Friday, 17 November 2006

Whose Security?

So little Anant Gupta is back with his family, after a three-day ordeal with kidnappers. All’s well that ends well and all that, but in the shock over the abduction and joy over the return, there’s something that’s getting overlooked.
Just a day before Anant was kidnapped, the government decided to provide Z category security to the grandchildren of the Prime Minister, Sonia Gandhi and Atal Behari Vajpayee.
Apparently there were reports of the Jaish-e-Mohammed (the Pakistan based militant group) planning to abduct the relatives of these VIPs and demand the release of some militants. The suspicion, however, refuses to go away that this is just a charade to extend security to Sonia’s grandchildren.
But even if that suspicion were not there, there’s still something disturbing. Sure, these people are important national leaders and, by that token, their relatives are in peril and deserve protection from the state. But what of Anant Gupta and countless others who are kidnapped across the country, especially in the badlands of Bihar and Uttar Pradesh? There’s a thriving kidnapping industry in the country that just can’t be controlled.
The children of each one of us is vulnerable. And taxpayers’ money is used to protect the children of a handful of VVIPs? It just doesn’t seem right.
People are supposed to pay taxes because the state provides certain services. Is it too much for tax payers to demand basic security and maintenance of law and order, which is the primary responsibility of the state? Why should that basic right be restricted to the children of just a few?
Forget the children of these three VVIPs, what about the crores that are spent on providing security to all kinds of people, many of them venal politicians under whose benign protection the kidnapping industry flourishes?
The inadequate police force across the country is stretched to its limits but never at the cost of security to all kinds of so-called VIPs. It is the ordinary people who have to pay the price.
This has to end.

Rejecting mindless pacifiers

There were two news items today on the Haj subsidy – one heartening and one depressing.
First, the depressing one. The government has decided to increase the subsidy cover for Haj pilgrims which will, in effect, allow 10,000 more Muslims to be covered. This is clearly a ploy ahead of the Uttar Pradesh elections.
The heartening news. The Indian Express has reported that several Muslim religious scholars and leaders have criticized the subsidy and asked for the money (Rs 180 crore at last count) to be used for schools, healthcare and other basic infrastructure for the community’s welfare. They’ve termed the subsidy un-Islamic because according to the Quran, only those Muslims who can afford to go on Haj should do so.
Now there can be issues whether the state should spend money on the uplift of certain communities (religious or caste-based), but clearly there is a realization among Muslims that this subsidy is ridiculous and does not help the community in any way. That it is nothing but votebank politics and is only creating resentment against them. Maybe that realization was already there but what is positive is that they are now coming out openly criticising it.
What is significant is that this criticism is not coming from the sophisticated liberal Muslims – the Mushirul Hasans, Shabana Azmis, Javed Akhtars and their like – but from people like Maulana Mehmood Madani, general secretary of the Jamiat-e-Ulema-e-Hind, S Q R Ilyas, convenor of the Babri Masjid Committee and a senior member of the All India Personal Law Board, Mohammad Owais, CEO of the Haj Committee and Mufti Nazeer-ud-din, who runs the Darul Aloom Rehimiya, which is supposed to be Kashmir’s biggest seminary. These people probably have more clout with the community than the seminar circuit Muslims. Come to think of it, one has never heard these Muslims ever raising this point?
It is time now for other Muslims to take up this line of argument and generate awareness in the community that Haj subsidies, holidays for Friday prayers and bans on books is not what will help uplift it. Those will only continue to keep it in physical and social ghettos. Rs 180 crore is a lot of money. It shouldn’t be wasted on mindless sops.

Friday, 27 October 2006

Muslim appeasement a myth?

The Indian Express has got figures given to the high level committee on the social, educational and economic status of Muslims headed by Justice Rajinder Sachar. It only confirms what is common knowledge - that Muslims are poorly underrepresented in the job market. Few would deny or dispute these findings.
But this is going to provide yet another opportunity by the left-liberals to rubbish the criticism about appeasement of Muslims.
It has already started. The Express report quotes `a senior member of the Sachar committee' as saying "if this data is any kind of a benchmark, this not only nails the myth of appeasement, it also shows that the politics of batting for Muslims is limited to providing security and safety, and it has been unable to go beyond simply protecting their civil right to life."
So that old line is back - if Muslims were being appeased, could their socio-economic status be so pathetic?
I have always found this line specious, at best. In a post titled Hum to anything karega posted on 5 March 2005, I had cited several instances of ridiculous sops in the name of making Muslims feel less alienated. (
To recap,

# The Mulayam Singh Yadav government declaring Friday a half day in UP schools to enable Muslim students to offer Friday prayers. Way back in the 1980s one government in Kerala had done something similar. Yadav was compelled to retract the step.

# The subsidy for Haj (which is not given in the most Islamic of Islamic nations)

# The Muslim Women's Bill

# The banning of Satanic Verses

The list could go on. If this isn't appeasement, what is?
Sure, the condition of economically backward Muslims is as bad as many from the scheduled castes and tribes. But that is because successive governments have focused on providing meaningless pacifiers and offering lip sympathy to the community. More often than not, these concessions are more to pander to communal parties and leaders who have a vested interest in keeping their community backward. So Muslims have been the victims of tokenism, instead of genuine efforts to improve their lot.
But that cannot airbrush the above-mentioned concessions away from the picture. These do fall into the definition of appeasement and there's no getting away from that.
Isn't it time for liberal Muslims to stand up and say, stop these stupid sops and help the community prosper? Isn't it time for them to protest every time any government gives in to the retrograde demands of the Muslim clergy and other self-serving politicians and refuse such token gestures? The burden of breaking `the myth of appeasement' lies with the Muslim community.

Thursday, 12 October 2006

Muzzling the media

Attempts to muzzle the media are back. What else can one expect from a Congress-led government supported by the Left.
I reproduce below a letter from the media advisor to the PM, Sanjaya Baru, a letter from the director, public relations attached to the PMO and a protest letter written by a spunky journalist, Jal Khambatta.
Going through Baru's letter, it appears that the behaviour of some journalists has sparked off the action of limiting coverage of Prime Minister's functions to only accredited journalists.
Without defending journalists abusing officials, staging dharnas and breaking security rules (I have myself been appalled at the behaviour of many of my tribe), let me explain why I (and Jal) see this letter as an attempt to gag the press.
Firstly, Baru's statement that the PMO will decide which meetings the press will cover smacks of arbitrariness. How can he decide which meeting will yield a news story for the media? What will end up happening is that Baru will later call select journalists who he is sure will toe his line and give them private briefings briefings with the PMO's own angle. It is a sad comment on journalism that this is happening and some of the people indulging in this are very senior journalists.
Then look at the warning that those who engage in unruly behaviour will have their accreditation cancelled. Such a provision exists anyway and often is not used because people complain to editors and the concerned persons are pulled up. In such a situation for Baru to seek opinion on how to deal with unruly journalists is nothing but a threat.
Accreditation rules don't allow newspapers less than a year old and journalists with less than a certain number of years to be accredited. So all such newspapers and journalists will be barred from covering the PMO, making it easier for the PMO to `manage' the media. In any case, mostly it is accredited journalists alone who cover PMO. And often the unruly behaviour is by them. So what is Baru trying to do, really?
I think this letter has less to do with some unruly incidents and more to do with the security breach that happened when two young girls and one boy drove into the PM's house complex. The PMO - especially Baru - tried to downplay it but the whole incident would never have come to light if the electronic media had not been present there to cover a cabinet meeting. Now briefings of the cabinet meeting are held at the office of the Press Information Bureau, some kms away from the PM's residence. The journalists were hanging around there to get sound bytes from departing ministers. And that's how they got not just visuals of these youngsters driving up to the reception area but also of the utter laxness on the part of the security forces. Now, clearly, this is not something that will be a `news story for the media' in Baru's definition. In fact, his proposed action will effectively ensure that the media doesn't get to know of any such incidents which could occur.
The other reason I think this smacks of muzzling is that this is the second time Baru has written to editors in such a high handed way.
In the wake of the dizzying market rise and the sudden crash last year, one irresponsible television channel put out the news that the PMO and the Intelligence Bureau etc were holding a meeting on the market behaviour. Most newspapers swallowed this and wrote about it. Turned out such a meeting never happened. Bad and irresponsible journalism and worthy of condemnation. It was an incident that should have journalists and their bosses introspecting on the way they work.
But what did Baru do? He shot of a letter to editors hectoring them on what happened and asking them to take action against the journalists concerned and - hold your breath - report back to the PMO on the action taken!
Well, going by that, this letter is very, very mild!

Dr. Sanjaya Baru D.O. No. 970/MA/G/2006
Tel 23016920 New Delhi - 110 011
August 24,2006
Dear Editor,
I am sure it must have come to your attention that we have once again had a couple of unfortunate incidents in the recent past at the Prime Minister's House involving the media.
I am writing this letter to you to seek your cooperation in a matter that I, as a media professional myself, feel we should revolve in the best interests of both the media and the Prime Minister.
You will agree with me that the Prime Minister has several meetings which do not necessarily yield a news story for the media. Whenever there is a meeting or an event of interest to the media, my office and the PIB normally ensure that the media is kept informed.
It is as much in our interests as it is in yours to secure media coverage for Prime Minister's programmes. Hence, you will appreciate that on occasions when the media is informed that there will be no statement from the Prime Minister's Office with respect to any meeting that the Prime Minister may have, it would be inappropriate for journalists to protest/sit in dharna and demand a statement or a byte for TV.
I, therefore, request you to tell your colleague who has been assigned to cover the Prime Minister's Office that it would not be regarded as good professional conduct to stage demonstrations in pursuit of news either at Prime Minister's Office (PMO) or at Prime Minister's House (PMH).
May I also request you to draw the attention of your colleagues to the imperatives of security at PMO and PMH and the need to be courteous in their behaviour with officials and staff to Special Protection Group and Delhi Police. The security personnel are only doing their job just as our media colleagues are also doing their job.
I have issued instructions that henceforth only PIB accredited media personnel will be permitted access to the media stand at PMO and PMH.
I request you to ensure that your reporting and audio-visual staff covering PMO and PMH have PIB accreditation.
I would like your advice on what action you feel, as an editor and senior colleague, we should take when journalists misbehave and use foul language when dealing with PMO/PIB staff and security officials.
Do you think it is fair to seek their transfer out of the PMO beat or withdraw their accreditation? Or, would you prefer that I merely report such instances to the editor concerned in the hope that the organization to which the journalist belongs, will take necessary disciplinary action. I will be grateful to you for your considered opinion.
Finally, let me add that I am fully aware of the physical stress reporters and cameramen undergo while waiting for a briefing outside PMO/PMH.
I have tried to improve facilities, especially at RCR. We are in the process of securing sanction for a media room at RCR that will provide some basic amenities and facilities.
I hope you will appreciate my concerns in writing this letter to you.
With kind regards,
Yours sincerely,
(Sanjaya Baru)

28 August 2006
All correspondents covering PM Beat
Dear Sir/Madam,
As is the practice for coverages in all Ministries, the Prime Minister's Office has decided that henceforth media persons with PIB accreditation alone be permitted to cover the programmes of the Prime Minister both at South Block and at 7 Race Course Road. This also includes the media stand within the precincts of 7 Race Course Road and the Car Park area at the South Block. This will be in force with effect from 1st September, 2006.
2. You may like to bring this to the notice of all concerned persons in your organization.
3. Further communication regarding enhancement of accreditation quota will follow separately.
Y.S.R. Murthy, DPR[PM]
PIB, 1st floor, A wing, Shastri Bhawan
Tel. 23381211; 9868111273
2338 4768; 9873079681 [Dhiraj, IO-PM mobilie]; 2338 3203 [fax]

Jal Khambata replies to this email on 28 August
Please be advised that this attempt to gag the Media would not get better publicity to the PM. The media persons gather at the two places not only for official version but also to catch those coming to meet PM for their comments.
Your media alert and the letter of the PM's Media Advisor to editors last week smacks of the Emergency days when we were allowed to publish nothing except what is officially cleared by the Censor. 2006 is, however, not 1976.
what a poor attempt to get positive publicity to PM by allowing only accredited journalists and that too only outside PMO and PMH and not inside PMO and threatening to cancel their accreditation if they do not sing the official tunes. Accreditations are sought for entry into ministries for coverage and not for coverage from outside and hence,may I please point out that it is wrong to say that it is the practice for coverages in all ministries that you now want to introduce in PMO.
As a seasoned PR executive, you may please like to advise the PMO, and rightly so, to desist from this kind of gag orders.
With thanks and regards,
Jal Khambata

Y.S.R Murthy replies on 28 August 2006, by email:
Dear Jal Khambata,
I am sorry that you have not understood it in the correct perspective. For entry into any Govt. building you require security cleared PIB accrediation card.
Media freedom does not entitle one to sit on a dharna at high security places and obstruct passage of Ministers etc, as happened twice in the recent past. I do not share some of the sentiments expressed by you.
We can discuss it over in person. If you happen to pass by Shastri Bhavan, it will be a pleasure to meet with you and clarify a few aspects.

To which Jal replies:
Dear Mr Murthy:
Journalists will always remain watchdogs irrespective of howsoever you try to banish inconvenient ones. They will certainly block ministers and officials to extract information. Would you suggest that the kind of restrictions Dr Sanjaya Baru is trying to slap tally with the Right to Information? If I am not wrong, almost all journalists involved in the two incidents you refer to were the security-cleared accredited PIB card holders. Threat to cancel accreditations of inconvenient journalists or ask editors to remove them from the PM's beat will only boomrang.
Today, journalists in a chorus protested to Congress spokesman Abhishek Manu Singhavi at the AICC Press briefing about Dr Baru's letter. Here is also a statement by Delhi Union of Journalists for your ready reference. I believe Editors' Guild and other professional bodies may also follow suit.
With thanks and regards,

And on 31 August 2006 this is what happens (Jal files a story):
From Our Delhi Bureau
NEW DELHI: Journalists turning up at the Prime Minister's House Thursday evening on official invitation to attend a book release by Dr Manmohan Singh had the first taste of the new game rules for the PM's coverage set by his media advisor Dr Sanjaya Baru.
They were thrown out, though with due courtesy, by the security personnel as soon as the function was over, not allowed to even have tea and snacks served to guests after the function.
Every such occasion gives an opportunity to journos to have a chat with the Prime Minister but the security personnel firmly and yet politely told them that they cannot go anywhere near him. The function over, you have no reason to remain on the premises,a senior officerof the Special Protection Group (SPG) that provides security to the PM affirmed, pointing out that the security had orders to banish all journalists from the PM's House immediately.
The gathered guest at Panchvati hall in the PM's House for the release of noted constitutional lawyer Fali S Nariman's book titled "India's Legal System : Can it be Saved?" looked askance as the SPG personnel cordoned off the Media persons and drew them out of the gate.
Dr Sanjaya Baru looked at from a distance just as some journalists pleaded with security men that they had come on invite and not barged in the premises to be dealt in such a manner.
They,however, quietly left without picking up any fight as if sobered by Dr Sanjaya Baru's threat to cancel their PIB (Press Information Bureau) accreditation and get inconvenient correspondents removed from the PM's beat.
Two, three journalists, however, did protest at the security personnel, showing all courtesy in pushing them out, that they always get opportunity to approach the Prime Minister and ask some questions after such functions. You are doing your duty but let us also allow us to do our duty, they pleaded but in vain. "Sorry, you cannot meet him.You cannot even stay here any longer," a senior officer responded.

Sunday, 27 August 2006

Profiling and labelling

It was heartening to see, on this Sunday, columnists in various newspapers - Vir Sanghvi in Hindustan Times, Gautam Adhikari and R Jagannathan in DNA rubbish the hysteria over `racial profiling' in the west in the wake of 12 Indians sparking off panic on the Northwest Airlines flight from Amsterdam to Bombay.

Jaggi very rightly pointed out that the whole problem arose because of the boorish behaviour of Indians, something all of us are familiar with. There are many who will argue that all they were doing is stretching themselves out, switching seats, exchanging new cellphones they had bought etc. so what's the big deal?

The big deal was that they refused to listen to warnings by the flight staff. It's something all of us are familiar with. But what is normal in India is not normal in other parts of the world and certainly not in an atmosphere of heightened and perfectly justified nervousness.

Gautam pulled no punches when he called the Indian reaction to the Dutch action "infantile". Vir Sanghvi felt the action was racist but very rightly lambasted Indian double standards, reminding us about how at one time every Sikh was seen as a potential terrorist. Remember how for many years there was no Sikh in the Prime Minister's security after Indira Gandhi's assassination? He also points to how innocent Muslims are harassed in a similar fashion now.

But I don't recollect the whole of India getting into such a lather about the Sikhs as it does about Muslims. This racial profiling noise is something that the media in India and self-proclaimed liberal Indians (mostly leftists, actually) indulge in every time Muslim homes are raided and Muslim youth rounded up after a terrorist attack. It's always called a knee jerk reaction. The minute any Muslim is arrested, there are interviews with neighbours and family members saying the person is innocent, he used to mind his own business, he was such a nice person, we can't believe he is a terrorist, this is a frame up etc etc. It's almost as if the media is trying to drum up sympathy for him. For heaven's sake, if I get arrested for a crime, my family is hardly likely to say I am guilty and that they always knew I was up to no good!

It's interesting that this debate should be happening during the week after I saw Rang De Basanti on television. One aspect of the film left me feeling very disturbed and depressed and I was planning to write about it as a sequel to my previous post on Putting a Name to Terror.

In the film, when the college students are partying in a monument, the political goons who come and disrupt the party, saying `band karo ye nanga naach' and ranting about `videshi parampara' have saffron scarves around their necks and huge tilaks on their foreheads, clearly marking them out to be Hindu extremists. And obviously the party they belong to is the one in power and is responsible for the corruption in defence purchases! The activist who first disrupts the party and then becomes friends with the college gang is beaten up by his party colleagues for trying to expose the government on the MiG issue. The imagery is very clear. It is the Hindutva spewing politicians who are unreasonable and steeped in bigotry and responsible for corruption as well.

Why did it offend me, even though I have utter distaste for the Vinay Katiyars, Bal Thackerays and their like? Because it is not just those kinds who rage against `nanga naach' and `videshi parampara'. Don't Muslim extremist organizations do the same? Don't the left parties keep raving and ranting about consumerist culture and western lifestyles? What was the need to identify the ideology of the political party activists? This film was just about aimless youth. Why bring in the religious fundamentalism angle into it? And then labour the point that such chauvinism is the hallmark of the Hindutva types?

I had felt a similar sense of outrage when I had seen Mahesh Bhatt's Zakhm several years back. That was about illegitimacy and it so happened that the hero's mother was Muslim and father Hindu. So, Mahesh Bhatt being among the self-proclaimed liberals, it had to be about secularism. And how was this to be depicted?

Go check out the picture again, if you've forgotten it. All the good characters are Muslim, Christian and Sikh. The Hindu characters belong to a Shiv Sena kind of organization and are rabid fundamentalists who cause riots. The hero's brother who joins them is, therefore, a wayward youth who is brainwashed by them. The hero is not brainwashed by them and is, therefore, the hero.

My question is simple: aren't there fanatics in other religions who do the same amount of harm as the Shiv Senas and Bajrang Dals do? How come they are never caricatured like this? If there is ever any hint of caricature, our pseudo-liberals are quick to jump to their defence and immediately blame the saffron brigade for vitiating the atmosphere.

Really, when are these double standards going to end? How long are we to treat fanaticism by Islamic groups with kids' gloves and even try to rationalize it even as we keep condemning Hindu fanaticism? Fanaticism has no colour. It is fanaticism and has to be condemned whether it is green, saffron or red (yes, communists are also fanatics).

And for what I've written, I'm going to be ideologically profiled - as a Hindutva type!

Sunday, 13 August 2006

Putting a name to terror

American President George Bush's latest gaffe has everyone - liberals and leftists - in a tizzy. When commenting on the terror plot to blow up ten planes bound for the United States from the United Kingdom, he warned about the dangers of "Islamic fascism". The short point everyone is making is this: how can he brand the entire community and entire religion ideology like this?
It's not the first time such labeling has been done - Islamic terrorists is a common enough phrase in the West and India (and that's why I suspect a lot of the objection to Bush's words is because Bush said them) - and invited similar reaction.
That is not to say the point is irrelevant, but why does it apply only to Islam? Every terrorist movement comes to be known by the cause it espouses. The terrorists fighting for a separate Sikh homeland of Khalistan were known as Sikh terrorists. LTTE cadres are referred to as Tamil terrorists (not Eelam terrorists, though Eelam is the name of the Tamil homeland they are fighting for). The IRA is an Irish terrorist outfit. The insurgents in the north east are known variously as Naga, Mizo, Manipur rebels. Separatist militants in Kashmir are known as Kashmiri terrorists. So terrorists claiming to act in the name of Islam, who say they are staging a jihad, come to be known as Islamic terrorists. Why should it be seen as anything more than that?
The counterpoint put forward to this is that the terrorists are misinterpreting Islam and misusing it for their own ends. Sure they are. No one seriously believes that any religion advocates or even condones the kind of violence we are seeing now. A majority of the Sikhs had little sympathy for the Khalistan movement or the terrorists. I don't know too much about the popular support for the other militant movements but am confident that ordinary people who may be sympathetic to the cause would not approve of the violent means adopted by those fighting for the cause. How come the other labels never invited this kind censure? Come to think of it, why is Hindu fanaticism an acceptable term, but not Islamic fascism?

Sunday, 30 July 2006

Time to stop obsessing with China and FDI

MIT professor says potential for disruption of reforms is high


New Delhi

Is China vulnerable to an East Asian kind of crisis? It could, given the combination of high financial inefficiency and declining productivity. That was the combination in East Asia, right before the financial crisis, says Yasheng Huang, professor at the MITs Sloan Institute of Management.

Huang, who co-authored the definitive paper "Can India overtake China" along with Harvard Business Schools Tarun Khanna, was in India to deliver lectures on "Policy framework and development strategies: India and China" organised by the Confederation of Indian Industry.

Improvement in Chinas financial sector has been very modest compared with the Indian reforms in the 1990s. "The potential for disruption is and remains high. Though whether or not there will be an actual crisis will depend on other things we cant foresee," he warned, speaking to DNA Money.

Huang, who has been a trenchant critic of the development model followed by China in the 1990s, had one message for India: dont be obsessed with China or foreign direct investment (FDI). Ascribing Chinas success to its world-class infrastructure or its huge FDI inflows is an incorrect, misleading and harmful way of understanding the Chinese phenomenon, was Huangs simple point. "India is achieving 8% growth with 50% of Chinas investments and 10% of its FDI. To me this is a picture of more sustainable growth.

Chinas FDI inflows, Huang argues, reflect the systemic weaknesses in the economy. The financial system heavily supported the state-owned enterprises (SOEs) and actively discriminated against domestic private sector firms, which, then had no choice but to turn to foreign investors for equity capital.

A vibrant domestic private sector, Huang argues, can pull in high quality, technologically intensive FDI. Suppressing it, he warns, will bring in only low quality FDI, as it is in China. Huang questions the popular notion in India that FDI is needed to bring in technology. Korean firms, he points out, obtained technology by getting technical designs and information from the companies they supplied to, as also by exporting capital and acquiring firms in Silicon Valley and elsewhere. Much of Indian investments abroad too, he notes, are for acquiring technology, mentioning Ranbaxy as just one example.

Provinces like Zhejiang following an Indian growth model tend to get more technologically intensive FDI. They may have poor infrastructure but fairly liberal financial policies that support the domestic private sector. Zhejiang is home to a lot of the Indian IT firms. "India has the best of both worlds because it can get FDI as well as the benefits of domestic private sector growth."

Nor has Chinas growth to do with its huge infrastructure build up. The huge investments happened in the 1990s, his presentation showed, while the growth preceded it. China, in fact, may have over-invested in infrastructure, since the actual usage of expressways and some other hard infrastructure is very low. Not for him arguments that usage volumes will increase ten years down the line. "

Why? The volume is a function of growth and the growth is a function of education, health." Putting huge amounts of capital in physical infrastructure, will pull away resources from the health and education systems, which are equally, if not more, important for growth. Most business analysts underestimated India because they only looked at the lack of airports and hotels, he rued, ignoring its soft infrastructure. "Economic growth is a function of soft infrastructure, property rights and a relatively efficient financial system."

Though China is on a course correction of sorts, this, says Huang, is yet to show up in increased domestic consumption, another factor that economists like Morgan Stanleys Stephen Roach have identified as a factor behind Indias more sustainable growth. The government has started waiving rural education fees, reducing rural taxation. All this, Huang believes, will increase the consumption to GDP ratio over time.

Though attempts are being made to address the problem of lack of local entrepreneurship (which Huang and Khanna had identified as a major weakness in the Chinese growth model), Huang isnt sure the government is going about it in the right way.

"They think the lack of innovation is because of too much FDI. Its not because you have very liberal FDI policy. It is because you have very illiberal domestic investment policies." The government is beginning to look into the domestic business environment but not as drastically as Huang thinks they should.

India must invest in basic education'

Yasheng Huang says in the long run, the Indian growth story is far more sustainable than China's

India's economic growth has prompted many to suggest that it will eventually compete with the other Asian economic giant, China. The numbers of course tell another story. On most counts, foreign investment, infrastructure and sheer economic strength, China is way ahead. Yet, there are sceptics about China. One of them is Yasheng Huang, MIT Sloan Institute of Management professor, whose paper, Can India Overtake China, co-authored with Tarun Khanna, has become a must read on the India-China race. He thinks India's economic model has several positive aspects that Indians themselves tend to dismiss. In an interview, Huang tells Seetha where he thinks China has gone wrong and why India is a better bet.

The Indian development model is seen as more sustainable than the Chinese one. But India is now pursuing the Chinese pattern of export-led, FDI-driven growth.

Indians are enamoured of China when the Chinese themselves increasingly recognise the shortcomings of their development model. I am not criticising the Chinese model as a whole. I am criticising the 1990s model, which is more investment driven. The current central leadership is more concerned about the aftermath of the huge investment programmes, about social issues, of the crowding out effect of FDI. They are increasing investments in agriculture and rural areas. But they cannot change policies drastically, because a lot of them have strong local support base. Besides, it will take some time for the changes to filter through the system.

You have argued that it is not FDI that propels growth but growth that pulls in FDI.

Over the last decade in India, FDI increased but only very moderately, but the growth pick-up was substantial. It's incorrect to say that China's economic miracle was created by FDI. It was created in the 1980s by rural entrepreneurs and economic liberalisation. Worldwide, FDI has played a relatively insignificant role in economic development. Why do we expect large countries like China and India, with huge entrepreneurial bases and domestic markets, to depend so heavily on FDI as a way to grow? I'm not against FDI; I'm FDI neutral. I am also not for protectionism. But the obsession with FDI in China has created huge distortions in the economy, with foreign investors being favoured and domestic ones being discriminated against.

The conmon argument is that FDI provides technology. That is just patently not true. In China we are talking about FDI in textile factories, shoe factories, garment factories. India has the best of both worlds. It can get FDI as well as the benefits of domestic private sector growth. This is what makes the Indian growth story superior and far more sustainable.

You argue that China's infrastructure hasn't been responsible for its growth. But can a country grow if it has an infrastructure deficit?

I didn't say infrastructure is not important for growth. My point is that poor countries struggle without infrastructure and they do something else right that promoted growth. Once you have the growth, you have the resources to invest in infrastructure. A lot of the Indian obsession with China is with Shanghai, with high rises and skyscrapers. That is wrong. I distinguish between business necessary infrastructure like power and roads and business unnecessary infrastructure, like government buildings. Much of the perception of China in India is shaped by business unnecessary infrastructure.

You identify China's lack of democracy as a weakness. But India's democratic advantage is seen as being overestimated.

High quality democracy should not slow down decision-making excessively. If there are problems with political interest groups in the Indian system, the first thing to look at is the quality of democracy. I think democracy is used in India very often as an excuse for not getting things done. It could be a reflection of poor leadership. In a democracy you need leadership, management. Rather than saying it is the problem of democracy, let's ask: do we have the necessary leadership?

Indians lament that our politicians have only a five year vision, while China's policy makers have a longer term vision.

What if that long-term vision is wrong? There is no free lunch. In a democracy, just as in a one party system, you come with certain liabilities. But they are of different kinds. Indians must make up their minds about what kind of liabilities they like and don't like. Land seizures, corruption are big problems in China. And it's all because China doesn't have democracy.

Wage costs in are rising faster in China than in India while productivity is rising slower. Could that be another reason why India will overtake China?

That's a big factor. Whether India is actually going to overtake China or not depends on what China is going to do. They need to reform their financial system, their legal system.

And what does India need to do?

For India to transform itself from a poor struggling developing country into a middle income prosperous one, it needs to have broad success in the manufacturing industry - labour-intensive low-end industries. For that, it has to invest massively in basic education. It should do everything possible not to divert resources that would have gone to the social sector. Indians are so creative, they can think of clever ways of managing this trade-off between physical and social infrastructure. We should never lose sight of the fact that basic education should take priority over all these things.

Friday, 2 June 2006

Apart from posting two more pieces on the blog - the interview with Dalit activist Chandrabhan Prasad is particularly interesting, even if I say so myself - I have a bit of good news to share. My book has been published by Penguin and it's out in the bookstores. It felt good to see it there. It's called The Backroom Brigade: How a few intrepid entrepreneurs brought the world to India.
It basically tells the story of how the BPO industry started and grew to where it is today. It's not a management tome nor a how-to kind of a book, but more like a current history story told in a chatty style.

We do want that education


It is perhaps a measure of the myopia that marks policy-making in India, that a controversy has brought to the fore an issue that the country should have been grappling with anyway. The issue of higher education infrastructure, for instance, is being talked about now only because of the decision to reserve 27.5 per cent seats in all Central higher education institutions for other backward classes (OBCs). The number of seats are to be increased so that no one loses out.

That's easier said than done, as the government itself is realising. The Delhi University vice-chancellor has said that it will take three years for the University to expand the infrastructure to cope with the increased load. So now, the oversight committee headed by Veerappa Moily will study the situation and work out a roadmap for doing this.

But why have we reached such a situation in the first place? The strain on the higher education infrastructure would have come regardless of caste-based quotas. Why didn't we prepare for it?

India's access ratio in higher education (the number of students as a proportion of population in the eligible age group of 18-23) is a laughable eight per cent, against 35-55 per cent in most developed countries. India plans to dominate the world economic stage with these kind of numbers?

The University Grants Commission's Tenth Five Year Plan in 2002 had planned to increase the access ratio to double digits-10 per cent-by 2007. That, the then UGC vice-chairman Arun Nigavekar had estimated, would have meant bringing in 14 million students into the higher education stream. This newspaper has reported that there is a 15 per cent increase in students passing out of school every 10 years and that the Human Resource Development ministry expects this to double in the next decade. The financial implications of this are enormous-close to Rs 12,000 crore, Nigavekar had estimated in 2002.

Can the public sector education system alone do this? Certainly not on its own.

Sure, no country has expanded its higher education infrastructure at the pace India has. Much of it has happened in the public sector, but the private sector has also played a significant role. Unfortunately, successive governments have done little to actively encourage private initiatives in education or let a vibrant market develop in that sector. If it had allowed that it is likely that the issue of lack of access of disadvantaged groups to education would not have come up at all. The current problem (and resistance to quotas) is as much a demand-supply mismatch one as it is a social one.

It's now time to start fashioning an environment that will encourage and facilitate the development of a vibrant market in education, which will supplement government efforts in primary, secondary and higher levels.

Why not revive the lapsed Private Universities Bill (introduced in the mid-1990s), which enabled registered societies, public trusts and companies to set up self-financing universities with their own curriculum, fee structure and degrees, under the benign supervision of the UGC? That's the kind of system the country needs.

It doesn't mean that the state withdraws from the field-why, even an ardent open economy advocate like Montek Singh Ahluwalia wants a hike in public spending on higher education -but rather, expands the market to increase supply.

Increasing the role of the private sector will also ensure that the curriculum is more in tune with what the job market requires; something that is not easily done in the government system. The problem of the lack of employability of our youth-regardless of caste-is a result of this.

It's not that the private sector is always more efficient. For all those private institutions that are doing sterling work, there are equal numbers which are extortionist and exploitative. The quality of education in quite a few leaves much to be desired. And there are several fly-by-night operators.

Unfortunately, attempts to regulate it only seem to foster a licence and inspector raj that encourages corruption even as it remains ineffective. The line between regulation and intervention is very fine but it is one that will have to be drawn.

Will creating a market solve the problem of access overnight? It won't. The problem is too huge and complex. It will take years -maybe even a decade-for a robust, fair market to develop.

But one thing is clear-education cannot be a public sector monopoly. The country and the economy have too much at stake to let this happen. Too much time has already been lost and since the benefits won't be immediate, the time to move in the right direction is right now.

"Pvt sector should integrate Dalits in the supply chain"

As India Inc grapples with the sceptre of job quotas for backward classes, some activists are trying to change the paradigm of the debate. Dalits should become entrepreneurs, Dalit scholar Chandrabhan Prasad tells Seetha, and the private sector can lend a helping hand by giving them preference in the supply chain.

# Do job reservations in the private sector have any relevance?

Dalits as a community should start thinking beyond working for others and start thinking of becoming businessmen and hiring others.

# Do they have a tradition of entrepreneurship?

There are many entrepreneurs, but they are small players. The only traditional business activity was leather processing. Most of those working in this area are in Agra and some have large companies. They prospered during World War Two, but post independence, the bania lobby took over the trade and Dalits have become sub-suppliers to them.

# How can Dalit entrepreneurship be fostered?

By integrating them in the supply chain. If the private sector has a problem with job reservations, why don't they start by making Dalits partners in the business by seeking supplies from them. Keep 5% or 10% outsourced services for Dalits. Hindustan Lever has 43,000 employees and two lakh dealers. Obviously, the latter is a larger pool and will create less displacement. Then there won't be so much social polarisation. It won't become an emotive issue.

I know someone working in a small factory making gear stick covers for Eicher tractors. This is sold to a wholesale dealer for Rs 5 a piece. He sells it to Eicher for Rs 10. If Eicher buys directly from a Dalit manufacturer, without compromising on quality, it can buy it for Rs 7.50. Both gain Rs 2.50.

Assuming a HLL dealer get a 1% commission, he can earn a minimum of over Rs 60 lakh a year. A Dalit can take up this dealership, taking less commission than others. Don't replace existing dealers, but when new dealerships are given out, reserve some for Dalits.

# So, they will need special privileges even here?

Yes, because the system of enterprise and trade requires traditional social networking. Dalits are not in the social loop. So industry has to make a conscious effort to bring them into the supply chain.

The American experience is so inspiring. Now, what 33 million Blacks spend annually in the market is equal to what 1 billion Indians produce annually. People say that affirmative action has saved the American economy because it has created a new class of aggressive consumers.

Similarly, if a Dalit is linked with HLL and Eicher, he will prosper and buy - not a Mercedes immediately - but a Maruti 800, a Videocon television and will build a house in his village. Whatever every empowered Dalit earns will go back to the market.

# Do Dalit entrepreneurs face discrimination in the market?

People may not practise untouchability. But if there is a manufacturer named C B Ram and another named C B Aggarwal, I will unconsciously start wondering and may opt for Aggarwal. It may not be deliberate. Many try to keep their identity hidden because of fear. The fear may be wrong but the very fact that it is there means there is some social basis for that.

# Dalit activists argue that the condition of Dalits has worsened post liberalisation.

They are right. Government downsizing after 1991 has hit Dalits very hard. With job reservations, they were assured of employment. That has stopped.

But instead of fighting liberalisation, Dalits must use it to their benefit. The fittest vehicle to get into mainstream society is the Indian rupee. Society will accept only empowered Dalits - wearing good clothes, living in good houses, exuding confidence.

# To become entrepreneurs, Dalits will need education, training which many of them don't have.

Lets start with areas where no formal education or complex skills are required. Dalits can start with this, earn enough to educate their children who will then not need reservations.

Coming together through business is much more reliable than any social reform law. The Dalit bourgeoisie will eliminate all social tensions. If the big industrialists understand this, it will be good.

Friday, 21 April 2006

Middle class angst


Tuesday, April 18, 2006 21.45 IST

When Salman Khan was jailed in the black buck killing case, it was seen as a demonstration that the rich cannot get away with crimes. There were an equal number of people who felt that he went to jail only because he was rich. It's an endless, inconclusive debate.

Those who lit candles in Delhi to protest the acquittal of Jessica Lal's murderers and in Lucknow to protest the lack of action on Meher Bhargava's murder and those who sent angry SMSs from across the country felt vindicated in a way (never mind that their vigil didn't influence the Salman case verdict).

The two vigils have won a lot of kudos. They are seen as a sign that the middle class is shaking off its apathy and taking a stand, saying they will not take injustice any more. For a Delhi whose overarching philosophy is sannu ki (what's it to me), this was certainly a change. But let's take a good, hard, dispassionate look at those protests. Was the outrage anything more than skin deep? A cynical question, yes, but one that needs to be asked.

The protests were about the rich and the influential getting away with serious crimes. The system, everyone said, was to blame. What a clear distancing of oneself from the system and the actions of the rich.

But isn't the system made up of individuals? And is the middle class less prone than the rich to use money to escape penalties? Can all those who agonised about money power and influence legitimately claim that they have never paid a bribe to avoid a challan for jumping a red light? Why is a Rs 100 bribe more acceptable than a Rs 1 lakh one? Can they say they never used the network of friends, relatives and classmates to tweak the system for one's own selfish benefit at someone else's cost?

What's worrying is how quick the middle class is to point fingers at people, without stopping to think what they would have done if placed in the same situation.

Take the case of the anger against Shayan Munshi for retracting his initial statement in the Jessica Lal case. Without condoning what he did, let's look at it in a more detached manner. He was just another middle class boy trying to get a break into a career. Could he really have afforded to keep appearing for police questioning and court hearings? He may not have been bribed or threatened (maybe he was), but he may have just decided that building his career must be his priority.

Is that any different from how each one of us would have behaved had we been in his place? Why, many of us won't even stop to help an accident victim for fear of 'getting involved'.

Over 20 years back, a former colleague's brother-in-law died of electrocution because he stepped on a naked wire jutting out from an electricity pole. The next day the photographer of a newspaper took a photograph of the wire, which was published.

During the court hearing, there was a request for the original photograph. The photographer refused to give it because he didn't want to make repeated visits to the court. Fortunately the case against the then Delhi Electricity Supply Undertaking didn't fall through, but what if that photograph had been the only clinching evidence?

Let's not kid ourselves. There is a Shayan Munshi in each of us.

How many of those who lit candles in Delhi and Lucknow intervened when they saw a wrong being done, instead of just turning their faces away? How many of us would intercede when we see a lout harassing a woman in a bus or train? Are we even prepared to go for the social boycott of a criminal? The man who raped and murdered Priyadarshini Mattoo in Delhi and got away scot-free is now a lawyer who's not exactly wanting for business. Jessica's murderer was running a hip and happening pub in Chanidgarh. Were the clients of both these gentlemen completely unaware of their backgrounds? These are hard questions the middle class will have to answer.

Salman got convicted because of the dogged perseverance by a group of people. The urban middle class, mired in its energy-sapping daily grind, doesn't have the bandwidth for that kind of persistence or any form of active citizenship. It's so much easier to light candles and send outraged SMSs. That's a quick salve for our collective guilty conscience.

Perhaps this is an extremely pessimistic view of things. Perhaps those gestures are the first, faint stirrings of active citizenship among the middle class. But that's not enough. Middle class angst has to go beyond that.

For the system to change, we have to change our individual behaviour. There's no getting away from it.

The numbers game


Monday, March 27, 2006 21:45 IST

So, India's much-feared population boom is actually turning out to be a boon, not a bane. A report by Pricewaterhouse Coopers (PwC), The World in 2050, says that India can be the world's fastest-growing large economy between now and 2050, thanks mainly to its demographic profile.

Understandably, those opposing any form of population control are rejoicing. They have been making this point for long, taking strength from American economist Julian Simon's famous "population is the ultimate resource" theory. "The most important economic effect of population size and growth is the contribution of additional people to our stock of useful knowledge," Simon argued.

But merely gloating over the fact that India is going to have the world's youngest population isn't enough. Are we doing enough to nurture and capitalise on that dividend? The answer may just be not enough. Consider some facts.

Over 66 per cent of children in the 0-6 age group are undernourished, the District Level Rapid Household Survey, 2002-05 shows. Over 90 per cent of pre-school children are anaemic. The incidence of anaemia in pregnant women is also 90 per cent. This is hardly the foundation of a productive workforce. The chances of an unhealthy child growing up into a healthy and fit adult are somewhat dim. Not only will such a child not be able to make use of the opportunities that will available to it; it cannot contribute to the economy in any way. On the contrary, it may well be a burden on the economy. Take the case of tuberculosis, which affects 1.8 million people a year. It is estimated that three to four months of work is lost per patient. Mortality rates may have come down in India, but morbidity due to various illnesses is still high. There's little to indicate that out of the box solutions to the problem of public health are being experimented with.

Then there's the question of equipping the future generation with the right skills that the global marketplace needs. Here, too, the figures don't look good. Only 64 per cent of India's population is literate. And the literacy rate in the 15-24 age group is only 73 per cent. That's just not good enough. In any case, this is just basic literacy. Tapping global job opportunities will require far more than that.

There are still some eight million children out of school. Drop out rates are high and learning achievements low. Right now, primary education is on top of the agenda, but one needs to start planning for the stages that will follow. The Mid-term Appraisal of the Tenth Plan points out that if the SSA achieves the goal of universal enrolment in the primary stage, then secondary enrolment is likely to touch nearly 50 million by 2011. Our current secondary school system cannot cope with this load, either in terms of numbers or quality. But secondary education is one area where even a start has not been made.

The same is true of higher education. Currently, only about 6-7 per cent of the relevant age group goes into higher education. A well functioning developing country needs to hike that to 25 per cent. Our higher education system, still largely public funded just cannot cope with the load. But not enough is being done to encourage private participation in this area. Some measures have only resulted in the mushrooming of unscrupulous teaching shops.

What's more, the education system is still designed to get people into government service. That's not going to be the source of employment growth. There's been no significant progress on vocational courses in secondary and higher education. Vocational training in Industrial Training Institutes (ITIs) is just not in sync with the needs of the domestic market, let alone the global market. Inclusion of new trades into the curriculum takes so long that they get outdated within no time. Attempts to involve industry in setting the curriculum have been patchy at best.

If basic human development issues aren't addressed with urgency, the demographic dividend could well turn into a burden. But it's not enough to open more schools and hospitals or train more teachers and doctors and nurses. Piecemeal and business as usual approaches to issues won't work. Illnesses can be reduced with better sanitation and safe drinking water. Roads and proper transportation are needed to get children to school. India has to fire on all cylinders simultaneously.

One of the reasons India will be the fastest growing economy is that the Chinese economy will slow down because of the drag caused by its ageing population. But the Indian growth story cannot be left to depend on the slackening of others. Our inherent advantages have to be nurtured and promoted. Without losing any time.

Saturday, 4 February 2006

Physicians, heal thyselves

LINE & LENGTH/BUSINESS STANDARD/New Delhi January 28, 2006

T C A Srinivasa-Raghavan

Reform is slow in India because of reformers. It is their shrillness that is the problem

Many moons ago, in October 2004, this column had suggested that while the Left idea was all right, it was the Leftists who were a problem. As much, I now think, can be said about reform and the reformers. Earlier this week, as is customary these days before an Indian Prime Minister goes to Washington and more rarely before a US President comes here, the government made a gesture of goodwill. In the old days gifts would be exchanged. Now greater market access is given.

So the government decided to allow very limited foreign investment in retail. Most commentators were not satisfied with what had been opened up. They wanted much more. They also attributed the slow approach to the government's desire to protect Indian capital, as if that was somehow wrong. But I want to know: if Indian governments don't protect Indian capital, who will? Foreign ones?

If big Indian business houses want to get into retail first, before the even bigger American ones like Wal-Mart are allowed in, is it not the government's duty to let the Indians have the first bite at the cherry? What is so wrong with that? This is only one example of how simple-mindedly our reformers view things, in black and white, as good and bad. There are many more, such as persistently and parrot-like demanding labour law reform without specifying what exactly they want reformed and why; agriculture markets reform without addressing the very live political concerns of state governments; competition policy; regulation, etc. It is monkey-see, monkey do.

Don't get me wrong. Economic reform is a must. We have to do it, especially if it means taking the government out of business activities. But that does not mean that reformers should always take an un-nuanced and crude view, like they often do. And this practice, I think, is what has given reform a bad name in India. The mullahs of reform have done it in by their shrillness and their refusal to even acknowledge the political and social dimensions of reform.

Not just reform, they have discredited all reformers. For example, one way or another, the case the mullahs invariably make is pro-foreign capital. But the truth is that FDI doesn't come to India for any number of reasons. Corruption is a major problem, for one thing. Nevertheless it is our labour laws that are held to be the main problem. Even the Prime Minister has said so. But then may I point out: it is not as if FDI is not coming. Indeed, it is increasing. So are all these investors idiots? If we reformed our labour laws, I am told, even more would come in. But how is it that those who have invested are earning a better return here than in China, where there is no labour law to speak of? And this, without always hiding behind high tariff walls?

Or take competition. The received wisdom is that competition is good and monopoly is bad because monopolists restrict output and raise prices whereas competition achieves the opposite. But amazingly this doesn't always hold in India. The railways and the power sector are excellent examples of the breakdown of economic theory. Both have consistently lowered prices in real terms and increased output. Economists get very shirty when I point this out.

However, there are two cases that prove competition works: airlines and telecoms. Earlier, the government monopolies in these businesses did keep output down and charge outrageous prices. So, surely, the right question to ask is what is different between the railways and power, on the one hand, and telecoms and airlines, on the other? To the best of my knowledge, no one has done so. Sometimes I am patronisingly told that the railways and power are inefficient and depend on government subsidies. But when I point out that even in the US these businesses are inefficient and depend on government subsidies (in the form of tax dodges) there is no proper answer.

Foreign banks, I am told, should be let in on request. Certainly, because they bring in technology and superior practices. But has any financial sector reformer in India examined how difficult the US makes it for Indian banks to operate in the US? Or Japan? Or anyone else, like China? Reciprocity is bad policy, I am then told, because unilateral opening up will benefit us. Is that right? Then why don't other countries practise it?

Multilateralism in international trade is good, bilateralism, FTAs and regional trading arrangements are bad, I am told. But when I ask why the US began moving away from multilateralism in goods trade in 1984, even as it was advocating it for services, I get no proper answer.

India should not think it can generate a great deal of employment from services, I am told. But it already does, I say. This is unsustainable is the answer. Well, I next ask, how many people can Indian manufacturing eventually employ? Around 75 million or so. Out of a workforce of 400-odd million? What are the rest going to do? In order to employ 75 million people in manufacturing, as against China's eventual 120 million or so, how much capital and physical resources would be needed at a wage level of around $100 a month? If you can employ twice as many people using half in capital and resources, what is wrong?

You guessed it. I get no answer.

Tuesday, 24 January 2006

Morality of middle class politics

Monday, January 23, 2006 22:50 IST
Remember the public outrage over the 'questions-for-money' and the MPLADS (Member of Parliament Local Area Development Scheme) bribery scams? Newspaper columns were full of indignant letters from middle class readers about the quality of public life. The expulsion of the tainted members of Parliament got overwhelming public support.

Contrast that with the public reaction to politicians' involvement in the demolition of unauthorised constructions in Delhi and Ulhasnagar. Politicians in both cities have been flexing every possible muscle to stop the demolitions. In Maharashtra, they even succeeded in getting the government to issue an ordinance that would, in effect, regularise the illegal buildings. In Delhi, too, there is talk about changing the master plan to do something similar. In both places, it has been conclusively proved that the politicians are opposing demolitions not out of concern for the ordinary people affected by the action but because many of the unauthorised buildings belonged to them.

And yet, people are getting worked up, not over the politicians involved in unauthorised constructions, but by those carrying out and authorising the demolitions. The same people who couldn't stop singing Delhi chief minister Shiela Dikshit's praises were on the streets demonstrating against her. Those who were not affected by the demolitions have chosen to keep quiet.

This dichotomy in reactions isn't surprising and is easily explained. The middle classes are more indulgent of unauthorised constructions because they are as much to blame for the urban mess as politicians. That's not quite the case with bribes. Ordinary people also give and take bribes but they are never of the magnitude that politicians receive. Moreover, the bribes the common person pays are usually to get absolutely mundane and even legal things done-an electricity connection, a completion certificate for a house which conforms to all the building bye-laws, a driving licence, a death certificate. It's not about diverting public funds for personal use. Therefore, it is easier to distance oneself from the bribery scams of politicians. The unauthorised constructions-or other violations of civic laws-are, however, another matter. That is something the middle class is doing all the time. Even when they don't need to.

Dikshit isn't alone in her experience of losing public support over this issue. In the previous government, urban development minister Jagmohan, was idolised when he set about demolishing slum clusters in Delhi. The minute the bulldozers reached the middle class localities, he was demonised. He also lost the Lok Sabha election. It's quite likely Dikshit will face the same fate during the next assembly elections.

Now you know why there is a dearth of good people in politics. They will just not get elected.

We are all actually quite happy with the existing system and have managed in little ways to tweak it to suit our ends-whether it is unauthorised constructions, illegal pumping of ground water, getting false certificates or some other misdemeanour. Voting an upright person into politics will mean putting this comfortable little world that we have built for ourselves at risk.

That's why the incensed reactions to politicians figuring in scams will never go beyond breast-beating, whether it is by the babus commuting in chartered buses/local trains or the elite chatting over cocktails and dinner. Forget the days when the Rajiv Gandhi government fell in 1989 on corruption charges. When it comes to the crunch, a corrupt politician has better chances of winning than a Shiela Dikshit or a Jagmohan. Because the corrupt politician will turn a blind eye-maybe even facilitate-your transgression. These two and others of their ilk won't.

It is possible to argue that ordinary people are often forced into misdemeanour by outdated and senseless laws and regulations. And it is those laws and regulations that lead to the kind of politics the country has. Sure, but encroaching upon pavements to build one's own little private garden or adding floors to a building, with scant regard for safety norms, can't be something you can't live without.

This lack of a civic sense reflects in the way people behave politically. If we see nothing wrong in fiddling with the electricity meter to draw more power than we are entitled to, we won't find anything wrong in what politicians are doing all the time-hijacking public resources/facilities for private use.

Till such time as this attitude changes, the prospects of cleaner politics is bleak. To change the quality of public life, let's start by voting in people who will not help us dodge the existing system but instead, work at framing a new system that we won't need to bribe our way through or circumvent.

Monday, 23 January 2006

'Pull people out of farms and into factories'

Sunday, January 22, 2006 19:34 IST

As finance minister P Chidambaram hunts for money to finance the government's huge expenditure commitments for programmes to help the poor, London School of Economics professor Lord Meghnad Desai lashes out at the view that only the state can help the poor. In this interview with Seetha, Lord Desai argues that the best way of ending poverty is to pull people out of farms and into factories.

There is this feeling that the market won't deliver in areas like health and education and the state should step in. But isn't it the market that is providing these services to the poor and more efficiently than the State?

That question hasn't opened up in India as much as it should have. It is true that most people have to resort to the market for health care. That is the best thing available at the price they are paying. There is an equally severe critique of the state in primary education. Many poor people prefer to spend on sending their children to private schools than government ones because they cannot afford to have their children not be equipped to be better off.

We need to study why people need to do this and what is the household behaviour on health care and education. If it is true that the market does provide services more efficiently, can the state provide a little bit of money at the margin to improve that instead of setting up an alternative system? Can the state purchase better health care for the agencies in the market? Money transfer is easier.

Why is this view persisting?

Many people of a certain age in India had a very bad experience with the private sector and associate it with cheating and feel it is only for the rich. In the West, an ideological and theoretical battle has been fought and now state provision is seen as more elitist and more regressive than market provision. But in India, the argument of statism is still very powerful. There is a lot of sentimental opposition to the idea that markets and globalisation can help the poor.

Moreover, so many vested interests have been generated in maintaining this peculiarly overburdened structure of laws and regulations that nobody in the political sphere has the courage to say let us dismantle this.

Are you for an absolutely minimal state?

My attack on statism is not a very classical liberal or libertarian position - destroy the state. Or even the neo-classical position that consumer welfare is all that matters.

My impatience is with the fact that the most statist part of our policies up to 1989 failed to dent poverty. The real elimination of poverty has come since we liberalised. But the intellectual hegemony of the Left is so strong that that message is not being allowed to come out clearly. There was a big battle about the percentage of people under the poverty line after the 1999-2000 survey results.

But that obscured the real fact that whatever it was, it was the most dramatic drop in poverty in the history of India. That liberal economic reform got more people out of poverty in this land than anything devised by the Planning Commission or by the state. People say it is because we had this subsidy and that handout. None of that has helped. Accelerating growth from 3.5% to 7% is what helped. But political parties and the media have entered into a conspiracy of silence, of obfuscation about simple facts that the poor can only be got out of poverty by rapid economic growth.

Is growth alone enough?

Well, try growth and see whether it is enough. You don't cure poverty by giving employment guarantee, which is like Elastoplast. The only surefire way to solve rural unemployment is moving people into manufacturing and urban areas. Ensure fantastic growth in manufacturing and get people to get out of farms and get into the factories.

They will live in slums initially and work conditions won't be good but that is the only way to ensure more and better income. We have to take manufacturing expansion very seriously. Focussing on agriculture won't leave anybody better off. It will just sustain them in their existing circumstances.

But isn't it necessary to have a 4% growth in agriculture to get a 9% overall growth?

No. Another remarkable fact of the Indian economy since liberalisation is that the deep connection between agricultural growth and overall growth has been broken. Agriculture growth has been all over the place but has always averaged 2.5%. But overall GDP growth has been climbing up.

The Indian economy has actually liberated itself out of agriculture. The votes may be in agriculture but it is not central to growth and it is not important for poverty alleviation.

Actually because we had this horror of food shortages and rural poverty, we've subsidised farmers, buying grain at high procurement prices. Everyone needs cheap food. Remove procurement prices, food will be cheaper. Of course farmers will complain. Farmers lobby is so powerful. On the one hand you keep the grain prices high for the farmers. And then you keep the food prices low for the poor. In between is a huge subsidy.

We have to see if we are doing the economically rational thing rather than the politically rational thing. We have to see whose money we are spending on whom. Government money cannot be spent like there is no tomorrow. There is a tomorrow and the money will be paid by our children.