Sanjaya Baru en Fri Nov 29 12:04:30 IST 2019 noose-around-newsies <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Zee TV’s Subhash Chandra and Sun TV’s Kalanithi Maran seem to have taken a hit in the purse thanks to Covid-19 lockdown, the economic slowdown and the reduced revenue from advertising and other challenges. Perhaps that would explain their individual family wealth going down from upwards of Rs25,000 crore in 2018 to Rs19,000 crore for Maran and Rs15,000 crore for Chandra. The numbers are from the IIFL Wealth Hurun India Rich List for the respective years. These two media barons sit on top of the pile. Further down the list appear names such as <i>Eenadu’s</i> Ramoji Rao, the Jains of <i>The Times of India</i> group, Aroon Purie of <i>India Today</i>, Shobhana Bhartia of <i>Hindustan Times</i>, the <i>Dainik Jagran’s </i>Gupta family and, surprise, surprise, Arnab Ranjan Goswamai of Republic TV, not even half a decade into media and with accumulated wealth of Rs1,300 crore.</p> <p>Media barons have taken a hit, mainly through decline in advertising revenue, but they remain barons. What about the journalists whose blood, sweat and tears bring in the moolah? The year 2020 saw the steepest increase in media unemployment in living memory. Literally hundreds of journalists have lost their jobs across the country. In newspapers, in magazines, in television and in online media. Do not blame yourself if you are unaware, either of the humongous wealth of media barons or of the rising joblessness in media. The simple fact is that media have hardly reported this news.</p> <p>When the IIFL Wealth Hurun Rich list gets published every year, a few news agencies and publications report the tip of the wealth iceberg. The focus is on the big names—Mukesh Ambani, Gautam Adani, Hinduja brothers, Shiv Nadar, Uday Kotak, Lakshmi Mittal, Rahul Bajaj and suchlike. A few women figure in the reporting. Kiran Mazumdar-Shaw and Smita V. Crishna figure on top. Rarely, if ever, do the media report names of media barons. What is worse, flip the coin and see that the media are even more niggardly in reporting job losses in the media.</p> <p>Among the few who have in fact reported the crisis in the media is the website,&nbsp;, whose founding-editor Seema Mustafa has been elected recently as president of the Editors’ Guild of India. Reporting on <i>The Citizen’s</i> website, Ammu Joseph wrote way back in July 2020 how dozens of publications, big and small, English language and Indian ones, were all sacking journalists. It did not make waves in mainstream media.</p> <p>When I approached the owner-editor of one member of the IIFL Hurun Rich List to try and save the job of a journalist who was sent home, I was told that we were all living through very difficult and challenging times. I guess finding one’s wealth go down by a couple of hundred crore, even if it is still well over a thousand crore, is truly a great stress and one of those life-altering challenges. So why not seek relief by firing young reporters, middle-aged editors, photographers and subeditors who only have to worry about paying their children’s school or college fees, the monthly repayment on a housing loan and suchlike minor expenses. After all, they are getting a seven-day week all to themselves.</p> <p>Neither professional organisations of the media nor political parties have protested loud enough. One of the most challenging consequences of the Covid-19 lockdown has been rising unemployment. The media report unemployment as if it is all about numbers and not human beings. Not even when their own are losing jobs do the media care to report it as a human interest story.</p> Thu Oct 29 15:33:35 IST 2020 the-uncertainty-conundrum <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The International Monetary Fund was once the bastion of what its critics have dubbed “neo-liberal economics” and the home of what is famously known as the “Washington Consensus”—that free markets, free trade, economic openness, less government and more private enterprise are all good for growth. Covid-19 is upending much of that orthodoxy. The IMF convenes this week for its annual meeting under the leadership of a woman chief born in communist Bulgaria, Kristalina Georgieva, and a chief economist, Gita Gopinath, who briefly advised the communist government of Kerala. Neither of them is a lefty, but neither swear by neo-liberal economics.</p> <p>Under the watch of these two women leaders the IMF’s World Economic Outlook, unveiled in time for the annual meetings of the Fund and the World Bank, makes a case for greater public investment as a way of countering the post-pandemic economic slowdown in developed and developing economies. The WEO suggests that a 1 per cent increase in public investment could trigger a 10 per cent increase in private investment. A third lady in the equation, Union Finance Minister Nirmala Sitharaman, has responded with alacrity announcing a new spending programme aimed at boosting demand in the coming festive season.</p> <p>A major post-Covid-19 challenge for economic policymakers remains that of dealing with the consequences of uncertainty triggered by the pandemic and the economic slowdown. Households and firms have become risk averse, unsure of future income. While lockdowns are being eased, uncertainty about the likely course of the pandemic continues. The US-based National Bureau of Economic Research (NBER) has put out an Economic Policy Uncertainty Index (EPUI), which seeks to measure the incidence of uncertainty in an economy, by gathering data from mainstream media in 26 major economies.</p> <p>The index measures the frequency with which words like “uncertainty” and “economic policy” occur in the media along with the incidence of news coverage on fiscal, monetary and trade policies. The EPUI team finds a global spike in reporting on economic uncertainty from the early part of 2020, with EPUI increasing from an annual average of 267 in 2019 to 320 in the first eight months of 2020. The NBER study shows how Covid-19 “triggered a massive spike in uncertainty”, caused by absence of definitive assessments of the “infectiousness, prevalence and lethality of the virus; availability and deployment of antigen and antibody tests; the capacity of healthcare systems to meet an extraordinary challenge; and how long it would take to develop and deploy safe, effective vaccines”. It also draws attention to continued uncertainty about state capacity— managerial and fiscal—to deal with the consequences of the pandemic and the fall in economic activity. There is uncertainty about future incomes, employment prospects, speed of recovery, consumer spending, and saving behaviour and investor sentiment.</p> <p>Much of current economic activity is based on expectations about the future. If uncertainty has gripped economic agents around the world, that would alter expectations in ways not seen before. After the Second World War there has been no other global phenomenon that has generated so much uncertainty about the future. The oil crisis of the 1970s was one such event but its consequences were managed within a reasonable period of time and the world economy adjusted itself to a regime of higher prices. The Asian and transatlantic financial crises of 1998 and 2008 were addressed before they became truly global. Many countries, including India, have been hesitating to spend more and it appears the IMF nudge has helped Sitharaman move.</p> Thu Oct 15 19:06:18 IST 2020 news-weak-time-out <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The media love lists, and Indian media obsess about western lists. How is India doing on this index and that, by how many places has it moved up or down. Rarely does such reporting educate the reader or viewer about what goes into the making of a list—the criteria used, the data digested, the assumptions made and the biases inherent to definitions. So, it was not surprising that when the newsmagazine <i>Time</i> included Prime Minister Narendra Modi in a global list of “100 Most Influential People”, Indian media was quick to report but without spelling out why he had made it.</p> <p>Remember that the criterion for making it to even <i>Time</i>’s “Person of the Year” is the person should have “most affected the news and our lives, for good or ill”. It was left to one of Modi’s irrepressible critics to point out that <i>Time</i> picked the prime minister for this list more for “doing ill than good”, so to speak.</p> <p><i>Time</i> explained its choice stating: “First elected on a populist promise of empowerment, his Hindu-­nationalist Bharatiya Janata Party rejected not only elitism but also pluralism, specifically targeting India’s Muslims. The crucible of the pandemic became a pretence for stifling dissent. And the world’s most vibrant democracy fell deeper into shadow.”</p> <p>Despite the fact that the west is today largely on India’s side, and Prime Minister Modi has established good relations and rapport with most major western leaders, western media is turning increasingly critical of him. However, nothing that has appeared in western media is more critical of Modi than what appears in Indian print media. It is only Indian television that has become excessively adulatory.</p> <p>Modi is not the first Indian prime minister to be criticised by western media. From Jawaharlal Nehru to Manmohan Singh, every Indian prime minister has been conferred both bouquets and brickbats. In 2008, <i>Newsweek</i>, under Fareed Zakaria’s editorship, wrote off Singh and echoed the view of Rahul Gandhi cronies who, in the run up to 2009 election, wanted an “ageing” Singh to make way for “young” Rahul. Singh surprised everyone later that year leading his coalition back to power with more MPs in tow.</p> <p>In 2002, <i>Time</i> declared that prime minister Atal Bihari Vajpayee was “asleep at the wheel” and that many in his party wanted him replaced. Nothing of the sort happened. Despite getting Indian politics wrong on many occasions and underestimating the survival instincts of Indian prime ministers, western media manage to make a splash in India, often with half-baked stories. This is more a reflection of Indian obsession with what the west thinks of us than a comment on western media’s political prescience or ability to tell the truth.</p> <p>It is one of the ironies of Indian media that it invests so little in covering the world and reporting from foreign stations but pays so much attention to what world media says about India and its leaders. Among all the major powers, India has the fewest number of foreign correspondents. World news comes to Indian media from foreign sources, rarely their own correspondents. Worse still, Indian media’s sourcing of news of non-western societies and many of India’s neighbours also comes from western media sources. It is an odd love-hate relationship: excessive dependence on western media for news, combined with condescension when the news is not complimentary.</p> <p>It has been reported that Foreign Minister S. Jaishankar has instructed Indian diplomats overseas to build better relations with local media. While this is necessary and diplomats can help improve India’s image overseas, there are limits to how much carefully built images can blur a reality staring in one’s face.</p> Thu Oct 01 15:50:58 IST 2020 china-wants-more-than-mountains <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>While the entire attention of the country may be on the border between China and India, the attention of China’s strategists would be more on the Indian economy. One should not interpret the old Chinese saying—One mountain cannot contain two tigers—too literally. The mountain that the Chinese strategists have in mind is not the Himalayas but Asia and its economy.</p> <p>&nbsp;</p> <p>The Chinese army’s repeated incursions along the Line of Actual Control (LAC)—Depsang (2013), Doklam (2017) and Galwan (2020)—should not be viewed purely as attempts at land grab aimed at securing advantageous positions in the event of a war. Many in India have become students of Himalayan geography, but the real game in Asia is for economic dominance. Of course, it is the duty of military brass to defend the border and retain control over territory. But, China’s strategy towards India has to be viewed from a wider lens, and not a purely military one.</p> <p>&nbsp;</p> <p>What does China want? From the plains of Central Asia to the islands of the Pacific, from Northeast Asia to Southern Africa, Xi Jinping’s China wishes to establish that there is only one Asian superpower. Sure, at the global level China still acknowledges that there is another superpower, the United States. But, Xi would want the world to acknowledge what it did at the end of World War II, that there are only two superpowers and everyone else is a secondary or tertiary player.</p> <p>&nbsp;</p> <p>Indeed, most Asian nations, including Japan, have come to implicitly accept this. India, too, has stopped calling itself a ‘leading power’ and now refers to itself, along with Russia, Japan, France and so on, as a Middle Power. But Xi would want India to say that a bit more loudly.</p> <p>&nbsp;</p> <p>Till around 2012, China may well have gone along with the global consensus that India too was rising rapidly and would catch up with China. After all, none other than Singapore’s Lee Kuan Yew, a friend of China, had said in 2007 that China and India were the two engines of the Asian aircraft, and for Asia to take off smoothly both engines must fire in tandem.</p> <p>&nbsp;</p> <p>India’s economic growth experience, between 1991 and 2012, may have made China believe that India was capable of catching up. Till 1980 the two economies stood more or less on par, even if China had by then built a stronger base for future growth. It was assumed India was capable of again catching up.</p> <p>&nbsp;</p> <p>The travails of the United Progressive Alliance II government may have made China re-examine these assumptions. The Indian economy seemed to be faltering and its political leadership seemed no longer capable of ensuring that India remained on the growth trajectory of the first decade of the 21st Century. It appears that the Chinese assessment of the six years of the Narendra Modi government is that despite its political strength it has not been able to restore momentum to the economy.</p> <p>&nbsp;</p> <p>It would be wrong to assume that China only aims to bolster its tactical, or even strategic, positions along the border. In appearing to do so, and repeatedly provoking India, China seeks to keep India both politically and economically off-balance. Which means no five-point joint statement is likely to end the impasse in the relationship. The challenge before India is to regain economic momentum and bolster its economic capabilities. That alone will ensure an Asian balance of power conducive to regional peace and global security. An Asia dominated by an authoritarian and hegemonic China will never be peaceful, secure or stable.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Sep 17 15:21:49 IST 2020 our-man-in-tokyo <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>No prime minister of Japan has ever made anywhere near the impression on Indian public opinion as Shinzo Abe did. It was not just that he is the longest serving prime minister in Japan’s history since the Meiji Restoration of the late 19th century. Never have millions of Indians had the opportunity to see a Japanese prime minister for an entire evening watching the glorious ceremony of the Ganga Arati at Varanasi’s Dashashwamedh Ghat. As he steps down from office this month, after a tenure of over nine years, Abe will be wished well by a people that have come to appreciate his abiding commitment to Japan-India friendship.</p> <p>&nbsp;</p> <p>Over the past quarter century Japan has had 17 prime ministers. Of them, eight served terms of less than a year and most others of less than two. Only Junichiro Koizumi enjoyed a decent tenure of five years in office. Into that office with a revolving door that was constantly spinning around Abe stepped in first in September 2007. However, ill-health made him step down a year later. Over the next five years Japan had five prime ministers, of uneven competence. Abe returned to office in December 2012 to become Japan’s longest serving prime minister.</p> <p>&nbsp;</p> <p>Even in that brief first year in office Abe left a mark as far as Japan-India relations are concerned. Addressing the Indian Parliament in August 2007, Abe enunciated the now popular and widely recognised idea of an Indo-Pacific geopolitical space. Giving his address the title of a book by the Mughal prince Dara Shikoh—A Confluence of the Two Seas—Abe spoke of the historic, cultural, economic and geopolitical links between the Pacific and the Indian Ocean. Abe’s successors in the period 2007-2012 did not follow up on that idea and many have come to associate it with Hillary Clinton who, as United States secretary of state, spoke about the Indo-Pacific to a gathering in Chennai in 2011.</p> <p>&nbsp;</p> <p>It was on his return to office in 2012 that Abe gave concrete shape to his ideas and has since laid the firm foundation of India’s probably most consequential bilateral relationship. Indians may be divided in their views on the country’s relations with the United States, Russia, Europe and even China. But there would now be universal agreement that Japan is an important partner country for India. Abe deserves all the credit for shaping that view. Which is why Indian diplomats will watch closely who his successor is going to be, and whether he would remain loyal to Abe’s vision of Japan-India relations.</p> <p>&nbsp;</p> <p>There is good reason for India remaining wary till the new prime minister unveils his vision for the bilateral relationship. Within the Japanese elite—its business class, political leadership, intellectuals and diplomats—there is an influential pro-China lobby of individuals and companies that have made their millions and billions in China. In 2007, when Abe stepped down, his first successor Yasuo Fukuda did an about-turn on India and cozied up to China. However, since then Xi Jinping has happened!</p> <p>&nbsp;</p> <p>While Japanese business, like most business, remains frustrated with the “unease of doing business” in India, the economic relationship has become stronger. More importantly, the defence, technological and people-to-people relationship has also grown stronger. The Quad—a new strategic foursome of Australia, India, Japan and the US in the Indo-Pacific region—is acquiring greater relevance and profile thanks to the unrelenting assertiveness of Xi’s China. India’s political leadership would want an early affirmation by the new Japanese prime minister of his commitment to the Abe vision of a confluence of values and interests between Asia’s great democracies.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Sep 04 11:46:48 IST 2020 the-makers-of-india <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>In the 1987 movie, Wall Street, the industrial worker and trade unionist father Carl Fox confronts his finance whiz kid son raking in his millions, making money out of money, with words that resonate across America even today: “You stop going for the easy buck and produce something with your life. Create instead of living off the buying and selling of others.” America paid little heed to those words for two decades thereafter till the money machine imploded in 2008. Donald Trump came to power promising to bring manufacturing jobs back home from China.</p> <p>&nbsp;</p> <p>It was no coincidence that in 2006 India also woke up to the challenge of revitalising Indian manufacturing, having lived through a decade of fantasy that services sector growth would help it leapfrog into the 21st century. Manmohan Singh’s National Strategy on Manufacturing (2006) aimed to take the share of manufacturing in national income from 16 per cent in 2006 to 25 per cent by 2020. Prime Minister Narendra Modi took this strategy forward calling it ‘Make in India’. Six years later, manufacturing’s share remains stubbornly stuck at 16 per cent.</p> <p>&nbsp;</p> <p>A key policy initiative aimed at facilitating Make in India has been to improve the Ease of Doing Business. Various incentives, including cuts in tax and interest rates, have been given to the mobilisers of capital. Acquiring land and employing labour have been made easier. There is a growing celebration of enterprise, especially of small and medium entrepreneurs, and being self-employed has been made into an act of great creativity and patriotism. All this is good.</p> <p>&nbsp;</p> <p>However, rapid industrialisation requires increasingly productive labour. The working class are the soldiers in the war against poverty and in the drive for modernisation. It is, therefore, surprising that few political parties have focused on improving labour productivity and the social security of the working class. Prime ministers, from Lal Bahadur Shastri to Narendra Modi, have said ‘Jai Jawan, Jai Kisan’, rarely do they say Jai Mazdoor. China’s rise has been on the back of its “creators”, to use Fox’s term for workers, and not just its traders.</p> <p>&nbsp;</p> <p>The unionised working class has often been damned as a labour aristocracy that has prevented the growth of industrial employment. While industrial labour unions may have their faults, they can hardly be blamed for policies that have encouraged capital-intensive manufacturing rather than labour-intensive manufacturing. Consider the fact that so much of India’s labour-intensive manufacturing activity is getting exported out, and workers in Bangladesh, no less organised or militant than their Indian counterparts, are getting the jobs that workers in Gujarat are losing.</p> <p>&nbsp;</p> <p>Why is it that political leaders are so quick to say Jai Kisan and so slow to say Jai Mazdoor? Prime Minister Modi’s Independence Day speeches have hardly said much to enthuse the industrial working class even as he has spoken so often about Make in India and Ease of Doing Business. This, despite the fact that the largest trade union organisation today is the Bharatiya Mazdoor Sangh (BMS), affiliated to the RSS and the BJP.</p> <p>&nbsp;</p> <p>In the focus on the large deficit that India faces in its merchandise trade with China attention is often drawn, and correctly so, to China’s various unfair practices ranging from hidden subsidies to non-trade barriers. However, an important factor that has made China’s exports more competitive has been the rising and high productivity of Chinese labour. The average Chinese worker produces more per hour of work and unit of capital than the average Indian worker—thanks to being better skilled, better fed and in better health. Make in India requires investing in the capabilities, health and social security of the ‘makers of India’.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Aug 20 14:48:17 IST 2020 strategic-promiscuity <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Nations have no permanent friends or allies; they only have permanent interests. So said Lord Palmerston, a mid-19th century British prime minister. That should settle the issue of who India’s partners are at any given point in time. When the Chinese invaded India in 1962, the United States offered military support. When India faced a US-China-Pakistan axis in Bangladesh, the Soviet Union stood firmly with India. Both in 1962 and in 1971, India’s interests remained the same—to bolster her own security—her friends changed. A nation has both short-term and long-term interests. Those who stand by it in achieving short-term objectives are tactical partners. Those who stand by it for the long run are strategic partners.</p> <p>&nbsp;</p> <p>Throughout the Cold War India opted for non-alignment as a strategy, but had no problem seeking tactical support from one side or the other. In the post-Cold War period, however, India got into the habit of calling every tactical alliance a strategic partnership. From France to Russia, from the United States to China, from Japan to... (hold your breath) Rwanda, every other country was signing up to be India’s “strategic partner”! In 2011, Arvind Gupta and Sarita Azad of the Institute of Defence Studies and Analyses listed as many as 30 strategic partnerships that India had by then entered into.</p> <p>&nbsp;</p> <p>In April 2005, Prime Minister Manmohan Singh hosted China’s prime minister Wen Jiabao. New Delhi went into a tizzy and the two heads of government ended up signing a joint statement in which they said, “the two sides agreed that India-China relations have now acquired a global and strategic character”. They then went on to establish “an India-China Strategic and Cooperative Partnership for Peace and Prosperity”.</p> <p>&nbsp;</p> <p>All the actors responsible for that statement are still around. The national security adviser and foreign secretary of the time are now regular columnists. Perhaps they could enlighten us now on what made them get the prime minister of the day to sign on to that statement and what was so “strategic” about that partnership.</p> <p>&nbsp;</p> <p>Even Prime Minister Narendra Modi was seduced by this promiscuity in strategic partnerships. The India-Rwanda strategic partnership was signed by him in 2018. Thanks to China’s President Xi Jinping, India’s strategists have been forced to define more precisely what they mean by a strategic partnership.</p> <p>&nbsp;</p> <p>Anything strategic must derive from a strategy. The distinguished scholar of war and strategy, Lawrence Freedman defines strategy as “the art of creating power”. As theorists of power, from Kautilya to Antonio Gramsci, have suggested, power itself has many dimensions and military power is just one of them. The foundation of military power, as Kautilya suggested in the Arthashastra, is economic capability and fiscal capacity. Thus, in identifying a strategic partner, a country must determine which other country would assist it in the “creation of power”, with a clear understanding of what form such power would take—military, economic, technological, cultural and political.</p> <p>&nbsp;</p> <p>Fifteen years after India and China signed the 2005 statement it is clear that it has not delivered on the promise of peace and prosperity, not to speak of enhancing Indian power. Rather, by aligning itself firmly with Pakistan it has enhanced the latter’s power. On the other hand, in these 15 years, the US, Japan, France and even Russia have helped enhance India’s power.</p> <p>&nbsp;</p> <p>But military capacity building is only one leg of such a partnership. Enhancing India’s economic capability should be the other. To qualify as strategic, a partnership must deliver on both counts. It is time we defined strategic partnerships more strategically, and not just tactically.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Aug 06 18:02:39 IST 2020 still-the-economy-stupid <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Look at where the economies of China and India were in the 1980s, and look where they are now. The power differential between the two today is largely a consequence of the different trajectories of economic performance. That was the reminder that External Affairs Minister S. Jaishankar offered last week in a televised discussion, echoing Bill Clinton’s famous slogan: It’s the economy, stupid!</p> <p>&nbsp;</p> <p>It reminded me of what one of his distinguished predecessors as foreign secretary, K. Raghunath, told members of India’s National Security Advisory Board (NSAB) in 1999. Asked what needs to be done to make Indian foreign policy more effective, Raghunath’s reply was quick—improve India’s economic performance. A stronger, more efficient and more competitive economy would facilitate more effective diplomacy. The era when good speeches and clever posturing made up for poor economic performance was over.</p> <p>&nbsp;</p> <p>The NSAB report that was then prepared reflected the strategic thinking at the turn of the century. China had gained power and influence with its economic capability and performance. Higher economic growth helped improve state capacity, including the fiscal capacity of the state. This, following Kautilya’s famous axiom in the Arthashastra—“from the strength of the treasury, the army flows”—enabled China to become a military power.</p> <p>&nbsp;</p> <p>If China is today more influential globally it is not because the world has discovered its civilisational greatness or exciting cuisine, but because it has demonstrated economic and human capability and has built relationships of interdependence with nations big and small.</p> <p>&nbsp;</p> <p>In the first two decades of the 21st century, China became an economic superpower and so became a great power. India has yet to become an economic superpower. From Raghunath to Jaishankar and after, Indian diplomacy can do its best to manage a difficult world, but at the end of the day India’s global standing and power will be shaped in farms and factories, in classrooms and laboratories. When India is economically not only stronger and self-reliant (atmanirbhar) but also more efficient and competitive (globally engaged), it will also be regarded a great power. Till then, we need clever diplomats and generals to mind the gap, and cleverer political leadership to bridge the gap.</p> <p>&nbsp;</p> <p>I am not yet convinced by the argument that external trade is a threat rather than an opportunity for the Indian economy. Jaishankar is wrong to buy into the Swadeshi Jagran Manch argument that Indian industrial development has been hurt by external trade, especially the few free-trade agreements negotiated by the Manmohan Singh government. India’s decision to walk out of negotiations towards a Regional Comprehensive Economic Partnership (RCEP) agreement was a consequence of such thinking.</p> <p>&nbsp;</p> <p>While Indian business leaders who run globally non-competitive firms may agree with what the external affairs minister was saying, those who have benefited from globalisation will not. Indeed, this year the trade surplus being generated signals a slowdown in domestic economic activity, not the growing competitiveness of the economy. There are many reasons why the share of manufacturing in India’s national income is stuck at around 16 per cent for two decades. External trade is certainly not the most important one.</p> <p>&nbsp;</p> <p>Moreover, there is a contradiction between the government seeking more foreign direct investment while turning away from external trade opportunities. Surely, atmanirbharata does not mean getting foreigners to produce more in India for the Indian market alone. Foreign direct investment policy is about tapping the world market. Trade is the means to that end.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Jul 23 14:32:17 IST 2020 trade-is-also-strategic <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Talking about his recent book on his tenure at the White House, former United States national security adviser John Bolton told an Indian journalist that he disagreed with President Donald Trump focusing far too much on bilateral trade issues and not enough on larger strategic issues with India. This distinction is an old fudge that both the tribes of economists and foreign policy experts indulge in. Every now and then we are reminded that while the US State department wants better relations with India, the US Trade Representative (USTR) marches to a different tune.</p> <p>&nbsp;</p> <p>This distinction that keeps trade policy in one silo, and foreign policy and strategic ties in another is mirrored even on the Indian side. In New Delhi, the partitioning is made complete by the fact that the Indian Administrative Service runs trade policy while the Indian Foreign Service runs foreign policy. When a certain former prime minister wanted to post an IFS officer as India’s ambassador to the World Trade Organization, the IAS killed the proposal with a ton of files. On the other hand, diplomats have often complained about the insularity of the trade bureaucracy that prevents closer relations with the US.</p> <p>&nbsp;</p> <p>The current stand-off with China and the new policy of atmanirbharta has forced the government of India to wipe out this distinction between trade policy and foreign policy. Even so, the ideological diehards among both economists and foreign policy analysts remain critical of blurring the distinction. Those who remain sceptical of taking a tough view on trade with China, as a response to China getting tough on border issues and political relations, would do well to read the views of the Nobel Prize-winning economist Thomas C. Schelling who deployed game theory in defining nuclear deterrence.</p> <p>&nbsp;</p> <p>Schelling told a US Congressional committee on trade and national security way back in 1971: “Aside from war and preparations for war, and occasionally aside from migration, trade is the most important relationship that most countries have with each other.... Trade is what most international relations are about. For that reason, trade policy is national security policy.”</p> <p>&nbsp;</p> <p>Schelling’s views have been echoed over the years across Washington DC. The White House has used the USTR to browbeat friend and foe. In the 1980s, Japan was the target. Today, it is China, India and many other trade partners. So, Bolton is making much of a muchness criticising Trump for doing what many of his predecessors have done—weaponise trade. What is amusing is that so many Indian apologists for US action continue to peddle the argument that while the White House and the US state department want good relations with India, the USTR is such a bloody-minded fellow.</p> <p>&nbsp;</p> <p>For good or bad, political and economic relations between countries do get inter-twined. China was a beneficiary of a mounting trade surplus with India during the pre-Xi Jinping period when the political relationship was improving. As the political relationship deteriorated, trade ties, too, took the hit. The theory that trade can buy peace was dumped long ago and China’s deteriorating relations with all its major trade partners goes to show that money cannot buy love.</p> <p>&nbsp;</p> <p>As for the US-India relationship, the media has reported that India’s External Affairs Minister S. Jaishankar has been receiving reassuring phone calls from Mike Pompeo, the US secretary of state, in the context of the spat with China. It would be equally helpful if New Delhi also received reassuring calls from the USTR, Robert Lighthizer. As George Bernard Shaw’s Eliza Doolittle told Freddy Eynsford-Hill, “Do not talk of love, show me!”</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Jul 09 16:43:10 IST 2020 china-message-to-asia <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Prime Minister Rajiv Gandhi came away from his historic 1988 meeting with the architect of 21st century China, Deng Xiaoping, reassured by Deng’s famous words: “Only when China and India have developed, will a real Asian century emerge.” In 2007, Singapore’s founder-leader Lee Kuan Yew expressed the opinion that Asia’s rise would be powered by the “twin engines” of China and India. In 1988, Deng may well have believed that, and, in 2007, Lee may well have sincerely hoped that. No one in China and few across much of east and southeast Asia any longer takes those views seriously.</p> <p>&nbsp;</p> <p>The accelerated rise of China is essentially a 21st century phenomenon. The trans-Atlantic financial crisis of 2008-2009 further consolidated China’s power, even as the west went into a period of disarray. India’s impressive economic performance in the first decade of the 21st century kept the hope of a catch-up alive. However, several developments in the second decade have combined to change the landscape to India’s disadvantage.</p> <p>&nbsp;</p> <p>First, India’s uncertain economic performance and its defensive approach to closer economic ties with other Asian nations. The decision to withdraw from the negotiations towards an Asia-wide Regional Comprehensive Economic Partnership signalled India’s economic weakness rather than a new sense of self-confidence or atmanirbharata. Second, the BJP’s focus on a divisive domestic political agenda offered India’s enemies an opportunity to draw global attention to political fault lines at home, which many see as a hurdle to economic revival. Finally, United States President Donald Trump’s “blow hot-blow cold” policy towards India, once again confirmed by the contents of former US national security advisor John Bolton’s book, may have convinced China that the US is unlikely to weigh in on India’s side, beyond a point.</p> <p>&nbsp;</p> <p>It is into this uncertain space that China’s President Xi Jinping is inserting China, hoping to herald its arrival as Asia’s pre-eminent power. From Depsang and Doklam to Galwan Valley the consistent push against India is, it seems, aimed at demonstrating to the rest of Asia that India remains pre-occupied with its own security, so how can it offer any reassurance to others? China’s India policy is less about acquiring territory and much more about demonstrating to the rest of Asia that India is not capable of challenging China’s hegemonic status across the continent any time soon.</p> <p>&nbsp;</p> <p>It is important to recognise that India is not alone in worrying about China’s hegemonic ambitions. Japan, South Korea, Australia, Vietnam and several other Asian nations are equally worried about China’s intent and capability. Mindful of this situation, India has reached out to other powers to build a defensive alliance. This is what strategic analysts now call the “Asian Great Game”. India must not deviate from the path of building a pan-Asian alliance that keeps Chinese power under check. Surely, no Asia-Pacific nation wants western hegemony replaced by Chinese hegemony.</p> <p>&nbsp;</p> <p>It is also important to understand that while an overwhelming number of Chinese citizens and people of Chinese origin around Asia take great pride in China’s resurgence and rise, and why not, there would be many who would not approve of President Xi’s politics and political style. To imagine that Chinese society and China’s political leadership is a monolith would be self-defeating. Even at the height of power of great leaders like Mao Zedong and Deng, China was internally divided. Xi’s politics and economics have caused much discontent within China. But the question is, would an internally plural China be externally less or more aggressive?</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Jun 25 16:50:43 IST 2020 down-under-looks-up <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The virtual summit between Australian Prime Minister Scott Morrison and Prime Minister Narendra Modi was historic—both in form and content. Given the media focus on Covid-19 and on India-China border tensions, the meeting did not get the attention it deserved. Apart from the foreign policy cognoscenti au fait with the ups and downs of India-Australia relations, few may be aware of the difficult journey that both Australian and Indian diplomats have had to make to get to the point where Modi and Morrison found themselves.</p> <p>&nbsp;</p> <p>While both countries paid little attention to each other through most of the Cold War, despite their shared history of British rule, the bilateral relationship actually worsened after the Cold War, when Australia sanctioned India for the Pokhran-II nuclear tests.</p> <p>&nbsp;</p> <p>However, prime minister Atal Bihari Vajpayee was willing to forgive Australian high-handedness at the time and pay a visit to Canberra. I discovered this when I turned up for lunch at the home of the Australian high commissioner Penny Wensley in early 2004. My host had just returned from a meeting with national security advisor Brajesh Mishra, and told me very excitedly that Vajpayee had agreed to travel to Australia “after the elections”. Vajpayee ended up losing those elections and Manmohan Singh kept delaying his visit, waiting for Australia to come to terms with India’s nuclear weapons status and agree to sell uranium.</p> <p>&nbsp;</p> <p>Meanwhile, something else turned up to spoil the bilateral equation. China. While students of foreign affairs can read the pro-China writings of Australian strategists like Hugh White, and some of the early speeches of former Prime Minister Kevin Rudd (a Mandarin speaking China lover who has since changed colours), to appreciate the depth of the Australia-China bonhomie in early 2000s, the best popular introduction to how Australia was kow-towing to China would be the Australian television series Secret City! Imagine a TV series that showed an Indian cabinet minister having an affair with the spouse of a foreign diplomat, of whatever country. Secret City had the Australian defence minister in bed with the wife of the Chinese ambassador. Nothing could be more candid in revealing the depth of Chinese penetration into Australian elite circles.</p> <p>&nbsp;</p> <p>The Modi-Morrison joint statement on a comprehensive strategic partnership inaugurates a new phase in the bilateral relationship. In November 2014, Modi delivered on Vajpayee’s promise and visited Australia. From then on, Australian officials favouring closer relations with India have had to work hard to overcome the influence of the China-lobby in Canberra. If there is one person who deserves credit for cementing the bilateral relationship it is former Australian high commissioner to India, Peter Varghese.</p> <p>&nbsp;</p> <p>I first met Varghese in Singapore when he came to see me at the Lee Kuan Yew School of Public Policy, where I was then teaching. Varghese was preparing for his New Delhi posting and wanted to know all about India. On completing his extended tenure, he returned home as Australia’s foreign secretary and subsequently wrote an influential report on an India strategy up to 2035. Battling the China-lobby at home, diplomats and analysts like Varghese had to convince their peers and political masters that placing all eggs in the China basket was no strategy.</p> <p>&nbsp;</p> <p>While a bulk of Varghese’s report focused on economic opportunities in India, the last chapter provided a “geopolitical pillar” to the relationship, identifying shared strategic interests and perspectives within the wider Indo-Pacific and Indian Ocean regions. However, geopolitical considerations alone cannot keep Australia engaged, given China’s continuing economic allure. India will have to deliver on the economic and trade fronts to get those Down Under to look up.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jun 12 12:26:05 IST 2020 self-reliance-third-edition <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Though the phrase ‘self-reliance’ does not appear anywhere in the First Five-Year Plan (1951-56), it is commonplace that the very idea of planned development, with the public sector occupying the commanding heights of the economy, implied that post-colonial India would seek to pursue self-reliant economic development. When Prime Minister Narendra Modi put forward his version of self-reliance, with a view to build an Atma Nirbhar Bharat, many thought he was saying something new. He was, in fact, enunciating a third variant of a concept that has its roots in India’s freedom struggle.</p> <p>&nbsp;</p> <p>Between Jawaharlal Nehru’s version of self-reliance, as it evolved through the first three five-year plans and eventually turned into import-substituting industrialisation, and Modi’s recent articulation of it, there is an intermediate second variant that Prime Minister P.V. Narasimha Rao articulated in his famous presidential address to the Tirupati session of the All India Congress Committee in April 1992. Each variant captures the reality of a changing India in a changing world.</p> <p>&nbsp;</p> <p>Rejecting criticism that the economic liberalisation and reform policies unveiled between June 1991 and March 1992 were a departure from Nehruvian self-reliance, Rao told the AICC that, “a country of India’s size has to be self-reliant”, but the concept of self-reliance has to evolve in step with the country’s own development and the changing global context. “While we are redefining self-reliance,” Rao assured the AICC, “we are not abandoning the basic principle.”</p> <p>&nbsp;</p> <p>Enunciating his own version of atmanirbharata relevant for an India at the turn of the century Rao said, “The very level of development we have reached has made us independent of the world economy in some respects, but more dependent on it in others. This is an important aspect of the complexity of modern development.”</p> <p>&nbsp;</p> <p>He then went on to define self-reliance for the world of the 1990s, how it was different from the self-reliance of the 1950s. Given the context of 1991-92, when India was dealing with a mounting internal and external debt and repayments crisis, Rao summed up, “One way of describing self-reliance would be to say that we should be indebted only to the extent we have capacity to repay.”</p> <p>&nbsp;</p> <p>Rao’s address to the 1992 AICC is, without doubt, the best post-Nehruvian statement on economic policy in the past three decades. Its detailed enunciation of India’s economic priorities and policies and the spelling out of a new theory of a mixed economy and of self-reliance, relevant to a more globally integrated and self-confident India deserves wide reading even today. It is a pity that in its pusillanimous sycophancy towards Sonia Gandhi, the Congress does not make available Rao’s historic AICC address on its website. Those interested can read the full text reprinted as an appendix to my book 1991: How Narasimha Rao Made History (2016).</p> <p>&nbsp;</p> <p>If Rao re-defined the Nehruvian idea of self-reliance for the 1990s, Modi has tried to do so for an India of the 2020s that would have to deal with a very different post-Covid global context. So, rather than suggest that Modi has expounded something new, merely because he has used a long Hindi word, it would be more appropriate to recognise that he, too, is re-defining an idea that has been intrinsic to India’s freedom struggle and post-Independence development.</p> <p>&nbsp;</p> <p>Like Rao, Modi too has taken care not to confuse self-reliance with inward-oriented autarky. Referring to the oft-quoted concept of Vasudhaiva Kutumbakam (whole world is one family), Modi clarified, “India does not advocate self-centric arrangements when it comes to self-reliance. India’s self-reliance is ingrained in the happiness, cooperation and peace of the world.” Clearly, the appeal of some mantras endures.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri May 29 10:04:32 IST 2020 season-of-policy-wonks <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The Covid-19 lockdown will be remembered for many things. One of them, without doubt, would be the tsunami of policy advice that has hit many governmental shores around the world. Sitting at home and forced to read, reflect and write, professionals in the policy world—ranging from pure academics and theorists to locked down government officials and their retired seniors—have loads of time to think about the pandemic and its consequences and come up with solutions.</p> <p>&nbsp;</p> <p>Crisis periods are like that. When governments are hit with unexpected challenges, they reach out to practical ideas from wherever they can get them. The Great Depression and the era of post-war reconstruction were two such periods when governments desperately looked around for ideas and that is when economists came into their own. The tallest among them was John Maynard Keynes, the father of modern macroeconomics. Keynes’s biographer Robert Skidelsky subtitled the second volume of his three-volume biography thus: ‘The Economist as Saviour’.</p> <p>&nbsp;</p> <p>In an earlier era, wrote Skidelsky, the common folk turned to priests and soothsayers for reassurance about the future in the midst of uncertainty. In the 20th century of reason, logic and empiricism, they had turned to the economist. “The generational shift with which Keynes was associated,” writes Skidelsky, “is properly called avant-garde. His generation saw itself as the front line of the army of progress.”</p> <p>&nbsp;</p> <p>However, Skidelsky adds, Keynes gave central importance to uncertainty in the realm of policy-making. All human action in the present is taken based on data from the past and assumptions about the future. But in a world of uncertain outcomes, “uncertainty pervades both private and public calculations of means to achieve given ends”. Skidelsky accused Keynes’s disciples of not paying adequate attention to the role of uncertainty in policy-making.</p> <p>&nbsp;</p> <p>In a crisis, the more successful governments are those that can manage the implications of uncertainty. Risk can be calculated, based on probability. Uncertainty is a virtual black box. One way in which economic policy makers have handled uncertainty is to rely on the disciplines of psychology and sociology. How are individuals and groups likely to behave under given circumstances? In going into the lockdown, the government may not have had enough time to reflect on its consequences. However, at the end of seven weeks of lockdown, there ought to have been adequate thinking within the government both on the consequences of continued lockdown and of the end of lockdown.</p> <p>&nbsp;</p> <p>It is now clear that different social classes have reacted differently to the lockdown. The middle class have been remarkably tame. Usually more vocal and argumentative and more demanding of the government, the urban middle class has silently fallen in line and accepted the lockdown. The less privileged and poor have, however, shown little confidence in the government and have opted to return to the imagined certainty of their distant homes rather than accept the risk and uncertainty associated with staying put in less hospitable territory.</p> <p>&nbsp;</p> <p>How will a population that has lived through the lockdown respond to various economic signals once the lockdown is lifted? Will the middle class regain confidence and return to public places? Will migrant workers return to places of work? Will consumers, savers, investors, employers trust governments? Can policy interventions of the past work in the future? Answers to these questions can only be found in the realm of human psychology and sociology. While behavioural economics may offer some answers, mainstream post-Keynesian economics would have little to contribute since most of its conclusions are based on past data and an understanding of homo economicus in a very different world.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu May 14 17:18:44 IST 2020 a-free-press-to-police-the-police <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>During my tenure as media adviser to the prime minister in the first term of the United Progressive Alliance government, I was often frustrated by the ideologically biased, often tendentious, ill-informed reporting of many journalists. On a couple of occasions, I wrote letters to the editor in protest against such news reports targeting the prime minister. On a couple of other occasions, I went and called on the editor or the publisher, depending on who was really in-charge, and lodged complaints. Never did I ever lodge an FIR at any police station against a journalist. In the recent past, it appears it has become commonplace for chief ministers to routinely do so.</p> <p>From West Bengal’s Mamata Banerjee to Andhra Pradesh’s Y.S. Jagan Mohan Reddy, and including such suave and westernised chief ministers like Naveen Patnaik of Odisha, an increasing number of chief ministers have been trying to muzzle the media. It is not surprising at all that Uttar Pradesh’s priest-turned politician Yogi Adityanath has also used the police under his charge to harass an award-winning editor, Siddharth Varadarajan, founder-editor of the online publication The Wire. Varadarajan’s fault was reporting that the UP chief minister was not observing social distancing even after the prime minister had urged the entire country to do so as a preventive measure against contracting Covid-19.</p> <p>During my tenure at the PMO, no other journalist was as difficult to handle as Varadarajan, then with The Hindu, who ran a virtually one-man campaign against the terms of the India-US civil nuclear agreement that was still being negotiated. It was Prime Minister Manmohan Singh’s most important and pet initiative during his tenure. The discussions between India and the US began within weeks of Singh becoming prime minister in 2004, but the deal was finally clinched in 2008. No journalist made the process more difficult for Singh than Varadarajan. Yet, the government of the day did not raise a finger against him. While Varadarajan had his ideological bias, he rarely got his facts wrong. (It was a different matter that he was getting his facts from sources within the government!)</p> <p>My approach to dealing with the media, as an official of the PMO, was simple—I classified the journalists I had to deal with into four groups: pro-BJP, pro-left, pro-Congress and the purely professional. Each time a pro-BJP journalist wrote something against the prime minister, I would offer facts to the contrary to one of the other three. Each time a pro-Congress journalist wrote something against the prime minister, and there were those who did, I would counter them using one of the other three. And so it went. The best way to deal with motivated reportage is to counter it with facts. If the facts favour the journalist, then the best course to adopt would be to ignore and move on. Even though few politicians have lost power because of professional reporting by journalists, the problem with many who enjoy brute legislative majorities is their intolerance of criticism and dissent. They become democratic despots very easily.</p> <p>Chief ministers cutting across party lines have for decades made the police service do their bidding. In the recent past, we have seen the Union home minister similarly using the police force under his direct charge in Delhi to do the ruling party’s bidding; for example, when the Delhi Police allowed masked goons who attacked students and faculty on the Jawaharlal Nehru University campus to get away. The politicisation of the police force is one of the major governance challenges in India and only a free press can keep it under check.</p> Sat Apr 18 10:14:47 IST 2020 colour-fades-cracks-show <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>President Xi Jinping has stopped colouring his hair. Recent photographs of the Chinese leader show him with streaks of grey. While going grey is part of the ageing process, going grey suddenly is a sign of either ill health or distress. Hence, some view Xi’s display of grey as an attempt to show his people that he cares, that he is worried about their welfare, that he is working extra hard in these difficult times. Those of us who have allowed our hair to grey naturally, have never coloured it through good times and bad, happy times and stressful ones, would view this hirsute deception with both amusement and distrust.</p> <p>When political leaders and entertainers colour their hair black, it is to show that they are still energetic and young. But, when a politician seeks to hide his grey it could be viewed as evidence of a willingness to deceive. Can one trust a person who colours his hair to be transparent in other matters? So, Xi’s decision to stop colouring his hair may not be just about demonstrating his concern for the health and welfare of his people. Its subliminal intent could be to win the trust of a people that are becoming increasingly distrustful of their political leaders.</p> <p>The Chinese have been largely stoic in the face of Covid-19, but public protests are on the rise and the subdued anger of an anxious people is beginning to show. Winning public trust is a key imperative of effective public policy. In the age of mass communication it is necessary for political leaders to be seen as being concerned about people’s welfare. So, it is not surprising that faced with visuals of thousands of urban poor walking miles to their distant rural homes in sheer desperation, escaping a lockdown of their livelihoods in the name of protecting their lives, even a macho politician like Prime Minister Narendra Modi was forced to ‘apologise’ for taking this tough decision.</p> <p>That was a decent gesture on his part. However, in an unthinking moment, Modi seems to have fallen prey to the sycophancy around him by launching a people’s fund for treatment of Covid-19 victims with the wearing-my-concern-on-my-sleeve acronym PM-CARES (Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund). After his convincing victory in the last general elections, Modi does not require a fund named “PM-Cares” to convince people that he does. Was it hubris or plain incompetence that such an in-your-face name got approved? Some would view it as a sign of political weakness, like Xi’s grey hair. When politicians find it necessary to convince people that they care, then they are merely admitting that they think the people think they do not.</p> <p>Will people concerned about Covid-19 want their governments to be merely caring or also competent? When each one of us has to go to a hospital, we seek both qualities in the doctor we consult—empathy and competence. When it comes to health, competence scores over empathy. Merely demonstrating concern for peoples’ distress without following it up with competent action is not going to win brownie points for politicians in power. On the other hand, there are different levels of public tolerance for incompetence in different societies. It is possible that in today’s China there is much less tolerance for incompetence than there was in Mao Zedong’s China in which millions died in famines. The question for Indian leadership, in Centre and states, is how much incompetence will the people tolerate merely because their leaders say they care.</p> Sat Apr 04 14:19:36 IST 2020 turning-crisis-into-opportunity <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>It is old hat that the Chinese character for ‘crisis’ is a combination of the characters for danger and opportunity. Thus went the wise old saying that in every crisis recognise the danger as well as the opportunity. Many knowledgeable people have been saying that to the Narendra Modi government for some time now. Make use of the economic slowdown and the unsettled political situation to initiate reforms that can turn the economy and polity around, and alter the national mood.</p> <p>&nbsp;</p> <p>The example often quoted is of P.V. Narasimha Rao and Manmohan Singh in 1991 to show how a crisis can be turned into an opportunity. The reason why this is not an apt precedent for Modi is that in 1991 Rao and Singh could claim they inherited a crisis, even if the chief architect of that crisis was Rajiv Gandhi (see my book 1991: How Narasimha Rao Made History (2016) for the evidence on that), while in 2020 Modi knows that the current conjuncture is of his government’s own making. But then coronavirus is not. That is a crisis made in China and so Modi has been quick to turn it into an opportunity.</p> <p>&nbsp;</p> <p>A global pandemic has helped concentrate policy minds in New Delhi. First, home minister Amit Shah staged a retreat on the proposed National Citizenship Register and National Population Register, ended the detention of former Jammu &amp; Kashmir chief minister Farooq Abdullah and reiterated the government’s assurance that at some point statehood would be bestowed on the union territory of J&amp;K. Second, finance minister Nirmala Sitharaman has been quick to use the fall in oil prices, caused by the global economic impact of the coronavirus pandemic, to in fact raise the excise duty on fuel and generate much needed revenues for the government. The finance minister has shown that faced with a prolonged slowdown, a stock market implosion and other negative economic consequences of a pandemic, she will do her best to prevent a fiscal crisis for an already fiscally constrained government.</p> <p>&nbsp;</p> <p>Then came Prime Minister Modi’s invitation to leaders of the South Asian Association for Regional Cooperation (SAARC) for a dialogue, albeit via a video-conference, on the management of a pandemic. This has the potential to kick-start two stalled engines—the India-Pakistan bilateral dialogue and the SAARC process. While Pakistan has responded cautiously it has not thwarted the opportunity.</p> <p>&nbsp;</p> <p>A pandemic that recognises no political borders is an apt metaphor for regional cooperation in South Asia.</p> <p>&nbsp;</p> <p>While India has been correctly defining its neighbourhood in more expansive and strategic terms, including south-east, east and west Asian neighbours, as well as the Indian Ocean littoral, the fact is that it is the immediate neighbourhood that is of greatest importance to India’s own growth, development and security. The Covid-19 pandemic offered an opportunity for regional cooperation and Modi was right to seize it. Be it religious extremism and the terrorism it spawns, be it trade and development or be it the fight against poverty, South Asia needs both regional and national strategies and policies given the multiple cross-border links that feed each other’s worries.</p> <p>&nbsp;</p> <p>The initiative, however, raises the larger question about the region’s shared destiny. Many have imagined from time to time that India and Pakistan can go their own way. Pakistan looks west, to the Islamic world, hoping to turn its back on India and India looks east, wanting to liberate itself from Pakistan. To an extent, weaker bilateral links have meant that both need each other less and less. However, if south Asia can learn to create an environment of cooperation rather than conflict, all countries in the region would be better off.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Mar 21 17:23:57 IST 2020 a-world-without-walls <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Way back in the 1960s, when my generation was in its teens, long before any economist wrote about globalisation, Marshall McLuhan wrote a bestseller—The Gutenberg Galaxy—and coined the term ‘global village’ that made waves around the world. The book is full of quotable quotes about modern media, advertising, communication, politics, technology and so on. The most persuasive and lasting thought he left behind among his readers was the idea of the world as a village. That time and space had been shrunk by technology.</p> <p>&nbsp;</p> <p>It was a couple of decades after McLuhan’s book was published that the word ‘globalisation’ captured the imagination of most people as they began to travel more easily and buy goods in their neighbourhood shop manufactured thousands of miles away. Television, as McLuhan reminded us, had brought the world into our living room. “Everybody experiences far more than he understands. Yet it is experience, rather than understanding, that influences behaviour,” he wrote. Television had brought experience closer home, without the required understanding of that experience. McLuhan believed that the Vietnam war was lost in “the living rooms of America—not on the battlefields of Vietnam”.</p> <p>&nbsp;</p> <p>As we sit in our living rooms and experience the communal hatred in the dirty, crowded streets of the nation’s capital; the fear of coronavirus from Wuhan to Paris and Tehran to Bangkok; the propaganda about citizenship and migration in the streets of Kolkata and Paris; the talk of fair and unfair trade in the election rallies of the world’s most powerful nation, we hear the drumbeats of the global village.</p> <p>&nbsp;</p> <p>The village drummer brought people together to inform them, warn them, alert them just as modern media does. The parallel ends there. The village drummer knew that the destiny of every villager was linked to that of another. His drumbeats were for all. Does modern media know that? Does television today beat the drum for all? When a virus engulfs a village, all are threatened. How stupid of anyone to imagine that one is safe while neighbours die of a spreading virus.</p> <p>&nbsp;</p> <p>The metaphor of the global village was meant to remind us of our shared destiny. Not just of those within a single village but of those in villages around, and those that inhabit the space between villages. The drumbeats of one village were heard in the next and so the message went forth.</p> <p>&nbsp;</p> <p>To imagine that one can have free flow of the good things of life through trade and travel, but keep what one does not like out with a wall in between is naïve, to say the least. The information on climate change only reinforces ancient knowledge that nature recognises no borders. Indeed, till the middle of the 20th century, humans, too, had no particular regard for borders. The history of mankind has been the history of movement of people, sometimes in response to the challenge posed by nature and sometimes in response to the threat posed by fellow humans.</p> <p>&nbsp;</p> <p>Just as the clouds above move freely across borders, so do animals below and so did humans. For how long can mere governments prevent the free movement of people when nature, the search for life and livelihood, for security and safety push people to move? When governments are unable to prevent a virus from crossing borders, how long can they prevent ideas from doing so? When big business wants free movement of capital and goods, how long can it prevent the free movement of people? Such are the questions that the drummers of the global village raise and we cannot remain deaf to their beats.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Mar 06 14:28:57 IST 2020 indian-aid-to-america <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The United States administration of President Donald Trump has given India a historic push. It has elevated India to the rank of a developed economy. Hallelujah! Perhaps President Trump deserves a Bharat Ratna for helping India rise so fast in such a short period of time. No other politician has been able to stage this developmental miracle for India. If you still think India is a developing economy with per capita annual national income of just $2,000 compared with $60,000 for the US, then you must be living on a different planet, certainly not on Trump’s La La Land.</p> <p>&nbsp;</p> <p>One cannot blame the simplistic mind of the Trump administration for having come to such a historic determination. After all, what about India do most of them see around them all the time? Some of America’s best educated, talented and best behaved people earning twice as much as an average white American. Consider the statistics. According to the well-known US public information surveying agency, Pew Research, the median household income of Indian immigrants in the US in 2015, at $1,01,591, was almost double that of not just all other immigrant nationalities ($51,000) but also almost double that of the average native American households ($56,000). If Indians around you in the US are so much better off than the average Joe, surely India must be a developed country!</p> <p>&nbsp;</p> <p>Of course, one reason why Indian Americans earn so much more is because they are better educated than the average Joe. Pew Research found that 72 per cent of Indian Americans in the age group of 25 and above were graduates, while only 19 per cent of all Americans had obtained a graduate degree, and 40 per cent of Indian Americans had obtained postgraduate degrees, with only 11 per cent of all Americans so qualified. So the average Joe thinks India must be doing more to educate its people. So why blame the average Joe and his president for imagining that India is a developed country?</p> <p>&nbsp;</p> <p>Now look at the other side of the coin. There are over four million Indian Americans in the US and almost all of them, with very few exceptions, either themselves or their parents, migrated after 1980. Less than 10 per cent of the 4.4 million migrated before 1980. A significant number of the migrants were initially educated in India, mostly in government subsidised public institutions. Their initial educational base was good enough for them to excel in institutions of higher learning in the US and get all those well-paying jobs. Today many of them contribute to the development of American science and technology, business and finance, academia and public institutions.</p> <p>&nbsp;</p> <p>It would be worth quantifying the total economic contribution of Indian Americans to the United States, especially its growth after the end of the Cold War. The ‘brain drain’ to the US out of contemporary India may well be worth more than the ‘drain of wealth’ from colonial India to Imperial Britain. One could argue that by exporting talent, a developing country has aided the continued global dominance of a developed one. The sum could well run into trillions of dollars and that should be considered India’s aid to the US.</p> <p>&nbsp;</p> <p>US trade negotiators complain that India remains closed to US imports and is running a trade surplus. India’s negotiators could tell their counterparts that the talent this country has exported to the US more than makes up for this. In fact, a developing India is contributing by the hour to keep developed America developed. President Trump may complain that many Indian Americans are not voting for him. That, too, is an important contribution of Indian Americans to America’s development.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Feb 22 11:29:21 IST 2020 every-city-needs-an-aap <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>For a chief minister who does not have even the powers of a mayor of most western cities, the head of Delhi’s local government gets a lot of national attention. For the second time in five years, Prime Minister Narendra Modi has pitched himself directly against Aam Aadmi Party’s Arvind Kejriwal in a campaign that opinion polls suggest places Kejriwal miles ahead of both national party rivals. In 2015, Modi suffered his first major electoral setback when the AAP swept Delhi polls. It was after that defeat and Rahul Gandhi’s famous jibe about Modi’s ‘suit-boot ki sarkar’ that the prime minister had to shift gears and turn populist in his policies. The consequences of that defeat are being felt even now in Modi’s economic policies.</p> <p>&nbsp;</p> <p>Kejriwal’s larger-than-life image is partly because so much of the national media, especially television news, is located in New Delhi. The chief minister of Delhi is like the mayor of New York, whose name often figures among presidential hopefuls in the United States, but his powers and finances are nowhere near the latter’s. The police commissioner of New York is selected by the mayor and reports to him. Successive chief ministers of Delhi have complained that the city’s police do not report to them.</p> <p>&nbsp;</p> <p>Delhi goes to vote on February 8 and by evening exit polls will give their verdict. If Kejriwal wins, as he is expected to, it will be because no political party has been able to present an agenda to the nation’s capital city that can hope to rival the AAP’s performance and promise. Indeed, the vote in Delhi will be for the AAP and not just Kejriwal. I have never met Kejriwal or any of his ministers, but I have had the opportunity to meet many of the young men and women who constitute the AAP’s backbone and it has always been an elevating and inspiring experience. Kejriwal’s best contribution to Indian politics has been to mobilise young people interested in improving education, health care and bring decency into human interaction.</p> <p>&nbsp;</p> <p>In the three decades I have lived in New Delhi, I had never had the opportunity to meet my local member of the state legislature or municipality till a young man from the AAP got elected. His contribution to making the place where I live more liveable, his grasp of the nitty-gritty of municipal and urban affairs, his ability to coordinate the work between agencies of the government that often work at cross purposes has truly impressed me. It is the good work of such young people in the AAP that will make Kejriwal return to office. Hopefully, he understands that and continues to empower them. It would be terrible if a second victory makes Kejriwal too ambitious. He has lots of work to do in Delhi and he must continue to do that.</p> <p>&nbsp;</p> <p>Every Indian city needs a local government like the AAP that pays attention to improving urban governance, infrastructure, finances, public service delivery and, above all, public education and health. It is by focusing on these issues that the AAP has endeared itself to Delhi’s citizens. Not by pandering to communal fears and resentment. In most states, on the other hand, the chief minister, his family and his ministerial and personal cronies keep a tight grip on urban space, enriching themselves and their next several generations. The India Against Corruption campaign and its political legacy remain the bright spots in an otherwise worrying national political landscape.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Feb 07 14:40:40 IST 2020 economy-lessons-from-china <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>While India entered the second decade of the 21st century worried about an economic slowdown and political sectarianism, China entered it celebrating not just the news of thaw in the trade war with the United States but, more strikingly, the fact that its annual per capita gross domestic product (GDP) had breached $10,000. Chinese media reported earlier this month that recently published national income data show that China’s per capita GDP was $10,276 in 2019. Technically, this qualifies China to become a member of the Paris-based Organisation for Economic Cooperation and Development (OECD)—dubbed the rich nation’s club. The OECD’s poorer economies— Mexico and Turkey—as well as countries like South Korea became members when their per capita income was below $10,000, but they are now all above that five digit mark.</p> <p>&nbsp;</p> <p>The latest news from China is just one more wakeup call for Indian leadership. While the Union government is presently focused on turning the economy around in the near term, and that should be the focus of this year’s annual budget speech of Finance Minister Nirmala Sitharaman, it is time Prime Minister Narendra Modi laid out a credible medium-term roadmap for the economy that goes beyond merely asserting that India will be a $5 trillion economy. As former finance minister P. Chidambaram correctly said, India will some day be a $5 trillion economy. The question is when?</p> <p>&nbsp;</p> <p>One unfortunate consequence of winding up the Planning Commission is that there is no group within the government tasked to develop an actionable medium-term growth strategy, with sectoral plans and targets. Such planning has now acquired renewed urgency given that the Union government hopes to revive economic growth by increasing public investment. There is expectation that the fiscal and revenue deficits are likely to be higher than budgeted and that the government may yet again set aside the discipline of the Fiscal Responsibility and Budget Management Act.</p> <p>&nbsp;</p> <p>There is a case for fiscal liberalism this year given the low rate of national income growth and the low ‘animal spirits’ of private enterprise. However, public spending should be undertaken within a credible medium-term policy framework. While China abandoned socialist planning many moons ago and has pursued socialism with Chinese characteristics, it continues to invest in institutional capacity for medium- and long-term planning. China’s National Development and Reform Commission (NDRC) has a mandate and professional capacity that far exceeds that of India’s atrophied macro-economic planning organisation, fancily called the National Institution for Transforming India (NITI) Aayog.</p> <p>&nbsp;</p> <p>The NDRC is a high-powered body that has played a key role in enabling the structural transformation of the Chinese economy from being mainly investment-driven and export-oriented to sustaining growth through a shift to domestic consumption. There is a fundamental difference between turning business and investment cycles around and enabling structural changes. A ministry of finance can, at best, deploy fiscal instruments to alter incentives for investment and consumption. The economy requires an all-in government approach for the kind of structural changes that the Indian economy now requires.</p> <p>&nbsp;</p> <p>The last time India adopted such an approach was in 1991-1992. Most economists now have come around to the view that the growth process unleashed by the structural changes of the early 1990s has run its course. A paradigm shift that is now warranted cannot be addressed by the finance minister and the annual budget policy alone. The budget speech can, however, chart out a medium-term strategy for accelerating growth and generating employment.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jan 24 19:58:01 IST 2020 nehru-dilemma-now-modi <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>One good consequence of the defeat of the Congress in the general elections of 2014 has been the number of good books that have been written by Congressmen like Shashi Tharoor and Jairam Ramesh. Following up on his highly readable biography of Indira Gandhi’s principal aide P.N. Haksar, published in 2018, Jairam has now published a 700-page biography of V.K. Krishna Menon, India’s defence minister at the time of the Chinese incursion of 1962.</p> <p>&nbsp;</p> <p>Historians and political scientists will benefit hugely from Jairam’s painstakingly detailed account of Menon’s role in India’s freedom struggle, his international articulation of Indian interests before and after independence, and his influence on policy at home and abroad through the first two decades after independence. To me, the most interesting part of this voluminous book was the detailing of the relationship between Menon and Nehru.</p> <p>&nbsp;</p> <p>The office of the prime minister is the loneliest political office in India. Many prime ministers have been very lonely individuals even in their personal lives—widowers, widows and bachelors—and Nehru was made lonelier by his upbringing. Menon was among the very few in Nehru’s council of ministers that came from a social milieu that Nehru felt most comfortable in. It would have been no mere happenstance that both shared a unique social intimacy with the Mountbattens.</p> <p>&nbsp;</p> <p>Menon and Nehru were two peas in a pod, but Nehru’s personality was shaped both by his long and deep involvement in the freedom struggle at home and his intimate association with Mahatma Gandhi. Menon fought for India’s freedom in the halls and on the streets of England, and then in the elegant world of diplomacy. He touched Indian soil only after convincing Nehru that he should induct him in his council of ministers. Jairam shows how their tenure as cabinet colleagues created tensions. Nehru had learnt how to function in New Delhi’s political milieu. Menon seemed to think that switching from Savile Row suits to dhoti-kurta was about the only transition needed. Nehru spoke in Hindustani. Menon hardly knew his own mother tongue.</p> <p>&nbsp;</p> <p>Of the many dimensions to the Menon-Nehru partnership that Jairam brings out, the one that may resonate today is how Nehru was made to pay a price for his friendship. Many around Nehru wondered why the prime minister was so accommodative, so tolerant, so indulgent of a man who was so unlike Nehru. The officialdom, the diplomats and even most political colleagues of Nehru loved the man. Few felt so endearingly towards Menon. So, when opportunity presented itself—in the form of India’s inability to defend itself against Chinese aggression—everyone around the prime minister wanted the defence minister sacked.</p> <p>&nbsp;</p> <p>An interesting anecdote from among the many is the one about Admiral R.D. Katari informing Nehru as early as in 1959 that he, too, wished to quit as Navy chief, after General K.S. Thimayya had sent in his papers to the prime minister. Nehru wondered why the three service chiefs had “ganged up” against the defence minister. Katari agreed with Nehru that Menon had his good qualities and had contributed to the nation, but then asked, “Why as defence minister, sir?” Katari felt relieved when Nehru laughed out.</p> <p>&nbsp;</p> <p>A prime minister is often faced with such a dilemma. To what extent can one stick with a friend if the friendship is beginning to hurt his standing? Looking at events in India over the past few weeks, one wonders if the prime minister today asks himself whether his friendship with a fellow Gujarati is beginning to hurt his own standing.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jan 10 11:45:20 IST 2020 learn-from-atalji <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>On Christmas Day Atal Bihari Vajpayee would have been 95. Will the India that celebrates Atalji’s centenary five years hence be the India that he would have felt comfortable living in? The answer to that lies in the manner in which Prime Minister Narendra Modi responds to the many concerns of many citizens being expressed in many ways as this year comes to a close.</p> <p>&nbsp;</p> <p>I was still in my teens when I first heard Atalji address a public meeting in the Vivek Vardhini College grounds in Hyderabad. I regarded myself a communist at the time and so was not impressed by his views, but I was mesmerised by his oratory. Years later, I first met Atalji in the stately rooms of New Delhi’s Hyderabad House. Prime Minister P.V. Narasimha Rao was hosting a dinner in honour of the visiting heads of government of the Group of 15—a like-minded group within the Non-Aligned Movement. Rao caught me and a couple of others laughing heartily as Atalji spoke to us, while waiting to move to the dining room. The prime minister walked up to us, leaving the other G-15 leaders behind, and inquired conspiratorially: “What is Atal telling you?” Atalji laughed heartily and replied: “Don’t worry, I am not saying anything that should worry you.”</p> <p>&nbsp;</p> <p>Like everyone who came in contact with him, I, too, was truly impressed by Atalji’s wit and charm. He endeared himself to all his interlocutors and to multitude of the Indian people. When he passed away, the entire nation mourned a true nationalist—one who united India. There is much that the present leadership of the Bharatiya Janata Party must learn from his example. Atalji may not have returned to power in 2004, but he firmly embedded himself in the hearts and minds of a large majority of Indians of all faiths.</p> <p>&nbsp;</p> <p>The poet Oliver Goldsmith wrote of The Village Preacher: “Truth from his lips prevailed with double sway; and fools, who came to scoff, remained to pray.” Much the same could be said for Atalji. Ironically though, towards the end of his tenure in office, Atalji was scoffed more within his own political movement than by his critics outside. He was mocked as a mask covering the real face of his party. Attempts were made to unseat him on the grounds that his health had been failing. He was criticised for not pulling up errant ministers, for allowing those close to him, from the late Pramod Mahajan to his family members, to misuse their positions of power and influence, and he was bullied by the BJP’s allies from Bal Thackeray to N. Chandrababu Naidu.</p> <p>&nbsp;</p> <p>Despite all his faults and foibles, one can say of Atalji what Goldsmith said of the Village Preacher: “His ready smile a parent’s warmth expressed/ Their welfare pleased him, and their cares distressed./ To them his heart, his love, his griefs were given,/ But all his serious thoughts had rest in heaven.”</p> <p>&nbsp;</p> <p>All great leaders are remembered not because they were powerful, but because they were caring. The most impressive tribute to any former president in the national capital of the United States is not to a leader who established American dominance over the world, but one who united his own people—Abraham Lincoln—fighting hate and prejudice.</p> <p>&nbsp;</p> <p>In the difficult days through which the country is passing, with insecurity of different kinds—from livelihood to life, scholarship to citizenship— gripping so many, there is much that Prime Minister Modi can learn from the qualities of Atalji’s head and heart in keeping the trust and confidence of all citizens.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Dec 28 12:26:37 IST 2019 prioritise-economy-over-politics <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Economist Raghuram Rajan was criticised when, as governor of the Reserve Bank of India, he made critical remarks about domestic politics. That was understandable. Central bank governors are generally not expected to air their personal views on political and social issues of the day. However, as an academic economist, which is what Rajan now is, he has every right to speak his mind on any issue and certainly on issues that a professional economist believes impinge on economic policy and performance. So, the critics who questioned Rajan’s recent remarks on political issues are wrong.</p> <p>&nbsp;</p> <p>It is one of the failings of modern economics that few professional economists are trained to understand the influence of political and social policies and events on economic performance. Indeed, the discipline of economics acquired shape in the womb of politics and of governance. Which is why it was originally referred to as ‘political economy’. Much of the economic theorising done by the discipline’s pioneers was about real-life policy issues and they showed acute awareness of the influence and role of politics and social attitudes on economic policy and performance.</p> <p>&nbsp;</p> <p>It is only after the Second World War that economics became increasingly about algebra, arithmetic and statistical techniques and the discipline shed the word ‘political’ from its name and declared itself to be a social ‘science’. Which is at least one reason why society expects economists to come up with scientific solutions to economic problems when so many of those problems originate in political and social choices people make.</p> <p>&nbsp;</p> <p>Consider the case of India’s economic slowdown. There are, without doubt, purely economic and commercial reasons for it. However, there are also political factors. How politicians handle policy is just one way in which politics influences economics. How politicians prioritise their concerns is another. Political management of economic policy is an important determinant of economic performance, for it shapes investment decisions, consumer behaviour and savings preferences. John Maynard Keynes’s most valuable proposition was that expectations have a way of shaping outcomes. Politics and political communication shape expectations about the economy and thereby influence actual outcome.</p> <p>&nbsp;</p> <p>The ‘rising India narrative’ played an important role in pushing up economic growth rates in the post-liberalisation era. Compared to the average annual rate of growth of national income of 3.5 per cent till the early 1980s, the post-liberalisation era saw growth rates double and accelerate to over 7 per cent. Economists have pointed to several factors that have contributed to the recent slowdown. One of them certainly is the political environment in large parts of the country and the political narrative being built around it.</p> <p>&nbsp;</p> <p>It would be wrong to blame only one political party, even if the BJP should take a bulk of the political responsibility for economic policy and performance. Most state governments are today run by non-BJP parties. Their performance, too, remains below par. So much of the politics of today revolves around irrelevant issues with the core issue of economic performance not getting the attention it deserves. This environment of political one-upmanship, brinkmanship and constant pursuit of short-term gains by almost all political parties has harmed the economy.</p> <p>&nbsp;</p> <p>The prime minister and most chief ministers are seen as being busy with and remaining pre-occupied by a range of non-economic issues and not paying adequate attention to the economy. This perception may be unfair and wrong. But, it exists. It is not just the executive that prioritises politics over economics. The judiciary, too, has adopted a lackadaisical approach to economic issues, often failing to appreciate the economic cost of judicial action or inaction.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Dec 13 12:13:36 IST 2019 stop-celebrating-brain-gain-work-on-retaining-talent <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Every now and then members of Parliament routinely and curiously seem to celebrate the departure of Indians from India. I wonder in how many other countries elected representatives of the people celebrate their citizens going abroad in search of employment rather than staying home and contributing to national development.</p> <p>&nbsp;</p> <p>Recently, External Affairs Minister S. Jaishankar was required to answer that frequently asked question about H-1B visas that the United States dishes out to hire talent produced in India and gainfully employed in the US. The government is put on the defensive if fewer Indians are able to secure their passport to paradise. So, Jaishankar informed Parliament that US official data showed that “in fiscal 2018, 1.25 lakh H-1B visas were issued to Indian nationals which accounted for 69.9 per cent of the total 1.79 lakh H-1B visa issued.” Members of Parliament seemed satisfied to be told that “Indian nationals account for nearly 70 per cent of all H-1B visas issued”.</p> <p>&nbsp;</p> <p>In my student days this was called “brain drain”. But around the turn of the century, policymakers and economists redefined this as export of services. India began demanding a multilateral regime for the ‘movement of natural persons’, as skilled labour export came to be called. This is no brain drain, argued some economists. India is creating a ‘brain bank’ from which it can draw hard currency in the form of remittances. Then we went a step further. Both former prime minister Manmohan Singh and Prime Minister Narendra Modi have spoken about ‘brain drain’ in fact being ‘brain gain’, since the emigrating Indian would return both better skilled and better off, and would contribute to India’s development.</p> <p>&nbsp;</p> <p>When former prime minister Atal Bihari Vajpayee decided to celebrate the achievement and contribution of the Indian diaspora, he chose January 9 since that was the date on which Mahatma Gandhi returned home from South Africa. The day is celebrated as Pravasi Bharatiya Divas—the home returning Indian, not the home leaving Indian. India now celebrates the home leavers, and hundreds of thousands are paying their way out.</p> <p>&nbsp;</p> <p>The Reserve Bank of India has estimated that the total expenditure on tuition and hostel fees by Indian students studying abroad has gone up sharply in recent years, rising from $1.9 billion in 2013-2014 to about $2.8 billion in 2017-2018. The Associated Chambers of Commerce &amp; Industry of India has, however, estimated the actual figure to be more than twice that number, at $6 billion.</p> <p>&nbsp;</p> <p>The issue is not the money outflow or inflow, but of the talent flow. Over the past four decades, India has contributed some of its best brains to the US, exporting students graduating from its best institutions. In the first quarter century after independence, most Indians who went abroad to study returned home to work. This benefitted the country. While more and more of those who study abroad are now returning home, because of reduced job opportunities in trans-Atlantic economies, the fact remains that India still exports far too much talent rather than retaining it at home. West Asia has been yet another magnet for talent export. It is no longer low-skilled labour that goes to the Gulf states. High-skilled labour and highly qualified professionals are now moving to the region. Indian companies, too, are investing more overseas.</p> <p>&nbsp;</p> <p>The time has come for new thinking on policies that impact brain drain and the export of talent. The celebration of the achievements of the overseas Indian is all very well, but how about celebrating the decision of those who choose to remain or return by making it worthwhile to do so.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Nov 29 12:03:15 IST 2019 judiciary-fills-political-vacuum <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The Supreme Court’s verdict on the Babri Masjid-Ram Janmabhoomi issue has been widely described as pragmatic. It has also been criticised for basing itself on faith rather than verifiable fact. All religious belief is based on faith. Hence, there is nothing inherently wrong in a court arriving at a view pertaining to religious belief on faith. As for the fact that the destruction of an existing structure called the Babri Masjid was an act of vandalism, the court has stuck to facts and opined that it was an illegal act.</p> <p>&nbsp;</p> <p>Much has been written in the past few days on the pros and cons of the court verdict. One aspect of it has, however, not been commented upon. The very fact that all political parties and almost all religious organisations took the view that they would accept the verdict of the Supreme Court and gave the judiciary the last word on the subject is a testimony to the failure of both political and religious leadership.</p> <p>&nbsp;</p> <p>The movement for the construction of a temple to Lord Ram in Ayodhya at the site where the mosque stood grew in strength over the years mainly as a political movement. Indeed, it can even be argued that the original decision to construct a mosque in the very heart of Ayodhya, a holy place for Hindus, was itself a political act, taken by the rulers of the day. So both the decision to build the mosque, taken sometime in the first quarter of the 16th century, and the decision to replace it with a temple, taken in the middle of the 20th century, were both political acts of assertion.</p> <p>&nbsp;</p> <p>Little wonder then that Lal Krishna Advani and the then leadership of the Bharatiya Janata Party decided to make the construction of a temple in the place of the mosque a political issue. The Archaeological Survey of India has established that the mosque itself was built on top of an existing structure. Even if this were not so, the temple protagonists could argue that they were making a political point with their demand to reverse an earlier political decision.</p> <p>&nbsp;</p> <p>Given the politics of the entire matter, it would have been appropriate if the matter had been resolved politically between elected representatives from both communities. Such a political resolution and reconciliation would have added shine to India’s democratic institutions. Prime minister P.V. Narasimha Rao tried to resolve the matter politically but no political party was willing to confront, address and resolve the matter politically. He then appealed to community leaders to resolve differences. He appointed the late Naresh Chandra, a former Union cabinet secretary and later India’s ambassador to the United States, as an adviser in the Prime Minister’s Office and placed him in charge of finding a way out of the impasse. He was supported by the late P.V.R.K. Prasad, an IAS officer from Andhra Pradesh who had distinguished himself as the builder of modern and devotee-friendly facilities at the Tirumala Tirupati Devasthanams and thereby endeared himself to Hindu religious leaders across the country. But the Rao-Chandra-Prasad trio was unable to resolve matters since neither religious leaders nor political parties extended their support to them.</p> <p>&nbsp;</p> <p>In the end, the matter landed at the doors of the judiciary. Over the years, it has travelled its way up within the judicial system and was finally settled by a five-member bench of the Supreme Court. For students of public policy, this is a good case study of how the judiciary steps in, time and again, to fill a policy vacuum created by the failure of political, administrative and social leadership.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Thu Nov 14 15:22:56 IST 2019 economy-hopeful-autumn <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>If winter comes, can spring be far behind, was the hopeful message of poet Percy Bysshe Shelley. Philosopher Albert Camus found hope in autumn as well. “Autumn is a second spring,” said Camus, “when every leaf is a flower.” The Indian economy has been through a longish summer of discontent and the consequences are still around. But, with the Central government now focused on the economy, there is hope of a colourful autumn. Winter is anyway a brief event in most of India.</p> <p>&nbsp;</p> <p>The results of the elections to the Maharashtra and Haryana assemblies showed once again that while the electorate reposes faith in Prime Minister Narendra Modi’s handling of national security, it remains less convinced about his handling of the economy. Interestingly, while Modi still benefits from a positive vote at the national level, the negative vote hurts the BJP at the state level. Development is, after all, a local phenomenon.</p> <p>&nbsp;</p> <p>Who cares about national gross domestic product, annual rates of growth, and the fiscal and current account deficits. The economy is about one’s employment, education, local infrastructure and development around where one lives. While Delhi may manage foreign policy and national security well, the political consequences of its mishandling of the economy are felt at the state level.</p> <p>&nbsp;</p> <p>While Modi and Amit Shah have understood how to articulate the language of hope for an aspirational India, they have not yet found a way of translating their mandate into better governance and speedier development, especially in states. The electorate trusts Modi and has given him a long rope. He will have to do more on the domestic development front to retain that trust. To begin with, it is necessary that Modi convinces every chief minister of the importance of the development agenda; he should take state governments along with him in seeking a higher rate of economic growth and improved governance.</p> <p>&nbsp;</p> <p>There was a time when a few chief ministers came to symbolise development and became national, indeed international, icons for a ‘new India’. Certainly, Modi was one such, as chief minister of Gujarat. There were others like Chandrababu Naidu, at the turn of the century, and Y.S. Rajasekhara Reddy after him. In his early years in office Bihar’s Nitish Kumar was also a symbol of good governance and development. During the years of above average growth, between 2002 and 2012, the combination of Atal Bihari Vajpayee and Manmohan Singh at the Centre, and a clutch of active and competent chief ministers in various states came to define the ‘spring’ in India’s growth story.</p> <p>&nbsp;</p> <p>After 2012, the story entered its hot and humid summer phase. While Modi’s victory in 2014 appeared like the good monsoon many were waiting for, his record on development has remained patchy. It was not just Modi who received the electorate’s hearty endorsement at the Centre but many chief ministers did so in states. Yet, there is no chief minister today who has come to symbolise development and the agenda of growth. Every one of them remains a populist of one kind or another.</p> <p>&nbsp;</p> <p>If the Indian economy has to return to the 8.0 per cent plus trajectory of growth, the prime minister and the chief ministers must work together to keep the national focus on economic growth, new investment, employment generation and increasing the purchasing power of the poor and middle classes. Modi must inspire chief ministers into better performance and ensure they focus on development. Perhaps a meeting of the National Development Council ought to be convened this winter with a view to take the economy into a new spring.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Nov 01 11:22:41 IST 2019 brute-majority-not-a-blessing-for-telangana-and-andhra-pradesh <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>It is generally believed that a comfortable parliamentary majority facilitates effective governance by the executive. While Manmohan Singh reinforced that view with his famous “coalition compulsions” argument, defending his government’s inability to act decisively during his second term in office, the votaries of coalition governments have long argued that the threat of exit keeps minority governments in check. Wafer thin majorities have been criticised because they encourage political corruption, with the ruling clique having to win over support of marginal elements who can unseat a government at will.</p> <p>&nbsp;</p> <p>Given all this theorising about the role of parliamentary support in the performance of the executive, few would have believed that brute majorities may, in fact, be more of a curse than a cure. Ruling political parties with a brute majority in the legislature come very quickly to believe that they owe no explanation to anyone for the decisions their government takes because the ‘mandate of the people’ is with them.</p> <p>&nbsp;</p> <p>Just look at what is happening in the two Telugu-speaking states—Andhra Pradesh and Telangana. The YSR Congress led by Y.S. Jagan Mohan Reddy was voted to power with a huge majority that virtually decimated the then ruling Telugu Desam Party and finally buried the Sonia Congress in Andhra Pradesh. It was hoped that with such a convincing victory the chief minister would take the fledgling state, beset with teething troubles, forward. Yet, not even six months into his tenure, Jagan has made a bigger mess of an existing mess.</p> <p>&nbsp;</p> <p>Obsessed with seeking revenge against TDP’s Chandrababu Naidu, Jagan has been taking one whimsical decision after another, upsetting many who had invested in the future of the new state—ranging from the government of Singapore and the World Bank to high-flying Indian and foreign companies. If Naidu erred in making the building of a new state capital at Amaravati a white elephant that the state cannot afford, Jagan is making his decision to move away from that plan a road to uncertainty about other investments made in the state. Jagan’s decision to nationalise liquor sales is yet another whimsical act, pursuing a policy that has failed in every state where it has been tried before, including Delhi.</p> <p>&nbsp;</p> <p>If the Telugus of Andhra Pradesh are ruing their decision to give Jagan such a thumping majority, their compatriots in Telangana are not far behind. Telangana Rashtra Samithi’s supremo K. Chandrashekar Rao ran a good government in his first tenure in office, ably assisted by his son, the bright and charming K.T. Rama Rao, and the very grounded nephew T. Harish Rao. KCR was given a thumping endorsement and returned to office with an even bigger majority in the hope that he would continue to take Telangana forward. However, the first year of his second term has been marred by whimsical decisions, ranging from not constituting a ministry for months to wanting to build a new secretariat and getting schools closed for weeks on end because of a public transport strike caused by the manner in which he dealt with its employees and so on.</p> <p>&nbsp;</p> <p>Both Jagan and KCR have to sit back, take a deep breath and reexamine their record in office if they want their respective states to remain at the top of the league in terms of development. One can only hope that between son and nephew the two younger leaders in Telangana will force the patriarch to focus on good governance and development of the state beyond Hyderabad. In Andhra Pradesh, one can only pray that Jagan’s mother reminds him of the good work his father had done as chief minister and pulls him back from his journey of whims and spiteful revenge.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Oct 18 12:15:42 IST 2019 future-far-from-perfect-for-india <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>How prepared is India to deal with the challenges of the future? Not very well. That is the conclusion of a fascinating report on future preparedness produced by a group of Russian scholars. Russia’s premier international affairs forum, the Valdai Discussion Club, has just put out a Future Preparedness Index (FPI) that ranks India at 17 in a list of the world’s top 20 countries. Right at the top of the list is, of course, the United States. Russia itself is at rank 12, testifying to the objectiveness of the study. China is at 10. Western Europe and Japan rank high on the index, occupying most of the top eight slots after the US. The only countries ranked below India are Indonesia, Mexico and South Africa.</p> <p>&nbsp;</p> <p>Valdai’s FPI is an aggregate of country performance across ten areas, namely, economy, education, technology, science, social cohesion, culture and communication, resources and ecology, state capacity, governance and international power. The FPI researchers used a range of freely available data, mostly from the World Bank, to estimate the level of development of a country along each of the ten parameters. Critics would pick holes about data accuracy and comparability, but then all such international comparisons are fraught. Despite all limitations, a statistical index of this sort has its uses. It allows one not just to judge where one’s country is in comparison with others, but where its strengths and weaknesses lie.</p> <p>&nbsp;</p> <p>India scores particularly poorly on education, ranked as it is at the very bottom of the list of 20. India’s other weak spots are inadequacy of natural resources and the ecological challenge, lack of social cohesion and low level of technological and cultural development. India scores better, though not too highly, on its economic performance and on governance. The score on governance may surprise many in India, but its relatively better ranking is owing to the extent of computerisation of public services and the role of a merit-based civil service.</p> <p>&nbsp;</p> <p>There were two surprises for me in the FPI index. First, the fact that it shows that the European Union is better prepared to face the challenges of the future than is generally supposed. The common perception is that it is the US and China that would dominate the future. The FPI index not only shows the EU to be on a stronger foundation, given its investment in education, science and technology and quality of governance and state capacity, but it also shows China as being on a weaker foundation than is widely imagined. Coming from a Russian think-tank, this is an interesting result.</p> <p>&nbsp;</p> <p>The second surprise in the Valdai report is the gap between what the data shows and what experts in the field of international relations think. A Russian public opinion research centre polled experts in Russia and around the world and asked them to rank the 20 countries on each parameter. There is considerable gap between what the data shows and what the experts think. The results show that the international research community has an exaggerated opinion of the power of most major countries, including the US, China, Russia, India, Brazil, Turkey and Saudi Arabia, compared with what the data shows. On the other hand, expert opinion underestimates the power of the European Union, Japan and Australia.</p> <p>&nbsp;</p> <p>Many have long argued that India punches above its weight in world affairs. But the FPI data suggests that China and Russia, too, are punching above their weight, while Germany, France and Japan are punching well below their weight. The warning for India, though, is that if it does not invest in education and research its global influence and power will diminish.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Oct 04 15:55:54 IST 2019 patriotism-out-of-pocket <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The balance of payments crisis of 1990-91 was triggered in part by non-resident Indians withdrawing their money from NRI accounts in Indian banks. Patriotic NRIs—the kind who in more recent years having been crowding into Prime Minister Narendra Modi’s rallies from New York to Dubai to Singapore to Houston—were precisely the kind who ran away with their money when the Indian economy was on the verge of bankruptcy. In 2019, it may well be the even more patriotic resident Indian citizens, who may have even voted for Modi, that seem to be taking their money out of India, worried about the economy’s near-term prospects and their children’s future.</p> <p>&nbsp;</p> <p>According to a news report, Reserve Bank of India data shows that outward remittance of foreign exchange from India increased from $1.325 billion in 2014-15 to $13.787 billion in 2018-19. In the first four months of 2019-20, it was already $5.871 billion. Part of the increase is due to growing foreign travel (for tourism, business and education) by an increasingly well-off urban elite. Over the past five years, Indian families forked out as much as $10 billion (an average of $2 billion per year) to pay for education abroad. The latter phenomenon is in part a comment on the desire of those who can afford, or who can secure a bank loan, to study abroad, but it is equally a comment on what the Indian middle and upper classes think of higher education in India.</p> <p>&nbsp;</p> <p>While outward remittances on account of tourism and education are associated with prosperity, rising outward remittances on account of transfer of savings, made possible by the liberalised remittance scheme that allows Indians to transfer up to $2,50,000 per year out of India, are a comment on what investors think of the country’s medium-term growth prospects. India’s rich may be voting for Prime Minister Modi, but are clearly de-risking, taking part of their wealth out of the country. The simple term for this is ‘capital flight’.</p> <p>&nbsp;</p> <p>The head of an investment bank told Sandeep Singh of The Indian Express, “Small businesses and entrepreneurs who are relatively affluent are looking to shift their base out of the country.” This trend has been observed since 2010, but there is a clear accentuation in the recent past. Whether it is a businessman or a middle-class professional, few allow their patriotism to blind their investment decisions. Money enters a country when investors feel optimistic about its future prospects. Money exits a country when expectations turn negative. The Indian economy is in the grip of negative expectations. Turning the mood around is the single most important challenge for the Modi government.</p> <p>&nbsp;</p> <p>Turning the mood around, however, is not just about the kind of tinkering with economic policies that the Union finance ministry has been doing over the past fortnight. While most of Nirmala Sitharaman’s initiatives are good and welcome, the fact is that few of her cabinet and party colleagues are lending a helping hand. The political energy of the government is getting dissipated in avoidable controversies that are adding to the negative mindset that has gripped consumers and investors alike. Turning the economy around requires political leadership and a clear sense of purpose at the very top. A subsidy here, a tax sop there, a tariff cut here and a cheaper loan there are not enough.</p> <p>&nbsp;</p> <p>The government must speak in one voice, avoid stirring the pot on meaningless issues about one’s linguistic, religious, cultural and social life and, instead, focus attention on the citizen’s economic and educational future. The government needs a new mindset moving forward.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Sep 20 11:51:00 IST 2019 economy-lessons-from-chanakya <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Former Prime Minister Manmohan Singh advised his successor, Prime Minister Narendra Modi, to listen to ‘sane voices’ on the economy to be able to restore confidence in the government’s macroeconomic policies and policymaking. For a prime minister there is probably no one better to turn to for sane and sage advice on statecraft than Kautilya aka Chanakya.</p> <p>&nbsp;</p> <p>In Arthashastra, perhaps the greatest of the ancient texts on statecraft and political economy, Kautilya advises the king to be “ever active in the management of the economy, without which both current prosperity and future growth will be destroyed”. A strong and vibrant economy, Kautilya repeatedly asserted, is the foundation of a powerful and successful state. Indeed, he went on to say that it is from the “strength of the treasury” that an army derives its strength. By the word ‘treasury’ Kautilya was not referring only to the ‘fisc’, but to the state’s fiscal and economic capacity as a whole. Kautilya believed it is the king’s job to manage the economy.</p> <p>&nbsp;</p> <p>There are many reasons why the prime minister must place the revival of economic growth on top of his personal list of priorities for the rest of the year. Nothing else literally matters. Returning to the long-term trajectory of around 7.0 per cent annual rate of national income growth would have several positive outcomes. It would improve government finances. It would generate new incomes and new jobs. It would set into motion the ‘virtuous cycle’ of investment-led growth that the Union finance ministry’s annual Economic Survey offered as a panacea for all ills. Above all, it would revive the ‘India Story’ that has driven investment and growth over the past decade.</p> <p>&nbsp;</p> <p>The ‘India Story’ was based on four numbers. For the first half of the 20th century, the economy of the Indian subcontinent as a whole grew at just over zero per cent per annum. From 1950 to 1980, national income grew at an annual average growth rate of 3.5 per cent. This went up to 5.5 per cent between 1980 and 2000. From the turn of the century, the rate of growth began to accelerate, touching close to 9.0 per cent per annum during Manmohan Singh’s first term in office. After 2012, the downturn began but the ‘India Story’ was kept alive by the fact that even at a lower rate of growth of over 7.0 per cent India was still the ‘world’s fastest growing large economy’.</p> <p>&nbsp;</p> <p>These simple but hard economic facts formed the basis of fundamental geopolitical reassessments of India around the world. The first off the ground was former United States secretary of state Condoleezza Rice who wrote an essay in 2001 urging the US leadership to stop thinking of India as a neighbour of Pakistan and to start thinking of India as a neighbour of China. Rising India was increasing its economic distance from Pakistan and closing up to China. This narrative helped India avoid the 1990-1991 kind of sentiment-based economic crisis even in times of trouble, as after 2008-2009.</p> <p>&nbsp;</p> <p>Investment is a sentimental act, whatever the number-crunching, model-building economists may say. The positive narrative about India shaped investor sentiment. The same way today a new negative narrative about India has begun to take shape and that is dampening investor sentiment. Despite his impressive electoral victory, Modi is not being viewed as someone who is on top of a difficult situation. Timely and credible communication is an important instrument of economic policy making. Former prime minister P.V. Narasimha Rao understood that when he went on Doordarshan and addressed the nation in May 1991 and then went about unveiling dramatic policy correctives that altered sentiment within a month. Rest is history.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Sep 06 11:41:52 IST 2019 conscience-mandated-by-law <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Corporate social responsibility (CSR) is once again in the news thanks to what businesspersons have described as a draconian amendment to the Companies Act that makes not adhering to the CSR law a criminal offence. The government got tough because a large number of companies have failed to comply with the stipulation that two per cent of a company’s profits should be spent on “socially-beneficial” activities. While this is true for many defaulting firms it is also true that many others have in fact spent more than two per cent of their profits on a range of such socially-beneficial activities.</p> <p>&nbsp;</p> <p>A study done a decade ago showed a distinct regional and cultural pattern in CSR spending. Companies located in western India, especially Parsi and Jain enterprises, had a better track record in CSR than those headquartered in northern and eastern India. While businesspersons may now complain about a legally-ordained CSR, the fact is that the idea originally came from some representatives of Indian business.</p> <p>&nbsp;</p> <p>In early 2007, the leadership of the Confederation of Indian Industry (CII) called on prime minister Manmohan Singh to invite him to address their annual general meeting. Singh accepted their invitation and advised them to consider ways in which corporate India could be more socially responsible. A senior CII functionary then met me and gave me a list of seven principles of CSR that the prime minister could outline in a speech that I was then drafting for him. Singh increased that list to ten and titled his speech ‘Inclusive Growth—Challenges for Corporate India’.</p> <p>&nbsp;</p> <p>Singh advocated greater attention to workers’ welfare, affirmative action in employment in favour of the less privileged, greater commitment to clean and green development, donation to charities, socially-responsible advertising and so on. The suggestion that drew most criticism from business leaders and media was for a ceiling on remuneration paid out to senior executives and promoters. Emphasising the importance of investment and saving over conspicuous consumption Singh referred to 19th century European business ethic and quoted economics guru John Maynard Keynes to say “The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion.”</p> <p>&nbsp;</p> <p>Most business leaders and business media criticised the prime minister for burdening business with the responsibilities of government. I had to explain to them that most of the ideas in Singh’s speech came from within CII. The media called it the prime minister’s “ten commandments”. In a hard-hitting comment, journalist Swaminathan S. Anklesaria Aiyar chastised Singh for his homilies to business leaders with his own set of “ten commandments” for the prime minister. Writing in his famous Swaminomics column, Aiyar’s tenth commandment to Singh was, “Thou shalt insist on intra-party democracy in the Congress, and on open, transparent elections for all posts. If you do so, the Gandhi family will sack you. But it will be socially responsible, no?”</p> <p>&nbsp;</p> <p>Arguments can be put forward both for and against legally-mandated CSR in a socially and economically unequal developing country. However, there is no justification at all for making non-adherence to such a law a criminal offence. There is, however, another problem with recent CSR funding. Critics have been complaining that companies have come under political pressure to donate to one or the other NGO, affiliated to the political party in power, as also to avoid donating to designated others. Such partisan political interference in CSR is unwarranted and will give a bad name to a good cause.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Wed Aug 21 14:33:20 IST 2019 whither-asian-century <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>China’s economy is slowing down. Its growing power and influence are being challenged not just by Donald Trump’s America, but by the common people of Hong Kong. Under growing pressure from China, the Taiwanese are becoming restive. Many among the leadership of China’s closest ally, Pakistan, are having second thoughts on the economics of the China-Pakistan Economic Corridor (CPEC). Japan is angry with South Korea. The Koreans fired shots at jets flying close to its waters as part of a joint Russia-China air force exercise. Members of the Association of South East Asian Nations (ASEAN) want to ink a regional trade agreement; they are worried about the fallout of a US-China trade war and China’s slowdown. But, India remains wary. The US’s plan to pull out of Afghanistan is contributing to growing unease between India and Pakistan. Kashmir has become a hot spot, the Indian economy is dealing with a crisis of confidence and the government is fiscally constrained.</p> <p>&nbsp;</p> <p>Taking all these independent developments together, western analysts are already declaring the end of the ‘Asian Century’. Will Asia cross its many geopolitical and geo-economic fault lines to produce rates of development witnessed over the past half century and make the rest of this century Asian? As Asia enters the third decade of the 21st century, that is the question over which many western analysts are salivating.</p> <p>&nbsp;</p> <p>From 1970 to 2000, the rise of east Asian economies, in a flying geese formation—led by Japan and followed by the so-called ‘Asian Tigers’ of Taiwan, Hong Kong, Singapore and South Korea—defined the rise of Asia. As the new century dawned, the mighty continental China got on to the east Asian bus. Within a decade and a half, China increased its GDP 10 times from over US$1 trillion in 2000 to over US$11 trillion in 2016.</p> <p>&nbsp;</p> <p>India entered the narrative during the first decade of the new century with convincing numbers. The annual average rate of growth of the Indian economy was around 3.5 per cent in 1950-1980. It shot up to around 5.5 per cent in 1980-2000 and had crossed 7.5 per cent in the first decade of the 21st century. It rose to over 8.5 per cent per annum during the first term of the United Progressive Alliance government.</p> <p>&nbsp;</p> <p>In 2001, the Organisation of Economic Development and Cooperation (OECD), based in Paris, published historian Angus Maddison’s now famous statistical analysis of global economic growth over the past millennium, and showed how China and India together accounted for close to half of world income, with China’s share only marginally more than India’s, till the 17th century. Two centuries of European colonialism reduced the combined share of China and India in world income to less than 10 per cent by the middle of the 20th century. The second half of the 20th century saw the resurgence of China, India and much of east and southeast Asia.</p> <p>&nbsp;</p> <p>Taken together, the combined growth experience of India and Asia to her east became the basis for the claim that the 21st century would be Asia’s century. Given that the Asia to India’s west is a mixed bag of resource-rich economies and crisis-ridden nations, the narrative about the Asian century focused only on the east.</p> <p>&nbsp;</p> <p>A combination of demographic change, investment in human capability, development of new technologies and the sheer ingenuity of aspirational Asians will continue to drive Asia’s growth, through ups and downs. Paraphrasing Mark Twain, one can claim that reports of the death of the Asian century are highly exaggerated. What Asia needs, however, is wiser leadership and a willingness to bury the past to claim the future.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Aug 09 11:30:54 IST 2019 grace-and-grit-of-sheila-dikshit <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>In recent times, only Atal Bihari Vajpayee has been a recipient of such unalloyed praise and affection. Everyone loved Sheila Dikshit. It was not just because she reminded most people of their warm and cuddly grandmother, nor was it only because she always sported a gentle smile. Sheilaji, as most people referred to her, was a remarkable combination of grace, grit and charm. She was not just a popular political leader, but also a good administrator. By the end of her first term as chief minister of Delhi she had made her mark.</p> <p>&nbsp;</p> <p>Sheilaji’s victory in the Delhi assembly elections of 1998 was a shot in the arm for a beleaguered Congress that was grappling with the challenge of losing power in 1996 and of the rise of the Bharatiya Janata Party across north India. Her reelection to office in 2003 made her a star. Commenting editorially on her political and administrative performance and promise in the Financial Express, I expressed the opinion at that time that Sheilaji had prime ministerial potential. She could one day lead the Congress back to power in New Delhi.</p> <p>&nbsp;</p> <p>Dikshit was horrified by my editorial endorsement. “Do you want to finish me off?” she called to ask. “I am happy being chief minister of Delhi. Mr Baru, let me be. Please don’t get me into trouble with praise.” That attitude of so many provincial performers of the Congress has, over the years, left it bereft of national leaders. In 2004, the Congress did form a government at the Centre. Its prime minister and four top ministers—Manmohan Singh, Pranab Mukherjee, Shivraj Patil, P. Chidambaram and Natwar Singh—were all political lightweights in their respective provinces.</p> <p>&nbsp;</p> <p>Reflecting on this fact I had once said to Sheilaji that she should join the Manmohan Singh ministry. “Tell that to Dr Singh!” she told me, and laughed the suggestion away. When I then added, as an afterthought, that she should become home minister, replacing Patil who had become the target of much criticism even before the Mumbai 26/11 terror attacks, she retorted, rather uncharacteristically, “Why home? I think I will make a good finance minister!”</p> <p>&nbsp;</p> <p>I conveyed a gist of that conversation back to the prime minister. He felt Sheilaji was needed in Delhi to stage the Commonwealth Games. Despite all the criticism that came her way, she held her own and, when the Games opened, the crowd at the opening ceremony heartily cheered Sheilaji even as it booed many of the other organisers. Sheilaji had firmly embedded herself in the hearts of every Delhiwala.</p> <p>&nbsp;</p> <p>Every single obituary has made this point. Sheilaji was not just a charming, graceful, genial lady whom everyone loved, but she was a good administrator who had speeded up the capital city’s modernisation and infrastructure development. Few today make any reference at all to the charges of corruption levelled against her government. Most Indians are willing to live with a bit of corruption if they get a government that delivers. Of what use are honest governments that are uncaring and do not deliver development?</p> <p>&nbsp;</p> <p>In retrospect, I still think my Financial Express editorial was right. Sheilaji was made of prime ministerial timbre. She ought to have moved up from being merely the ‘mayor’ of Delhi, which is what a Delhi chief minister is, to becoming India’s prime minister. The Congress would not be gasping for breath if it had allowed such locally popular leaders to make their mark nationally. But, that process ended in Indira Gandhi’s time. Why blame lesser mortals?</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jul 26 11:33:04 IST 2019 from-proprietorship-to-party <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>In his fictionalised autobiography, The Insider, former Prime Minister P.V. Narasimha Rao has a provincial leader of the Indian National Congress describing Indira Gandhi’s takeover of the Congress as the party becoming a proprietorship. The Congress, to be sure, was never really a ‘party’. It was what its name suggests, a ‘congress’. The dictionary defines the word congress to mean a gathering, a platform, a meeting of minds. That was what the Indian National Congress was before 1947 and that is how Gandhiji wanted it left to remain. Several parties grew out of the Congress, while the Congress itself evolved into a ‘system’ of political mobilisation, organisation and governance, as political scientist Rajni Kothari famously put it.</p> <p>&nbsp;</p> <p>Till 1969, the Congress tried hard to function like a party. Once Indira Gandhi staged her coup and then, in 1975, her younger son stepped in to take charge, the party had indeed become a proprietorship. It then began to call itself Congress (I) for Congress (Indira). By the same token, in 1998, we saw the creation of a Congress (S). In between, in 1992, Narasimha Rao tried to reinvent the pre-Indira Congress by conducting organisational elections in the run-up to the All India Congress Committee gathering at Tirupati. He legitimised his ‘nominated’ status as party president by getting himself properly elected. Next year, a dissident group rebelling against Rao’s leadership called itself Congress (Tiwari). For all these reasons, I have always believed the correct name for the party that made Sonia Gandhi its president in 1998 should be Congress (Sonia).</p> <p>&nbsp;</p> <p>It is precisely because the party has been a proprietorship that the change of guard after an ignominious defeat is proving so difficult. In any normal political party, the incumbent leader would quit when defeated and a new round of organisational elections would have been held to elect a new leader. Not so in a proprietorship. The owner has to nominate the successor. As an aside, the proprietorship metaphor was made more apposite by the fact that many properties of the Sonia Congress became trust properties, including the Jawahar Bhavan on New Delhi’s Rajendra Prasad Marg that was originally constructed to house the Congress headquarters and became home to the Rajiv Gandhi Trust and Foundation, with all such trusts governed by the family and its loyalists.</p> <p>&nbsp;</p> <p>How then does one reconvert a proprietorship into a party? That is the dilemma facing the Sonia Congress. Should the Congress’s next president be nominated by the present proprietors or should a popularly elected leader take charge? In politics, power is never inherited. It is acquired. Both Indira Gandhi and Narendra Modi acquired power through their political actions. While both may have been initially nominated to their national leadership roles, Indira by K. Kamaraj and Modi by Rajnath Singh, the fact is that both Indira and Modi acquired power by asserting their leadership over all others. Whoever succeeds Rahul Gandhi as Congress president will have to do likewise.</p> <p>&nbsp;</p> <p>In politics, opportunities to assert leadership do not arise often and certainly do not come twice. A good opportunity was lost when Adhir Ranjan Chowdhury was nominated leader of the Congress in the Lok Sabha. If at that time someone like Shashi Tharoor had demanded an election to that post, he would have launched a new phase in the evolution of the party. Even if Tharoor did not offer himself as a candidate for leadership of his party in Lok Sabha, he could easily have stood up and demanded an election for the post. What is the use of preaching democratic values to the nation and the world when one’s own party does not value them?</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jul 12 11:31:38 IST 2019 modi-2-0-eye-on-the-economy <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>By seeking out the views of economists, business journalists and business leaders a fortnight before the presentation of the Union budget, Prime Minister Narendra Modi has done more than just take ownership of Finance Minister Nirmala Sitharaman’s first budget. All policy in this government in any case has the imprimatur of the prime minister. Given that the framework of the Union budget and of the government’s macroeconomic policy would already be in place, no one at that meeting would have been under the illusion that they were actually shaping policy. They were at best clarifying the PM’s mind, if it needed any such clarification.</p> <p>&nbsp;</p> <p>The meeting was convened against the background of an avoidable controversy on India’s economic growth performance, created by former chief economic adviser to the government of India, Arvind Subramanian. His charge that there was considerable overestimation of growth in the past is an implicit criticism of the first Modi government’s economic performance and policies. While more competent econometricians have questioned Subramanian’s methodology and conclusion, the fact remains that Subramanian did strike a chord with many who have felt that Modi did not pay much attention to the economy in his first term. Coming as it does from a former senior official of the Modi government who is presently affiliated to Harvard University, Subramanian’s criticism would have many takers at home and abroad.</p> <p>&nbsp;</p> <p>It may well be the case that Modi himself agrees with the assessment that the economy did not get its due in his first term. He may agree with the critics of his demonetisation decision, except that he would perhaps still defend it on political grounds, since it was essentially a political move. Modi’s view could well be that his two priorities in his first term were, first, to get elected to a second term and, second, to establish himself as the only national leader of any consequence, recognised as such by the voter and by the world. He has achieved both objectives.</p> <p>&nbsp;</p> <p>Many psephologists would support Modi if he had felt that economic growth does not deliver electoral rewards as much as low inflation does. He ensured low inflation and built a campaign around non-economic issues and secured his second term. Having ensured his political hegemony, Modi has perhaps decided that he should now focus on growth and development. Hence the meeting with economists and businessmen.</p> <p>&nbsp;</p> <p>In many ways, this is what the so-called Gujarat model was about. In Gujarat, too, Modi’s first term was focused on ensuring his political survival and dominance. Once he achieved that, he focused on development. Consider the fact that few around the country credited chief minister Modi with any attempt to further Gujarat’s development in his first term in office. Rather, the focus was all on his alleged misgovernance after the incident at Godhra. Chief minister Modi’s focus, however, was on ensuring a second term in office and the establishment of his unquestioned political hegemony over Gujarat. Modi’s national reputation for good governance came into focus the day Ratan Tata moved his automobile factory from West Bengal to Gujarat. That happened in October 2008.</p> <p>&nbsp;</p> <p>If the ‘national Modi model’, so to speak, has to play out like Modi’s Gujarat model, the prime minister has to ensure that the national economy returns to the 8.0 per cent per annum trajectory of growth. This requires an increase in the savings and investment rates. So, one should expect from Sitharaman a budget policy that promotes both. Modi has raised expectations with his pre-budget policy statements. He and his finance minister cannot afford to falter and deflate those high expectations.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jun 28 11:59:40 IST 2019 back-to-bucket-baths-to-save-water <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Even as the monsoon lashes the western coast, it has been reported that more than 40 per cent of the country is facing severe drought. The problem of simultaneously dealing with floods and drought in different parts of the country is an annual challenge for the government. The decision of Prime Minister Narendra Modi to appoint a cabinet minister for Jal Shakti came in a week when it was also reported that 21 Indian cities, including Delhi, will run out of groundwater by 2020, affecting a hundred million people.</p> <p>&nbsp;</p> <p>Against this background, any effort to raise water use consciousness ought to be welcomed. So, I heartily applaud the local authorities in Gurugram for fining cricketer Virat Kohli for using drinking water to wash his car. Regrettably, the fine was a measly Rs500.</p> <p>&nbsp;</p> <p>My generation grew up with greater water use consciousness even when water was not as scarce as it is now. Just as we were taught to switch off the lights and fan while leaving a room, we were taught to use water with care. Having bucket baths was one way of conserving water. Today, it is no longer regarded fashionable to have bucket baths. While shower baths have become more common, western-style bath tubs are back in vogue and, in many upmarket homes, one even encounters a jacuzzi!</p> <p>&nbsp;</p> <p>The Indian practice of bucket baths received an interesting European endorsement way back in the 1970s when the celebrated European journalist Victor Zorza devoted one of his highly regarded and widely read columns, published in the Manchester Guardian and Le Monde, to the experience of taking a bucket bath. Take a can or a mug in your hand, I recall his writing, splash water over your left shoulder and then your right, over your head if you wish to, splash again on your torso and your back, splash a couple of mugs of water on each leg. Rub soap over yourself and repeat the splashing of water with the mug. It takes just one bucket for a good wash, Zorza told his European tub-soaking audience.</p> <p>&nbsp;</p> <p>If there is one lesson that urban India can learn from the city-state of Singapore, it is about water conservation and re-use. Singapore’s population has increased several fold in the past two decades and yet it has been able to provide adequate drinking water to all its citizens. Of the many things Singapore does, the most doable in India is rainwater harvesting. India has a standing example, in Fatehpur Sikri, of what lack of water can do to life. That story ought to haunt every urban Indian who has invested one’s life’s saving in a home.</p> <p>&nbsp;</p> <p>The challenge of revitalising groundwater through rejuvenation of water tanks has received policy attention for some time now, but much more needs to be done to put this programme into mission mode across the country. Hopefully, the new minister for Jal Shakti will address this challenge better than his predecessors.</p> <p>&nbsp;</p> <p>It is in the very nature of the subcontinent’s ecology that the government has been required to play a key role in water management. Historian Karl Wittfogel wrote famously about ‘hydraulic societies’, wherein the state was required to mobilise the resources required to provide large-scale irrigation systems necessary for sustained agriculture. The state in India has played that role both by constructing and maintaining large-scale irrigation systems and by building local water tanks. Water harvesting, too, requires state intervention. But, above all, the state needs to step in to raise public consciousness regarding water scarcity. Fining Kohli for wasteful use of drinking water was a laudable act of state intervention.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Jun 15 17:51:36 IST 2019 chaturvedis-challenges-of-governance-yet-another-insiders-view <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Speaking at a function launching his autobiography, One Life is Not Enough, former external affairs minister Natwar Singh generously confessed that he was encouraged to be more forthright in recollecting certain politically sensitive events in his life after reading my book, The Accidental Prime Minister. Thanks to more persons in public life penning their thoughts, we now have several interesting accounts of how governments are run. Such books are commonplace in western democracies, but in India it is a welcome new trend. However, political memoirs or biographies written with a pen dipped in rose water are mere hagiographies and make for boring reading. So it is always refreshing when one comes across a book that pulls no punches. A new addition to this genre of forthrightness is former Union cabinet secretary B.K. Chaturvedi’s soon-to-be published book, Challenges of Governance: An Insider’s View.</p> <p>&nbsp;</p> <p>“It is important that civil servants write about their work and the manner in which they met the challenges. This is the material from which learning evolves,” says Chaturvedi. In a brief first chapter he recalls his tenure as a district magistrate in Uttar Pradesh and an official of the state government. Chaturvedi devotes the rest of the book to his tenure in the Union government, that was capped by his being named cabinet secretary by Manmohan Singh in June 2004.</p> <p>&nbsp;</p> <p>Chaturvedi’s observations on the functioning of the United Progressive Alliance (UPA) government, based on what he saw from his high perch at the head of the Union government, confirm all that is by now widely known about the distribution of power between the head of the government and the head of the ruling political alliance. As a traditional civil servant who believed in the principle that government officials should only deal with politicians in ministerial office and not with those outside the government, Chatuvedi says he hesitated seeking an appointment with UPA chairperson Sonia Gandhi. But then, as chairperson of the National Advisory Council, she had acquired for herself an advisory role with cabinet rank and so Chaturvedi felt he should call on her. The meeting was arranged for him by Pulok Chatterji, a joint secretary in the prime minister’s office who had worked for many years with Sonia Gandhi.</p> <p>&nbsp;</p> <p>Chaturvedi has serious reservations about the approach adopted by Vinod Rai, the then comptroller and auditor-general of India in his report on 2G telecom licences. “Dishonest acts, given the large-scale corruption in our society, need to be identified and punished,” says Chaturvedi. “But one must clearly identify the corruption flowing from abuse of office for private gains, as is the globally accepted approach. The report of the CAG has led to the start of a judicial process where ordinary administrative decisions, if falling foul of prescribed guidelines, have been treated as criminal acts. This has weakened the ability of civil servants to take risks and focus on achieving results for the benefit of the people, and has adversely impacted day-to-day governance.” That is also a strong indictment of judicial activism and interference in the normal functioning of the executive.</p> <p>&nbsp;</p> <p>Observing the functioning of the PMO from his room down the South Sunken Road of the Rashtrapati Bhavan, Chaturvedi says the institution of the national security advisor, located within the PMO, requires a relook. Apart from the fact that no one person can be overall in-charge of internal and external security, Chaturvedi seeks the restoration of the primacy of the cabinet secretariat. Chaturvedi could have written much more, but even this slim volume is worth reading.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri May 17 21:37:27 IST 2019 lok-sabha-polls-how-leaders-have-brought-caste-politics-to-the-fore <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The late Rasheeduddin Khan—one of Jawaharlal Nehru University’s founding professors, and a learned political scientist with a feel for politics—often made a telling comment about the pan-Indian identity of Indians. Only the Brahmins and the Muslims constitute truly pan-Indian communities, he would say, because irrespective of which part of the country one came from, a Brahmin or Muslim would immediately relate to a kin from some other part of the country. Thus a Vaishnavite of Bharadwaja gotra from Uttarakhand would have no problem explaining his social, caste and sub-caste status to a fellow Brahmin from Tamil Nadu. Much the same could be said of a Muslim. A Malayalam-speaking Sunni from Kerala would be able to socially relate to a Urdu- speaking Sunni from Uttar Pradesh.</p> <p>&nbsp;</p> <p>Extending Khan’s argument one could say that much the same could be said for dalits, despite different sub-caste identities among them. Whatever the relevant local name by which a dalit may identify herself in different parts of the country, there is a pan-Indian sense of oneness that all dalits share given the history of their social oppression. Both Mayawati, as a dalit leader, and Asaduddin Owaisi, as a Muslim leader, are trying to build a pan-Indian electoral constituency on this basis.</p> <p>&nbsp;</p> <p>Kshatriyas and Vaishyas have a problem in that the names by which they are known in different parts of India vary so much that one would have to explain one’s social position to a kinsman. The late N.T. Rama Rao, Telugu Desam Party’s charismatic founder, found an easy way out when explaining his caste status to Haryana’s Jat supremo, the late Chaudhary Devi Lal: “My caste is like yours. The Kammas are the Jats of Andhra Pradesh.”</p> <p>&nbsp;</p> <p>Those at the top and the bottom of the caste pyramid from different parts of India can place one another in the social hierarchy, and perhaps even relate to one another’s cultural practices and prejudices, more easily than the great plurality of the middle castes. It is the pan-Indian diversity of the so-called ‘backward castes’ that poses a riddle. How does a Munnuru Kapu from Telangana explain where he stands in the caste hierarchy in relation to a Kurmi from Bihar, except to say both are other backward caste/class (OBC).</p> <p>&nbsp;</p> <p>‘Who is an OBC?’ has become a political issue across the country. The economically better off Marathas, Patidars and Kapus have all demanded OBC status to claim the benefits of educational and employment reservations. Given regional variations in OBC identity, backward class/caste politics has always had a regional character. Every state has its own regional OBC leaders and parties. Last month Prime Minister Narendra Modi claimed that he was being pilloried by upper caste opposition party leaders because he was an OBC, drawing attention to his caste status and departing from the usual focus on religious affiliation. Was he seeking to create a national mould for the OBC constituency?</p> <p>&nbsp;</p> <p>Interestingly, in response to Modi’s statements, other regional OBC leaders in different states have questioned his claim, because it is so easy to do so given the pan-Indian diversity of who is an OBC. The very nebulousness of OBC identity across the country has so far allowed so many to claim OBC status, and, yet, there is no all-India OBC leader. While H.D. Deve Gowda was the first OBC prime minister, his political constituency is regionally confined. Has Prime Minister Modi created a national OBC constituency projecting himself as the first pan-Indian OBC leader? Perhaps the results of the ongoing general elections may answer that question.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat May 04 11:51:43 IST 2019 india-needs-a-vibrant-left-sanjaya-baru <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Amidst the daily din and dust of election reportage and analysis, one important trend in Indian politics is not getting the attention it deserves. The expected precipitous decline of the left front, led by the Communist Party of India (Marxist). Most election forecasts suggest that the left front may draw a blank in West Bengal and Tripura and may pick up four or five seats in Kerala. Even if the left picks up a seat or two here and there, the final tally would mark a historic moment in Indian politics, with the left front down to single digits. That would be a pity. Agree with the communists or not, India needs a political left.</p> <p>&nbsp;</p> <p>In the first, second and third general elections—in 1952, 1957 and 1962—the Communist Party of India emerged as the single biggest party in opposition, though way behind the ruling Indian National Congress. In 1967, after the communist split, the CPI(M) and CPI together won 42 seats against 35 of the Bharatiya Jana Sangh.</p> <p>&nbsp;</p> <p>Thanks to the left’s impressive performance in the quarter century after the end of Emergency in 1977, it acquired an all-India profile larger than its numbers would suggest so much so that in 1996 Jyoti Basu was in a position to become the head of a coalition government in New Delhi. That did not happen because of an ideological confusion within the left as to whether the communists were playing the parliamentary game or were still fighting to establish their political and ideological hegemony. Basu called it a ‘historic blunder’.</p> <p>&nbsp;</p> <p>A parliamentary presence in single digits is a far cry from the 59-member peak that the left front touched in 2004, becoming the fulcrum around which the United Progressive Alliance (UPA) was constructed. The mishandling of the UPA opportunity was a second ‘historic blunder’ and the left has not recovered from it. The left’s precipitous decline is, paradoxically, both a consequence of its sectarian and ideologically rigid politics, on the one hand, and its dalliance with politicians of questionable virtue like Lalu Prasad, on the other.</p> <p>&nbsp;</p> <p>In 2004, the left had the opportunity to be “queen-makers”, so to speak, but by 2009 their decline began and has since continued. After the defeat in Tripura, the writing has been on the wall. How could the left have played it differently this time? To begin with, it should have kept its distance from the Sonia Congress, like Arvind Kejriwal’s Aam Aadmi Party, and flown its own flag more boldly. Second, rather than field its tired old politicians, the CPI(M) and the CPI could have flooded the field with celebrities with a winning chance. In Bihar, they have done this by fielding the firebrand student leader Kanhaiya Kumar. He has a fighting chance if his campaign plays out well. That model could work for the left in many other states.</p> <p>&nbsp;</p> <p>For example, in Andhra Pradesh, the CPI(M) could have been energised into action if party general secretary Sitaram Yechury had contested from his hometown of Kakinada. In Kerala, Prakash Karat should have been fielded against Shashi Tharoor with a no-holds-barred aggressive campaign. The left could have fielded celebrity fellow-travellers from the worlds of cinema and literature in urban constituencies where neither the Congress nor the BJP have much traction. The left candidates could have still lost, but the left’s profile would have gone up. Television loves celebrity candidates and finds the left’s traditional old guard boring. Imagine Javed Akhtar being fielded from a Mumbai constituency, an Amartya Sen from Kolkata and a Gopalkrishna Gandhi from Wayanad! A fitting riposte to Rahul’s betrayal.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Apr 20 11:33:15 IST 2019 what-china-wants-from-italy-and-vice-versa <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>On my first visit to China in the early 1990s I found at every hotel that I stayed in, in all major cities, the only non-Chinese cuisine available was Italian. Vegetarians had to either look for a ‘Buddhist’ restaurant or an Italian one where pasta and pizza with just tomato sauce and cheese was always available. The China-Italy relationship is an ancient one and so is that between spaghetti and noodles. For a long time it was assumed that Marco Polo had either taken spaghetti to China or brought back noodles to Italy, and so the two were linked. But, more recent studies suggest that the two slippery carbohydrates may have independent origins, and while one is eaten using chopsticks the other is eaten with a fork.</p> <p>&nbsp;</p> <p>Forget history. Today, an increasing number of Chinese eat spaghetti and visit Rome, and an economically-distressed Italy is hungry for Chinese tourists. Surprisingly, not enough number of Chinese are making the journey, despite the increasing number of flights. Last year, Rome welcomed 27 million tourists and only one out of every 20 was a Chinese. That number could easily double and triple.</p> <p>&nbsp;</p> <p>Italy has harked back to history to rediscover the ‘old’ silk route, and justify its latching on to the new silk route, aka the Belt and Road Initiative (BRI). Strategists and politicians from Berlin to Washington, DC and from Paris to London are not too excited finding spaghetti in their noodle soup.</p> <p>&nbsp;</p> <p>Italy’s decision to be the first member nation of the European Union and of the transatlantic alliance to partner with China’s most important geopolitical initiative, BRI, has been in the works for some time, given its economic woes. Apart from access to China’s markets and funds, Italy wants more tourists. Tourism is a major source of income for Italy and Chinese tourists are becoming increasingly important for tourism-dependent economies. In 2018, Chinese travellers made 140 million outbound trips, spending $120 billion abroad.</p> <p>&nbsp;</p> <p>Given the lure of tourist spending, China has used outbound tourism as a geo-economic tool. In small, tourism-dependent, island economies in the Caribbean, South Pacific and around the world—including Sri Lanka and the Maldives in India’s neighborhood—Chinese tourists in search of sunny beaches and the exotic have become an important source of foreign exchange. A highly regarded Chinese economist has even gone to the extent of suggesting to such countries that they forget about manufacturing and focus on attracting more Chinese tourists. Money earned from tourism would pay for imported manufactures.</p> <p>&nbsp;</p> <p>What China wants from Italy, in exchange for its tourists and funds, is access to key ports like Trieste that would then give road and rail access into eastern Europe. It is understandable that Germany and France are upset with Italy striking out on its own and not playing by the European Union’s rules. But, the Italians have been unhappy with EU for some time now. Italy’s tourism industry strongly feels that dumping the Lira and adopting the Euro has cost Italy dearly, raising the cost of Italian tourism. With new tourist destinations in Europe opening up to the price-conscious Asian traveller, Italy is under pressure to remain competitive.</p> <p>&nbsp;</p> <p>The Italian decision also brings into sharp relief the downside of US President Donald Trump’s “America first” policy as far as relations with western Europe are concerned. Sometimes exerting pressure and sometimes just not bothering, Trump’s whimsical policy towards longtime allies in the name of defending US interests has opened up new spaces for Chinese and Russian diplomacy in the West.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Apr 06 19:27:30 IST 2019 venezuela-will-india-give-in-to-us-pressure <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Where there is oil and natural gas there is the potential for conflict. From West Asia to the South China Sea, from Latin America to Central Asia and in places across Africa, the control of the sources of energy—the fuel of economic growth—has been a key factor in defining conflict through most of the past century. During the cold war, many such conflicts were garbed in ideology. With the fear of communism overpowering capitalism declining, with China chasing capitalism in the name of socialism, the naked use of power to grab oil and gas became all too visible. No other commodity has moved the militaries of the United States and its allies around the world more than oil and gas. No other commodity has been responsible for regime change in the developing world more than oil.</p> <p>&nbsp;</p> <p>Venezuela is the latest geopolitical hot spot where oil has once again become a weapon. Seeking regime change in Venezuela, the US, its biggest customer for oil, has imposed sanctions on the former’s oil exports. It wants other countries to follow suit in the name of democracy. India is Venezuela’s second biggest customer and needs that oil. Though, under the circumstances, Venezuela needs the Indian market more. So Venezuela has, understandably, offered India a barter deal that will enable India to pay rupees for oil. Venezuela will then have to buy Indian goods to make use of the cash. The incentive for India, apart from continued access to Venezuelan oil, would be an increase in demand for Indian goods. Venezuela has long enjoyed a trade surplus with India, with Indian manufacturers having difficulty in accessing the Venezuelan market.</p> <p>This is not the first time that the US has exerted pressure on India to give up buying oil from one of their adversaries. US sanctions on Iran have forced India to find new ways of keeping that flow coming even as the quantity imported has been curtailed. But, Venezuela is not Iran. Not only is Iran an important geopolitical neighbour, given the access it offers to Afghanistan, Central Asia and beyond, some of India’s refineries can only process Iranian crude. India used both arguments effectively in dealing with the pressure exerted by the US to join in on the Iran sanctions when Manmohan Singh was negotiating the civil nuclear energy deal with former US President George Bush. Even the unpredictable Donald Trump has offered India some flexibility in dealing with Iran after he re-imposed sanctions.</p> <p>&nbsp;</p> <p>Will President Trump be as accommodative when it comes to Venezuela? These are dog days for Venezuela. Not only has the regime of President Nicolas Maduro become less popular but the oil market, too, has become less stressful for buyers. The rise in the use of gas and renewables in both developed and developing countries, along with the growth slowdown both in the West and China, have given consumers like India some breathing and bargaining space.</p> <p>&nbsp;</p> <p>If there was one thing going for Venezuela in India it was the fact that one of its major buyers was the highly influential Reliance Industries. But, Reliance is not only sharply reducing its purchase of crude oil from Venezuela, it has also decided to stop exporting refined products to that country. Reliance has important business interests in the US, generally and specifically in energy, and so it has decided to fall in line with the US rather than face sanctions. The government of India, however, will have to show diplomatic spine and take a more long-term strategic view. It is not easy and how successful New Delhi is in balancing friendship between the US and Venezuela will test India’s diplomatic skills.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Mar 23 11:12:47 IST 2019 an-indian-view-of-china <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Two decades ago prime minister Atal Bihari Vajpayee and his national security adviser Brajesh Mishra took the interesting initiative to constitute a National Security Advisory Board (NSAB), comprising a mix of retired diplomats and officials, professional scientists, economists, international relations and defence and security analysts. As a member of NSAB, from 1999 to 2001, I recall an important suggestion—that India needs to invest more in a deeper understanding of its neighbours. The follow-up was not very encouraging and, even today, we tend to look at our neighbours and the world through western eyes. Thanks, however, to a variety of factors and the commitment of various individuals, there is today a wider body of indigenous thinking on India’s most important neighbour, China. The best evidence of this is now available in a scholarly compilation of Indian writing edited by one of India’s pre-eminent China watchers, Professor Manoranjan Mohanty. Mohanty and others of his generation, like Patricia Uberoi and Ravi Bhoothalingam, have provided valuable leadership to a new generation of China watchers at the now 50-year old Delhi-based Institute of Chinese Studies (ICS). Their recent publication—China At A Turning Point: Perspectives After The 19th Party Congress—brings together the views of three generations of analysts, based on their reading of largely Chinese sources. The average generally informed Indian has two views of China—either of awe and admiration, or disdain mixed with defeatism. It is not often that one comes across a balanced assessment of China, of its strengths and weaknesses, its achievements and failures. Mohanty and colleagues have not only managed to take such a balanced view but have also brought together essays on a wide range of topics including China’s record in urbanisation, innovation and health care. Around the time the NSAB was recommending investment in developing an Indian view of China, western analysts like Gordon Chang were predicting The Coming Collapse of China (2001). Far from collapsing, China has, over the past two decades, emerged as a stable superpower that the world has had to come to terms with. For India there is no other greater geopolitical and geo-economic challenge today, and for the foreseeable future, than a resurgent China. While there is sizeable objective scholarship on China in the west, Indians should base their view of China on one’s own national assessment. That is the challenge that ICS has grappled with in the face of paltry funding and inadequate Chinese language expertise among scholars. What Indian scholars and commentators require is the greater familiarity with China that increased travel, tourism and exchange of students and scholars are now facilitating.</p> <p>&nbsp;</p> <p>China seeks to enter a new phase of development based on innovation, science and technology and the productivity of its workforce. Like many western powers, China, too, is emerging as a ‘knowledge-based’ power, albeit with problems like rising inequality and still limited political freedom.The lessons for a rising India are clear—determined focus on the social and economic empowerment of her citizens, investment in modern and universal education and health care, strengthening the domestic foundations of industrialisation, innovation and defence capability. No one helped China get here, no one will help India get there. India, too, is a ‘civilisational power’ that has regional influence and global aspirations. We, too, have to raise ourselves by our own bootstraps, while remaining open to external investment, trade and knowledge flows.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Mar 08 12:52:37 IST 2019 turn-of-kashmiri-millenials <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Politicians are responsible for everything, laments Ghulam Hassan Dar, a farmer and cloth merchant, and father of the Pulwama suicide bomber, Adil Ahmad Dar. “They are not doing anything because no harm comes to their families. In the end, we lost lives on both sides,” says Dar, mourning not just his son’s death, but also those of the jawans of the Central Reserve Police Force. He was, of course, referring to all politicians—in India and Pakistan, and, in particular, those in Kashmir.</p> <p>&nbsp;</p> <p>Kashmir’s millennials, born in a period of hope but growing up in a period of despair, have little regard not just for the Abdullahs and the Muftis, but for the Hurriyat as well. They are a generation in search of leadership, seeking hope in their future. Bringing them back into the state’s and the nation’s political mainstream is the challenge at hand. As former Union home secretary G.K. Pillai put it recently, “Kashmir is not a territorial issue…. It is about bringing the people of Kashmir to our side, making them feel that they have a say in how Kashmir and their lives are governed.”</p> <p>&nbsp;</p> <p>While the Abdullahs, the Mufti family and the Hurriyat may strut around the country and the world, they have lost the respect of their own people, especially the young and the economically backward. Kashmir’s politicians of most hues have become millionaires within their lifetime, while the state’s ordinary folks rue the loss of opportunities for a better life.</p> <p>&nbsp;</p> <p>The battle in Kashmir is within—between its development and opportunity-seeking youth and a greedy, delegitimised political leadership. On top of this is the mountain of corruption that has created so many vested interests, in India, Pakistan and Kashmir, in favour of the status quo.</p> <p>&nbsp;</p> <p>The last attempt at breaking the mould was made by former prime minister Manmohan Singh when he convened the Jammu and Kashmir roundtable and initiated a dialogue with Pakistan. The roundtable was the last attempt at bringing together all political voices within the state. It is a different matter that both the Hurriyat and the BJP chose to stay away from the roundtable. But, if ever a genuine solution to Kashmir’s alienation has to be found, it would require the imprimatur of all political stakeholders in the state, and in New Delhi and Islamabad.</p> <p>&nbsp;</p> <p>Manmohan Singh and Pakistan president Pervez Musharraf came very close to an understanding with their jointly developed formula that Singh summed up at a public meeting in Amritsar, in March 2006: “I have often said that borders cannot be redrawn, but we can work towards making them irrelevant…. People on both sides of the Line of Control (LoC) should be able to move more freely and trade with one another.” He then suggested the creation of “cooperative, consultative mechanisms” that would have the approval of New Delhi and Islamabad, and would facilitate Kashmir’s social and economic development on both sides of the LoC.</p> <p>&nbsp;</p> <p>No one talks about this formula any longer, but that remains the “final solution”, whenever the leaderships in New Delhi, Islamabad and Kashmir are ready for it. Till then the alienation of the Kashmiri Muslim has to be managed. The fact is that a majority of them still see their future in India, where they come to study and trade, to have fun and find jobs, to buy property and marry. Let no terrorist or bigot disrupt this flow and intermingling of people.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Feb 23 18:43:36 IST 2019 congress-and-the-telugus <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>In a letter full of angst and agony, a senior leader of the Sonia Congress in Andhra Pradesh declared last week that, “The Congress organisation in Andhra Pradesh has suffered a multi-organ failure and is on life support.” A five-term Congress member of Parliament, the highly talented and well regarded Kishore Chandra Deo believes that the party is “in a state of coma… is literally extinct there and the leadership is not concerned”.</p> <p>&nbsp;</p> <p>Deo is not just any ordinary member of the Congress. A tribal ‘zamindar’ educated at the prestigious Madras Christian College, Deo’s name figured on every short-list of potential members of the Manmohan Singh ministry until he was finally inducted in 2011. Deo deserved better than being merely a minister for tribal affairs and panchayati raj. It was a comment on the state of affairs within the Andhra Congress that his talents were never better utilised.</p> <p>&nbsp;</p> <p>For him to now make bold to declare the virtual death of a party to which he always belonged is testimony to the crisis facing the party in Andhra Pradesh, following its ignominious defeat in the recent assembly elections in Telangana, where Congressmen are leaving the party to join the ruling Telangana Rashtra Samiti.</p> <p>&nbsp;</p> <p>Clearly, the Sonia Congress has not yet recovered from the consequences of its ham-handed handling of the bifurcation of the erstwhile united state of Andhra Pradesh and continues to be rejected by Telugus on both sides of the divide. That this should be the fate of a party that once counted the Telugus among its most loyal voters is a statement on the larger crisis facing the party, despite its recent victories in state assembly elections.</p> <p>&nbsp;</p> <p>Coastal Andhra was a region in which the original Indian National Congress had struck deep roots and despite the challenge posed by the Communist and Swatantra parties, the Congress held its own in the region under the leadership of such stalwarts as Bezawada Gopala Reddy, Damodaram Sanjivayya and Kasu Brahmananda Reddy. Till N.T. Rama Rao’s historic mobilisation against the Congress in 1981 the party faced no competition at all.</p> <p>&nbsp;</p> <p>My familiarity with the kind of roots the original Congress party had struck in the Andhra region owes at least partly to the tales one heard from relatives who were active members of the Congress. My great grand uncle, Baru Raja Rao, a Congress volunteer at Ananda Bhavan in Allahabad, played host to Panditji when he visited Rajahmundry and stayed at Rao’s home. After independence, my father worked closely with Congress chief ministers including Brahmananda Reddy, P.V. Narasimha Rao, M. Chenna Reddy, Jalagam Vengala Rao and N. Janardhana Reddy. During those years the Congress seemed to be the natural party of government in the state.</p> <p>&nbsp;</p> <p>United Andhra Pradesh was a strong bastion of Congress support during the tenure of the United Progressive Alliance. It is, therefore, shocking to see the Congress virtually decimate itself in both Andhra and Telangana. What explains this sorry state of affairs?</p> <p>&nbsp;</p> <p>Deo blamed both the party’s national leadership, especially party president Rahul Gandhi, and the state’s present rootless and self-styled leaders for this denouement. Rahul’s decision to ally with Telugu Desam’s Chandrababu Naidu helped further weaken the party’s already tenuous hold on the state, given Naidu’s declining popularity. The precipitous decline of the Congress in Andhra and Telangana seems to mimic the fate that befell the party in Uttar Pradesh, Bihar, West Bengal, Tamil Nadu and Odisha. A sudden implosion following years of decay.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Feb 09 12:24:32 IST 2019 primed-for-power <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>With the singular exception of Karnataka’s H.D. Deve Gowda no chief minister made it directly to the prime minister’s post till Narendra Modi in 2014. No chief minister figured in the speculation that went on in the 1960s in response to the famous question “After Nehru who?” Indira Gandhi answered the question “After Indira who?” by ensuring, to quote P.V. Narasimha Rao’s apt remark in his fictitious autobiography The Insider, that the “party became a proprietorship”. Prime ministers like Lal Bahadur Shastri, Morarji Desai, V.P. Singh, Rao, I.K. Gujral, Atal Bihari Vajpayee and even Manmohan Singh had all been senior cabinet ministers in the Union government and saw themselves as qualified to be considered for the job.</p> <p>&nbsp;</p> <p>Modi broke the mould by challenging his own party’s ‘national’ leadership. It is a comment on the paucity of talent at the national level among all national parties that so many of today’s chief ministers now regard themselves as potential prime ministers. Sure, Rahul Gandhi is an exception to the rule, but that is only because his party had long become a family proprietorship and other national leaders in it have long given up the hope of challenging the party’s first family.</p> <p>&nbsp;</p> <p>It is unfortunate that both national parties, the Sonia Congress and the Bharatiya Janata Party have not offered adequate space for senior cabinet ministers to acquire the required national profile for the electorate to view them as potential prime ministers. In the Congress, after Pranab Mukherjee’s elevation as president, there is no one who has been able to acquire the required stature to make a pitch. In the BJP, Modi has ensured adequate distance between himself and his other colleagues. Only Home Minister Rajnath Singh and Minister of Road Transport and Highways Nitin Gadkari are viewed as having prime ministerial qualifications. Singh’s portfolio places him on New Delhi’s Raisina Hill, but Gadkari has been kept at a distance.</p> <p>&nbsp;</p> <p>It is because of this vacuum that popular chief ministers from a clutch of states have entered the fray. They have become the new pool of talent for a potential prime minister. West Bengal Chief Minister Mamata Banerjee, Andhra Pradesh Chief Minister N. Chandrababu Naidu and Telangana Chief Minister K. Chandrashekhar Rao and former Uttar Pradesh chief minister Mayawati would hope to do a Modi in 2019. Modi had a national party to back him, and that made all the difference. None of the regional leaders are as yet willing to accept Rahul Gandhi as their prime minister, even though he heads a national party.</p> <p>&nbsp;</p> <p>Can a chief minister heading a regional party become prime minister without the active support of a national party? The case of Deve Gowda proves the point. He became prime minister because he had the implicit support of the Congress. If today’s chief ministers want to become the prime minister they must secure that kind of support. That is what makes Banerjee a front runner. She could secure the Congress’s support if the numbers enable it. It is unlikely that the Congress would trust Mayawati or Naidu more than Banerjee.</p> <p>&nbsp;</p> <p>What of the BJP? Suppose it has the numbers to back a third front of its own, would it opt for a Deve Gowda model by backing a friendly chief minister? Who would that be? Chandrashekhar Rao? Naveen Patnaik? Perhaps Mayawati?</p> <p>&nbsp;</p> <p>Is there a wild card a la Manmohan Singh waiting in the wings? Pranab Mukherjee maybe! Indian politics is entering an interesting phase.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jan 25 15:43:30 IST 2019 have-you-read-the-book <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>We are into what has come to be known as the ‘lit fest’ season. From Delhi to Bhopal, Chennai to Jaipur, Mumbai to Hyderabad and increasingly in newer centres, a kind of celebratory circus gathers around writers, ‘public intellectuals’ and media celebrities. It is, of course, heartening to see lots of young people at these literary festivals and one hopes they are all book readers. I say “hopes” because many in the audience are not. The growing popularity of book fairs and literary festivals is only slowly translating into book buying and reading.</p> <p>&nbsp;</p> <p>When ill-informed questions about my books have been directed at me at such lit fests, I have sometimes had to ask the questioner if he has, in fact, read the book. More often than not the reply tends to be, “No, but I plan to.” The proliferation and growing popularity of lit fests has meant that politicians, publicists and Page 3 celebs have all jumped on to the platform. Speakers are expected to spar and joust like gladiators, stabbing each other with smart one-liners, and often entertain more than enlighten. How many at lit fests have actually read the books of authors they wish to hear, question and criticise?</p> <p>&nbsp;</p> <p>It is now a wider malaise, thanks to social media. Consider the number of critics of a writer like Ramachandra Guha on Twitter. How many of them would have actually read his voluminous, well-written books? I would imagine very, very few. The social media view of an author’s writings is shaped, at best, by his newspaper columns or television appearances and, at worst, is manufactured by partisan critics.</p> <p>&nbsp;</p> <p>Four years after the publication of my book, The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh, I am still confronted by opinions about the book based on comments in the media. Every time I am asked an ill-informed question or face a baseless comment, my gentle reproach has been to urge the interlocutor to read the book, in full, cover to cover. Those who have read the book appreciate the fact that 80 per cent of it constitutes the best available defence in print, even as of now, of the Manmohan Singh prime ministership. The book would have read like a hagiography, an unrelenting paean to the former prime minister, if it had not also contained the 20 per cent of criticism.</p> <p>&nbsp;</p> <p>In a new afterword, published in the book’s latest edition, I have mentioned the fact that I had alerted the PM and his office to the fact that while the book is, by and large, a defence of Singh’s tenure, the media would focus on the critical comments. That is what happened. The PMO’s knee-jerk response and the media’s focus on the book’s controversial parts, rather than the totality of a complex argument, have shaped thinking about the book both among its critics and most admirers! Now with the book being adapted into a movie, chances are that a larger body of opinion about the book is going to be shaped by what the movie’s producers have claimed to be a ‘fictionalised’ dramatisation of the book. A pity.</p> <p>&nbsp;</p> <p>My experience with the critics of my book is far from unique. So many authors, especially those who have written on history, politics and religion, have found themselves at the receiving end of ill-informed public criticism, especially on social media, where the critics have clearly not read the book. Controversy may help sales, but it prevents a reasonable view being taken of a nuanced argument.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Jan 11 12:40:41 IST 2019 a-year-to-remember <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>The Russian Revolution happened in 1917 and the Jallianwala Bagh massacre happened in 1919. Nothing of such historic significance happened in 1918. It was just another year. A century later we regard the Russian Revolution as a turning point in world economics and politics, and the Jallianwala Bagh massacre as a turning point in the history of anti-colonialism. These events shaped the 20th century. What are the events of 2018 that analysts in the future would regard as historic?</p> <p>&nbsp;</p> <p>One way of answering that question would be to quote what Zhou Enlai is supposed to have said about the impact of the French Revolution: “It is too early to judge.” Who knows what obscure event of 2018 will be seen as a historic turning point a decade from now, or a century from now! Did anyone imagine at the end of 1919 that the Jallianwala Bagh massacre would light a fire across India, bringing Mohandas Karamchand Gandhi to the centre-stage of India’s anti-colonial struggle? Surely not.</p> <p>&nbsp;</p> <p>Another way of answering the question would be to identify trends, rather than events, observed in 2018 that may have life-altering consequences for the human race. One such trend would be the spread and application of Artificial Intelligence. Another could be the observed retreat of the United States and the rise of China. But, in none of these cases does 2018 seem to have had a defining moment, unless US President Donald Trump’s declaration of a trade war against China becomes one such.</p> <p>&nbsp;</p> <p>There have been interesting political and economic developments during the year in the Americas and Europe, but none of them seems as yet to amount to much. The western world will remember 2008-09 as a turning point thanks to the trans-Atlantic financial crisis. The west’s loss of confidence in itself began in the wake of that crisis. But, if Trump’s “geo-economic containment” of China bears fruit, then 2018 could well be viewed as a turning point in global geopolitics.</p> <p>&nbsp;</p> <p>What about the home front? On the economic and foreign policy fronts nothing of much significance happened in 2018. Some economists believe 2018 has been a turnaround year, altering the slowdown that set in around 2012. If this proves correct, then 2018 would be seen as the end of a period of economic uncertainty and the beginning of a new cycle of growth. The jury is out on that question.</p> <p>&nbsp;</p> <p>On the foreign policy front, Prime Minister Narendra Modi succeeded in stabilising all key bilateral relationships, including those with the United States, China, Japan, Russia and Germany. He has continued to engage Southeast and West Asia, stabilising India’s wider neighborhood. But, nothing of historic significance was achieved during the year.</p> <p>&nbsp;</p> <p>It appears the only truly significant event of 2018 has been on the domestic political front. The revival in the fortunes of the Sonia Congress, Rahul Gandhi’s transformation into a credible political leader after a decade of trying and the first major defeat for the BJP in the Hindi heartland have all combined to open a new phase in Indian politics. How historic a shift this proves to be will be decided by the general elections of 2019. If the Sonia Congress is able to lead a new alliance back to power, then 2018 will mark an important milestone in Indian politics. If the BJP regains momentum and returns to power, then that development, too, could mark a new phase in Indian politics. Thus, the significance of the political developments of 2018 will in fact be settled only in 2019. The jury is out till then.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Sat Dec 29 11:01:41 IST 2018 manmohans-lesson-for-modi <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>In Rajasthan, the Bharatiya Janata Party (BJP) was expected to be defeated. In Telangana, the Telangana Rashtra Samithi was expected to retain power, albeit narrowly. In Chhattisgarh, the BJP was expected to retain power and Madhya Pradesh was the close fight. In the event, most pollsters got only Chhattisgarh totally wrong.</p> <p>&nbsp;</p> <p>While many ‘helicopter’ and ‘limousine’ journalists from New Delhi returned from Hyderabad to predict the defeat of TRS, I had consistently held that the father-son duo—K. Chandrashekar Rao (KCR) and K.T. Rama Rao (KTR)—would return to power in the state. I have won all my bets. The reason for my forecasting a TRS victory in Telangana was simple—there was really no strong anti-incumbency element in Telangana and most people in rural and urban areas have credited TRS with ensuring both power and water supply. Life in the state has been normal. Finally, in the greater Hyderabad region, KTR managed to win over urban support, among the locals and the so-called “settlers”, by reassuring them that the city would continue to be open to all, hospitable to all.</p> <p>&nbsp;</p> <p>What portents does this week’s verdict have for the 2019 Lok Sabha elections? The Sonia Congress has come out of the long shadow of the 2014 defeat and found its voice, recovered its gait. What this means for the so-called Mahagathbandhan remains to be seen. The BJP is on the back foot. The magic of Narendra Modi and the tactics of Amit Shah seem to have run their course. The BJP needs a new narrative to recover support among the youth, scheduled castes and tribes. The non-BJP, non-Congress parties, including the TRS, the Trinamool Congress, the Biju Janata Dal, the YSR Congress, the Bahujan Samaj Party, the Samajwadi Party and the Nationalist Congress Party may explore new spaces available to them. All in all, the 2019 game is wide open.</p> <p>&nbsp;</p> <p>What lessons must the BJP learn from this verdict? Remember a plea that Modi made to his own party and the opposition in 2014—‘Give me ten years of stability, away from the politics of divisiveness and watch us take India forward.’ His party wasted the opportunity by allowing the politics of instability and divisiveness to take root. Modi belied expectations generated by his slogan—‘Less government, more governance’. Can he take the focus firmly back to issues of development and governance in the next few months?</p> <p>&nbsp;</p> <p>With the benefit of hindsight one can say that the verdicts of Lok Sabha elections in 2004 and 2014 were both the outcome of anti-incumbency. It was only in 2009 that a pro-incumbent sentiment gave Manmohan Singh his second term. I have analysed the basis of the pro-incumbency mandate of 2009, and how the credit was denied to Singh, in my book The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh. The fact is that even six months before the 2009 elections, in the aftermath of the Mumbai terror attack in November 2008, no one imagined that Singh would deliver a second term to the Congress. He did so with his quiet assertion on the nuclear deal and in the manner in which he dealt with Pakistan.</p> <p>&nbsp;</p> <p>It would now appear that Modi has not been able to so far find the formula for converting the anti-incumbency vote of 2014 into a pro-incumbency vote for 2019. If he learns from Singh and finds his own formula for generating a pro-incumbent sentiment in the next few weeks, he could still be a two-term prime minister.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Dec 14 12:09:44 IST 2018 the-losing-hand <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>It was amusing to hear Sonia Gandhi rail against family rule in Telangana. The idea of ‘dynastic succession’ in Indian politics goes all the way back to 1928, when Motilal Nehru prevailed on Mahatma Gandhi to name Jawaharlal as the former’s successor as Congress president. Jawaharlal’s mother, Swaruprani, went into ecstasy and declared it “a king passing on the sceptre of the throne to his logical successor”.</p> <p>&nbsp;</p> <p>Even in 1966, when Indira Gandhi became prime minister, there was no other political party in which the idea of dynastic succession had taken root. Indeed, even in 1980, when Sanjay Gandhi became the party’s de facto number two, the present dynasties in other political parties—the DMK, the Samajwadi Party, the Telugu Desam Party, and so on—had not come into being. Today, with the notable exception of the Bharatiya Janata Party and the communist parties, most political parties are dominated by the leader’s family.</p> <p>&nbsp;</p> <p>The question that then becomes relevant is whether the next generation has lived up to the promise of the previous one. Indira Gandhi certainly did. Indeed, she surpassed Nehru on many fronts. Rajiv Gandhi failed to do so. Sonia took her party to power in 2004, but Rahul is yet to make his mark.</p> <p>&nbsp;</p> <p>What of Telangana? The fact is that, in many ways, the next generation has proven to be better than the previous one. Though K. Chandrasekhar Rao succeeded in securing the establishment of Telangana, the credit for running a reasonably competent government should go to his son K.T. Rama Rao and nephew T. Harish Rao. Whatever anti-incumbency is there in the state is largely because of KCR’s style of functioning. Whatever support there is for the government is because of the good work done by his lieutenants.</p> <p>&nbsp;</p> <p>KCR’s biggest achievement in the past four and a half years has been to reassure all citizens in and around Hyderabad, Secunderabad and Cyberabad, and ensure the sustained development of the metropolis as a centre of business and culture. Be it a farmer in Nizamabad or the resident of Hyderabad’s upmarket Banjara Hills, there is universal appreciation for the fact that the KCR government has ensured supply of water and power.</p> <p>&nbsp;</p> <p>What of Sonia’s claim that she was the architect of Telangana? The Congress was in two minds on the Telangana question from the very beginning. What seems to have encouraged the party’s so-called high command in Delhi to keep the separatist pot boiling was its concern with the manner in which Andhra Pradesh chief minister Y.S. Rajashekhar Reddy had consolidated his position, paying scant attention to the durbaris of Lutyens’ Delhi. It was partly to weaken YSR’s control over the Congress’s state unit that Telangana dissidence was encouraged. This was a straight copy of Indira Gandhi’s response to the separatist agitation in 1969, when she used Telangana leaders to cut Andhra’s Kasu Brahmananda Reddy and Rayalaseema’s Neelam Sanjiva Reddy to size. She succeeded with the help of Telangana’s Marri Chenna Reddy.</p> <p>&nbsp;</p> <p>After YSR’s impressive second victory in 2009, he managed to virtually silence the demand for a separate state. The high command once again encouraged the revival of the demand, to keep YSR on a tight leash. But YSR’s unexpected death gave KCR and the Telangana agitation a boost that the Congress could not then control. Fearful of losing power in both Andhra Pradesh and Telangana, the Congress chose bifurcation in the hope that it would at least get to keep Telangana. The rest is history.</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Tue Nov 27 16:16:02 IST 2018 demonetising-impatient-india <a href=""><img border="0" hspace="10" align="left" style="margin-top:3px;margin-right:5px;" src="" /> <p>Claims and counterclaims on the economic impact of demonetisation have been vigorously made this past week by the defenders and the critics of this disruptive policy intervention. Every economist has an opinion, and we all know that the sudden withdrawal of a substantial sum of cash from the economy, followed by its all too gradual replacement, was a huge shock to the system. It is also easy to say that such a shock would temporarily dislocate economic activity and have a negative impact on national income growth, overall economic activity and related economic indicators.</p> <p>&nbsp;</p> <p>Everyone is agreed that demonetisation has a negative impact on the level of economic activity; differences arise when it comes to estimating the magnitude and duration of that impact. The defenders of demonetisation have argued that the government weighed the negative consequences against a range of positive outcomes, and that two years down the road, the latter are there to see.</p> <p>&nbsp;</p> <p>Surely, an intelligent and experienced political leader like Prime Minister Narendra Modi would have known this much about the consequences of that fateful decision he took on November 8, 2016. Would the prime minister have undertaken a cost-benefit analysis of demonetisation before taking the decision? He may well have. However, the problem might have been that the economists in government and the Central bank were only counting the economic costs and benefits while the prime minister was weighing the economic costs against political benefits.</p> <p>&nbsp;</p> <p>Modi’s demonetisation decision was an essentially political one. Within his first two years in office, he had two major political setbacks—first in Delhi and second in Bihar. Arvind Kejriwal and Lalu Prasad were trying to run away with the common man that the ‘chaiwala’ of 2014 had assiduously cultivated. Rahul Gandhi seized the moment with his “suit-boot ki sarkar” jibe. Modi had to do something dramatic to show he was with the common man, and was willing to hurt the moneyed class. Ergo, demonetisation.</p> <p>&nbsp;</p> <p>Did the prime minister reap the political dividend he was after? Consider the fact that in every assembly election between November 2016 and November 2018, with the sole exception of Punjab, the BJP did well. Uttar Pradesh was a sweep. In Karnataka, the BJP narrowly missed forming a government. For its part, the Congress has been trying hard, but in vain, to resurrect the ‘suit-boot’ image by suggesting that in the Rafale decision, Modi was once again helping well-heeled friends.</p> <p>While economists have written copiously on the costs and benefits of demonetisation, it is truly surprising that political scientists and sociologists have not published any meaningful research on its political impact. To me, the most interesting question remains why millions of Indians, even the normally impatient urban ones, were willing to stand patiently in long queues to collect their own cash from their own accounts. It is not difficult to get a group of Indians worked up enough to start an agitation, take out processions in protest and even burn buses. How come the opposition parties failed to mobilise that kind of protest? There were sporadic outbursts of impatience and anger, but they did not light a nationwide fire of protest. Did Modi gauge public mood better than his opponents?</p> <p>&nbsp;</p> <p>The disruptive impact of demonetisation has angered many groups, especially small businesses operating largely with cash, and the political opposition is now mobilising that anger.</p> <p>&nbsp;</p> <p>Even so, the sociological question remains. Why were the normally impatient Indians so patient when put through such hardship?</p> <p>&nbsp;</p> <p><b>Baru is an economist and a writer. He was adviser to former prime minister Manmohan Singh.</b></p> Fri Nov 16 19:38:42 IST 2018