The government must do more

IN A speech on Thursday, the Prime Minister expressed the view that if India begins to grow at 10 per cent in the near future, it can eliminate poverty in 10 to 20 years, ensure education for all, and greatly enhance employment opportunities. A 10 per cent growth rate and the elimination of poverty are within reach today. Since the reforms process began in 1991, Indian enterprises have done well at both manufacturing and services – which have great potential for employment generation – and there is much scope for further growth in sectors like construction, food processing, IT and tourism. The increasing strength of regional parties can enable reform and growth to reach the remotest corners of the country and ensure that inequities are removed. Moreover, an active civil society and the success of concepts like micro-finance and self-help groups can assuage the ‘trickle-down’ deficit.

However, none of this will yield fruit unless the government plays its own part right. For this, clarity of vision regarding what we want the reforms to achieve is imperative – do we just want growth, or do we want growth and development? Double-digit growth figures mean nothing if the benefits remain limited to the already affluent – such growth is economically unsustainable, socio-politically dangerous, and morally unacceptable. For more inclusive growth and development, the government needs to do a lot more – and not less, as neoliberal economics would have us believe. As Prof Jagdish Bhagwati, one of the world’s most famous proponents of free trade and liberal reform, puts it, India cannot rely on hopes of a ‘trickle-down’, it needs a “radical and activist pull-up strategy”. The areas that most need attention are obvious – employment generation, agricultural reforms, PSU reforms, taxation reform (to tax the rich more than the poor), competition policy, labour market flexibility, and so on. So far, change has often been incremental, whereby the government has only done more of the same thing – for instance continuing to provide wasteful subsidies, like those that actually accrue to rich farmers and hopelessly inefficient PSUs.

Perhaps there are lessons that India can learn from China’s new ‘five balances’ approach. China’s Communist Party, having achieved growth rates of 10 per cent over several years, has consciously sought to balance its priorities and correct inequities by privileging domestic matters over external, interior regions over coastal, rural areas over urban, society over economy, and nature over man. The dragon has clearly realised that growth, to be sustainable, must be widespread. In India, much ink has been split to discuss – and mostly denounce – the Congress’ re-adoption of its ‘garibi hatao’ slogan. Thirty years after the slogan was first used, its re-adoption contains an implicit admission of failure. However, the UPA now has the chance to learn from the mistakes of the past. With the economy is superb shape, it has a chance to make history. Here’s hoping it will succeed.

Agriculture reform

SINCE THE beginning of economic planning in India, there has been a consensus among Indian policy-makers that industry must be the sector that propels growth. The reforms initiated in the 1990s were also marked by this implicit consensus. The result has been that the agricultural sector has been largely bypassed by direct reforms. That this policy has been economically shortsighted and socio-politically dangerous was acknowledged by the Prime Minister in his speech to the second Agriculture Summit on Wednesday, in which he spoke of the need for a “fundamentally new perspective on rural development and agriculture”.

It is not hard to see how important agriculture is to the development of the country. Agriculture continues to provide employment to 60 per cent of our population – which, looked at another way, is the majority of the consumer households of the country. There are sizeable inter-sector linkages – forward linkages between agriculture and agro-based industries, and backward linkages between agriculture and agricultural inputs industry. To give one numerical example, the share of inputs bought by the agricultural sector from the non-agricultural sector increased from 7.4 per cent in 1960-61 to 50.7 per cent in 1995-6 (1980-81 prices). It is not hard to see that agricultural reform is essential to not only spread the benefits of liberalisation, but to take the ongoing growth to a higher plane.

The PM’s diagnosis is correct: the rural and agricultural sectors suffer from deficits in public investment and credit, infrastructure, market economy and knowledge. To bridge these, there must be a “sustained effort” to pull subsistence farmers out of their marginal existence while propelling advanced farmers onto the global platform. The task is daunting due to its sheer scale. It is made all the more so because any meaningful agricultural reform must tackle sensitive issues of political economy, especially the issues of prices and subsidies. Offering a fair price to producers is a bitter pill that the middle class must be convinced to swallow. The politically powerful big farmer lobby must be weaned away from subsidies on fertilizers, power, irrigation, etc – which have grown to more than $12 billion annually, far more than both public and private investment in agriculture. Nonetheless, the growth and increasing affluence of the middle-class offers ample opportunity for growth and diversification of the agricultural sector. Food comprises 50 per cent of an average Indian household budget, and the consumer is demanding more variety and better quality. The government must begin by shifting the focus from subsidising production to incentivising investment by providing better infrastructure and letting the market take production decisions.

Developing people skills

THE phrase ‘reform with a human face’ is so sweet that it can make you smile on a bad day. It assures the neo-liberal while smoothening the dissenter’s feathers. The problem lies in making sense of it. The draft National Policy on Relief and Rehabilitation 2006 is a dire example of failure in this regard. With some 168 SEZs and numerous infrastructure projects set to roll out across the country, the draft offered the government an opportunity to look at the bigger picture and come out with a solution that would give displaced persons a stake in development. Instead, the draft looks like a crafty attempt to circumvent the rulings of the Narmada Water Disputes
Tribunal, which were upheld by the Supreme Court, regarding compensation for, and rehabilitation of, evacuees.
The most contentious part of the draft relates to monetary compensation for
acquired land. Relief and rehabilitation (R&R) specialists working on various projects have argued for years that monetary compensation for agriculturalists and tribals is inadequate and futile. Once the meagre amount paid is exhausted, the evacuees find themselves without any source of livelihood and little chance of finding employment. So such compensation ends up pauperising the disadvantaged. The draft also fails to mention any change in the archaic Land Acquisition Act, 1894, to make rehabilitation of evacuees a right. It also skips any mention of setting up a statutory National Rehabilitation Committee as recommended by the National Advisory Commission. Are these slip-ups or avoidances?
To attain the avowed objective of
reforms — sustainable development — there is need for a clear relief and rehabilitation policy. An effective R&R policy must fulfil some basic criteria: it must recognise evacuees’ right to rehabilitation as an inalienable part of the project concerned; it must provide for advance and well worked-out R&R planning; it must ensure participation of the affected people in the planning process; it should be implemented by trained and sensitised R&R personnel. No one is arguing that liberalisation is evil per se and that it should stop pronto. All one is saying is that development should not
be at the cost of people — in the case of most developmental projects, a vulnerable section. Surely, that’s not being an impractical Luddite?

Voice of the disadvantaged

FEW WILL deny the distinct footprint that Kanshi Ram has left on northern Indian politics. Unlike Babu Jagjivan Ram, the towering dalit figure till the Seventies, Kanshi Ram saw his community’s salvation in the creation of its own political vehicles. Kanshi Ram was more of an organiser and a political strategist than a visionary – his views were shaped largely by B.R. Ambedkar. After a decade spent in organising dalit government officials, the beneficiaries of a generation of reservation policies, he launched the Bahujan Samaj Party in 1984. The party was narrowly focused on promoting dalit interests, even though it sought to gather all the so-called ‘disadvantaged’ such Muslims and some of the other backward castes. The BSP made no bones about its determination to seek political power at the earliest, and at the cost of the upper castes. While this has not been a smooth process, the BSP has come to play a major role in shaping the politics of Uttar Pradesh, Madhya Pradesh, Punjab and Delhi, with the help of Kanshi Ram’s charismatic protege, Ms Mayawati.
Kanshi Ram owed his success as much to hard work as to good timing. His rise coincided with the reemergence of caste in public discourse in India. The ‘Mandalisation’ of politics initiated by V.P. Singh worked in his favour by legitimating a new politics of the disadvantaged. It was also rode on a political trend that saw the decline of the Congress and the rise of the BJP. In this flux, Kanshi Ram, pursued the objective of power with a single-minded rigour, and struck electoral alliances without regard to either principle or stability. While the BSP consolidated its hold, the governance of the state where it was the strongest atrophied. Kanshi Ram will undoubtedly be remembered for his role in promoting dalit empowerment. But his place in history will only be secure when the party he founded can also show that it has the capacity to provide good, if not better, governance than its rivals.

UN by the Moon-light

NOTHING BEATS war at firing nationalism, although contests to select new UN Secretaries-General come a close second. Shashi Tharoor may go down in UN history as an also-ran, he had a billion people shedding tears for him. If newspapers can be seen as a reflection of what is important in public life, it is interesting to note that while Indian, South Korean and Asian papers have placed the news of Ban Ki Moon’s victory in Tuesday’s straw poll on their front pages, US newspapers have not deemed the event worthy of such notice. Most of the excitement for us was, of course, because an Indian was in the fray. But when looking at the larger picture, this chasm in perceptions – and the politics behind it – is a bellwether of the problems facing the UN at the beginning of the 21st century.

Although based on liberal political principles of sovereignty and cooperation, the UN has always been a power club, set up as it were by the victors of World War II. The organisation's record of fulfilling the obligation that are its raison d’etre – preventing war and keeping peace – is rather dismal. Its handling of the conflicts in Rwanda, the Balkans and Sudan are some examples. The one problem is that the country that hosts the world body, the US, has chosen to pay attention to it somewhat fitfully. In the case of the Iraq invasion and the Israeli invasion of Lebanon, the US has simply ignored the UN. To make matters worse, the UN has come in for much criticism following some high-profile corruption scandals. Yet it is no one's case that we dismantle the world body and return to the anarchic years that preceded World War II.

Given all these challenges, the new UN Secretary-General will have an unenviable task on his hands. Mr. Ban's challenge will be to get veto-wielding permanent five members of the Security Council to fulfil their responsibilities, as well as to assure all nations big and small, weak and powerful that the UN has a continuing relevance. On the plus side, he has a resurgent Third World – led by India, Brazil, South Africa and Brazil – to back him. But his real test will be to ensure that he has enough gumption to deviate enough from his predecessors’ path to make it to the front pages of US newspapers.

Lost in semantics

AS IF to reaffirm the stance of those critical of the Joint Mechanism Against Terrorism, Pakistan has taken its standard line over a list of wanted persons sent by India. In a statement on September 25, a Pakistani spokesperson asserted that some of those wanted by India have a “different” status in Pakistan because of their association with the “freedom struggle”, and that the joint mechanism is not “a plan to hand over wanted people”.

That one man’s terrorist is another man’s freedom fighter is a well-worn cliché. The international community has struggled for years to arrive at a consensus on the definition of ‘terrorism’. This failure has brought most efforts towards combatting the menace – including the half a dozen UN Security Council and General Assembly resolutions – to a nought. While elaborate strategies have been planned to combat terrorism – the latest being the Global Counter-Terrorism Strategy earlier this month – action on the ground remains limited because various States and non-State actors differ on what does or does not constitute terrorism. Defining terrorism is a contentious issue because it is a matter of moral judgment – in itself subjective – which, in the real world, is subject to political leanings and exigencies. For instance, while the Reagan White House called the Afghan mujahideen ‘freedom fighters’, the Bush White House calls the mujahideen’s successors terrorists. Similarly, Nelson Mandela went from being a ‘terrorist’ to a Nobel Peace Laureate. And so, those that India terms terrorists, Pakistan calls ‘freedom fighters’.

Internationally, the issue remains divisive due to the multiplicity of actors and interests involved. However, there is no reason why two countries which agree that they are both victims of terrorism and that they want to counter it, should not be able to agree to a mutually-acceptable definition. As far as India and Pakistan go, there should be no problem in accepting that killing, injuring or kidnapping of non-combatants for political reasons is terrorism, and a definition based on this principle should be arrived at. Unless that is done, all attempts to counter terrorism will amount to putting the cart before the horse.

Re-rise of India

ASK JOHN Ralston Saul about the rise of India, and he will promptly correct you: “the re-rise, you mean.” Indian civilization has, for millennia, been “used to dealing with complexity with methods of its own. And it has come so far by drawing upon itself and moving at its own pace. It is probably the only post-colonial state that has survived without a coup d’etat or an economic collapse.”

And now, it is re-writing the rules of globalisation, engaging with the West on its own terms. Saul’s latest book is entitled The Collapse of Globalism and the Reinvention of the World. Among the evidence he cites for the collapse of globalism is the rise of India (and China) in a manner contrary to the rules of globalisation as defined by the West, and has hence resisted easy categorisation. “The economic idea behind globalism and globalisation comprised a deterministic belief in the weakening of the State and the ascendancy of the market, which would take economics out of the purview of the State. We see none of this taking place in India or China. They are, in fact, rebuilding the ‘nation-State’,” he says.

India’s demographic outlook, says Saul, is more promising than China’s – India is a largely young society, while China is already an ageing one. Moreover, India has first-rate institutions – judiciary, free press, and democracy, “however flawed”. Saul asserts that although India’s rise is impressive – given the constraints it faces in the form of its well-entrenched caste structure, language politics, regional question, and so on – for this growth to last, it has to be more inclusive. At the moment, there are some successful sectors, a small percentage of people growing richer, and some expanding cities. However, the wealth has not spread to the vast majority of the population. And herein, he believes, lies India’s biggest challenge. “Historically, the rich States of today set off on a path of economic growth only when they began to invest in infrastructure and education for all,” he asserts, adding, “This is the kind of revolution that makes a richer, more equitable society – not a communist/ fascist/ militarist revolution.”

This revolution is led by a critical mass of the elites who break ranks with their peers and take it upon themselves to bring about change by using power responsibly. “This has been the experience in Europe, Canada and the US. This is what the Communist Party of China is now doing through its five-point plan that gives precedence to domestic over international issues, to the interior and rural areas over the coastal and urban ones, to society over economy, and to nature over man,” he says.

Only when wealth is fairly well spread out does the wealth of a nation solidify to form a strong base for further growth. “A healthy, well-educated population is the best wealth creating tool a country can have,” he says.

Does he agree with the possibility of an emerging India-China “duopoly”? “It depends on how unstable the world becomes as India and China grow in importance. Perhaps they will end up as rivals. But, who knows, they may just cannily realise that their interests are best served through cooperation.”