Biblio Essay - Medha M. Kudaisya, The life and Times of G.D. Birla,

Oxford University Press, New Delhi, 2003, 434 pages, Rs

Owning a dynamic, indigenous entrepreneurial group like the Marwaris would seem to give India a competitive advantage in the world economy, yet the Marwari has never quite won the respect from Indian society that he has yearned for. Most Indians know him as the furtive shopkeeper around the corner. Like the Jew in old Europe he is the moneylender of last resort, who charges extortionate interest and dispossesses widows of their land and jewellery when the loan is not repaid. Or he is perceived as the ruthless tycoon who did not stop at anything, including the pre-empting of licences during the hypocritical forty years of the Licence Raj.

The story of the Marwaris is a fascinating tale of how a tiny community from the desert sands of Rajasthan spread out to every corner of north, west, and central India, settling in thousands of villages and towns in the 19th century. With their enormous appetite for risk, Marwaris seized control of India’s inland trade, then gradually turned to industry after the First World War, and as recently as 1997 they controlled roughly half the nation’s private industrial assets. Although the profile of Indian business has begun to change with our success in information technology, but in 1997 fifteen of the twenty largest industrial houses were of vaishya or bania trading caste, and eight were Marwari. The question is what made them so spectacularly successful?
The answer to that question will not be found in Medha Kudaisya’s fine book, The Life and Times of G.D.Birla. There are hints, however. It had something to do with their wonderful support system. When a Marwari travelled on business, his wife and children were cared for in a joint family at home. Wherever he went in search of trade, he found shelter and good Marwari food in a basa, a sort of collective hostel run on a co-operative basis or as a philanthropy by local Marwari merchants. Ghanshyam Das (GD) Birla’s grandfather, Shiv Narian, the founder of the Birla Empire, settled in a basa when he first came to Bombay in the 1860s. When the Marwari needed money, he borrowed from another Marwari trader on the understanding that the loan was payable on demand, “even at midnight,” and he would reciprocate with a similar loan. At the end of the year, they tallied and settled the interest. He could count on community banks to insure his goods in transit and collect his dues when the goods arrived. His sons and nephews were apprenticed to other Marwari traders, where they earned their salary through profit sharing, learned business skills, and accumulated capital to start their own business when they were ready.

The Marwaris achieved their biggest successes in the British trading post of Calcutta. They smelled the chance for big money and they flocked there to become brokers and agents to the British (who called them “banians”.) Ramdutt Goenka was a typical example. He came to Calcutta in 1830. Starting as a clerk to a Marwari firm, he gradually became a broker to the major English firms. Nathuram Saraf began as a clerk in Ramdutt Goenka’s firm and he graduated to become a “banian” to other British firms. He opened a free hostel for migrants from the Shekhavati area of Rajasthan and GD Birla used to say that this hostel spawned many entrepreneurial careers. At night, the young apprentices would exchange stories of their commercial exploits of the day and draw lessons from them. Some of these stories became legendary. Passed on by word of mouth for generations, it was their version of Harvard Business School cases. The arrival of the Delhi-Calcutta railway in the 1860s quickened the migration to Calcutta and by the turn of the century, Marwaris had become dominant in the jute and cotton trade. During World War I, they made spectacular profits speculating in cotton, jute and hessian, and these profits laid the foundation for many industrial careers after the War.

Marwaris are socially conservative, and that too might help to explain their success. They took to English education much later than most other communities like the Bengalis or Punjabis, for example. But now their children routinely get MBAs and have a similar way of life as the young in other communities and as other young professionals. Nevertheless, they continue to be more religious and tradition continues to have a greater hold. Although professional executives run their businesses, most of them are from their community. Although they engage in the most sophisticated enterprises, their strength lies in the way they use old family networks and traditional accounting and financial controls. The Birlas, for example, continue to monitor the financial performance of their companies on a daily basis.

Medha Kudaisya’s The Life and Times of G.D.Birla is a sober, scholarly work, whose biggest strength is that it is among the first business biographies that is not a hagiography. It grew out of a PhD thesis for Cambridge University, and it is well researched, based for the first time on unrestricted access to Birla private papers. It offers a ringside view of the political and economic forces that have shaped our country in the 20th century, including the funding of the nationalist movement and the Congress Party. There are fascinating insights, for example, into the attempts at “reform by stealth” during the brief period that Lal Bahadur Shashtri was Prime Minister. GD Birla, more than anyone could see what “a precious opportunity had been lost” when Shastri died prematurely. I try to imagine, what sort of nation we might have been had the 1991 reforms begun in 1965! This has to be one of the tantalising ‘what ifs’ of Indian history.

Kudiasya poignantly describes the slow decline of GD Birla’s stature in national life after the death of his Sardar Patel, whose advisor and protégé he was. However, this did not necessarily reflect in the decline of his economic fortunes (with the exception of the nationalisation of Bharat Airways and his insurance company). Kudaisya describes in some detail how he moved with strategic foresight into basic industries after Independence, and the heartbreaking episode concerning the rejection of his Durgapur steel plant after so much work had gone into it. If his aluminium company, Hindalco, is anything to go by, he would have created a world class steel company as well. Today, after liberlisation, Hindalco is the lowest cost producer of aluminium and is one of our best companies. Just as Tata Steel is world class today; so too might have been Birla Steel; instead we are saddled with the unmanageable public sector company, Sail, which continues to struggle and keeps guzzling public money.

The best part of the book is the account of Birla’s growing relationship with Madan Mohan Malviya and Lala Lajpatrai and his growing involvement in nationalistic politics, culminating in his close relationship with Mahatma Gandhi. Equally noteworthy is how he suffered during the Indira Gandhi years when he was an easy target of any young, unscrupulous socialist (like Chandrashekhar) who wanted to make his mark in public life. Morararji Desai, in particular, comes out looking like an arrogant prig, happy to take the money of industrialists but without any grace or gratitude. Birla was too much of an old style Congresswallah; anyone else would have chucked up the Congress Party after Shastri’s death, when the rot began to set in, and joined the Swatantra Party.

Nehru was always suspicious of Birla, and not only because he had been Sardar Patel’s protégé. In Motilal’s and Jawaharlal’s case it was a caste prejudice, reinforced by the latter’s English education at Harrow and Cambridge, where he acquired the English upper class bias against trade and learned socialism from the Fabians. When he came to power in 1947, Nehru institutionalised the prejudice into the mindset of the national state. Lord Wavell, the British Viceroy in the 1940s, also shared the prejudice against Marwaris, who he thought were like the Lombards and the Jews in Europe. Nevertheless, he recognised G.D. Birla’s uniqueness and he paid him a huge compliment by preferring him to JRD Tata as Queen Mary’s companion for lunch in Bombay. JRD was then the young head of the largest and most respected business family, and Wavell wrote:

I think Queen Mary would find G.D. Birla better company than J.R.D. Tata if she wishes to invite one of them to lunch. Tata is a pleasant enough fellow to meet, but I have not found him communicative, and as a casual acquaintance he is much the same as any other wealthy young man who has had a conventional type of education. Birla has plenty to say, and whatever one may think of Marwari businessmen and their ways, he is well worth talking to. I think Queen Mary would have a very dull lunch with Tata and quite an interesting one with Birla.
Mahatma Gandhi, a bania himself, had no qualms about accepting money from Birla or other businessmen. Nor was he contemptuous of commerce like Nehru. He came from Gujarat, which had many ports and vigorous commerce, and where the merchant was held in higher esteem. Gandhi believed that a businessman’s wealth was not his own but held in trust for the rest of society. Today’s business titans of the new economy, men like Narayana Murthy and Azim Premji, oddly enough are closer to Gandhi’s way of thinking about the place of business and wealth in society. And fortunately, the old socialist attitudes to business are practically dead in the minds of the nation’s young, even though they linger in the minds of the ruling class, and this slows reform.

There are wonderful moments in the book, especially the descriptions of GD’s childhood in Pilani among women and without men, where Vaishnav religion pervaded the day. This religiosity never left him, and the Gita in particular was a great source of strength to GD during crisis. The men in the family were continuously away in Bombay and Calcutta, making their separate fortunes, and expanding the family’s wealth, and GD went to a local school, where there were no books and classes were held in the open air. In the end, of course, the education he received there was wholly inadequate, he realised, and he plunged into reading English books after he left Pilani. His proficiency in English placed him in a privileged position in the family firm from the beginning because he could negotiate with English brokers.
The weakness of the book—and it is a major flaw—is the inability of the author to tell us why GD succeeded in business. How did the Birlas succeed in making so much money? Why did they win when others lost? I found it frustrating that there is nothing to explain GD’s legendary ability to hire, train, and retain so many managers who ran his many companies when he was busy with politics? Aditya Birla inherited the same ability, and perhaps that is why he was GD’s favourite and he got the lion’s share of his empire. Equally disappointing is her silence on the division of the Birla companies. There was a real fight and it caused so much heartburning and she dismisses the whole thing in half a page.

The real failure of the book in the end is that it does not uncover the man within. This is not easily done, of course, because GD was (and Marwaris, in general are) secretive. Hence, he had thrown a challenge: “Certainly, no Indian can write my biography because biography isn’t an Indian skill,” he had said to Ian Jack of London Times in 1978. But it the job of biography ultimately, isn’t it—to uncover the man within?
It is true that Indians have traditionally not accorded a high place to making money. It is also true that a certain amount of antipathy to business exists in all societies. But Aditya, GD’s grandson, could not understand why the Indian public chose to target the Birlas as the ugly face of big business. He thought it unfair. After all, they had supported the nationalist movement for independence; they had invested huge sums in charities and philanthropy; they had maintained an austere and quiet life-style and reinvested their entire surplus rather than consuming it; they had come as close as anyone in the practice of Mahatma Gandhi’s idea of trusteeship—that the bania’s wealth belongs to the community and the businessmen is merely a trustee of this wealth during his lifetime.

In one of his letters, GD offered the following advice to Aditya when he was studying at MIT: “eat only vegetarian food, never drink alcohol or smoke, keep early hours, marry young, switch-off lights when leaving the room, cultivate regular habits, go for a walk everyday, keep in touch with the family, and above all, don’t be extravagant.” Aditya thought that his grandfather’s advice symbolised the ethic of the Marwari merchant, with restraint and austerity its defining tone, not dissimilar to the ethic of Protestant, Jewish, or Chinese business families. It captured the spirit of conservation that leads to accumulation. With all this going for them, why should the Birlas not be more esteemed?

Many think that the Birlas, were the great beneficiaries of the Licence Raj. They point to the Hazari Committee which had pointed a finger at the Birlas for pre-empting 20 per cent of all licenses awarded by the government between 1957 and 1966. From 20 companies in 1945 Birla companies had grown to almost 150 by 1962, and wasn’t this monopostic? I could not disagree more with this popular misconception. I believe the Birlas behaved in a rational manner, as any businessman would towards his competitor, and what was wrong was not the behaviour of the Birlas but the incentive system of the Licence Raj in that hypocritical, ugly world that ended in allowing our bureaucrats to kill our industrial revolution at birth.

Far from doing the Marwaris a favour, the Licence Raj made the Marwaris lose touch with the market. Competition is the great school where companies acquire skills. It is through intense rivalry in the market place that businesses learn to improve their products, hone their marketing skills, and improve their systems in order to become more responsive to the customer. The Licence Raj, by eliminating competition, distorted their behaviour and suppressed their business skills and made Indian businesses complacent and insensitive to customer needs.

When the economy opened in 1991 and markets became increasingly competitive, many old Marwari businesses were in trouble. Some of these will never recover, but for the others it has taken more than a dozen years after the economic reforms to become competitive. The shining example is the Aditya Birla Group, the direct inheritor of Ghanshyamdas Birla’s legacy, now headed by Kumaramangalam Birla. Its success is due to a great part to Aditya, who decided not to invest in India in the late sixties, when he realised the monster of a political economy that Indira Gandhi was creating, and which would not allow an honest enterprise to exist in India. He created instead a commercial empire instead in highly competitive South East Asia, which taught his managers competitive skills that came in handy when India finally opened up in 1991. Forty years of Indian style socialism fortunately was not able to destroy India's legendary entrepreneurship, although it did distort its behaviour.

Jagdish Bhagwati, In Defence of Globalization

Oxford University Press, New York, 2004, 308 pages, $28.

This book has arrived not a day too late. A lot of rubbish has been floating in the air ever since May 13, when our election results came out. Silly ideas, discredited years ago, have been revived and assiduously marketed by the left, creating the illusion that India’s centre of gravity had shifted against the global market system. To those who are undecided in this battle of ideas Jagdish Bhagwati’s charming and highly readable, In Defence of Globalization, offers well thought out answers to the questions that have been raised over the past six weeks.
Jagdish Bhagwati is a distinguished economics professor at Columbia University, a former Adviser to the United Nations on Globalization, and one of the world’s authorities on international trade. He was one of the first persons to raise serious questions about the premises of Nehruvian socialism in the sixties. In his book with Padma Desai, India: Planning for Industrialization (OUP, 1970) he described how India was steadily degenerating into a “license raj”. A generation later, the same sorts of do gooders are blaming global capitalism for worsening poverty, for child labour, for degrading our environment, for cultural homogenisation and many of the world’s ills. In this book Bhagwati seriously takes on the bogus arguments of the anti-globalization movement and shows them for what they are--a threat to human development. He argues that globalization is not the problem but the solution, and he does it with wit and humour.

In recent weeks the Left in India has stridently argued that the economic reforms need a human face. Bhagwati shows that global capitalism does have a human face and he demonstrates its beneficial effects on poverty, child labour, women’s rights, and host of social issues. The left argues that growth by itself will not create enough jobs or alleviate poverty. Bhagwati shows that growth is the principal means of reducing poverty. He illustrates this with the examples of China and India.

Since 1980, China and India have been among the fastest growing economies in the world and both have reduced poverty spectacularly. China’s poverty ratio declined from 28 percent in 1978 to 9 percent in 1998, according to the Asian Development Bank. India’s poverty fell from 51 percent in 1978-79 to 26 percent in 1999-2000, according to official Indian data. In contrast, for a quarter century before this, when our growth was an abysmal 3.5 percent poverty, poverty had obdurately hovered around 55 percent. China had the same experience in its pre-reform period. As a result of high growth in Asia, Sala-I-Martin’s huge 97 country study, concludes that the poor in Asia as a whole declined to 15 percent of the world’s poor in 1998 (from 76 percent in the 1970s) while they rose in Africa from 11 percent in the 1970s to 66 percent of the world’s poor by 1998. Surjit Bhalla’s and Dollar and Kraay’s recent work has come to the same conclusion.

I had a sense of déjà vu as I noted Bhagwati demolishing the same arguments of the anti-globalizers that India’s reformers had faced in the early nineties when India began to seriously reform its economy. When we liberalised the rupee, the left warned us about a flight of capital, as rich Indians would run away with their money. The opposite happened, in fact, and our reserves shot up from $1 billion to $117 billion today. When our tariffs began to come down and import licensing was scrapped, the left prophesied that India would be flooded with luxury goods, and there wouldn’t be any foreign exchange to buy capital goods for our industry. Again the opposite happened; with declining tariffs, India became more competitive, and our exports grew.

When we lowered tax rates, the left forecast that our government would be reduced to a pauper; instead, government revenues shot up and income tax has consistently grown faster than our GDP since the reforms. When we liberalised foreign investment, the left predicted that predatory multinationals would swamp Indian businesses and our industry would be destroyed. None of this has happened, and Indian brands are thriving in many product categories. In fact, our worry is that we are not getting enough foreign direct investment. Forget China, countries much smaller than us—Vietnam, Malaysia, Thailand, Poland—attract far more foreign investment.

Given this terrible track record of the left, why should we should we now listen to it? It has been consistently wrong. It has always led us astray, and it now wants to bring back the sort of policies that made India, “the world’s greatest under-achiever” in the words of the Economist. Is it surprising that the markets continue to be spooked by the Common Minimum Program? I sometimes don’t know who is more likely to destroy our future--the lunatics of the left or the fascists on the right.

Terrorism, Democracy & Capitalism

On Tuesday September 11th I was visiting my aged mother in a village in northwest India, at her guru’s ashram by the banks of the river Beas, when my son called from China. “Turn on the TV,” he said, and we began to watch in stunned disbelief the barbarous tragedy unfolding on the other side of the globe. The second tower of New York’s World Trade Center came down before our eyes. After the initial horror had passed, I felt like many Indians that perhaps now the world might begin to understand what we have been going through. For over a decade we have been victims of Taliban trained terrorism that has taken hundreds of innocent lives.

Ironically, the same dreadful Tuesday was the deadline given by faceless terrorists to force women in Kashmir to cover themselves in veils. Tailors in the valley had been busy for weeks, but they could not catch up with the demand for burqas. An innocent 15 year old girl, whose tailor failed to meet the 11 September deadline, found acid sprayed on her face as she was rushing home from school. She lost an eye and her pretty face was disfigured for life.

Two years ago Osama bin Laden had announced from his hideout in the mountains deserts of Afghanistan, “India and America are my biggest enemies and all mujahideen groups in Pakistan should come together to target them.” Why are India and America the prime targets of Osama and the Taliban? It is because they are the most pluralistic societies and share the same ideals and liberal values. America is the oldest modern nation, and India is one of the world’s oldest civilizations. They are the two largest democracies in the world. They are also the only two nations, as far as I know, where democracy has preceded capitalism.

Migrations of diverse people have created both America and India. America is a nation of immigrants and the historic wanderings of many peoples and tribes of Asia over thousands of years created India. America dealt with its diversity historically through the “melting pot”; India accommodated its migrant minorities through the caste system, which made it possible for a vast variety of people to live together in a single social system. Today, India and America have emerged as unusually open pluralistic societies and diversity is their most vital metaphor. Both present a challenge to fundamentalists, who are only comfortable in monolithic states with one religion, one language, and one mind. Indeed, India faces this problem with its own Hindu and Muslim fundamentalists. These societies are vulnerable to terrorists because they are so open.

The U.S. got democracy in 1776 but it did not embrace full-blooded capitalism until the early 19th century with the industrial revolution. India became a full-fledged democracy in 1950, with universal suffrage and extensive human rights, but it was not until 1991 that it opened up to a freer play of capitalist forces. For the rest of the world it has been the other way around. Suffrage and rights were gradually extended in Europe and they altered the capitalist institutions that had come up after the industrial revolution. This historic inversion has made all the difference, and it goes a long way to explain these two noisy targets of terrorism.
In the past half-century, Indians went to the school of democracy. They learned to change their governments periodically and peacefully; they gave free reign to their litigious natures and pushed the courts to the limit; they created a vigorous free press and more recently a lively electronic media; and they began to internalize the rule of law. As a result, diverse voices have risen, backward castes have come forward, a more pluralistic middle class has developed, and there is a greater balance of opportunity.

While they were at the school of political liberty, Indians however gradually lost their economic liberty to a domineering socialist state. Hence, they failed to create an industrial revolution, though the farmers did manage to create a green revolution. But this changed in 1991 and since then India’s economy has grown 6.4 percent a year (and 7.5 percent for three years in a row), making it one of the ten fastest growing economies in the world. More recently, population growth has begun to slow, and in 1998 it was down to 1.7 percent compared to an historic 2.2 percent growth rate. Literacy has climbed to 65 percent in 2000 compared to 52 percent in 1990, with women and the backward states registering the biggest gains. More than 120 million Indians have pulled themselves out of poverty in the past decade as the poverty ratio has declined to 26 percent. And India may have finally found its competitive advantage in its booming software and IT services.

If the economy continues to grow at this rate for the next two to three decades, then half of India (that is, the west and the south) should turn middle class in the first quarter of this century and the other half should get there in the second quarter. If growth accelerates to eight percent with greater reforms, then this happy day will arrive sooner. At that point poverty will not vanish, but the poor will come down to a manageable 10-15 percent of the population, and the politics of the country will also change. By 2025, India will see its share of world product rise from 6 to 13 percent, making it the third largest economy in the world. By then India and China will account for 39 percent share of global output, which is about equal to the present share of United States and Europe combined.

The curious inversion between democracy and capitalism means, however, that India's future will not be a creation of unbridled capitalism, but it will evolve through a daily dialogue between the conservative forces of caste, religion and the village, the leftist and Nehruvian socialist forces which dominated the intellectual life of the country for 40 years, and the new forces of global capitalism. These “million negotiations of democracy,” the plurality of interests, the contentious nature of the people implies that the pace of economic reforms will be slow and incremental. It also suggests that India might have a more stable, peaceful, and negotiated transition into the future than say China. Equally, it will avoid some of the deleterious side effects of an unprepared capitalist society, such as Russia. Although slower, India is more likely to preserve its way of life and it’s civilization of diversity, tolerance, and spirituality against the onslaught of the global culture.

Despite appalling governance, corruption, and the indecisiveness of their democracy, most Indians believe that their plural, democratic and capitalist society is worth fighting for, because it offers the promise of preserving and enlarging human freedoms, creating prosperity, diminishing poverty, and upholding the dignity of a human being, and it does it better than any other system that human beings have tried so far. Because India is unique in this, like America, it is vulnerable to terrorists.

Who is America fighting and why ?

It is a month since the macabre dance of death in New York and Washington and we are now in the midst of a war, but I am not sure that we understand what this is all about. People around the world are uncomfortable and insistently ask whom is America fighting? Americans are also confused. They want to know who are their enemies and why do they hate us? And hate so much that that a few young men defied the instinct to live and died for it. The trouble is that America is at war against people it doesn’t know, and having gone off to war, it can’t very well return without having won it.

President Bush says that it is a war against freedom. He says that democracy and the American way of life is under attack. In the present atmosphere of grief and anger this is easy for Americans to accept. But surely it doesn’t sound right? If it were true then the terrorists would have targeted the Statue of Liberty? Instead they targeted the Pentagon and the World Trade Center--symbols, not of liberty, but of American military and financial might.

As a citizen of India, a country that has eagerly embraced these same liberal, democratic ideals for a half century, I can say unhesitatingly that people overseas admire America for its open, free society. Nor are the American people the objects of hostility. The world admires and loves the incredible achievements of America’s scientists, artists, writers, and filmmakers. Last month people around the world were also moved by the courage of New York’s firemen and rescue workers.

Most Americans do not know that for over a decade we in India have been victims of Taliban trained terrorism that has taken hundreds of innocent lives. Two years ago Osama bin Laden announced from his hideout in the mountains deserts of Afghanistan, "India and America are my biggest enemies and all mujahideen groups in Pakistan should come together to target them." Since then I have wondered why he singled out India and America as his targets.
It is also tragic irony that faceless terrorists in Kashmir had set September 11—-the same dreadful day--as the deadline for what women could wear. Tailors in the valley had been busy making burqas for weeks. But an innocent 15-year-old girl, whose tailor failed to meet the deadline, found acid sprayed on her face as she was rushing home from school. She lost an eye and her pretty face was disfigured for life.

It is tempting to believe that India and America the prime targets of Osama and the Taliban because they are open, pluralistic, and liberal societies. Both have to constantly appease minorities and they present a constant challenge to fundamentalists, who are more comfortable in monolithic states with one religion, one language, and one mind. (Indeed, both Hindu and Muslim fundamentalists have this problem in India.)

Yet, I believe, it is wrong to blame freedom, democracy and the open society for the September 11 suicide attacks on America.

Powerful and large nations have always been envied. They are symbols of arrogance, distrust, and fear. When the powerful get into trouble there is an understandable feeling of glee—an expression of “well, they deserved it”. For example, Mexicans express this envious feeling towards their powerful neighbor to the north: “Too close to America and too far from God”. But it is difficult to imagine that such envious feelings were the recent events. There must be another reason.

It is easy to see this as a clash of civilizations. Islamic people are angry over America’s consistent support to Israel in the Palestine dispute. They are upset that half a million Iraqi children have died as a result of American economic sanctions. They are consumed by the irony that Taliban and Osama bin Laden are America’s creation from the forgotten days of the Cold War. Islam also has an old tradition of jihad against infidels, but the fact is that the average person in Islam is moderate, and not very different from average human beings. They do not hate America enough to condone the terrible tragedy of September 11, and American leaders have rightly pointed out this is not a war against Islam.

I could be wrong, and many Americans may find this unpalatable, but I think one has to look to the American government’s record during the Cold War to explain the present situation. One has to remember the millions who were killed in Korea, Vietnam, and Cambodia; the thousands who died in Lebanon in 1982 and the hundreds of thousands during Operation Desert Storm in Iraq; the countless millions who were victims of American government supported dictators in Haiti, Chile, Nicaragua, and El Salvador. It is this disregard for non-American lives that might begin to explain why America is so hated around the world.

The present administration is in a difficult situation. The world approves the legitimate hunt for Osama bin Laden and applauds the will to destroy terrorist networks. But the risk to America is that wars have their own logic and innocent lives are inevitably lost. Having once contributed to Afganistan’s tragedy by creating the Taliban, America does not want to be remembered once again for creating enormous human suffering among innocent people. That would be counter-productive, and only reinforce the antipathy that brought about the present situation.

This is not only America's war

It is more than a month since the short, macabre dance of death in New York and Washington changed the world. We are now in the midst of a war, but many are uncomfortable and ask who is America fighting? Some are confused, and insistently ask why were they made targets of the September 11 attacks? They also wonder why is America disliked? And in this case, so hated that a few young men were willing to defy the basic human instinct for survival and die for what they believed to be a worthwhile cause.

I shall attempt to answer these questions from a non-American perspective. I live in India, a country that has eagerly practiced the same American liberal, democratic ideals for a half century. But most Americans are unaware that we in India have been victims of Taliban trained terrorism for more than a decade that has taken hundreds of innocent lives. It is tragic irony that faceless terrorists in Kashmir had set September 11—-the same dreadful day--as the deadline for what women could wear. Tailors in the valley had been busy making burqas for weeks. But an innocent 15-year-old girl, whose tailor failed to meet the deadline, found acid sprayed on her face as she was rushing home from school. She lost an eye and her pretty face was disfigured for life.

Two years ago Osama bin Laden announced from his hideout in the mountains deserts of Afghanistan, "India and America are my biggest enemies and all mujahideen groups in Pakistan should come together to target them." Since then I have wondered why he singled out India and America as his targets.

It is tempting to believe that India and America are the prime targets of Osama and the Taliban because they are open, pluralistic, and liberal societies. They are the two largest democracies in the world. They have to constantly deal with diverse minorities and they present a constant challenge to fundamentalists, who are more comfortable in monolithic states with one religion, one language, and one mind. (Indeed, both Hindu and Muslim fundamentalists have this problem in India.) Yet, I believe, it is simplistic to blame democracy and the open society alone for the September 11 suicide attacks on America. If it were only a war against freedom, as President Bush says, then the Statue of Liberty would have been the first target.

Indians have welcomed Bush’s global war on terrorism partly because it has strengthened our own government’s hand to fight terrorists here. Maulana Masood Azhar is India’s Osama bin Laden. He is the mastermind of Jaish-e-Mohammad, a Pakistan based terrorist group that claimed responsibility for the suicide bombing in Srinagar which killed 38 people three weeks after the attacks in America. Indians were relieved when America announced the freezing of this group’s bank accounts because of its links with Osama. Azhar believes in jehad like Osama, and India needs to go after him with the same vigor that America is going after Osama.
Until America declared a war on terrorism, the rapidly growing Indian middle class had been resigned to live with terrorism. It regards all forms of religious extremism with disdain—as something divisive and irrational that comes in the way of its “rational” preoccupation with a rising standard of living, upward mobility, and the peaceful pursuit of electronic appliances. The world has not realized how much India has changed since the 1991 reforms. Its economy has grown 6.4 percent a year for a decade (and 7.5 percent for three years in a row), making it one of the ten fastest growing economies in the world. More recently, population growth has begun to slow, and in 1998 it was down to 1.7 percent compared to an historic 2.2 percent growth rate. Literacy has climbed to 65 percent compared to 52 percent a decade ago, with women and the backward states registering the biggest gains. More than 120 million Indians have pulled themselves out of poverty in the past decade as the poverty ratio has declined to 26 percent. And the nation may have finally found its competitive advantage in its booming software and IT services. At this rate half of India (that is, the west and the south) should turn middle class by 2025, and India will see its share of world product rise from 6 to 13 percent, making it the third largest economy in the world.

This is the future that terrorism threatens and this is why the Indian middle class supports America’s war. However, many Indians are offended by the America’s historical indifference to non-American lives. America has historically propped up dictators in Latin America and backed tyrants in Africa and Asia, and this has led to the death of millions around the world. I wonder if this disregard for non-American lives explains why America is so disliked around the world.

Then there is the usual anti-Americanism, just as fashionable in our influential left wing and academic circles as it is in Europe and Latin America. These are the same people who are against economic globalization, technology, free capital flows and foreign influences. They charge that America is arrogant, hypocritical and is exporting an unhealthy consumerist way of life. However, this sort of anti-Americanism does not resonate with the common person, who loves the incredible achievements of America’s scientists, artists, athletes, filmmakers, and only last month was moved by the courage of New York’s firemen and rescue workers.

About 12 percent of India’s population is Islamic, and they are more ambivalent about America’s war. Our Muslims are more ready to argue the Palestinian case, and believe that America could have done more to restrain Israel. They are upset that half a million Iraqi children have died as a result of American economic sanctions. They are consumed by the irony that Taliban and Osama bin Laden are America’s creation from the cold war. We have a few Islamic fundamentalists as well, but the truth is that the average Indian Muslim is moderate but confused about what is happening. Hence, we have not seen Indian Muslims protesting against this war.

Amidst the confusion, uncertainty and fear--after all, Afghanistan is almost our neighbor--ordinary Indians understand that in the end this is a war against fanaticism and terror, and for civilized tolerance. They realize that in all wars some innocent people will be killed. But they also know from unhappy experience that almost every victim of terrorism is an innocent person. Thus, this is not an American war. It is also our war. But President Bush has to be sensitive as he prosecutes it. He needs to convince the world that non-American lives are just as precious as American ones. Otherwise, for all the good that America will achieve, the world will continue to dislike America.

India Shining (1984 – 2004), RIP?

Outlook, 12 Jul 2004

It is no use pretending. While the last general election brought some good news--especially, a well deserved slap to Narendra Modi’s fascist face—it also brought bad news. The hugely positive global sentiment in favour of India that had prevailed until mid May has received a setback. The clearest example is the dramatic slowdown in the growth in the nation’s reserves. Until the week ended May 7, reserves had been growing at the rate of US $750 million a week. This accretion to reserves had diminished to less than US $100 million a week. The rupee has also reversed its appreciating trend. Although this may, in fact, be good for exports, but the currency trend combined with the stock market crash demonstrates that sentiment has changed, and if this is not reversed quickly it will hurt new private investment in the economy, and longer term growth, competitiveness, and jobs.

Sentiments are fragile and often irrational, but they do matter. Entrepreneurs invest when they are feeling good and stop investing when doubts creep in. This is what has happened in India. Doubts have crept in, and the self-confidence that had fuelled investment during the past nine months has largely evaporated. Both Indian and foreign investors have once again begun to have doubts about India as a worthy destination for investment. Thus P. Chidambaram faces a heroic task. For no matter how much you tell investors that the fundamentals of the economy have not changed—that it is still the same sound economy as it was two months ago—market sentiments have a life of their own, and they do not always listen to reason.

Although the left tends to dismiss it, national confidence is a good thing. Ask any CEO and he will tell you that a sustained positive feeling among employees often separates success from failure. Ask a historian of Rome, and he will testify to its amazing power. Or of 19th century Britain, or Japan between 1960-1990, or even current day China—they will all bear witness to the clout of self-belief, which makes ordinary people do extraordinary things. This confidence has been jolted by this election.

Before relegating “India Shining” to history’s dustbin it is well to remember that it did succeed in one space, and there it succeeded spectacularly. The business class both in India and abroad bought the idea that India had become a serious player in the world economy and was poised to make a leap forward. This had generated tremendous excitement in the corporate world, both in India and abroad, and for almost a year I could feel a palpable optimism in my interactions with investors and business people. The offshoring controversy in America may also have fuelled it, and the foreign press certainly reinforced it. From a land of snake charmers India had suddenly become a serious competitor for the white-collar jobs of the developed world. I was abroad in February and March this year and never have I seen such a spate of positive views expressed by foreign commentators about India.

Right through the nineties, China had been the big success story. Quietly over the past couple years, however, India had somehow crept onto the radar of global media. Hence, during the past year every time China was mentioned India’s name was attached to it. Earlier this year the New York Times wrote in a front page story that China and India were going to write the script for the 21st century. But the more cautious rendition was usually “China and to lesser extent, India” as the Economist put it. This positive perception of India has diminished, if not ceased entirely, ever since the stock market crash. The Indian left may have contempt for markets, but investors watch markets, and since we are part of the global economy, investor sentiment will determine investment, growth, and jobs.

I ask myself, why has this sentiment suddenly changed when the fundamentals about our economy are the same? In part, I think it is because the Indian whining story has also affected the business community, which has concluded that India’s economic prospects were perhaps never as rosy as they had been led to believe. And the defeat of the BJP has reinforced this perception. In the process of trashing the BJP’s tall claims, the opposition unintentionally ended in trashing India, the country. Investors began to wonder if the story of India’s prospects were a bunch of tall claims, when the reality may have been that it was still the same “under-achiever” which the Economist has been portraying for years. I don’t think that Congress meant to trash the country, but this is how it ended, and our country became the victim of competitive democratic politics. Self-confidence has always been lacking in our society, especially in the business community. I don’t know what and how long it will take to rebuild it. We certainly have an outstanding economic team in place today, but as I said before, sentiment is irrational and elusive.

The well intentioned Common Minimum Program (CMP) of the new government probably did more to kill this spirit than anything else. The idea of reservations in the private sector, when the prospect of labour reform had died--this frightened managers who were engaged in the hard day to day work of running companies. As it is, they had to put up with a sub-optimal work culture with endemic absenteeism, and now this burden of reservations. It is a future just too awful to contemplate!

Businessmen have repeatedly expressed the view that they would happily pay to lift the poor if they had the slightest faith that the money would reach the poor. They agreed that the best way to lift the poor was through good primary schools and primary health care. Hence, they didn’t mind the proposed education cess. But they worried about the condition of our municipal schools: 93 percent of Bengali primary schoolchildren can’t write their names in Bangla; 30 percent of teachers are absent in Bimaru states, 50 percent don’t teach and most beat their pupils. Unless we first reform our schools (by giving parents’ associations a voice, for example, in the teacher’s pay) we would only be wasting the nation’s hard earned money. As it is, India spends around Rs 1 lakh crores on education (which is higher than most countries as a percent of GDP), but because of teacher absence and other inefficiencies, a third is perhaps wasted. That is a waste of Rs 30,000 crores!

“India shining” is a nice expression and it’s a pity that it got mixed up with politics. Since it is synonymous with India’s economic success, not surprisingly both the BJP and the Congress wanted to take the credit. The BJP claimed that its policies were responsible for the past year’s fine performance and the changed mood; the Congress argued that the economy grew faster under their man, Narasimha Rao. Both were right (and wrong). The truth is that India’s economy has been shining for two decades, growing around 6 percent a year, making it the fifth fastest major economy in the world.

After stagnating for centuries, our economy did finally pick up after Independence. It grew 3.5 percent a year between 1950 and 1980; but our population also grew 2.2 percent; hence the net affect was 1.3 percent per capita income growth (3.5 minus 2.2)—this is what we mournfully called “the Hindu rate of growth.” Things began to change with modest liberalisation in the eighties when annual GDP growth rose to 5.8 percent while population growth remained at 2.1 percent; thus, income per capita moved up to a more respectable 3.7 percent. This happy trend continued in the reforms decade of the nineties when growth averaged 6.2 percent a year, and population, in fact, slowed to 1.8 percent average; thus, per capita income rose by a decent 4.4 percent a year.

What these numbers mean is that if our per capita GDP had continued growing at the pre-1980 level, then Indian incomes would have reached current American per capita income levels only by 2250. But if our economy continues to grow at the present 6 percent rate, and if population grows at 1.5 percent, then we will reach American income levels by 2066. This is a gain of 216 years, and this is what “India shining” really means. And it is worth dying for! It means that it is finally possible to believe that we shall soon be able to conquer India’s age-old worry over want and hunger.

It is easier to explain why India was shining in the nineties. The brave reforms of Narasimha Rao’s government opened our economy, dismantled controls, lowered tariffs and taxes and broke public sector monopolies. And the economy responded magnificently. But how does one explain the pick-up in the 1980s? And here I think we don’t give enough credit to Rajiv Gandhi. He too opened the economy, albeit reticently and modestly—lowering marginal taxes and tariffs, removing the most irritating import restrictions, and liberalised industrial licensing through “broadbanding”. Although modest, these efforts seem to have had a bigger impact that even the sweeping reforms of the 1990s. Bradford Delong, an American economist, wrestles with this puzzle in In Search of Prosperity: Analtytic Narratives on Economic Growth, edited by Dani Rodrik of Harvard. The real miracle, however, is that all the governments after Rao surprisingly continued the reforms, albeit in a frustratingly slow way. Yet this elephant-like pace has made India one of the fastest growing major economies in the world. So, the lesson is that if you consistently reform in one direction in a democracy, it adds up. Since we haven’t had strong reformers at the top, like Thatcher or Deng, is it possible that the reform process has become institutionalised?

This “adding up” over time has enhanced our national confidence, and which to my mind is central to the notion of “India shining”. Thus, it is the Indian people who are shining as they have overcome all the obstacles put in their way by self-serving bureaucrats, politicians, monopolistic industrialists, left intellectuals and labour leaders—in short, all the vested interests of the Licence Raj. But for all Indians to shine, we must begin to seriously reform agriculture and education. This ought to be the agenda of this government.

This election has reminded us that left’s historic role is to make the right sensitive to the needs of the poor and to humanize capitalism in the process. Unfortunately, our left is bankrupt in terms of ideas, and thinks that throwing good money at old problems will solve them. Moreover, the left has not ditched its naïve faith in state control when our nation is groaning under the weight of red tape. This statism makes the left look stupid. In the end, the problems of India’s poor will not be solved by ideology but by good implementation. And this needs mental application. We have to focus on the “how”, not the “what”. It is easier to abuse the India’s bourgeoisie, but more difficult to come up with real answers to real problems.

A DANGEROUS IDEA

Times of India, July 11, 2004

A lot of rubbish has been floating in the air ever since May 13, when our election results came out. Silly ideas, discredited years ago, have been revived and assiduously marketed by the left, creating the illusion that India's centre of gravity has shifted against the global market system.

The most dangerous of these is to extend reservations to the private sector. Let me illustrate with this thought game. Let's assume that this becomes a law. You are in the market for a new scooter, and just before visiting the Bajaj showroom a friend tells you that a quarter of Bajaj's workers were not hired on merit. Since you have a three year old daughter who is going ride at the back, you stop in your tracks. Since all Indian scooters suffer from the same defect, you are forced to buy an imported one. Soon Bajaj, Hero Honda, TVS and others will have to shut their Indian factories, start producing abroad (say in Thailand), and importing their scooters into India. Thus, Thai workers will gain from our reservations.

Not for a moment am I suggesting that a scooter made by a dalit is inferior. In fact, it is probably superior to one made by a brahmin (who has probably never worked with his hands). But you will suspect a Bajaj scooter if merit has been compromised in recruitment. Companies that employ nephews and nieces will always perform worse than those who hire the best. In our highly competitive global market, talented people are the scarcest of resources - ask any CEO, recruiting is his biggest challenge. If Infosys were to hire less than the best talent, it too will lose customers and market share.

A second problem is that jobs in the private sector are not for life, unlike the government. If a person doesn't perform she loses her job. So, if Bajaj were to hire on grounds other than merit, he will get into an endless cycle of hiring and firing people. Those fired will go to court, alleging discrimination. Thus, while Bajaj spends his energies on litigation, his foreign competitors will move ahead, improving products, distribution and customer satisfaction. Finally, our reservations have not benefited the poor. Studies show that they are monopolised by the creamy layer of the privileged among the backwards, giving the middle class backwards an unfair advantage. In fact, the politics of caste submerge the real problems of the poor.

This is not an academic discussion either. Maharashtra has already passed a law extending reservations to state-aided institutions (which some have interpreted to mean any company with a loan from a public sector bank). As a result, Rahul Bajaj has threatened to shift his factory from Pune. How can you advise anyone to invest in Maharashtra under the circumstances!

Although I am against reservations, I do think that there is a strong case for affirmative action. We should study the American model, where quotas are illegal, but institutions do attempt to achieve diversity. There are no short cuts in the end. The only way to genuinely lift the poor is through better schools and primary health centres. If our politicians had focused on education and health over the past 50 years, by now there would have been greater equality of opportunity, and we wouldn't need reservations. Instead, they chose to give subsidies and reservations, which didn't help the poor. Hence, India was ranked 134th out of 150 nations in the Human Development Index (2000). The worst indictment of Indian socialism is that in the end it did so little for the poor.

LETTER TO MY LEFTIST FRIENDS

Times of India, June 27, 2004

I sometimes find it hard to believe how many of my close friends are leftists. The reason, I suppose, is that I was a socialist once, and old associations don't die easily. Also, I admire your courageous idealism even though it is misguided, and your undoubted personal integrity. This election has reminded us of the left's historic role - it is to make the right sensitive to the needs of the poor and to humanise capitalism in the process. You now have a historic opportunity to do it.

You must have been surprised by the hostility that greeted the Common Minimum Programme. Although you may dismiss the Indian middle class (of which, btw, you are a part), the truth is that it would happily pay to lift the poor if it had the slightest faith that the money would reach the poor. Sadly, the government's delivery mechanism is a leaky bucket.

We both agree that the best way to lift the poor is through good primary schools and primary health care. Hence, your proposed education cess looks attractive. But ask yourself: why don't you send your child to a municipal school? It is because they are rotten. Only 7 per cent of primary schoolchildren in West Bengal can write their name in Bangla. Some 30 per cent of teachers are absent in Bimaru states and 50 per cent don't teach, and most beat their pupils. Unless we first reform our schools (by giving parents' associations a voice, for example, in the teacher's pay) you are only wasting our hard earned money. We already spend around Rs 1 lakh crores on education (which is higher than most countries as a per cent of GDP) and estimates show that a third is wasted.

In the past weeks, you have opposed labour reform, wanted loans waived to farmers, and asked for a roll back of the modest LPG price increase - all this in the name of the poor. Consider this: labour reforms will only hurt the lazy among organised labour (which is only 7 per cent of India's total labour) but it will improve the lot of the 93 per cent. Also, it is the rich farmers who default on loans, not the poor. Finally, it is the middle class which uses cooking gas while the poor use kerosene. It sounds suspiciously as though you champion the labour aristocracy, the rich farmers, and the middle class. For 40 years you supported the license raj, knowing full well that it helped big business houses against new entrepreneurs. There is no bigger indictment of the Indian left - in the name of the poor, it has done so little for the poor.

This brings me to your historic role. If you genuinely care for the poor, then help the state to improve the delivery of services to the poor. The problems of India's poor will not be solved by ideology but by good implementation. And this needs mental application. Since the 1970s the Economic and Political Weekly has been highlighting the horrendous leakages in the employment guarantee schemes. Focus on the how, not the what. It is easier to abuse the bourgeoisie, but more difficult to come up with real answers to real problems.

I sometimes think that you hate businessmen so much that you would keep everyone poor rather than allow a few businessmen to get rich. It is time you reconciled to the market as the only workable economic system. You may dislike businessmen, but you must value competitive markets. Finally, ditch your naive faith in state control. Our nation is groaning under the weight of red tape. Stop being statist - it makes you sound like Murli Manohar Joshi !.

THE BILLIONARIES CLUB

Times of India, June 12, 2004

During the past year the world has begun to see us differently. In the nineties, China occupied centre stage, but increasingly Western commentators have begun to club India with China as future economic powers. This image received a jolt with the change in government, but it will recover because our economy is strong.

We owe this new respect, in part, to the outsourcing controversy as the West has begun to think of India as a competitor for its service jobs. The changed perception has also made global investors look at us once again, which is why I received an invitation from a group informally known as The Billionaires Club, organised by the respected investment firm, Goldman Sachs.

Gathered in an elegant room in Chicago last month were 15 soft-speaking individuals whose collective net worth exceeded a hundred billion dollars. First, they listened to the now famous BRIC report, which projects India to be the star performer over the next fifty years, ahead of Brazil , Russia , and China . Next, I got up and unabashedly sold India for 45 minutes. Before concluding, I asked these worthies why they preferred to invest in China . One of them gently corrected me, ‘‘Forget China , we have much greater investments than India in smaller countries like Thailand , Malaysia , Vietnam .’’ I asked,

‘‘Why? Don’t you like us?’’

‘‘We love India , but we hate your red tape.’’ Over the next thirty sobering minutes I bit the dust, as I heard one horror story after another about India ’s officialdom. The owner of one of the world’s largest hotel chains described how it took 5 years to get land access to his hotel in Mumbai. Another spoke about his humiliation by the Reserve Bank. ‘‘In other countries we deal with banks, but why are we forced to deal with the central bank in India ?’’

Someone described how his factory was delayed by two months because he refused to bribe the engineer from the SEB. Another complained about our central excise and customs officials. The owner of an FII said, ‘‘Portfolio investors don’t take the Mauritius route to evade Indian taxes — we do it to avoid dealing with your tax officials.’’ To drive the point home, the group contrasted the welcoming behaviour of Chinese officials, who they said were also corrupt, but had created a business friendly environment.

A second reason for India ’s weak FDI performance, they pointed out, was our infrastructure, a point that Jeff Immelt, G.E.’s boss, also made in Bombay recently. ‘‘In the nineties, China ’s energy sector grew 20 times that of India , and transport market 8 times,’’ he said. On the other hand, the billionaires were hugely impressed with India’s human capital, and one of them recounted how Indians had upgraded Russian planes brilliantly with Indian avionics, ‘‘and this has impressed the hell out the American defence establishment.’’

‘‘Face it, Mr Das, Indians are a great people, but your red tape is the killer,’’ was the conclusion. I had tried to put up a brave front in the meeting, but as I trudged back to my hotel I had a sickening feeling in my stomach. I consoled myself thinking, why does it matter to India ’s poor what 15 rich Americans think? But I knew in my heart that it did matter — if these men invested, others would follow. And this would create jobs, bring technology, make India competitive, bring revenues to the government, and this in turn would make it possible to invest in village primary schools and health centres. This is how China has been lifting its poor, and this is why P. Chidambaram so desperately wants foreign investment.

LETTER TO A FRIEND

Times of India, May 30, 2004

Dear Prime Minister,

I remember the day you made me tea. I was privileged to visit you at 9 Safdarjang Lane soon after you relinquished office in 1996, and nobody, it seems, was at home, your wife was away visiting friends and the servant had gone on some chore. I was deeply moved by the quiet simplicity of your life, and when I told this to my wife, she said, Are you surprised? He is the only dignitary we know who answers his own telephone.

You opened our economy to the world in 1991, and this unlocked India ’s astonishing brain power to a degree that even you could not have imagined. Your reforms brought us the best years in our economic history. And all the governments after yours miraculously continued the reforms, albeit slowly. The lesson is that if you consistently reform in one direction, it does add up, and this has made India one of the fastest growing economies in the world.

Growth, you said that day, is the best anti-poverty programme, I hope you will repeat this to your colleagues when they try to pressure you into populist programmes that our deficit burdened treasury cannot afford. The best way to distribute the fruits of growth, as we both know, is through better schools and better primary health centres. This is the only way to give reforms a human face (and not leaky poverty programmes). However, the reform of education and health is not just about spending more money. It is about making teachers and nurses accountable, so that they will, at least, show up.

Like it or not, India ’s general elections have become municipal elections. What matters to the rickshawala is that the cops not take away a sixth of his daily earnings. The farmer wants a clear title to his land without having to bribe the patwari. The sick villager wants the doctor to be there when she visits the primary health centre. The housewife doesn’t want the water tap to go dry while she is washing. This is how government touches ordinary people’s lives, and in successful societies people take these things for granted. You might say that these are local subjects, but to ordinary citizens you are the face of the government and they expect this from you.

Where does the illness of governance lie? Why don’t employees of the central, state, and local governments do their jobs? In the Far East , for example, citizens get far better service. Is it because we protect labour excessively in India , to the point that they no longer feel accountable? This was my experience in the private sector, at least — our labour laws have taken away accountability and diminished our companies competitiveness. Thus, you may have to tackle labour laws despite your partners.

If you buy my argument about governance then your focus will shift from policy to implementation. Hold your finance minister accountable for the behaviour of income tax officers. Judge your home minister, for example, for eliminating harassment of honest NGOs who get foreign donations. Reward your economic ministers for eliminating red tape — foreign investors repeatedly tell us that they prefer China over India because of our red tape.

In the end, even if you make a small but perceivable difference, you will break the anti-incumbency factor, which is a code word for poor governance. If you do not, then you will be asking for the return of the BJP in 2009.

ENOUGH IS ENOUGH!

Times of India, May 15, 2004

The most popular word in our election vocabulary is "anti-incumbency" and this ungainly word re-emerged this week to explain why the Indian voter has punished the ruling coalition. Everyone has his own definition of "anti-incumbency", but I am convinced that it is a code word for, "Enough is enough! I am sick and tired of bad day-to-day governance."

Despite strong economic growth, good monsoons, improved relations with Pakistan and America , and a new national self-assuredness, Indians were unwilling to forgive bad governance. And they employed their favourite weapon against one of our best governments in recent times — they didnt re-elect it.

My neighbour told me last week, "I voted for the BJP the last time because I thought they would be different, but they turned out to be no better. So, I think I'll change my vote, and I'll change it again and again, until my neighbourhood improves." She despairs over the simplest public goods — good behaviour from the policeman on the beat, for a government schoolteacher to actually show up in school, for honest justice from the lower judiciary. This is what governance is all about and she will remain anti-incumbent until she gets it.

Like many Indians I used to blame ideology for our economic failures. But now I have realised that the bigger villain is poor day-to-day management. Even socialism could have delivered more and need not have degenerated into License Raj. It is this boring, everyday failure of implementation by our public servants that makes the average citizen's life dismal in India . And because bureaucrats are not accountable, our governance is weak and our public institutions fail.

Yet, we also know that good institutions are possible in India . We admire our armed forces, the Supreme Court, Reserve Bank and the Election Commission. If these institutions can be successful, so can others. This is the message of this and every recent election. The voter is telling the politician: "Reform the institutions that affect my daily life." But no one seems to be listening.

The sari tragedy in Lucknow was the defining image of this election. Apart from other sadnesses, it brought home the colossal managerial ineptness in our public life. Since the supply of saris fell short of demand from the thousands of hopefuls gathered, a good manager would have found a way to distribute them fairly and calmly.

Instead, panic and incompetence resulted in the tragic death of more than 20 women. The nation awaits Commissioner Lakkha's enquiry report. He has interviewed more than 180 eyewitnesses, and it will not be a surprise if he indicts both the police and the organisers for their callousness. I admire Atal Behari Vajpayee, and I could feel his anguish when he confessed there were huge areas of darkness while India was shining.

Ram Madhava of the RSS is wrong in saying that the BJP lost because it diluted its ideology. The secularists are wrong in thinking that the BJP has paid for Hindutva and Gujarat . The leftists are wrong to blame the economic reforms. (People are not against reforms; they want the reforms to be broadened, in fact, to agriculture so that everyone can shine.)

The voters have punished the BJP alliance for poor governance. What matters to the ordinary person is her daily life and this will only improve when our institutions improve, when babus implement, and when politicians hold babus accountable. By now you'd think our politicians would havedecoded the meaning of "anti-incumbency".

India’s New Self-Assuredness

Wall Street Journal, May 3, 2004

(Copyright (c) 2004, Dow Jones & Company, Inc.) NEW DELHI -- Next Monday, India's general elections -- which began on April 20 -- will finally conclude. In an exercise that was both staggered and staggering, 670 million Indians will have had the opportunity to vote at 700,000 polling booths via 1.1 million voting machines -- with all this, the greatest democratic show on earth, supervised by 5.5 million stateofficials.
But there is another impressive number this time around. The economy has grown at 8.1% in 2003 -- 10.3% in the last quarter, surpassing China for the first time -- and not surprisingly, the ruling National Democratic Alliance, led by the nationalist Bhartiya Janata Party (BJP), capitalized on this feel-good factor with a highly successful "India Shining" ad campaign. The opposition Congress Party retorted with "India Whining," and as if to prove it my mother phoned to say, "How is India shining when my house is in darkness because of a power cut this evening?"
Whether India is shining or whining, what makes this election different is a shift in rhetoric from religion and caste to the economy. Amidst the usual scramble for seats and alliances, politicians in urban constituencies have been forced to learn Economics 101 in order to debate economic reform with an increasingly sophisticated urban voter. The stridency of Hindu nationalism seems to have died, and even dark talk of Congress leader Sonia Gandhi's Italian origins lacks conviction. The turning point was last December, when four major state elections were decided on economic issues - much to everyone's surprise. Thus the slogan "Bijli, Sadak, Pani" or "Electricity, Roads, Water" has entered the political lexicon, having replaced "Mandir, Masjid, Mandal" or "Temple, Mosque, Caste." If this is an enduring trend, then we may be looking at the most dramatic change in the Indian political mindset in 50 years.

The BJP claims that its policies are responsible for the fine economic performance and the changed mood; Congress argues that the economy grew faster under its man, Narasimha Rao, who was prime minister in the '90s. Both are right (and wrong). The reality is that India, in a sense, has been shining for over two decades, its GDP having grown at an average annual 6% real rate, making it one of the fastest growing major economies in the world over a 23-year period. While its growth is slower than China's, it is almost double the Indian growth rate of the previous 30 years, and double the rate at which the West created its Industrial Revolution. More recently, India's population growth has also begun to slow; in 1998 it was down to 1.7%, compared to a historic 2.2% growth rate. And literacy has begun to climb -- it reached 65% in 2000 compared to 52% in 1990, with the biggest gains among women and in backward states. Almost 170 million Indians have risen out of destitution since 1980 as the poverty ratio has declined to 26%. Finally, India may have at last found its competitive advantage in its boomingsoftware and business process outsourcing services to the world.If its economy continues to grow at this rate for the next few decades -- and there is no reason why it should not -- then a majority in the south, west and northwest should be middle class by 2025. The poorer Eastern states should get there by 2050. Had India's GDP growth continued at the pre-1980 level, Indian incomes would only have reached American per-capita income levels by 2250; but at the current rate India will reach it by 2066. It is thus increasingly possible to believe that India will finally be able to conquer its age-old worry over want and hunger. The amazing thing is that all this growth is happening alongside the most appalling governance. In the midst of a booming private economy, Indians despair over the simplest public goods -- good behavior from the cop on the beat, honest justice from the lower judiciary, or for a government schoolteacher to actually show up in a village school in Bihar. Hence, it is the public sphere that is "whining." So, also are the unreformed sectors of the economy, such as electric power. The contrast between power and telecom is obvious to everyone. After a successful reform program, India is in the midst of a telecom revolution that is as profound as China's. Its telephones have grown from five million in 1990 to 60 million today and they are growing by two million a month. Yet power reforms have failed, and no wonder my mother whines about power cuts. (Like most Indians, however, she is not aware that legal reform has now set the stage for a similar power revolution over the next five years.)

More and more Indians hold ideology responsible for their past economic failures rather than poor management. They blame Nehru's and Indira Gandhi's socialism without realizing that even that socialism could have delivered more and did not have to degenerate into "License Raj." It is this failure of quotidian implementation that makes institutions weak. Indians admire their army, the Supreme Court, Reserve Bank and the Election Commission. (Curiously, except for the Election Commission, these are the institutions that Americans admire most in their country.) So they know it is possible for India to have good institutions, and that India will not truly shine unless there is a vigorous reform of institutions. It is easier to explain India's economic rise after 1991, when Mr. Rao's government opened the economy, dismantled controls, lowered tariffs and taxes and broke public-sector monopolies. And the economy responded with three years of 7.5% growth. But how does one explain the jump in the '80s? And here Indians don't give enough credit to Rajiv Gandhi. Although modest, his reforms seem to have had an impact. The real miracle, however, is that all the governments after Mr. Rao's continued the reforms, albeit in a slow manner. Yet in spite of an elephantine pace of reform, India is one of the fastest growing economies in the world. So the lesson is that if you consistently reform in one direction in a democracy, it adds up. This "adding up" has enhanced confidence, which is at the heart of "India shining."
Where has this self-assuredness come from? I traveled widely across India in 1995 and discovered that the nation's mindset had changed in the '90s. Many Indian minds had become decolonized. This mental liberation is a powerful force in national regeneration. A changed attitude to English illustrates the new mindset. Ever since the British left we have heard constant complaining against the English language, and then in the '90s it suddenly disappeared. Quietly, without ceremony, English became one of the Indian languages. English lost its colonial stigma, oddly enough, around the time that the Hindu nationalists came to power. Hindi-language protagonists lost steam because they lost their convictions -- their own children wanted to learn English. Based on present trends, India will become the largest English-speaking nation in the world by 2010, overtaking the U.S.

When I was growing up, it mattered how you spoke; you could speak rubbish but you had to do it with the right accent. Today, young Indians in the new middle class think of English as a skill, like Windows. This is why a confident "Hinglish" (Hindi mixed with English) is spreading, encouraged by flourishing private TV channels and supported by advertisers. A new cultural confidence has emerged. Perhaps, it is due to the reforms, which have been reducing the intrusive power of the state, making Indians more self-reliant. Pop stars like Daler Mehndi display an exuberant nonchalance, as do the young Bollywood heroes. So do the fiction writers in English, the fashion designers, the beauty queens and the cricket stars. Indians seem to have lost their hypocrisy toward making money and getting rich.
Last month, Kiran Mazumdar became the richest woman in India when her biotechnology company went public and her personal net worth crossed $500 million. To some Indians this is the true shining India, and they point to the many multinationals that have set up R&D centers in India in recent years, including GE, Microsoft, IBM, Texas Instruments, Cisco, Intel, General Motors, and Motorola. Supplementing them are Indian companies like Wipro and Infosys, both with a billion dollars in sales, who provide customers with R&D services. Some Indians attribute the explosive growth in R&D labs to their Brahminical heritage, arguing that they are conceptual people and that the knowledge age plays to their advantage. They explain that Indians have wrestled with the abstract concepts of the Upanishads for 3,000 years.

We are past the halfway mark in the election, and the exit polls seem to suggest that the ruling BJP coalition is likely to win by a narrower margin than expected earlier. If these polls turn out to be right, it will mean that the winning side will have to horse-trade to bring in coalition partners. This will weaken the government and diminish its ability tocontinue the reforms. That might slow the rate of growth.

The most popular word in the Indian election lexicon is "anti-incumbency," and this awkward word is being used to explain why the voter is not keen to return the ruling party with a bigger majority, especially at a time when the economy is shining. This, I think, goes back to poor governance on the ground. Despite strong growth, Indians are unwilling to forgive bad governance and this is the weapon they use against incumbent politicians.

They don't re-elect them.

GIVE TITLES, NOT CAKES

Times of India, May 02, 2004

Thousands of miles away in distant Peru lives Hernando de Soto and he has a simple message for us in India . People are poor, he says, because they usually lack formal title to the little property that they own. Without a legal right they cannot use their property as collateral. They cannot go to the bank and get a loan in order to start a business. Their potential is locked up in "dead capital". De Soto calculates that the dead capital locked in untitled assets held by the world's poor is around $9.3 trillion, which is many times the total foreign aid given by all the rich countries to all the poor countries for the past 50 years.

Whether a sharecropper in Bihar or a slum dweller in Mumbai, the vast majority of India 's poor have unclear titles. For decades after Independence , we had socialist minds and thought that property rights were a capitalist idea; so, we ignored this terrible flaw in our governance. But after the 1991 reforms our mindset has changed and we have lost our hypocrisy towards private property. Today, the best thing that our state and local governments can do for the poor is to simplify and streamline the process of granting property titles. Two of our states, Andhra and Karnataka, have recognised this problem and have tried to make land transactions easier. My friend in Guntur district tells me that land records and titles in Andhra are now on the Internet, and corrupt officials who deal with land are the unhappiest people there.

Hernando de Soto observes in his book, The Other Path, that most businesses in Peru also lacked titles. To find out why he and his colleagues started a fictitious clothing factory. It took them 289 days working full time plus Rs 55,400 in bribes and expenses to get all the approvals they needed from 11 departments. Next, he and a group of low-income families petitioned the state for a vacant plot to build housing; it took them six years and 11 months plus Rs 97,020 per person to get all the bureaucratic clearances. Finally, to get a pushcart licence to sell fruit on the street in Lima took them 43 days plus Rs 26,550. ( India is not the only country with License Raj!)

Poor people are not stupid. In countries like Peru and India they naturally avoid this bureaucratic nightmare and simply start businesses without approvals; and this is called the informal or the black economy. Every Indian city, and especially Delhi , is a hive of this feverish activity. The poor, thus, have houses but no titles; crops but no deeds; business without licences. The informal economy is people's spontaneous response to the state's failure to do its job. Much maligned, this parallel economy is in many ways more authentic, hardworking, and creative than our legal economy.

When the common citizen has to fight for 10 months with 11 departments just to keep the file moving - this explains why the Third World is poor. The answer to poverty is not the socialist one - for the state to provide all things - but to give people freedom to own property and create wealth from it. We need the state to quickly confirm title on the citizen and get out of the way. Classical liberals were right in believing that true liberty flows from the right to property. Curiously, de Soto 's ideas have had so much impact that he was the target of the Shining Path, the Marxist terror group, in the early nineties - the only economist I know with the distinction of an assassination attempt.

THE REVOLUTION WE MISSED

Times of India, Apr 18, 2004

With each passing day we continue to watch China 's mesmerising success in creating millions of low-end manufacturing jobs through the export of toys, shoes, clothes, and all the things we need to live our daily life. We also observe the striking success of Indians in exporting knowledge services to the global economy.

Seeing these phenomena some Indians insistently ask, are we going to skip the industrial revolution and jump from an agricultural to a services economy? The question, not surprisingly, frightens people because the rest of the world has evolved from agriculture to industry to services, and India appears to have missed the middle step.

Karl Marx predicted that the railways would usher in India 's industrial revolution as they did in many Western nations. They didn't. After Independence , Nehru attempted an industrial revolution via the state. He didn't trust private entrepreneurs, so he made the state the entrepreneur, and not surprisingly, he failed. Today, whether our fast growing services can transform the lives of our millions is debatable, but the desirability of creating manufacturing jobs is not. It is a pity that we are losing the opportunity because of bad policies.

It is especially heartbreaking because we have come a long way since 1991 in improving our competitiveness -- there has been a telecom revolution; interest rates have come down and capital is plentiful; our highways and ports are improving; real estate markets are becoming transparent. It's also true that a few large companies in a few sectors have become globally competitive, but that's not enough to create a revolution. Hence, our exports are a paltry $55 billion compared to China 's $400 billion.

There are many reasons for our industrial failure, but the silliest and most hurtful one is that 670 industries in India are still reserved for small (SSI) companies, and they are unable to compete against the large firms of our competitor nations. They make simple things like pencils, boot polish, candles. We now import these products freely, but we don't allow our big companies to make them. We could create millions of new jobs by exporting these products, as the Far East nations have done. But the government is afraid to touch the ‘‘SSI holy cow'' as it fears a powerful lobby. The truth is that this vested interest faded long ago and there is little incentive left in being an SSI. In recent years, around 150 industries have been de-served and there was no adverse reaction from anyone. The only vested interest left is the department of small-scale industries.

Certainly, our entrepreneurs face other problems: electric power is less reliable and costlier than in competitor nations; octroi/check nakas keep our trucks waiting for hours; excise and import duties may have come down, but their cascading effect (tax on tax) burdens Indian manufacturers; our labour laws continue to destroy our work ethic and scare entrepreneurs from hiring workers -- if you can't fire a bad worker and can't close your factory then you will be hopelessly uncompetitive. Finally, ‘‘licence raj'' may have gone but ‘‘inspector raj'' is well and alive; the ‘‘ midnight knock'' from an excise, customs, labour, factory inspector haunts many an entrepreneur.

Some of these obstacles are more daunting, such as labour reform and power, and will be more difficult to overcome. But scrapping SSI reservations is an easy thing to do, and should be in the manifesto of all parties. Whoever wins this election and removes this silly anachronism could create India 's industrial revolution and go to glory.

Private Secularism !

Outlook, 12 Apr, 2004

“The country with the most impressive and intelligent secularist movement is India,” wrote Christopher Hitchens in the respected journal, Daedalus, last summer. Hitchens is a public intellectual who is read and listened to with some admiration on both sides of the Atlantic. He did not explain, but I think what he meant is that Indian secularism has acquired many voices and it seems to be maturing.

It is sobering to remember, however, that Indian secularism was unable to stop the murderous carnage in Gujarat, which may have receded in public memory by the good cheer from a rapidly growing economy and an approaching election, but still remains a blot. There is a change, nevertheless, in the rhetoric of the political class this time. Amidst the usual scramble for seats and alliances there is healthy silence on religion. The turning point seems to have been the four state elections in November and December, and every politician who has been interviewed in the past eight weeks has talked about “bijlee, sadak, pani”. Our fondest hope, of course, is that these three words will replace “mandir, masjid, and mandal” in our political lexicon, and when that happens we may be looking at the most dramatic change in the Indian political mindset in decades. Clearly, it is too early to proclaim that victory.

Coming back to Indian secularism, it is important to ask why it has failed to stem the rising tide of intolerance in recent years? And the reason, I suspect, is that it is identified in the public mind with atheism. It is true that many of our most vocal secularists were Marxists and they did not value the religious life. In a well-meaning effort to limit religion to the private life they behaved as though all religious people were superstitious and stupid. This naturally didn’t go well with the majority of Indians who are deeply religious and suspicious of godless, westernised, brown sahibs telling them what to do. Our secularists were also statist, thinking that the state could reform society and religion, which is again arrogant and foolish for genuine reform must emerge from within society. Moreover, our secularists forgot that the truly religious are usually deeply secular. Thus, what has failed is not the noble philosophy of secularism but its practice in India, and in the meantime, intolerant fundamentalists have filled the vacuum.

Partially as a reaction to this failure a new generation of secularists have come to prominence in the past 15 years, and this is what Christopher Hitchens has in mind. The change began when Ashis Nandy first assaulted the old, orthodox, Nehruvian secularists with his critique of the European modernity in the mid-1980s. He promoted a return to tradition, wherein we might find the roots of a religious tolerance of a different kind, which might better resonate with the masses than the hegemonic language of Western secularism. A year later, T.N. Madan, the distinguished sociologist, wrote that secularism was having a problem in India because the realms of the sacred and secular continued to be deeply intertwined in Indian tradition. Secularism would only succeed in India if we understood it to mean inter-religious understanding and an equality of citizenship rights; he added that we should “take both religion and secularism seriously, and not reject the former as superstition and the latter as a mask for communalism and or more expediency.”

This attack did not go well with the Nehruvian secularists, who roundly chastised Nandy and Madan for feeding into the hands of the Hindu nationalists. In the early nineties, Partha Chatterjeee, the eminent social scientist at Columbia University, questioned if secularism was, in fact, the right way to stop Hindu majoritarianism. The Hindu right, he argued was perfectly comfortable with the institutional processes of the modern state, and the main issue was not ideology, he felt, but to protect the cultural rights of the minorities, and this could best be done through toleration “premised on autonomy and respect for persons…but made sensitive to the varying political salience of the institutional contexts.”

Neera Chandoke, the political scientist at JNU, responded by arguing that the concept of toleration was not enough and that minorities needed supportive structures in order to protect their cultural identity. The writer, Mukul Kesavan, and others rightly worry, however, that this sort of thinking will only delay the day when we might call ourselves equal and common citizens of one state. Rajeev Bhargava, the editor of an excellent volume of essays on Indian secularism, distinguishes between political and ethical secularism, and says that to exist in a more liveable polity, we as citizens need to agree to what is right rather than what is good. Let’s just be content with living together, rather than living together well (which is, of course, another project, and a valid one too.)

So, how do we begin to privatise religion? The answer, I think, lies with the deeply religious but moderate voices in each religion’s mainstream, who must come forward and proclaim once again that true religion has nothing to do with political life. The failure of our contemporary public life is that we do not hear these voices, but only hear the shrill voices of extremists at both ends. It was not always so. Earlier, we had sensible public figures who were also deeply religious. Mahatma Gandhi, Maulana Azad, Vivekananda used to speak with credibility on behalf of the vast majority of religiously minded Indians. Today, what we have is an unfortunate polarization between an influential and articulate minority of secularists and the vast majority of silent, religiously minded Indians. Neither takes the trouble to understand the other, and what we have as a result is a dialogue of the deaf. We need to hear the many reasonable voices of good sense within the Hindu and Muslim religious communities, surely, there must be a few courageous individuals who will speak up before their faith is totally hijacked by the terrorists!
Following Rajeev Bhargava, our secularists should learn from the American philosopher, John Rawls, and distinguish between public reason and secular reason. While public reason limits itself to political and civic principles, secular reason is broader and deals with a secular person’s moral doctrines and first philosophy. Our secularists need to be aware of this distinction and refrain from introducing secular values and secular reason into political debate. This is not easy to do, I realise, because liberal political values are intrinsically moral values and closely intertwined with moral doctrines.

Above all, let’s learn from our own Emperor Ashoka, who ruled when Hindus and Buddhists were fighting each other in mid-third century BCE, and who declared in his famous Edict XII, “The sects of other people deserve reverence…By thus acting, a man exalts his own sect, and at the same time does service to the sects of other people…He who disparages the sects of others…inflicts the severest injury on his own sect.” Here is a wonderful insight for our times: you damage your own religion when you malign another’s and secularism is not only good for governance but also for religion. Those who call for a Hindu nation not only harm the nation, they also damage Hinduism.

Private Secularism!

Outlook, 12 April, 2004

“The country with the most impressive and intelligent secularist movement is India,” wrote Christopher Hitchens in the respected journal, Daedalus, last summer. Hitchens is a public intellectual who is read and listened to with some admiration on both sides of the Atlantic. He did not explain, but I think what he meant is that Indian secularism has acquired many voices and it seems to be maturing.

It is sobering to remember, however, that Indian secularism was unable to stop the murderous carnage in Gujarat, which may have receded in public memory by the good cheer from a rapidly growing economy and an approaching election, but still remains a blot. There is a change, nevertheless, in the rhetoric of the political class this time. Amidst the usual scramble for seats and alliances there is healthy silence on religion. The turning point seems to have been the four state elections in November and December, and every politician who has been interviewed in the past eight weeks has talked about “bijlee, sadak, pani”. Our fondest hope, of course, is that these three words will replace “mandir, masjid, and mandal” in our political lexicon, and when that happens we may be looking at the most dramatic change in the Indian political mindset in decades. Clearly, it is too early to proclaim that victory.

Coming back to Indian secularism, it is important to ask why it has failed to stem the rising tide of intolerance in recent years? And the reason, I suspect, is that it is identified in the public mind with atheism. It is true that many of our most vocal secularists were Marxists and they did not value the religious life. In a well-meaning effort to limit religion to the private life they behaved as though all religious people were superstitious and stupid. This naturally didn’t go well with the majority of Indians who are deeply religious and suspicious of godless, westernised, brown sahibs telling them what to do. Our secularists were also statist, thinking that the state could reform society and religion, which is again arrogant and foolish for genuine reform must emerge from within society. Moreover, our secularists forgot that the truly religious are usually deeply secular. Thus, what has failed is not the noble philosophy of secularism but its practice in India, and in the meantime, intolerant fundamentalists have filled the vacuum.

Partially as a reaction to this failure a new generation of secularists have come to prominence in the past 15 years, and this is what Christopher Hitchens has in mind. The change began when Ashis Nandy first assaulted the old, orthodox, Nehruvian secularists with his critique of the European modernity in the mid-1980s. He promoted a return to tradition, wherein we might find the roots of a religious tolerance of a different kind, which might better resonate with the masses than the hegemonic language of Western secularism. A year later, T.N. Madan, the distinguished sociologist, wrote that secularism was having a problem in India because the realms of the sacred and secular continued to be deeply intertwined in Indian tradition. Secularism would only succeed in India if we understood it to mean inter-religious understanding and an equality of citizenship rights; he added that we should “take both religion and secularism seriously, and not reject the former as superstition and the latter as a mask for communalism and or more expediency.”

This attack did not go well with the Nehruvian secularists, who roundly chastised Nandy and Madan for feeding into the hands of the Hindu nationalists. In the early nineties, Partha Chatterjeee, the eminent social scientist at Columbia University, questioned if secularism was, in fact, the right way to stop Hindu majoritarianism. The Hindu right, he argued was perfectly comfortable with the institutional processes of the modern state, and the main issue was not ideology, he felt, but to protect the cultural rights of the minorities, and this could best be done through toleration “premised on autonomy and respect for persons…but made sensitive to the varying political salience of the institutional contexts.”

Neera Chandoke, the political scientist at JNU, responded by arguing that the concept of toleration was not enough and that minorities needed supportive structures in order to protect their cultural identity. The writer, Mukul Kesavan, and others rightly worry, however, that this sort of thinking will only delay the day when we might call ourselves equal and common citizens of one state. Rajeev Bhargava, the editor of an excellent volume of essays on Indian secularism, distinguishes between political and ethical secularism, and says that to exist in a more liveable polity, we as citizens need to agree to what is right rather than what is good. Let’s just be content with living together, rather than living together well (which is, of course, another project, and a valid one too.)

So, how do we begin to privatise religion? The answer, I think, lies with the deeply religious but moderate voices in each religion’s mainstream, who must come forward and proclaim once again that true religion has nothing to do with political life. The failure of our contemporary public life is that we do not hear these voices, but only hear the shrill voices of extremists at both ends. It was not always so. Earlier, we had sensible public figures who were also deeply religious. Mahatma Gandhi, Maulana Azad, Vivekananda used to speak with credibility on behalf of the vast majority of religiously minded Indians. Today, what we have is an unfortunate polarization between an influential and articulate minority of secularists and the vast majority of silent, religiously minded Indians. Neither takes the trouble to understand the other, and what we have as a result is a dialogue of the deaf. We need to hear the many reasonable voices of good sense within the Hindu and Muslim religious communities, surely, there must be a few courageous individuals who will speak up before their faith is totally hijacked by the terrorists!

Following Rajeev Bhargava, our secularists should learn from the American philosopher, John Rawls, and distinguish between public reason and secular reason. While public reason limits itself to political and civic principles, secular reason is broader and deals with a secular person’s moral doctrines and first philosophy. Our secularists need to be aware of this distinction and refrain from introducing secular values and secular reason into political debate. This is not easy to do, I realise, because liberal political values are intrinsically moral values and closely intertwined with moral doctrines.

Above all, let’s learn from our own Emperor Ashoka, who ruled when Hindus and Buddhists were fighting each other in mid-third century BCE, and who declared in his famous Edict XII, “The sects of other people deserve reverence…By thus acting, a man exalts his own sect, and at the same time does service to the sects of other people…He who disparages the sects of others…inflicts the severest injury on his own sect.” Here is a wonderful insight for our times: you damage your own religion when you malign another’s and secularism is not only good for governance but also for religion. Those who call for a Hindu nation not only harm the nation, they also damage Hinduism.

REMEMBERING MAULANA AZAD

Times of India, Apr 03, 2004

Many of my friends have stopped writing letters ever since the mobile phone came into their lives, but Asgar is not one of them. He continues to write long, elegant letters from Pune, and last week he sent me the following quote from Maulana Azad: ‘‘I am a Muslim and profoundly conscious of the fact that I have inherited Islam’s glorious tradition of the last fourteen hundred years. I am not prepared to lose even a small part of that legacy.

The history of and teachings of Islam, its arts and letters, its culture and civilisation are part of my wealth and it is my duty to cherish and guard them. But with all these feelings, I have another equally deep realisation born out of my life’s experience, which is strengthened and not hindered by the Islamic spirit. I am equally proud of the fact that I am an Indian, an essential part of the indivisible unity of the Indian nationhood, a vital factor in its total makeup, without which this noble edifice will remain incomplete.’’

Asgar is willing to lay a wager that most Indian Muslims feel these sentiments in their hearts. I won’t take the wager because Asgar is probably right. But the question is that if most Muslims feel this way why don’t we hear their sensible voices? Why do we only hear the strident rhetoric of the extremists in our press? It is the same with Hindus — we mainly hear the voices of the VHP and the Shiv Sena these days and not the moderate talk of the believers of Hinduism, the kind of talk we used to hear from Mahatma Gandhi during the freedom movement.

The Maulana’s message is that an Indian can be both a Muslim and an Indian at the same time, and being one does not exclude the other. The fundamentalist, on the other hand, believes that an

Islamic person can only have one Islamic identity, and everything flows from it. In India , over the past 50 years, our open Constitution has fostered the modern idea that we can have multiple identities. One can be an engineer, a mother, a cricket enthusiast, and an extremely religious person, all at the same time. This is what, in fact, it means to be modern. In contrast, the extremist, whether Muslim or Hindu, privileges his religious identity.

Asgar writes that one of the best kept secrets in India is the rise of a sizeable Muslim middle class. This has happened, he feels, because of the rapid growth of the Indian economy and rising literacy, particularly of girls. Hence, Indian Muslims are increasingly concerned with jobs and schools rather than fanatical ideologies, which also explains why terrorism has little appeal in our open society. The impact of cable television also contributes to their relaxed attitude.

Members of the new Muslim middle class, not unlike their Hindu counterparts, were living on the margin earlier, and are now seeking, desperately, an identity. They are overwhelmingly religious, and this is why it is so important for them to hear the message of Maulana Azad. No amount of ranting by Westernised secularists will be as effective as a secular message given by a true believer. The timing is also right, for we are in the midst of another election. The discourse of political candidates is inevitably on the

India of their dreams. Can we dare to hope for another Maulana Azad to come forward and tell us about his idea of India , and neutralise the poison that is continuously spread by extremists of both sides?

WHOSE INDIA IS IT, ANYWAY?

Times of India, Mar 20, 2004

‘India Shining’ is a nice expression, but it’s a pity that it’s got mixed up with politics. It is synonymous with India ’s economic success, and not surprisingly both the BJP and the Congress want to take the credit. The BJP claims its policies are responsible for this year’s fine performance; the Congress argues the economy grew faster under Narasimha Rao.

Both are right (and wrong). The truth is that India ’s economy has been shining for two decades, growing around 6 per cent a year, making it the fifth fastest in the world. After stagnating for centuries, our economy finally picked up after Independence . It grew 3.5 per cent a year between 1950 and 1980; but our population also grew 2.2 per cent; hence, the net affect on per capita income was 1.3 per cent (3.5 minus 2.2) — this is what we mournfully called the ‘Hindu rate of growth’. Things began to change with modest liberalisation in the eighties when annual GDP growth rose to 5.8 per cent while population growth remained at 2.1 per cent; thus, income per capita moved up to a more respectable 3.7 per cent.

This happy trend continued in the reforms decade of the nineties when growth averaged 6.2 per cent a year; moreover, population slowed to 1.9 per cent average; thus, per capita income rose by a decent 4.3 per cent a year.

If our per capita GDP had continued growing at the pre-1980 level, Indian incomes would have reached American capita income levels only by 2250. But now, if our economy continues to grow at the current 6 per cent rate, we will reach it by 2066. This is what ‘India Shining’ really means and it’s worth dying for: It is possible to believe that we shall soon be able to conquer India ’s age-old worry over want and hunger.

It is easier to explain why India was shining in the nineties. The brave reforms of Rao’s government opened our economy, dismantled controls, lowered tariffs and taxes and broke public sector monopolies. And the economy responded magnificently. But how does one explain the 1980s? And here I think we don’t give enough credit to Rajiv Gandhi.

He too opened the economy, albeit reticently and modestly — lowering marginal taxes and tariffs, removing the most irritating import restrictions, and liberalised industrial licensing through ‘broadbanding’. These modest efforts seem to have had a bigger impact than even the sweeping reforms of the 1990s. Bradford Delong, an American economist, wrestles with this puzzle in In Search of Prosperity: Analytic Narratives on Economic Growth, edited by Dani Rodrik of Harvard.

But the real miracle is that all the governments after Rao surprisingly continued the reforms, albeit very slowly. Yet, this elephant-like pace has made India one of the fastest growing major economies in the world. So, the lesson is that if you consistently reform in one direction in a democracy, it adds up. Since we haven’t had strong reformers at the top, like Thatcher or Deng, is it possible that the reform process has become institutionalised?

This ‘adding up’ over time has enhanced our national confidence, which makes ordinary people do extraordinary things, and which, to my mind, is central to the notion of ‘India Shining’. Thus, it is the Indian people who are shining as they have overcome all the obstacles put in their way — by all the vested interests of the Licence Raj. But for all Indians to shine, we must begin to seriously reform agriculture and education.

NOT JUST CHEAPER, BETTER

Times of India, Mar 06, 2004

I am on a visit to the United States , and I am appalled by the ugly sight of America turning protectionist over the migration of white-collar jobs to India . I can feel the rage on websites like yourjobisgoingtoindia.com, created by people who have recently lost their jobs.

John Kerry, the Democratic candidate for the presidency, calls American companies traitors who send jobs offshore to India . CNN’s respected nightly business programme greets every announcement of lost jobs as though it were a terrorist attack. Amidst this pressure, the American Senate has passed a bill forbidding the outsourcing of federal government contracts overseas. Many American states will probably follow suit.

The legislative action is not a serious problem, however, as it affects only government business, which is less than two per cent of potential US business. And in the end, I believe, market rationality will prevail in America . Just as Indian swadeshis could not stop Pizza Hut, and Americans could not stop Japanese cars in the 1980s, so protectionists will fail once again. As long as Indians are adding genuine value to American companies, economics will trump politics.

Meanwhile, this controversy has provided an unexpected bonus to India : it has made thousands of medium and small American companies suddenly aware of India . They are wondering if they shouldn’t also begin to save costs by sending their work to India . It would have cost millions in advertising dollars to achieve this level of awareness. Not surprisingly, this controversy has also lifted India ’s image. Americans, who used to think of India as a land of poverty and spirituality, have now begun to see Indians as competitors for jobs in the global marketplace. A competitor is someone you fear and admire.

American politicians talk about losing jobs because of ridiculously low Indian salaries — "at a fraction of the cost" is the fashionable phrase. But American companies tell a different story. "Sure, it is cheaper — that is why we offshored in the first place — but it is the quality that keeps us there," said a company executive to the NBC reporter. American companies report that offshoring not only saves costs, their customer service improves, and they can prove it with market research surveys.

This is the real challenge before Indian companies. In some cases the quality of Indian service has failed. So far, these were exceptions. But companies who want to succeed and grow in the global service economy must not only teach the right accent, they must inculcate an ethic of service. This is a different kind of education from what we are used to — it’s about caring for the customer.

A successful Indian call centre employee says that she learned to care about customers from her father’s lessons in karmayoga, which teaches how to diminish your ego and act without thinking of your reward. This idea is not as far out as it may sound: Indian BPO companies might create competitive advantage by training thousands of karmayogis in order to win in the global service economy.

It is easy to shrug off the political controversy in America as the rhetoric of democracy in an election year. But what is disgraceful is the assumption that Americans have a God-given right to middle class jobs. Americans have long preached the virtues of capitalism and free trade, but they are now fleeing the party because the shoe is beginning to pinch. They have to get used to the idea that capitalism and free trade works for Indians as well.