Archive for the ‘public affairs’ Category

15 Jan

Companies and CSR – the Indian experiment

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

Corporate Social Responsibility (CSR) has been a favourite topic of discourse in the public domain over the past decade or so. With instances coming to light in recent years where actions of companies have impinged on the environment and the lives of local communities and with a far more discerning and voluble public, companies, and more so, governments, are aiming for responsible policies that, while promoting commercial interests, also take into account the sensitivities of the populations that will be affected, directly or indirectly, by these policies. The Government of India spelt out these obligations as far back as 2011 when it issued National Voluntary Guidelines (NVGs) listing out the social, environmental and economic responsibilities of businesses in India. The NVGs were, however, advisory rather than mandatory. It was only with the new Companies Act, 2013 (“Companies Act”) that Corporate Social Responsibility (CSR) spending was formally made a statutory obligation for companies incorporated under the Companies Act.  The objective was that companies deriving commercial benefit from their business operations should, as good corporate citizens, give back something to communities.

Section 135 of the Companies Act has laid down the procedure for companies to develop a CSR policy. However, the only specific issue mentioned in this section (that has a financial implication for the company) is the obligation for companies exceeding a threshold limit of net worth, turnover or net profit to spend, in a financial year, at least two percent of the average net profits of the preceding three financial years on any of the activities listed in Schedule VII of the Companies Act. These range from eradication of extreme hunger and poverty to promotion of education and gender equality, reducing child mortality, ensuring environmental sustainability and social business projects. As mentioned in the Report of the High Level Committee (“HLC Report”) appointed by the Government of India to suggest measures to improve monitoring of implementation of CSR policies, it is for the first time in the world that a provision for CSR spending has been made part of a statute. The HLC Report “…is convinced that the main thrust and spirit of the law is not to monitor but to generate conducive environment for enabling the corporates to conduct themselves in a socially responsible manner, while contributing towards human development goals of the country.” The first few years would necessarily be a learning experience for all stakeholders, including the government. It may, therefore, be instructive to focus on some of the key areas of implementation to see how this unusual piece of legislation could work out in the coming years.

It is quite clear that the intention of the CSR legislation was not to supplement public resources for social and human development; government could as well have taxed the companies to raise additional resources for this purpose, as has recently been done with the 0.5% enhancement in service tax rates to meet the costs of the Swachh Bharat campaign. Too often, non-governmental organisations (NGOs), particularly the larger ones based overseas, tend to wrongly visualise their roles as substituting the efforts of government. They tend to invest significantly in manpower and other resources in projects they take up on a pilot basis in certain parts of the country. The major drawback in such efforts is the failure to integrate the project with the local, especially public, resources already on the ground in a specific social sector. The result is that excellent outcomes reported in a very localised area almost never attain either scalability or sustainability. They are not scalable because of a lack of buy-in from the public service delivery machinery and the failure to enthuse/convince governments to adopt similar approaches in other areas. With NGO resources being finite, the initiative cannot be sustained even in the initial success area, leave alone extend it to other areas. There are lessons in such previous initiatives which need to be drawn by corporates if they are not to squander their CSR resources on small local projects that do not survive the withdrawal of the initial sponsor. It may make more sense for companies, especially larger ones, to link up their CSR spending with activities that complement ongoing programmes of the government. This view finds support from the HLC Report recommendation that companies with annual CSR spends of over Rs. 5 crores should undertake programme based sustainable CSR activities, with some measurable outcomes, while companies below this limit can go in for project-based activities. In fact, companies should, where resources permit, link their CSR activities to ongoing development programmes of the government. This would benefit such government programmes in two ways: (a) pilot initiatives could be started in selected areas, with the lessons learnt from such pilots being used to improve public programme implementation; and (b) governments could benefit from the innovative ideas and new concepts that corporate involvement brings to social ventures. This has been the rationale for at least one such multi-stakeholder partnership in the state of Maharashtra a few years back, the Bhavishya Alliance. This Alliance, comprising leading corporates, the Government of Maharashtra and NGOs/community based organisations, focused on reducing under-6 child malnutrition in Maharashtra state between 2006 and 2011.

Although it is rather early to start analysing the implications of specific provisions relating to CSR spending in the Companies Act and Companies (CSR Policy) Rules, 2014 (“CSR Rules”), certain issues may perplex companies and bedevil smooth implementation of CSR activities, unless greater clarity is forthcoming in the coming days and months on interpretation of some of the provisions:

  • Section 135 requires companies to give preference in CSR spending to the local areas where their operations are based. While this does not necessarily circumscribe company discretion to extend CSR activities to geographical areas not necessarily contiguous to their operational areas, it can give rise to interpretation conflicts. The HLC Report talks of companies with over Rs. 5 crores annual CSR expenditure being allowed to go in for programme-based activities. A number of such activities may not always be feasible in the immediate vicinity of company operational areas. Also, companies (especially family-owned ones) may wish to spend their CSR funds in the areas from where the founder came (Gujarat, Rajasthan, etc.) though there are no company operations in these areas. Most importantly, this may limit CSR spending in areas sorely in need of such human capital investments (in education, health, nutrition, etc.), such as remote tribal areas. In fact, there is need for governments to specifically encourage CSR investments in the most backward regions of the country, which often receive far less than their due share of budgetary resources.
  • There is a specific provision in the CSR Rules that CSR activities should not include those pursued in the normal course of business. Schedule VII of the Companies Act, which lists the eligible CSR activities, has been expanded three times already since the Act was notified in February 2014. It is well-nigh impossible to fully anticipate the nature of activities that qualify for CSR spending. Development priorities and needs can vary across time and geographies; hence, the HLC Report recommends an omnibus clause which covers all activities that serve a public purpose and enhance public welfare. Alternatively, the Companies Act should be amended to provide for specification of such activities in the CSR Rules, so that the Department of Corporate Affairs can amend the Rules as and when necessary.
  • In its present form, the Companies Act does not prescribe any penalty for non-compliance with the provisions of Section 135. It provides for what in regulatory parlance is termed “comply or explain”. The annual report of the Board of Directors of a company simply has to explain why the required amount could not be spent. Of course, in this age of social media, a multi-billion rupee company that trotted out silly reasons for its inability to spend on CSR activities would face public scorn, not to mention the adverse impact on its social image and the loss of goodwill. And yet, there could be valid reasons, like major business downturns, for a company’s failure to meet its CSR expenditure obligations. Rightly, then, the Companies Act has refrained from penalising non-compliance in spite of the mandatory nature of Section 135. However, Sections 450 and 451 of the Companies Act prescribe punishments ranging from fines to imprisonment for contraventions of provisions of the Companies Act for which no penalty or punishment is provided elsewhere in the Companies Act. In the absence of a specific clarification that these punitive sections do not apply to actions under Section 135, it is not impossible to visualise some overzealous bureaucrat bringing the might of the state to bear on infractions by companies under this section.

In the final analysis, the CSR legislation, despite its mandatory tone, is more self-regulatory rather than punitive, requiring a mature approach from both companies and governments. Both parties need to see how they can collaborate in using company resources to achieve the greatest public good. Companies need to shed their earlier approach of deeming that they have met their social obligations if they contribute to a schoolroom or a balwadi. Rather, the emphasis should be on CSR investments that contribute to ongoing improvements in the social and economic status of communities for which the CSR expenditure is intended. Companies should also interact on a regular basis with government departments and agencies to jointly examine how they can contribute to building managerial capabilities of the public service delivery machinery and introducing innovations in ongoing government programmes to ensure better outcomes. On their part, governments (especially state and local governments) should proactively assess and list programmes and activities where government efforts will be positively boosted by private support. The objective should be to develop a menu of activities which can be posed to various private sector partners for participation along with the government in improving standards of life. The Upanishadic exhortation “Vasudhaiva Kutumbakam” (the whole world is one family) has special relevance in the context of these efforts to improve the lot of one’s brothers and sisters.

 

 

1 Nov

Killing Mockingbirds – A Twenty First Century Syndrome

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

It is not often that a writer hits the bestseller list with her first novel. Harper Lee achieved that with her masterpiece “To Kill A Mockingbird”, which describes the racism and social inequality prevalent in the 1930s in the American South. A black man, Tom Robinson, is falsely accused of raping a white woman from one of the most wretched white communities on the fringes of society. The prevailing animosity of whites towards blacks, seventy years after slavery was formally abolished, manifests itself in efforts of some members of the white community to lynch the accused. In the ensuing trial by an all-white jury, Tom is sentenced to death, despite a brilliant defence put up by his white lawyer, Atticus Finch. Atticus is able to discredit the evidence of the rape complainant very comprehensively, although this does not lead to a verdict of acquittal. Despairing of getting justice in a system weighted against his community, Tom is killed while trying to escape from jail. The father of the complainant, a down and out reject of society, seeks to avenge his humiliation at the trial by attempting to kill Atticus’ children, losing his own life in the process. What the novel highlights is the number of innocents who are caught in the web of this bigotry and hatred. The author likens these to mockingbirds, which cause no trouble to humans and give pleasure through their singing. Hence the injunction of Atticus Finch to his children never to hunt mockingbirds. Tom Robinson, like many others in the novel, is the mockingbird caught in a vortex not of his making but of which he has to reap the grim consequences.

Twenty first century India is in some ways (and unfortunately increasingly so) reminiscent of the American South of an earlier generation. In recent times, women, children, householders, truckers, scholars, writers and journalists have been at the receiving end of lynch mobs for just trying to live their lives as they deemed best, without in any way interfering in the lives of others. The provocation (as so termed by vigilante groups) can be linked to a certain worldview about “culture”, which gives no space to diversity of individual behaviour, intellectual thought and even dietary practices. Women in Mangaluru (and elsewhere) have been targeted for expressing their individuality in ways which in no sense constituted any violation of the law of the land but “offended” patriarchal mindsets of some groups. Violence against women has been a longstanding feature of Indian society (protestations of its veneration of women notwithstanding) – what is disturbing in recent years has been the concentration of violence against women seen as bucking traditional mores and behaviours expected of women – whether it is association with the opposite sex, visiting places (e.g. pubs) seen as male prerogatives or even establishing their financial independence through gainful employment. Freedom of expression (enshrined in Article 19 of the Constitution of India) has been sought to be curbed extra-legally ever since the forcible exile of M. F. Husain two decades ago. Then we had the unedifying spectacle of hooligans from the Nationalist Congress Party (in power in Maharashtra at the time) vandalizing the Bhandarkar Oriental Research Institute in Pune  and destroying priceless manuscripts to protest the research support it is supposed to have given to a “controversial” book on the Maratha ruler, Shivaji. More recently, writers like Perumal Murugan in Tamil Nadu have been pressurized to disown their writings which some social groups objected to, apart from the as yet unsolved murders of three rationalist scholars over the past two years. The last straw on the camel’s back has been the recent incidents of mob violence against members of minority denominations by socially dominant groups enjoying political patronage, ostensibly on the grounds of offending religious sensitivities related to alleged beef consumption.

There are two disturbing aspects to these developments that make all right-thinking, sober Indians reflect on (and despair of) the direction that Indian society seems to have taken. The first refers to what the political theorist Hannah Arendt has termed as “tribal nationalism” in her book “The Origins of Totalitarianism”. As she puts it “(Tribal nationalism) can be easily recognized by the tremendous arrogance, inherent in its self-concentration, which dares to measure a people, its past and present, by the yardstick of exalted inner qualities and inevitably rejects its visible existence, tradition, institutions and culture…tribal nationalism always insists its own people is surrounded by “a world of enemies”, “one against all”, that a fundamental difference exists between this people and all others. It claims its people to be unique, individual, incompatible with all others and denies theoretically the very possibility of a common mankind…”. The concept of an Indian nation is barely seventy years old. National pride was sought to be rekindled during the two hundred years of British rule by hearkening back to a pre-Muslim conquest glorious past, as though to deny the existence of history after 1192 CE (the Battle of Tarain), which marks the start of Muslim political ascendancy in India. It is unfortunate that, today, history is sought to be rewritten on the same basis, ignoring six centuries of social and political evolution which influenced the mosaic that is present-day India. It is even more unfortunate that this ersatz history has had its impact on certain sections of society, especially those exposed to a limited worldview founded on prejudice and a marked sense of inferiority, leading to a conviction that the majority community must assume its “rightful” place in the country. The “other” then becomes a convenient scapegoat for all one’s shortcomings and no effort is spared to impose a majoritarian worldview on all other communities.

The second aspect, and this is one that can be fatal to the very existence of a democracy, is the lack of respect for and observance of the rule of law. The police and security forces have, on a number of occasions, been swayed by partisan considerations in the maintenance of law and order and in the prosecution of criminal offences. Matters have not been helped by a creaking judicial system that takes decades to punish the guilty, if at all they are brought to trial. It is not surprising, therefore, that two tendencies manifest themselves: (a) using every loophole in criminal investigation and judicial procedures, those with money, influence and power delay, or thwart, the course of justice; (b) in frustration, those denied justice take the law into their own hands. A sense of impunity develops where the absence of the fear of deterrent punishment encourages vigilante groups and mobs to go on killing sprees; India’s experience is testimony to numerous such cases.

All sections of the state and society in India bear some of the blame for this sorry state of affairs. Political parties in India have always operated on the basis of expediency and short-term political gains. Right from Indian independence, the political class has used divisions of religion, caste and language to further its agenda of survival. With the cynicism (or should I say, realism) of thirty years in government, I would say the Indian political class amply justifies Goethe’s description of “estimable in the individual and wretched in the generality.” While there must be many politicians who are unhappy with the state of affairs today, it is rather optimistic to expect a statesmanlike response from them to promoting communal harmony and refraining from using sectarian propaganda to further their political prospects. The media has tried to highlight the various instances of intolerance and hatred; unfortunately, in the babble of voices and utterances in print, electronic and social media, no reasoned debate on issues based on factual evidence is possible, with battle lines already drawn in advance. There are only two silver linings in an otherwise rather dark thundercloud: the judiciary and independent citizens in different spheres of society. The courts have upheld a number of individual freedoms and have, especially at the highest levels, sought to jealously guard their independence from executive encroachment and ensure that the basic structure of the Constitution of India is not tampered with. Even more heartening has been the fearless response from people representing a wide spectrum of opinion, cutting across gender, community, religion and caste barriers.

Ultimately, the India that the framers of the Constitution dreamed of (and that every right-thinking Indian aspires for) will be realised only when two prerequisites are met. Firstly, reason has to guide actions, rather than blind emotions arising from intolerance, hatred and a sense of inadequacy. Every Indian has to put the past behind and focus on the path ahead. Today’s situation has to be taken as a given, to be improved on, rather than ventilating past grievances and manufacturing unrealistic future scenarios. Secondly, every individual and institution in the country has to abide by and promote the rule of law. At the individual level, this requires adherence to laws and regulations. At the institutional level (especially the executive and judicial arms), this requires the fair and impartial administration of these laws and prompt delivery of services to the aam aurat/aadmi to address common needs that are often the source of frustration and anger. Above all, at a time, when the world is wracked by violence and destruction linked to religious and ethnic differences, there is a special responsibility cast on the inhabitants of the world’s largest democracy to set an example of compassion, love and humanity for their brothers and sisters in India and across the globe. In this context, it is apposite to end with portions selected from the masterpiece of the immortal bard, Rabindranath Tagore:

Where the world has not been broken up into fragments by narrow domestic walls;

Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit;

Into that heaven of freedom, my Father, let my country awake.

 

 

 

 

 

 

 

 

15 Oct

What goes around comes around

Posted by vramani in political economy, public affairs, public policy.

There was a young lady of Niger

Who went for a ride on a tiger

They returned from the ride

With the lady inside

And a smile on the face of the tiger.

This limerick came to mind almost immediately when Sudheendra Kulkarni, the organiser of the function to launch the book of former Pakistan foreign minister, Khurshid Mahmud Kasuri, had his face blackened by miscreants, following the veto by Maharashtra’s “Tiger” party, the Shiv Sena, of any function in Mumbai involving a personality from India’s western neighbour. That he was a prominent figure, till some years ago, of a political party, the Bharatiya Janata Party (BJP), which runs the governments in Delhi and Mumbai, with the Shiv Sena as a junior partner, apparently cut no ice with the Sena, which more or less said “serves him right” after the unfortunate incident. But then, after having consorted with a party like the BJP, many of whose members have made a virtue of divisions in society, Kulkarni ought to have been aware of the consequences of associating with a perceived “enemy” whose country is anathema to the professed worldview of his ex-party and its like-minded partners. It would, therefore be apposite to remember the Biblical injunction “they have sown the wind and they shall reap the whirlwind”. History is replete with instances of the consequences of one’s karmas (both of individuals and nations) visiting one in this rather than in a future life. The eternal wonder is that this unpleasant truth does not cause man to ponder over his actions. Events from the not so distant past down to the present day illustrate man’s continued myopic vision.

We can start with the two major totalitarianisms of the twentieth century, the Third Reich of Germany and the Communist Soviet Union. Touted to last a thousand years, the German Reich crawled to its miserable, ignominious end in just over twelve years. Riding to power on the wave of disenchantment of the German people with inflation and unemployment, the Nazi Party, with its openly anti-Semitic approach, capitalised on the weak-kneed approach of European powers to unleash aggression on many of Germany’s smaller neighbours climaxing in the conquest of France in 1940 and the assault on Great Britain. Along with the millions killed in actual combat, there was the horrific genocide involving over six million Jews. The Second World War ended with the devastation of Germany and its division into two countries for the next forty five years. The Soviet Union, founded on the promise of equality for all, witnessed some of the greatest purges of its citizens and the despatch of countless others to concentration camps. The contradictions of an inefficient economic system and an oppressive political system saw the uprooting of the entire Communist edifice in the Soviet Union and its satellite states before the dawn of the twenty first century.

The USA has been no exception to this karmic cycle. Its post-World War II attempts to keep communism at bay and secure the world for Western (read American) capital led to the standoff in Korea and the disastrous misadventures in Vietnam, Kampuchea and Laos. Unchastened by this experience, the USA leapt into the fray through its proxies, the Mujahedin and Pakistan, to counter the takeover of Afghanistan by the Soviet Union. These Mujahedin were to form the nucleus of the Al Qaeda which took the war into US territory sixty years after Pearl Harbor. Further American adventurism in Iraq destroyed the one regime (of Saddam Hussein) that might have checked the spread of Islamic fundamentalism. With the Arab spring, the path was open for fundamentalism to spread through a number of countries with tottering regimes in the Middle East. In effect, US policy since the Second World War has led it to shoot itself in the foot; the terrible consequences are unfortunately being borne today by the masses of refugees fleeing Syria and other war-torn countries.

Coming to India, we have the Grand Old Party, the Indian National Congress, suffering (and, collaterally, making the nation suffer for) the consequences of one historic blunder after another. The declaration of the Emergency in 1975 saw the suspension of civil liberties and the unchecked use of brute state power against the people, whether in the relocation of people in the name of city beautification or the forced sterilisation campaigns. Given a resounding slap by voters in the 1977 general elections, the Congress showed it had learnt no lessons when it came back to power in 1980. The tolerance of (and tacit support to) ethnic divisions for narrow electoral gains saw the horrific Nellie massacre of 1983 in Assam and Operation Blue Star in 1984. Dabbling in ethnic quarrels exposed India to domestic terrorism with the assassinations,within seven years, of a Prime Minister and a former Prime Minister. The encouragement by the Congress of the Shiv Sena in the 1960s to check the influence of the leftist trade union movement in Mumbai nourished the growing “Tiger”. So much so that the Shiv Sena and its allies have controlled the cash-rich Mumbai Municipal Corporation for most of the past forty years. The Congress gave yet another chance of grabbing power to the Shiv Sena and its allies when it mishandled the 1993 Mumbai riots; coupled with internecine warfare within the Congress, the Shiv Sena and its allies were able to capture power in Maharashtra in 1995. Just four years of this government and the voter was ready to give another chance to a squabbling Congress-Nationalist Congress Party alliance. Fifteen years further down the road, this alliance, with its inept governance, blew its chances yet again and handed a major state to its opponents on a platter.

All these events are warning signs for practitioners of political power today but they continue to blithely ignore the lessons of history. The BJP came to power in 2014 on the electoral plank of “Sabka saath, sabka vikas” (with the cooperation of all, for the development of all). Unfortunately, its 16-month tenure has been marked by growing tensions between religious communities and a deep sense of insecurity in minorities. The utterances and actions of members of the ruling dispensation have emboldened fringe groups to take the law into their own hands, whether it be the murder of rationalists, the lynching at Dadri or the recent shenanigans over Ghulam Ali and Khurshid Mahmud Kasuri in Mumbai. It will be argued that states ruled by different parties are responsible for the protection of their citizens. But when a government at the national level lends support to Orwellian thought-control processes for controlling at least three of the five senses (sight, hearing and taste) of its citizens, it is not surprising that impressionable sections of the majority community work out their perceived grievances and frustrations on those who are not seen as part of their fraternity. Irresponsible and incendiary statements at election time and at emotionally surcharged moments only add fuel to the fire.

This column is tired of reiterating that those who do not remember history are condemned to repeat it. Yet, the aspirations of the aam aurat/aadmi – jobs, houses, food – are lost sight of in the preoccupation with rewriting history and dictating moral codes to the population at large. India’s youth is far more concerned with a resplendent future than with a glorious past. Agitating emotive issues to win electoral support can take a political party only so far. As matters stand, the Dadri incident may well cost the BJP dear in the ongoing Bihar elections. If it does not recast its image as a right of centre party with a plural approach to diversity, it may find the going tough in the 2017 Uttar Pradesh elections. And come 2019, we may see the Indian voter, with her dreams of achche din (good days) not realised, trudging to the polling booth echoing the immortal words of Faiz Ahmed Faiz:

This stain-covered daybreak, this night-bitten dawn,

This is not that dawn of which there was expectation.

 

 

 

 

 

 

15 Sep

The Fear of Creative Destruction

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

As an undergraduate student of economics in Delhi University some four decades ago, I was immensely flattered when my classmate and dear friend Ramachandra Guha conferred on me the name “Schumpeter”; he was in the habit of naming after famous economists those of his classmates whom he considered scholastically minded. Many years later, Schumpeter came to my notice again when his famous concept “creative destruction” was referred to in that brilliant book by Daren Acemoglu and James Robinson “Why Nations Fail: The Origins of Power, Prosperity and Poverty (2012)”. The central thesis of their book is that countries with extractive political and economic institutions falter on the growth path because their elites are preoccupied with their ability to extract rent from economic activities through the exercise of unfettered political authority coupled with keeping out groups that constitute a threat to their economic oligarchy. These countries are, therefore, in a situation where innovations leading to high economic growth are not possible, because of the opposition to change from vested interest groups benefiting from the current system. When Schumpeter referred to the “process of creative destruction” in his 1942 book “Capitalism, Socialism and Democracy”, he was emphasising the fact that capitalism involved the destruction of existing economic structures and their replacement by new structures. This was not price competition between existing producers but a discontinuity following the introduction of new technology, new products and new forms of industrial organisation, many of which could not even have been envisaged prior to their development.
W. Michael Cox and Richard Alm, co-authors of “Myths of Rich and Poor (1999)” have given a graphic example of creative destruction in the transportation sector. Water transport was increasingly replaced by railroads, which in turn (along with animal transport), was supplanted by road and air transport. In our own lifetime, we have seen typewriters and fax machines vanish with the advent of personal computers. The impact of these revolutionary changes was felt not just in the eclipse of once powerful industries but also in dramatic changes in the job market and a churning in industrial enterprises, with new companies elbowing their way to the top. Of the top hundred companies in the USA in 1917, only five retain their position in the top hundred. Half of the top hundred companies in the USA in 1970 have been replaced by newer companies today. We don’t need to go as far as the USA; India itself is abundant proof of this phenomenon. Who had heard of Reliance Industries or Sun Pharma in 1970? Infosys and Tata Consultancy Services were nowhere on the horizon till the 1991 reforms and the development of the information technology industry. The nature of jobs also registers dramatic changes over time. Occupations like those of drivers of motorised vehicles were almost non-existent at the start of the twentieth century, while computer programmers and scientists were nowhere in evidence at the end of the Second World War.
I give these instances to buttress my theory that the failure of the Indian economy to grow rapidly (in the sense of benefiting large sections of its population) can be linked to an almost mortal dread of “creative destruction”, at considerable cost to the people of India. The landed aristocracy and the agricultural elite, in the decades after independence, kept land redistribution efforts at bay and successfully resisted the imposition of an agricultural income tax. Coupled with high support prices for agricultural produce grown by the rich farmer and extensive subsidisation of the profligate use of fertiliser, power and water (largely by the rich farmer rather than his humble subsistence farmer cousin), this has implied a reversal of the traditional pattern where a booming agriculture sector finances the growth of a robust industrial sector. By stifling the growth of the industrial sector, which would enable off-farm employment to reduce the growing pressure on agricultural land, it has been ensured that agricultural productivity remains low and farming has become (or remains) a non-viable occupation.
Other policies of the state continue to impede rapid industrialisation. The 2013 Land Acquisition Act is a case in point. In a classic case of the remedy being worse than the disease, the requirements (in case of acquisition for public private partnerships and for private companies for a public purpose) of consent of at least 70 to 80 percent respectively of affected families, the high rates of compensation and the provision of a social impact assessment, as well as the passing of a resettlement and rehabilitation package by the district authority (even for negotiated sales by a private company) taken together will ensure that no project or industry can get off the ground in a reasonable period. The fear of creative destruction operates here too: rural poverty is sought to be addressed through complicated (and infeasible) compensation and resettlement packages rather than giving the rural community a chance to be a partner in rapid industrialisation and to move to more remunerative work in the industrial sector. The same holds true for official urban policy (or what passes for it) — there has always been a bias against promoting opportunities in urban areas, given the misguided view that Gandhi’s “gram swaraj” must be kept intact at all costs, never mind the wretched and inequitable condition of India’s villages and the reality of massive rural migration to urban areas.
Nor do the political class and bureaucracy want their monopoly over patronage to be disturbed. Independent India has seen the politician use the public sector to disburse jobs to his constituents apart from skimming off economic rent through manipulating award of contracts. Controlling licenses also enabled the politician/bureaucrat to extract rent from the private sector. Only the form and manner of rent extraction changed in the post-1991 liberalisation era. With growing urbanisation, land use permissions in urban and semi-urban areas became a major area for abuse of discretionary powers. The lack of clear norms for allocation of natural resources and for infrastructure development project contracts contributed to the suspicion (often genuine) of manipulation of selection processes to favour cronies, the fallout of which is being experienced to this day. Failure to reduce government control over public enterprises and improve their public accountability meant that this cash cow (where it did not fall sick) was available for patronage distribution. Wilful major defaulters of bank loans are able to use their political connections to delay takeover/liquidation of defaulting concerns.
In preventing or delaying the “gale of creative destruction”, the political class at least has the alibi that it is looking after its narrow economic interests. The same defence is not available to India’s “thinking” classes, its intellectuals, media and bureaucracy, who have consistently opposed thoroughgoing reforms in different sectors. Efficient exploitation of natural resources through impartial bidding processes is slowly becoming a reality more than two decades after the start of the liberalisation process. But even now, vociferous sections in India’s middle class oppose moves to open natural resource sectors to private investment to add economic value. Trade unions in the coal and mining industries will, of course, oppose all such steps since it will diminish their powers. But the opposition of the bureaucracy, sections of the media and academia to these measures defies understanding. The same logic holds where freeing public sector enterprises from the stranglehold of government by reducing government holdings in these enterprises is contemplated. There still seems to be a touching faith in the ability of government to micromanage these enterprises. Foreign direct investment in retail would give better profit margins to the farmers by eliminating middlemen in mandis (market places) and agricultural produce marketing committees. It would also provide the badly needed investment in reducing wastage by streamlining the supply chain system from the farmer to the consumer. No such luck — by allying itself with vested interests protecting their traditional fiefdoms, the intelligentsia betrays the interests of the large body of farmers.
Ultimately, India’s middle classes have to decide whether they want to be in the vanguard of rapid economic change or are content to wallow in mindless, outmoded socialist rhetoric with a credulous belief in the capabilities of the state. The next two decades are crucial to India moving on to a path of sustained development. “Creative destruction” is no respecter of size or reputation. Consider the example from India’s favourite sport, cricket. India took over fifty years from its entry into international cricket to win a World Cup. Sri Lanka took about two decades to reach the pinnacle of world cricket by winning the World Cup in 1996. By defeating Pakistan and India in quick succession earlier this year, the Bangladesh team has shown its resolve to shorten the time span it needs to reach the top. Countries like Vietnam, South Africa and Bangladesh can well pose major challenges to India’s markets (both local and global) in the years to come and at a much faster pace than is anticipated. “The gale of creative destruction” can blow in both directions: move it outwards and you control your destiny; if it turns against you, you may well get blown away.

1 Sep

Why blame the IAS alone?

Posted by vramani in public affairs, public policy. Tagged: , , .

“The evil that men do lives after them;

the good is oft interred with their bones.”

                   — William Shakespeare (Julius Caesar)

 

Let me begin with a caveat: I worked for thirty years in the Indian Administrative Service (IAS). I clarify this at the outset so that no one accuses me of conflict of interest. The immediate urge to pen this blog arose out of recent Facebook posts by different individuals and a statement by India’s Metro Man, E. Sreedharan, which were critical of the IAS. While the Facebook comments were of the usual ill-informed, middle class genre that seeks an anti-establishment outlet for every perceived grievance, real or imaginary, Mr. Sreedharan took issue with the role of IAS officers in delays in commissioning of the Bengaluru Metro Rail Project (BMRC). In his view “An IAS officer will not have the commitment, dedication and accountability of a technocrat in executing the project on time. BMRC has had five IAS officers as chiefs so far.” His second sentence, in one sense, contradicted his first; unless Mr. Sreedharan sought to imply that IAS officers posted to the BMRC were in a tearing hurry to get themselves posted out (for which he has not offered any evidence). But it is also indicative of a tendency to lay the blame for all (or at least, most) of the ills plaguing the country on the IAS. If it were so simple, the government at the national level has only to wind up the IAS and, hey presto, the era of efficiency and prosperity would be promptly ushered in. Alas, this is a case of “If wishes were horses, beggars would ride”. Unfortunately, public governance is a far more complicated business.

Often, I get the feeling that the public associates with the IAS anyone selected by the Union Public Service Commission in its massive annual recruitment exercise to the civil services. A very large part of public services are rendered by members drawn from different branches of the civil and technical services. There is also the mistaken presumption that, since the IAS mans a majority of the top-level posts in the government, it has stifled initiative in all other services and cadres. In fact, as a former middle-level functionary in the Central Government Secretariat, I can testify that most of the inputs for decision-making come from the middle levels, especially the Joint and Deputy Secretaries. A very significant number of these officers are drawn from services other than the IAS. It would also be pertinent to point out that public organisations like the banks, railways, communications and public sector units (which have also displayed sometimes glaring inefficiencies) are staffed almost entirely by technocrats or by people with domain expertise in the relevant subjects.

I am not for a moment suggesting that the IAS does not, like every other profession in the country – politicians, lawyers, doctors and engineers – have its share of “the good, the bad and the ugly.” Unflattering comparisons of the IAS are often made with its colonial predecessor, the Indian Civil Service (ICS). It is generally forgotten that the ICS operated in a completely different milieu, responsible only to their colonial masters in India and the India Office in London and without having to factor in politicians, public opinion and the media into their operating matrix. They too had to bear the brunt of Jawaharlal Nehru’s reference to them as “neither Indian, nor civil nor a service.” Even to this day, some of the best and brightest opt for a career in the IAS. That they are perceived as not having lived up to their promise can, in my opinion, be ascribed to three reasons: (a) the short tenures in most postings; (b) the failure to develop specialisation in a particular area which contributes to economic growth and development; (c) the almost automatic kick up the ladder for all and sundry, especially in the states, which leads to a number of IAS officers assuming leadership roles in departments/organisations for which they are totally unsuited.

Short tenures because of frequent transfers have been the bane of the civil services in India, but especially the IAS, probably because of their high level of interaction with issues that are the bread and butter of the political class. This is most damaging at higher levels of policy making, where continuity for a reasonable period ensures that the implementation of the policy is overseen by the same person responsible for framing the policy. Unfortunately, things seem to have worsened on this front in recent times; in the past, bureaucrats were more or less assured of a four or five year term in the Central Secretariat. Of late, Secretaries and even Joint and Deputy Secretaries have been shifted around after a year or two in a particular post. From my personal experience, I can testify that the two jobs I feel I did maximum justice to were those where I got full five year terms.  It takes about two years to understand all the nuances of the job and the officer makes a productive contribution in the subsequent three years.

Even when an officer lasts her full term in a post, meaningful contributions are often impeded by the lack of specialised domain knowledge. The intention to promote specialisation in generalist administrators has remained just that; there have been no initiatives from government to bring this to actuality. Where officers acquire in-depth knowledge of a particular field in a posting, their subsequent assignments mostly have no relation to the expertise earlier acquired by them. When my five year term in the Petroleum Ministry in Delhi came to an end, oil industry insiders found it incredible that the government could invest in building up domain knowledge in an officer over five years and then casually dispense with this acquired expertise overnight.

But the biggest roadblock to building up a responsive, efficient bureaucracy (especially in the IAS) has been the tendency to hand out promotions along with the weekly rations. This phenomenon is particularly noticeable in state governments, with over 95 percent of officers reaching the Apex Scale of pay. Apart from demoralising creative and hardworking officers, who find no avenues for fast-track advancement in their careers, it also leads to a glut at the top. Many posts (more correctly, sinecures) are created to accommodate average quality officers, swelling the ranks of the higher bureaucracy and promoting inefficient systems. Additionally, officers who can really make a difference to governance systems get barely two to three years at the topmost levels, hardly enough to make any visible impact.

Lest it seem that these ills plague the IAS alone, let me clarify that all the civil services in India suffer from a severe lack of professionalism. This is partly due to a lack of performance accountability while in service and partly due to moribund governance structures which do not encourage creativity and risk-taking. There is also the problem of undue political interference in personnel and purchase decisions which sap bureaucratic morale and encourage participation of the bureaucracy in institutionalised corruption. In an earlier blog (The Gadfly Column: Reconstructing the Bureaucracy: 28 February 2015), I had outlined the directions for restructuring governance systems. The issue assumes greater urgency now for two reasons. The nature of bureaucratic functioning over the last one year of the present government belies its promise of achche din, more so in the states, where “business as usual” continues merrily. Another couple of years and the present national government will move into pre-election mode, with administrative reforms taking a back seat. The second cause for urgency is the report of the Seventh Central Pay Commission, due by end-2015. Governments in the past have implemented popular recommendations while ignoring the bitter medicine prescriptions. 2015 presents a historic opportunity to recast the Indian bureaucratic system, when the carrot of improved pay packages can be dangled before the bureaucracy in return for much needed changes in governance systems. Four specific suggestions are made below:

(a) implement a five year roadmap for bureaucratic restructuring: Setting 26 January 2020 as its target date for final implementation, the Indian government should enforce, from 26 January 2018, a voluntary retirement package for its employees at all levels who joined service on or before 31 December 2000. For all those recruited on or after 1 January 2000 but before 26 January 2018, a grace period upto 26 January 2023 will apply, on which date they will leave government with their severance benefits (there will be no recruitments other than contractual appointments after 26 January 2018). All central government jobs after the target date will be on five year contractual basis. The contractual recruitment process can be commenced in January 2019, so that employees who have already quit will benefit from an “early bird incentive” to apply for contractual positions. The structure of government departments and agencies has already been discussed in the earlier blog referred to. State governments should be incentivised to go in for similar reforms; the Terms of Reference of the 15th Finance Commission should include measures to link financial devolution to improvements in governance.

(b) decentralise, decentralise, decentralise: Governance at the level of the Aam Aurat/Aadmi will improve only when decision making is pushed down to the local level. The 73rd and 74th Constitution Amendments should be given real teeth by legislating devolution of powers to urban and rural local bodies. As earlier, linking incentives, including Finance Commission devolutions, to moves in this direction would motivate state governments to support and give effect to such legislation.

(c) develop effective anti-corruption mechanisms: To bring an end to the impunity of governance systems in India, the institutions of Lokpal and Lokayuktas should be set up across India to synchronise with the changes in the bureaucracy and the decentralisation initiatives. Failure to introduce this reform will breed cynicism about the new governance structures, especially at the local government level.

(d) get government out of business: Governments should learn to mind their own business, which includes provision of basic infrastructure, creation of human capital and enforcement of the rule of law. Governments at both the central and state levels should sell off inefficient and sick enterprises and reduce their shareholding in most other enterprises. These will yield revenues for the government and reduce pressure on its financial resources. Even in the few cases where the government wishes to retain ownership of flagship public sector enterprises, management control should be fully vested in the Board of Directors of the company, with full autonomy in investment decisions and in personnel matters. Government should nominate independent directors with managerial and technical skills to serve as its representatives on these Boards. This will not only remove the irritant of bureaucratic interference in commercial decisions, but also the political doling out of favours at the cost of these enterprises. Board appointments will no longer involve the current, cumbersome procedures and investment decisions will no longer have to go through the hoop of ministerial and cabinet committees.

I wish to clarify that I have no bones to pick with the tribe of IAS-bashers — please bash on, regardless. However, I would caution that attention needs to be focused not on the symptoms but on the root causes of the disease, which lie in an anachronistic and dysfunctional governance structure. Commonwealth countries like Australia and Great Britain, from whose examples India has fashioned its civil services, have overhauled their bureaucratic systems to make them more responsive and efficient. There is also little evidence to show that undertaking such major reforms undermines a political party’s electoral prospects; free of the bureaucratic yoke, the grateful citizen may actually reward the party with a further lease of power. The ruling party at the national level can do no better than implement its Vision 2020 to give effect in the administrative sphere to the late President Kalam’s Vision for India 2020. I can only close with the following comment: those who do not wish to create history may become history.

 

 

15 Aug

Swachh Bharat or Swachh Bharatiyas?

Posted by vramani in public affairs, public policy. Tagged: , , .

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!

 

 

 

1 Jul

The Evil That Men Do Lives In Them

Posted by vramani in political economy, public affairs.

Forty years ago, India lost her innocence. After bumbling through more than twenty seven years of existence as an independent nation, the dire prognostications of Western doomsayers, who were pessimistic about the survival of the tender plant of democracy on Indian soil, appeared to have been proved right. In the late hours of 25 June 1975, a process was set in motion which led to constitutional rights being severely abridged, the press being muzzled and thousands of political activists and others being thrown into prison. A dark night of twenty one months followed, till the ruling government was unceremoniously ejected from power by the Indian voter. I am not here going into the events of the 1975 Emergency and its manifestations, which have been covered in great detail by various writers, but am more intrigued (and grieved) by the presence of that quality in man which impels him towards evil action.

This reflection on man’s innate capacity for the greatest good and the vilest crime was brought home to me starkly by the recent shooting incident in Charleston, South Carolina, USA, where a young white barely into his twenties sprayed bullets into a crowd of African-Americans gathered in a church for evening prayers, killing nine worshippers in the process. When I saw photographs of the cherubic visage of the assailant after he was apprehended, I found it impossible to correlate his angelic demeanour with the ghastly crime against humanity he had committed. An explanation of this seeming paradox came from an article in the New York Times by author Brit Bennett, titled “White Terrorism is as old as America“. The Declaration of Independence in 1776 did not bring freedom to blacks in the USA. It took another ninety years and a Civil War to take the first hesitant steps towards giving blacks an equal position in American society. Another century was to pass before the blacks formally secured their due rights as citizens with the passage of the Civil Rights Act in 1965. But even today, fifty years after that epochal event, blacks labour under disabilities, whether in terms of access to education and employment opportunities or even in terms of being accepted as equals by their white brethren. There still remains a strong undercurrent of animosity, bigotry and prejudice that informs white attitudes towards blacks, manifesting itself in the unfortunate recent incidents of police excesses and random shootings, with blacks at the receiving end. However, this is a tendency prevalent among dominant communities in all countries. Sometimes it is activated by historical grievances, as in the case of sections of the Hindu community who mourn their lost ascendant position and the eight centuries of political domination by another community. It can also arise from basic insecurity, as when historically oppressed communities (blacks and Dalits) improve their economic and social standing by availing of education and employment opportunities through affirmative action policies. There can also be a more immediate impetus to teach the other ethnic group a lesson — the anti-Sikh pogrom of 1984, the Bosnian massacre of Muslims in the 1990s and the wholesale murders in Gujarat in 2002 are cases in point.

It is another category of evil that has manifested itself in human actions in more recent times that causes even greater unease. This is what the political theorist Hannah Arendt has termed “the banality of evil”. She used this term in her book “Eichmann in Jerusalem“, in which she analysed the motives which influenced Adolf Eichmann to organise the deportation and mass murder of six million Jews by the Nazi regime. She reached the startling (and to many, upsetting) conclusion that Eichmann was no more than a mediocre bureaucrat executing as efficiently as possible the orders he received from above. It is chilling to contemplate that the Holocaust was the product of the thoughtless actions of numerous individuals: there was never any reflection by them on the consequences of their actions, no stirring of what we term as “the voice of conscience”. A similar absence of thinking that discriminates between good and evil actions can be seen in the actions of mobs that indulge in murders of their neighbours solely on the grounds of their different religion, caste or ethnicity or of the thousands of misguided individuals who today murder fellow humans in the name of religion.

It is in this context that there are sobering lessons for today’s Indians from India’s tryst with absolutism four decades ago. Every institution of democracy crumbled when challenged by dictatorial might. With honourable exceptions, the press acted like the pet parrot of those in power. The judiciary went by the letter of the law: “procedure established by law” rather than “due process of law” was the touchstone for the evaluation of draconian legislation which damaged the basic structure of the Indian Constitution. The greatest tragedy was the Eichmann-like behaviour of the bureaucracy and the police. The Shah Commission set up after the Emergency to inquire into its excesses, trained its guns on the shenanigans of the then Prime Minister’s second son and the coterie around him. Not nearly as much attention as was required was focused on the bureaucracy/police, which not only implemented orders directly affecting the life and liberty of many Indians, but displayed a frightening zeal over and above the call of duty in forcibly resettling poor people in insanitary surroundings and carrying out forced sterilisations of thousands of Indians, not only in Delhi but elsewhere in the country as well.

Evil manifests itself in humans in three dimensions. There is the class of psychopathic megalomaniacs (Stalin, Hitler, Pol Pot) for whom human life is only an instrument for their overweening ambitions — they use the weapon of terror to beat people into submission. Then there are the soulless, thoughtless beings who are either hatchet men in the Eichmann mould, pursuing their amoral role of executing orders with efficiency and with not the slightest moral stirrings, or persons venting their frustrations and insecurities on “the other” — of a different religion, race or language, often with the tacit support of the state or powerful groups. Finally, there is the large amorphous mass of people who are indifferent to and who condone the crimes committed by the first two groups. They rationalise their position by saying that they can make no difference — their reluctance to take a principled stand is occasioned by their insecurity. Most of us fall in this category. I often wonder why, as college students, we did not protest against the throttling of our democratic rights. Probably, it was because we were concerned with our future careers and because we considered it futile to resist. In that respect, we behaved rather like the Holocaust victims who meekly walked to their certain death rather than heroically face death confronting their oppressors.

Let us face the stark truth: there is no predicting when the authoritarian streak in an individual politician or a political group will act up. Given current trends in the bureaucracy, there will also be enough helpers willing to push the authoritarian agenda. True, 2015 is not 1975 — citizens are more vociferous regarding their rights, aided by active social and other media networks. And yet, a nagging doubt remains — will there be enough strength in civil society and its institutions to withstand a concerted assault on democratic rights? The answer can be a qualified yes, provided each of us recognises that condonation of and complicity in evil amount to one and the same thing. Purging ourselves of the evil of indifference when injustice is committed is the only way to realise the yearning of Rabindranath Tagore expressed so vividly in the Gitanjali:

Where the mind is without fear and the head is held high;

…………………………………………………………

Into that heaven of freedom, my Father, let my country awake.

 

 

 

 

 

 

1 Jun

India: Economic Illiteracy (or Economic Hypocrisy)?

Posted by vramani in public affairs, public policy.

There was a lot of congratulatory backslapping in the government and mass media recently when huge amounts were realised from the sale of telecom spectrum, auction of coal blocks and the divestment of government interest in the public sector. Lost in all this noise was the signal it conveyed: that, for government and, indeed, for large sections of the Indian intelligentsia, short-term material gains are far more important than the presence of investors in crucial infrastructure sectors over the long haul. No one tried to analyse the impact of the successful bids in terms of their implications for prices for the consumer or for the sustainability of the project for the investor. Public policy actions in India have almost always seemed to live up to my favourite lament, which has appeared in my blogs on more than one occasion: “don’t kill the goose that lays the golden eggs.” It is time, therefore, to analyse this revenue mania in the light of recent actions and decisions taken not just by government but by other institutions of the state as well and the approval these have received from the media and from what one would have thought were better-informed sections of the thinking classes.

The recent efforts by the Petroleum Ministry to tinker with a thirty-five year old revenue model for oil and gas extraction are but a continuation of its attempts to renege on the sanctity of negotiated, signed contracts once these contracts reach the stage where petroleum revenues start or are likely to commence flowing soon. Behind these moves are what I would term a paranoia related to short-term revenue accrual, long-term economic interests be damned. In the case of the acquisition of Cairn India by the Vedanta Group, the Government of India successfully extracted its pound of flesh in terms of imposing payments of royalty on oil and gas, from payment of which companies had been specifically exempted in the contracts of the early 1990s to encourage investment in risky exploration activities. This represented nothing less than a violation of a signed contract by a government. As if this was not bad enough, the Government of India reversed its policy on allowing private companies to market their share of gas produced under the New Exploration Licensing Policy, in breach of accepted contractual provisions. It played along, for reasons best known to it, with the Supreme Court view that, as the owner of the natural resource, government has the right to decide the end-consumers, when accepted international practice is that once the oil/gas reaches a particular delivery point, ownership of the resource devolves in the agreed percentages to the government and the contracting producing parties. Extend this logic to the mining of other natural resources like coal, bauxite and copper and you are back in the heyday of the license-permit raj of the 1960s and 1970s, when government decided who would produce and who would consume a particular resource. As the Government of India got sucked into the Ambani family war (of which more in a subsequent blog), it started to get more and more defensive about the exploration and production contracts signed by it over the years with private parties. Not to be outdone in adding its two bits to the management of petroleum contracts, the Comptroller & Auditor General (CAG), the audit watchdog of the government, weighed in with advice on how petroleum operations should be carried out and what constituted acceptable expenditure. Given the lack of knowledge in India’s legal and financial fraternity (especially in the government sector) about the economic and technical niceties of petroleum exploration and production, it is not surprising that private investors found themselves caught in a bind, with a harried government refusing to clear payments of company dues. The situation has come to a pass where the government is apprehensive of resorting to arbitration and obtaining expert opinion to resolve contractual issues: given the level of mistrust and suspicion about a subject that most of those taking decisions have very little understanding about, only a very brave person would stick her neck out to take bold decisions.

I am sorry for dragging you through a subject with which I have been connected for the past quarter century. But I am using this example from a crucial infrastructure sector to draw your attention to a serious lack of economic common sense in not only the government but other pillars of the establishment as well, which is fraught with grave consequences for the future economic development of India. Let us dwell for a moment on the disinvestment of government stakes in public sector gems like the Oil and Natural Gas Corporation, the Steel Authority of India Limited, Coal India Limited and Bharat Heavy Electricals Limited. The aim of any disinvestment should be to broaden the shareholder base and makes these companies more market-responsive. Instead, with government, and its captive institutions in the insurance and finance sectors, controlling over 70% of the shares, there is no change at all in the archaic decision making processes installed in these enterprises in the past, despite cosmetic changes in “granting autonomy” to these units that make no difference to their operational and managerial efficiency. Appointments to top managerial positions still go through a tortuous process, often taking months on end while prospective candidates lobby for posts. The fear of decision making in public sector enterprises arises from the dread of the big three C’s: the Comptroller and Auditor General, the Central Vigilance Commission and the Central Bureau of Investigation. As a manager, attract the attention of any of these three worthies and you can kiss your peace of mind goodbye for the next couple of decades. An example will suffice: the public sector National Thermal Power Corporation (NTPC) was to get gas for its power plants from the gas fields operated by Reliance and its partners in the offshore Krishna-Godavari basin. For various reasons, their gas sales agreement could not be concluded and is still to date embroiled in legal squabbles. Any sensible power producer would have recognised the time value of money; besides, NTPC was in a position to get liquefied natural gas on a 17-year term contract from Petronas, the Malaysian producer, for US$ 3.50 per million British Thermal Units (million BTU). But just imagine the furore if NTPC had opted for gas at US$ 3.50 per million BTU instead of the agreed effective price with Reliance of US$ 2.97 per million BTU; there would have been allegations of a sell-out and someone from NTPC would have lost his head. So NTPC played safe and continued its courtroom wrangles with Reliance. But power projects cannot wait for fuel indefinitely, so NTPC went in for spot market purchases, where it is today paying US$ 10-14 per million BTU. A greater criminal wastage of finances is difficult to imagine, but when tied up in the embrace of government, all is possible.

We need to analyse the reasons for this unspeakable economic illiteracy, not only wasting scarce investible resources but acting as a drag on the economic future of the country. Essentially, the post-Independence period has been characterised by the dominance of four interest groups: the landed elite, the rentier businessman/industrialist, the trade unions and the urban middle class. The 1991 reforms hardly dented the influence of these groups. The landed elite is interested in paying no taxes, having access to heavily subsidised water, power and fertilisers and an assured minimum support price for their produce, with suitable increases over time. The rentier businessman/industrialist has drawn on his “know-who” rather than his “know-how” to corner, in recent years, scarce natural resources like land and minerals. The less said about the trade union movement in India the better: they represent a fraction of India’s labour force and, through their stubborn opposition to labour law reform, have denied large swathes of Indians access to relatively secure, well-paid jobs in a growing industrial sector. The vocal Indian urban middle class is the two-faced Janus: while they seek aspirational lifestyles for themselves, their “bleeding heart” liberalism prevents them from allowing the extension of this privilege to their far less fortunate and far more numerous countrymen and women. Thus, whether it is a sensible land acquisition policy that gives manufacturing industry quick access to land, a labour law policy that gives far better employment opportunities to India’s growing unemployed and underemployed or a foreign direct investment retail policy that enables the farm producer to control the disposal of his produce besides adding value through the reduction of wastage, there is a shrill cacophony each time these issues are debated. Listening to the declamations of politicians and other self-styled experts can make you despair about the chances of any coherent economic policy.

It is then that the first doubt starts to set in: is all this posturing more to do with hypocrisy rather than illiteracy? In my years in government, I have seen politicians run successful businesses of their own, especially in the cooperative sector in Maharashtra. But put them in charge of the government and they successfully run it aground in the space of a few years. Clearly, private thrift does not extend to public prudence. Our search for the great leader who will lead us out of this morass is fated to be doomed. What we need is something more on the lines of the English Glorious Revolution of 1688, when the wealth-creating classes established their ascendancy over the wealth-preserving classes. What India needs today is a coalition of interest groups dedicated to the creation of wealth with, of course, the incorporation of social security measures that have evolved over the past two centuries. What it needs also are governments at both the national and state levels that steadfastly pursue this goal, unmindful of electoral consequences. Failure to do so can have very grim consequences. India is adding 13 million unemployed to its rolls every year. The consequences of this waste of human resources are beginning to be felt in the Maoist insurgencies in Central and Eastern India, which have access to a ready supply of disaffected and angry youth who have no connect with the Indian economic system. With growing urbanisation, this restlessness is spreading to major urban pockets. It is time India’s governing elite realised they are sitting on a series of time bombs which can go off at any time and any place. So my advice to them would be: stop this tinkering with welfare schemes and empower the people through bold reforms. The time for action is NOW.

 

 

15 May

The Tyranny of Trifles

Posted by vramani in irony, public affairs.

In his interesting book on his travels from Turkey to Pakistan, “Stranger to History”, Aatish Taseer has devoted one chapter titled “The Tyranny of Trifles” to the ways in which authoritarian regimes seek to maintain their hold on power. As he puts it “The emphasis on trifles, and the hypocrisies that came with it, had been institutionalised, turned into a form of control over the people…” This is not surprising in many countries to the west of India’s borders, where theocracies and terrorism have sought, with varying degrees of success, to impose their writ on the populace at large. It is far more surprising, not to say disturbing, when this obsession with trivia lodges itself in as vibrant and chaotic a democracy as India. And yet, events in India, in recent months and years, point in the direction of attempts to establish a monolithic society, through use of different instruments of the state and society.

Actually, this trend towards straight jacketing thought and action has its roots in historical events. We can hardly forget the treatment meted out to the celebrated artist, M. F. Husain, for his pictorial depictions of Hindu goddesses, leading to his flight from India and eventual death in exile. The longstanding prohibition regime in Gujarat state has exposed the hypocrisies of state action: if people want to drink, they can gain access to bootlegged liquor, often of the lethal variety. The only ones laughing all the way to the bank are the liquor suppliers and the arms of the state machinery in league with them.

But it is the recent efforts to dictate what the individual citizen should see, read, study, eat and create (through the written or visual medium) that give cause for concern about the encroachment on the freedoms guaranteed to each and every individual by the Indian Constitution. Let us first take the unsavoury furore over the screening of the documentary “India’s Daughter”. To display its masculine might, the Government of India applied its not-so-sensitive suasive powers to black out the documentary from social media. The law of unintended consequences kicked in here with a multiplier effect: the uproar drew public attention and led to probably a thousand fold or more increase in the number of Indians who, through one method or the other, viewed the documentary. A similar phenomenon was witnessed when, probably exhausted by a protracted court battle and recognising the harsh reality of a supportive social and political environment, a leading publishing house pulped the works on Hinduism of the scholar Wendy Doniger. To be honest, I, and probably 99.999% of all Indians, had never heard of her till the controversy blew up in public. The result: many more Indians, out of sheer curiosity if nothing else, acquired her books (till they were available) or googled to read more about her. Doniger should be grateful for the free publicity undertaken for her by obscurantist groups determined that only a particular view on the myths and legends of India should prevail.

The efforts to impose a particular world view on the educational system are part and parcel of this attempt at social engineering. We have already gone through the tamasha of the meaningless replacement of German by Sanskrit in the Kendriya Vidyalaya curriculum. As I observed in an earlier blog, this will neither help the students nor serve the cause of Sanskrit. Students will merely do what is required to secure good marks and forget about this language thereafter. To think that this step will promote Sanskrit scholarship in India is akin to chasing a mirage. The same argument applies to Yoga as well: Yoga goes far beyond mere physical training and involves complete development of the individual. Imposing it on school students, many of whom are unaware of and possibly also unwilling to follow its discipline will only devalue one of India’s major contributions to the world. Then again, the teaching of the Bhagavad Gita in schools represents a very unidimensional approach to promoting ethical values and the spirit of pluralism that characterises a multicultural society. There is no recognition of the lessons that other religions can contribute to the development of a tolerant, compassionate human character. Within the Hindu religion itself, there is no one accepted book; some follow the Upanishads, others the works of revered saints and seers, like the Thirukkural and the Ashtavakra Samhita, while many others follow oral traditions without reliance on any one book or treatise. Ditto for the efforts to rewrite history with a northern, Hindu perspective intended to eulogise India’s “glorious” past. Short shrift is given to Ashoka and Kanishka and the spread of Buddhism, the promotion of religious syncretism by enlightened rulers like Akbar and the magnificent kingdoms of the Chalukya and Vijayanagara empires in South India; revanchist history would have it that Hindu greatness died in the ninth or tenth century CE, never mind that the Vijayanagara kingdom fell only in 1565 CE.

My karmabhumi Maharashtra has not lagged behind in this obsession with trivia. We had policing of public morals in Mumbai with the ban on bar girls; not to be outdone by the previous government, the present one has intervened in the eating and entertainment habits of citizens. An almost two-decade old state legislation banning slaughter of bulls and bullocks was dusted off and given sanction recently by the central government, run by the same political party that did not see fit to give approval to this legislation when it was in power for six years at the turn of this century. Incomes and livelihoods of thousands of farmers, butchers and traders have been imperilled by this move, with grave consequences for social harmony. The law of unintended consequences (referred to earlier) will kick in here, with enormous rent-seeking powers being placed in the hands of the enforcement machinery in the police and municipalities. The compulsion on multiplexes in Mumbai to show Marathi movies in the primetime slot, since modified to a slot in the matinee and evening period, will benefit neither the multiplexes nor Marathi movies, if multiplexes run to poor audiences. How to make the Marathi film industry more robust and in tune with public tastes (a la Tamil cinema, never mind the quality) may yield better financial dividends for all concerned.

But it is in the arena of religion that one witnesses the greatest attempt at trivialisation of what ought to be one of humankind’s deepest experiences. The ghar vapsi (homecoming) campaign of some hard-line majority community groups has sought to make a big issue out of conversion of people born in the Hindu faith to other religions. Ignoring the fact that the Hindu religion has no provision for proselytisation, efforts are being made to reconvert people of other faiths (almost always from the lowest pecking order of Hindu society) to Hinduism. There are very serious issues of inequalities in Hindu society arising from the caste system, eloquently articulated by Dr. Ambedkar, which deserve introspection among all sections of Hindu society. Instead of focusing on what needs to be done to promote equality in Hindu society, attention is (probably deliberately) being drawn to the dangers of “minoritisation” of the majority community: yet another instance of seeking to preoccupy people’s minds with irrelevancies rather than getting them to confront (and change) uncomfortable truths.

So does all this give cause for concern? Yes, to the extent that it displays bigotry and a refusal to acknowledge the pluralistic nature of Indian society. And yet, in a chaotic, throbbing democracy like India (unlike its theocratic and autocratic confrères elsewhere), one can draw hope from a number of factors, borne out by the changes in Indian society and by recent history. India’s burgeoning middle class is irreverent in its treatment of the absurdities that too often characterise political and social discourse in India. Indeed, the foibles of political parties and “religious” outfits are grist to the mill for cartoonists, commentators and bloggers like me. With its innate capacity for jugaad, the Indian public will find ways to circumvent illogical and absurd governmental decisions. Wherever possible, the aam aadmi or aurat will blissfully ignore whatever executive fiats are hurled at her. Finally, if her patience is exhausted (which it will be if governments expend their time and energies on irrelevant issues rather than on crucial matters of governance), the Indian voter will exercise her prerogative in the exercise of her democratic rights: she will change the government without bloodshed at the next available opportunity (the most apt definition of democracy by the philosopher Karl Popper).

1 May

Who will guard the guardians?

Posted by vramani in public affairs.

Let me tell you a true story. The protagonist and the locale do not matter; this happens to the poor every day in Bharat that is India. However, to make storytelling easier, let us call our main character Sunil, a name one could encounter anywhere in India. Sunil is a migrant who runs a very small shop, polishing the meagre gold jewellery owned by the poor residents of his locality. Since this is scarcely enough to keep body and soul together, he takes on the occasional, temporary job of driving private cars and auto rickshaws — very much a member of the huge unorganised sector in India.

It all started one fine winter morning when four hefty men barged into Sunil’s small shop and forcibly bundled Sunil into a private vehicle parked outside the shop. No one knew who had taken him away or where he had been taken. His mother, frantic with worry, called his close friends, who started the search for him. Almost six hours later, they located him in a police station away from his locality, detained for questioning in a jewellery theft case. A known jewellery thief, in the custody of the same police, was present there, testifying that Sunil had acted as a fence in melting stolen gold jewellery and reselling it. The local head of Sunil’s clan, all petty jewellers, also rushed to the police station to try and secure his release.

This is where the story takes a twist. The sub-inspector of police on duty claimed that Sunil had helped in the disposal of Rs. 25 lakhs worth of stolen jewellery. He offered to drop the case if Sunil arranged for the payment of an amount of Rs. 25 lakhs. After much bargaining, the sub-inspector agreed to give Sunil a day’s time to arrange for the money. In parting, he also let drop casually that Sunil should not think of approaching any influential person to help him; in fact, he should not even try to get any legal help in his case. Else, the policeman warned, he would arrange for Sunil to be implicated in a number of theft cases, which it would take him years to wriggle out of. The message coming through loud and clear, Sunil returned to the police station the next day with the head of his local jewellers’ association to negotiate the terms for his freedom. After a daylong haggling session, the sub-inspector finally magnanimously agreed to settle the case for Rs. 75000. Sunil raised Rs. 50000 from the local moneylender for immediate payment. A delay in settling the remaining Rs. 25000 saw another visit from the police, following which Sunil moved pillar and post to square his accounts with the police. A shaken Sunil decided to close down his jewellery business and concentrate on setting up a small eatery, apart from occasional driving assignments, to feed himself and his family.

There are thousands of Sunils across the length and breadth of India who have to confront the criminal justice system on a daily basis. I refer here to the three arms of this system: the police, the jails and the courts. Even where they are not invested with special powers, the police represent a very repressive arm of the state. Small wonder, then, that most ordinary citizens give them a wide berth, notwithstanding encouraging slogans on police vans like “With you, for you, always”. Nearly all public institutions in India have a strongly extractive (and extortionist) nature: the police, with its immense powers, are only an extreme example. Once a common man enters the chakravyuha of this system courtesy a criminal case, getting out is a herculean task, especially for those with limited means and no influence. Investigations are rarely completed and charge sheets are often not filed in the prescribed 60 or 90 day period. If the unfortunate “accused” is not able to raise bail, he remains incarcerated for months (and sometimes years) on end in jails that breed criminality. The new entrant into this system is exposed to hardened criminals and, with a police record against his name, may find it easier to join their group if and when he is finally released. This may take many years, given that the wheels of justice grind so slowly in India. Paying even a hefty bribe is seen as preferable to getting entangled in the coils of this system.

So what needs to be done to ensure that Article 21 of the Constitution of India becomes a reality, rather than a dream, for the aam aadmi, with his right to life and liberty being safeguarded? While there have been a host of reports on improving the criminal justice system, some suggestions to guard the ordinary citizen against unnecessary arrest and incarceration are being given here. When the commission of a cognisable or non-cognisable offence comes to or is brought to the notice of the police, a First Information Report (FIR) should be registered online, with the Aadhaar (unique identity) of the suspect being entered; where there is no such Aadhaar number, the Aadhaar identity should be obtained within twenty four hours. The FIR will go into a database which has details of every single individual who is being arraigned before the criminal justice system. Where the individual is committed to police or judicial custody, the database will keep track of the custody period so that bail can be offered; where the individual is not in a position to arrange bail, the case should be pursued expeditiously through the investigation stage and filing of chargesheet to final disposal by the court. This is imperative since the 2012 report of the Law Commission of India has observed that over 66% of those in India’s overcrowded prisons are undertrial prisoners. A time limit should be set for conclusion of trials and for hearing of appeals on conviction or acquittal, say, one year for offences punishable with imprisonment upto three years and two years for offences punishable with imprisonment for more than seven years.

National Crime Records Bureau statistics show pendency in courts, as of end-2010, of over 12 million cognisable offences under the Indian Penal Code and other local and special laws. With the backlog of cases increasing over the years, there would be well over 15 million cognisable criminal cases pending in Indian courts as of 2015. Not only does this confirm the adage “Justice delayed is justice denied”, it also enables the wealthy and influential to subvert the processes of justice, leading to a gradual erosion of faith in the rule of law among the general public. Measures like increasing the size of police forces, establishing an independent investigative agency, improving the quality of public prosecution and speedier trials, as well as using modern technology in a range of areas from forensic investigation and digitisation of police records to videoconferencing for judicial/police remand and use of online systems to speed up judicial decisions are all welcome and will contribute to the effective delivery of justice. But, in the final analysis, it is the actors in the drama — policemen, prosecutors, jailors and judges — who will determine the quality of criminal justice. Unless there is total dedication and commitment in all these players, no amount of sophisticated technology or superior monitoring systems will make any noticeable difference. The Roman satirist Juvenal employed the term “Who will guard the guards themselves?” in his Satires in the early years of the millennium, although he used it in a different context. This concept, in the context of accountability of power, is generally ascribed to Plato’s Republic, where the main character talks of men being responsible for their own actions. This swarajya, where each citizen, but especially those entrusted with governing others, are aware of their responsibility in sustaining and nurturing a free society will, in the final analysis, determine the contours and directions of democracy in India in the coming decades.

 

 

 

 

 

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