Archive for August, 2015

Swachh Bharat or Swachh Bharatiyas?

As another Independence Day rolls along, we, as Indians, need to introspect on an issue that we are all fond of speaking and writing about but not so much on taking positive action. The Father of the Nation, Mahatma Gandhi, with his eye for detail and his passionate conviction about the need for self-improvement, deplored the insanitary habits of his countrymen. It is, therefore, in the fitness of things that his 145th birth anniversary in 2014 saw the launch of the Swachh Bharat Mission by the Indian Prime Minister. And yet, if one sees the habits of fellow Indians, one doubts whether the ambitious goals to be reached by the Mahatma’s 150th birthday will be realised. I do not wish for a moment to spread pessimism about what is undoubtedly a noble venture. It is just that our countrymen (and, to a lesser extent, countrywomen) are still so blissfully ignorant of, or uncaring about, basic hygiene. The four letter words that we are taught to abjure in conversation are very much in existence when we undertake, in public, different functions relating to waste disposal (for the sake of politeness, I will leave it to my readers to infer them).

The first and foremost sight that assails our visual senses whichever way we turn is the one huge garbage dump we have made of our habitations, whether city, town or village. I had personal experience of this till recently at the flat in Bengaluru where I stayed for one year. The open space next to the flat was the dumping ground for the solid and liquid waste of all the households in the area. The owners/tenants of the higher floors of flats abutting the open space did not even take the trouble of coming down to throw the waste; the law of gravity did all their work. Compounding the problem in Bengaluru is the absurd approach of the Municipal Corporation, which apparently does not believe in garbage bins. Not surprisingly, there are piles of garbage at every street corner, adding to the menace of flies and mosquitoes. Bengaluru may be the information technology capital of India, but it is also fast achieving the status of the dengue capital of India. Even when the garbage is collected, no scientific method of segregation of wet and dry waste is employed; the entire muck is thrown into the back of three-wheeler vehicles. I am told that the transport lobby is powerful enough to stall alternative approaches to waste collection. While working in the Mumbai Municipal Corporation in the late 1990s, one of my jobs was to oversee the cleaning of storm water drains in the eastern suburbs from Chembur to Mulund. With every type of dry and wet waste finding its way into these drains, including industrial scrap from the thousands of small manufactories in Kurla, it came as no surprise that the first heavy downpour accompanied by high tide levels would leave large parts of the city totally submerged. The same story repeats itself even today in Mumbai, despite the (pious?) intentions of the city fathers (and mothers) and its bureaucrats. In the late 1990s, Mumbai had created a force of nuisance detectors empowered to detect and penalise (through fines) citizens littering and spitting on the roads. Like all good ideas, this died a natural death in the course of time. But, in the final analysis, it is only when his pocket is hurt that the blasé Indian citizen will heed instructions on waste disposal, as he does in Singapore, San Francisco and Sydney.  Nor is the problem of waste limited to land sites. The cleaning of the holy Ganga River, revered by millions of Indians, was undertaken with much fanfare almost thirty years ago. There is little to show for all the money, time and effort that have gone into this exercise. Contrast this with the successful exercise in fifteen years after 1986, of the Swiss, French and German governments, to improve the quality of water in the Rhine River, which flows through heavily industrialised areas. Water quality monitoring is carried out every six minutes at different points along the river in Germany and offending industries are penalised. One has not heard of any similar measures being implemented along the Ganga, with the tanneries of Kanpur City spewing out carcinogenic poisons into the river, not to mention the many urban settlements along the course of the river discharging their sewage directly into the Ganga.

We move on to another national pastime: spitting. An apocryphal story has it that Mahatma Gandhi once remarked that if all Indians spat together, it would be enough to drown all the three hundred thousand Englishmen ruling India. The habit shows no signs of abating after India’s independence. Move anywhere in public and you are greeted by a hoarse, hawking sound, followed an instant later by the expectoration of an ample quantity of body fluid. The widespread fondness for betel leaf (paan) and tobacco lends a touch of colour to the environment. The walls of public buildings (especially staircases) receive a generous coat of human paint at regular intervals. Woe betide the individual dressed in spotless white clothes: he has a more than even chance of getting his clothes dyed a reddish pink through the oral efforts of his fellow man (yes, this is an activity to which gender equality has not yet percolated). And yet this is one activity where no concerted public action is evident till today, notwithstanding its public health hazard: the prevalence of tuberculosis in India is, at least in part, an unfortunate consequence.

There is yet another waste disposal activity which has remained a jealously guarded male preserve: urinating in public open spaces and on walls of buildings. Build any number of public toilets and Sulabh Shauchalayas: the male Indian still retains his birthright to let fly in public. I still remember being overcome by ammonia fumes when passing one of the colourful gates in Jaipur; architectural marvels are not immune to these depredations either.

And then we come to India’s greatest public health and sanitation problem: open defecation. Not only is this a major cause for the spread of an assortment of communicable diseases, recent studies have also established a direct correlation between this and child stunting, where India registers one of the highest percentages in the world. Women bear the brunt of the lack of toilets: not only does it constitute an affront to their dignity, it also compromises their safety when they have to venture forth in darkness. I still recall the women of the village having to hastily stand up on the roadside in the midst of their ablutions in fading daylight when, as a district officer, I had to enter or leave the village at that hour. Toilets in urban slums were, and still are, badly maintained and child-unfriendly, leading to highly insanitary conditions in areas already burdened by poverty and poor healthcare access. Even after fifteen years of a national sanitation campaign, more than half the country is not served by toilets, whether public or private.

I have not even touched upon noise pollution, an area where India, with its election campaigns and religious functions, not to mention car, bus and truck horns, holds its head proudly aloft in the comity of nations. A touch of black humour has been injected by a recent Indian government report ranking the best performing Indian cities in the Swachh Bharat campaign. Bengaluru, which I have had occasion to refer to earlier, ranks among the ten best cities in the country. Experts feel this high ranking is largely on account of good intentions and the relatively worse position in other cities. It reminds me of the finance manager-philosopher Nicholas Taleb’s description of Mediocristan where the values of a population are clustered around an average in what we term to be a normal distribution. In the Indian Mediocristan, a slightly better performer tends to be eulogised since the benchmarking is by modest national rather than outstanding international standards. Be that as it may, it is now time for all Indians to pay attention to issues that bedevil not only our lives but imperil those of future generations as well. With apologies to Cassius, “The fault, dear Indians, is not in our stars, but in ourselves”. The Mahatma was prescient in making cleanliness one of his planks for social change; it is apt to close with a quote generally attributed to him “हम सुधरेंगे जग सुधरेगा” (be the change you want to see in the world).


Happy Independence Day!




Beware of Greeks accepting gifts



When the war between the Trojans and the Greeks entered its tenth weary year, the desperate Greeks, on the advice of their seer, offered the Trojans a huge wooden horse while seemingly withdrawing from the battlefield. The overjoyed Trojans brought the horse within their fortress, ignoring the prophetic warning of their priest not to accept the gift. His words, rendered in Latin in Virgil’s Aeneid, were “Timeo Danaos et dona ferentes” which, literally translated, reads “I fear the Greeks, even when bringing gifts”. The consequences of this folly are now history: the Greek warriors hiding in the horse emerged at night and decimated the Trojans. Cut to the present day and the shoe is on the other foot: it is the Greeks, who have taken financial assistance from the troika – the European Central Bank, the European Commission and the International Monetary Fund (IMF) – who are faced with the Scylla of an exit from the European Union or the Charybdis of enforcement of unpleasant austerity measures at home. And it is the Europeans who now fear the Greeks accepting rather than giving gifts.

The Greek drama has its share of villains, depending on your ideological sympathies. The free marketer will blame the profligate approach of the Greek government while the left of centre statist will hold “evil” international capital and its institutional handmaidens responsible for the unthinkable situation where a developed country has, for the first time, defaulted on its debt obligations.  As with everything in life, the truth lies somewhere in between. The Greek people, and their governments, spent as though there was no tomorrow.   More importantly, they forgot the prudent maxim of any thrifty householder: don’t spend beyond your means. Running up budget deficits, they resorted to external borrowings to cover their expenses. It also appears that successive governments cooked budget figures to hide the true budget deficits. Enter the IMF, with its usual “slash and burn” policy. Undeterred by the experience of its disastrous handling of the East Asian crisis in  the late 1990s, the IMF prescribed the usual austerity measures, including drastic spending cuts. The carrot for these harsh measures was in the form of financial assistance from the troika. The problem was that far too much of this assistance went to pay private creditors of the Greek government or was spent in unproductive areas like military spending. With the option of currency devaluation foreclosed by its membership of the Eurozone, Greece could not think of spurring export growth to promote industrial growth; nor could it employ monetary policy to kick start the economy and ease the budget deficit. The obvious result of reduced public spending was the adverse impact on welfare  payments like pensions, a sharp deceleration in growth and a rapid increase in unemployment, noticeably among the youth. The resulting anger in these sections saw Greece getting its first leftist government towards the end of 2014. It was only to be expected that a government with a reddish tint would forswear “anti-people” austerity measures. At the same time, the new government knew that it could get no further credit without belt-tightening measures. It, therefore, went in for the masterstroke of a referendum on the austerity measures sought by the troika. This was a win-win situation for the new government; by asking for a vote against austerity measures, it took a populist stand which it thought would go down well with its voters. Expectedly, the people (from whom you can hardly expect a deep understanding of either  economics  or realpolitik) voted against austerity measures. As things turned out, the government has had to subsequently accept even more onerous conditions from its creditors; only, it can now tell its voters “See, we were on your side, but these big, bad Europeans left us with no other option”. The problem, post-referendum, is that Greek citizens, especially pensioners, insecure public sector workers and the growing tribe of the unemployed, are likely to be bitter about their “betrayal”, leading to lack of public support for the unpleasant measures that are to follow.  So the Greek drama ends for the present, with neither the dire predictions of Greece exiting the Eurozone nor the collapse of the Euro currency becoming a reality, at least in the near future.

As a former practitioner and a present student of public policy in India, I am interested in the lessons the Greek episode throws up for India. We went through similar harrowing times twenty five years ago, when the family gold had to be pledged abroad to save our national honour. There are four clear messages emanating from the present brouhaha for our politicians and policy makers:

1. Stay away from chronic debt:

What applies to families and companies applies to countries as well. You have to be able to service your debt obligations at least to some extent from surplus revenues to avoid falling into a debt trap. An essentially requirement for this is to keep budget deficits down to a reasonable limit. On the one hand, this means that tax collection systems (both direct and indirect) have to be robust and reasonably leak-proof. On the other hand, it also involves adjusting budget expenditures to avoid serious revenue deficits. This is an area where governments generally rush in where wiser men would fear to tread. Governments in India, both at the national and state levels, display a penchant for ill-thought out social schemes. The previous United Progressive Alliance (UPA) government enacted legislation providing entitlements to a broad spectrum of the population in the areas of rural employment, education and food security. The goals are certainly praiseworthy; the schemes, however, involve expenditure estimates that are hazy at best and will go up once implementation across the country is in full swing. There is also the very real danger of well-intentioned schemes being implemented by a disinterested, corrupt bureaucracy, the end result of which would be unproductive use of valuable public finances. This phenomenon of wastage of public money is already evident in the across-the-board subsidies in the power, cooking gas, water and fertiliser sectors, where public resources are being wasted on the well-off sections of society. The touching faith in bureaucratic solutions to every problem has spawned a bloated, inefficient bureaucracy, with guaranteed tenures and no performance compulsions, which constitutes a burden on government finances, especially with decennial wage hikes. There is also the matter of the touching faith of the government (and influential sections of the intelligentsia) in the public sector, which, in the absence of managerial reform, is bleeding government finances. All of which point to the precarious nature of public finances — a sharp economic downturn can derail these and put pressure on the economy. Start borrowing to finance the deficit and you are headed in the same direction as Greece; a number of states in India already live mostly on the largesse of the national government.

2. Be and remain competitive:

Healthy tax revenues and a booming market require competitive industries which can create domestic jobs. In the globalised era, this also means being internationally competitive to avoid being swamped by cheaper competitors. Alas, this is one area where the Indian economy continues to limp along, “Make in India” exhortations notwithstanding. Recent land acquisition legislation makes getting land for any public purpose a Herculean enterprise. Apart from the astronomical compensation cost, there are the bureaucratic hurdles to be surmounted, including getting an Environmental Impact Assessment, a Social Impact Assessment and a Resettlement and Rehabilitation package (this last applies even to land privately acquired) approved by the authorities. At the best of times, land acquisition has been an excruciatingly slow process: add the requirements of public consultation and owners’ consent and you have a process that could drag along to eternity. Archaic labour laws cannot be reformed unless the government is ready to take the unions head on a la Thatcher. The longer this takes, the less the incentive to start new industrial ventures in the country. The cost of borrowings is also much higher in India than in many of its present and potential competitors. The icing on this rather unappetising cake is the lack of ease of doing business, where the World Bank ranks India 142nd in a list of 189 countries. Little wonder, then, that recent years have seen even Indian companies fleeing to safer, more productive investment pastures abroad. With Indian companies already on the lookout for investment opportunities abroad, it would hardly be surprising if foreign private investors too are tempted to try their luck in environments friendlier than India. Indian politicians and policy makes must hear the wakeup call before India gets left behind in this competitive race.

3. The world doesn’t owe you a living:

Indians have been lecturing other countries since the days of Nehru and Krishna Menon. The bubble was punctured by the Chinese invasion of 1962 and finally burst in the mid-1960s when food aid had to be secured from the USA, a country loftily scorned by the Indian powers-that-be during the first fifteen years of Indian independence. Nearly all politicians and most bureaucrats, as well as large sections of the intelligentsia, comprising the media, academia and judiciary, seemed to think (and still think) they were (are) doing private investors a favour by allowing them to bring their money into the country. From my personal experience, I can testify to the reactions of investors around the globe when our team from the Indian Petroleum Ministry was marketing investment opportunities in the oil and gas exploration sector in India in late 1991. Responses ranged from cautious in Houston to sceptical in Singapore and downright hostile in London. Things improved somewhat in the late 1990s and the early years of this century. But the environment has again turned anti-private investment in the last seven to eight years, thanks largely to a lack of conviction at the level of the national government. Whether it is whimsical interpretation of contractual commitments (petroleum sector), ex post facto tax levies (financial sector) or simply reluctance to allow entry (retail FDI/mining), public policy is hostage to domestic vested interests and to a “command and control” mentality that harbours a nostalgic fondness for development through public investment alone, blithely ignoring private-investment driven success stories in the information technology and telecommunications sectors. When push comes to shove, not too many tears will be shed internationally for India’s travails (notwithstanding its position as the “world’s largest democracy”, “promising emerging economy” and “country with large market potential”) if it runs into economic difficulties on account of its inability to provide an environment conducive to private, especially foreign direct investment.

4. Use referendums as a political tool but don’t take them seriously:

Whether Greece or India, democracies the world over are representative democracies, which means that the voters select the women and men who will articulate their interests through legislation and policy making. It is generally a bad idea to decide policy through a referendum. The abortive Greek experience is there before us. Nearer home, the Aam Aadmi Party (AAP) has as much of a fascination for referendums as does the Syriza ruling party in Greece. It conducted one in 2013 to ask citizens to decide whether it should form a government in Delhi with outside support. It plans to hold one more now on the issue of statehood for Delhi. In both cases, AAP lands on the right side of public opinion. In 2014, it could blame the Indian National Congress Party for the collapse of the government; this certainly paid dividends, with AAP sweeping to power with an overwhelming majority in the 2015 elections. It can now again lay the blame for failure to confer statehood on Delhi on the ruling Bharatiya Janata Party dispensation in Delhi. All this makes for politics that Machiavelli and Kautilya would be proud of. However, the mechanism of asking the people at large to take a view on specific issues has two major flaws: firstly, it uses people’s emotions to decide an issue, certainly not the best way to take a dispassionate view and, secondly, it presumes an understanding by voters of the specific issues at hand. Even given their high levels of literacy, it would be ambitious to presume that the people of Delhi understand the implications of statehood, with the increased responsibilities of fiscal management. The lesson for those in power and for those in society who harbour idealistic thoughts about referendums is: by all means conduct them, but don’t think their results can be used to guide policy actions. The unfolding Greek tragedy has lessons for the present day, just as the classic Greek tragedies highlighted the foibles and follies of humankind.