Sunday, May 04, 2014
Modi shouldn't forget Fareed and millions like him
Sunday, April 06, 2014
Secularism or growth? The choice is yours
Monday, March 31, 2014
चयन का सही आधार
Thursday, March 06, 2014
Elect to transform India with these eight big ideas
The world is divided between optimists and pessimists. Optimists believe that if the government invests in infrastructure, removes barriers facing entrepreneurs, jobs will multiply, the economy will grow, and the country will gradually turn middle class. Pessimists worry about problems— inequality, crony capitalism, degrading environment, etc. The problems are real but optimists focus on opportunities and lead nations to success. Let’s hope an optimist is elected in 2014 after a decade of UPA’s pessimism, and here are eight big ideas to help him/her restore India to health.
First, bring urgency to growth, rubbishing the false trade-off between growth and equity, which is the destructive legacy of the Left under UPA-I and of the national advisory council under UPA-II. To this end, give priority to investment in power and roads. Second, eliminate the nearly 70 clearances (yes 70, according to planning commission’s new manufacturing policy!) for starting a business, and fuse them into a 'single window clearance' achieved by our competitor nations. India’s notorious red tape is mainly responsible for our 134th rank in World Bank’s ‘Doing Business’ report. Every country protects its environment but none stops hundreds of projects in the process.
Third, complete the good work already done to make the Goods and Services Tax (GST) a reality and India a national market. GST will replace the present nightmare of indirect taxes—state sales taxes, central sales tax, excise duty, service tax, entry tax, etc. Since it will tax only the added value at each stage, it will discourage cash transactions as no one wants to lose credit for taxes already paid. Compliance will rise, tax revenues will swell, black market will diminish, and peoples’ morals will improve.
Fourth, create masses of formal jobs by reforming senseless labour laws while creating a labour welfare fund (with contributions from employers and government) to finance transitory unemployment and re-training. Companies have to survive in a downturn. When orders decline, either one cuts workers or goes bankrupt. Successful nations allow employers to ‘hire and fire’ but protect the laid off with a safety net. India’s labour laws insist on lifetime jobs. Hence, Indian companies avoid hiring ‘permanents’ and 90% workers have ended up as ‘informals’ without a safety net. Protect workers, not jobs.
More than half our people are stuck in agriculture and the fifth imperative is to create a second green revolution. To this end: A) Scrap ‘agricultural produce marketing committees’ (APMC) which function as wholesaler cartels in mandis. Opening markets will allow traders and farmers to buy and sell freely, making India into a national market. When large retailers buy from farmers, they will save food from rotting through cold-chains, raising returns to farmers and lowering prices to consumers. B) Discard the minimum support price system, which has created massive distortions—growing rice in water scarce Punjab!— and destroyed the entrepreneurial dynamism of the Indian farmer. C) Reverse UPA government’s damaging decision against genetically modified crops. Recall, Bt cotton doubled India’s cotton production in five years and made us the world’s largest exporter. D) Have a predictable export-import regime for farm products. Stop the present ‘switch on, switch off’ policy which harms the farmer and brings disrepute to India. E) Remove the irrational conditions that are preventing global retailers from entering India. And BJP must get over its unreasonable opposition to FDI in retail. In those states where FDI in retail is banned, consumers will lose the opportunity for lower prices, farmers will lose prospect of higher returns, a third to half of fresh produce will continue to rot, and millions of unemployed youth will be denied jobs and careers in the modern retail economy.
Sixth, sell off hotels, airlines, and all uncompetitive public sector enterprises, including banks, which have been bleeding the country for generations. Especially, break the monopoly of Coal India, which has made India--sitting on the world’s third largest reserves--the largest coal importer in the world. Seventh, abolish all subsidies and replace them by cash transfers into the bank account of the female head of the household via mobile banking. NREGA, PDS, Food Corporation and all such leaky institutions must be phased out. As large sums are involved, employ the world’s best practices to determine who is a deserving beneficiary. Finally, get rid of license raj in education to meet the insatiable demand for good schools.
This is a big agenda but it is achievable by an optimist leader, who is also competent in execution. Such a leader will not only declare this policy agenda but will monitor progress, get into the messy details of execution, not to micro-manage but to encourage the implementers of the policy, and clear barriers. He will thus give the those who have to execute the policies—the bureaucracy--a sense of purpose and this will propel India to high growth, a demographic dividend, and to achieve its potential.
Sunday Times of India, March 2, 2014
Thursday, February 27, 2014
अमर प्रेम के भ्रम से उपजी त्रासदी
Sunday, February 02, 2014
Modern marriages aren’t made in heaven
The standard narrative in such cases is to blame the unfaithful man, calling him 'scumbag’ and 'cheat'. There is another narrative, however, which holds the institution of 'love marriage' equally guilty. Modern marriage combines three idealistic ideas — love, sex, and family — which make distinctive but unreasonable demands on a couple. To raise a family was, of course, the original idea behind marriage. To it has been added the second ideal of romantic love; and a third — that one's partner should also be a great performer in bed.
We have a sensible institution in India called 'arranged marriage' which we contrast with 'love marriage'. Throughout human history arranged marriages were the norm in most societies. People got married to raise a family. In early 19th century, with the rise of the middle-classes, 'love marriage' emerged in Europe. It coincided with the Enlightenment, which incubated 'modern' ideas such as liberty, equality, individualism and secularism that quickly swept the world. These liberal ideas, along with 'love marriage', came to India on the coat tails of the British Raj. Initially it infected a tiny westernized minority but today it has permeated a larger middle-class. Most Indians received their ideal of 'love marriage' unreliably from Bollywood, which may explain why good old fashioned arranged marriage is still well and alive in India.
In pre-modern times, men satisfied the three needs via three different individuals, according to the philosopher Alain de Botton's sensitively male perspective. A wife made a home and children; a lover fulfilled one's romantic needs clandestinely ; and an accomplished prostitute or courtesan was always there for great sex. This division of labour served men well. Given a chance, I expect, my grandfather would have lived thus. But today, we make impossible demands on a single person to meet romantic, sexual and familial needs. She feels huge pressure to fulfil all three roles plus make a career outside the home. What she mostly wants is a love marriage with good and faithful husband.
The insane ambition of modern love marriage to satisfy so many needs places a huge burden and this might also help to explain the tragedies of Sunanda Pushkar and Valerie Treirweiler. It was certainly behind the tragedies that befell the heroines of two of my favourite novels, Madame Bovary and Anna Karenina. Both women had enviable financial security but also loveless marriages. But both had modern, romantic expectations from life, and dared to fulfil them outside marriage. Society did not forgive their illicit love affairs and their lives ended in tragic suicides.
Human beings may have become modern and liberal but society remains conservative. Who has not been tempted by illicit love? An affair with a beautiful stranger is a thrilling prospect, especially after years of raising children. There is also fear of death if one is middle-aged — life is passing and when will another chance come? But these exhilarating thoughts have to be weighed against hurting another human being. One must always empathize with the victim of adultery. Even the Kamasutra admits that dharma trumps kama.
Does one betray another human being or oneself ? Either way one loses. If one decides to have a fling, one betrays a spouse and puts one's love at risk. If one abstains from temptation, one risks becoming stale and repressed. If one keeps the affair secret, one becomes inauthentic. Confessing to it brings needless pain. If one places one's children's interest above one's own, one is disappointed when they leave. If one puts one's own interest above theirs, one earns their unending resentment. This, alas, is the unhappy, melancholic human condition.
Sunday, January 26, 2014
Aam Aadmi is not the reforming party India needs, Financial Times,January 26, 2014
For the past six weeks Indians have been mesmerised by the stunning success of the Aam Aadmi party, which has propelled its 45-year-old activist leader, Arvind Kejriwal, to chief minister of Delhi. The AAP – or Common Man party – is only a year old but its popularity is challenging the supremacy of India’s two main political parties, the left-leaning Congress and the Hindu nationalist Bharatiya Janata party.
Saturday, January 25, 2014
आप से ज्यादा उम्मीद नहीं
Sunday, January 19, 2014
Inflation, not corruption, will be the key issue in LS polls
Economists have struggled to understand why India’s consumer prices have been rising 10% a year for the past five years when prices in the world have been reasonably steady. Even in poor, emerging economies, prices have risen at half the rate as India’s. Inflation is complex but it has become clear that India’s inflation is the result of the same bad policies that brought down our growth. Huge government spending without commensurate production has meant that too much money has been chasing too few goods.
UPA II put massive funds into villagers’ pockets. Rural wages thus rose an unprecedented 15% a year in the last five years. Farmers received a bonanza — they got high minimum support prices for grains besides fertilizer and energy subsidies plus loan waivers. Rising wages are a good thing when they reflect climbing demand in a prospering economy. To an extent, this is true of India, which experienced a ‘golden age’ of growth and prosperity till 2011. These rising incomes changed the aam family’s food habits — eating fewer cereals and more protein, fruits and vegetables. But escalating rural wages have also been the result of ‘make work’ jobs of NREGA, which did not create productive assets. Had the same money been invested in factories, roads and power plants, prices would not have risen to this extent.
The obvious answer to inflation is to revive economic growth. To its credit, the government has realized its mistake, and is desperately trying to approve projects that have been stuck for years in red and green tape. But investments take time to translate into jobs and growth. There are quicker ways to tame food inflation fortunately. One of them is to scrap ‘agricultural produce marketing committees’ (APMC), which function as wholesaler cartels in mandis rather than protecting small farmers. Like most of our bad economic ideas, this is a hangover from Indira Gandhi’s socialist days.
Freeing wholesale markets will bring competition as traders and farmers are able to buy and sell freely. International retailers will be able to buy directly from farmers, and with their formidable cold-chains, they will also save food from rotting in the fields and mandis. This will result in higher returns to farmers and also lower prices to consumers as supermarkets will pass on the savings from bypassing middlemen. Economists have been urging the scrapping of APMCs for years. Rahul Gandhi has now discovered this idea, and since he has put his weight behind it, it might get implemented in the Congress-ruled states. Powerful local politicians, however, control APMCs — let’s watch if Rahul Gandhi has it in him to take on this powerful vested interest.
The Aam Aadmi Party’s (AAP) first action should have been to scrap the APMC in Azadpur Mandi near Delhi. It would have brought quick relief to consumers by curbing prices of fruits and vegetables. But it did the opposite. AAP scrapped foreign investment in supermarkets, denying aam admi the potential for lower prices. It did not realize that around the world it is the aam admi who shops in supermarkets because of lower prices. Besides, AAP’s aspiring supporters would any day prefer to work in modern supermarkets rather than in kirana stores.
Of our three main political parties, only the Congress seems to have understood that inflation can be controlled by APMC reform and foreign investment in supermarkets. The BJP has chosen the trader against the aam admi and opposes FDI in retail. The AAP’s leadership, oddly enough, does not seem to be in sync with the aspirations of its followers. It is trapped in old ‘povertarian’ ideas of the Old Left which ensured that India remained an underachiever. Given the crucial role that prices will play in the coming election, can the Congress convert its advantage into votes?
Friday, December 13, 2013
Book Review: 'An Uncertain Glory' by Jean Drèze and Amartya Sen , 'Transforming India' by Sumantra Bose, The Wall Street Journal, December 13, 2013
Part of what led to this change of course in India was that reformers didn't sell the country's liberal reforms to the people themselves, as Margaret Thatcher did in the U.K. in the 1980s, for example. Hence the broad population got the impression that the free market helps the rich alone and not the common man. India ended up reforming in a furtive or incomplete way because no political party had bothered to explain the difference between being "pro-market" and "pro-business." To be pro-market is to believe in competition, which helps keep prices low, raises the quality of products, and leads to a "rules-based capitalism" and economic growth, a state of affairs that helps everyone, not just the rich. (This lesson and others were brilliantly explained by Jagdish Bhagwati and Arvind Panagariya in "Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries," published earlier this year.) To be merely pro-business, by contrast, means leaving the control of economic decisions with politicians and officials, an arrangement that easily leads to "crony capitalism."
Sunday, December 08, 2013
Desire or dharma: Dilemma that is as old as the vedas
Sunday, November 10, 2013
Our bullion-dollar troubles can end if India goes for gold
India absorbs about a quarter of the world’s gold, and the finance minister is quite right in wanting to limit its import. A recurring theme of world history is the constant loss of Western gold and silver to India. Two thousand years ago Roman senators grumbled that their women used too many Indian spices, silks and fine cottons, and India was draining the Roman empire of bullion. Pliny the Elder called India the ‘sink of the world’s precious metal’ when he heard that a Roman ship touched an Indian port daily.
The Portuguese similarly complained in the 16th century that their hard won gold and silver from South America was being lost to India. The British Parliament echoed this refrain in the 17th century. But India kept sucking Western bullion because Western consumers hankered after Indian luxuries and Indians were not interested in Western goods. As books had to be balanced, they were balanced with bullion. Only Britain’s Industrial Revolution reversed the flow in the 19th century when Indians finally found something they wanted from the West—cheap, durable cottons from the mills of Lancashire — as handlooms worldwide gave way to machine-made cloth.
Soon after Independence, India’s leaders forgot their grand trading heritage and closed our economy in the mistaken belief that trade had impoverished India. Touting the false mantra of ‘self-reliance’, they adopted an import-substituting path, and India lost out in the great trading boom after World War II. India’s share of world trade declined from 2.2% in 1947 to 0.5% in 1990. It was only after 1991 that India regained its historic pre-eminence in the world economy.
Given the one-way flow of gold over the centuries, a staggering amount has accumulated in India. The World Gold Council estimates it to be over 20,000 tonnes, worth $1.1 trillion or half of India’s GDP. For years economists have wanted to use this unproductive asset for productive investment. And happily, the process has begun. Gold loans, bonds, and deposit schemes are all steps in the right direction. In these schemes owners of gold earn interest by depositing it with banks, which in turn releases part of it in the market, thus reducing India’s demand for imported gold.
The bigger prize is to convince temples to do the right thing and deposit their vast gold stocks in banks and earn interest. Jamal Mecklai, the currency expert, had suggested earlier this year that if Tirupati temple were to deposit a third of its holdings at two per cent interest, it could earn Rs 3,000 crore a year. Tirupati did just that in May, beginning with a 2,250-kg deposit with the State Bank of India. This is a triumph! If major temples follow suit, gold will soon flood the domestic market, imports will stop, the global gold price will fall and the rupee will strengthen.
But this government is shy to go for an all out public campaign. It worries about people’s sentiments and of the opposition playing the religious card. Gold is, after all stridhana, ‘woman’s wealth’. Although a daughter now legally inherits her share of family property, families still insist on giving her inheritance at marriage as gold jewellery. But young Indians today are sensible and they will buy the idea that an inflation-proof gold linked certificate exchangeable for gold is the hip thing to receive at marriage rather than a bunch of clunky sets. So go for it, Reserve Bank. The road to India’s economic future may well be paved with gold.
Sunday, October 13, 2013
Secularism or development: Making the right choice
The Congress party’s starting point is an immediate and massive attack on poverty. It focuses on spending on social welfare and on subsidies to the poor. Its assumption is that a better-fed population will be more productive, and this will lead to more inclusive growth. Modi’s BJP, on the other hand, believes in direct measures to induce growth. Some of these are investment in power, roads and ports, cutting red tape, and encouraging entrepreneurs to invest. The resulting investment creates jobs, raises peoples’ incomes, and brings in higher taxes for the state. The higher taxes, in turn, provide the resources to attack poverty, illiteracy and ill health.
Obviously, a successful nation needs both growth and equity in the end but resources are limited and governments are forced to prioritize. The right of centre Modi-led BJP gives priority to economic growth whereas the left of centre Congress gives priority to equity and redistribution of growth. This choice was underlined recently in the much-publicized dispute between India’s two global superstar economists, Amartya Sen and Jagdish Bhagwati.
A second choice before voters is between competing styles of leadership. Modi is a strong, determined leader, who leads from the front while Rahul is shy, reticent, and leads from behind. Rahul is more likeable and compassionate; Modi is dictatorial but with his obsession with implementation, he is more likely to get the job done. Both are reasonably intelligent, but we make a mistake in overvaluing intelligence. Our current prime minister is hugely intelligent but he has failed to deliver results because he lacks determination, which in the end is more important in delivering results. Modi, on the other hand, has shown willpower and purposiveness in trying to root out corruption in Gujarat. Incidentally, business leaders make the same mistake in over-valuing intelligence when they recruit new employees. It is always better to hire for attitude and train employees in skills.
In the past two weeks, both leaders have made welcome moves to overcome their personality deficits. Rahul showed determination in overturning the Congress’ immoral ordinance on criminals in politics; Modi showed concern for the poor and a secular mind-set when he declared “shauchalya before devalya”, toilets before temples.
A third choice before the voter concerns the important issues of secularism and corruption. The BJP is a Hindu nationalist party and is inclined to see the world through majoritarian eyes. The Congress professes to be secular but its secularism often amounts to appeasing minorities in order to win votes. Still, a voter deeply wedded to secularism, will choose Congress over the BJP. When it comes to corruption, the Congress has broken all records and is seen by many to be profoundly corrupt. The BJP too has skeletons in its closet but the voter is likely to be influenced by Modi’s cleaner record against corruption in Gujarat. Thus, there is a third polarization — does one vote for a nonsecular BJP or a corrupt Congress party?
Sharp choices bring clarity to decision making for the confused, middle of the road voter, someone like me. Ultimately it amounts to this: Should one risk India’s precious secular and collaborative traditions for the sake of good governance and prosperity? But by choosing secularism over development, one might deprive millions of young Indians a chance to realise their capabilities, to rise above their lot into the middle class, and the nation a demographic dividend. It is an unappetising choice. It would be easier if Modi were more secular and compassionate, or if Rahul Gandhi showed more determination, gave more priority to growth, and was less tolerant of corruption.
Alas, it is not a perfect world and the best one can hope is to choose the less worse of the two candidates and call it a “wise choice”.
Sunday, September 15, 2013
Long-term prosperity vs short-term populism
Sunday, July 14, 2013
Just one hour a week is the answer to our political discontent
The new food law comes at a gigantic cost to a nation that cannot afford it. It will not solve the problem, which is malnutrition and not hunger. But it will undoubtedly result in a colossal scam when a large part of the grain mountain is diverted into the black market. Instead of improving delivery of the current PDS system, we have burdened a weak, corrupt institution with a massive new mandate. When institutions cannot implement existing laws, it is madness to create new ones. It only widens the gap between aspiration and performance, damages the nation’s moral character, and undermines the trust between rulers and the ruled.
Anna Hazare’s movement has proven that crowds may awaken people but they do not achieve the goal, and Arvind Kejriwal is discovering that it is not easy to turn a protest movement into a political party. What then is the answer to our democratic discontent? The key lies with decent individuals to move out of the dogged pursuit of material comfort and engage with politics. The right place to begin is one’s neighbourhood. When public spirited individuals engage in the community they help create new ‘habits of the heart’ in society. This was the great insight of Alexis de Tocqueville who wrote, Democracy in America, perhaps the best book on democracy. What impressed Tocqueville about Americans almost 200 years ago is that they were ‘joiners’ and engaged in volunteer activities for a few hours a week. By joining local clubs and social activities, they connected with neighbours. And when neighbours meet, what do they talk about? They discuss the condition of the roads, the schools, garbage collection and so on. Thus, civic life and ‘citizen’ are born.
Between 1947 and 1949 a diverse assembly of deeply principled men and women worked selflessly to create the concept of ‘citizen’ through a fine Constitution. It was one of the great moments in our history. India was blessed with an amazing first generation of leaders who thought of politics as the noblest of endeavours. In the Mahabharata, Bhishma returned from his deathbed to give the same message to Yudhishthira, who wanted to renounce the throne after the bloody war at Kurukshetra. Sixty five years after independence the nobility of politics has been replaced by criminality. The best spurn politics, leaving it to the worst. If decent men and women do not take the plunge, criminals will take over entirely.
What inhibits decent people from entering politics in India is black money and political dynasties. A talented, high minded person will not join a party without inner democracy where merit is not rewarded. Fortunately, a new generation of political leaders has begun to realize that a young India is waking up politically and it will not tolerate the old sycophantic politics of ‘rishwat’ and ‘sifarish’. Political parties will have to learn to value talent the way India’s companies’ do, and a party with inner democracy and meritocracy is bound to gain competitive advantage in the end. Dynasties are thus warned.
All of us struggle to give meaning to our lives. The standard Indian solution is to turn inwards and seek liberation from human bondage through meditation. But there also exists in our tradition the path of action, karma yoga, which means to leave the world a little better than we found it. The answer to our democratic discontent is thus to dive into one’s neighbourhood and assume the duties of a citizen. Don’t worry about the corruption of 2G, Commonwealth Games, or Coalgate. Act instead against the sleaze in our locality. Just one hour a week in the neighbourhood is the best way to reciprocate the compliment that our founding fathers paid us.
