An Adarsh lesson for babus: Don’t flirt with political bosses

http://www.dnaindia.com/analysis/standpoint-straight-from-fantasia-bjp-s-bank-transactions-tax-1947973

There has been a noticeable silence from the bureaucracy over the decision of the Maharashtra government to go soft on the politicians indicted by the J. A. Patil commission on the Adarsh Housing society scam, even as proceedings against the officials allegedly involved continue.
Contrast this with the outraged reactions when retired coal secretary P. C. Parakh was named in the first information report (FIR) in the coal block allocations case. Or when young IAS officer Durga Shakti Nagpal was suspended for taking on the sand mining mafia in Greater Noida in Uttar Pradesh. Serving and retired IAS officers demanded that safeguards be put in place to ensure that bureaucrats are not victimised for bona fide decisions and actions they take in the course of their work.
The contrast in responses is natural. Parakh and Nagpal were seen as honest officials being persecuted for legitimate decisions. The officers named in the Adarsh scam are seen as having benefited from illegal actions.
Important though this difference is, dare one suggest that the bureaucracy’s silence in the Adarsh case is a tad misplaced? The issue is not whether the officers are innocent or not; the issue is the patent double standards that the Maharashtra government has adopted.
The state government sees no duplicity. The politicians, chief minister Prithviraj Chavan quibbled, had merely extended political patronage and not indulged in any criminality. He is perhaps technically correct. After all it is the bureaucrats who initiate files, make notings and, in some cases, sign on decisions. Politicians merely indicate what they want done.
In Andhra Pradesh, eight IAS officers are facing criminal charges in cases of alleged corruption by former chief minister, the late Y. S. Rajashekhar Reddy. Some politicians are also in the dock, but the officers became more culpable because they had done the paperwork.
Look also at what happened when Parakh’s name figured in the coal block FIR. The Prime Minister’s Office issued a statement which detailed the movement of the file related to the allotment of coal blocks to Hindalco. The statement said that the Prime Minister merely signed something Parakh had proposed. Worse, information and broadcasting minister Manish Tewari and external affairs minister Salman Khurshid said ministers could not be going through every word and notation on a file before signing it.
This has a clear message for the bureaucracy – when push comes to shove, politicians will stand by their own and disown official. This is not just an end to the days of anonymity of the bureaucracy – the unwritten code that existed in the fifties and sixties that ministers would take responsibility for decisions they had signed off on. It is an indication that politicians now expect bureaucrats to take the rap for everything, much like drivers have to own up to hit-and-run accidents committed by their rich employers.
Who is to blame for this state of affairs? Unpalatable as it may be, the truth is that the bureaucracy has brought upon itself a lot of the problems it is facing today. Indira Gandhi has rightly been blamed for politicising the bureaucracy, but could it have happened to the extent it has unless bureaucrats also played ball?
The onus of change, therefore, cannot be on politicians alone. Why would they initiate change in a system that works for them all the time? It is the bureaucrats who must now put the political establishment on notice – that they will no longer be willing accomplices or supine doormats.
But this will mean doing a lot of things differently.
It will mean not taking verbal orders, especially if they are illegal. There is a convention that verbal orders are recorded in a note without delay. The fact that the Supreme Court had to recently give an order insisting on this practice shows how rarely it was being followed.
It will mean using the various protections that service rules offer to resist pressure and do one’s job with integrity.
But above all, it will mean bureaucrats presenting a united front to the political establishment.  Many bureaucrats succumb to pressure because they cannot fight the system alone. They need to have the confidence that their colleagues and seniors will stand by them. This solidarity cannot be episodic but has to be sustained.
Harassment in the form of frequent or clearly vindictive transfers can be checked by the cabinet secretary at the Centre or the chief secretaries in the states. But often they do not pull their weight adequately. If the head of a service refuses to stand up for those under his charge, who will?
Political bosses find ways to get around stubbornly upright officers by using other pliable officers. A senior officer can use his position to browbeat a junior. And a willing-to-be-compromised junior can put the senior in a spot by drafting a note or manipulating a file in a particular manner. Ashok Khemka, the controversial Haryana cadre IAS officer, has accused two other officers of conspiring with the state government to harass him because he tried to block some allegedly dubious land deals of Robert Vadra. One of the two officials, he has alleged, had a role in approving these land deals. Clearly, for every upright officer, there are several others who not only facilitate wrongdoing but also the harassment of conscientious and principled colleagues.
The Adarsh case should be a wake up call for all those bureaucrats who either willingly collude with the political establishment for rewards ranging from comfortable/lucrative postings to material gain or silently acquiesce in wrongdoing.  At the first sign of trouble, the politicians will abandon them and leave them holding the can. And then their colleagues are not likely to rally around them.
There are two lessons for the bureaucracy. One, don’t get into too a cosy relationship with the political bosses; stay within the boundaries set by the Constitution.  Two, stand by your own, especially when upright colleagues are being harassed or facing pressure.  But the second will not be possible without the first. No Supreme Court order or administrative reform measures will work if bureaucrats willingly break ranks to flirt with their political bosses.

AAP’s volunteers shouldn’t be Youth Congress redux

http://www.firstpost.com/politics/volunteers-or-vigilantes-the-perils-of-aaps-anarchic-politics-1328297.html

`This is like a return to the Emergency days.’ That startling comment came from my mother yesterday as she was reading the newspapers. She was referring to this report in the Indian Express Newsline which said that the Delhi health minister Satyendra Jain has dismissed the existing hospital management societies, Rogi Kalyan Samitis, and that Aam Aadmi Party volunteers, with their trademark caps, were conducting inspections and helping out with administration in government hospitals, apparently without formal orders.
The RKSs were headed by the local MLA and comprised representatives of hospital administrations, doctors, civil society members and patients. They were part of the National Rural Health Mission eco-system and were the interface between hospitals and the public. Jain said the samitis were defunct and that he had received a lot of complaints of corruption and malfunctioning.    
Three days earlier, Delhi’s education minister Manish Sisodia had announced that volunteers would be recruited to monitor government schools. They will visit government schools and monitor toilets, water supply, cleanliness and presence of teachers and report their findings to the education minister every day.
So what’s all this to do with the Emergency? Apparently during those dark days, similar volunteers from the Youth Congress would go around `checking’ various things – from the working of government babus to the number of guests and the quantity and kinds of food being served at weddings (those were the days of guest control order). Needless to say, bullying and muscle flexing was common and the `volunteers’ would often be `pacified’ in various ways. 
Going by the Indian Express report, the muscle flexing may have already started. Hospital administrators and doctors are complaining about the AAP volunteers barging into labour rooms and calling doctors out of surgeries to complain and threatening filing of Right to Information (RTI) applications.
One needs to allow for a measure of hyperbole in these reports. Let’s face it, public hospitals are not the best run places and any attempt at reform will affect those who are benefiting from the current mess. The Indian Express journalist does not appear to have personally witnessed any bullying but is going by the accounts of doctors and managers. It would be natural for them to exaggerate things in the hope of derailing what could be a welcome initiative by discrediting it.
It’s also a bit unfair to liken the AAP volunteers to members of the Youth Congress which, at least in Delhi, was viewed with a fair bit of alarm. In contrast, AAP has come to power on the wings of a lot of goodwill from the public and its activists are fired by a sense of idealism about changing the way politics is conducted – the kind of politics the Youth Congress represented.
And yet, there is need to set off the alarm bells.
The current system of governance in Delhi needs to be overhauled completely but little is to be achieved by dismantling existing structures in a hurry. Jain, according to the Indian Express report, plans to replace the RKSs with new Jan Swasthya Samitis, which will be devoid of political interference. But shouldn’t that have been done before the RKSs were wound up? Why create an anarchic situation with volunteers having a free run of hospitals? Anarchy is romantic and even acceptable as long as an organization is in an activist mode. Once it comes into a position of responsibility, it has to function according to a set of rules and procedures. If these procedures are blocking reforms, then change them by all means but creating a vacuum is not the answer.
Delhi needs an active and vigilant citizenry; but this should not become an aggressive vigilante mode, which is susceptible to misuse. The initial lot of AAP volunteers may be an idealistic bunch which would not misuse powers, but can AAP stand guarantee for each and every volunteer, especially those flocking to it in droves after it formed the government?
Even if there is no misuse, reckless vigilantism is also dangerous. People who believe they are morally superior – as many AAP volunteers do – invariably adopt to a `my way or the highway’ route. This was precisely the attitude of Anna Hazare, from whose Jan Lokpal movement AAP was born. There is a certain impatience with and disdain for any criticism or urging of caution.
So it wouldn’t be surprising for overzealous volunteers to refuse to accept perfectly valid reasons for some official not being able to do things the way they want it to be done. Not all of them will be able to distinguish between genuine problems in doing things their way and clear attempts to block reform. The Delhi law minister forcing the law secretary to call a meeting with judges (something only the High Court can do) and accusing him of siding with the old regime is a case in point. When this is the case with the law minister, can ordinary volunteers be capable of more discretion?
A Firstpost article had wondered if the AAP revolution was similar to the French or the American revolution? But remember what happened during the French revolution, when vigilantism gave way to mob rule?
Governance in Delhi needs to be shaken up, no doubt. Only AAP has this as an agenda. But in implementing this agenda, the party needs to take care that its cadres don’t become like the vigilantes of the French revolution. Or like the Youth Congress during the Emergency.

Modi's poochandi effect on Congress

http://www.firstpost.com/economy/quick-modi-is-coming-fear-spooks-cong-into-reform-action-1311349.html

Harassed Tamilian parents troubled by their naughty children invariably use two words to get them to behave. Poochandi varan (poochandi is coming) or poochandi koopuduta (should I call the poochandi).
A poochandi is a fictitious fearful person – I remember being told as a child that a particularly frightening looking vagabond was poochandi  - who would, children were told, take them away. The threat invariably worked – children ate their food, drank their milk, went to sleep or did whatever their elders wanted them to.
Narendra Modi seems to have had a similar poochandi effect on the Congress Party (thought it is rather difficult to think of a 129-year-old political party as a below five-year-old child). Psyched by the very real possibility of a Modi-fronted BJP coming within more than touching distance of power in 2014, the Congress and the government that it leads are suddenly in a policy and implementation overdrive, doing all that they had dithered over all these years.
Gone is the arrogant complacency; there is now a new sense of purpose. So an obstructionist environment minister is shown the door; the norms for approvals are eased; coal supplies to nine power plants have been cleared as have some port projects; and Rahul Gandhi is no longer sounding lost and confused. His focussed speech at Ficci last Saturday and a press conference on the Lokpal Bill the Saturday before that signalled this change. His press conference yesterday following the meeting of Congress chief ministers could be another sign that the party is not taking its eye off the ball. Lost in the noise over the rap that Maharashtra chief minister Prithviraj Chavan got are the four actions Congress-ruled states have been told to take to tackle price rise and reach essential commodities to the poor.
One of these is time-bound. By January 15, the states have to remove fruits and vegetables from their respective Agricultural Produce Marketing Committee (APMC) Acts. They have also been told to be strict in implementing the Essential Commodities Act (ECA) to deal with hoarders and to invoke the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities (PBMSEC) Act, 1980 against chronic offenders. And they have to take steps to immediately implement reforms in the public distribution system (PDS) in line with the Food Security Act. Finally, Congress-ruled states have to open fair price shops run by state governments on self-help groups of women to sell essential commodities like fruits, vegetables and eggs at reasonable prices.
Clearly, someone in the Congress has finally got the message that rising prices is not something the Reserve Bank can control through higher interest rates and that supply bottlenecks have to be eased. Delisting fruits and vegetables – the items that have seen the highest levels of inflation – is a good first step in that direction. Of the 12 Congress-ruled states, three – Maharashtra (Vashi), Karnataka (Bengaluru) and Andhra Pradesh (Hyderabad) – have the largest fruits and vegetables mandis, according to the Financial Express. This move will enable framers to bring fruits and vegetables directly to the market, which will help in easing prices and bring some relief to household budgets, though some agriculture policy watchers like Devinder Sharma are skeptical of this happening. It remains to be seen if the chief ministers can take on the powerful lobbies that control these mandis merely because Rahul Gandhi has asked them to.  It will be great if they can.
The other steps Gandhi announced may not be so effective.
The Essential Commodities Act (ECA) is dusted out and deployed every time the inflation dragon rears its head, but its effectiveness is somewhat doubtful. Both its critics (who want it scrapped) and supporters (who want it to continue) agree that the ECA has not been able to check price spikes whenever there is a shortage of some food item. On the other hand, it is implemented in a ham-handed manner and often becomes a tool for harassment. 
The logic behind setting up more fair price shops to sell fruits and vegetables is not clear. If these items are delisted from the APMC Act, and if silly rules don’t hamper hawkers and street vendors, the cooling effect on prices will make such steps redundant. Special outlets work only during times of price spikes. In Delhi, for example, government sales outlets were set up to sell onions at cheaper rates. Unless this is a way of doling out shop licences ahead of the elections.
The PDS reforms will take time to pan out. They have more to do with improving the last mile of the PDS chain – transporting food grains from godowns to fair price shops and then to the consumer – to eliminate diversion. This requires the deployment of technology – Aadhar, digitization of ration cards and list of beneficiaries, smart cards, use of GPS and SMS to track movement of food grains, to name just a few. These can’t be done overnight.
Questions naturally arise about the haste that is driving the flurry of decisions and actions. Are decisions and actions being pushed through without enough thought going into them, just like the Lokpal Bill was passed without sufficient discussion? Could these then lead to more problems some months down the line – when the Congress isn’t around to deal with them? These are questions that need to be asked and answered.
There are reports that Veerappa Moily, as environment minister, may give the go ahead to GM crops. The hyper-active and obstructionist green lobby has been red-flagging this and had managed to persuade the previous two ministers, Jairam Ramesh and Jayanthi Natarajan, to block field trials. But in overturning these, are essential precautions – that are in place in countries that have embraced BT foods – being given the go-by? When easing environmental norms for large industrial projects, are necessary safeguards being junked?
Is the fear of the Modi poochandi leading to rash decision-making?
Actually, it was the Congress and those whom economist Arvind Virmani calls the LIMPs (Leftist Intellectuals, Media and Politicians) who first portrayed Modi as poochandi. Except that they used the H-word from Europe of the 1930s. Poochandi varan, they warned the public, pointing to 2002, fake encounters, Haren Pandya’s murder, the snooping controversy and a lot more. Your freedoms will be jeopardised; your lives will be in danger, they all warned. But the public didn’t get spooked.
I remember a young cousin turning the poochandi tables on my grandmother once. Should I call the poochandi, she asked, when my grandmother did not do something she wanted. It was a sign that she wouldn’t be frightened any more.
Voters in four states have, in effect, shown that they are not going to be frightened into not voting for the BJP. They, too, have turned the poochandi tables on the Congress.
Whether the poochandi comes or not is immaterial. What matters is the effectiveness of the threat. It is the Congress that is now being spooked into action. Someone now has to ensure that it is the right action in the right direction.

Inflation needs a political solution

http://www.firstpost.com/economy/politicians-hold-the-key-to-taming-inflation-dragon-1298845.html

So, India’s central banker Raghuram Rajan did not hike rates on 18 December, even though both wholesale and retail inflation persisted at elevated levels. The man who was expected to act like a hawk, is being panned for behaving like a dove, taking a benign attitude to inflation.
Rajan made it clear that he is not comfortable with such labels and that, far from being soft on inflation, he was keeping a close eye on it. If inflation did not ease, he said, he would act appropriately. Maybe he had a problem with the choice of birds, and would have preferred to be compared to the wise owl instead.
Will inflation – particularly food inflation – ease over the next month? Given that general elections are due in a few months, the government and the Congress Party will certainly hope that it will. The results of the recent assembly elections made it very clear that the public will be unforgiving about rising prices. However, opposition parties would do well not to gloat about the government’s plight. What India is seeing today is not a cyclical or seasonal high inflation that will correct itself. High inflation, especially food inflation, has got entrenched and is not likely to go away soon. It is certainly going to pose a huge challenge to whichever government comes to power in May 2014. And there is no quick solution for it.
The persistent high inflation that we are seeing now is an economic problem created by politics. The solution, too, is rooted in politics. The UPA cannot escape the blame for the current high inflation. The unchecked populism during its ten years is mainly to blame. Finance minister P. Chidambaram admits that higher farm gate prices and higher rural wages (thanks to the NREGA effect) had played a role in rising inflation. But he justified both decisions as being right. “The argument that inflation must be contained by suppressing farm gate prices or rural wages is a specious argument that ignores the needs of the poor and deserves to be rejected,” he said at the Delhi Economics Conclave in mid-December.
It is by now well established that the rising food inflation is the result of increasing demand, thanks to growing prosperity, far outstripping supply. This statement, however, needs to taken with a bit of caution. While expenditure on fruits and vegetables (which has seen the highest levels of inflation) grew by 42 percent between 2004-05 and 2011-12, data from the National Horticulture Board shows that production increased 53 percent. Dr Ramesh Chand, director of the National Centre for Agriculture Economics and Policy Research (NCAP), explains this discrepancy, pointing out that given the huge increase in demand even a marginal fall in production in some months has a huge multiplier effect on prices. This becomes more marked in vegetables that lend themselves to hoarding – potatoes, onions and tomatoes, which have almost become necessities now. So clearly, there is a supply bottleneck issue that needs to be addressed. For this, traders and the entrenched cartels in farm goods are to blame.
How is this to be tackled? The solution is an economic one – liberalising and bringing in more competition into agricultural trade. But politics is not letting it happen.
The issue of monopolies and cartels in agricultural trade has to do with the state-level Agricultural Produce Marketing Committee (APMC) Act which set up regulated zonal wholesale markets to which farmers in a particular area are bound to sell their produce. This not only encourages monopolies, but also stands in the way of the integration of farm production with the national market. According to an ICRIER report on the non-alcoholic beverage sector, even in cases where food processing firms buy produce directly from the farmers, they have to pay the APMC cess.
There is near-unanimity that the APMCs need to go or at least be modified to allow more competition and that a barrier-free national market is the best way to tackle food inflation. Unfortunately, this is something that is solely in the realm of state governments. A model APMC Act, which allowed for more competition, was drawn up by the Centre during the National Democratic Alliance (NDA) government. During the NDA and the UPA reign, there have been attempts to prod states to adopt this model legislation. A committee of state ministers in charge of agricultural marketing has unanimously endorsed the need to adopt the model Act. And yet, only 17 states have done so. So strong is the political hold of the vested interests that control these markets.
When food inflation started heading northward in 2002-03, the NDA government cooled prices by releasing part of food grains stocks through the public distribution system and selling grains at cheaper rates to millers. The government is sitting on huge food grain stocks, but it is wary of offloading this because of the requirements of the Food Security Act. Can the damage be contained? There is a provision in the legislation to move to a system of cash transfers, which will obviate the necessity of huge public stockholdings. This is again a political call that either the present or future governments will have to take. Do parties have the gall to take this route? Remember that this unwise piece of legislation was green-lighted by all parties.
Former finance minister Yashwant Sinha recently recalled an anecdote from his tenure about the finance minister of a northern state losing his temper when the Union finance secretary suggested that states abolish a tax on trade in food grains in order to keep food prices down. For the minister, filling up his state’s coffers were more important than the larger macro-economic implications of rising food prices.
When politicians across the country and across parties refuse to see economic logic, can there be an easy solution to the inflation problem? There is no point drawing comfort from the fact that high inflation is being driven by food prices and that core inflation is largely at acceptable levels. As C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, has warned, sustained food inflation gets generalised and spreads to other sectors. Given the current levels of distortions in the marketing of food grains, cereals and fruits and vegetables, high food inflation is unlikely to be a temporary phenomenon. Rajan, at his press conference on Wednesday, clearly said that the RBI could not indefinitely wait for the supply side to catch up with demand pressures on the food front and that if necessary, he would take steps to bring demand closer to supply. That is obviously the only solution that will be left.
But just because inflation targeting is one of RBI’s mandates, is it justified to put on it the entire onus of solving a problem that is not of its creation in the first place? In doing that, isn’t the political class that is responsible for the situation being let off the hook? Won’t the use of monetary policy to address a supply-side problem lead to other problems? These are questions all political parties need to mull over. It is time inflation is seen as a political problem requiring political solutions. The structural problems cannot be addressed overnight. The benefits also will take time to materialise. If any new government does not take action early enough, five years down the line (or even earlier during elections to state assemblies) it will find itself in the same situation as the UPA.
In October 2012, when Rajan’s predecessor D. Subbarao hiked rates to tackle inflation amid fears that it would hurt growth, a miffed Chidambaram had said he would walk alone if necessary to face the challenge of growth. Chidambaram or whoever the finance minister will have to walk alone to address the challenge of inflation. At any rate, they can’t expect the RBI governor to walk alone on this issue. They – and the entire political class – will have to support him.

Save the country, Dr Singh

http://www.firstpost.com/economy/stand-up-dr-singh-you-have-only-your-doormat-reputation-to-lose-1279879.html

It is indeed interesting that in all the reactions—solicited and unsolicited—that have come after the drubbing that the Congress party has just got in the assembly elections, one voice has not been heard at all—that of Prime Minister Manmohan Singh. That, clearly, is a measure of the man's irrelevance. But what he does in the next few months will become increasingly relevant, by virtue of the office he occupies.
Local factors and the disarray in the Congress party no doubt added damaging volume to the anti-Congress wave, but what led to that wave in the first place? Was it not a complete popular disenchantment with the functioning of the United Progressive Alliance government headed by Singh, whose policies have fuelled inflation, messed up the economy and fostered widespread corruption?
Singh is as responsible as the Gandhis for electoral debacle. Had he refused to be a mere figurehead, quietly rubber-stamping the Sonianomics brand of populism and turning a blind eye to corruption, the country would not have been in the mess it is in and the public would not have been so angry as it is today. As prime minister he could have put his foot down on several issues. He did not.
So what do the next few months hold for the country? Any Congress strategy for 2014 cannot revolve around revamping the party machinery alone. Since the Congress is the main party in the UPA coalition, the Central government’s actions or non-actions will also be part of this. The Congress could play it two ways. It could, for one, decide to get the UPA to do a course correction so as to recover some of the lost ground. What can a lame duck government do will remain a question, but the prime minister’s former press advisor Sanjaya Baru has argued in this piece that quite a bit is possible. 

Inflation—the one issue on which people unforgiving—will obviously top the list. The Congress is now claiming a conspiracy is behind the onion price hike. Perhaps, but let’s not forget that food inflation has remained at elevated levels for over a year. The reasons for these are structural and as Finance Minister P Chidambaram himself admitted recently, there is no easy or quick solution to the problem. "I am afraid it will take some time to contain this inflation. We are paying a political price for that and I acknowledge that, but those are the facts," he said on 15 November.
When the country’s finance minister is throwing in the towel, there is no scope at all for taming the inflation dragon within the next five months.
Reviving an ailing economy should be another priority. Here, too, the scope of easy and early successes is doubtful. There are several reform-oriented legislations that need to be passed but that seems unlikely, with an aggressive opposition and uncooperative allies.
Baru has suggested that the government can address issues like uncertainty over tax policy which could alleviate concerns of investors. While that could help the stock markets, quell the fears of foreign investors and arrest a possible flight of capital, it is hardly likely to bring in electoral gains.
The government could shake off the policy paralysis it is caught in and get into action mode, clearing pending projects, ironing out policy glitches and the like. Plan expenditure is only 43 percent of what is budgeted for the year (of which capital expenditure is only 40 percent of what is scheduled) and it could decide to step this up. All this will revive sentiment and businesses may perhaps not put off their investment plans till after the elections. But it takes several months for investment plans to make their effect felt on the economy. So the benefits are not going to come within five months.
Realising that these steps may not reap the expected gains and that it will face certain defeat in May, the Congress could opt for another strategy – to lay booby-traps for the next government. It will then get a stick to constantly beat that government with. Fortunately, the government won’t be able to push bad legislation like the proposed National Right to Homestead Bill through Parliament (though some good legislation will get hit as well) but that will not stop it from taking decisions that are clearly populist and which will leave an enormous fiscal burden for the next government. Some of that has already started. The June decision on pricing of natural gas (read Firstpost editor-in-chief R Jagannathan's criticism of this) and the early announcement of the Seventh Pay Commission are cases in point.
Using the fact that the fiscal deficit is already at 85 percent of the full year’s target, the government could put a lid on spending on the grounds of wanting to stick to the target of 4.8 percent of GDP. That will leave a lot of the spending for the next government. Already, tax refunds are being delayed and oil companies are not being reimbursed for subsidies in time.
The government could also go on a populist announcements spree. Already, news reports say, Chidambaram is under fire for hard decisions and there is a call for rolling back fuel subsidy cuts. Rural Development Minister Jairam Ramesh, for example, wants to hike old age pensions paid under social welfare schemes, when there is evidence that much of this is not reaching the intended beneficiaries.
The assembly elections did not give a clear picture on how voters respond to welfare schemes. Welfarism didn't appear to work in Rajasthan and Delhi but seemed to work in Madhya Pradesh and Chhattisgarh. So, what is there to stop the Congress from announcing schemes? If it brings in the votes, that’s great (and the fiscal bridge will be crossed when it comes); if it doesn't, well, the next government will have to deal with the economic consequences. The only thing that might stop the UPA from doing this will be the fact that many welfare schemes are implemented by the state governments and non-Congress governments may just walk off with the credit.
The first path will put the economy back on the rails, but the gains for the Congress will be uncertain. The second could swing things in favour of the Congress, but will spell ruin for India. It is now up to Singh to choose between the two. As prime minister, he can still has veto power (though some of his ministers may slip things through). 

Dear Manmohan Singh, for the sake of the country, please opt for the former. You have nothing to lose but your reputation as a doormat.

Beyond voting: Why we can’t outsource change to netas

http://www.firstpost.com/politics/beyond-voting-why-we-cant-outsource-change-to-netas-1270437.html

What a sad reflection on the Delhi voter that a 67 percent turnout in an assembly election is being hailed as record-breaking and historic. The missing names in the voters’ lists and other glitches that prevented people from voting would not have made more than a difference of a few percentage points. It is the lowest voter turnout in the country (as it has always been) from a place where whining by the people is perhaps the highest.
Those lower down in the class hierarchy – the lower middle class and the poor – have always made up the bulk of the voters in Delhi. It is the relatively better-off and the well-heeled who preferred to grumble about The System in the comfort of their homes instead of actually getting out and doing something about it, even if it is just to take a couple of hours off on a holiday to stand in a queue and vote. They didn’t need to, because they could manage The System, regardless of who was in power. Maybe this section also came out to vote this year.
Various explanations are being offered for this year’s high turnout – the galvanising chutzpah of the Aam Aadmi Party, the Narendra Modi appeal and the dissatisfaction with the Sheila Dikshit government – but one will have to wait for the results to see which of these proved decisive. But it isn’t about this year alone. Depressing as the voter turnout scenario is, one must perhaps take grudging cheer from the fact that it has been increasing over the years. Something is obviously changing.
But does this indicate a more active engagement with politics and democracy, as almost the entire commentary on this year’s phenomenon seems to suggest? Voting during elections is seen as sufficient for doing one’s duty by democracy. Once that is done, everyone retreats into their apathetic, insular worlds for another five years. That is where the problem lies.
Engagement with democracy cannot be merely a quinquennial affair involving pressing a button on a voting machine. It involves being in a constant state of alert and speaking out – on everything from overflowing drains to corruption in high places. It is about keeping the pressure on elected representatives through the five years and not just at the end of that period.
It is also about the way we engage with our immediate environs, taking responsibility for our actions or non-actions, as the case may be. There is little point in knowingly flouting the law and bribing officials to, say, build an unsafe structure and then blame only politicians and officials when disaster strikes.
There is little point in turning away when a woman is being harassed or not accompanying someone who has been to a police station and following up a complaint and then blaming the government for lack of women’s safety.
Harassment bribes can be fought; there are mechanisms for that. It requires putting up with some inconvenience. That’s not easy to do for a middle class that is sapped of all energy by the daily grind of living life in Delhi. But are we doing even the little bit that is possible?
There is little point in demanding the right to recall or that elected representatives be held accountable to us when we are not even willing to hold office-bearers of our resident welfare associations (RWAs) – who are far more accessible, since they are our neighbours – accountable. One can’t go lower than the RWA as far as building blocks of democracy are concerned. But attendance at general body meetings held once in three months (sometimes even less) to discuss the colony’s problems and how the RWA’s budget is to be spent is rarely more than 30 percent, across Delhi. As a result, most RWAs are dominated by a few groups, which run amok whenever they are in power, just like political parties and politicians do.
Given this attitude, what is the guarantee that people will actively participate in the mohalla samitis that the Aam Aadmi Party has promised to set up? The proposal involves dividing assembly constituencies into zones (based broadly on municipal wards) and holding regular town hall kind of meetings which all residents of that zone can attend and discuss how the budget for that zone should be spent. It could, as supporters claim, deepen democracy by involving people more closely in the governance process, something they are excluded from currently. Or it could lead to anarchy, as critics insist. But given the high levels of public indifference, will either of these assertions even get a chance of being tested?
Change is not something that can be outsourced to a Narendra Modi or an Arvind Kejriwal or whoever else represents change at a particular point in time. They can come up with solutions for the macro issues, but it is the people who have to ensure that those solutions make a difference at the micro level. The leaders and political parties can bring in steps to bring corrupt officials in line, but they can’t come to your locality to supervise how roads are being built or see if officials are harassing someone for a bribe.
The change that they represent and perhaps facilitate will come only when individuals shake off their ennui and put the systems they may set up to good use. When we refuse to pay a bribe even if it means harassment. When we follow up repeatedly on a faulty public works project. Are we ready for that? Or will we go about our lives as usual and then, at the end of five years, blame Modi or Kejriwal for failure to bring change and then look for some other messiah?
The record voter turnout in Delhi is a cause for celebration only if it is a tentative first step towards a more active citizenship and a more sustained engagement with governance systems, inconvenient as they may be. Only that will lead to sustainable change, set the foundation for an entirely different kind of politics lead to a deepening of democracy.

The middle class too sells its vote

http://www.firstpost.com/politics/campa-cola-to-aap-the-middle-class-too-sells-its-vote-1234619.html

In April 2011, anti-corruption crusader Anna Hazare, riding high on middle class adulation, made a seemingly pithy remark. Indian voters, he said, can be bought for as little as Rs 100, one saree or a bottle of alcohol. They don’t, he lamented, understand the value of their vote.
It was an odious remark directed specifically at voters at the bottom of the economic pile, those who lived below, at or just above the controversial Rs 32-a-day poverty line. But barring a few commentators who slammed it, the ordinary public were delighted by it. Absolutely spot on, they said. It is the vote-bank politics that panders to these people which is ruining the nation, they sneered. The politicians regularise their slums and illegal power and water connections, give them illegal ration cards, protect the goons and so on.
And then there was the sanctimonious posturing. We don’t do these illegal things; we are law-abiding. We don’t go running to those vile politicians to bail us out.
That claim has been effectively shattered by the sight of the well-off residents of Campa Cola housing society in Mumbai not allowing demolition teams to enter the complex to bring down illegal structures as ordered by the Supreme Court. No tear-jerking histrionics were spared to whip up public sympathy. Pressure was put on the local politicians. In doing all this, the Campa Cola residents behaved no differently from the slum dwellers for whom actress Shabana Azmi sat on a dharna several decades ago and was roundly reviled for doing so.
There are some who hold that this case cannot be compared to that of demolition of slums. But the merits of this particular case are not relevant. The point is that the middle class is no different from the unwashed masses when it comes to breaking laws and then trying to go scot free.
The Campa Cola case isn’t an isolated one. In 2006, in Ulhasnagar in Maharashtra, public pressure forced the government to issue an ordinance that regularised illegal buildings. That same year in Delhi, a drive against unauthorised buildings had people who were singing paeans to chief minister Shiela Dixit suddenly turn against her. They even wanted the Delhi Master Plan to be changed to make the constructions legal.
The middle class also likes to believe – and more than that it would like others to believe – that its members vote responsibly and cannot be bought off. Nothing could be further from the truth. The middle class are as liable – and willing – to being bribed for its votes as the poor. Except that the bribe in question is not rice at Rs 1 a kg or cookers, television sets, laptops (regularisation of unauthorised constructions is something both classes have in common, though); the stakes are much higher.
What else was the announcement in September of the constitution of the Seventh Pay Commission but a bribe to the middle class voter? Why do reservations in educational institutions and government jobs become an issue before every election (the latest being quotas in Central government jobs for Jats)? Who else but the middle class of the target communities will benefit from this? What makes the Aam Aadmi Party zero in on electricity bills as the key election issue in the Delhi assembly elections? The majority of the Delhi voters are from the middle class (and are perpetually averse to paying bills and taxes) and this issue has touched a chord with it.
Remember also that the middle class is not a single ethnic/caste/community bloc. So its members are part of community-specific vote-banks (Muslim, upper caste Hindu, OBC Hindu, Dalit Christians etc.) that politicians woo and successfully at that through sectarian give-aways and promises.
What is also conveniently forgotten is that many of the freebies that are given in the name of the poor – notably the fuel subsidies – actually benefit the middle class. That is why one will never see the middle class criticising the economically disastrous subsidies on cooking gas, petrol and diesel, even as they denounce the equally ruinous food subsidies for the poor. And the middle class is quite willing to barter its votes for getting its illegal constructions regularised. In 2000, then Union urban development minister Jagmohan was a hero when he demolished slums in Delhi; he became a villain when the demolition drive targeted encroachments and unauthorised constructions in middle class and upper middle class localities. The demolitions became a major issue in the municipal elections and Jagmohan, who had to face the ire of his own party, lost the 2004 elections. The party cadres, facing the wrath of the middle class, simply abandoned him.
The middle class is going to play a huge role in the coming elections – the assembly elections round the corner and the general elections next year. And the middle class will be wooed – as a group and community-specific sub-groups – by politicians with all manner of promises. There will also be demands that the middle class will come up with, which will be met to the extent they can. Is this wrong? No. In a democracy, these are par for the course. But let the middle class not take the moral high ground that it is above selling its vote like the despicable poorer sections do.

Shutting doors on FTAs is a bad idea, push through reforms instead

http://www.firstpost.com/economy/shutting-doors-on-ftas-is-a-bad-idea-push-through-reforms-instead-1217035.html

News of finance minister P Chidambaram and chairman of the National Manufacturing Competitiveness Council, V Krishnamurthy, speaking out against India’s growing penchant for free-trade agreements (FTAs) invited a quick clarification from the commerce ministry.
Yesterday, The Times of India reported that Chidambaram and Krishnamurthy differed with Planning Commission Deputy Chairman Montek Singh Ahluwalia on the benefits of FTAs. According to the report, both Chidambaram and Krishnamurthy said FTAs had not been advantageous for India.
By evening the commerce ministry put out a press release pointing out that the effects of FTAs had not been as detrimental as they have often been made out to be and that there is an in-built mechanism of review in all agreements.
The last paragraph of the press release was a gentle rebuke – “. . . Indian exports to different regions are crucially dependent on competitiveness which is guided by other factors such as ushering in the second generation reforms on taxation, rolling out of GST, reform in labour laws, upgradation of infrastructure relating to power, ports and roads.”
Indeed, the lament over FTAs is really a lament over the complete lack of competitiveness of Indian industry and hence of its exports. That is why import of goods at zero or low duties under FTAs are possible and hurt domestic manufacturers (though the consumer benefits) even as Indian goods are not able to make significant inroads into markets that are now open to them.
Interestingly, Indian companies are using the FTA route innovatively, setting up manufacturing bases in countries with which India has signed these agreements and then importing the finished goods under the low duty regime. They do this for two reasons. One, the raw materials are available in those countries and importing them are costly. Two, it is easier to do business in those countries.
It is not as if Chidambaram and Krishnamurthy are not aware of this fundamental problem. Way back in 2006, The National Strategy for Manufacturing document put out by NMCC noted that “in order to attain competitive edge in manufacturing the constraints being faced by the sector have to be mitigated.” It then listed some ‘generic issues’ – lack of proper infrastructure, higher transaction costs, higher interest rates, inadequate power and other disabilities and regulatory issues, among others – that it would take up.
The report also notes that India suffers on competitiveness due to various factors such as higher import duties, including inverted duty structure; higher incidence of indirect taxes; sub-optimal levels of operations; lower operational efficiencies; higher transaction costs; lower labour productivity; higher cost of capital; and inadequate infrastructure. Taken together all of these are estimated to push up the cost of Indian manufacturing by between 15 percent and 30 percent.
Needless to say, keeping the cost of manufacturing low is the first step to being competitive. Chidambaram can address some of these issues – those relating to taxation and cost of capital - as they fall within the purview of the finance ministry. What is preventing him from doing so?
The solutions to the other problems are also well known and have been repeated any number of times for more than a decade now by economists, chambers of commerce, global consultancy firms and, yes, even by NMCC.
It is a telling comment on economic policy making in India that there has been no progress on these, with successive governments putting them on the backburner. By lowering import duties, without addressing these issues, FTAs can hurt domestic industry really badly. But using the poor competitiveness of Indian industry – because of bad policies – to stall FTAs is not the right remedy, since the country will lose out on the benefits they bring. And even if we take that approach, there is always multilateral trade liberalisation through the World Trade Organisation (WTO) to deal with.
Another WTO ministerial is scheduled for December in Bali and it is not clear which way it will go. If the Doha Round gets revived, then countries will have to prepare themselves for greater trade openness. If the deadlock continues, the popularity of FTAs (which became the preferred route to trade liberalisation because of the WTO logjam) will increase. Either way, it is clear that we are getting into a scenario of greater integration with the world economy. It has its advantages and disadvantages. It is necessary to maximise the first and minimise the other.
For India, both require a very strong dose of internal economic reforms. There is simply no getting away from this – for either this government or any government that comes to power after the next general elections.