Shifting the Debate

The last one month has been interesting, to put it mildly. We have seen major political upheaval in the country just when most people thought we were about to drift aimlessly through the rest of the UPA government's second term. And I would say it was about time that these events transpired - the way things were going, something had to give. For a country that was touted to be an economic superpower by the end of the decade, economic stultification loomed large, potentially dashing the hopes and dreams of millions who had dared to expect more than subsistence in a country that was used to defeatism and poverty-mongering.

There are those who have looked at the course of events over the last month (and to put the last month in perspective, over the last 2-3 years), through the prism of an ongoing politics vs. economics debate. The rationale of their argument goes something like - Indian politicians need votes and are obsessed with staying in power, so choosing to take reform-oriented, economically sound decisions must necessarily mean going against conventional political wisdom. Well, interestingly enough, those that have been making this argument seem to have missed the shift in the debate.

If some recent accounts of major national commentators are to be believed, the politics vs. economics debate has been already been consigned to the dustbin of modern Indian history. Through anecdotal accounts as well as intensive data collection and analysis, many are now saying that the dichotomy between good economics and good politics seems to be blurring away into oblivion. In a phase shift of historic socio-political proportions (and implications), the divergence between the two is about to be decimated forever in this country. Indian people, cutting across economic and social strata have perhaps discarded the 'dole' mentality where they voted into power the political party that gave away freebies and subsidies to a narrowly defined electorate that was often defined by lines of caste or religion. That age, good morning, is over.

Instead, what seems to be emerging is an epoch in Indian political history where reforms constitute the mainstream in the electoral agenda. In spite of what some political dinosaurs like Mamata Banerjee would like to believe, the people of this country have already moved on to a growth and development based debate. Her brand of 'povertarian' politics is obsolete. Consider this - in a thought provoking article wittily titled 'The Meena Kumari Politics', Indian Express editor Shekhar Gupta claims, "An important and powerful Congress MP.... made a confession that....the party made a suicidal blunder by brainwashing itself that the 2009 victory had come because of NREGA when it had, in fact, come from growth." Even discounting for any personal biases that Mr. Gupta may have, this is an important claim, coming ostensibly from people who are grassroot politicians, not opinion-wielding intellectuals.

In yet another account published in the New York Times, called 'Reformers Do Win Elections in India', hard evidence is cited, based on the work done by economists Jagdish Bhagwati and Arvind Panagariya, "from the 2009 national elections to bust a standing myth in India’s power corridors – that pro-growth economic reforms equals to political suicide." On the NDA's loss in 2004, which is often incorrectly attributed to the rejection by India's poor masses of the reform agenda, the article substantiates how "the 2004 mandate was not for anti-growth, socialist policies of the past.... In fact, it was the opposite: Voters wanted more meaningful, high-growth reforms, not fewer."

There seems to be an increasingly stark realisation among the avant garde Indian intelligentsia that the argumentative transformation on the Indian political stage is now complete - voters have now begun expecting more than just the consistently disingenuous electoral promises of 'bijli, sadak aur paani'. Inspired by cases of model governance in states like Bihar, Gujarat, Delhi and Uttaranchal, they have begun to expect local leaders to actually deliver on these promises in substantial measure. In fact, they have gone further and have now begun to expect private-sector employment generation as a result of government policy. As someone recently pointed out, the difference between 5% and 8% growth is a difference between comfort and more comfort for someone who belongs to the middle-class or the affluent class, but for the economically weak, it constitutes the difference between unemployment and subsistence (or even aspirational upward mobility).

In a timely move, the Economist has published a special cover edition on India this week, aptly called, "India, In Search of a Dream". The publication comments, with typical trenchant criticism, that India's leaders have done a shoddy job of convincing the masses on the need for reform. They have been guilty of perpetuating a regressive pseudo-socialist regime of quotas, subsidies and inefficient government control on the 'commanding heights' of the economy. But perhaps for the first time, voters seem to be taking the initiative to bypass the politicians' restrictive agenda - matters have come to a head and the electorate has suo motu decided that growth and reform is non-negotiable and in doing so has shifted the course of this debate forever. Old fogy politicians and tantrum-throwing dinosaurs will ignore this at their own peril.

The long arm of the welfare state

In a country that has been stung by experiments with race-to-the-bottom socialism for decades, advocating a greater presence for the state can be a lonely cause. Yet, in my view, perhaps in a country like India that is making the transition from socialist poverty to capitalist nouveau riche prosperity (for a few), the role of the state becomes ever more important. Not least because the state then becomes the only benefactor of those disenfranchised by the process of development (which, even in the most benign, inclusive of models can often be skewed). Ironically, then, socialist welfare policies must be perpetuated, even expanded, not culled in the name of 'less government is good government'.

First, the rise in individual wealth in a nation also often comes with a concomitant bulge in state coffers. Even with a 5% fiscal deficit, the Indian government today is far richer in both absolute and relative terms than it was as in its socialist heyday. This gives the government a far greater ability (and responsibility) to spend more and to spend on more causes. Agreed that this model has gone horribly wrong in Europe and America - but that is only the other extreme. The 'reform-minded' economists and right-leaning policy hawks will cry foul and say that the profligate Indian state already spends far too much. Wrong. The Indian state wastes too much. Subsidies are large, not because they are unnecessary, but because they are targeted ineffectively. The poor still need cheap kerosene and rice. It is electoral calculations that hold the government back from targeted subsidies. It is often said that a 'benefit' once doled out in India, can never be revoked - be that a subsidy, a reservation or an entitlement. However, it is easier to refine a benefit by targeting it correctly than to rescind it completely.

The vastness and sheer socio-cultural diversity of India necessitates a state that reaches out to parts of the country and to people that corporations would never find economical to serve. There is either no money to be made in these transactions, or the wait for returns can be longer than a for-profit entity can be answerable to shareholders for. In all such cases and more, the state must step in and provide. It has a moral duty and responsibility to, irrespective of the economic policies that it espouses. In the farthest corners of the Himalaya mountains in Kashmir, the remotest villages of the North-Eastern states and in the densest jungles of central India, the state must extend its arms and reach out - build schools, roads, provide medicines for free and transport services for cheap. Because someone has to, and no one else will. What every newspaper in the country will tell you is the story of mainstream India. Either the India that is in the thick of the action on growth, or the India that is poor but has a political voice to matter enough. There are hundreds of untold stories from another India that a welfare state does reach out to, but one that is never heard by the rest of its fellow-countrymen for the simple reason that it does not pay anyone to hear it. This is where the state must step in and hand-hold the development process to mainstream entire populations. Even if there is no economic or electoral reward to be reaped.

A Fragile Peace

Over the last month, I have come to realize that 'peace' in India can be a very fickle state of existence. In a country with more than  a billion people with a million identities of religion, caste and creed each, fault lines can be exposed with the slightest scratch on the surface. It also makes me marvel sometimes at the chaotic fabric of society in India - perhaps chaos is the equilibrium state of this country and its people. I do not mean that to be derogatory - it is merely my assessment of our reality and perhaps something that is essential to appreciate before anyone can set about understanding, surviving in and even attempting to govern this country.

The speed with which hatred and violence spreads in India never ceases to amaze me. In the case of the recent episodes of violence in the North East, followed by the exodus of people ethnic to the North Eastern region from some major cities in India, technology became a medium for perpetrating hatred and fear. I believe that at the center of the process of creating such mass hysteria, lies the inherent gullibility of the Indian mind. You need only look at the number of 'chain emails' that regularly spam your inbox to figure out the very minimal levels of discretion that Indians exercise before passing on a viral message.

What is surprising, and to some extent disturbing, is that I have more than occasionally seen otherwise sane, 'educated' people falling prey to such instances of hysteria. The same goes for people 'sharing' meaningless viral messages on facebook - it takes almost nothing to get the most rational Indians to begin 'sharing' hateful, derogatory and frankly absurd ideas on social media. People deride and personally attack politicians, celebrities, sportsmen, countries, races and religions at the drop of a hat. They do not think twice before participating in the process of creating 'popular delusions' (a phrase that I shall borrow from the title of a brilliant and very topical book: Extraordinary Popular Delusions and the Madness of Crowds).

To cite an (admittedly tangentially related) instance, when the government sharply hiked prices of petrol a few months ago, I saw even some of the most intelligent and economically literate friends of mine crying foul on social media. As if low fuel prices, even in the face of global spikes in crude, is a birthright of every citizen in this country. Bafflingly, some of the people most actively deriding the price hike by 'sharing' the most number of such facebook messages/jokes/pictures did not even own vehicles of their own. At the heart of such behaviour lies a tendency to let the mob think for you. It has happened so frequently in this country that it is almost disturbing how we can lay claim to being part of a civilized society - the Godhra riots, the Babri mosque demolition, Delhi's anti-Sikh riots, a mob molesting a teenager in Guwahati; all of these are instances of the worst kind of mob behaviour in Indian society.

I think understanding the basic nature of the Indian socio-cultural make-up will serve any individual/government well before an attempt to censor or regulate online media is made. Even if the internet is sparingly used by the most affluent few millions out of a billion odd people, sometimes the social structures that they are part of and the identities that they represent remain largely the same as the teeming masses of the most backward hinterlands. Consumption patterns and the adoption of pseudo-liberal urban mannerisms does not change the biases, delusions and hysterias that are deeply ingrained in our multidimensional identities. Addressing these regressive tendencies should be as much an integral part of the agenda for the 'development' of modern India. Economic progress without the concomitant liberalisation of ideas and cultures is meaningless and to some extent dangerous. We are in the midst of a fragile peace that needs to be buttressed with stronger foundations, lest we should relapse into the chaos that is ingrained in our social DNA.

Black and White

Too many people have told me too often that life throws up shades of grey more often that it does black or white. "Nothing is for certain"; "It's not as simple as it seems";"There are always exceptions" - these are only some of the excuses of an explanation that have been offered by way of justification for a compulsive indecisiveness that I have so often found inexcusable. Try offering these excuses to the widow of Avneesh Kumar Dev, a senior HR manager at Maruti Suzuki, who was murdered by a mob of workers in the Manesar plant of his company. Try telling her that punishing her husband's murderers is not a simple matter - that there are many shades of grey involved since the violence that was perpetrated this July at Maruti is the manifestation of deeper malaise which has something to do with socio-economic divide and class struggle between the haves and the have nots. Try telling her that her husband's death was collateral damage in a centuries old process of giving voice to industrial workers, the poor and the downtrodden. Try explaining that he is not the first or the only casualty in the struggle for achieving the socialist ideals that our economy and our country has been founded on - that his death is a sacrifice towards a larger cause. Try telling her that in this instance too, one is being too harsh and too judgmental by pronouncing the mob of workers guilty before conducting a "thorough investigation into the matter, at the end of which, rest assured. none of the guilty shall be allowed to go scot free". Try by starting your story with how workers at Manesar were never allowed to form a trade union, were never given a voice and were not given the wage hikes that they had been demanding for so long; tell her this is why things came to a head and got out of control; this is why someone broke her husband's bones and set him on fire while he was still alive.

Perhaps you won't. Perhaps these excuses are easier to proffer on televised national prime time debates. Perhaps deep inside someone knows the truth - that sometimes, perhaps more often than not, it is as simple as black or white. That this was murder. Not class struggle, not a manifestation of socio-economic divide, not an 'unfortunate accident'. This was murder which should be avenged - by awarding the most stringent punishment that the law of the land allows: the death penalty. Let us not glorify this instance by giving it the name of industrial strife. Let us learn to identify the black from the white before we permanently delude ourselves with grey.

On brands and conspicuous consumption

I have had this debate on many an occasion with different people, and never seemed to be satisfied with any of the explanations/arguments I heard - Why is a brand so important? Especially when it comes to articles of consumption. At some level, I believe that advertising/branding often ceases to be what it is supposed to be - informative and begins to encroach upon the territory of mental subversion and manipulation. I have seen a number of instances where products brazenly appeal to a subconscious vulnerability that people might have and feed on their weakness. Some societies even regulate advertising to vulnerable groups like children and rightly so. But it is surprisingly easy to influence the minds of some adults too. Personally, I deem falling for such machinations as an insult to one's intelligence.

I have seen a number of instances where an individual chooses Product X over Product Y simply because he (often she) wants to be seen using the former, not because it ranks higher on utility in the pure sense of the term. If, therefore, the same person were to objectively evaluate the 2 products in terms of their utilitarian aspects - any or more of the qualities such as effectiveness, durability, ease of use and then also include cost into the equation, the choice would seem obvious. Instead, I see many otherwise perfectly rational individuals assigning an overwhelmingly large weight to a fuzzy criterion called 'brand' in their decision making, which then distorts the entire process of choice. The reason I have a problem with that - such irrational impulsiveness is meant for lesser mortals. Those of us who have been endowed with the ability to reason, go beyond image management and choose objectively, have the responsibility of putting such faculties to good use, not fall for clever tricks called brands.

Perhaps brands are meant to serve the need for conspicuous consumption. People say things such as 'the ownership of this product makes you part of a select group.' Of fools, I often think. Each of whom is falling prey to mass-hysteria and collective ignorance. Rich people often find innovative ways of cheating each other by inventing such things as 'labels' and segments such as 'premium' and 'ultra'. I don't really have a problem with that. More money changing hands is good for economic activity (can't say the same for economic progress). When the bourgeois begins to behave with such aspirational impetuosity, it pains me. If only we thought for ourselves before giving in to such depravity.

Why Pranab Mukherjee is one of the worst FMs in recent history

With GDP growth at 5.3%, one would expect panic, firefighting, or at the very least, concern from the highest echelons of government. Not so in India. It is almost as if in its quest for political posturing, our government would be more concerned because this is now being referred to as the 'Hindu' rate of growth. Sacrilege for those who swear by secularism. Pranab Mukherjee, the man at the helm of affairs in the Finance Ministry (and some say the whole government), is, I think, one of the worst FMs India has seen in recent history. Not only  did he deliver a toothless budget when a bold one was expected, he is also personally responsible for the deteriorating investment climate in India.

At a time when growth is collapsing, the current account deficit is running high, one would at least expect the FM to support Balance of Payments by encouraging capital flows. His conjuring of the Vodafone tax specter to haunt investors (past, present and future) has been particularly damaging. In his desperate quest for bridging a fiscal deficit (which by the way is his own government's creation, thanks to Sonia Gandhi's pseudo socialist policies a la NREGS), he seems to have unleashed his sniffing taxman on all unsuspecting corporates.

"We cannot declare India a tax haven to attract FDI," he said. Very soon, Mr Mukherjee, you may not have any FDI left to tax. In your gold-rush, you have killed the goose that laid the golden eggs. Good luck with your revenue targets. 

What scares me most, is that Pranab Mukherjee, at some level, also refuses to acknowledge the situation that his government has created - time and again, when he would have been expected to stand up and take responsibility, he has instead conveniently passed the buck to the Europe crisis, coalition compulsions and market volatility. In other words, to anything but his own incompetence and apathy.

The arrogance of entitlement is apparent, when your Finance Minister claims in Parliament that "When we had no FDI, we did not eat lizards." Nice to know what your worst case scenario is, Mr FM. We shall be prepared. Even now, after the latest GDP figures have been released, a number of government advisers are choosing to hide behind a paltry Fixed Capital Formation growth (which some people have already claimed is due to a one-off).

Pranab Mukherjee is touted to be the next President of India. I think that would do just as well - it could offer some much needed relief and a welcome change in the Finance Ministry. Only, I wish this was applicable with retrospective effect.

Neither here nor there

Watching Pranab Mukherjee deliver his budget speech on Friday was like watching a thriller - except that you kept waiting for a climax that never came. He started off well enough, with rhetoric on how fiscal responsibility is dear to the government and how he will return the country to a respectable rate of growth next year. So he led his audience on, having captivated them into believing that there is excitement ahead. But like a badly written script, his movie only disappointed and exasperated thence. The initial promise of a blockbuster, therefore, faded quickly after a well-made trailer, albeit with some comic relief afforded by the good-humoured quoting of Shakespeare and by the minister likening himself to a medic, called upon to administer a bitter pill to the ailing patient which is our nation. (I personally believe an enema would have been in order; pills are for milder afflictions).

Many went on to describe this budget as 'middle of the road' - perhaps delightfully oblivious of the heavy haulers hurtling towards us at 100 kmph (alliteration unintended!). But I think this accurately describes policy under the current government: neither here nor there. Ultimately, it all seems to be an exercise in clinging on to that chair (never mind if it increasingly resembles an electric one).

I thought the 'retrospective amendment' business on the Vodafone deal was an absolute stinker. The Indian government seems to have pioneered a new form of time travel. We are increasingly witnessing instances where actions are taken retroactively. I would say arbitrarily. Taxman needs money? Amend laws and enforce them with retrospective effect. Supreme Court must deliver justice in 2G scam? Cancel allotment of licences done years ago. Why, it must a popular joke in the galleries of power these days. Be kind to me, or I will go back in time and screw your happiness. Why should anyone be made to suffer because you had not put your house in order? If there was mischief involved in the distribution of 2G licences, too bad. Punish the criminals, hang them if you like, but how can you go back in time and cancel licences because YOU botched the process? Foreign investors must be pissing in their pants thinking about putting their money in India. And yet we have ambitious capital account targets.

I watched the Finance Minister being interviewed by a TV-channel post the budget. The interviewer pointed out bluntly to the FM that some of the acts in the budget could actually constitute criminal offences on the part of the government. Case in point is the additional cess introduced on crude oil production by companies like ONGC. The government only just concluded an auction of shares for that company days ago (botched that too). If a private company's promoters were to act the way the government has, they would have been subject to strict action by SEBI. The government has essentially hoodwinked minority shareholders into buying shares at high prices, knowing fully well that this additional cess is going to hurt the company. Why disinvest at all in that case, if every action that you take as a promoter is meant to transfer wealth out of the pockets of minority shareholders including the general public? Similarly, issuing tacit directives to oil retailers not to raise prices before elections must certainly constitute a violation of the model code of conduct - you are using state machinery to advance your own ends only because you are the party in power at the center. How is that not illegal?

What the government is trying to put up is a depraved act of trying to please everyone for all time. You want disinvestment, double digit growth, price stability and fiscal responsibility and yet you won't budge on reforms. I think the finance minister did well to concede in his budget speech that most of India's inflation is driven by supply side constraints. He has the uphill task of removing these structural bottlenecks. Perhaps the government needs to realize that it need not dilly-dally on reforms in order to seem populist. The status quo only benefits certain vested interests which most definitely do not constitute the poorest of the poor whose cause the government claims to have taken up. Multi-brand retail will not hurt the farmer, it will hurt the middlemen. Disinvestment does not hurt the country, it hurts trade unions that represent inefficient workers. Substitution of subsidies with direct cash transfers does not hurt the poor, it hurts the black marketeers who divert PDS supplies for personal gain. Sooner, rather than later, we will have to choose sides. The funny thing is, the choice might be easier than the government likes to think it is.

Midnight's Children.... and still living in the dark

With every passing year, there are recurring suspicions that Indian democracy is growing stronger. Countless newspaper articles and television debates periodically seek to remind us that the times are finally changing and so is the level of political debate in this country. Analysts wax lyrical at how the average voter these days has astutely started focusing on issues like development. I say rubbish. Every year a new ilk of politicians comes along and reminds us that we, as an electorate, are still the evolutionary equivalent of dinosaurs. The latest spate of events on the Indian political landscape, precipitated by the advent of that terrible quinquennial feature called elections, has proven just that. For instance, the government of the day believes that it will clinch the minority vote by narrowly appealing to that section's sentiment in preventing Salman
Rushdie from attending the Jaipur Literature festival (presumably inspired by the same logic that had driven another political outfit into preventing Maqbul Fida Hussain from living freely in this country). It is perhaps the same wisdom that has guided our leaders into outbidding each other to unconstitutionally guarantee a quota on the basis of religion in Uttar Pradesh.


Now I wouldn't be so naive as to assume that the very able politicians who constitute our government are out of touch with reality. If they have decided to deny a man of the stature of Mr. Rushdie (can there ever be a better poster boy for Indian literature than someone who has won the Booker of Bookers?) entry into India, they must have done so after rigorous political calculations and after having concluded that we as an electorate are indeed a sorry enough bunch of dolts to fall for such moves. So let's not get all excited and begin to blame the politicians - they are merely doing their jobs (which I presume, is to engage in politics, the worst kind of it). No, this is an indictment of Indian society. We get the governments we deserve. As long as we continue to pander to this rabble rousing and bigotry, there will be politicians falling over themselves to spin votes out of non-issues. It is perhaps the easiest way for them to get elected - without performing on the real issues that a mature democracy should actually be voting on. Shame on US!