Archive for the ‘political economy’ Category

17 Aug

Himalayan Blunders in Healthcare – Gorakhpur and Beyond

Posted by vramani in health & nutrition, political economy, public affairs, public policy. Tagged: , , , , , , .

This article was originally published on Indus Dictum, a site where thought leaders from diverse fields, spanning business and technology to politics and modern law, contribute unique insights and experiences. You can access the article at https://indusdictum.com/2017/08/17/himalayan-blunders-in-healthcare-gorakhpur-and-beyond/

In a country which is seemingly inured to bad news, the news of the deaths of a large number of children, infants and adults in a major hospital in Gorakhpur, Uttar Pradesh (UP) was like an atom bomb being dropped. Predictably, the blame game started immediately, with every opposition party and every media hack trying to pin the blame on someone, preferably the head honcho of the state. The previous Chief Minister was loudest in his criticism, forgetting that he had presided over the destinies of the state (and its health systems) till just a few months ago. In this atmosphere of cynicism and one upmanship, we are in danger of losing sight of the disease and focusing merely on the symptoms.

Let us start with some visuals, which convey the bald facts about the state of amenities in the Paediatric and Neonatal Intensive Care Units (PICU and NICU) of the hospital in question, the Baba Raghav Das (B.R.D.) Medical College and Hospital, the major tertiary health facility in the city of Gorakhpur, the bastion of the present Chief Minister of UP. These are reproduced from a tweet from Rahul Verma (@rahulverma08) based on the replies to a Right To Information (RTI) query of 2011.

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Reply from the office of the Principal, B.R.D. Medical College, to an RTI application.

The RTI reply of early 2012 gives telling evidence about the lack of facilities in the hospital (in particular, the non-functioning of critical life-saving equipment because of poor maintenance) and the significant staff shortages in both medical and nursing staff. Although this is a slightly dated reply, there is little reason to suppose that matters have greatly improved in 2017, given the disclosure that lack of oxygen supply to children and neonates could possibly have been a prime cause of the large number of deaths.

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Staffing shortages in medical and nursing personnel (Jan 2012)

The reply, which is signed by the Head of the Department of Paediatrics of the hospital, shows that 50% of the qualified medical posts are unmanned and 40% of the nursing posts are not filled in. Even more disheartening is the state of affairs in respect of critical equipment in the ICUs. The incubators, pulse oximeters and infant ventilators are not working, while 16% of the cardiorespiratory monitors are non-functional.

Only a detailed enquiry will (hopefully) establish the truth of the allegation that one of the primary causes for the deaths was, apart from encephalitis, the shortage of oxygen supply in the paediatric and neonatal wards. I am not too sanguine about the truth in this regard coming out given the conflicting statements from politicians, doctors and bureaucrats on when payments were released to the oxygen supplier and on whether oxygen shortage was in fact responsible for the deaths.

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Status of equipment and machinery in PICU and NICU.

But the issue goes far deeper than that of lack of oxygen supply alone. It is a pointer to the systemic rot in UP’s public institutions and in its systems of governance, a malaise that can be seen across institutional structures in different Indian states. Nowhere is this better exemplified than in the condition of India’s health systems.

UP’s public health care systems do not reach many of its citizens, especially the most vulnerable. This is partly due to the low percentage of public expenditure on health systems, as reflected in a 33% to 40% shortfall of over 31,000 health sub-centres, over 5000 primary health centres and 1300 community health centres in the state (as reported in the Financial Express). On top of this is the abysmal functioning of even such public health care institutions as do exist at the primary and secondary levels and the resultant lack of confidence of the public in these facilities. With primary and secondary public healthcare services not adequately available in Gorakhpur and its neighbouring districts, Sant Kabir Nagar, Siddharth Nagar, Maharajganj, Kushinagar and Deoria, the public is forced to come to a tertiary care facility even for ailments that can be treated at lower levels. A large hospital that already suffers from shortage of funds and skilled manpower, poor management, and corruption, is thereby further overburdened. The National Family Health Survey of 2015 (NFHS-4) data reveals the poor quality of health services that mothers and children receive. While 5% to 10% of mothers receive full antenatal care, medical check-up of neonates in the first two days after birth ranges from 9% to 25%. About 66% of children in the 12-23 month age group are fully immunised in Gorakhpur and Deoria districts, with the percentage falling to just over 40% in the other four districts.

Not surprisingly, then, rates of child undernutrition, morbidity and mortality, as well as maternal mortality rates (MMR), are high in this region. Mortality rates of under-5 children vary from 76 to 116 per 1000 live births and of infants (0-1 year) from 62 to 87 per 1000 live births, with 80% of the infant mortality rate being accounted for in the first 28 days after birth. Stunting and underweight rates in under-5 children exceed 40% and 32%, with well over 10% of children falling in the wasting category. MMR in the Basti and Gorakhpur mandals, where these districts are located are 304 and 302 respectively per 100,000 live births (all mortality figures are taken from the Annual Health Survey 2012-13 of Uttar Pradesh, conducted by the Census Commissioner of India and undernutrition figures from the NFHS-4 data). All these figures are distressingly high and place many of UP’s districts in the same league as war-torn states of Africa in health and nutrition indicators.

gorakhpur tragedy hospital doctors watermark.png

The underlying morbidity and mortality proneness of the population in this region, especially its children, is exacerbated by the surrounding external environment. In their recently published book, Where India Goes: Abandoned Toilets, Stunted Development and the Costs of Caste, Diane Coffey and Dean Spears have highlighted the contribution of the practice of open defecation to high stunting rates in children. Open defecation has persisted despite the Swachh Bharat Abhiyan, because of the notions of pollution associated with latrines in the house and the reluctance to empty the pit latrines. The Japanese Encephalitis (JE) virus, to which a large number of the present deaths are attributed, is spread by the Culex mosquito breeding in the swampy paddy fields which are a feature of eastern UP. With traditional immunisation rates themselves being low in this region, it should be self-evident that the two doses of the JE virus immunisation are also not covering a significant portion of children. Insanitary conditions coupled with poor immunisation rates and failure to reach health care early to affected persons – especially children – constitute a lethal combination that contributes significantly to high mortality rates.

This deadly cocktail of factors is aggravated by the endemic corruption in the health and nutrition sectors in UP. The scam in the National Rural Health Mission in UP has been facilitated by politicians and highly placed bureaucrats, including some from my former service, the IAS. Fictitious purchases of medicines for which payments were made were facilitated by doctors and officers of the health department in collusion with suppliers. This disease is by no means confined to UP: nearly every state in India is prone to this syndrome, given the centralisation of purchase powers in the state secretariats. In fact, the purchase of medicines is mostly made keeping in mind the interests of politically-linked powerful suppliers, with no analysis of the disease and illness pattern in different areas of the state, which would enable a scientific assessment of the type and quantum of medical supplies required. States are loath to adopt the pattern of Tamil Nadu, which set up the Tamil Nadu Medical Services Corporation over two decades ago to streamline the procedure for procurement, storage and distribution of essential drugs and medicines to government medical institutions throughout the state. UP has a similar scam operating in the ICDS sector, which is meant to provide wholesome take home rations to mothers and under-3 children, and hot cooked meals to children in the 3-6 year age bracket. A recent LANSA study details the systematic misappropriation of huge sums from the ICDS budget for lining the pockets of the politician-bureaucrat-contractor nexus.

Once again, in the ritual breast-beating that is going on in the media, there is the real danger that we will revert to the “business as usual” approach after a short hiatus. The Harvard economist, Lant Pritchett, characterised India as a “flailing state”, not quite failed like many of its Asian and African confrères but where accountability is extremely weak and where there is little control of the head over the limbs of the state. Even this is a very charitable interpretation given that, in the Indian context, the limbs behave just as the head dictates. What I wish to highlight is the need to focus on systemic processes and institutions rather than personalities and political formations. As the preceding paragraphs seek to establish, a combination of factors – man-made and natural – have contributed to the ongoing crisis in India’s health systems. Rather than looking for temporary scapegoats, the need for an overhaul of the system is overdue (one possible solution is outlined by the Foundation for Democratic Reforms). The acid test for the new government in Uttar Pradesh has arrived, whether it will tread the same beaten track of its predecessors or chart a new path to governance and the arrival of achhe din in UP. Else, we will be left to exclaim “Even you, Brutus?”

10 Aug

The Indian Political League

Posted by vramani in irony, political economy, public affairs. Tagged: , .

This article was originally published on Indus Dictum, a site where thought leaders from diverse fields, spanning business and technology to politics and modern law, contribute unique insights and experiences. You can access the article at https://indusdictum.com/2017/08/10/the-indian-political-league/

The match went down to the wire… ultimately, the winner was decided by the third umpire. No, I am not referring to a close finish in a cricket T20 match, but to the results of the Rajya Sabha polls in Gujarat. Like its acronymic twin, the Indian Premier League (IPL), the Indian Political League (IPoL) is today’s greatest spectator sport for the ten months of the year that the cricket IPL is not in operation. Indians have an abiding interest in these two spectator sports: cricket and politics. Spectator, because most have never played the game and because both circuses (like the Roman ones) provide titillation on an almost continuous basis, given the ubiquity of cricketing and political contests in the subcontinent.

I thought we Bharatvasis had had more than our fill of political spills and thrills after the Yadav father-son battle in Uttar Pradesh, the coronation of a religious head as Chief Minister in the same UP, the internecine struggle for power in Tamil Nadu after Amma’s departure and the “about-turn” change of government in Bihar. I was wrong: we are now in a perpetual silly season, where political shenanigans in different states dominate the public consciousness, titillated by the blow-by-blow descriptions given on a round-the-clock basis by screeching reps of the electronic media. As Gujarat has shown, we need our daily dose of Bollywood-style drama, replete with Bengaluru resorts, income tax raids and exciting polling processes coupled with hysterical scenes outside the Election Commission in New Delhi.

The IPL is, of course, still in its childhood (nine years and counting) as compared to its hoary grandfather, the IPoL, which has entered its sixty-sixth year of life. The IPoL, in the first fifteen years of life, was somewhat staid in appearance, resembling Indian cricket of that time, when test matches were the only source of entertainment for the masses. Things became far more exciting when legislators started defecting en masse on an almost daily basis after 1967, giving rise to the popular Aaya Ram Gaya Ram phenomenon. Elections also ceased to be once-in-five-year affairs and, with the delinking of Parliament and State Assembly elections, were held year in and year out. Things have become far more exciting in the past four decades, ever since the Congress Party’s dominance in the political hustings was successfully challenged, much in the same way that Bombay’s stranglehold over the Ranji Trophy was loosened by upstarts like Delhi and Karnataka.

But it is the similarities in the IPL and IPoL that command our interest and attention. An examination of these highlight both the features that the two have in common as well as the ways in which, with its infinitely superior financial resources and experience, the IPoL has managed to straddle universes that are outside the reach of a modest IPL.

ipl auction watermark

Everything starts with the auction of players. However, unlike the annual or biennial auctions in the IPL, the IPoL auctions are continuous in nature. These auctions are conducted by the team managements themselves and are held on camera. Unlike the IPL, there is no way to know the cost of each player to the team. In earlier days, especially after anti-defection laws were passed, auctions took place only at specified intervals, when elections or by-elections were due. Nowadays, the trend is towards mass auctions of large portions of a team, rather than individuals. After a match (read election) is over, even an entire competing team can be merged with the existing team (think Goa and Manipur).

What keeps the players in the IPoL engaged continuously are the opportunities given to them to twist the rules of the game to keep adding to the moolah already given to them at auction time. Even before the match starts, there are chances available to seduce the ground staff to prepare a pitch conducive to one’s strengths. These could include freebies distributed recklessly prior to the election or illegally transferred just prior to the start of the match. The players would not be averse to nobbling the on-field umpires as well: to their eternal regret, the umpires (the Election Commission and its paraphernalia) have proved immune to blandishments.

But nothing stops the players of one team from influencing the opposing team members, given that the open auction system is in place. The match can then be suitably fixed, with all the 22 players going through the motions of a keenly contested match. Even measures like shepherding all the players of one team to a hidden sanctuary prior to the match and producing them only at match time are often futile, given the ubiquity of mobile phones. Where phones are confiscated, there is nothing to prevent signals being given on field to compromised players, as was the case in IPL matches (and as was so wonderfully demonstrated during the Gujarat Rajya Sabha elections). The unsuspecting public is generally unaware of the charade, though it does wonder sometimes why its favourite batsmen are throwing their wickets away. The match-fixers — the management, the players and their backers and financiers — are reaping the rewards of the crowd attendance, through revenues from crowd payments (taxes, etc.) as well as from the extra-legal earnings through inflated infrastructure and supply contracts.

ipl stadium watermark

The only flies in the ointment for the players in the IPoL are the oversight authorities in the form of the Election Commission and the courts of the land. The players have a code of omertà between themselves, known more commonly as “honour among thieves”. Knowing that matches can go either way, depending on the quality of manipulation by both parties, the best option is to keep silent on the transgressions of one’s opponents, in the hope (and trust) that the favour will be reciprocated at the opportune moment. When nemesis does catch up in the form of a whistle-blower, an enthusiastic judge or a conscientious civil servant, the indicted players rely on the lumbering judicial system and the loopholes of the law to stay out of prison as long as possible.

This then is the “saam-daam-dand-bheda” approach, attributed to the astute Chanakya, that is the governing philosophy of the IPoL. It starts with friendly advice to opponents to join the current popular dispensation while the going is good. Where moral suasion is insufficient, the lubrication of lucre is added to sweeten the deal, either in the form of upfront payments or deferred gratifications in terms of dabbling in patronage and sharing in the spoils. The unmoving opponent is then subjected to the travails of the legal system, through innuendoes and insinuations leading to registration of cases and protracted litigation that could go on for decades, punctuated possibly by stretches in prison. It helps that most players in the IPoL have a past that renders them vulnerable to such pressures.

The final tool is the “divide and rule” strategy that has been perfected over the centuries by our colonial masters. The IPoL players are masters at winning the support of important segments of the crowd by exploiting differences in language, religion, caste and ethnicity. And so, the game goes on “to the last syllable of recorded time” as lamented by Macbeth. It is apposite that his soliloquy ends with the statement “It is a tale told by an idiot, full of sound and fury, signifying nothing.” His ruminations would find favour with our ancient sages, who saw this life on earth as maya. And yet, we go through the illusive make-believe, the political dramas that characterise our petty lives.

19 Jun

WHEN SILENCE IS NOT AN OPTION

Posted by vramani in government, political economy, public affairs, public policy. Tagged: , , .

(The full version of the open letter of 10 June 2017 can be accessed at the wire.in)

Sixty-five retired officers from different services came together in early June 2017 to pen an open letter to the public expressing their disquiet at the growing aggression in all forms of public discourse, the open expression of intolerance of the ‘other’ as well as the easy categorisation of all dissent as ‘anti-national’. These officers between them represent over two thousand person-years of public service in various capacities in state and central governments as well as overseas. What really motivated them to move from their quiet, retired environs into the public gaze, knowing fully well that there is a substantial constituency that would run down their motivations, vilify their reputations and seek explanations for their questioning society (and, by implication, the governments of the day) for acquiescing in, if not actively promoting, an environment that fosters animosity and hatred for one’s fellow human beings and a dogged desire to enforce conformity of behaviour in social and cultural norms, right down to personal choices in respect of food, relationships and dress?

For there is no doubt that the trolls and Doubting Thomases have crept out of the woodwork to attack the recent effort with renewed vigour. The assaults focus on the usual reasons:

  • Why did these officers not raise their voice in the past to instances of vigilante violence and misuse of authority by the state apparatus?
  • Many of them must be officers beholden to the past regime for favours granted to them or must be disgruntled at not being considered for plum post-retirement sinecures by the present dispensation.
  • Did these officers take questionable decisions in their different assignments while in service?
  • Having ruined the country over seventy years with their maladministration of public affairs, these retired officers now seek to demoralise the present government and place obstacles in the way of its effective functioning.

Answering these four issues may cast light on why persons who hung up their boots years ago have deemed it necessary to listen to their inner voices.

Those who point to the apparent failure of these retired officers to agitate issues in the past forget that these officers (and many of their colleagues) observed the dharma of organisational discipline while in service. Opposing wrong decisions does not require rushing to the press at the first opportunity, though this unfortunate trait has been observed increasingly in recent years. There are several ways of standing up to blatantly wrong political decisions: persuading the politician to change her decision, pointing out one’s inability to implement the decision and, therefore, accepting a transfer. It is not correct to say that retired officers have not expressed their reservations over government actions (and inaction) in the past, be it the 1984 anti-Sikh pogroms, the 1993 Bombay riots or the 2002 Gujarat episode. If retired officers did not come together often to voice a collective protest in the past, it was because events did not follow a predictable pattern at that time. The current hype built up over the dietary habits of a substantial section of the population and the efforts to restrict these, the aggressive responses to perceived threats to the nation and the repeated questioning of the loyalty of significant segments of the population by responsible public figures are a recent phenomenon. Many of the signatories have served in vulnerable areas at times when the nation faced both internal and external challenges. But never in the past was the atmosphere cranked up to such a fever pitch as is the case at present and certainly not at the cost of disrupting what is still a relatively delicate social fabric.

I am not ruling out that, like elsewhere in society, some of my fellow officers cultivate an unhealthily close relationship with political patrons. Speaking for my fellow signatories, I am sure that they are not in the game of repaying favours. Most of us worked under different political dispensations: I, for one, have worked with politicians of all the four major political parties in Maharashtra. While maintaining friendly ties with all, we have kept our distance from developing too cosy a relationship with any one political outfit: call it the survival instinct, if you will. We were aware of, and dismayed by, the aimless drift of the previous regime and the difficulties in working with some of the worthies of that coalition government. It amuses many of us that we are perceived as hankering after the fishes and loaves of office post our retirement. A look at the list of signatories reveals that a significant number of them resigned or prematurely retired from government service to pursue their passions or private avenues of employment. Even those who did occupy positions in the immediate post-retirement period were fully aware of the fact that 65 (that magic number again!) was the upper age limit for gainful employment, unless you were fortunate enough to be destined for governorships, ambassadorships or a political career. In any case, a disgruntled person still harbouring ambitions would be shooting herself in the foot by signing such a letter.

The easiest way to target a person is to cast aspersions on his/her character and integrity, especially in relation to decisions taken while in service. It is always easy to be an ex post facto guru, pointing out the apparent errors committed in the past. What is forgotten are the circumstances at the time the decision was taken, the processes followed in arriving at the decision and the quality and quantum of information available to the decision-maker at the relevant time. The civil servant lays no claim to infallibility: s(he) can only vouch for her/his bona fide actions while arriving at a decision. In any case, the issues presently at stake are of a nature where passing of judgments on the past actions of a signatory are of no relevance.

The final charge against us merits the closest attention and rebuttal. Politicians of all hues find it most convenient to blame civil servants for faulty policies, forgetting their role in contributing to the state of affairs. Unfortunately, the aam janata, stuck as it is between the Scylla of one political party’s rule (in one five-year tenure) and its opposing party’s rule (in the next five years) has no further options and lays the blame at the doors of the civil service. Where has the political class provided the inspiring leadership to motivate and guide the civil service to deliver great results? My seniors of the Nehruvian era and those of us fortunate enough to participate as (minor) actors in the immediate post-1991 period recall the enthusiasm in the civil services in putting together and implementing plans and programmes for economic development and change. There are many dynamic officers who innovate and bring change in their districts and departments. Alas, there is little publicity for these efforts, especially in the rarefied precincts of Lutyens’ Delhi and Dalal Street. The last thing any retired officer would do is to run down the government of the day. S(he) knows the constraints governments work under, especially at the state level, and always hopes and prays for rapid development and improvement in living standards of her/his countrywomen/men.

What has dismayed us is the approach (or rather, the lack of it) to building a social consensus on issues critical to the survival of the common woman/man. India has, unfortunately, never had participatory governance: the trend towards centralisation has been amplified in recent times, whether it be currency demonetisation, regulation of cattle slaughter or ensuring the dignity of women. Matters are not helped when public functionaries routinely ventilate historical grievances and seek to lecture the public on social norms and traditions. An aspirational society with a positive demographic dividend is routinely fed with tales of past glory (with a specific religious bent), rather than developing a scientific, analytical approach to life that can meet the unpredictable challenges of the twenty-first century. Above all, those controlling the levers of power seem to have conveniently forgotten the intricate mosaic of social and economic relationships that are the hallmark of a pluralist society. Imposing uniformity and conformity will stultify society and severely damage entrepreneurial abilities. At a time when fundamentalism and religious obscurantism are gaining a toehold (and more) all over the world, it behoves India, as one of the world’s most ancient, tolerant civilisations, to act as the beacon for guiding the world through increasingly stormy waters. Our open letter is an appeal to our fellow countrywomen/men to realise their oneness with all humanity and promote compassion, love and peace rather than intolerance, hatred and violence.

24 Apr

Maximum Government, Minimum Governance

Posted by vramani in government, political economy, public affairs, public policy. Tagged: , , .

No, I have not got the title wrong, as some people might think. It is just that a government elected on the platform of delivering efficient service with minimum intrusion into the lives of individuals is doing exactly the opposite today. And it is not just the executive wing of the state which is displaying this enthusiasm to “govern”. As if to match the executive step for step in this exercise, the Supreme Court has ruled that all liquor vends within half a kilometre of highways will have to shut down. So, after being told what she can eat and wear, who she can be seen in public with and what she can read and view, the aam aurat is now being lectured (and hectored) on where she can buy what she wants to drink.

Not that spirits that raise the spirits are popular with our stern, killjoy leaders (let me add a disclaimer that I don’t touch the stuff myself, so there is no personal grievance involved). Chief Ministers who had a beef about beef are now concocting remedies to counter heady brews. Gujarat state and Wardha district in Maharashtra state were the only two regions to traditionally face total prohibition, probably because Mahatma Gandhi had a link with both areas. I have often wondered how IAS officers in the states survived the schizophrenic experience of simultaneously administering both liquor prohibition and augmenting liquor revenues. Probably a case of the left hand not bothering to know what the right hand was doing. Bihar went in for total prohibition in the wake of a heady election victory for the incumbent government in 2015. There are few studies on the effectiveness of this move but I am willing to eat my proverbial hat if anyone claims that liquor is no longer available in Bihar. No state in India, leave alone Bihar, can boast of an efficient, corruption-free administrative machinery that can implement such measures. Driving liquor supply (and corruption) underground will benefit neither public revenues nor public ethics.

It is, however, more the issue of government priorities rather than a specific, ill-conceived policy that ought to worry us. We see the central government tripping over itself in its haste to streamline tax administration and plug leakages. While the indirect tax reform (through GST) was long overdue and welcome, the same cannot be said for the slew of measures to reform the direct tax regime. Starting with the midnight knock (and shock) of demonetisation and the twists and turns in policy over the past five months, the citizen has faced innumerable hurdles in accessing her own, hard-earned money. ATMs have run dry (and continue to do so at various places), bank staff are loath to honour even bearer cheques (as I have personally experienced) and customers are being discouraged from visiting bank branches. Honest tax-payers are now being arm-twisted to go in for Aadhaar registration or forego their right to file income tax returns (though not from paying income tax). So, we will have a situation in Financial Year 2017-18, where people wanting to pay income tax will be unable to do so in the absence of PAN identities but will still be liable for harassment by the IT petty bureaucracy: a compelling instance of maximum government but very poor governance.

We are also witness to a rash of cases where the state is unable, or, worse, unwilling, to enforce its writ in observance of the rule of law. Cattle merchants, if they are from the minority community, risk their lives in transporting cattle even for bona fide commercial purposes. That these instances occur in states ruled by the same party which is in power at the centre rules is cause for even greater concern. Governance starts with the guarantee of the citizen’s right to life and liberty as enshrined in Article 21 of the Constitution of India. In fact, we may term “government” to represent hard power, in the sense of enacting rules and regulations and enforcing compliance with these. “Governance”, on the other hand, represents the soft power of the state, in the sense that citizens voluntarily comply with laws based on a broad consensus on values and an ungrudging acceptance of certain behavioural norms. Governments function successfully when governance systems are seen to be impartial, nonpartisan, reasonably incorruptible and based on the rule of law. India is, and has been, through its independent history, afflicted by far too much government and inadequate governance.

The seeds of big government were sown in the early years of independence when the state sought to arrogate to itself a role in virtually every area of public functioning. Nehru’s grand vision of the “command economy” drew trenchant criticism from prescient observers like C. Rajagopalachari. Whether in the production of consumer goods or in the provision of important social goods like education and healthcare, the tentacles of government reached everywhere: the problem was the shoddy delivery of goods and services. 1991 saw some changes, with, over the following years, competition in sectors like banking, telecom and automobiles improving both the quantity and quality of goods and services. The problem lay in the approach to liberalisation: the licence raj was dismantled to a considerable extent but the inspector raj remained strongly entrenched. The ultimate irony arose during the decade-long UPA regime, when a Prime Minister turned into a pale shadow of his earlier avatar as a progressive Finance Minister. Oppressive government continued through the entire period – the instances of retrospective tax demands, messing up the telecom revolution and discouraging private investment in the petroleum sector through a combination of ham-handed regulation and excessive doubt of private sector motives come to mind – so much so that private investment slowed down to a trickle and investors hesitated to put their money in India.

Hopes for an economic renaissance soared again when the new government assumed office in 2014, on the promise of good governance rather than big government. Unfortunately, apart from certain positive steps like the GST legislation, the present government has fallen into the same habits that characterised earlier governments. Ideology has had a role to play in this but there is also the Pavlovian suspicion of the average citizen. With the central government (and its regional formations) obsessed with the dietary and cultural habits of its citizens, policing of consumption of certain forms of meat and of the mingling of those of opposite sexes has come to the fore, with vigilante right-wing groups acting as self-appointed guardians of morality. Article 11 of the United Nations Universal Declaration of Human Rights explicitly states “Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law…” Recent incidents like the lynching of those transporting cattle (and the subsequent police action against the victims of violence) and the illegal intrusion of police in the private relationships of consenting adults violate this universally recognised right as well as the constitutional guarantees of rights to liberty, freedom of association and to practice any profession or carry on any trade, occupation or business. The recent moves of demonetisation and tightening of the direct tax regime, while ostensibly directed against tax evaders and corruption, hurt the small man to a far larger extent. What is forgotten by those in charge of policy formulation is the enormous scope for tyranny in the petty bureaucracy charged with enforcing laws. The income tax official has acquired substantial powers of raid and seizure in enforcing his writ on the hapless tax payer, the lower municipal and police official has considerable scope to harass butchers and slaughter houses in checking “illegal” slaughter of animals and the local thanedar can question any man and woman seen together, in public or elsewhere. What is forgotten is the centuries-old “Indian” tradition of oppression of the average citizen by the lower bureaucracy and the continued inability of the higher bureaucracy (and the political class) to enforce norms of probity on this gargantuan bureaucracy.

Ultimately, the citizen will experience freedom only when technology (and strict enforcement) compel the lower bureaucracy, especially at municipal, thana and village levels, to conform to standards that are taken for granted in more mature democracies. It is not the central government that administers these levels of the bureaucracy: however, by its own actions, it should create an enabling environment where governments at lower levels are shamed into action to ensure responsive, corruption-free bureaucratic functioning. As of today, there are still no serious efforts to restructure the bureaucracy at all levels, review outmoded laws and make it easier for the citizen to carry on her daily professional and personal life. The recent United Airlines fracas in manhandling a passenger cost the airline over half a billion dollars in lost market value as investors punished it for its executive excess. Governments lose far more in the election market place when the public withdraws its confidence in the incumbent government: 2004 and 2014 are chastening examples for the political elite in India from both sides of the spectrum. Enforcement of the rule of law without unnecessary intrusion by the arms of the government is, in the long run, a far better guarantee of a happy citizen and a happy society, as also of the continued survival of governments.

 

6 Apr

No discussion, no debate, no consensus

Posted by vramani in government, irony, political economy, public affairs, public policy. Tagged: , , , , .

The government came up with forty amendments to central statutes as part of the Finance Bill, 2017. Nothing unusual, you might say, except that some of these amendments affected certain basic rights of the individual. By presenting these amendments in a Money Bill, the government managed to push them through without much debate in the Lok Sabha, where it enjoys a comfortable majority, and bypass the Rajya Sabha (where it is in a minority) altogether. This stratagem is becoming popular with the present government. They used it in 2016 to push through the Aadhaar Bill with a number of provisions that sought to virtually make obtaining an Aadhaar number mandatory for the citizen. This, despite litigation pending in the Supreme Court on what could be the scope of Aadhaar and the Supreme Court’s repeated directions to the government that it (the Supreme Court) would be the final arbiter on what the Aadhaar scheme could cover. Now, in one stroke, the government has gone beyond the provisions of even its own Aadhaar legislation to compel the honest taxpayer to register for Aadhaar. Come July 1, 2017 and the Kafkaesque situation could well arise where, after paying her income tax for the financial year 2016-17, the taxpayer finds that her income tax PAN has been invalidated and she cannot file her tax return, rendering her liable for financial penalties and incarceration.

The Finance Bill 2017 has also incorporated other amendments which merited taking the considered advice of the House of Elders, the Rajya Sabha. Certain tribunals have been abolished, their functions being taken over by other tribunals, without any clear rationale being spelt out. Not only that, the central government has armed itself with extensive rule-making powers to determine inter alia the qualifications, manner of appointment and removal of tribunal members and their emoluments. Given that the government is itself a litigant in a number of cases coming up before these tribunals, public confidence in the impartiality of these tribunals is likely to be severely shaken. Existing financial limits on contributions by companies to political parties have been removed and there is no need to disclose the party to which contributions are being made. Draconian powers of search and seizure have been given to officials of the income tax department: welcome back, inspector raj!

If these facets of unilateral exercise of executive power, unchecked by legislative oversight, were confined to just the Finance Bill, one could have ascribed it to overzealousness of the Finance Minister and his mandarins. Alas, the unbridled exercise of power has contaminated many other areas of government and society. Don’t like books that run contrary to your worldview? Just drag the publishers to court and let them stew in their own juice till they capitulate (Dina Nath Batra vs. Penguin/Wendy Doniger). Take offence at comments about a historical figure in a book? No problems, go ransack the venerable institution that worked with the author and destroy priceless, age-old artefacts and manuscripts, as goons of a ruling political party in Maharashtra did in 2004 (Bhandarkar Oriental Research Institute, Pune). The availability of alternative methods of civilised expression is apparently foreign to most citizens of the world’s largest democracy.

Mahatma Gandhi observed in 1947 “In India, no law can be made to ban cow-slaughter…It will mean coercion against those Indians who are not Hindus.” Like many of Gandhi’s sage views, this one too has been consigned to the dustbin, with states vying with one another to ban the sale of beef. In 2017, one state, Gujarat, has legislated to punish cow-slaughter with imprisonment for life. Not to be outdone, the Chief Minister (CM) of Chhattisgarh has declared his intention to hang those guilty of cow-slaughter. A non-binding Directive Principle of state policy has been converted into laws that infringe the right to liberty of the citizen (and even the right to life, if the honourable Chhattisgarh CM were to have his way). Meanwhile, summary justice (or, rather, injustice) is meted out by vigilante groups to those suspected of involvement in alleged cow-slaughter.

The newly-installed theocrat CM of Uttar Pradesh has trained his sights on Romeos through his anti-Romeo squads (William Shakespeare is turning in his grave, four hundred years after his death, at the ignominy being heaped on one of his most romantic characters). I shudder at the unlimited latitude given to the police force of Uttar Pradesh, not known, even at the best of times, to exercise moderation in its interpretation and implementation of the law. Dating in UP will soon be a dated concept, with no Juliet worth her salt daring to be seen publicly with, you guessed it, a Romeo.

Actually, Juliets in India are having a tough time even completing their education. School and college managements from Varanasi to Vellore have decided that information will enter the craniums of their female students only if they are suitably attired (suitability being decided by the management). Not only that, women students must keep their distance from male students (apparently to keep hormonal outbursts at bay), eschew library work after 6 PM and forego the privileges of wifi (to keep corrupting internet influences away).

And then, to top it all, we have that abomination called the Central Board of Film Certification (CBFC). It was bad enough when the CBFC puritans arbitrarily decided what was viewable only by adults. But now we have situations where certification is refused altogether for “lady-oriented” films. The latest news is that a film dealing with the demonetization episode is being referred by the CBFC Kolkata office to Delhi, so apparently terrified is the local officer of taking a decision on merits.

So, seventy years after India’s tryst with destiny, the Aadhaar-enabled, celibate, vegetarian, male Indian enters a Brave New World where he apes Gandhi’s three monkeys – “See no evil, hear no evil, speak no evil.” One does not necessarily dispute every decision taken by the government of the day. It is only that in a country with multiple sub-nationalities, religions, languages and traditions, a culture of debate and discussion ensures wide acceptability of laws and regulations, so essential for a functioning democracy. Jawaharlal Nehru, that inbred democrat, whose name is anathema to many of those in power today, wrote fortnightly letters to Chief Ministers uninterruptedly for over sixteen years from late 1947 to the end of 1963. Despite enjoying an unrivalled political status, Nehru was keen to justify his policies and explain their rationale and the motivations underlying them. Even in today’s rather vitiated political atmosphere, it would be statesmanlike for leaders to explain their actions to others, especially those opposed to their policies, and seek a broad consensus on the way forward. We would hardly want a scenario where people, on whom decisions have been thrust, echo the words of the disillusioned poet, penned by the inimitable Sahir Ludhianvi, in the film Pyaasa:

तुम्हारी है तुम ही संभालो यह दुनिया

यह दुनिया अगर मिल भी जाए तो क्या है

 

 

 

21 Mar

When the President of India speaks

Posted by vramani in political economy, public affairs. Tagged: , , , , .

(March 21, 2017 marks the fortieth anniversary of the lifting of the Emergency in India)

We normally get to hear the President of India speak on three formal occasions: on the eve of Republic Day and Independence Day and at the joint session of both Houses of Parliament marking the start of the Budget session. Of course, the President of India also makes speeches on various other platforms over his/her tenure. But what marks all these speeches is their standardised nature – they are either listing the priorities and achievements of the government of the day or are exhortations to select audiences on specific subjects. Which is why the publication of the first of his three volume memoirs by President Pranab Mukherjee was interesting: it was the first by a President while still in office. More intriguingly, it dealt with his first fifteen years in Lutyens Delhi during the Indira Gandhi era.

Of particular interest to my generation, which received its political education from the Emergency years, is his analysis and understanding of the Emergency – the events that led to it, the rationale for the Emergency and the happenings during that period and the political resurrection of Indira Gandhi in the post-Emergency years. Even today, forty years on, I remember my feelings on the morning of 21 March 1977 – “Bliss was it that dawn to be alive, but to be young was very heaven”- when a captive All-India Radio and Doordarshan had to admit that Indira Gandhi and her Congress Party had been decisively routed in the polls. At a juncture now in the country’s and world’s history when strong personalities bestride the political scene and when the tenets of liberal democracy are being seriously questioned by the inhabitants of such democracies, there is need to try and understand the social forces at work in a country like India and what these imply for a country which has defied its critics and sceptics by doggedly persisting with a democratic form of government, despite all its flaws and aberrations. A comparison of 1975/77 India and her offspring of 2017 bring out the bright and dark sides of present-day India and enable possible prognostications of what the future holds for us Indians.

  • The educated middle class expansion and its implications: Post-1991, the middle class population in India has grown significantly in numbers apart from being engaged in a variety of occupations. The 1975 Indian middle class was largely employed in government service and beholden to the rulers of the day. The present day middle class Indian could be an entrepreneur, one who works in the organised private sector or is self-employed, very often one with international footprints. She has had access to improved education opportunities, is far more aware of thought currents across the globe and has many more avenues to express herself openly. And yet, the educated middle class is today far more susceptible to the allurements of narrow nationalism, jingoistic pride and intolerance of the views of others, as evidenced by the vicious attacks on social media. The ideals which guided the framers of the Indian Constitution find little resonance with the millennial generation. The technocratic worldview has little patience for liberal, humanistic values. It is little wonder then that liberal democracy is facing an existential crisis today.
  • The explosion in mass media: Freedom of expression has been facilitated by the internet revolution and the humongous growth in electronic and social media. Those of us who had just All India Radio and Doordarshan for meeting our information needs during the Emergency find the current Babel Tower of the electronic media refreshing, even if somewhat irritating at times. Twitter trolls notwithstanding, there is opportunity for every Indian with digital access to put forth her views. And yet, the flip side can be disquieting. While print media in the past was privately owned, big business has now come to dominate both print and electronic media. Editors and news managers are under increasing pressure to conform to the business interests of their owners, unlike in the past. The dissemination of news is also coming to resemble a cricket Twenty-Twenty match, with inexperienced reporters (having little understanding of ground realities) excitedly putting forth garbled versions of the true picture. Even more dismaying is the tendency of news anchors (puffed up with self-importance) functioning as judge, jury and executioner, silencing all inconvenient voices and sending to the gallows those they consider lacking in patriotism and national pride.
  • The Big Brother syndrome – I am the State: We are now in the era of the strong man, whether in India, Russia, the USA, Turkey or the Philippines. Indira Gandhi in 1975 was strong in her own right but she did not have the wide, rapturous acceptance of her predominant position that a Narendra Modi enjoys today. The problem is that the person, party, state and nation are today all seen through the same prism. Criticism of any one of these is seen as opposition to the nation-state. An aura of invincibility is sought to be created around the superman, using the media and capitalising on an ineffectual political opposition. It is true that unlike 1975, when Tamil Nadu was probably the only prominent non-Congress state, today’s political scene is marked by a multiplicity of parties, especially regional formations, ruling in different states. Many of them are often hostile to the ruling party at the centre and lose no opportunity to oppose it on a variety of issues. However, with power and money rather than principles and convictions being the bases for political conduct, there is no certainty about the opposition either, as the recent events of manufacture of governments in Arunachal Pradesh, Goa and Manipur show.
  • Diversity – of language, customs and religion: Running a subcontinent of India’s size and heterogeneity is no easy business, more so for a centralised, authoritarian government, as Indira Gandhi found to her cost in 1977. The multiplicity of tongues, religious beliefs and customs, cultural and dietary patterns render the enforcement of a uniform, majoritarian worldview well-nigh impossible. But, in recent times, efforts are being made to impose straitjacketed versions of history, culture and ideas that are drawn from the Gangetic plains. Conformity with the majoritarian mindset is sought to be ensured through indoctrination, legislation and government action and, where these prove inadequate, through resort to vigilante action, whether to dictate what women can wear and do or what people can eat, see and talk.
  • Institutional capture: The first attempts by the government of the day to bend institutions of democracy to its whims and fancies started in 1975 with the supersession of judges of the Supreme Court and the enunciation of the concept of a committed bureaucracy, apart from very crude efforts to muzzle the media. History seems to be coming full circle once again, with steps being taken to exert the influence of the political executive on appointments to the higher judiciary and with no clear system being adopted for appointments to the elite bureaucracy at the level of the Government of India (the media has already been tamed to a great extent, as mentioned earlier). Institutions of higher learning and statutory bodies are being packed with appointees beholden to the reigning political order.

It is impossible (and highly risky) to hazard any definite conclusions about the likely direction of politics in India in the coming decades. Inferences can at best be drawn from the straws in the wind as revealed by the actions of the government and the averments of its spokespersons. In totting up the balance sheet for India’s political system, what gives cause for some comfort is the resilience of the Indian people and their refusal to tolerate incompetent, corrupt and authoritarian behaviour on the part of those elected to represent them. In the first volume of his memoirs, Pranab Mukherjee has glossed over the rationale behind the Emergency, apart from sticking to the usual Congress line of opposition indiscipline, unrest and the call for the resignation of the Prime Minister: having been a loyal Congressman for most of his life, it would be too much to expect him to frankly analyse the inner motivations of the primary actor in first imposing the Emergency and then calling for the elections that led to its end. What is important is whether, forty years hence, we as a people understand the significance of a functioning democracy and the rules and conventions by which it should operate. Sadly, we, the so called “thinking classes”, are ready to hand over our powers (and even our freedoms) in our quest for security and certainty, forgetting that democracy is eternally a story that is in the making. It is we, the citizens of India, who have to write that story, learning from past mistakes. Else, there will be need to revert to a perennially favourite quote of mine “Those who cannot remember the past are condemned to repeat it.”

25 Feb

Hamam Mein Sab Nange Hain!

Posted by vramani in irony, political economy, public affairs. Tagged: , , , .

“Judge not, that ye be not judged.                                                                                                        2For with what judgment ye judge, ye shall be judged: and with what measure ye mete, it shall be measured to you again.
3 And why beholdest thou the mote that is in thy brother’s eye, but considerest not the beam that is in thine own eye?”
(Matthew 7:1-3, The Bible, King James Version)

“Something is rotten in the State of Denmark”                                                                                       (Hamlet, Prince of Denmark: William Shakespeare)

It was extremely depressing to read the 60 page note purportedly penned by Kalikho Pul, former Chief Minister of Arunachal Pradesh, before he committed suicide in August 2016. The note, which virtually amounts to a dying declaration under Section 32(11) of the Indian Evidence Act (though there may be some legal quibbles about this) is a searing indictment of the Indian system of governance and leaves no institution with even a fig leaf of credibility. This is not the place to go into the details of the note and one hopes that there will be at least some anguished introspection about the incident which saw a new, rather ignominious first for the Indian republic: a public representative taking his life out of despair at the prevailing state of affairs.

Recent years have been ones of deep disenchantment for the people of India. Illusions about politicians died many years ago: most of them are seen as representative of the corrupt, venal strain of society. The socialist economy of the 1960s and 1970s established political corruption as part of the “command” economy, a legacy of the Nehruvian era. Political life has continued to touch newer and newer lows over time, as criminals realised that they could be direct participants rather than sponsors of the political drama-farce. 1991 was only a minor hiccup for the politician; by 1994, it was business as usual again. In any case, state governments continued to blithely operate by their own rules, with the new breed of politicians unconcerned about probity in public life.

The less said about my own tribe, the bureaucracy, the better. Till the mid-1970s, the uppermost echelons, the IAS, IPS and the Central Services had relatively few black sheep in their midst. Over the 1980s, shamelessness started to pervade even the elite services. The middle and lower bureaucracy in the states were infected with the twin evils of corruption and politicisation to an extent where, returning to field level administration in 2000 in the same area I had served in ten years earlier, I could hardly believe the extent to which the rot had set in. Things have only worsened in the new millennium and the ugly politician-bureaucrat nexus is now caught in a fatal embrace (fatal for democracy, that is).

Faith in the judiciary was the one reassurance one sought in an increasingly darkening scenario. Unfortunately, the judiciary never used whatever independence it had to set its own house in order. The backlog of cases piled up at a dizzying rate; measures that might have made a difference, like written arguments (in appeals), summary disposal procedures and specified, limited recourse to legal remedies were never pursued. Lawyers who, as officers of the courts, are expected to assist in the speedy provision of justice have often resorted to tactics aimed at deflecting rather than delivering justice, with judges remaining silent spectators. We now have an unseemly conflict between the highest levels of the judiciary and the executive on the manner of selection of judges to the upper echelons of the judicial system. That India has a woeful per capita judicial officer quota is beyond doubt. But neither have serious efforts been made by the government to rectify it nor has the judiciary tried to at least make the best of a bad situation and enforce accountability in performance and propriety.

The press started to crawl in 1975, when shown the whip by the government of the day. Print media at district levels had always had its share of doubtful characters, who lived off the largesse of government advertisements and downright blackmail. But the print media at national and state capitals was still peopled by stellar characters. The downward slide started with the domination of electronic media and the larger than life image of well-known media personalities. Given the incestuous ties of journalists with North-South Block and Dalal Street, it was only a matter of time before something like the Radia tapes exposed the seamy side of journalistic wheeling dealing. Today, it has become common to associate any media group with a specific political party or business house (in terms of ownership and/or ideological slant).

The biggest casualty in the morality stakes has been civil society. Corruption was endemic in Indian society, but, till the 1970s, at least attracted some opprobrium. It has now gained respectability; the honest officer faces the ire of her superiors, peers and even family members. Systemic reforms face hurdles at every level, with the Indian propensity for jugaad at its inventive best when devising methods for circumventing the law. Post demonetization, a fair amount of government energy has been expended on plugging loopholes in implementation.

Poor Mr. Pul was trying to draw attention to these national drawbacks in his impassioned letter. The meaninglessness of his heartrending wail lies in our hardened attitudes to lawbreaking and looting public money. As a nation, we have also developed the habit of blaming every institution except that one of which we are a member. The politician seeks alibis in the intransigence of the judiciary, the non-performance of the bureaucracy and the hostility of the media. The bureaucracy, when it is not cosying up to the politician, either blames the political executive/judiciary or outdated procedures and rules. The media relishes hauling the executive over the coals without seeking to understand the complexities of policy making and implementation. And, of course, the judiciary has extended its reach to virtually telling governments and other agencies how to run their businesses. No one seeks to set their own house in order. How many Ministers at Central or State level have foregone their discretionary powers in dispensing patronage or finalising contracts? None, barring the Union Railway Minister. How many officers have resisted the temptation to bend rules in their last years in service to secure post-retirement appointments? Probably a handful. How many journalists do not seek their mess of pottage in terms of house allotments and foreign junkets? The fingers of one hand may suffice for this. Members of the judiciary are yet to raise the bar of accountability to deliver speedy justice, enforce norms of integrity in their ranks and restore waning public faith in the effectiveness of the judiciary. And the general public has let institutions of governance get away with sub-optimal service delivery levels, adopting the prevailing motto of “each man for himself and the devil take the hindmost.”

In his book on the Mahabharata, the author Gurcharan Das had talked about the impossibility of being good. Our human failings make it impossible for us to stay on the straight and narrow path during the course of our tumultuous lives; even Yudhisthira had to utter a falsehood to get rid of Dronacharya. And yet, the beauty of human existence lies in our attempts to surmount our weaknesses and struggle to attain the noblest expressions of our humanity. Else, we will all be like the citizens of Mohenjo Daro in their open air baths, our nakedness visible for the entire world to see.

 

 

 

 

 

10 Feb

The Governor – His Master’s Voice?

Posted by vramani in government, irony, political economy, public affairs. Tagged: , .

The ongoing political drama in Tamil Nadu once again focuses the spotlight on the role of the Governor of a state. The Chief Minister of Tamil Nadu sent in his resignation letter to the Governor on the first Sunday of February, 2017. The Governor, who was holding additional charge of the state of Tamil Nadu, was, on that day, ensconced in the salubrious climes of Tamil Nadu’s premier hill station, Ooty. What he did subsequently defies comprehension. Instead of moving immediately to Chennai to ascertain who in the ruling party enjoyed the confidence of its legislators, he chose to decamp from the state, apparently reaching Mumbai via Delhi a day later. Meanwhile, the outgoing Chief Minister, after communing with the spirit of his mentor, decided that he would rather continue as Chief Minister. The subsequent Mahabharata saw the s**t hit the ceiling, with the current Chief Minister and his likely successor, a long-time confidant of the deceased Chief Minister, trading ugly charges of conspiracy that would have done credit to a William Shakespeare play.

More to the point, what ought to concern us is not the Tamil Nadu drama, which has all the makings of a successful Tamil movie, but the way in which, once again, the institution of the Governor has taken a beating. Governors have come (and gone) in all shapes, sizes and political hues, contributing more than their share of controversy to the wonder that is India. We have seen Governors pressurising administrations of Universities to alter marks of politically influential students, indulging in unbecoming behaviour in Raj Bhavans and, recently, leaving after allegations of sexual harassment. More par for the course have been the efforts of Governors to interfere with the constitutional process for government formation in the states (especially opposition ruled ones), generally at the behest of the political masters who appointed them. Arunachal Pradesh is still fresh in our memory, with the death of one Chief Minister and the overthrow of another following gubernatorial actions; ditto for Uttarakhand, where it needed the Supreme Court to reestablish constitutional norms. Any government coming to power in Delhi exercises its divine right to sack existing incumbents and appoint its chosen favourites as Governors. Out of work or inconvenient politicians are generally the first choices, though the list often extends to bureaucrats, police officers and army officers who have established good equations with the ruling dispensation. There being nothing like a free lunch, especially in statecraft, favours have to be returned by the appointees, mostly through political meddling and (in case of opposition ruled states) making life difficult for the government of the day. Rare, or nonexistent, would be the Governor who takes any decision of consequence without the prior nod of the political bosses in Delhi. A more recent bad habit of the central government has been its propensity to not appoint a full-time Governor for a state but to give additional charge to another Governor. A major state like Tamil Nadu, which has had more than its share of political turmoil and natural calamities in recent months, has been among the victims of this cavalier approach of the Delhi Sultanate.

It would, of course, be unfair to tar all Governors with the same brush. There have been outstanding personalities like Surjit Singh Barnala and Gopalkrishna Gandhi, who have not only displayed qualities of independence from the Delhi Darbar but have also rendered sage counsel to their state governments. In my own karmabhumi of Maharashtra, I remember the quiet dignity of C. Subramaniam, the political father of India’s green revolution and the dedication of P. C. Alexander to removing the developmental backlog of the Vidarbha, Marathwada and Konkan regions of the state. Despite being close to both Indira and Rajiv Gandhi and being appointed Governor by a Congress government in 1993, Dr. Alexander enjoyed a close rapport with the Shiv Sena-BJP government in Maharashtra and, paradoxically, was supported by these parties for elevation to the post of President of India, though not by the Congress Party, proving that a Governor can endear himself to all shades of political opinion through a professional, nonpartisan approach.

However, since such Governors are the exception rather than the rule, there is need, in a situation where, increasingly, the centre and states are ruled by parties with different ideologies and political beliefs, for the Governors of states to be selected by an independent process. I suggest that Governors should be selected by a collegium comprising the Vice President of India, the Prime Minister, the Chief Justices of the Supreme Court and the concerned State High Court and the Leader of the Opposition in the Lok Sabha. This would ensure that a totally incompetent political apparatchik is not foisted on an unwilling state government. It also gives scope for a reasoned choice where a state faces major challenges like insurgency, political instability or law and order breakdown.

Nonpartisan choices of competent public figures for the post of Governor are the need of the hour in a scenario where the professional politician in power in the states is increasingly pandering to the urges of the lowest common multiple in the electorate and is concerned only with hanging on to power at all costs, consequences be damned. More disturbingly, political flunkies who, as Governors, act neither as per convention nor in accordance with the Constitution damage the credibility of the democratic process. A misstep in a state like Tamil Nadu with a history of strong local sentiment could well have consequences that endanger the federal consensus that is the bulwark of a republican democracy. The sooner the political elite of Lutyens’ Delhi realise this, the better it will be for the health of the Indian polity.

1 Dec

Demonetization – Phase 2 – from cash to cashless

Posted by vramani in government, political economy, public affairs, public finance. Tagged: , , , , .

The first month of demonetization has been a trying one: long queues, frayed nerves, some panic and the usual meaningless political drama. Now that the genie has been let out of the bottle, it makes more sense to work out the future steps than to flog the dead horse. I chanced on a news item where a Pune-based not-for-profit outfit, Arthakranti, has claimed credit for planting the idea in the Prime Minister’s brain. Unfortunately, they have also pointed out that, of their recommendations, the government of India implemented only one. Since not many would have gone through their suggestions, I am detailing them below, along with my views on the way ahead, as well as two critical issues that will need a push from the government if the cashless economy is to become a reality in the not so distant future.

Withdrawal of high denomination notes (₹ 1000, 500 and 100) from circulation was the one recommendation that has largely been implemented. Arthakranti had, however, proposed a phased withdrawal programme starting with the ₹ 1000 note, then the ₹ 500 note and finally the ₹ 100 note, spread over three six-month periods, with an adequate supply of newly printed notes of the next lower denomination to substitute for the withdrawn currency note. Finally, the highest denomination note in circulation was to be the ₹ 50 note. Without trying to guess the compulsions of the government in rushing through such a monumental process in fifty days without ensuring adequate supply of currency of legal denominations, there is no denying that much pain has been caused to the general public, apart from the man-days lost in queues and the depression in economic activity just when the kharif crop has been harvested and the rabi sowing is due. Having done what it did, the government should now move towards a gradual phase out of the ₹ 2000 and ₹ 500 notes, probably over the next 12 to 18 months, with adequate provision of ₹ 100 notes to avoid the situation we went through in November. I would advocate continuing with the ₹ 100 note for at least another three to five years till cashless payment systems are firmly established as the preferred transactional mode.

A cap on legal cash transactions of ₹ 2000 has tentatively been proposed by Arthakranti. Given the large number of unbanked Indians and the gestation period that will be needed for cashless payment systems to be put in place, I would be more comfortable with a cap set at ₹ 10000 for the period when the ₹ 100 note continues to be legal tender, with the cap being reduced to ₹ 5000 once ₹ 50 is the highest currency note in circulation. Any transaction in cash above this cap should be made illegal and liable for punitive action.

The truly revolutionary recommendation of Arthakranti is the replacement of all domestic direct and indirect taxes (central, state and local) by a banking transaction tax (BTT), with only import and export duties continuing in respect of internationally traded goods and services. This is tantamount to killing many birds with one stone. Coupled with the cap on legal cash transactions, this brings every transacting citizen into the tax net. Any transaction through a bank account (with automatically attached Aadhar and PAN card details) attracts a BTT of 2 percent, as suggested by Arthakranti. The BTT is added to the transaction value and deducted from the amount realised by the payee. The BTT realised is shared between central, state and local governments and the banking intermediary. With the tax net covering all transactions over ₹ 10000 (ultimately ₹ 5000), the system can be revenue-neutral even at a rate which is barely 7% of the currently highest marginal income tax rate or 10% of the anticipated GST rate. The ordinary citizen will be spared the ordeal of filing direct and indirect tax returns, an exercise that today taxes even the most nimble-minded chartered accountant. Governments at all three levels can save money on the huge army of tax inspectors, assessors and enforcers in departments ranging from income tax and central excise to state excise, land revenue, stamp duty, registration fees, commercial taxes, road tax, entry tax and property tax. User charges paid online will not only accrue immediately to the concerned department/agency but revenue receipts to the concerned governments and banks will also be instantaneous. The BTT would also cover agriculturists, who are out of the income tax net for political reasons, despite the recommendations of the K. N. Raj Committee over four decades ago. Most importantly, black money generation through corruption and tax evasion, and its conversion from cash to other asset forms like real estate and jewelry, can be checked.

Reaching out to the huge unbanked portion of the Indian economy requires, as a prerequisite, a digital revolution: the cashless economy can be built only on the foundations of a digital economy. Efforts to promote cashless payments and cash transfers in MGNREGA and the PDS have foundered on the absence of virtual connectivity in large swathes of the country. With banking services not covering even the last ten miles, let alone the last mile, banking correspondents, armed with point-of-sale machines, and mobile wallets are probably the major means by which money can be accessed. This, however, requires microwave towers, with reliable electric supply. Where the terrain does not suit microwave tower connectivity and where electric supply is yet to reach (which are the areas where the most disadvantaged sections of Indian society live), there is need to rely on satellite connectivity coupled with towers powered by solar energy. A second concern is that of cyber security. With increasing criminal infiltration of cyberspace, development of secure, encrypted systems is the need of the hour to avoid economy-wide disruption of financial systems.

Demonetization was initially promoted as the solution to check tax evasion and corruption and deal with counterfeiters and terrorists. With growing public irritation and the downturn in business, the government has started trumpeting the virtues of a cashless economy. This requires a paradigm shift in technology and in individual mindsets. But above all, it requires certain crucial reforms in other sectors of our democracy and polity. I will deal with these in a future blog.

19 Nov

Money…the root of all evil

Posted by vramani in government, irony, political economy, public affairs, public policy. Tagged: , , , , .

“For the love of money is the root of all evil”
(Timothy 6:10, The Bible, King James Version)

The Bible makes it clear that it is not the medium which is evil but the inordinate attraction to it. Before we castigate that poor banknote or coin, let us also reflect that greed is only one of the human failings, on par with envy, fear, lust and anger. And yet, the action of the government of the day to render worthless ₹ 500 and ₹ 1000 denomination notes at the drop of a Prime Minister’s speech has left the common citizen speechless and in the grip of a welter of emotions. The intentions may be good and the purpose may be noble : there is a groundswell of support today for the government’s actions among the chattering classes, even though the silent masses are going through difficult times. But is “black money” so easily tamed? Since there seems to be popular misconceptions about “black money”, its origins and nature, some clarifications are in order.
Black money can refer to a flow or to a stock. It is the activity through which the money is generated which determines whether it is black or white, while the subsequent use of the money determines its colour at that time. For example, a private engineering college accepts a donation in cash from a student and declares only 25% of the amount as received. The remaining 75%, which is held in cash, or converted to other assets (and not declared as income), constitutes black money. If this money is used to pay cash salaries to the college employees, the money gets converted from black to white, since the employees use it for their legitimate monthly expenses. Similarly, undisclosed “black money” income parked abroad (as stock) is converted to a “white money” flow when it legally reenters India as foreign institutional investment from foreign tax havens. The roots of black money can lie where activities are wholly illegal (smuggling, drug dealing, arms transactions), or where the activity is legal, but part or whole of the amount realised is not disclosed, either because there has been some violation of permissible limits (illegal mining, capitation fees) or simply to avoid tax payments of any kind. The mythical metaphor could be Ravana’s ten heads in the Ramayana or the Lernaean Hydra in Greek mythology: chopping off one head would see more heads grow back again. A modern day analogy would be the Jackal, the terrorist tasked with the assassination of President Charles De Gaulle of France. With his multiple stolen passports and the ability to change his appearance to suit the passport photograph, the Jackal evaded stringent police surveillance and was finally stopped in his tracks by a patient, persevering French policeman only after he had managed to take a crack at his target. Black money is similar: just when the enforcement agencies think they have got the beast, it will reappear in a new form elsewhere.

In these days of highly fungible economies, the very processes of economic and government functioning give immense scope for the generation of black money. Since I started this article with a quote from the Bible, it would be appropriate to list the Ten Commandments that the Government of India must follow if the current demonetization drive is to come anywhere near yielding the desired results:
I. Thou shalt make bank accounts mandatory and easily accessible
The innovative idea of the Pradhan Mantri Jan Dhan Yojana (PMJDY) to provide every Indian citizen with a bank account has seen as many as 254 million accounts being opened till November 2016. By the government’s own figures (gathered from banks), nearly 25% of these accounts have zero balance; there is an average of about ₹ 2500 in the remaining accounts. The geographical spread of these accounts would be highly skewed: remote tribal and rural areas are likely to be underserved. It is the poor with no access to bank accounts who have been hardest hit by the demonetization exercise. The significant percentage of zero balance bank accounts is testimony to the fact that bank accounts are still not perceived as useful by the poor, especially where they have little bankable surplus and where bank locations and timings are such that they cannot easily be accessed. Making the opening of a bank account by every citizen above the age of 18 mandatory would popularise the use of banking services and compel hitherto reluctant bankers to actively seek customers. There will still be areas where access to bank branches is difficult, either because of geographical location or, more often, because of timings which do not suit the customer. It is here that the Second Commandment comes into play.
II. Thou shalt actively promote the cashless economy through the use of technology
Mobile wallets and payments through mobile phones and computers using internet and wireless technology can obviate the need to visit banks. Use of point of sale (POS) terminals at all transaction outlets would promote cashless transactions. Money transfers (salaries, etc.) can be done online or using mobile phones. Banking correspondents can ensure needed cash payments from and deposits to customers’ bank accounts. This will need some knowledge of how to use these systems. Having seen how quickly nearly 900 million Indians have mastered the use of mobile phone software, including the use of WhatsApp and the downloading of videos, I do not foresee any problems of adapting to modern technology. There is, of course, still the need to ensure that the temptation to escape the electronic trail is checked…enter the Third Commandment.
III. Thou shalt declare illegal and void any cash transaction exceeding ₹ 10000
Given the Indian propensity for jugaad, all efforts will still be made to evade scrutiny of economic intelligence agencies by going in for over and under the counter cash payments, to avoid payment of direct and indirect taxes. Black money will be converted into holdings in real estate and gold/jewelry. To ensure a clear electronic trail of all transactions, any cash transaction over ₹ 10000 should be made illegal and liable for punitive action, including confiscation. This will also, hopefully, check the widespread and pernicious practice in India of large-scale cash transfers in real estate dealings to evade payment of capital gains tax, stamp duty, registration fees and other related levies.
IV. Thou shalt demonetize ₹ 2000 and ₹ 500 notes
The rationale for introducing ₹ 2000 notes when the lesser denomination of ₹ 1000 has been scrapped has raised many eyebrows: suitcase payments become easier when the number of currency notes required to be packed into the suitcase are reduced by 50%. A strong case can be made for scrapping all currency notes of a denomination greater than ₹ 100. In fact, there is growing support from American economists for withdrawing from circulation the 100 dollar bill which, they feel, helps only drug dealers, terrorists and illicit activities while rarely being used for transactions. India may not be quite in the same cashless economy boat as the USA, but moving the economy in the cashless direction requires demonetization of ₹ 500 and ₹ 2000 currency notes. The presence of currency in only small denominations from ₹ 1 to ₹ 100 would force reluctant merchants to go in for cashless technology. It would also render more difficult the task of using low denomination currency notes in large numbers for high value transactions.
V. Thou shalt make Aadhaar and PAN card details mandatory for all transactions above ₹ 10000
Despite the objections of neo-Luddites opposed to the universal deployment of the Aadhaar card for all, it is heartening that, for schemes like the LPG subsidy transfer, Aadhaar cards are being linked to bank accounts. Since opening a bank account does not require either Aadhaar card registration or PAN card details, there is every scope for diversion of unaccounted for income to benami accounts. What is urgently required is to link Aadhaar and PAN card details and to make PAN details mandatory for any transaction exceeding ₹ 10000. This would check possible misuse of bank accounts which are not on the income tax radar (due to non-availability of PAN details) and would also ensure that non-income taxpayers (like agriculturists) are not used as conduits for undisclosed payments.
VI. Thou shalt discontinue top-level political decisions in all discretionary matters
A major scope for corruption lies in the centralization of decision making powers at the political apex, especially in state governments and local bodies. Whether it is the posting of officers, the permission to start primary schools or the award of contracts for anything from chalk pieces to supplementary nutrition for children to major constructions, the ministerial seal of approval is a must. This has spawned a major corruption industry which enmeshes a significant portion of the bureaucracy as well. We are also often regaled with stories of the MLA or local body corporator who becomes a multimillionaire within a year or two of getting elected. The standard defence is that elections are a costly business, although how that justifies corruption is beyond one’s comprehension. Be that as it may, there is no denying that, apart from lowering administrative efficiency and providing substandard services to the aam aurat/aadmi, high-level political corruption is a significant source of black money, often ploughed back into real estate and conspicuous consumption. Since this is a disease that cuts across political boundaries and is particularly common at state and local government levels, the Government of India must, through a combination of incentives and shaming, compel governments to restructure their governance processes and decentralize decision making powers.
VII. Thou shalt implement a sound public procurement policy
The Government of India had introduced a Public Procurement Bill in 2012 to regulate and ensure transparency in procurement by the central government and its entities. The bill was allowed to lapse and there have been no efforts subsequently to resuscitate it. Most state governments have no public procurement policy or legislation in place. Even in the few states where such legislation has been passed, its effectiveness has never been assessed. Since, apart from administrative postings and patronage in resource allocation, public procurement is the greatest source of political and bureaucratic corruption, some urgent action on this front is essential to check amassing of illegal wealth by the politician-bureaucrat-businessman trinity.
VIII. Thou shalt eliminate the inspector raj through online processes
The permit-license raj was curtailed in 1991; unfortunately, the then government lost steam before the death blow could be delivered to the inspector raj. There are still too many ‘inspectors’ in local bodies, police, road transport, liquor licensing, education, industry and labour welfare, whose major function appears to be the collection of economic rent, for themselves and those above them in the government hierarchy. Some streamlining of licensing processes has taken place but the overall picture is still one where the inspector-tout system flourishes: just visit any Regional Transport Office and see for yourself. This corruption has two “black money” aspects: firstly, the unlawful gains to the organs of the state and, secondly and more dangerously, the operation of a parallel economy that can threaten national security and financial stability. Technology is, again, the only answer. As more processes go online, self-certification by licensees and only minimal, essential contact with the human element can help reduce corruption and harassment.
IX. Thou shalt streamline the justice system to deliver just deserts promptly to all bribe-takers, bribe-givers, tax evaders and hawala traders
As an American jurist put it “The millstones of justice turn exceedingly slow, but grind exceedingly fine”. Justice in India often seems inordinately long in coming. It is rather ironic that, in recent times, a public prosecutor of Indian origin investigated and secured the conviction of two well-known individuals of Indian origin on charges of insider trading in a matter of four years in the USA. While we may not all support his approach, it is a fact that high profile cases involving top political and bureaucratic functionaries in the previous central government are still far from closure even in the trial court. Lengthy, tortuous legal processes not only breed cynicism in the populace at large (not a healthy sign for a democracy) but also embolden lawbreakers with political and economic clout. Sincere and speedy implementation of the provisions of the Benami Transactions (Prohibition) Act, Prevention of Money Laundering Act, Prevention of Corruption Act and related legislation will show that the government means business. Along with the government, the judiciary also needs to tighten its processes and dispense justice fairly and speedily.
X. Thou shalt ensure that all elections are funded only through legal contributions and that all transactions relating to elections are closely monitored
The final Commandment covers a subject which is at the foundation of the efforts to tackle the genesis of black money: electoral corruption. Election funding is itself a small portion of the black money generated. But the politician-businessman nexus that unaccounted election funding sustains has deleterious long-term implications for the economy as well as for the credibility of democracy in the eyes of the people. There are politicians who proudly claim that they have never enriched themselves personally but have taken money only for their political party. Political parties have never been required to account for the sources of their funds and have stubbornly resisted efforts to bring them within the ambit of the Right To Information Act. Demonetization should bring about a situation where all receipts and all expenditures, small or big, by parties and their candidates can be electronically tracked. This will give the Election Expenditure Observers far more teeth than they have at present. With rigorous monitoring of electoral expenses, the last fig leaf for justifying corruption before, during and after elections will be gone.

I write this piece at a time when the nation is probably going through one of its greatest phases of turmoil since independence, rivalled only by the churning of the polity in the closing months of the Emergency in 1977. As one who lived for over a decade in the vicinity of Muhammad Bin Tughlaq’s aborted capital of Daulatabad, his other aborted experiment with currency comes to my mind. Of course, 2016 is not 1333 and we are not minting brass and copper coins, though the flimsy quality of the Rs. 2000 currency note makes me slightly apprehensive. There will always be insinuations that raw political calculations dictated the demonetization decision. The current pains that large sections of the population are going through could have been mitigated somewhat if some of the Ten Commandments had been implemented prior to the “surgical strike” on the currency. As matters now stand, systemic changes on the lines suggested above would give the government some victories on the black money front in the months and years to come. Human greed will remain, the craze for conspicuous consumption and the Big Fat Indian Wedding will continue unabated and the Cayman Islands and other tax havens will always beckon those with an insatiable appetite for moolah. But the government would at least have the satisfaction that it made earning a fast buck that much tougher for those who are never going to respect the rule of law, while also ensuring that it does not make the wretched life of the common (wo)man even more wretched.

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