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.

 

 

 

 

 

 

1 Oct

Land Acquisition – Much Ado About Nothing

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

This is the way the world ends

Not with a bang but with a whimper.

(T. S. Eliot: The Hollow Men)

This famous poem, which ends with the above quoted lines, is linked to a number of overlapping themes. The entire drama covering the period from the introduction of the amendments in end 2014 to the Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act 2013) through an ordinance, to the “sound and fury” over its introduction in Parliament as a Bill in 2015 (LARR Bill 2015), down to its final quiet burial in the end of August 2015 reminded me of this piece of 20th century literature. What was touted to be a grand effort at reform in making land available for the nascent “Make in India” industries and the infrastructure to support rapid industrialisation came a cropper in the face of a politically motivated, generally ill-informed campaign to preserve the “pristine” nature of the LARR Act 2013 which the LARR Bill 2015 sought to amend. After the heat and dust of the battle settled, there was only one clear loser — the average Indian citizen who hoped for better amenities, job opportunities and an improved standard of living.

What was the LARR Bill 2015 trying to do that so aroused the ire of the supporters of the LARR Act 2013? The Amendment Bill sought to exempt certain categories of projects from the social impact assessment and public consent provisions, including public private partnership infrastructure projects on lands owned by the government, going beyond the exemption from public consent already available in the LARR Act 2013 to projects of the government, its public sector undertakings and other entities essentially in the public sphere. There was no dilution of any of the provisions relating to compensation or resettlement & rehabilitation. This makes the defensiveness of the government of the day about the LARR Bill 2015 all the more inexplicable; it dissimulated where it should have unequivocally come out with a confident statement about its commitment to improving the lot of India’s citizens. In any case, as has been pointed out by Sanjoy Chakravorty (A Lot of Scepticism and Some Hope: Economic & Political Weekly, 8 October 2011), about 90 percent of land acquisition and displacement of people has been occasioned by government projects, so it is rather strange that an impression has been created that the LARR Bill 2015 is intended to further private corporate interests. A lot of hullaballoo has been created around non-issues to score political points and the likely damage to India’s long-term growth prospects by a seriously flawed Act has not been analysed or debated.

The manner of calculation of compensation has major implications for the economic viability of projects requiring acquisition of land, apart from its implications for the distortion of already imperfect land markets. Land valuation at four times the market (or consented) price, for rural areas, and twice for urban areas has no rationale. This will sharply raise project costs and also create a piquant situation in peri-urban areas, with demands for compensation as in rural areas impacting the economics of urban and industrial development in the peripheral areas of cities. The requirement for the social impact assessment to be carried out before the preliminary notification of the land is incomprehensible; any administrator connected with land acquisition will tell you that this will immediately lead to land speculation in those areas. Bengaluru witnessed this phenomenon when land was to be acquired for the NICE corridor road on its fringes; the Vijayawada-Guntur belt is also experiencing sharp escalations in land prices with the forthcoming development of the capital city for the new state of Andhra Pradesh. Inordinately high land cost will act as a dampener for land acquisition and will also exert upward pressure on prices of land privately acquired.

Multiple layers of bureaucracy will have an adverse impact on prompt acquisition. A potential investor will have to run the gamut of a social impact assessment, getting public consent, fixation of land compensation and approval of the resettlement and rehabilitation package before getting possession of the land for actual construction. This is, of course, presuming that environmental clearances and approval of the District Collector for conversion of agricultural land to non-agricultural use are forthcoming in a timely manner and that the proceedings do not get bogged down due to, firstly, lack of public consent and, secondly, demands for enhanced compensation and other contentious issues to be decided by the Land Acquisition, Rehabilitation and Resettlement Authority set up under Section 51 of the LARR Act 2013. Recourse to other legal procedures (e.g. writ petitions) by interested parties to secure higher compensation or to contest the need for acquisition can further delay matters. Even with an outmoded Act like the Land Acquisition Act 1894, with its anti-landowner bias, it took anywhere up to several years for land to actually come into the possession of the acquirer. The LARR Act 2013 is likely to further increase this period, leading to project cost escalations.

Historically, industrialisation has proceeded based on the conversion of land from agricultural to nonagricultural use and on the ability of the agricultural sector to feed a population increasingly dependent on off-farm employment. This process has not been without its share of conflict, as brought out by Richard Hofstadter in his seminal book “The Age of Reform (1955)” where he describes the agrarian revolt of the 1890s in the USA and the attempts to harness it for political purposes. Not only did these agrarian movements fail to take off, quite to the contrary, as Hofstadter puts it “…the prosperity of the commercial farmers was achieved not only in spite of but in good part because of the rise of American industry and the American city“. As urban demand for food grew, agricultural prices registered a significant upturn. Improved efficiency in and mechanisation of farming operations, coupled with finance and transportation arrangements, contributed to a rise in farm incomes. At the same time, the excess rural population found employment opportunities in the cities. State support and guidance on farm produce distribution issues and the rapid growth of farmers’ cooperatives (in the areas of credit, mutual insurance, public utilities, marketing and purchasing) reduced the exactions of middlemen and diverted more income into the pockets of farmers.

What is truly unfortunate about the entire land acquisition mess is the ill-conceived effort to create a hostile relationship between the agricultural sector and the industrial/infrastructure sectors. On the one hand, there has never been a holistic approach of government to tackling issues from the farm to the table, nor has there been any concerted effort by organised farm lobbies to get government to invest in measures designed to enhance agricultural productivity and incomes. The result, with a large population still dependent on agriculture for survival, has been increasing pressure on land and temporary or permanent migration to urban settlements. With greater access to education and growing aspirations, the younger generation seeks a shift from an unviable life in agriculture. The distressing occurrence of farmer suicides is testimony to the failure of government to address farm issues, be they irrigation, crop insurance, productivity or remunerative markets. Archaic labour laws and an entrepreneur-unfriendly business environment have limited job creation in industry and related ancillary services. When 3 million people, many of them graduates, apply for a few hundred jobs as peons in government, something is definitely horribly wrong. And yet, the present debate on land acquisition procedures has not sought to focus on what could be done to ease the availability of land for industrial growth while also protecting the interests of the agricultural community. One interesting suggestion from Maitreesh Ghatak and Parikshit Ghosh (The Land Acquisition Bill: A Critique and a Proposal, Economic and Political Weekly, 8 October 2011) is to allow the land transfer price to be determined through an auction process rather than rely on bureaucratic determination through generally flawed sales statistics. Displaced farmers would be given the option to receive compensation either in cash or in the form of land. The government would buy more land than needed for the project to enable offer of land outside the area acquired for the project to those farmers who want land in return for land surrendered. This approach has the advantage of allowing the farmer to quote his consent price, which will probably reduce subsequent litigation for enhanced compensation. I am not advocating this or any other specific measure; what I seek to highlight is that there has been no informed debate on possible solutions that meet the needs of industry for land while also giving farmers a fair deal.

In fact, the entire brouhaha is reminiscent of the lines of another famous poet, W. B. Yeats “The best lack all conviction, while the worst are full of passionate intensity“. A law which was passed in a spirit of misguided sympathy for the farmer but is likely to severely impede economic development did not come up for a sorely needed review. The government of the day sought cosmetic changes in the law but, faced with an obstructive opposition in Parliament, meekly capitulated, consoling itself with the reflection that, since land acquisition is a concurrent subject under the Constitution of India, state governments can pass their own laws to simplify and speed up the land acquisition process. In that case, no purpose is served by Section 107 in the LARR Act 2013 which only permits such legislation by state governments as provides more favourable terms in respect of compensation and rehabilitation and resettlement provisions; it is anyhow unlikely that any state government will enact legislation that is seen as more onerous than the Central law, since this gives its opponents a ready political handle to beat it with.

We are, therefore, in a situation where a neo-Luddite combination of professional politicians and city-bred intellectuals, both without exposure to the realities of the farming sector, are effectively sealing opportunities for a large agricultural population to benefit from industrialisation. Adding to land market rigidities, while also stumbling on labour market reforms and doing little to improve the ease of doing business (best exemplified by the flip-flops on the Goods and Services Tax legislation), are hardly the best recipes to enthuse private Indian and foreign investors. The brunt of this economic obtuseness and political opportunism will, as always, be borne by the long suffering masses of India.

 

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 Aug

Beware of Greeks accepting gifts

Posted by vramani in Innovation.

 

 

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

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

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

1. Stay away from chronic debt:

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

2. Be and remain competitive:

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

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

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

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

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

 

 

 

 

 

 

15 Jul

The Importance of Data – Why Numbers Matter

Posted by vramani in public policy.

The much delayed release (that too only partially, with data at the state level not being officially published) of the Rapid Survey on Children (RSOC) carried out by the Government of India (GoI) and UNICEF has caused considerable disquiet in those working in the area of child health and nutrition. As with any report whose publication is delayed by the government, reasons have been ascribed. The Economist, in its editions of 27 June 2014 and 4 July 2014, has carried articles on this apparent reluctance of the Indian government to disclose data. One of the possible reasons adduced is the less than flattering performance of the Prime Minister’s home state of Gujarat, which he ruled for nearly 13 years before his move to New Delhi. In fact, as the Economist points out, data on child immunisation released by the Ministry of Health and Family Welfare (MoHFW), GoI, in October 2014 did not include figures for Gujarat. Even the July 2015 release of data by the Ministry of Women & Child Development (MWCD), GoI, gives figures only at an aggregated national level. The Economist, which has gained access to the RSOC report, has published state-wise data on various indicators of child nutrition, which show encouraging improvements over the numbers in the last published National Family Health Survey-3 (NFHS-3) conducted in 2005-06. Unfortunately, this good news has been buried under the controversy over the delay in releasing the Report. Sources in the GoI claim that the delay has been occasioned by the conflicting data from two different surveys launched at the same time by two Ministries, the MWCD and the MOHFW. One finds this reasoning very difficult to digest. The MOHFW had no cause to commission a study on child nutrition indicators, a subject that falls squarely within the ambit of the MWCD. It (the MOHFW) has already lost three precious years in bringing out NFHS-4, which means that there has been no authentic data to guide policy making on child nutrition since 2005-06. In apparently getting in each other’s way, the two Ministries seem to be not only confused about the Rules of Business in government specifying which Ministry should carry out what functions, but also seem to be uncoordinated in the area of child nutrition, where they should be operating in close harmony from Dilli to galli.

This lack of critical data in the public domain in India is a malaise that has long affected the development of meaningful public policy initiatives in the social sector, especially in the health and nutrition sectors. Even where data exists, it is generally aggregated numbers, either at the state level or, at best, at the district level. Only one or two states provide disaggregated online monthly data on child nutrition outcomes. As any public policy practitioner will tell you, data at the sub-district (tehsil or block) and village or urban ward levels is crucial for programme implementation, monitoring sectoral outcomes and enforcing accountability of the “street-level bureaucracy” and their immediate supervisors. I have personally encountered frustration in trying to gain access to Integrated Child Development Services (ICDS) data, supposed to be sent online monthly by all states to the MWCD. I suspect that most states do not even bother to send monthly reports or, where they do send it after months of delay, it is no better than garbage. Since there is no analysis of this data at the national or state level, its authenticity is highly suspect. My requests for state-wise data (at the block level) have met with stony silence from successive bureaucrats in the MWCD in New Delhi. Even my reasoning that this is not data vital to the nation’s security or commercial interests and is, therefore, to be disseminated online as per Section 4 of the Right to Information Act has met with no response. An earlier blog (The Gadfly Column: India, The Flailing State: 15 September 2014) has brought out the depressing experience of my colleagues in promoting the use of online tracking systems to monitor mother and child health and nutrition and provide timely public services. While frontline health and nutrition workers enthusiastically adopted the system, the obstructive attitudes of their supervisors and the lack of support at the higher levels of the health and nutrition bureaucracy prevented the widespread use of the tracking system. In any case, the emphasis is always on reporting based on inputs like personnel, financing and supplies rather than on the outcomes generated by the use of these inputs. In my experience in the nutrition sector in Maharashtra, I found that the only time when outcomes were monitored systematically were when the state set up a Nutrition Mission in 2005 to reduce child malnutrition.

If governments (and the personnel manning them) are loath to set up data networks that monitor programme outcomes, they are equally reluctant to use information gathered by reputed private or non-profit organisations. A case in point is the Annual Status of Education Report (ASER) brought out annually by PRATHAM, a non-profit working in the area of primary education. The response of the education bureaucracy to the efforts of PRATHAM (through the ASER Reports) to improve learning outcomes in schools has been, to put it frankly, dismissive (this has been clearly brought out in the Note “Looking Back and Looking Ahead” by Madhav Chavan in the 2014 ASER Report). I have personal experience of this in the education sector. Between 1998 and 2004, my colleague Sumit Mullick and I attempted to improve learning outcomes in 13 backward districts in the Vidarbha and Marathwada areas of Maharashtra through a rigorous monthly testing of basic language and arithmetic competencies in class I-VII students in government schools and school-wise monitoring of these monthly results. Its adoption throughout the state in 2005 spelt its death knell: faced with opposition from the education bureaucracy and the teachers’ unions, the programme was swiftly wound up, including in the areas where it was originally started.

The inability (or unwillingness) of governments to use even data that is generated by the decennial Census of India is illustrated by the Total Sanitation Campaign, promoted by the GoI and implemented in all states of India since 1999. This has obviously had its adverse impact on effective programme implementation and realisation of the outcome of reducing open defecation. Comparative data on the percentage of household toilets in tehsils in India as of 2001 and 2011 show that apart from coastal areas, parts of north and most of north-eastern India and some urban pockets, there has been very little progress in provision of toilets under a programme that enjoyed high visibility. I am willing to hazard a guess that the reason probably lies in the lack of use of available data. Disaggregating data on available toilets down to village and urban ward level would have enabled focus on specific areas lacking in amenities and the reasons for non-adoption of toilets — these might be on account of behavioural reasons related to location or use of toilets or due to lack of awareness or of funds. In the absence of a clear understanding of the reasons for continued open defecation (which poses one of India’s greatest public health challenges), the government machinery probably focused just on inputs without any monitoring of the outcome, which should have been the percentage reduction in open defecation.

What all these examples highlight is the failure to measure outcomes right down to the sub-district and village/urban ward levels and to monitor and demand accountability at the implementation level. The present government at the centre has laid stress on outcomes — given the “business as usual” approach of government structures at all levels, it would not be surprising if this strategy is given short shrift in the course of time. The critical requirement is the availability and use of disaggregated data by policy makers and supervisors of programmes at the central, state and local levels. In the last one year of this government, I do not see any such urgency on data use informing the actions of government departments even in New Delhi. The less said about the states and districts, the better (or should I say, worse?). Till India’s administrators learn to be comfortable with numbers and use them as tools for devising solutions to problems, we will continue to muddle through, maintaining our three digit position in the country-wise Human Development Index, way behind all our BRICS partners.

 

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.

 

 

 

 

 

 

15 Jun

Why marks do not matter — in the long run

Posted by vramani in irony, personal development.

A recent newspaper article by a highly successful author on why average marks in school need not imply the end of the road for a student set me thinking, especially at this time of the year, when the declaration of results leads to extreme despair in those who do not fare so well, leading even to the ultimate tragedy of taking one’s own life. The author advised his young, probably apprehensive readers to take it in their stride and realise that life was about far more than just getting great marks and a plum job. Fair enough advice, as it went, except that I want to present the perspective from the other side, of a so-called “high achiever” of whom a lot was always expected and what it meant for him as he dealt with the later years of his life. Yes sir, I am talking about yours truly, a product of an aspirational system where success was judged by your marks and by your visibility as a person who has made it, who is an object of envy for others.
I grew up in a middle class milieu in Delhi where the dream was to land a prized job in the civil services or qualify as a doctor or engineer, or move to academic pursuits in the USA/UK. Competition was tough even then for the best colleges and the most highly valued jobs. As it happened, I did more than well enough to land the college and the subject of my choice. I enjoyed my college life, participated in various extra-curricular activities and, apart from a hiccup or two, acquired two degrees in my five years in the university. That I had done well academically meant that there were great expectations about me, among family and friends, and everyone assumed that I would easily be able to enter the hallowed portals of India’s civil services. This too I managed rather comfortably, apparently to no one’s great surprise.
It was after I was posted to a rural district completely removed from my earlier Delhi life that the realisation hit home — buster, you are on your own! My performance in the civil services entrance examination initially got me some attention in the Indian Administrative Service circles in my state, but I very soon realised that you are in the position of the Indian bahu (daughter-in-law): after a very short honeymoon, you are landed with many duties, with very little sympathy for your plight. I struggled with that bugbear of bureaucratic functioning in India — the achievement of targets. Whatever I did, I was often not able to meet annual targets, whether for family planning cases (a euphemism for sterilisation), biogas plant construction, land revenue collection or small savings. Realising the meaninglessness of many of these achievements, I probably never really put my heart and soul into reaching these annual targets. Matters were not helped by the bright, ambitious young men and women who were my colleagues and who seemed so fired by the zest to not just reach, but surpass, the magic numbers set for their districts. I soon got inured to the pained look on my Commissioner’s face, when, after reviewing the success of four other districts, he had to handle under-performance in my district. Slowly, I reconciled myself to the apparent truth that I was not one of the dashing, dynamic officers that senior officers in the service would laud.
It was only after I moved to a Secretariat posting in Delhi that I finally found my métier. My above average abilities in drafting notes in the English language and my passion for the subject I was handling saw a lot of responsibilities being entrusted to me. The excellent annual assessments by my bosses stood me in good stead in subsequent postings; it was then that the realisation dawned on me that you are only as good as your last assignment. Added to that was my deliberate decision to keep as low a profile as I could, within the requirements of my job description. Over the next fifteen years, I was fortunate to get a number of interesting assignments and have a warm and supportive relationship with my political and bureaucratic bosses. But what I really value is the love and affection I got from a large cross-section of people: the public I interacted with, my peers and those I worked with in my different postings across a wide geographical area. These gave me a level of comfort and confidence that enabled me to withstand such criticism as came my way. When the failure to reach revenue targets in my administrative division led to reproachful remarks from my top boss (and even a mild rebuke from the then Chief Minister), I was secure in my belief that I was pursuing more important goals impacting the lives the lives of individuals rather than striving to achieve revenue targets.
Today, five years after I took early retirement from service, I realise that there are far more important things in life than just your academic performance or even your rise up the bureaucratic ladder. As you near the sixth decade of your life and look back on the last forty years or so of life, two things come to mind: firstly, you should try to excel in (and, more importantly, enjoy) whatever you do, without getting too tied up in planning where you want your career (or life) to take you and, secondly, the human relations you form in your years at work (including, most significantly, your family relationships) are far more important and rewarding than any material successes you may enjoy in your years on the job. Of course, those marks in school and college do matter, but only for a very limited period and to enable a climb up the next rung of the ladder. It is far more crucial to develop the awareness that one may be climbing up the wrong ladder, at the cost of relationships, contentment and one’s own integrity. Remember, Bill Gates and Steve Jobs never finished college. Equally, remember all those brilliant classmates of yours, with bright futures beckoning to them, who fizzled out in the University of Life and were never able to contribute meaningfully to the society of which they were a part and which had invested so much hope in them. So, by all means, participate in the marks race, but realise that it is ultimately a game where you win some and lose some. Winning over your own fears and insecurities is what will finally make you a complete human being.

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.

 

 

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