Sunday, July 31, 2011

Anna must resist the trap of populism....

Again, before I write this piece, I have to make the standard disclosure. I am not against Anna or the Lokpal Bill. I like everyone else, also think that corruption is a menace that the country can ill-afford and every effort must be made to remove it to the extent possible. I give credit to Anna for having brought corruption into the mainstream. But this is where my appreciation stops. And my worries take over. Anna appears to have become trapped by a desire for populism.....a desire to cater to the mood of the public. A mood whose author he himself is. He perhaps realizes that all is not well with his proposals. But it’s now proving to be very difficult for him to change his stance. In a way, Anna is trapped in populism.....

Since the first agitation in April this year, there has been a lot of time to analyze Anna’s specific proposals in greater detail. Numerous debates have brought out the pros and cons of of his proposal. Today, we are much better equipped to understand his specific proposals.

In my interactions with people, I find that I can classify them into two buckets. One – and admittedly the larger bucket – is made up of the “common” people. The general public. Without doubt, Anna has struck a chord with this group. Most of these people support Anna’s movement to the hilt, though most don’t understand the specific points raised in his Bill. Hardly anyone has actually read his draft. Most know that Anna is fighting the political class – and that brings great joy to them. On the other hand, there is the “intelligentsia” that has now analyzed Anna’s proposals from a far more practical stand-point. They are the experts, so to say. Those who have experience in law, politics, governance, experience etc. And the opinion emerging from this class is clear: That several of Anna’s proposals are downright impractical.

For eg., the demand to include the judiciary under the purview of the Lokpal is considered by most to be a wrong demand. The cornerstone of any democracy is the separation of the Executive, the Legislature and the Judiciary from each other. I might add “Media” to this list of august institutions. These are the four “pillars” as it were of any democracy. They need to work independently of each other, but should co-ordinate their actions with each other. If the absolute independence of any of these pillars is curbed, it will harm our democracy. Clearly, the judiciary must be kept out of the purview of the Lokpal. Take limiting the reach of the Lokpal to the higher echelons of bureaucracy as another example. Again, experts are of the view that to expect one single body to handle corruption charges against the entire system is impractical. I have argued in the past that this will make the Lokpal an extremely large organization – maybe having 20-30 thousand employees. It will become a bureaucracy in itself. There will be no way to prevent this bureaucracy from itself becoming corrupt. Thus, most experts are of the opinion that the Lokpal should focus on the highest levels of corruption (someone called it “spectacular” corruption in last night’s TV debate on NDTV) – involving ministers, senior bureaucrats and the types. Again, Anna must back off on this point. To be fair to the government, it has agreed to include the seniormost people under the Lokpal, not the juniormost. If it had been the opposite, one could have accused the government of protecting the big daddies. Now, all ministers can be prosecuted without any permissions being required. This is a big success for Anna.

Take the selection committee for choosing the members of the Lokpal. I think the government’s proposal is a fairly balanced one with only a slight advantage being wielded by the government. There are three politicians from the ruling party – the PM, the Speaker and one more Minister – while there are two from the opposition – the leaders of both house of Parliament. The rest are supposed to be apolitical people from the judiciary and other walks of life. I think we need to let the government have this slight edge so that we can see what “style” of governance and leadership they bring to the table. For instance, if the Congress is a corrupt party as many claim it is, it may attempt to push in weak members.....but at least we will know what it is up to. Likewise, a good party (is there one?!) will try to bring in good people and again, we will be able to see this. If on the other hand, the opposition has a stronger hand, then it will take all the calls, but the ruling party will have to take the flak. Similarly, on the Lokpal members itself, the government’s proposal is not half as bad as Anna’s team makes it out to be. There is one Chairman, who is a member of the Judiciary (not a politician). Four others are also from the judiciary. So a majority is apolitical.....

The main bone of contention is including the PM within the ambit of the Lokpal. Here, the opinion from the experts is that a blanket inclusion of the PM is not a good idea because of the way this can hobble the government. Ex-CJI’s including Justice Venkatchelliah have also said that the PM must be kept out. Besides, it’s not as if the PM is being kept out of the purview for ever. Once he/she demits office, charges can be brought against the PM also. I would prefer to include the PM under the Lokpal.....but I am quite ok to accept this proposal also.

Frankly, on nany points, there is a case for Anna to scale back. But here-in lies the problem. If Anna was to agree to any changes, he will be seen as “compromising”. Anna is probably worried that his followers will be upset with him for “climbing down”. In many ways, we are to blame for this. Just look at the words we use to describe a process of negotiation. “Compromise”, “climb down” are hardly the kind of words that Anna wants to associate himself with. Anna would anyday prefer to be seen as “going down fighting” against a “venal, authoritarian” government. It gives him far more glory to be an idealist that to be a realist. Who knows – if he agrees – some people may even accuse him of having slept with the enemy. Such is the fervor in the people that accepting anything less than the original demands will be seen as a major “defeat” for Anna. This is a trap. It scuttles the process of negotiations from the very beginning. It makes the outcome a pre-determined one even before the process of negotiations has begun. It makes the two sides, warring sides. (Why are they even called two sides – why not one side trying to find the best solution)? One side – with the aggressive, original demands – is the right side and the other side – the one that suggests practical changes – as the wrong side. I think Anna has become a victim of this. He is giving too much importance to what people will think. So, even if it means taking an extremely unreasonable stand, he feels he is better off doing that than going against the mood of the people.

This is the big difference between Gandhi and Anna. Gandhi was a pragmatist. He knew when to step off the gas. When to agree; when not to. He could take tough calls if required and then explain them to his followers. He was not trapped by people’s opinions....he shaped people’s opinions. Apparently, Gandhi coined the terms “duragraha” or “a-satyagraha” as meaning the opposite of satyagraha. Gandhi had the guts to stop a movment if he thought it was “duragraha”, even though its proponents thought it was satyagraha. He could go against his people if required. He had the guts to acknowledge his own weaknesses. He stopped the khilafati movement after the Chauri Chaura incident – because he believed his people had gone too far. Anna has never demanded that his followers stop giving bribes; start paying all taxes before they joined his movement. Never has he advised his team to take a pragmatic approach to removing corruption. Anna wants to remain an idealist. Even this would be ok, if his team was pragmatic.....but if all his team members want to be idealists – then we have a serious problem.

The real truth is that Anna must back down. He has to listen to the views of the intelligentsia. He must consider that his team may have made some mistakes He has to believe that not everyone in government is corrupt. He must have the patience to keep toiling and not expect to achieve all that he wants in one step. Surely he understands that after this Lokpal Bill is passed, there may be a need for change again in a few years.....He push for that then. For him to take a hard nosed stand right now could be suicidal for the entire movement. In fact, I already sense a change in tide. The media, the intelligentsia and even many in civil society are beginning to think that enough is enough .Anna has to stop.....

Saturday, July 30, 2011

Yeddy gone (hopefully) what about the Reddy brothers???

What a dirty and embarassing story this is turning out to be for the BJP. With Yeddy cocking a snook at the central party leadership and refusing to go even after having been specifically told to do so, there is no doubt that the party has suffered a huge body blow in its campaign against the Congress on corruption. Even if Yeddy does go now (and no one can be sure of that), it will leave the BJP in no position to take a high moral ground on corruption. On the contrary, it now faces new charges – of having a weak central leadership and a fractious one at that. The party that taunted the Congress for corruption is now facing corruption charges of its own. The party that taunted the Congress for a weak PM is now facing similar charges against its own central leadership. The shoe is truly on the other foot now....

And even after Yeddy has gone, the question of the Reddy brothers – the real moneybags – remains. There has been no comment from the BJP on the fate of these three brothers (of whom two are minsters) and their close family friend Srimamulu (also a minister). The four of them have slogged over the last 10-12 years to get the BJP to power. It must now be very difficult for the BJP to throw them out. And here’s the further complication. There is a slanging match going on between Arun Jaitley and Sushma Swaraj on who is responsible for the rise of these corrupt brothers. Clearly, Sushma was the beneficiary of the clout of the Reddy brothers during her 1999 campaign against Sonia Gandhi in the Bellary Lok Sabha seat. She may have lost then, but she didn’t forget their help. In fact, some believe that they are like “adopted sons” to Sushma Swaraj. But Sushma has her scores to settle with Arun Jaitley. She alleges that she was never in favor of two brothers being in the same cabinet (Janardhana Reddy is the Minister of Tourism and infrastructure and Karunakara Reddy is the Revenue Minister). But it was Arun Jaitley who got them both in. Whoever it was who was responsible for giving them this prominence, the party shouldn’t be fighting internally. What is important now is that the mess be cleaned up and the brothers be thrown out of the party. Can the party do that? I seriously doubt that.....

The Yeddy episode also brought out another embarassing habit of the BJP. That it attacks those who attack it. The party first attacked the Times Now news channel for the “scoop” it had carried out. Blaming it for the leaked report. Now, while I understand that the party is bound to be angry at the leak, it should realize that there are enough leaks in all state governments and at the Center; all feeding stories to the media. It is not that media has to struggle to get its hands on such scoops. The reality is that the leaks choose the media outlet they want to give the story to. The BJP has itself benefitted in the past when such leaks have surfaced against the Congress. At those times, Ravi Shankar Prasad has “complimented” Times Now and called it an “expose”. Now it cannot sue the same channel. Rather, the BJP should investigate its own administration. Whatever the reasons for the leak, it hardly speaks well for a national party to be seen as trying to muzzle the press.

The party then attacked Justice Santosh Hegde. Now, the current political environment is such that no matter what Justice Hegde writes – even blatant lies – the people in the country are going to believe him 100%. In this case of course, Justice Hegde has backed up his work with tons of research and investigation. What the BJP should not have done is challenge Justice Hegde’s intentions. That’s a huge mistake to make in politics. Then there were charges made by Justice Hegde that his phone was being tapped. And of some politicians coming home to discuss the report (euphemism for threatening him). The judiciary in this country is held in high esteem – even though everyone knows that it is corrupt itself. The large scale hatred that people in this country have is towards politicians.....and they are willing to ignore the corruption in the judiciary as long as it helps to get to the politicians. Besides, Justice Hegde simply isn’t the types who anyone would hold as corrupt. Or politically motivated. Very bad mistake indeed.

The party then attacked the Congress for the indictment of its own MP, Anil Lad. Now honestly, who even cares for Anil Lad? And if he is involved, let him be sued. But by directing its attack at Lad, the BJP again found itself on a weak wicket. It was relatively easy for the Congress to point out that Lad was not holding any constitutional authority. What could he resign from? The Congress was not demanding the resignation of the Reddy brothers as MPs and MLAs.....they were only demanding that they not remain ministers any longer. It’s the exact same that happened with Raja, Kalmadi, Chavan et al. They all continue to remain MPs and MLAs but they have had to give up their constitutional positions. So Lad should and would be investigated and charged. The stakes however are much larger for the BJP – It has lost a CM, and it will most likely lose four more ministers in this dirty saga. Again, one gets a sense that the party could have handled the issue much better.

The Yeddy episode just proves what I have been saying for long. There is corruption in every single political party in India. I am neither pro-Congress nor pro-BJP. Nor anti them. What I cannot stand is the attempt.....indeed audacity of the BJP to pin corruption on Congress, when it fully knows that its own state governments are all equally corrupt. Of course many people in this country believe that the Congress is more corrupt than the BJP – given the sheer higher number of cases against the Congress. But people should remember – the Congress has ruled for the most time – and hence it has the most to hide. Give the BJP the same amount of time, and their record will be no different.

But corruption in politics should not depress us. Or make us angry. It should make us determined to fight the problems that exist in the system. I doubt if any of us wants to give up our democracy. What we need is a bunch of sane people to sit down and clean up the root causes of corruption in our politics. Our response must not be to throw out all politicians (and risk throwing out democracy in the process), but to encourage better people to join politics. We must remove the problems that lead to corruption and even good people becoming corrupt after joining politics. We must clean up election funding. We must acknowledge how much it costs to fight elections and we must develop our rules accordingly. Currently, the Election Commission limit on spending per candidate is so arbitrarily low that even honest candidates have to spend “in black”. We’ve seen in the past (when we had the License Raj in the 1960s and 70s) that it is bad laws that cause corruption. Artificially low limits are bound to cause corruption. We also need to allow more open funding of elections. Maybe corporates should be given tax breaks on their election spends. Maybe the state should fund elections. That’s what happens in many European countries.....

My request to the many readers who comment on my posts is that they should not complain all the time. If we go by what some of them write, it would appear that they want India to give up on democracy itself. We cannot do that. We must try and reform our democracy, not give up on it. I particularly cannot stand cribbers – those who shout and rant at everything – but have no solutions except “jail all of them”. These people harm the country by leading it to the precipice from where only a military rule or a dictatorship looks feasible. My sincere request to them is to start contributing positively with good ideas. My sincere request also is to allow a different point of view from theirs to exist. They may not like my views, but they cannot hold me back from writing what my views are. If they do believe in democracy, then they must believe in allowing different views to emerge.

The real truth is that the BJP has disgraced itself. But why only the BJP? All political parties have disgraced themselves by being proven to be corrupt. Apart from the Congress and the BJP, the Left has been exposed in WB, BSP in UP, the RJD in Bihar and the DMK in TN. Earlier, the AIADMK in TN and the SP in UP were shown to be corrupt. It’s a matter of time before every party gets exposed. In my mind, the Lokpal Bill is not a solution. It’s just an external “balm” to temporarily curb the symptoms of corruption. It won’t cure and remove the root causes that cause corruption.....

Friday, July 29, 2011

Move on Anna Hazare. There are many other important things to be done.....

An attempt is again being made by Anna and his team to hijack the agenda of the country and focus only on corruption. Already, the Lokpal issue has taken up too much time. It should be put to bed now. By changing its priorities and moving the Lokpal issue up, the government has already done enough. In a fast developing and fast growing country, there is limited bandwidth for any one issue. The farmers, the aam aadmi, the rural poor, the landless and the land owners are all waiting for the Lokpal logjam to end and their issues to be taken up. The new Land Acquisition policy announced by the government yesterday is one such.

India’s ancient Land Acquisition Act (1894) is about to be changed. After many land battles over the past few years, it’s become clear that the old act is simply not good enough to balance industry’s and government’s need for land with the needs of the poor. There have been violent protests all over India as the government and private players have tried to acquire land. At least one government (WB) has been toppled with at least part of the reason for its loss being attributable to its poor handling of the Singur and Nandigram land issues. There have been recent land acquisition problems in UP – the most important political battleground in India, with Mayawati’s government being accused of corruption and looting the poor. There was trouble yesterday in Punjab also on a similar matter. Clearly, the poor of the people are upset and angry at the way their land is being “grabbed” by the government under the present act. The compensation isn’t enough; the care for the displaced even less. Now all of that is set for a change.

The new policy tries to reward land owners in a huge huge way. It recognizes that for farmers, land doesn’t have just commercial value (the so called market value). It has high emotional value as well since land is usually inherited from previous generations. It also has high security value.....after all, the only security the poor can give to their next generation is the security provided by land. And then there is the very special ability-to-feed value attached to land – even in the most adverse of circumstances. Land for the acquirer is just land. Land for the giver is much more. Taking congisance of this reality, the new proposal recommends six times of the market value to be paid as compensation. Further, the land-owner would be provided an annuity of Rs 2000 per month for twenty years. It remains to be seen if this annuity is inflation linked or not. It should be. Additionally, with the objective of keeping the rural poor gainfully employed, mandatory employment has been prescribed for those who have been displaced. If employment cannot be given, then additional compensation of Rs 2 lacs has been prescribed. It remains to be seen if this compensation is dependent on the size of the land acquired. It should be. There is also a serious effort at making the displaced a beneficiary in the future success of the project for which the land was acquired.....if the land is being developed for urbanization, then as much as 20% of the developed land has to be shared with those whose land has been acquired. Further, there is a provision for paying 25% of the compensation in the form of shares, whose value (hopefully) would appreciate over time. There is also the concept of resettlement allowance for those who lose their livelihood. It appears that the whole idea is that the land deal should not be a one-time transaction of buying and selling, but should tie the land seller and the land buyer for a much longer period of partnership. Scheduled Tribes are set to get additional sops.

The impact of the new Land Acquisition Act is so profound that the country must stop all other activities (including agitating endlessly on the Lokpal Bill) and take note of this bold initiative. We must have debates on it. Discuss its strengths and weaknesses. By making the policy pro-people, the government is trying to make it more attrative to those who have owned land for centuries. By bringing in clarity, the government is trying to make it easier for industries to acquire land. By balancing the needs of the land owners with those of industry, the government is trying to remove the biggest bottleneck in the path to rapid industrialization. By engaging with the government on this policy, civil society can make it even stronger. If the draft Bill is passed by Parliament, it should help grow industry while protecting the rural poor. Why should the country’s industrial and rural policies be in conflict with each other? The center has been careful not to allow acquisition of multi-cropping land – keeping an eye on the food production requirements of the future.

What’s the downside of this policy? It’s obvious. Every single policy that empowers the poor has an opposite impact on the better-off groups in the country – including most readers of this blog. As a result of higher land acquisition prices, there will be an upward pressure on the prices of manufactured goods. As prices rise, many urbanites who don’t adequately understand economics or choose to mix politics into it will shout and scream at the government (many years later) for the high inflation in manufactured goods. Most will blame the Congress for it (as they are doing now), not realizing that the same factors that cause inflation for us urban folks also help the rural folks improve their lives. There is a re-balancing of wealth happening and many of us dont like it. So we blame the politicians. Inflation will become the subject of many discussions on many TV channels – with opposition politicians masking the real issues and taking the ruling party to task for the wrong reasons.

Want another example of a government policy leading to inflation? Take the current food inflation. Many of this blog’s readers have commented in an earlier post of mine that there was lesser inflation during the NDA rule than during the Congress rule. Let’s look at some facts. During the 5 years of NDA rule between 1999 and 2004, the Minimum Support Price (MSP) paid by the government to the farmers of the country moved up at a snail’s pace. In these five years, farmers managed to get only 25% more prices for rice and just 15% more for wheat. Now imagine this. If you were a salaried worker, and in five years, your salary went up by a total of just 15-25%, would you keep working in the company or quit it?! That’s why the farmers quit the BJP in 2004 and went to others who could take better care of them. The BJP has always focused on the city folks – their core constituency – telling them that they had kept inflation for them down. But they never explained that they kept inflation down by squeezing the rural poor. In contrast, in the last 7 years of UPA rule, the price of rice has gone up by 96% and that of wheat by 78%. Who’s paying the higher prices? Urban folks like you and me. Who’s benefitting? The poor farmers of this country. Can’t we, the better-offs, afford to pay a little more if we know that that our money is going to help the poor in the country? Apparently not. Everyone complains about inflation. Many complain that it is the hoarders and agents in-between who take away most of the money we urban folks pay for our food items. That’s indeed true. They do. And this needs to be cleaned up too, but let’s not mix issues here. The extent of hoarding hasn’t suddenly increased during the UPA rule. It’s always been a problem in India. It’s more to do with our traditional distribution systems. Those need to be modernized. Besides, let’s remember.....the MSP is the price that is delivered in the hands of the farmer. It’s a real increment for him.

That brings me back to Anna. Anna should know that while he has started a good movement, he must know when to stop it. In economics, there is the Law of Diminishing Marginal Returns. The Lokpal debate is suffering from that now. I see the opinion turning now. So many media outlets that were blindly supporting Anna’s movement in April are now nuancing their commentary. Anna is suffering from not having a good team with him. A good team would advise him when to stop. A good team would agree to move ahead one step at a time but never give up. By hogging all the country’s time now, Anna’s team is being selfish and greedy. The Lokpal Bill can be improved in the future again if required. My feeling is that most people agree with Anna but want him to stop his movement now. Enough has been achieved. Hair-splitting will only help marginally, but it will take away too much time from the other pressing issues.

The real truth is that there are many many issues that face the country. All of them need to be solved and all of them press the government for its time and attention. That’s why we need to know when to close issues and move on. It’s time to move on from the Lokpal issue. Anna should take up other problems that the poor face. Like he did in his early days. He should scale up Ralegaon Siddhi and cover the entire state of Maharashtra. Then take it national. That’s where his help is required. Anna understands the problems of the poor......and wants to help solve them. But what about his team members???? Unfortunately, they only want to become media celebrities.....

Thursday, July 28, 2011

Sorry, but I cannot support Anna’s Lokpal movement beyond a point.....

The reason is simple. It’s not as if I don’t support the Lokpal concept. It’s not as if I don’t think Anna is a great visionary. It’s just that I don’t believe Anna is going about this issue the right way. There is too much of emotion....even drama and the movement (remember slogans like 2nd freedom movement. What rubbish). But the real issues that lead to corruption are being skirted. The Bill – whicheve version you take – is hardly the solution to corruption. The real solution lies in cleaning up the root causes that cause corruption. But even apart from this fundamental point, there are many more flaws in Anna’s movement.....

The first thing I cannot grant nor give in to is the way that Anna’s team has usurped the space of civil society. Exactly what are the credentials of Anna’s team? Who gave them the authority to become representatives of the entire civil society? The 25000 odd people who came to Jantar Mantar? The few lac “likes” they must have got on social networking sites? Maybe even a few thousand who joined special anti-corruption groups on Facebook? Let’s not be silly here. Suppose I make the accusation that Anna’s team represents only the urban middle class youth? Can he prove that it is not so? Because I really believe that apart from students – who tend to be revolutionaries by nature – not many people really support Anna’s team. They surely support Anna, they want to see corruption weeded out.....but they don’t support his team or his style or several of his proposals. Each of his team members has been hand-picked by him or someone else. Why not have some sort of elections to choose the team members? I am really scared of unaccountable, extra-constitutional elements trying to drive the country their own way with no consideration to the diversity of opinions and views that exist in the country. This is a small movement of a good-intentioned but wrongly-motivated section of the society – eagerly egged on by a mass media which is itself in a crazy rush for TRPs.

The second thing I don’t like about the Anna movement is the complete feeling of superiority they have about themselves. Anything that Prashant Bhushan and Arvind Kejriwal say is the gospel truth. Anything that the government says is utter nonsense. Exactly, who gave these people the right to take such a supercilious and arrogant stand? Last night, on TV, when Kiran Bedi was all worked up, she was being sarcastic to the bone. Would she mind being a little decent when talking to others who may perhaps have a different point of view? This is the tragedy in today’s media-built world of celebrities. Their celebrityhood gets ahead of them and they start believing they are the real super-stars. The focus is on them and not on the issue. They forget there are many others who may not be as media savvy as them; but are nonetheless more committed and effective. I include myself and millions of others in this group of people. I am convinced that this post of mine will be construed to mean that I am pro-corruption or pro-Congress or pro-politicians or anti-Anna or some such nonsense. No one is willing to concede that there may be alternate points of view to the ones that Anna’s team has.

The third thing is that I don’t like several proposals in Anna’s Bill. There are so many obvious flaws in the proposal. But fundamentally here is what I don’t like. It assumes that the entire institution of the Lokpal will itself be above board. From what I can make out, Anna’s proposal would like the creation of an entire bureaucracy that is totally independent of all that exists today. So it would have its own investigation wing, its own prosecution wing and a whole bunch of other departments. All put together, this organisation could be as strong as 10-20-30 thousand people, especially if we assume that every single institution in this country must be covered under the ambit of the Lokpal. The budget of the Lokpal – again if I remember correctly from the discussions that were happening 2 months back – is proposed to be limited to 1% of the GDP. Wow. 1% of the GDP is approx Rs 75000 crores. That’s per annum.....This again indicates that the proposed Lokpal body would be a massive bureaucratic set-up. Now my question is why would this body itself not become a fully corrupt organization just like other government departments are? The same reasons that make politicians and bureaucrats corrupt will also make the Lokpal organization corrupt. The pay scales of the Lokpal organization will be the exact same as that of the rest of the government. The powers they wield will be as enormous as any government department. Why will this not lead to massive corruption within the Lokpal? Can we assume that the people who work in the Lokpal will all be Annas? To solve the problem of corruption, are we not setting up another corruption-prone organisation? That is why my approach to removing corruption is different (more later).

The fourth flaw is that I hate the method of blackmail that Anna is personally adopting in pushing for his reform. Now, this is not the British Raj, when Gandhiji used this powerful tool to pressurize an alien government. Today, we have a vibrant democracy with huge participation of the common people in the election process (the cynics should check out just how many % of people voted in the recent WB elections). This government (or any government – in the Center or the state) is a legally elected government and it truly represents the aspirations of the people of this country. When Anna goes on a hunger strike against a legally elected government, then he is using extreme pressure tactics.....akin to blackmail. But why is this surprising at all? From what I read in Hindustan Times some months back, Anna had the habit of whipping erring people in his village (liquor store owners etc) with his military-issued belt in an attempt to coerce them into agreeing to his terms. This is no different. The entire hunger strike drama is one of punching the opponent in the face – knowing fully well that the other person cannot fight back. Cannot fight back – not because he is incapable of.....Cannot fight back – only because of the peculiar position he finds himself in. A position where media will eat that person alive if he were to as much as even raise his hands in defence. Lets be honest here – Anna carries extreme personal credibility and anyone who complains against him is seen as a villain. So, the government is expected to take the slap on its face, and do nothing about it. I am sorry, but I want to see my government being strong. Not subjected to humiliation by anyone. My suggestion to the government: Even before you introduce the Lokpal Bill in Parliament; introduce a Bill that disallows fasting-unto-death. Fasting as a method of protesting against the government is alright.....but fasting beyond five days should be taken as illegal. After all, suicides are illegal in this country. Why not fasting-unto-death?

The fifth flaw is that the movement does not even bother to understand why corruption happens. It attempts to solve the externally visible signs of corruption and believes that this will cure the deep rooted problem itself. Nothing can be further from the truth. Let’s look at the first major cause of corrupton. When a politician cuts personal deals, we call it corruption. But do we know why he/she cuts those deals? Well, there are two types of politicians here. One....those who are inherently clean....but are forced to do a few deals so that they can fund their next election campaign. Have no doubts in your mind – fighting elections is an expensive business. This is one of the root causes of political corruption. Then there is the other type. Those who are just plain greedy. They recover their cost of elections and then they go on to fill up their pockets. This group includes people like Yeddy, Raja, Pawar, Kalmadi.....but I believe this is the smaller group. My view is that Anna’s team must provide some good suggestions for removing electoral funding problems. The second major cause of corruption is the pathetic salaries we pay our bureaucrats and ministers. Imagine this: even the Cabinet Secretary (the seniormost bureaucrat) makes a “take-home” salary of less than Rs 1 lac per month. Please don’t include the lavish perks – the home in Lutyen’s Delhi, the unlimited air tickets, the phone calls, the electricity connection.....all these are useless after retirement. If need be, cut all these out, but make the salary of the Cabinet Secretary at least Rs 1 crore per annum? Likewise, the ministers and the PM. Let the PM make at least Rs 2 crores per annum? Now when I make this suggestion, most people will shout and say “Do you know how much our poor people make? 80% of our people earn less than Rs 20 a day”. Blah. Blah. Blah. The point is that if we want the best people to run the country and these people don’t come cheap. All the best people today join the private sector because the private sector pays much much better. If our pay scales were better, many of us would have been in government. If we want corruption to go, we have to have better people in government.....The third root cause of corruption is the huge size of our government. Over the last 20 years, the size of the government has come down quite significantly. With the License Raj being dismantled, there is a visible reduction in corruption in that area. If the tax laws were simplified, we would need a smaller bureaucracy and that would also reduce corruption. So we need to work at reducing the size of the government.....There are so many other reasons for corruption. But Anna’s movement is totally ignorant of these. In many ways, Anna’s movement is a movement in naivete. And the worst thing is that they don’t even want to listen to others who may want to bring up these points....

The last complaint I have is that the movement fails to understand how India’s government works. Here, things move one step at a time. Take any government policy. The government will open the door a little bit.....wait for the reactions.....then open a little more. Take FDI in retail. First, there was zero FDI allowed. Then they allowed FDI in cash-and-carry stores (those that sell only to retailers....not to the general public). There was no public reaction. Then they allowed FDI in single-brand retail. Again, there was no adverse reaction. Now they are allowing FDI in multi-brand retail. Take import of luxury goods. From never allowing imports, to allowing imports but with steep import duties to reducing the duty rates to Asean levels is all a gradual process in the government. Why can’t Anna’s team appreciate this? Why do they want it all done in one stroke? Why can’t they get in one act now and keep changing it over the next ten years? Is it that they themselves don’t have the confidence or patience or determination to persist with their focus on removing corruption? Do they believe it’s just this one chance they have got? Are they in a rush to go on to the next movement? Why can’t there be improvements going forward?

The real truth is that Anna is a good man who has been hijacked by a poor quality team. This is the difference between Gandhi and Anna. Gandhi had a great team with him in the form of Nehru, Patel and many others – who would negotiate with the British in a language they understood. Never giving up on their demands; yet doing things the appropriate way. Anna’s team is no comparison to Nehru and Patel. They all want to be Annas. But what Anna needs is not more Annas in his team; but more Nehrus and Patels. That’s what is sadly missing. And that’s why, while even I want to root out corruption as much as anyone else, I cannot support Anna’s movement beyond a point.....

Wednesday, July 27, 2011

Advani, Sushma Swaraj, Arun Jaitley and Nitin Gadkari should also resign alongwith Yeddy.....

The reason I am saying this is that we, the people of India want the same standards to apply to all political parties. It hardly helps us common people when the BJP accuses the Congress of high corruption and demands the resignation of the PM and the Finance Minister.....and then when it comes to itself, it prefers not to apply the same standards to its own conduct. From the point of view of equity of justice, the BJP central leadership also must resign - alongwith the erring CM of course.

After all, Sushma Swaraj has a special relationship with the Reddy brothers, the kingpin of the mining scam. It was she in 2009 who helped settle the internal squabbling between the Reddy brothers and Yeddy at a time when the BJP’s sole state in the South could have fallen. Now she is at pains to deny her special relationship with these two. Interestingly, as evidence of squabbling between the two seniormost leaders of the party, she’s pointing her fingers at Arun Jaitley – who was the state in-charge when these two brothers were made ministers. Fair enough. Arun Jaitley should also resign on moral grounds. What about Nitin Gadkari and Advani? Surely, they were aware of what was going on in Karnataka? Surely they had read the interim report of the Lok Ayukta a few years back? Surely they had approved of the “not illegal, but immoral” remark that let Yeddy off the hook the last time. So if they want the PM and FM to resign, then maybe they should start first by resigning themselves? Or would they insist on protocol here? That the PM and FM resign first and then they will resign? Unfortunately, in politics, its not protocol that matters – we common people don’t care for protocol. We care for real action.....

I am of course speaking in jest when it comes to these central leaders of the BJP resigning. There is no hope of any of them taking the flak for the state. That’s what happens in politics. Prakash Karat hardly took the flak for overseeing the Left’s total erosion in the country. He will survive and by usual turn of fortunes, when the Left will gain back some modicum of strength, he will claim success for the revival! That’s how politics works. The minions take the blame. The bosses are protected. We see that in the Congress. We’ve seen that in the Left. And we’ve seen that in the party with a difference, the BJP!

On a more serious note, Yeddy should have been sacked last week when the Lok Ayukta’s report was leaked. Instead, the party adopted a rather silly line. It’s first failure was that none of the central spokespersons (Ravi Shankar Prasad, Nirmala Seetharaman, Siddhant Nath Singh, Chandan Mitra) came on to take the bullets on their chests. They put up some local Karnataka minister to defend his ilk. Then they mouthed some silly things about protocol – let the report be tabled first. Last night, Ravi Shankar Prasad passed it onto Nitin Gadkari when he said that the party president had decided that the party will take a suitable call after reading the 10,000 page report. Nice! Why couldn’t Nitin Gadkari have made a statement that “I am promising the people of India that if the report is indeed true, then the CM will quit on the day the report is tabled”? That would have settled the matter. And even now, the party will go into its usual “chintan baithak” to think about what course of action should be taken. Everyone knows what chintan they will do in the meeting – how to protect their government! And while we are on this subject.....was this the reason that the BJP was happy to mouth pleasantries at Anna’s Lokpal draft bill.....but not ready to give its official response to it? Were they just trying to hitch a free ride to Anna’s chariot while in reality, they couldn’t care less?

But let me be fair. This same rule must apply to the Congress as well. It sacked Raja after a lot of time had elapsed......and only when public pressure forced it to. It sacked Kalmadi after the country couldn’t tolerate him for one more second. It sacked Ashok Chavan after the story had already scorched the Congress. So while the Congress did eventually sack its tainted ministers, it should have done it earlier......after all, there was more than a reasonable element of doubt against these men. In politics, its perception that matters and that’s why the Congress is perceived to be the most corrupt party. Well, if it’s any solace to them, the BJP isn’t too far behind!

One other point. I keep coming back to the 2G matter. I have written many times earlier that it wasn’t really a scam. At least not the way it has been portrayed by the CAG and in media. I think it was a great government policy to give 2G spectrum free. It showed the vision of the government (both NDA and UPA) when it treated mobile telephony on par with material goods like kerosene and LPG which also are subsidized. There was no loss to the exchequer in the real sense. There was only a gain to the public when it got mobile phones so cheap. Cheap telco prices started a real revolution within the they could do business without even having an address. Besides, no telco made illicit or abnormal profits as a result of this free spectrum. Even if we stretch and say that there was a loss to the government, that money went to the people only......(of course, there was corruption, but in process violations and Raja should be nailed for that). Out here in Karnataka, it’s totally different. No one except the mining companies appear to have benefitted. By not paying due royalties to the government, the state government (and hence the people of the state) lost Rs 16,000 crores in just 4 years. Unlike in 2G, there was no policy issue here. This was out and out, blatant corruption, which benefitted a few individuals and one party. Wasn’t it the BJP that had coined the catch-phrase that in the Congress Raj, there was corruption “above” (air waves) and below (mining)????? Now it appears that the same applies to the NDA and BJP also – after all, the 2G taint is smearing the BJP as well and now the mining scandal has blown all over its face.

Some people have said that corruption in mining exists in all states where mining is a big business. It is my suggestion that all these states should be investigated. It is fairly certain that similar scams will be unearthed in those states as well. So whether it’s AP or Jharkhand or Bihar or West Bengal, its time to start a probe into the mining industries there.

The real truth is that no political party can build its imagery and positioning on the subject of being clean or fighting corruption. All are equally corrupt. In their defence, I will only say that political parties need money to contest elections and run their huge machinery. A wise man once told me parties need Rs 5 crores per Lok Sabha seat. If there are just 5 candidates for each of the 542 seats, that comes to some Rs 25000 crores. Add state elections and we need Rs 1 lac crores every five years......that’s why wee need electoral reforms and state funding of elections. Currently, all this money is raised illegally.....from private corporates and the likes. Obviously, the favors need to be returned when the party comes to power. I have said this in the past that maybe the “education cess” the government collects (the 3% surcharge) should be replaced with a similar sized election cess. After all, if electoral corruption reduces, education will take care of itself.....

Tuesday, July 26, 2011

Politics killing economic growth.....

The RBI yesterday increased benchmark repo rates (the rates at which RBI lends money to banks....and which set the benchmark for all rates in the country) for a record 11th time in the last year and a half or so. It has been shouting from the rooftop for a long time now that the economy is starting to sputter. Corporate head honchos have been similarly repeating ad nauseum that the economy is slowing down. It is quite clear that the policy freeze in the government – arising from an environment of extreme politics – is responsible at least partly for the current situation we find ourselves in.

The RBI is mandated to keep inflation rates low. It considers rightly inflation to be the worst type of taxation.....affecting the poorest the most as it does. It controls inflation by shaping the Monetary Policy of the country. In other words, it looks at “money supply” – basically any movement of money from banks to those who need money. By increasing rates, the RBI squeezes supply of money, thus clamping down on demand. If demand drops, pricing should drop, thus easing pressures on inflation. That’s why RBI has been constantly increasing prices. RBI controls prices by controlling demand and often this is the only way to control demand in the short run. However, inflation by demand management has limited utility in curbing prices in the long run. Clamping down on demand is akin to a company cutting costs to manage profitability in an environment when revenues are not growing. Cost management may yield results in the short run, but in the long run, revenues have to rise, if profitability has to be sustained. In the same way, in a country, raising rates may moderate demand and inflation in the short run, but in the long run, it is increasing production and supply of goods and services that is the right way to manage inflation. That brings us squarely into the domain of the Government in general and the Finance Ministry in particular.

The Finance Ministry uses the Fiscal Policy to incentivize higher production in sectors that are suffering from under-supply. For eg., if import duties on oilseeds are reduced, it will increase supply of oilseeds and lower prices. If there is inflation in real estate, there must be a policy to free up land, make credit cheaper, lower cement and steel prices and so on and so forth, so that supply can increase. Over the last 20 years since economic liberalization began, the fiscal policy of the country has been made more liberal – customs duty, excise duty etc have all been pruned to encourage more industrial production. That has stood us in good stead till now. But now the challenges have increased. We need to relook at industrial policy, at agricultural policy and at fuels separately. This is where politics is starting to hurt the economy.

Just one more point on inflation components before we go to the politics involved. Inflation has three major components – Primary articles (20% weight – mainly made up of food and non-food items), manufactured products (65% weight....which has several components) and Fuels/power etc (15% weight). Everyone knows that controlling fuel inflation is not in our hands in the short run. India still imports 85% of its crude oil and though natural gas production has increased, it is no where close to substituting crude. With the rise in global crude prices, there is precious little that India can do. In the very long run, India has to depend more on nuclear fuel and must move its transport industry more towards electric modes of transport (with the electricity generated from hydro and nuclear power plants). Hence the government must invest in more metro networks in all our bigger towns, significantly improve the inter-city train network, encourage electric cars, plan for more unconventional power sources (sun, wind, biogas mainly) etc etc.

When it comes to food inflation, this is where successive governments have repeatedly failed. There has been nothing substantial achieved in agricultural productivity since the Green Revolution in the mid-sixties. We need to embrace more bio technology. We need more irrigation facilities. We need better food storage facilities so that so much food doesn’t get wasted. We need a better cold chain system. We need more mechanisation in farms and for that we need to develop a system of credit flow to the farmers. We need more power supply at affordable rates. We need a better fertilizers policy......Clearly, a lot needs to be done on this side.

And finally when it comes to manufactured products, we need a far more aggressive industrial policy. We need flexible labor laws so that industries can use labor supply as required and not have to rely on contract labor. The Left blocks any labor reforms.....but like many things that the Left used to believe in, this one also has got outdated. Industries are using contract labor to fill the vacancies that should have actually gone to full-time labor. The plight of contract laborers is quite the Left must ask itself what it has achieved by its rigid stand on labor reforms. Likewise, we need a better mining policy which encourages more exploitation of minerals without exploitation of the environment or the people who own the land. We need better environmental laws.....but those that are realistic, not extremist. We need a new land acquisition policy which rewards people who have to surrender the land. We need more fiscal incentives in smaller states where industrialization has barely been seen. We need tax reforms – the GST being the primary one of them all. We need a better educational policy which focuses on vocational training. There is so much to be done. And if we get distracted from this, there is no chance of us achieving our destiny.

This is where politics starts to hurt. Just think about it. For the last year now, all that this country has been talking about is corruption. We have had one scam after another. In most cases, the truth is far from what is projected. The 2G scam for instance is an example of hyperbole. There is local corruption but the CAG has confused matters by mixing its comments on policy with actual acts of corruption. The CWG scam was touted as being Rs 70,000 crores – of course no one owes anyone any explanation of where this number first came from. The Adarsh scam? It’s one building for god’s sakes.....and sometimes we must ask if our protestations are justifiable for scale. The BJP’s own woes in Karnataka have given rise to a feeling of there being corruption all around in all parties. Of course, most people in the country (and that’s true of all countries really) don’t understand the reasons which cause corruption and hence have no solutions to offer. Even readers of this blog offer emotional responses, not commensurate with expected levels of intelligence. Many attack me personally (doesn’t bother me really!). It would appear that the solution to all problems is the enactment of Anna’s Lokpal Bill. And while we are at it, please.....don’t even think of suggesting changes to it. And of course, there is this other hint in all responses.....throw out the, no, throw out all the politicians. So who runs the country if we throw out the politicians? Maybe we need a Pakistan style military dictator? Or maybe a half century of old-style communism? Or maybe Anna should become the PM!

Poltics is essential in our country, but when it starts to distract from economic growth, we must pause and review where we are headed. If every decision the government makes (BJP or Congress) is to be seen as an act of corruption, then we are actually incentivizing the government to take no decisions. If every bureaucrat is assumed to be corrupt, then only the scum will join that service. If every media channel will don the role of the judiciary, then we will be adopting a primeval form of judicial system akin to what prevails in Afghanistan or worse. Sure we need lots of reforms. We need to take erring politicians to task. But we must have the maturity to balance this with identifying, rewarding and applauding good work. The mood in the country today is such as if everything was wrong in India. All the good work has been done by the people.....all the bad work by the government. This is political jingoism. And it harms the country to no end.

The real truth is for people to realize what they are doing. For media to play a far more responsible role – even if some people will call them as having “sold out to the politicians”. The fourth estate has a critical role in nation building and this is needed more than ever now in the country. There has to be a limit to politics.....else the poor RBI will have no options but to keep increasing rates again. And again.....

Monday, July 25, 2011

Ridiculous.....yesterday’s debate on 2G makes no sense.....

Since The Real Truth started about 7 months back with a story on the 2G “scam” (I dont like to call it that), yesterday’s court-room drama by Raja and then the plethora of TV shows last night compel me to write a piece that tries once again to explain the real issues involved here. When I look at the issue after so much time having passed, I can vouch with near certainty that the issue is almost entirely a political issue. From an economic point of view, there is hardly any basis for the allegations being hurled by the NDA at the UPA. Sure, there has been corruption (not proven; but quite apparent) and Raja looks guilty of complicity, but the corruption is at a much smaller level than has been made to appear so far.

Before I start, let me state here that I don’t belong to the Congress or to any political party. I have no politicians in my family. I have no friends who are politicians. I have no family members working in the telcom business. Net Net, I have zero stake personally in this discussion.....Now let me analyze and look at each charge separately and closely:

1)      That 2G spectrum was given away cheaply: This is the main charge. We need to start by understanding the meaning of the word “cheap”. In my understanding, the charge would have been correct if the telecom companies which got the spectrum “cheap” had earned tons of profits. That would have meant that the government could have earned more from the spectrum. However, in this case, none of the telcos have earned profits that any normal enterprise would not expect to earn. Airtel’s EBITDA margin is around 30%, which is really par for the course for a company that has huge capex spendings. The #2 telco, Vodafone declared profits for the first time only this year after being in this business for more than 15 years. And what profit? Just a hundred crores or so. Idea’s EBITDA margin is under 20% and Reliance lost money last year before reporting a small profit this year. So if the telcos have not profited from the “cheap” spectrum, who has? The answer is obvious to those who want to see it. The Indian public. Because of intense competition, telcos were compelled to pass on lower prices to the public. Everyone knows that Indian telecom pricing is the lowest in the world. How would this pricing have been possible if it had not been for the “cheap” spectrum. It is entirely a result of these low prices that the telecom revolution happened in the country. India is an extremely price sensitive market and products priced high simply don’t penetrate the market deep enough. Look at any of our consumer products companies. The highest selling items are the cheapest ones. And even those will usually sell smaller quantities than local or regional ones that sell even cheaper. So the real beneficiaries of the “cheap” spectrum have been the people of India. Those who do not believe this should look at 3G pricing. I have a 3G connection and the monthly outflow is some Rs 1000 or so. In contrast, the ARPU for 2G services is some Rs 120 or so. Most prepaid 2G subscribers have balances of less than Rs 20 at any point in time. But why did successive governments offer spectrum so “cheap”? Clearly offering spectrum “cheap” was a matter of policy. It’s like the government’s policy of supplying kerosene and LPG cheap. It is supposed to help the poor. The governments (both NDA and UPA) offered spectrum cheap so as to encourage the telecom revolution. Both used to rush to claim credit for the revolution when it was still being considered as one of the biggest revolutions of India; now both want to blame the other. The fact is that both should claim credit for the way telecom has made an impact on the lives of people. The underprivileged poor, who don’t even have homes to live in, can today conduct business with dignity because they have a “number” where their customers can reach them. Our lives have improved a thousand times because every single service provider is a mere phone call away. It’s time we cut the crap and looked at the issues with at least a small amount of intelligence.
2)      That new licensees “sold” off their licenses for huge profits: I blame media for not explaining to their readers and viewers how corporates work. There is a primary difference between “selling off” and “diluting”. Selling off means that a promoter sells his shares to someone and “takes home” the profits if any. The money actually goes into the seller’s bank account. If that happened, yes it would be a sell-off. But diluting is a different thing. It means new shares are issued. The buyer becomes a partner in the venture. This is the way all joint ventures are signed. In this case, the original promoters (Unitech; Swan) got nothing to take home. No money flowed into their accounts. There is no “buyer” and there is no “seller” in that sense. The “buyer” has put his money into the company. The company’s equity and cash position swells. What does the company do with all this cash? It invests. Invests in building the infrastructure. Does building infrastructure lead to instant profits? Every businessman hopes so; but in most cases, unfortunately, it doesn’t happen that way. It will take decades for Telenor and Etisalat to make money on their telecom businesses in India. There is so much competition; and these brands have come in so late. They cannot match the infrastructure already built up by Airtel, Voda, Idea and Reliance. Today’s story in Business Standard brings out this point very clearly. The question then is why these companies so desperately want to come to India. The answer is that they see India as a long term play. As a country where they “just have to be present”. Anyone who doesn’t understand this should just shut up. That includes pretty much includes all of the BJP leaders. And much of the media as well.....people who cannot even understand the difference between assets and liabilities. So I am sorry, but diluting equity is not corruption. And the PM and Finance Minister have nothing to worry on this count. They approved it and they did the right thing by approving the dilution.
3)      Licenses were sold off: The government’s policies with respect to licenses have always been clear. Licenses belong to the government and they cannot be sold off. Licenses are only leased to the operator. Once the license period ends, the license reverts back to the government. The government may decide to extend the lease period for a consideration; or it may decide not to. It’s the same with spectrum. It belongs to the government. So license and spectrum are never “sold off”. What can be sold off is the equity in a company that has been granted the license and the spectrum. As we have seen in point 2 above, even that has not happened.
4)      The UPA gave 2G spectrum away without auctions: This is utter rubbish. As we now know, this decision was taken by the NDA government in 2003. Arun Shourie (NDA) has also given away several licenses without auctions. The BJP is just playing dirty and silly by bringing this up.
5)      There were process violations during Raja’s tenure: Most likely there were. When some corporates were favored over others; when some corporates were ready with Demand Drafts in a few minutes after the date for submission was advanced; these are all signs of Raja twisting the rules to earn the kickbacks. This is surely a case of a scam. This is what the Supreme Court is looking into. This is what CBI has charged Raja with.....taking Rs 200 crores from DB Realty (still has to be proven). Incidentally, there is still no case made out against Unitech at all. Sanjay Chandra is being held in jail only because of the public anger in the 2G matter. Like I mentioned in point 2, dilution of equity is being misunderstood for profit-booking.
6)      Reliance Infocomm was a front for Swan: Yes it looks that way. And clearly if this is true, then either Reliance was extremely savvy in the way in which the companies were structured (they are experts in this). Or Raja knew of it and allowed it to go on. Or both. In the first case, it’s a debatable point. Every corporate veers around complex laws by designing “innovative” structures. In each case, the letter of the law is followed, but the spirit is violated. Is this a crime? I don’t know the answer to that. If Raja was aware, then surely, this is a scam. And must be probed.
7)      Unitech and DB Realty were not eligible for the licenses: I don’t know if they were eligible or not, but if this is true, then take the licenses back. And yes, this would be a valid corruption charge.
8)      Many new licensees have not rolled out their networks as committed: It’s simple. Take the licenses back. Where’s the scam here???

The real truth? Corruption was there in the 2G matter – but in limited pockets and in limited quantities. Why is this surprising at all? I am willing to go so far as to say that corruption exists in most government deals. It doesn’t matter whether the NDA is ruling or the UPA. But there is a difference between corruption and policy concessions. The CAG blundered by failing to realize this.....or by intentionally sensationalizing the matter. Today, challenging the CAG report is considered harakiri. Anyone who points a finger at the CAG is considered to be an involved party. Likewise, and understandably, the BJP has made a political issue out of 2G and has succeeded to some extent in tagging the Congress as the “most corrupt government”. This is ridiculous – at least this cannot be surmized basis the 2G case. If there are other cases to go by, I don’t know. Like I said at the beginning, I don’t carry their brief.....

Sunday, July 24, 2011

20 years of economic reforms and boom. And yet so much angst......

We are the world’s 2nd fastest growing major economy. We’ve been growing at a scorching pace for 20 years now. The Indian economy is booming, and yet, ironically, it is at this time that there appears to be a peaking of the angst levels of people in the country. A government which has been primarily responsible for delivering this economic performance is at the receiving end of a lot of abuse. It is facing perhaps the only genuine fast-unto-death (from a self-proclaimed Gandhian Anna Hazare).....that independent India has seen. Are we Indians right in expressing our anger so strongly at a time when we are actually doing quite well? Or are we just being too harsh on ourselves? Is this genuine criticism or is this just a different form of political opposition to the ruling government?

The naysayers are already baring their swords. Poverty is still hovering around 30%. Illiteracy is rampant. Our farmers commit suicides in the hundreds each year. Terrorism is growing. We are soft towards our neighbours. Our ruling government has a policy of appeasing the Muslims. There is crony capitalism. There is corruption everywhere. A person visiting India from Mars and reading the newspapers and watching the TV channels here would feel India was a sub-Saharan economy struggling to survive. And yet, nothing could be further from the truth. In reality, India has never seen better times. The poverty is declining rapidly (@ 1% per annum). Literacy rates amongst the under-20s are upwards of 90%. There is some degree of crony capitalism, but the economy has created a lot new business families in the last 20 years than existed historically (there was no Sunil Mittal or Narayan Murthy before 1990). Is this just a world of extreme negative propaganda that we are living in which certain vociferous elements of the population dominate media with their colored views? One in which media joins hands with political opponents of the ruling dispensation to sensationalize every problem and play down every success? Do our common people feel the same way about the country?

Of course there is a lot left to do. But 60 years is a short period of time in the life of a complex heterogeneous country like India. I find most people of today’s generation to be ignorant of India’s history post independence. A reading of Ramachandra Guha’s “India after Gandhi” should be made mandatory for such cribbers. It was widely believed after independence that India would split up into many fragments. Had it not been for the vision of Nehru and the solid administrative capabilities of Patel, that would have indeed happened. There were more than 550 princely states who the British had given the option of becoming independent and not aligning with either India or Pakistan. It is only because we had some outstanding politicians and civil servants that we were able to keep them all with us. There were three princely states which proved to be particularly difficult to convince. Junagadh and Hyderabad eventually were addressed......but Kashmir was the one that remained unsolved.....largely because of its strategic location.....between the two newly founded countries of Pakistan and India. The problems that India faced then have not been faced by any country before. The British had left us as paupers. We had no industry to call our own. Those who complain against the socialistic model we adopted then, those who deride our five-year plans, may want to keep in mind that there was no private industry worth its name that could carry on the onerous job of nation building. That was the government’s job. Our people were uneducated; steeped in orthodoxy. Casteism was rampant. We had a language problem that almost made the South secede. Until 1965 or so, the South was not even sure that it wanted to be a part of India. Unread cribbers have no idea how important and......almost unbelievable to achievement just staying together as one country was. Those who compare our first 50 years with smaller East-Asian countries – or at least one reader has compared us with Israel (don’t ask me why) – have no understanding of issues. Those in awe of China compare India with China. Even this is wrong – people forget that China was always one, united and monolothic nation under one emperor – while India was just a conglomerate of various princely states. That’s why the invading Englishmen found it easy to capture India but were unable to capture China. Further, what exactly did China achieve in its first 50 years????

That’s why those who complain about India’s achievements should first read a bit of history. Admittedly, the period between 1970 and 1990 could have been utilized better, but then in hindsight, they say vision is 20:20. Everyone now knows that socialism had run its course and we could have adopted market reforms much earlier. China beat us to this game by a decade. Their economic reforms started in 1980.....ours only in 1990.

Since 1990, there has been no looking back for India. The economy has become much stronger and if we continue on this path for 20 more years, we will become one of the world’s top three economies. The Economic Times yesterday (Sunday) did a good story titled “The numbers tell our story” where it shows several economic variables and how they have moved in the last 20 years. The GDP in 1990 was some $300 billion. Today, it is upwards of $1.5 trillion. We used to get almost zero FDI then; last year, we got $30 billion. Our forex reserves were $6 billion then, they are $300 billion today. We had half a million telephone users then; we have 860 million today. We used to sell 1.8 lac cars then; we sold nearly 3 million last year. We had 9 million air passengers then; we have 57 million now. We had no IT revolution then; today, we are one of the world’s fastest growing IT economies. Our electricity production has increased from some 250 billion KWH to nearly 4 times that now. Any way you look at it, no one can complain about our economic growth in the last 20 years.

I am surprized that reminding people of these growth statistics is even necessary. Our success story should have been written about and talked about all around. But then there is so much cynicism inside our country. People outside India call us an economic miracle. People inside would like to call ourselves a failed state. People outside call us the most vibrant democracy. People inside would like to throw out democracy if they had a choice (but not knowing what to replace it with). People outside want to see India play a more important role in climate change, in the reform of the global economy, in ensuring peace.....People inside feel we have become puppets in the hands of outsiders. It’s indeed ironical that during the tough economic times of the past, we cribbed much lesser; today, in the midst of high growth, we are cribbing a lot more.

But this happens in all countries. As they progress, people demand more and more. In the US, a similar movement called The Progressive Movement was seen in the early twentieth century. The US had already become a very powerful country by then; but it was riddled by corruption and for almost 30 years until the 1920s, the “progressives” challenged the government of the day, bringing in transparency, women’s suffrage, modern thinking and efficiency in governance. The good thing was that they did all this in a way that made their country stronger. Never did it reach a situation when it felt like all was lost. That’s the difference between their movement and what we are seeing today. The way the discussion in India is going these days, it appears that we want to throw out democracy. If we had our way, we would jail ALL politicians and civil servants. What then? No one seems to have any solutions. No one wants to address the root causes of the problems that we face. It seems that the solution to every problem is one: the Lokpal Bill. Will the Lokpal (and there will be thousands who work there) be manned by people from a different gene pool? Will they not also become corrupt for the same reasons that most Indians have become corrupt? No one seems to care.

The reason it’s important to care is that if we remain critical all the time, we will spread a high degree of negativity in the country. I would like people – even critics of the present government – to stand up an applaud what we have achieved in the last 20 years. There is nothing wrong in cribbing.....but cribbing all the time, and never appreciating never helps anybody.

The real truth is that I worry about what is going on in our country. I worry that we will ruin our chances of gaining global economic (and political) strength because of intense internal bickerings and self-criticism. I worry that we will let politics get the better of every important debate. I worry that instead of reforming our systems, we will create an environment where a dictator could take over. I worry that we are so less grateful and so extremely demanding, that we will push out even the few good men and women that are still there in government..... In short, I worry that we will throw out the baby with the bathwater.

(Yeah yeah.....let the cribs come in.....I can handle some more of those!)....

Saturday, July 23, 2011

Has anyone heard Anna castigate the BJP over Karnataka?

At least I haven’t. And I am really really surprised by this silence that Anna and his entire team of so called “civil society activists” is maintaining. Why is Anna not taking the BJP to task? Shouldn’t he be seen taking an apolitical line on corruption?

The biggest complaint that I have had against Anna’s Lokpal Bill campaign is that it has never been an apolitical campaign. There have been charges against his being a motivated campaign against the UPA government. Some have gone so far as to call him an RSS “mukhota”. Now honestly, there would be nothing wrong in the BJP or the RSS taking up the anti-corruption fight against the Congress. That can only do the country good. But it should be done openly. Shadow boxing using the good name of a mass leader like Anna sounds like cheap tactics. And for Anna to succumb to this kind of obvious deceit is regretful.

Of course, the BJP seems to have gone into a deep freeze. This is truly something I never expected. After all, whatever my complaints have been with the party, I have never found it lacking TV-savvy spokespeople. Be it Arun Jaitley or Ravi Shankar Prasad or Nirmala Seetharaman or Siddhant Singh or Chandan Mitra or the many undeclared supporters of BJP, the party has always been well represented on TV channels. Why the sudden deafening silence then? Is it that the party has been unable to handle the shock? Where is Ravi Shankar Prasad, the Chief Spokesperson of the BJP? Where is Arun Jaitley, the savvy lawyer and leader of the party in the Rajya Sabha? Where is Advani, the party patriarch, whose extremities in speeches are legendary? And oh.....I almost forgot the party President. Where is Nitin Gadkari? And why is Sushma Swaraj, the leader of opposition in the Lok Sabha not tweeting about Karnataka? After all, she was the one leading Anna’s team on at Rajghat and tweeting at the same time wasn’t she? Have all of them been stunned into silence? Is the party going to call another “chintan baithak” where it will try and figure out yet another devious defence of Yeddy? After all, the party found it alright and justifiable to explain Yeddy’s earlier scam (selling land to his sons cheap) as “legally right” but “morally wrong”. What now? Are the legal hawks strategizing whether to attack Justice Santosh Hegde? After all, that must surely be easier than taking Yeddy to task.

The BJP has yet again shown that it is a party that is run by local satraps. First it was Narendra Modi in Gujarat who won the party three successive wins in this economically powerful state. Economically powerful state gives Modi the means to economically power the party’s treasury. And with the party out of power at the Center, it has to count on the local outfits to fund the treasury. Now it’s Yeddy. The charge that many make against the BJP is that even if it wants to, it cannot remove Yeddy. He carries the support of the powerful Lingayat community in Karnataka. An attack on Yeddy could well mean calling for elections all over again. Is the BJP sure of re-winning the state if this were to happen? Going by their silence, it certainly doesn’t appear to be so.

But this post is not about the BJP. It’s about Anna. Surely Anna has had enough time to consider Justice Hegde’s report? Surely he’s had a chat with Justice Hegde? Surely, there can be no doubt in the report’s credibility? If so, then why is he keeping so quiet? And what about his other fellow team members? Arvind Kejriwal, Kiran Bedi and Prashant Bhushan could be seen on every channel when the UPA blundered with its own corruption cases. I am sorry but this silence is unacceptable to their thousands (I doubt if its millions) of followers. They expect the team to be consistent. After all, their fight is against corruption, not against a political party. And by keeping quiet, they are giving credence to the charge that some Congress supporters make that Anna is just a front for the BJP and RSS.

Or is it that there is a divide within team Anna? Even in the past, there was some controversy related to Justice Hegde joining Anna’s fast starting Aug 16th. First he said he would support but not join the fast. Then he said that he would join. Then there was the controversy about him first saying he would not attend a meeting with the government on the Lokpal draft. Then he said he would. What’s going on? Is it that Justice Hegde understood the movement to be apolitical but later found that it was anything but? Under normal circumstances, I would have imagined his entire team coming out in his support; decrying the efforts of the Karnataka government to tap his phone and to send “negotiators” to his house. Does Anna’s team also want to run with the hares and hunt with the hounds?

And what about civil society? Since I have written a few anti-BJP posts of late, I have been getting loads of comments calling me a Congress stooge. Let me declare it right here. I have my complaints against the BJP, but I am no Congress stooge. This blog is called The Real Truth and I will unearth the real truth wherever I find it......No matter whose toes I have to step on. I wrote against Vilasrao Deshmukh becoming the MCA President also. But somehow, I have managed to irk the BJP supporters quite a bit. Unfortunately, very few of their comments against my posts have been logical. They’ve mostly been an emotional support for the BJP and against the Congress. I thought the intelligentsia would be apolitical on issues of corruption. But it looks like everyone in India loves politics!

The real truth is that I am disappointed with Anna’s silence. I have never believed in his aggressive style. But now, I don’t believe in his motive also. No doubt he is a good man and his work in Ralegaon Siddhi speaks for itself (There is a full chapter in my son’s book on Ralegaon Siddhi and I am happy it is there). But he has been sucked into politics. For the sake of the fight against corruption, I hope he speaks out. Soon......

Friday, July 22, 2011

A turn in the tide for the UPA?

A number of stories in today’s papers bring cheer and hope that things are finally moving. Give the impression that the UPA is slowly shrugging off its inertia of the past few months. Looks like the troubles of the BJP are giving it a new dose of energy and confidence that all is not lost! Is the tide turning for the UPA?

First, the decision of the government to clear BP’s investment in RIL, should bring in $7 billion immediately and a lot more in the years to come. More importantly, it should bring in specialized technology which should help extract more gas from the KG basin. This would give a boost to many power plants and fertizer units who have, of late, been expressing worries about the supply of gas from the KG basin. Second, the decision of the panel of Secretaries to recommend 51% FDI in multi-brand retail is a good decision. Again, it is expected to bring in more investments into the front-end and back-end of the creaky and inefficient Indian retail sector. Potential gains are a significant impact on job creation in the urban areas and a fairer sharing of wealth with the farmers. Third, thanks to ever larger remittances from the 27 million NRIs strewn all around the world, and more investments from those who believe in the India story, India got more than $100 billion in foreign currency inflows. The country needs as much access to foreign capital as possible and this will surely help in firing up investments. The government can rightfully claim success for this inflow since it’s the strong banking sector in India (entirely because of the government’s own policies) that has given NRIs the confidence to keep sending the money back home.

These are significant economic stories, but even apart from these, the government finally appears to have found its feet on political issues also. It’s made ready its Lokpal draft – and much as it will offend Anna’s many fanatical supporters – it indicates a determination to move ahead rather than get stuck in one contentious issue. In the past, the PM had famously said (during the Indo-US nuclear deal discussion.....when the Left was blocking the deal) in 2007-08 that his was not a “single issue” government. Since the Lokpal imbroglio started, I have myself been urging the PM to remember his own words....and let his government not get bogged down by just one Lokpal issue. That he should show determination in moving ahead and making progress all around. It appears that the government is finally doing that. It appears that the tide is finally turning for the Congress. With the Karnataka crisis in the BJP – and worse, with the party’s total inability to even respond in a convincing manner to the crisis – the Congress must be feeling strengthened. As far as the people of this country are concerned, all we want is to see progress. Political fights can keep happening, but progress mustn’t stop.

The last story is about the tragic twin terrorist attacks in Norway. Clearly shows that no part of the world – even those with extremely developed intelligence – can survive terrorist attacks all the time. Norway is as far away from the hotbeds of terrorism as is practically possible and yet it has had to suffer these attacks. Those in India who complain of India’s unpreparedness and softness as a state should understand that terrorism is not an India-specific problem, but a global one. No point in bashing up our country alone and spreading gloom all around....although I do agree a lot more needs to be done on the terrorism front.

I just want to focus on three things in this post. One: that the way out of the mess for the UPA government is to start acting decisively. And get out of its deep freeze. That’s the entire objective of the opposition’s attacks. They should understand this. If India keeps growing at 8-9% per annum, the UPA would be called a performing government and it would be difficult to dislodge it during the next elections. The BJP realizes this – and its ultimate agenda in attacking the government – is to stop the government in its tracks. Additionally, if they could make “corrupt”, “soft on terror” and “undecisive” stick to the party, it would be a huge bonus. The Congress has clearly fallen into this trap and has been unable to extricate itself for many months now. Finally now, it appears that the party has understood the plot. Finally, it appears to be responding.

The second thing is about the BJP’s response to the Karnataka crisis. I kept looking for the BJP’s famous, self-righteous and aggressive spokespersons – Ravi Shankar Prasad, Nirmala Seetharaman, Siddhant Nath Singh......but I couldn’t find themselves on any TV channels last night! Looks like they preferred to stay under the radar, just like Amar Singh! On a more serious note, why is the BJP not issuing a strong statement promising to take action? I would have like to hear Sushma Swaraj or Arun Jaitley say that they will sack the Karnataka CM if the Lok Ayukta’s indictment is indeed true. By not doing that, the BJP is missing out on a chance to prove that it is serious about fighting corruption. Timing is everything. There is no point in sacking Yeddy after a few days or weeks. The party would have lost its chance.

The third thing is that I am very disappointed with Anna and his team of TV-savvy panel members (Kiran Bedi, Arvind Kejriwal and of course Prashant Bhushan). Why have they not been on TV lambasting the BJP. After all, one of their own panel members – Justice Santosh Hegde – has brought the report indicting the Karnataka CM. Wouldn’t it help Anna quell the misgivings that many like me harbor that he is a BJP/RSS plant? That his movement is nothing but a political movement? Shouldn’t he demonstrate that he is unwilling to condone corruption no matter which party is responsible for it? By keeping silent, he has only strengthened the suspicion. Unfortunately, many people notice such lapses....and media is sure to bring this out slowly.

The real truth is that a strong push for economic reforms, a determination to take tough political decisions and a resolve to not let the government get pulled down by various distractions is what the UPA needs to demonstrate to the people. The UPA is only in its 3rd year of this term and it has ample time to ride out of the hole it has dug itself into. But if it continues to pussy foot around major decisions, there is nothing which can rescue the party. People want action; and people are willing to forgive those who admit mistakes and move ahead; but people are unwilling to support those who get cowed down under pressure.