Monday, December 31, 2001

Times of India 2001 Columns


I was in Kathmandu recently, where I had gone for my nephew's wedding. It turned out to be a warm family affair with plenty of good food and good feeling. This was before the Hritik Roshan episode, and there was lots of sunshine, attractive women, and beautiful clothes. But what took my breath away was the Patan Museum, which is arguably the best museum on the subcontinent with plenty of lessons for us in India. The museum displays the traditional sacred art of Nepal in a wonderful setting. Its home is an 18th century royal palace of Kathmandu's Malla kings, restored lovingly by Gótz Hagmúller and others, with funding from Austrian and Nepali sources. Its gilded door, guarded by two ferocious bronze lions, faces one of the beautiful squares in the world. Inside is an exciting collection of 200 sculptures and objects that transport one into the rich living traditions of Hinduism and Buddhism. This in itself is not exceptional. Many Indian museums are housed in grand buildings and contain equally rare treasures. What is exceptional is the world class presentation, the quality of the display, accompanied by educative commentary, impeccable maintenance and expert management. There is no dust, filth or anything shoddy, which alas, are the defining qualities of our museums. Museums in India are usually run by bored bureaucrats, who don't even have the authority to replace a light bulb. The treasures are poorly displayed, poorly guarded and poorly maintained. They depend on annual government grants, which are eaten up in staff salaries. The end result is that our museums appeal neither to local people nor to foreign visitors. They don't achieve their educational aim or their tourist potential. The creators of the Patan Museum were aware of these pitfalls, and their biggest victory was to convince the government to let it be a semi-autonomous body, with an ability to raise revenues, employ its own staff (not bureaucrats), and manage its pricing policy and budget. Its entrance fees are Rs. 10 for Nepalis, Rs. 30 for SAARC tourists and Rs. 120 for foreigners. It supplements the fees through revenues from an outstanding Museum Café in the landscape palace gardens, which is run by professionals and a gift shop that sells lovely posters, art books, and post cards. The end result is a self-sustaining, world-class museum that attracts 40,000 annual visitors or 5 per cent of all tourist arrivals in Nepal. It has been acclaimed around the world and its growing popularity guarantees it a sustainable, self-reliant future. A decaying old building has won a new lease of life as a cultural preserve that will be Nepal's pride for generations. Now, here is an idea for India's many languishing museums. Some will ask, how can we allow our national treasures to be managed by non-government institutions? Others will protest why do we need foreigners to restore our palaces and design our museums? The simple answer is that museums need people with special skills, a unique knowledge base, and a passion for art history and aesthetics. Museums are public spaces, but they don't have to be run by governments. The best museums in the world, especially in America, are managed as autonomous citizens' trusts. Expertise has no colour, and the issue is not swadeshi versus videshi. The challenge is to get passionate experts to run our institutions rather than bored bureaucrats. To be afraid of foreigners is the sign of an inferiority complex, and Tagore reminds us that "Whatever we understand and enjoy in human products instantly becomes ours, wherever they might have their origin." So, are there high-minded Indians who care enough about their heritage to come together, raise funds in India and abroad in order to upgrade our museums and be willing to convince our government that our museums should become semi-autonomous, self-sustaining institutions? To be sure the cultural bureaucracy will resist, but the truth is that our government doesn't have money. It might welcome a Patan type initiative, which will make our museums self-reliant. Once that happens we can dream of a Gótz Hagmúller to create magic one day in the Chola bronze gallery in Chennai. In these troubled times between Nepal and India, this will be our best compliment to our neighbour. While on the subject I, for one, do not think that Ayodhya needs a new building. But if there is "national sentiment" in its favour, as Mr. Vajpayee believes, I hope it will be a world-class monument to India's multi-faith diversity. I would invite one of the world's top architects--a Frank Gehry, Richard Meir, I.M. Pei, or Charles Correa--to design it. That will do more for Ayodhya's pride and tourism. Recall, Nehru had the courage to invite Corbusier to design Chandigarh. Now, here is another idea, Mr. Vajpaye.


For the past twenty five years we have owned a small coconut farm in a village in Maharashtra. If this does not make me a full blooded Maratha, it does make me at least an honorary Maharashtrian in my neighbours' eyes. Bhiku, our gardner,looks after our wadi, and we have seen his children grow up nicely over the years. I have always taken a special interest in his eldest boy, and when the Enron power plant came up I confidently predicted thatPrashant would have a shining future. The main obstacle to our village's prosperity is perennial shortage of power, which inhibits commercial activity. Although Enron has made Maharashtra surplus, our village still does not get power on Fridays and brown-outs define our other days. Across the harbour is Mumbai where people get plenty of power, and entrepreneurs set up industries, call centres and software companies and create thousands of jobs every day. Who is robbing Prashant's future, especially when our state now has abundant electricity? Most people blame Enron, and they expend enormous amount of negative energy in blaming the foreign devil for selling expensive power. The truth is that Enron's power is not more expensive than similar new plants. Enron's power appears expensive because Maharashtra's electricity board (MSEB) buys only half the power that Enron can produce and this makes Enron inefficient. If Enron could run its plant full blast, then the cost of its power would be Rs. 4.02 per unit. Even a new thermal plant like NTPC's Kayankulam plant produces power at Rs. 4.50 per unit. Enron's notorious Rs. 7.80 tariff was a fluke for the month of July when MSEB bought only 30 per cent of Enron's power. The rise in oil prices and the rupee's depreciation have not helped, but the main problem is MSEB's inability to buy enough power from Enron. If you buy a monthly train pass for Rs. 100 and use it only once then your journey costs you Rs. 100. But if you use it 100 times then each journey costs Re 1. If you create a fixed asset you should use it as much as possible. Maharashtra's electricity board behaves in this irrational way because it is bankrupt. It doesn't have money to buy Enron's power because it sells power below its cost. If a mango seller buys mangoes for one rupee and sells them for 50 paise, she too becomes bankrupt. MSEB has 13 million customers and of these 11.8 million get power below cost. 9 out of 10 Maharashtrians pay 42 paise per unit and 1 out of 10 pays Rs. 5.40. In addition, many of its customers steal power. Hence MSEB loses Rs. 5 crore per day. Mumbai, however, has plenty of power because MSEB does not distribute it. Professional private companies like BSES do, and they ensure that their bills are collected and they don't let anyone steal their power. Hence, Transmission and Distribution losses are only 9 per cent in Mumbai while they are 31 per cent in Maharashtra. The truth is that if some people have to pay 13 times more than others then no amount of policing by MSEB will help. The answer, of course, is to charge customers what it costs to produce electricity. This is easier said because no politician has the courage to raise tariffs to farmers and risk losing his assembly seat at the next election. MSEB must also learn from Mumbai and privatise power distribution. The crux of the problem facing Enron and every other independent power producer in India is that they have the freedom to generate power but they do not have the freedom to sell it. In a power starved country we should encourage Enron and all our power plants to produce as much power as possible (which will lower production costs). Put this power on the national grid, and open the trading of power to private entrepreneurs. Private companies will bid for power from generators and sell it directly to consumers. Those who want high quality power, without interruption will be willing to pay more. So will customers who live in power scarce areas. Consumers will be able to choose between different suppliers and from a menu of prices. During peak hours rates will rise, but eventually when supply exceeds demand prices will decline, as they did when cement was liberalised. So Prashant, don't blame Enron for spoiling your future. Blame Maharashtra's ugly politicians and the incompetent MSEB. In the next election vote for the candidate who promises to make everyone pay the real cost of power, privatise distribution, and sack MSEB linesmen who steal power. Remember, only insecure people blame foreigners for their own troubles.


Inspired by one of Emerson's essays, Mathew Arnold, the English poet, wrote in the 19th century about the "seeds of godlike power". He was referring to a human being's great potential for progress, but his happy phrase fits the new miracle seeds that will help India create a "second green revolution". The seeds are a product of biotechnology. They are resistant to pests, and the farmer doesn't need to spray his crop with pesticide. Farmers love them because they don't have to spend on costly pesticides and they raise yields and income by 30 to 50 per cent. Consumers like them because the food is less toxic and more nutritious. Many seeds are also nutritionally enhanced. For example, you won't feel guilty eating the new potatoes because you will get protein in addition to starch in your diet. No wonder, the seeds cover 44.2 million hectares in 13 countries on six continents. Eight of these countries are industrialised and five are developing. In the past five years, genetically improved crops have grown 25 fold in acreage--a dramatic rate of adoption for any new technology. Tragically, India's farmers have not been allowed to experience this miracle. China, our rival, has beaten us in this race as well. The new cottonseed, called Bt cotton, is especially popular because it is resistant to the dreaded bollworm, which attacks 70 per cent of India's cotton crop and destroys 35 to 50 per cent of it every year. Hence, 36 per cent of the US and 10 per cent of Chinese cotton crop is planted with Bt cotton. If our Andhra farmers had used it, their crop would have survived and we might have prevented suicides. Bt cotton is not available to Indian farmers because our regulators have not approved it despite 6 years of successful trials by Maharashtra Hybrid Seed Corporation (Mayco), the seed company. Similarly, Proagro's mustard seeds have been tested to death for 7 years and they have not been yet been approved. Chinese bureaucrats, in contrast, take a more practical approach. They saw that Bt cotton was being extensively used in America and a dozen countries, and it had cleared the rigorous requirements of the US FDA. So, they decided not to re-invent the wheel, but to merely check Bt cotton's bio-safety in their soil and climates. Hence, 18 months after trials, Chinese farmers had begun to enjoy its fruits while Indian farmers were committing suicides. Our two largest cotton growing competitors, the US and China have, thus, taken a lead over us. When global agricultural markets open up--and the day is not far--our rivals will be better positioned because their costs will be lower and their yields higher. As with any breakthrough, genetically improved seeds have plenty of critics, especially in Europe, including Prince Charles. They are creating a scare in people's mind without a shred of scientific evidence. Since most seeds are the discoveries of international companies, there is also the usual anti-MNC prejudice. European NGO's have funded Indian NGOs in order to stop transgenic seeds here and they are spreading plenty of disinformation. They have even taken the Indian government to court for approving the Bt cotton trials. Meanwhile, Professor Nanjundaswamy instigated 3000 farmers in Karnataka on January 3, 2001 and they approoted Mayco's trials in 2 locations. According to scientists, the European stand is emotional and based on unknown future risks and not on data. But these vocal critics have slowed our bureaucrats and made them timid. Fortunately, our bio-safety regulations are in place and our trials are well advanced. If they are not stopped either by obstructive bureaucrats, or eco-terrorists or the courts, the Indian farmer will be able to plant the miracle cotton in the next season, mustard in 2002, potato, tomato, cauliflower and brinjal in 2003. Transgenic wheat is ahead of rice but the farmer won't see it before 2005. Remember, India has only 2 per cent of the world's arable land, 1 per cent of the world's rainfall but 16 per cent of world's people. Indian farm yields are only half or one-third of our competitors. The hybrids of the first green revolution have stopped giving productivity gains. Remember, also, that our first green revolution in the sixties was not an accident. Bold individuals created it--they flew in the new dwarf wheat from Mexico and distributed it to Punjab's farmers. Had they waited for endless trials, our first green revolution would not have happened. In comparison, our second green revolution so far is a sordid tale of apathetic, timid bureaucrats, misguided NGOs and eco-terrorists who are robbing our farmers' future.

A HERO FOR OUR TIME 25/02/2001

Every nation must have its heroes. Having lost its stars of the Independence age, Indians have been desperately seeking new ones who can inspire them in these dispirited post-reform, post-Mandal, post-modern times. Narasimha Rao, like Deng could have been one such hero. Deng has become a hero to contemporary China and has supplanted Mao in Chinese hearts. Although Rao created an economic revolution between 1991-93, he was not a visionary; he was only a reluctant reformer. Now mired in corruption cases, he is no longer respected. V.P. Singh could have been a hero. He released a social revolution as he attempted to raise the backward castes in our society. But most Indians saw through his electoral ambitions. In the end, he divided society and seriously compromised standards. If he had genuinely cared for the backwards he would have delivered them education and health, and that would have truly lifted them over the long term. Manmohan Singh and P. Chidambaram are hero candidates. Indeed, with a solid record of achievement in reform, they are already heroes to the young. But politics has not been kind to them and they have been languishing in recent years. We are shy of politicians today and look to individuals with narrower but concrete achievements--to V. Kurien, for example, for making India the largest milk producer; to Sam Pitroda for inventing the STD call centre in the bazaar; to C. Subramaniam for our green revolution. Who ought to qualify to be our hero in the post-reform age? Many would agree that it is individuals who succeeded by helping themselves, who made a difference to society through their own efforts rather than the patronage of others, especially the government. Leftist intellectuals call this ethic "selfishness" and "greed", but it is rags-to-riches stories like Narayana Murthy's that resonate with our times. Recently I was reading Ashish Nandy's fascinating, An Ambiguous Journey to the City, where he discusses Karna, and it struck me that the mythic hero of the Mahabharata, might qualify as a hero. Of uncertain birth, insecure and defiant, Karna represents the predicament of a self-made person in an insensitive society that is not quite ready for individualism and competitiveness. His fight against the Pandavas is an attempt to break out of his lowly status as a charioteer's son and affirm the values of personal achievement and competitive individualism. If we cannot find a hero in the flesh we might as well import one from mythology. Karna, as every school child knows, was born of the princess Kunti, who had a boon that allowed her to have a child by any god that she wished. Whilst still young and unmarried she invoked through her prayers, the sun god. As a result, she conceived and gave birth to Karna. Fearing a scandal, she stealthily placed the child in an ornate casket and left it to float on the Ashva river, where a humble charioteer, Adhiratha and his wife Radha found him, and bought him up to be their son. Meanwhile, Kunti married the sickly Pandu, the prince of Hastinapur, who was cursed to die if sexually aroused. So Kunti exercised her boon and had children by the gods. These were the famous Pandavas who went on to fight the Kauravas in what became the Mahabharata. Meanwhile, Karna grew into a brave and gifted warrior, but he was subjected from birth to jibes about his humble birth and his princely ambitions. When young he challenged his half brothers to competition. They refused--competing with princes was a princely privilege. Karna was again humiliated when princess Draupadi refused to marry a charioteer's son even though he had won the right to do so in fair competition. Embittered, Karna turned to the Kauravas for friendship. This worried Krishna, who revealed to Karna the secret of his birth on the eve of the great battle and pleaded with him to join the Pandavas. He offered him, in return, the prize of Hastinapur's kingdom and Draupadi's hand in marriage. Kunti and Surya, his natural parents, begged him as well, but Karna was loyal to his word, and refused to betray the Kauravas, who had elevated him to a kshatriya and a prince. In the end, like a good hero, Karna knew when to die, and he went down unvanquished, killed through Krishna's trickery. Although he walks out of the pages of the Mahabharata, this Karna seeks power and legitimacy for a new ethic and a new mindset. He defies his low caste; he celebrates achievement in a competitive society; he stands for individualism and a "can do" attitude. He seeks legitimacy for the rustic and lowborn in a secular city. He could well be a hero for our times.

Hail, a new dawn! 11/03/2001

Praise has been showered on Yashwant Sinha's Budget, and deservedly so. There is much to laud and everyone has his favourite measure, but I am happiest that agriculture has finally entered the reform agenda. I am pleased because we have a comparative advantage in agriculture--something we do not enjoy in industry. By investing in agricultural reform we will get a "bigger bang for our buck" as the Americans say. The timing is good because we sit comfortably on a grain mountain, forty million tonnes high. Both domestic and international prices are down. So, no one seriously worries about food security. Agricultural reform is a big agenda and there is no point talking of globalisation or WTO when the Indian market is not free. Our farmers are victims of archaic laws that prohibit them from selling their produce freely within the country, traders face limits on how much they can buy and stock, mills face levy burdens on rice and sugar, prices are distorted by politicians. All this is incompatible with a modern, successful economy, but the biggest change we need is in our mindset. We still labour under a scarcity mentality. All our policies are aimed at achieving self-sufficiency when we achieved it 20 years ago! Year after year we produce wheat and rice surplus that piles up into a mountain for the enjoyment of rats. How can a nation be so stupid? Instead of a defensive mentality we need an offensive, exporting, "can do" attitude, which regards the WTO as an ally, not an enemy. No country became a successful agricultural power through peasant farming--this is the second mindset change. Farming is not a "noble profession"; it is agri-business. Ask any peasant--his son doesn't want to be a peasant. We must treat farmers as businesspeople. Our green revolution succeeded because we treated Punjab's farmers as capitalists. Our farms need a huge infusion of capital and technology in order to raise yields and compete globally. Peasants cannot make this investment. Neither can the government for is it bankrupt. Hence, we must free peasants to lease their lands to agri-business professionals with capital and technology. Thus, we will stage the second green revolution and become an exporter in a world economy. All our agricultural institutions are stagnant or defunct and incapable of reform--extension services, co-operatives, FCI and dozens of others. Five ministries interfere in our farmers' lives--Agriculture, Fertilisers, Water, Food, and Consumer Affairs--and there is no co-ordination, professionalism, or result orientation. It takes 6 months to import a commodity, and by then we don't need it, and 5 months to export it when prices have plunged. Hence, we need to trust the individual and the market and not the government--this is the third change. Mr. Sinha has struck a big blow for agriculture reform, not through budgetary measures, but by challenging these old mindsets. He has promised to free inter-state trading--this means he will amend the archaic Essential Commodities Act. He will lift storage and stocking curbs, which hurt farmers and diminish their incentive to produce. A 24 per cent expansion in rural credit (to Rs. 64,000 crores) is significant, especially for creating rural godowns and cold storages to boost the farmer's holding power. Chopping the Food Corporation's role and decentralising food management will bring down subsidies, avoid needless stockpiling, and rat feasting. The introduction of a futures market ensures a soft landing for sugar decontrol. Perhaps, the boldest move is to remove excise duties on food processing, which could usher a horticultural revolution and transform our fruit exports. My favourite measure is agri-clinics or agri-business centres, financed by NABARD loans, which could unleash thousands of agricultural graduate-entrepreneurs. It leverages knowledge and marks a new era of private farm services--in testing soils, plant protection, seeds, marketing, post harvest handling, etc. Farmers will pay for result oriented, private consultancy instead of free, apathetic government extension service. Just as our IIT graduates become millionaires, it is now the chance for our 17,000 annual graduates of agricultural colleges. Each clinic will need on average 3 graduates and 9 technicians, and this could also create vast employment for the educated in rural areas. I have two criticisms though: One, the absence of a food-for-work program to reduce the present grain mountain, and two, the absence of reform in our mandi or post-harvest system. With 15 per cent of our food (worth Rs. 24,000 crores) wasted, we must at least experiment with a modern system of silos and mechanised, bulk handling. India is not a tiger but an elephant--hence our reform process is frustratingly slow. As a first step, agriculture needed to be placed on the national reform agenda. This Mr. Sinha has done.

IF INDIA CAN, WHY CAN'T WE? 25/03/2001

The English have been surprised by Professor James Tooley's observations that India can teach Britain something about education. This is unusual spin over the usual foreign expert who patronisingly offers us advice on how to improve ourselves. Indeed, when Tooley wrote about this in the Times Education Supplement his editor was so perplexed that he inserted a photo of an impoverished school in Bihar with a caption, "Education in India has a lot to teach the British"--implying, may be, that the good professor had lost it. The professor of education from Newcastle has been documenting a "self help" revolution in Indian towns and villages as education entrepreneurs are opening private schools and creating opportunities for the poor to rise. Most Indians would agree that private schools are indeed mushrooming across India (although they worry about their indifferent quality.) This may explain, in part, why literacy has grown at double our historic rate--1.4 per cent a year between 1992-1998 versus 0.7 per cent between 1950-1990. Professor Tooley argues that India's blossoming spirit has much to teach England's poorer inner city areas. Most of us were shocked 18 months ago when the government sponsored Public Report on Basic Education in India (PROBE) disclosed that teaching was going on in only 53 per cent of government schools in M.P., Bihar, U.P., Rajasthan villages. Teachers were absent in one-third; many had brazenly closed their schools and were busy running shops. Some teachers were found drunk and a few even expected pupils to bring them "daru". A few were asleep; others engaged children in domestic chores, including minding their babies. Given this, is it surprising that parents are turning to private schools in more and communities? PROBE confirmed that village private schools, in contrast, had "feverish classroom activity" and more dedicated teachers. The reason, it said, was that teachers were accountable to managers (who could fire them) and to parents (who could remove their children). Research shows that these private schools charge modestly--from Rs. 35 to Rs. 50 per month in villages and Rs. 65-100 in towns. They are also popular because they teach English. In the slums behind the Charminar, in Hyderabad, a private school exists in every alley. 500 such schools belong to the Federation of Private Schools, and they are mainly in poor communities. They are run on commercial principles charging Rs. 750 per year and do not depend on state subsidies or private charity. Typical parents include rikshaw-pullers and vegetable and fruit sellers, and many schools offer free seats to roughly 20 per cent of the poorest students. Professor Tooley has observed this same phenomenon in Thailand, Columbia, Tanzania, and Chile. Cheap private schools are doing more for the poor since state education has let them down. What should we do? We must not only fix the shocking state of our government schools, but we must also nurture and encourage private schools. Today, private schools face great hostility because we have not got used to the idea that education can be commercial. Indeed, the infamous Unnikrishnan judgement of the Supreme Court prohibits "commercialisation" of education. The bureaucracy exploits society's prejudice and has created a virtual license raj. It makes it impossible to start a new school without paying a bribe. Education entrepreneurs face a plethora of regulations, which limit competition, create artificial scarcity, and allow existing schools to exploit parents. Their major problem continues to be "recognition", which requires that schools have playgrounds among dozens of other requirements. All very well, but private schools for the poor cannot afford these middle class luxuries. Indeed, the PM's Economic Advisory Council has recognised this problem and has recommended that "education must be liberalised and all entry-exit restrictions and bureaucratic hurdles faced by [private] schools and colleges should be abolished." We should also ask hard questions. Given the shocking state of government schools, can we trust the state to deliver education? If we can't trust it to produce bread, how can we trust it with the minds of our young? It is one thing to believe that the state must provide money for primary education, it is quite another that the state must be in the business of running schools. Wouldn't it be better if our state schools were managed by NGO's, education professionals and entrepreneurs on a contract that was renewable based on performance? Indeed, there exist NGOs today who already run parallel schools (inside government schools during off-hours) and they deliver excellent results. This change won't occur overnight, but meanwhile we can make a beginning and become more understanding of these new private schools and fight against the license raj in education.


Last week I walked into our neighbourhood chemist's and the shop assistant gave me a look that spoke a thousand words. He looked me straight in the face and his eyes said "treat me as an equal". He sought equality based on dignity and mutual respect, and his disarming expression, it seems, had already got him in trouble. For the Punjabi woman ahead of me complained to the chemist. She used the nice Urdu word "tamiz", which roughly means "courtesy", but in her feudal mind it really meant that the shop assistant was not sufficiently servile. When she left the chemist confided in me, "this boy is good and efficient, but he is a Dalit from Bihar and his manners seem to put off my customers." Walking back I was reminded of George Orwell's description of social equality in "Homage to Catalonia." There he describes the waiters in revolutionary Barcelona "who looked you in the face and treated you as an equal." The Indian middle classes, used to feeling superior to the lower castes, are now going through disconcerting times as Laloo Prasad and Mayawati have given the OBCs and Dalits a new sense of confidence. We are in the midst of a social revolution that has been created by the ballot box. As economic reforms deepen and prosperity becomes widespread this will only accelerate. The latest poverty figures confirm what we are seeing around us. The Planning Commission reports that people below the poverty line have declined in the nineties by ten percentage points. Somehow cold percentages don't quite capture the enormity of the achievement until one realises that 10 per cent of one billion means that 100 million people have been lifted out of poverty in less than a decade. China, incidentally, achieved more or less the same in the eighties. Nevertheless, there exists huge inequality in our society and between rich and poor nations. Leftists claim that inequality has grown in recent times and globalisation is its cause. This is plainly false. In fact, for the first time in two centuries global inequality has actually begun to decline since the 1980s, and this is mainly because living standards in China and India (to a lesser extent) have begun to rise as growth has accelerated in both countries. China has done far better than India because it has taken better advantage of globalisation. Its reforms have gone deeper, its exports have grown brilliantly, and it has received far more foreign investment. Critics of reform and globalisation--such as the powerful voices in the Congress, RSS, and CPM--should seriously learn from China before they force India to turn inwards, and condemn our poor to perpetual poverty. Soon after the chemist episode, I was at a social gathering where people were avidly discussing the six recently minted MBAs at IIM, Ahmedabad, who had won starting annual salaries of more than a crore and the average for the class of Rs. 18 lakhs was not bad either. The gathering felt righteously indignant, and people blamed liberalisation. I felt, like Justice Holmes, that their passion for equality was merely "idealised envy". These two episodes--the equality sought by the Dalit and the inequality created by the IIM graduates--left me vaguely uneasy. The cause of our discontent, I'm increasingly convinced, is that we confuse inequality with poverty. Everyone agrees that there should be equality of opportunity. This means that every child should have access to a good school, primary health care, and safe drinking water irrespective of birth and ability, and we should minimise the headstart that some children have over others based on caste, gender, or birth. This however, is very different from an equality of result or an equal standard of living that leftists seek. Absolute equality is desirable but it is not possible because it goes against human nature. Most of us would happily accept rich people or an increase in inequality among the middle classes provided it leads to even a small improvement in the conditions of the poor and the most disadvantaged. It is more important to raise the poor than worry about inequality. Economic reforms are bound to increase inequality that comes from open and free competition. But that does not mean that they will worsen the situation of the poor and the most disadvantaged. It is stupid to think that every inequality worsens the condition of the worst off. The IIT students' crores are the result of a competitive economy which in the long run will accelerate economic growth and eventually reduce the disabilities of caste, gender, and birth. Hence, economic reforms are not anti-poor, but they must be accompanied by an equal passion for reforming primary education, health and the delivery of our poverty programs.

WERE WE ONCE RICH? 22/04/2001

I am on a book tour of America as I write this column, and Americans sometimes ask, "Was India once really rich? Then why did it become so poor?" I remind them that Columbus had gone in quest of the riches of India but discovered America instead. Thinking he had found India, he called the natives "Indians." The name stuck and so has the linguistic confusion. It took the Portuguese five years to get over the humiliation that Spain, their enemy, had discovered America when it could have been theirs. In 1497, they sent Vasco da Gama the other way round the world. He did indeed find India's legendary wealth. He informed Portugal's King Manuel of "India's large cities, large buildings and rivers, and great populations." He spoke about spices, jewels, and mines. But he added that Indians were not interested in European trinkets and clothes. They made far better fabrics and trinkets themselves. In the European mind "Golconda" became the symbol of the haunting wealth of India. "The discovery of America and the passage to the East Indies by the Cape of Good Hope are the two greatest events in the history of mankind," wrote Adam Smith. At the end of the 16th century, economic historians tell us, India's wealth sustained more than a hundred million people. With plenty of arable land, its agriculture was vibrant with productivity comparable to the best in the world. There was a vigorous and large skilled artisan workforce that produced not only cottons but also luxurious products for the zamindars and the courts. The economy produced a great financial surplus, and the annual revenues of the Mogul emperor Aurangzeb (1659-1701) were more than ten times those of his contemporary Louis XIV, the richest king of Europe. This surplus supported the vast and growing Mughal Empire and financed spectacular monuments like the Taj Mahal. When the English later got to this wealth they found that India produced the world's best cotton yarn and textiles. To this huge industry they provided the powerful stimulus of European demand, and made it even richer. Thus, by the end of the seventeenth century India had a sophisticated market and credit structure and controlled a quarter of the world trade in textiles, according to Paul Bairoch. It had 22.6 per cent share of world GDP (or roughly America's share of the world's wealth today), confirms Angus Maddison. Indian cottons transformed the dress of Europe, and cotton underwear changed the standards of cleanliness and comfort in the West. The Indian peasant, however, was very poor. Francois Bernier, a French physician who spent twelve years in India, wrote about the decrepit houses of the poor, their humiliating lives and the dramatic inequality between the tiny rich and the impoverished many. Because the rapacious Mughal State took away something like half the agricultural product there was little incentive to improve the land. The merchants hid their wealth for fear of the tax collector. There is no easy answer to the problem that the country was prosperous and the people were poor. Lest we forget, 250 years ago peasants everywhere were poor and today's great disparities in income between nations did not exist then. The difference between Europe and India (or China) was 1.5 to 1 versus 20 to 1 today. The English, who learned about textiles from India, soon turned the tables in the late 18th century. They began making textiles with machines and this began the West's industrial revolution, and brought it amazing prosperity. As a result, handloom weavers were destroyed all over the world, including India. We blamed the Britain for impoverishing us, but the question is why did India not experience an industrial revolution? The truth is that pre-British India was significantly behind Western Europe in technology, institutions and ideas. A scientific revolution had not occurred. How to make a poor nation prosperous is a more difficult question. The answer seems to lie in technology and institutions. Since Britain's industrial revolution there been for the first time in recorded history a continuous flow of inventions. Moreover, these have been absorbed commercially as profitable innovations. History teaches that a nation's ability to absorb these innovations and create an industrial revolution depends on having the right institutions in place--for example, property rights, schools, and stable governance. In the second half of the twentieth century, the Far East nations demonstrated that it can be done--a poor nation can become rich, and very quickly. They took less than thirty years to transform their societies, whereas the West needed a hundred. After the reforms India too is poised to do it soon--as long as we keep vigorously reforming our damaging socialist institutions and investing in education


There is no use pretending that the departures of N.K. Singh and Montek Singh are not going to hurt. They are. Two very different men--Montek is an elegant economist and NK is a natty networker, who knows how to turn every screw in the government's machine. But both are reformers. N.K. Singh has been transferred from the Prime Minister's office (PMO), where he coordinated the PM's economic agenda, to the Planning Commission. Montek is leaving to head the Independent Evaluator's office for the International Monetary Fund. Earlier, he was Finance Secretary, where he had spearheaded many an economic reform ever since the summer of 1991. Both men have fallen victim to the RSS and the swadeshi lobby. Although, Muralidhar Rao and Datta Pengdi may have precipitated N.K.'s recent departure, all anti-reformers are delighted. The communists, the leftists--the Samtas and Mamtas--and the considerable forces of darkness in the Congress would rather live with inefficient and corrupt public sector monopolies than have anything to do with competitive markets. Montek's achievements are well known, but NK too leaves a considerable record of reform, culminating in the recent path-breaking budget with dramatic reforms in labour, agriculture, and industrial policy. It contained both Mr. Vajpayee's and Mr Sinha's reforms, and was a product of teamwork between North and South Blocks, and NK's networking skills with the ministries were crucial. NK has left a mark on many Vajpayee initiatives: for example, the current momentum in building highways, the new "open skies" policy (held hostage for so long by the malicious civil aviation ministry), the decision to lease five major airports, the new energy behind ports privatisation, resolution to the telecom tangle via an excellent telecom policy--the ruckus over WiLL notwithstanding, and the soon to be announced liberalisation of drugs price control. Against these successes is failure in the power sector and the centre's inability to get the states to reform SEBs. The lack of initiative on Enron is also inexplicable. India cannot afford to let Enron blow-up and destroy our credibility with the world. At one go we could lose our reputation for honouring contracts. Remember, Enron's board members, James Baker and Kenneth Lay, are George W. Bush's closest friends. Reforms don't happen without reformers. Even the most reform minded minister needs a reforming officer to help build pro-reform coalitions in the bureaucracy, the party and in parliament. Few realise A.N. Varma's stellar role when he was Prime Minister Narasimha Rao's secretary. His legendary Thursday meetings with economic secretaries became the crucial instrument for the blistering pace of reform between 1991 and 1993. Mr Varma was a terror and ran his committee tightly. No one was allowed to travel on Thursdays. The committee met for only two hours, when the reform in question was openly discussed. Varma summarised and minuted the outcome and the reform proposal was taken to the cabinet for approval, and then on to the parliament. Many of us remember our excitement in those golden years as a new reform was announced every week. Just as Narasimha Rao had Varma, so Manmohan Singh had Montek. Chidambaram had Jairam Ramesh, and Vajpayee had N.K. Singh. These minister-officer partnerships have been crucial in making reforms happen. Those who criticise the PMO for becoming too powerful forget that in our political model ministries are independent and someone has to coordinate our chaotic government. It used to be the cabinet secretary, but when you want strategic management of change, then you require initiative and pro-activity. Who knows, a powerful, hands-on secretary might have been able to prevent the Fifth Pay Commission disaster--the lowest point in our economic history of the 1990s. To our worthy anti-reformers, who are gloating over N.K. and Montek's exits, I ask: how can you oppose the work of reformers who are trying to, for example, reduce the theft of electricity by employees of the state electricity boards? If this theft is reduced from 30 per cent today to only 18 per cent, there will be enough capital to build sufficient new power capacity. But the only way to stop thievery is by privatising distribution, for no private distributor will allow his power to be stolen. Thieves don't steal power in Bombay and Calcutta because distribution is private. Our anti-reformers retort, "don't privatise power, just catch the thieves!" Well, for fifty years we have not been able to catch them. Should we wait another fifty? Think about this--the next you oppose reforms and reformers you vote for public sector thieves rather than competitive markets. Liberalisation is not a matter of ideology. It is common sense to want clean, uncorrupt services. The only losers in privatisation will be thieves and lazy workers. The winners will be the Indian people.


We are well into our Indian summer and for teenagers this is a time to recuperate from the slogging drudgery of tuitions, coaching crammers, computer classes, board exams and college entrance tests. The summer job has not yet arrived in India. So, what does one do for "time-pass" in desi-land? My secret recipe for the enviably happy summer is to draw the curtains, turn on the cooler, sit in a comfortable old cane chair and begin to read. Feel your youth like a nimbus, and start to create a self. You don't inherit a self; you build it. One way to do it is to read the great books. Take a break at noon with lassi. Read some more after lunch and in the evenings treat your friends to dahi chaat and gossip-in part, about the books you are reading. For you never accept a text passively; you interrogate it. Smell the jasmine at night and go to sleep reading. There is no royal road to nirvana but only the many roads large and small, the innumerable curving paths, a thousand steps and turns leading to education. Begin with the Mahabharata, and feel the brute vitality of the air, the magnificence of chariots, wind, and fires; the raging battles, the plains charged with terrified warriors, the beasts unstrung and falling. Like the brilliant first scene in the Oscar-winning Gladiator, see the men flung facedown in the dust, the ravaged longing for home and family and the rituals of peace, as the two sets of cousins, bitter enemies descended from King Bharata, fall into rapt admiration of each other's nobility and beauty. It is an apocalyptic war poem, with an excruciating vividness, an obsessive observation of horror that causes almost disbelief. Since you are unlikely to read it in the original Sanskrit, look for R.K. Narayan's readable translation, and if that is not available try C.V. Narsimhan's version. Feast also on the great books of the West. Begin with Homer's Iliad and Odyssey in the Lattimore translation. Follow it up with the great tragedians--read Aeschylus' Oresteia, Sophocles' Oedipus and Antigone in the Grene translation and Euripides' Electra in the Vermeule translation. Then a bit of history-read Thucydides' History of the Peloponnesian War in Penguin classics. Finally, philosophy-read Plato's Symposium, Apology, and The Republic in the Hackett translation, and end with Aristotle's Nicomachean Ethics in the elegant Ross translation. The magic of an American undergraduate education is that it breathes life into the humanistic classics. Whether your field is chemistry or engineering, you are required to read the great books and learn that life and literature are inseparable. With a good teacher like Edward Tayler at Columbia you learn to read as though your life depended on it, and you are carried along on the crest of excitement and high adventure of ideas that will resonate throughout your life. Indian students are not so lucky. Not only does our traditional insecurity for jobs push our youth early into careers, our silo-like curriculum does not permit cross fertilisation of disciplines. Now, I ask you honestly, Shri Murli Manohar Joshi, isn't this what our mandarins in the Ministry ought to be thinking about? Instead of dabbling in the dubious mysteries of astrology, let's make our students immeasurably richer by breathing life into the great books of the East and the West. To experience the romance of a liberal education, I recommend David Denby's Great Books: My Adventure with Homer, Rousseau, Woolf and Other Indestructible Writers of the Western World. In 1991, thirty years after graduating from Columbia University, Denby went back to college and sat with eighteen-year-olds and read the same books that they read. Not just the ancient classics above, but also modern ones. Together they read Goethe, Kant, Milton, Cervantes, Marx, Conrad, Woolf and others. Denby was certainly a most unlikely student: forty-eight years old, film critic of New York magazine, a husband and father, a settled man who was nevertheless unsettled in someway. Was it just knowledge he wanted? He had read many of the books before. Yet nothing in life seemed more important to him than reading these books and sitting in on those discussions. Denby's book is an account of his journey, sometimes perilous, sometimes serene, through the momentous ideas he consumed with such hunger in middle age. He took the two "great books" courses, devised earlier in the century at Columbia, which spread to the University of Chicago, and in the 1940s to other colleges in America. In India, the triumph of the IIT-IIM culture and our current mania for computers, is producing too many graduates with a tunnel vision. We are not producing leaders for tomorrow's challenges. Reading great books is one way to make it happen.


India, truly, is a land of paradoxes. For forty years political scientists have been debating how we became a vibrant democracy despite our poverty, low literacy and ethnic violence. Adam Przeworski's empirical study of 135 countries recently concluded that, given everything, India ought to have been a dictatorship (in his "Democracy and Development"). Indeed, the late and gracious Myron Weiner of M.I.T. wrote a charming book called "The Indian Paradox", in which he wrestled with the contradiction of how democratic politics could endure in our diverse and violent society. Now, here is another paradox. By any yardstick, the 1990s have been the best years in our recent economic and social history. Yet, it was also the decade of the greatest political instability. How does one begin to explain this contradiction? Conventional wisdom says that prosperity and stability go together and economic growth needs political stability. Does this mean that our economic sphere is slowly becoming autonomous from the political realm? Is this another example of Indian exceptionalism? There are five good reasons to believe that the last decade was our best, economically. First, our wealth or GDP grew at an average real rate of 6.4 per cent per year (and crossed 7.5 per cent for three years). No wonder President Clinton said the world's best-kept secret is that India has been the second fastest growing economy in the world. Second, our population growth has begun to slow down for the first time in decades--against a 2.2 per cent growth rate it had come down to 1.67 by 1998. Third, literacy growth doubled in the nineties--from its historic climb of 0.7 per cent a year to 1.4 per cent--hence, literacy rose from 52 to 65 per cent during the decade, with the biggest gainers being women and the backward states. Fourth, at least 90 million Indians rose out of poverty as the poverty ratio declined from 36 to 27 per cent between 1993-99--this is almost the same pace as China's in the 1980s. Fifth, we may have finally found our global competitive advantage in our booming software and IT services--what the economists call the "lead sector" that can transform the whole economy. These hopeful numbers offer a dramatic contrast to our political instability. We had six prime ministers in the nineties. Between 1989 and 1999 we changed our government every two and a half years compared to every four and a half years between 1951 and 1989. No single party has won an overall majority since 1984. Roughly half the incumbent representatives lost their seats in the nineties. And the once mighty Congress Party, which ruled the republic for almost forty years, has been humbled. Today, we have forty weak and silly parties and the ruling coalition has around 20 partners. Compared to India's vibrant economic space our political stage is a comedy, peopled by clowns, who do everything except govern. Not only is our economic sphere alive, our social sphere is humming. Lower castes have risen through the ballot box as a social revolution has taken place in the north. (The south experienced its social revolution decades ago.) We may laugh at Laloo and Mayavati, but they have given a new confidence to the backwards, and you can see it in the "walk" of the Yadavs and the Dalits. Cable television and other interventions have also decolonised millions of young, urban minds. Daler Mehndi, A.R.Rehman, Arundhati Roy, and Aishwarya Rai are products of this liberated mindset. More women are working outside and this is gradually liberating them from the old tyrannies of the family, the caste, and the village. We have also lost our hypocrisy about money, as the sons of Brahmins and Kshatriyas are getting MBAs and becoming entrepreneurs--this social revolution is, perhaps, rivalled only by the ascent of Japan's merchant class during the 1868 Meiji revolution. How, then, does one begin to explain the paradox of an economic and social revolution happening in the midst of political instability and poor governance? Professor Devesh Kapur at Harvard has found an answer in our polymorphic institutions which, he says insulate our political system. While the old formal institutions--the bureaucracy, the parties, public enterprises--have decayed or got clogged by interest groups, new institutions have emerged and old moribund ones have been rejuvenated, such as the Election Commission, CVC, the judiciary, NGOs, and the new regulatory agencies. This simultaneous cycle of decay and rejuvenation gives our system a certain resilience when political actors keep changing. Weak parties mean unstable coalitions, but they have also brought more federalism, less misuse of the evil Article 356, and a dilution of the BJP's economic nationalism and identity politics. Certainly, it a believable answer to another Indian paradox!


We are a nation so disappointed with itself that we have become immune to good news. So when it does come, we either ignore it or cynically dismiss it with a shrug. The latest census is an example. It has brought the happy news that literacy in India has jumped from 52 to 65 per cent during the last decade. This means that our literacy growth rate has doubled from 0.7 per cent a year in the past to 1.4 per cent. Millions of children have been liberated in the 1990s from the bondage of ignorance, with the greatest gains having come from rural areas, the Hindi states, and among girls. How did this happen? On the demand end, it is parental motivation--parents are increasingly realising, even in the most backward villages, that education is the passport to their child's future. On the supply side, it is a combination of things. First, Literacy campaigns in some states, supported by the internationally funded District Primary Education Program (DPEP) have begun to make a difference. Their central premise is that teachers must be made accountable to local communities to overcome the problem of chronic teacher absenteeism--the scourge of primary education in Hindi rural areas. Because states are bankrupt, they have resorted to employing para-teachers on performance contracts ("shiksha karmi"), and they are outperforming regular teachers. We now have an astounding 500,000 para-teachers in India today! Second, private schools of varying quality, in towns and villages across India have mushroomed. State schools, especially in the Hindi belt, had grown so rotten that people took matters into their hands and pulled their children out of government schools and put them into these private schools, where, at least, the teacher shows up and some teaching does take place. Third, there have been outstanding initiatives in states like Madhya Pradesh, where mass literacy has risen from 44 to 64 per cent in the 1990s. Against this 20-percentage point gain, literacy had risen only 6 points in the eighties, 11 points in the seventies and 6 points in the sixties. Female literacy has also gone up an impressive 22 points--from lowly 28 per cent, it has risen to 50 per cent. Thus, Madhya Pradesh has begun to replicate Himachal's education miracle, and soon it too will stop being a contemptible Bimaru state. Rajasthan and Andhra too are not far behind. Finding the state treasury empty, subversive warriors inside the M.P. government have created an alternative system of 26,000 schools. This is the famous Education Guarantee Scheme, which I wrote about two years ago. Through it, the village creates its own learning space, hires a local teacher on a performance contract, who is accountable to parents through "shala shiksha samitis". Having recognised that "job security" is partially the cause of the disease, the reformers have now ensured that all future teachers in the formal system will be "shiksha karmis" on performance contract. As a result, primary education is gradually being de-centralised and de-bureaucratised, despite resistance from teachers unions. It is becoming community based and this has visibly reduced teacher absenteeism and improved teaching quality. Some critics are dismissive. They see in these initiatives a conspiracy by the state to off-load the burden of primary education to the village panchayats. They rightly point out that para-teachers are sometimes relatives of the village pradhan. They worry that alternative schools might institutionalise dualism. Also, an unscrupulous politician might make shiksha karmis permanent. These are valid concerns. The critics, however, overlook the richness of the achievement. In tests administered by independent experts, children in non-formal schools run by para-teachers in M.P. have consistently outperformed those in the formal government schools. The "joyful learning" curriculum by an NGO, Eklavya, is also making a significant difference in young children's development. The teacher's commitment is turning out to be more important than a B.Ed degree. High salaries and fancy buildings seem to be less important than accountability. The other lesson we are learning is that instead of flaying the state for the umpteenth time for its failure, let us admit the state's limitations in broadly delivering quality education. If it cannot produce bread how can it realistically develop the minds of our young? However, only the state has the resources for universal primary education in our vast country. Hence, the solution is "state aided" schools--government must gradually give up running schools, and become a non-interfering funds provider. Running schools is best left to education professionals, NGOs and "edu-preneurs". Once this happens, new schools will emerge, creativity will blossom, and parents will have choice. The miserable state schools will also improve when they are forced to compete. And if they do not, then parents will pull their children out, and they will either have to close down or be sold off.


Contrary to what many believe the economic lives of our ancestors is a story of almost unrelieved wretchedness. Everywhere a small number lived humanely while the great majority lived in abysmal squalor. We forget their misery, in part, by the grace of literature, poetry, and legend, which celebrate those who lived well and forget those who lived in the silence of poverty. The eras of misery have been mythologised and are remembered as golden ages of pastoral simplicity. They were not. In truth, survival was the only order of business. Only recently have progress and prosperity touched the lives of somewhat more than the upper tenth of the population. In the last 200 years the West (and recently the Far East) grew fabulously rich. This miracle was based on harnessing technology and organisation to the satisfaction of human wants, while keeping their economies free from political control, ensuring that private individuals made decisions rather than bureaucrats. The striking character of the West's miracle was its gradualism. There was no sudden change--just gradual year-to-year growth at a rate that somewhat exceeded population growth. The gains at first were not noticeable and it was widely believed that only the rich experienced them. As growth continued through the 20th century, it became obvious that working classes were increasingly turning into middle classes. Poverty also declined from 90 per cent of the population to 20 per cent, or less, depending on the country. The West's prosperity originated in innovations in technology and organisation. As economies expanded, so did their stocks of capital, their expenditures on education and public health, and the accumulation of skills by their work forces. Virtually without thought or discussion, the West delegated to enterprising individuals decision making in the innovation process. But innovations needed to be tested in the marketplace. This required money and competence in engineering, manufacturing, and marketing, especially if the innovator was to capture the rewards of the innovation. These resources came to exist in the ordinary firm. Comparatively free of political and religious controls, markets determined who won the rewards of innovation. The response of the market was the test of success or failure of an innovation. And competition became central to innovation. The market rewarded innovators with a high price for a unique product or service until such time as it was imitated or superseded by others. In the seventeenth century, the West developed a scientific procedure, associated with the names of Galileo and Bacon, based upon observation, reason and experiment. Although artisan inventors invented their own technology in the beginning, the contributions of science to industrial technology became more numerous with time. Did the West grow rich through colonialism? Karl Marx thought so, and he attributed part of the new wealth of the West to its imperialist acquisition of raw materials and markets from overseas. I tend to doubt this because poor, colonised countries did not provide large enough markets. Moreover, imperialist Spain and Portugal did not achieve long-term growth; Switzerland and the Scandinavian countries were not imperialist countries; Germany and United States, which achieved long-term growth, were latecomers to imperialism. And Japan's growth after 1868 totally undermines the case. In India, we have not so far experienced this miraculous transformation. But we will in this century if our economy keeps growing as it has in the last two decades. Compared to the West's historic 3 per cent economic growth we are growing at more than 6 per cent. The key is to keep reforming our institutions. Prosperity is not a matter of national character but of institutions. As East and Southeast Asia have shown, all countries can move from poverty to prosperity. Our economic reforms are creating an autonomous economic sphere from political interference. They are slowly replacing the licence-raj institutions, where bureaucrats made economic decisions with competitive market institutions where entrepreneurs, firms, and markets make economic decisions. In a democracy this process will inevitably be slow unless we can throw up an economic reformer like Margaret Thatcher. However, it will take more than de-regulation to succeed. Widespread prosperity needs the reform of our education and health institutions as well. Even after we replace bureaucrats with competitive markets, we will still need honest constables and efficient judges to dispense speedy justice. Hence, we need to strengthen our administrative institutions. We should not unduly worry that our firms are not delivering innovation, which was at the heart of the West's industrial revolution. We are only ten years old as a free economy, and innovation takes time. Japan has only just become an innovator. Korea and Taiwan are not yet innovators. At this stage we ought to be content to imitate, for innovation often emerges out of imitation. Latecomers have this advantage, and smart nations, like smart entrepreneurs, don't reinvent the wheel.


Since I give my address at the bottom of this fortnightly column, I usually get a fair amount of email and snail mail. And being a diligent sort, I endeavour to read and reply most letters. However, recent events have called into question this process of civilised exchange. One outraged reader wrote recently to say that two of his articles had been rejected by the Times of India. "Why is it," he demanded, "the Times rejects my work, and publishes a fourth rate writer like Gurcharan Das?" I took his letter to a friend at the Times, and tried to sound casual, but my friend could tell that this was no ordinary fan mail. He gave me a sympathetic smile, and clearing his throat, he said, "your writing is not fourth rate--it is third rate, at least". I thought that I had misheard, but he added, "Well, third rate is better than fourth rate, and I hope your head won't get too swollen now" Another provocation came in May, from a reader in Mumbai. In elegant calligraphy, he wrote the most inelegant things. "You disgusting pig, yes, you, Gurcharan Pig. Unfortunately I subscribe to the Times of India, because of which, week after week, I am forced to read the pigshit you punctually keep defecating--glorifying globalisation, free markets, reforms, bullshit, blah blah. Everyone knows that the only real beneficiaries of globalisation are America and MNC's who cheat, exploit and pauperise the rest of the world, particularly, Third World economies. Here is an example of how they cheat…." Strong and dramatic prose, you will agree. My colourful reader went on to give the example of a computer he had purchased, which did not contain the promised software to drive the DVD-rom. He had complained to the dealer, the company, and finally to its headquarters in America. But to no avail. He ended his letter characteristically, "What do you, free market Bastard, have to say about it?" My advice to my reader is that he first cleans his mouth, either with an MNC or non-MNC toothpaste. Better still, like the "nearlynine" Saleem Sinai in "Midnight's Children", he scrub his roof-of-mouth with non-MNC Coal Tar Soap. Next, re-write a straight forward business letter to the same cast of characters, deleting this time all the colourful expletives referring to animals, their excreta, and those that raise doubts about the reader's paternity. I realise that this might sacrifice his natural style, but it might pay-off, and the global capitalist system would also be saved. A reader from Nagpur complains that I am coming between him and his son. "You see, we always read the Sunday paper together as a family under a Banyan tree in our courtyard. We drink tea leisurely and there is harmony in our ancestral home, until we read your column. Then we begin to argue like mad and our peace is shattered. My wife always seems to take my son's side and my brother mine. I fear that my son and I are drifting apart, thanks to you." I wish sometimes that I could write weekly, like Swami Aiyar or Jug Suraiya. The great American columnists, I'm told, wrote five, even seven days a week. I wonder how they had something to say everyday of their lives. Apparently, one of them, Bob Considine, I think, couldn't find anything to write about one day in 1973, and he solved the problem by writing a column, which in its entirety read as follows: "I have nothing to say today." My favourite is the liberal American writer, E.B. White, who wrote for years for the New Yorker. He was more of an essayist than a columnist--the difference being that the essayist's writing seems to endure while the 780-word rectangle, such as this one, loses its appeal in a few days. Flip through the pages of old newspapers and you will find that you are more likely to read the ads than the articles. E.B. White had an endearing modesty and a sense of one's limitations. He taught me to use simple, everyday colloquial English, to adopt an informal and relaxed manner, to claim a deficient memory, and to be flexible--that is, never be afraid to change your mind. The problem with writing in the first person, I have found, is to constantly run the risk of sounding irritatingly egoistic and self-absorbed. George Orwell solved it by pretending to be more modest that one is. He opened his famous essay, "Shooting an Elephant," in a way that both established his importance and downplayed it: "In Moulmein, in Lower Burma, I was hated by large numbers of people--the only time in my life that I have been important enough for this to happen to me."


General Musharraf has come and gone. Whatever maybe the long term impact of his entertaining visit, he did achieve one thing--he made us look within ourselves, and ask once again, who we are as Indians, and how are we different from our neighbour. For the past fifty years, we have grown up with the belief that Pakistan is a monolithic, theocratic state with one religion, one language, and one mind. India is the opposite--with many religions, many languages, many communities and many minds. In the 1990s, with the ascent of the BJP, a second conception of India became popular with, perhaps, a quarter of our voters. Instead of the plural India of the first conception, it views the nation as singular and essentialist, which will be energised by Hindu nationalism. In its view, India has been victim of a thousand years of foreign invasions, and is now threatened by multinationals and particularly American culture. It wishes to restore it subliminally to a pure, pre-invasions, and eternal Hindu past and advance rapidly toward superpower status in the future. The first concept of India, by contrast, is more relaxed, liberal and self-confident. It celebrates the opening up of India in the 1990s to foreign trade, investment, and most importantly to ideas. It thinks of India as a mixture of different peoples and cultures that settled here. In this view, India never had an authentic past; it was always a moving feast and the moments of mixture were in fact the most creative. Historic migrations and wanderings of many peoples and tribes over thousands of years created this India. The subcontinent, in this view, is a deep net into which various races and peoples of Asia drifted over time and were caught. The tall Himalayas in the north and the sea in the west, east, and south isolated the net from the rest of the world and brought into being a unique society. Our caste system may have had its origins in this net, for it made it possible for such a vast variety of people to live together in a single social system over thousands of years. Hence, diversity is India's most vital metaphor--it is a "multinational" nation. It is what plural Europe would like to be--a united economic and political entity in which different nationalities and minorities continue to flourish. In recent years a new generation of historians has enriched this plural conception of India. Their innovative studies have illuminated our regional identities, showing how our national identity is superimposed from above and created usually by the grab for power, with little to do with how ordinary people saw themselves. Moreover, our recent politics are further reinforcing our regional identities. This liberal view, however, does not deny a shared sense of India. It merely warns us to be careful in positing a unifying conception of India based on nationalism. That our minds have finally got de-colonised gives this liberal view of India a quiet reassurance and self-confidence. The year 1981 was the symbolic watershed in this respect, when "Midnight's Children" appeared. The moment Salman Rushdie began to "chutnify" the language of Shakespeare, he opened the minds of the Indian sub-continent. Ever since, contemporary Indian history, "has acquired the air of a fancy dress party…full of chatter, music, sex, tomfoolery, free drinks, and rock and roll, an occasion to which everyone is invited provided they can join in the fun", says Amit Chaudhuri. Dileep Padgaonkar, who produces the worthy 750 word rectangle above mine, reminded us two weeks ago about Sam Huntington's thesis--that an "indestructible fault line" exists along Islamic borders and clashes with neighbours are inevitable. Hence, he says, there will be trouble with the Serbs in Bosnia, the Jews in Israel, Hindus in India, Buddhists in Burma, Chinese in Malaysia, and Catholics in Philippines. Those who hold the second, singular concept of India fully accept Huntington's premise; they believe that permanent peace between India and Pakistan is impossible. Prime Minister Vajpayee is obviously not one of them; otherwise, he would not have invited General Musharraf. Mr. Vajpayee understands better than his colleagues in the Sangh Parivar that India and Pakistan's future will be determined far more by the relentless push of the global economy and communications, supported avidly by our rapidly growing middle classes. The future preoccupations of both peoples will be with rising living standards, social mobility, and the peaceful pursuit of consumer goods. As a result, obsessions with religious identity and fundamentalist attitudes will slowly fade. The issue is not whether Mr. Vajpayee holds the singular or the plural conception of India, but which of the two is likely to prevail? Or will India evolve uneasily from the constant clash of these two competing conceptions?


Foreigners often remind us that Indians are a bright people. But foreigners are too polite to add that Indians can also be 'over-smart', and this creates its own problems. We think and argue too much, see too many angles, and don't act enough. It makes hiring and recruiting talent particularly difficult, for all Indians come out sounding well in an interview, and how do you separate the doers from the talkers? National stereotyping can be dangerous and is usually wrong. We have learned this only too well from the history of the violent 20th century. Hence, I prefer to rely on institutions and economic laws to explain human behaviour rather than national character. However, the gap between thought and action is so pervasive in Indian life that I have begun to despair in recent months and I wonder if our weakness in execution is, in fact, a deficit in character. My experience with dozens of Indian companies in the past decade is that while most have acquired a reasonably robust strategy, they implement poorly. I am also associated with a venture capital fund that has invested in 15 Indian I.T. companies, and its experience is that the best firms are not the ones with the best business model but the best executional ability. This may appear tautological--we perform poorly because of poor performance--but it isn't. McKinsey, the respected management consultant, has found the same weakness. In a survey of 35 major companies and interviews with more than 600 executives, it has concluded that "while many Indian companies perform well on strategy, there are lagging in execution". It conducted similar studies around the world, and its international data shows that the best performing companies in the world distinguish themselves from mediocre ones in their ability to execute. High performers, such as General Electric, Sony, and Singapore Airlines, consistently implement better and this is ultimately reflected in their market share, profitability, and share price. Does our national bias against action explain why there isn't a single Indian company with a global presence? Is this also the reason why so many Indian companies are floundering ten years after the reforms? While it is tempting to blame character, the culprit, I am afraid, is more mundane--it is poor skills. And the reason is the historic lack of competition in our market. These skills are learned typically when rivalry is intense and survival is at stake. We have only had real competition in the last decade. So perhaps, it's early. Hence, our business leaders should stop crying for protection, honestly face up to poor execution as the cause of their troubles, and go to real world school of competition and learn these skills. There are outstanding Indian performers, to be sure, but they are exceptions. Reliance owes its consistent success, partially at least, to its awesome project management skills, which allows it to build plants faster than anyone does. A few years ago I was on the jury to select the best among 40 Aditya Birla's companies and I observed the same executional excellence in company after company. No wonder, Hindalco for example, has become a world class aluminium producer. It is the same with Jet Airways. Ask its passengers--they will tell you that it is always on time. HDFC and Sundaram Finance have consistently demonstrated outstanding service levels for decades. A jewel of a company in Bangalore, Himatsingka Seide, is able to command Rs 8,000 per metre for its luxurious silks in Europe and America because it consistently delivers defect-free fabric and always on time. Why do these companies have executional ability when the majority does not? It begins at the top. Their leaders, I have observed, are not content with laying broad policies, but insist on getting into the messy details of the business--monitoring day to day performance, removing obstacles, staying close to employees and motivating them. They reward managers who act and take initiative, and punish those who play safe and behave like bureaucrats. They set clear, measurable goals and create small implementation teams so that people become accountable. Reliance's top management, for instance, monitors daily the number of kilometres of optic fibre that its telecom teams lay on the ground, and motivates them to improve the next day's performance. Thus, these companies get ordinary people to do extraordinary things. Successful executives follow the British scientist, Jacob Bronowski's advice that the world is not understood by contemplation but by action--"the hand is the cutting edge of the mind". The best lesson I learned at Procter and Gamble was how to write its legendary one-page memo, which was its language of action. Good executives, I have observed, do few things. They make sure they are the right things, and they do them brilliantly.


We commonly make the mistake of blaming our character, or ideology, or even democracy for our nation's failures when the real felon is more pedestrian. The same unhappy inability to translate thought into action that I wrote about two Sundays ago with regard to our companies afflicts our public life with devastating consequences. Nehruvian socialism need not have deteriorated into licence raj had our civil servants possessed better management skills. East Asia grew twice as rapidly as India between 1965 and 1985, not because it saved and invested more, but because it had the ability to make its investments more productive. During the last decade every government has wanted to reform the economy. Yet, why have we suffered heart-breaking delays in implementing the reforms? If we are all agreed about what's to be done, why don't we just do it? We continue to waste our energies on debating "the what" when we ought to focus on "the how". How to reform requires mental application and the ability to implement. And this is precisely what our public figures-both politicians and civil servants-seem to lack. Our hopes rose earlier this year when Mr. Yashwant Sinha announced a brilliant Budget. Mr. Vajpayee said, "People want action, not talk." Finally, we thought, we are going to see the second phase of reforms. But what has happened? The government has been in a repeated state of distraction. First, it was Tehelka, then the stock market scam, then Musharraf's visit, and now UTI's problems. Everything, in short, but the implementation of the Budget, and the Indian people are weary of excuses. Our politicians and civil servants, like our businessmen, seem to be good at defining the broad picture, but they fall apart when it comes to detailed planning, monitoring, readying alternative courses of action, following through and showing the determination to stay the course that eventually leads to delivering results. We don't give enough credit, I think, to Narasimha Rao's executive abilities. The reforms happened in those golden years between 1991 and 1993, not only because Manmohan Singh and he set clear goals, but also because he encouraged his principal secretary, A.N. Varma, to create an executional structure. This was the famous, hands-on Thursday committee of secretaries (of the economic ministries) which coordinated, monitored, gained cabinet consent and implemented reforms week after week. Lest we forget, Mr. Rao's was a minority government at the time, and it too had its share of distractions and scams. Ironically, there appear to be better performers in the states today than in the centre-for example, S.M. Krishna in Karnataka, Chandrababu Naidu in Andhra, Digvijay Singh in Madhya Pradesh. They are quietly transforming their states with the help of handpicked doers from the bureaucracy. One of them, S.R. Mohanty, a civil servant in Madhya Pradesh, succeeded last year in getting patients to pay for services in state hospitals against huge opposition. As a result, the quality of medical care in the hospitals has improved dramatically. Now, as head of the State Bridge Corporation, he has got the country's longest toll road, connecting Indore and Edalabad, going. How he went about it is instructive. Mohanty and his team of three discovered that the PWD had a Rs 120 crore road maintenance fund. With the Chief Minister's support, the team put this money into a sinking fund, and used it to raise Rs 500 crores through bonds with the help of SBI Caps. Having overcome the single biggest hurdle-of financing infrastructure--the team focused only on 3 per cent of M.P.'s roads, which carried 80 per cent of the state's traffic. It opened tenders for the Indore-Edalabad segment on July 2; it got all government clearances by July 11; it issued LoIs by July 18; and developers began constructing the world class highway on July 29. This is implementation. Implementing this Budget (and the second generation of reforms) will need huge administrative skills because of thorny labour, agriculture, and privatisation issues. The Prime Minister has also lost a doer and networker in N.K. Singh, who had so far been quietly coordinating the reform agenda, including the successful telecom reform. Now, Mr Vajpayee and Mr Sinha, if you are serious, you will wake up each morning and remind yourself that nothing is more important to yours, your party's and India's future than implementing the reforms. You will make it your one point agenda as Mr Deng and Ms Thatcher did. You will cancel your six foreign trips because you impatiently want results. Thus, you will bring bite to your Independence promise of making 2001 the "Year of Implementation". Remember, good leaders do a few things, but they bring all theirs and their organisation's energies onto that single focus, and they execute brilliantly. And history does not forget them.


Another splendid monsoon is coming to an end and its effects are lingering in the sultry air. The nights are lazy and green trees rustle pleasantly around the small off-white houses in our compact neighborhood. My mind is uneasy, however, and at odds with tranquil nature. Like many Indians, I am morally outraged that we should be sitting on the largest mountain of grain in the world and yet people go hungry, especially in areas affected by drought. Meteorologists tell us that this is the thirteenth good monsoon in a row, but we know that even in the years of plentiful average rainfall some areas don't get enough rain. The Food Minister is shedding crocodile tears, insisting that he has offered free grain, but "the states are not lifting stocks". The states claim that they are bankrupt and cannot afford to pay for transporting and distributing the food to the poor. Most of us in the cities, despite our reputation for callousness, would be happy to see the poor fed, but we are cynical of the government's ability to implement poverty programs. Rajiv Gandhi's famous warning rings loudly--that only fifteen per cent of the poverty money reaches the poor. Whether it is fifteen or thirty per cent the truth is that a vast sum leaks out. There are two main sources of corruption and inefficiency in our food-for-work programs. One is in honestly distributing food to the poor in return for a fair day's work. The second is in the movement of grain. Now, there is evidence to show that both leaks can be plugged and there are models of success that we can follow. The main disease afflicting food-for-work programs is that the wrong people corner the benefits. Typically, local officials collude with the sarpanch, create bogus rolls, and siphon the food grains. States like Madhya Pradesh have now found an answer--neither local officials nor sarpanches are allowed to decide the food-for-work project or the beneficiaries. It is the gram sabha or the assembly of all adults in the villager. When a food-for-work program is announced, all village men and women assemble together, vote for what asset they want to create in the village--a water tank, or a school building, a road. Those who want to work in exchange for food come forward in the assembly. Although the panchayat executes the poverty project, the gram sabha meets again to ratify the panchayat's accounts. Several sarpanches have already been sacked by their gram sabhas for stealing funds and NGOs in some drought-affected districts of M.P. have confirmed that corruption has declined markedly this year. After the 73rd amendment to the Constitution, one third of the panchayat members everywhere are now women and another quarter or so are also dalits or tribals. Moreover, one third of the sarpanches are also women. Hence, the old upper caste landlords and local BDOs and VDOs are an unhappy lot--they are seeing power and money slipping away. In Rajasthan, corruption has declined thanks to the "right of information" movement, as local officials are forced to open government records to the people. The second source of corruption and inefficiency is in the movement of food. Many welfare experts now advise governments that it is more efficient to give vouchers or food stamps to the poor rather than incur the huge cost of moving, storing and delivering the food to thousands of places. There is evidence from Iraq, U.S., Sri Lanka that vouchers work, and very simply. Instead of food, the beneficiary receives a voucher, which she (or he) exchanges for so many kilos of rice or wheat from her normal store--it doesn't have to be ration shop. The shopkeeper, in turn, exchanges these vouchers for grain when replenishing his stocks. Thus, grains only move through normal retail and wholesale channels. When the state doesn't physically move the food, costs come down and corruption diminishes. And state governments can no longer hide behind the excuse of lack of money for not implementing food-for-work programs. As prosperity has grown in the past two decades, we have learned that the poor are eating other food beside grain. So, a grain-for-work program, if it has to be attractive to the poor, will have to offer far more grain per day's work than in the past. This will increase the subsidy, but it will lower the costly grain mountain faster. With the two biggest obstacles to food-for-work overcome, can we now expect the morally offensive hunger amidst plenty to disappear? Will our leaders now implement massive food-for-work programs? If they don't, rats will get to the food. If they do, the poor might re-elect them. So, they can choose--feed rats or people. It doesn't seem to be a difficult choice since rats don't vote.


This is a tale of two districts, one virtuous, the other vicious. Jhabua, in western Madhya Pradesh, is a success story where forests have regenerated, bodies of water have sprouted, and incomes are growing-all this, because people have learned to help themselves. Kalhandi, in Orissa, is a failure-there is chronic starvation and parents sell their children to pay for food. Both districts are uplands and home to tribal people. Both were once covered with splendid forests, mainly teakwood, but these have been dying in recent years. As forests vanished rains became irregular; village water tanks fell into disuse as government took over their ownership. Increasingly, the two districts became prone to drought, and people began to migrate for six months a year. In the mid-1980s both districts were in the news when Rajiv Gandhi visited them following reports of food riots in Jhabua and the sale of children in Kalhandi. The Centre for Science and Environment reports that in Orissa, the soil conservation department has spent more than Rs. 90 crores in the past 15 years to build 1400 water-harvesting structures. The central government has poured huge sums for constructing micro-watersheds. But these projects have been poorly implemented and massive corruption charges have plagued them. Lazy district collectors allegedly don’t work and the budgeted funds of the drought prone area program (DPAP) and the employment assurance schemes (EAS) are consistently under-spent. Whatever is spent is largely lost in corruption, according to NGOs. “We get complaints of corruption in watershed activities, but the officials belong to the state (rather then the centre) and we can’t punish them,” says N.C. Saxena, former secretary of rural development. It is the opposite story in Madhya Pradesh, where local communities created 706,304 water harvesting structures between February and June alone this year and they will irrigate 52,000 hectares of additional land. The benefits too have come quickly. Decent rains in late June and July filled these village tanks, ponds, and earthen check dams (johads). Madhya Pradesh is succeeding because it is involving people (and NGOs) in managing water and energising institutions of local self-government, while Orissa depends on apathetic bureaucrats to do the job. The people of Jhabua district tell their own story. Residents of Kalakhoont removed three metres of silt from their village tank that had accumulated from the erosion of surrounding hills. The very first rains in June filled the tank and “the stored water will be enough to irrigate more than 61 hectares of land and recharge our old, unused wells,” Nana Basra excitedly told reporters of “Down to Earth.” In neighbouring Datod, villagers built a community dam on the seasonal Mod River to irrigate the surrounding villages. “This is something unheard of in our drought stricken district,” said Balusingh Bhuria, president of the block panchayat. People contributed a quarter of the cost through their labour in these initiatives in Jhabua, and they were ably assisted by an NGO and supported by the state watershed mission. As a result of hundreds of these efforts over the past five years the water table in Jhabua is rising. Satellite pictures confirm that water tanks, lakes, and village ponds have grown visibly and so have trees, shrubs and green cover. The people in Ambakhoda have stopped migrating. “Our hills have become green again and I have crops in my field,” says Manna, a 65-year-old farmer. In Kakradhar “we have plenty of fodder for our cows”, says Jhitra, chairwoman of the village’s forest committee. In Kalidevi, the cropping pattern has changed-villagers get two crops because ground water has risen dramatically and there’s plenty of water after the monsoon is over. The greening of Jhabua district though 218 micro watersheds is an example of people’s participation through watershed committees-its members are water users, self-help groups, and panchayat representatives. And one third are women by law. The watershed committee is ultimately accountable to the gram sabha or the village assembly. For the first time in history, it seems to me, we are dealing with water and drought and water in a different way. Gujarat and Rajasthan have also reported plenty of miracles of community effort during the last drought, but these states are not pushing power down to the people as single-mindedly as M.P. This Gujarat government, in fact, is notorious for sabotaging panchayati raj. The challenge for the future is to look after these people’s water structures, and keep recharging the ground water. Environmentalists tell us that four years is enough for ecological regeneration, and if you maintain a structure for 5 to 8 years then the community will be able to withstand three droughts in a row. That is why I am betting on Madhya Pradesh because it is creating long term, sustainable institutions of local democracy.