The RK Puram Budget

RK Puram is a determinedly down-market neighborhood in southwest Delhi. It is chockablock with government colonies for middle-level bureaucrats, schooled in the cruel education system that strips young people of hope and ideals; the cynics who have held the economy to ransom.

These housing settlements are pleasant enough with lots of shady trees and large green spaces. The apartment buildings, however, are a different story: built by the Central Public Works Department, they are shoddy and ugly; islands of bad design in an otherwise nice environment.

RK Puram sprang to mind as I reviewed the 2015 budget of the absolute-majority BJP government. In his budget speech, the finance minister presented us with an economic RK Puram, dressed up in rhetoric and intention but tacky, grotesque and dysfunctional in content. Bottom line: higher taxes, higher government spending and significant tax policy obfuscation to keep everyone guessing.

This budget is especially prone to criticism because the government leadership has mindlessly hyped its sermon of happy days: a new and improved “India Shining” with gleaming highways, bullet trains, smart cities, soaring stock markets, a tsunami of foreign investment, gainful employment and “gili-gili,” a waving wand to banish the reality of blight and deprivation. Instead, as the first major government initiative, not counting all the diplomatic event management, the budget is seriously disappointing.

The finance minister, not particularly known for his grasp of economics and somewhat shorn of a sense of irony, said in his budget speech, “It is quite obvious that incremental change is not going to take us anywhere. We have to think in terms of a quantum jump.” The rest of his speech was devoted to what might best be called bureaucratic tinkering such as raising deductions in taxable income, easing resolution of commercial disputes and what have you. All the words and sentences and paragraphs of the speech could not obscure reality: it was a bureaucrat’s do-nothing budget.

Claiming credit for the introduction of a Constitutional amendment to facilitate a nationwide Goods and Services Tax (GST), the finance minister appeared to sweep under the rug, his party’s opposition to GST when the UPA first proposed it.

His was also the voice that could be heard in the recent Parliamentary debate over the land acquisition bill, proclaiming disingenuously against the Opposition’s “politics of obstruction.” He seemed to forget that his party had supported the UPA-sponsored bill while opposing everything else including the proposal to allow global retail chains to set up operations in India and the one to permit multinational insurance firms to increase stakes in their joint ventures. During the UPA’s two terms, the disruptions forced by the BJP were frequent, extended and virtually paralyzed Parliament.

The finance minister’s lack of a sense of irony was matched only by his lack of grace. This was abundantly evident in his ad hominem attack on the previous government, calling it a “scam, scandal and corruption raj.” These are not just the finance minister’s failings; almost no one in his party has the sensibility or moderation that is required of statesmanship.

To get back to the finance minister’s budget proposals, several of them of them stand out for their potential to hurt the economy:

First, the increase in service tax from 12.23 to 14 percent. Though the increase is less than two percent, its impact on small and medium service businesses is likely to be huge. In its search for “happy days,” the government needs to give such businesses access to credit and tax breaks to smooth their cash flow. They are the key to “development,” the backbone of the economy. The budget proposals will simply make it harder and harder for them to function. That’s not all: the proposed increase in service tax remains in suspense because there has been no notification by the government.

Second, the proposal to allow the fiscal deficit to balloon to 3.9 percent of Gross Domestic Product instead of the restricting it to 3.6 percent targeted by the previous government is troubling. The finance minister seems to have thrown fiscal rectitude to the winds and has, perhaps unwittingly, endorsed the waste and redundancy that are hallmarks of the bureaucracy.

Third, the assumptions trumpeted in his speech are at best fantastic. The notion that economic growth will exceed eight percent next year is simply outlandish. So is the minister’s assertion that the global economic situation has turned adverse. On the contrary, as former Prime Minister Manmohan Singh pointed out, external factors are favorable for India to chart a high-growth orbit once again. The hurdles are all internal and if this government was serious, the budget could have focused on addressing them. Instead, the finance minister’s speech seems to have been caught between hype and bureaucratic tinkering, a sure sign of the policy paralysis to come.

(An edited version of this post will appear in Education World, April 2015.) 

  

Neo Middle Classes Protest

High on Aspirations, Low on Talent

Let me just say it straight out. The Delhi protests against the shocking rape of a young woman in a bus were led by students of the Jawaharlal Nehru University and other universities and colleges where underpaid teachers spew their leftist propaganda to taint impressionable minds.. They are high-minded but like all university students in India, somewhat moronic on the organization front. Their post-modern protest, inspired by the leftists of Europe and North Africa, simply didn’t work. They neither have the ideological fervor of their Western European counterparts nor the rage against the machine of their Tunisian and Egyptian idols. What they are confronting is a political system that is bereft of vision beyond electoral calculation, a bureaucracy that is inept and obstructionist, a business class that is free of ethics and morality. And this is not today’s news; the gridlock has been in existence since 1947. How otherwise do you explain the lack of basic infrastructure, not just roads, power, public transport but also the lack of education, public health and social security?

It is mind-boggling that the protesters and the media, egged on by shadowy political interests, can hold public debate  to ransom over a sordid criminal offence by marginal people like the monsters on the bus. The protest is all about the government and how insensitive it is. The young men and women seemed to be more interested in having major government officials talk to them. The real issue to be debated is what kind of a society has been created in which marginal men from urban slums take not just the law into their own hands but visit terror on hapless citizens. You don’t have very far to look: the outskirts of Delhi, beyond the Lutyens zone, is a free for all. Scofflaws rule the roost. They harass women; drive like lunatics (including city-certified public transport drivers); they also rain chaos and arbitrary violence on unsuspecting citizens. This is a society and culture in which the girl child is killed at birth; those that survive rarely make it past five years of age; the remnant end up being victims of dowry and bride burning. Very few girls born in India make a steady income and or attain social dignity. Dare I say it: if you are born a girl the chances of you having a normal life are minuscule.

These are the issues the heinous rape should have brought forth in public debate. Instead, the neo middle class protesters, egged on by the RSS, Arvind Kejriwal and Baba Ramdev,  focused on the government and its shortcomings. I dare these kids and their mentors to go protest against the “khap panchayats” of Haryana, Rajasthan, Uttar Pradesh, never mind Bihar, Jharkhand and Chhattisgarh; or the Maoists in the central spine of India; or the cultural fascists in south and central India. Easiest thing to do, especially if vested interests ply you with funds, is to assemble at India Gate and capture the attention of the marketing-driven media.

Looking at the chaos of cities and small towns and the complete neglect of rural populations, not just this government but going back to 1947, it is apparent the entire governance structure is about privilege and corruption. Even high-minded leaders like Sonia Gandhi and Manmohan Singh are unable to make a dent; their writ simply doesn’t run. As the Singapore Prime Minister said in a recent interview, India is held in thrall by vested interests. What he was saying, in a polite way, is India suffers from a lapse of governance: bad roads, poor street lighting, discontinuous water supply, no sanitation, poor public health facilities, and dysfunctional schools.

In the end, there are two ideologies in India; one, the Congress that has its hands full just running the government peopled by know-nothings and do-nothings. Two, the others are all against the Congress and hoping to run the system, not for change and development; but for personal aggrandizement. What remains is the permanent government, the bureaucracy, and they have been having a ball since Rajiv Gandhi, with 220 seats refused to form the government in 1989. Since then the toadies have emerged from under their stones with caste and communal demands while the vested government officials simply twiddle their thumbs. Or milk their positions for rent in issuing licenses and permits.

So poverty endures in a country that is getting richer by leaps and bounds. No government will pay heed to middle class demands for better governance. The refrain is we represent the poor who have nothing so you should accept an abysmal quality of life. Even the governor of the Reserve Bank, who has succeeded in keeping interest rates higher than anywhere in the world, was quoted as saying, “Inflation is my concern because I represent the poor  people, who are most affected by spiraling prices.” Or some such words; never heard a central banker talk like this.

The cogent way to fight this government apathy and ineptitude, as Mahatma Gandhi did, is through lawful protest and constitutional propriety. The neo middle classes of India, schooled essentially in value-free disciplines such as engineering, management and vocational studies, have no appreciation for that. Their cause is just; their methods are hugely questionable.

An edited version of this article appeared on Times of India website on December 28, 2012.

Neo Middle Classes Protest

Andy capped - How to outsmart the smartest of smartphones

Bunny recently outsmarted a smartphone. We’d heard of smartphones. Like we’d heard of flying saucers, and of the giant Hadron collider which scientists have been using to discover whether the Higgs-Boson god particle actually exists. But, as in the case of flying saucers and the giant Hadron collider, we’d never actually met a smartphone. Not until our friend Rajiv got himself one.

Rajiv – who runs a PR company and has been known to hob as well as nob with people like Delhi CM Sheila Dikshit (though the rumour that he calls her Auntiji is probably not based on fact) and the current tenant of Rashtrapati Bhavan, Prez Pranabda – has always been a well-informed and generally clued-up guy. But ever since he got the smartphone he’s become like a brainiac with a genius-level IQ, a sort of Viswanathan Anand who’s been taking IIT-JEE coaching classes on the sly, or an Einstein who’s been given a prescription for Dabur Chyawanprash Golis for Gaining Gyan.

Something or the other, to which no one present seems to know the answer, crops up in conversation. Like who won the last but one assembly by-election in the Phalana-Dhimka district of Gujarat. Or whether it was Mukesh or Mohammed Rafi who did the voice-over for the hero in the Dilip Kumar-starrer Naya Daur. Or what the mean temperature in Vladivostok is during the winter solstice.

And before you know it, Rajiv has whipped out his smartphone, performed some tantric jantar-mantar with it, and come up with the answer to whatever the question was: the winner of the Phalana-Dhimka by-election, the playback singer for Naya Daur, the mean winter solstice Vladivostok temperature. In Celsius, as well as Fahrenheit. So there.

It’s spooky. It’s the electronic age equivalent of a magical brass lamp with an inbuilt know-it-all genie at your command. And Rajiv is not the only person we know who’s got his own rent-agenie in the form of a smartphone. A number of our other friends have got them as well.

The result is that what is called peer pressure – also known as keeping up with the Joneses, though of course in India it wouldn’t be the Joneses, but the Suris, or the Mathurs, or some such – began to build up on Bunny to join the smartphone set. Being so technologically challenged that for a long time i imagined the keyboard formulation called QWERTY to be an umbrella organisation for LGBT fraternities, i was automatically excluded from any such pressure. My getting a smartphone would be like Manmohan Singh being given a gift voucher for Elocution Lessons on Public Speaking. Gee, thanks. But what the heck am i supposed to do with the darn thing?

So Bunny dutifully began to bone up on smartphones. She found out that the name of the genie inside smartphones was Android, Andy to friends. And Andy had something called apps, which are to Andy what abs are to John Abraham, a sort of existential defining trait: i apps, therefore i am.

Thanks to its apps, your personalized Andy could play you music, show you a film, tell you what time it was on the planet Mars, and teach you Gangnam style horse dancing in Seven Easy Steps. All this for about 30,000 bucks, plus or minus change.

Then Bunny asked herself a question: did she really want – for 30,000 bucks, plus or minus change – something that would every day, in every way show her how much smarter it was than her? How smart – or how dumb – was that? That’s when Bunny outsmarted the smartest smartphone ever invented. By deciding not to buy a smartphone.

This article by Jug Suraiya appeared in Times of India on December 14, 2012.

Andy capped - How to outsmart the smartest of smartphones

‘I’ve maintained high standard of integrity in my conduct’

PM Manmohan Singh tells HT that never before have so many steps been taken in such a short time to bring in transparency. Here’s the full text of his written replies to an HT questionnaire.

On economy: We will bring clarity on all tax matters. We want the world to know that India treats everyone fairly and reasonably and there will be no arbitrariness in tax matters.

On charges of corruption: ...Bills such as Whistleblowers Bill, Lokpal Bill, Judicial Accountability Bill etc, which if taken in totality, will raise the standards of integrity at all levels of government.

On his legacy: I have tried sincerely throughout my life to make India a better place to live and work in ...We have an unfinished agenda. I will leave it to history to judge whether I was successful.

Q1. How do you see the economic situation today and why have we come to this pass?

We are certainly passing through challenging times economically. This did not happen overnight. A lot of it was due to developments in the global economy. The developments in the Eurozone have been a major dampener of global economic sentiment, till the Eurozone leaders hammered out an agreement a few days ago. Europe is the most important destination for our exports and any turbulence there will certainly affect sentiment here. We then had the oil price rise. For a country which imports nearly 80% of its oil, this badly hurt our trade balance. In fact, a major portion of our trade deficit is accounted for by oil imports. There were domestic factors as well.


Q2. What are the top five challenges to the economy in the year ahead?


The India Growth Story is intact. We will continue to work, as we have been doing for 8 years, to keep the story going. Measures which I intend to focus on, in the short run, are:

• Bring complete clarity on all tax matters. We want the world to know that India treats everyone fairly and reasonably and there will be no arbitrariness in tax matters.
• Control the fiscal deficit through a series of measures which my officials are working on and on which we will build consensus in the government.
• Revive the Mutual Fund and Insurance industries which have seen a downturn. Absence of investment avenues has pushed Indian savings into gold. We need to open new doors so that savings can be recycled into productive investments that create jobs and growth, not into gold.
• Clear major investments in the pipeline awaiting FIPB approval. Investors should feel that we mean business. We will also work towards improving the response time of government to business proposals, cut down infructous procedures and make India a more business friendly place.
• Most importantly, we have given a major push to infrastructure, particularly through PPP. A lot of investment avenues are opening up in Railways, roads, ports and civil aviation. The doors are open for the world to strengthen our hands and contribute to these vital sectors which will give a further push to the economy.

Q3. How do you see coming elections in the states and the Centre affecting policies? How do you guard against populist measures, given the size of the deficit?


I am largely satisfied about the way we have progressed over the last 20 years. The fact that governments have changed many times in between but economic policies have continued means that the direction that has been set is seen to be the correct one by all parties. That is a source of satisfaction also.


However, there are a few issues that come quickly to mind when it comes to what else needs to happen. Firstly, we have yet to settle down to a stable institutional framework to manage an open economy. Our institutions are still evolving and it will take time till we see mature institutions in all sectors as we see them in advanced economies.


Secondly, the logic of an open economy and its benefits are still not widely understood among the general public. Public discourse still sees markets as anti-public welfare. The instinctive reactions of many, both in the political class and in the public at large, is to revert to a state controlled system. There is no realisation that a reversal to an earlier era is neither possible nor desirable. Even a neighbour like China has understood the logic of an open economy and is developing the institutional framework which is required for this. It is necessary that we change the discourse from a critique of an open economy to a critique of what is needed to make an open economy work better for the welfare of the people.


Lastly, there is the issue of distribution. We have lifted millions out of poverty. But, I worry that the fruits of an open economy will be increasingly captured by fewer people. I worry that a large segment of our population will be left out of the benefits of economic growth. We need to correct that fast.


Q4. Foreign investors have been rattled by events such as the tax row with Vodafone. How do you intend to set their minds at rest?


The investor community had concerns on some tax matters. The finance ministry, over the last three months, has been issuing clarifications and working with the investor community to bring greater clarity on the matter. However, there has been a slowing down of capital flows which normally would have covered the current account deficit.


That does not mean things have turned very bad. Coca Cola has announced to invest $ 5 bn in India just a few days ago. IKEA plans to invest a billion dollars. The pessimism in the media and the markets is far more than reality. Consumer spend is holding up and this has not been affected by interest rates. The Chairman of GE captured the picture correctly when he said "the mood in the market is worse than the mood on the ground". I agree with that.


Q5. There is also a perception of drift, of policy paralysis. You have used the term “coalition compulsions” is this the main factor? How do you dispel the impression of drift? Do you intend to communicate more often with the nation?

I think it is a matter of perception. We worked under far greater constraints under UPA 1. However, there were a lot of things which had been done under the previous government which we had to undo. We had to bring a healing touch to the nation, make minorities feel secure and included, and give emphasis to the needs of the common man who had moved to the background in the Shining India of the NDA rule.


The biggest achievements of UPA 1 were the healing touch which we managed to bring in and the focus on inclusive growth. We did this with widespread support across the spectrum of parties supporting us.


But difficulties existed then as they do now. Parties are entitled to their differences then and now. There were differences on the US Nuclear deal and there are going to be some differences now also. I do not think that the political landscape is radically different now as compared to 3 years ago. What has changed is public expectation. Now that the immediate problems caused by the NDA government have receded into the background, other issues are coming to the fore. This is but natural. That is the way of democracy.


As for speed, look at the way we responded to the 2008 crisis. We rolled out a stimulus package which ensured that we came out of its effects rapidly. We are passing through a similarly challenging situation and I am confident, we will roll out measures to restore economic growth once again.


Q6. In your role as finance minister what do you see as the roadmap for key pending reforms such as pensions, insurance and banking reform, the goods and services tax and the direct taxes code?


Firstly, legislation is not the bottleneck to economic growth. Barring an issue here and there, most economic steps that need to be taken do not need legislative action.


More important is that we need political consensus in the government on some policies. These are genuine differences in opinion. So, in a democracy, consensus building is the key to long term economic success and we are steadily moving ahead in doing that.


Q7. Can we expect some of the young ministers of state becoming cabinet ministers soon?


You have to wait for a while for that question to be answered.


Q8. When will you go to Pakistan? What are the ideal circumstances that would make such a visit possible?


I am looking forward to visiting Pakistan. No dates have been finalised for the visit. As you know there have to be suitable outcomes for such a visit.


Q9. How do you react to charges of corruption during your Prime Ministership?


Never before in the history of India have so many steps been taken in such a short time to bring in transparency into the functioning government, make government accountable to the people for its actions and bring in measures to control corruption. The Right to Information is a landmark Act for which the Congress Party and its President will be remembered for generations. In fact, this single act has done far more to bring down corruption and bring in accountability than any other measure. It is the information flowing out as a result of this Act which is bringing a lot of corruption to light which would otherwise have been hidden.


We have introduced a Public Procurement Bill which brings in far greater transparency into government procurement and severe deterrents for wrongdoing. This would remove a major source of corruption.


A number of other bills are there such as the Whistleblowers Bill, the Lokpal Bill, the Judicial Accountability Bill, etc. which if taken in totality, will raise the standards of integrity at all levels of government.


Coming to the personal criticism, not only have I maintained a high standard of integrity in my conduct, I have endeavoured to raise the levels in the system as well. All these measures are a reflection of our party’s will to tackle corruption. As for criticism by media, that is their job and I compliment them for doing it effectively.


My only request to them is to exercise some balance and retain a sense of proportion in their coverage of issues. Just as the pessimism over the economy is more in the markets and less on the ground, even in the case of corruption, I do not think there has been any explosion in corruption under my watch.


Q10. What is that one thing that you would like to be remembered for?


I have tried sincerely throughout my life to make India a better place to live, work and lead a fulfiling life. In some ways, I contributed to this as a Finance Minister. As Prime Minister, I have had a larger remit. I have worked on the same lines but on a larger platform. We have tried to build a peaceful, harmonious, secure, friendly, prosperous India where every citizen can aspire for the best in life. We have an unfinished agenda. I will leave it to history to judge whether I was successful.


This Interview appeared in Hindustan Times on July 08, 2012.
I've maintained high standard of integrity in my conduct'

India Journal

Bangladesh and Our Foreign Policy Elitism

http://blogs.wsj.com/indiarealtime/2011/09/15/india-journal-bangladesh-and-our-foreign-policy-elitism/

 

When Prime Minister Manmohan Singh announced he would visit Bangladesh, there were great expectations. It appeared as though ties between the two nations were finally on the right track, backed by diplomatic and political goodwill. Many believed that during his visit, the Prime Minister would make a “game changing” policy shift in the matter of the international border, trade and especially shared river waters.

Such issues have crimped relations between the neighbors. Mr. Singh’s visit was to herald a new dawn. His timing was impeccable. Bangladesh’s Prime Minister Sheikh Hasina is much more India-friendly than the previous regime. Her father, Mujibur Rahman, the leader who challenged and triumphed over Pakistan, could not have done so without massive Indian support. It seemed as though as the ducks were lined up and Indo-Bangladesh ties were headed north.

However, one of the Congress party’s major allies, the Trinamul Congress led by Mamata Bannerjee, chief minister of West Bengal, pulled out from Mr. Singh’s delegation at the last minute. Her pique apparently was over the amount of water the government proposed to divert from the Teesta River, which also runs through her state, to Bangladesh.

The mercurial Ms. Bannerjee was concerned that her Communist political rivals could make the deal into a political controversy and cause her to lose the support of the farmers in the northern parts of the state.

Ms. Bannerjee’s decision caused heartburn in the Ministry of External Affairs. In foreign policy circles, many termed the chief minister’s behavior unwarranted, obstructionist and downright petty.

The tendency of the foreign affairs establishment to disparage local political sensibilities stems from a belief that foreign policy is a highbrow pursuit best handled by the Oxbridge lot. The corollary is that they would allow no moffusil (local) interests to get in the way of Delhi’s international relations agenda.

Similar thinking pushed Prime Minister Rajiv Gandhi into a misadventure in Sri Lanka. Between 1987 and 1990, Delhi sent an Orwellian-named “Indian Peace Keeping Force” to fight the Tamil Tigers, who had fought a long and violent war in pursuit of Eelam, an independent state in northern Sri Lanka.

Faced with an unexpectedly fierce guerrilla challenge from the militants, the IPKF eventually withdrew. At that time too, local politicians in Tamil Nadu had advised against supporting the Sri Lanka government.

The elitist mindset that led to India’s misadventure in Sri Lanka and the subsequent assassination of Rajiv Gandhi survives two decades later. It is evident from the reaction to Ms. Bannerjee’s intervention in the river waters issue.

Neither Ms. Bannerjee’s recalcitrance nor the protest of the Dravidian parties in Tamil Nadu against the IPKF had merit. Dravidian parties support for the Tigers never did get much political traction; Ms. Bannerjee, as always, has very narrow political concerns.

The issue, however, is not about the limited perspective of state politicians. It is about the inability or unwillingness of the Indian foreign policy establishment to take into account domestic sensitivities before they decide what they are going to do.

In 1955, the story goes, Jawaharlal Nehru conceded to China the United Nations Security Council seat offered to India. With his fabled vision and ideals, Nehru realized quickly that India, with high levels of poverty and illiteracy as pressing domestic concerns, was in no shape to take on global responsibility.

Even after 56 years, the Internet chatteratti rant and rave about Nehru’s decision, arguing that his naïveté cost India a place in the UNSC.

Nehru was right. The British government of India was a powerful force, whose writ ran from Afghanistan to Burma. The newly independent government that inherited the colonial mantle faced insurgencies in Kashmir and the northeast as well as the perils of poverty, disease and illiteracy. In addition, while the wealthy colonial government of India played a huge role in the British Empire, the newly independent entity was poor and powerless in the international arena.

Many in India and those who live abroad wrongly believe Nehru lost India a Security Council seat because of his arrogant idealism. The more important issue is that any concern for India’s standing in the world, and its relationships with other countries, has to take into consideration domestic realities.

This is especially true today. With the Indian economy on a roll and the ever-increasing ambit of Indian trade and commerce, the demands on diplomacy have become ever more complex. Diplomats are called upon to explain not just the evident disparities in Indian society and widely reported allegations of corruption but to use their skills to run interference for the growing number of Indian companies doing business around the world.

As they do so, Ms. Bannerjee’s much reviled opposition to the river water deal with Bangladesh is worth keeping in mind. It is an affirmation of what Henry Kissinger said in his seminal book, “Domestic Structure and Foreign Policy”: domestic politics cannot be “taken as given.” The Bannerjee dissent is a sure sign that Indian foreign policy has to descend from its elitist heights and deal with local politics.

This appeared on India Real Time, The Wall Street Journal on September 15, 2011

Indo US Ties Nosedive

Obama Has No Time for India

US President Barack Obama has sent a huge message to India. He visited every major country in Asia: Indonesia, Singapore, Japan, China, and South Korea but could not find time to include India in his itinerary. In Beijing, he acquiesced in a joint communiqué that covered a lot of ground. What struck home in India were media reports focused on a passing reference that urged China to ensure peace and stability in South Asia. It is probably true that what Obama meant was to tell the Chinese to refrain from arming Pakistan.

Nevertheless, the statement was a measure of Obama’s inexperience in dealing with India’s prickly sensibilities, especially with regard to China. India has never forgotten the humiliating backstab in 1962 when the Chinese army attacked India; nor has it come to terms with China’s dubious role at the International Atomic Energy Agency conference to approve the all-important waiver that was necessary for the fruition of the Indo-US civilian nuclear deal. Plus India treads warily of the Chinese fifth column, the CPM, which did all it could to scupper the deal; every thinking Indian believes that Prakash Karat and company were acting at Beijing’s behest. More recent, the Indian government has had to deal with Beijing’s aggressive stance on Arunachal Pradesh, the northeastern state that it calls southern Tibet.

It is becoming clear to those of us who champion Indo-US relations that Obama really has no time for India. He’s from Chicago, where I lived for the best part of the 1970s and 1980s. And India is not big in the Chicago political mindset. As such, India is not in his list of priorities.

Prime Minister Manmohan Singh is scheduled to visit Washington later this month. In a patronizing way, the White House has billed it as the first state visit of any world leader. But that’s meaningless. Every major leader has visited the US and met Obama. The “state visit” business is a piece of diplomatic fluff. It is very clear India is very low in the Obama scheme of things.

Nobody is more pained about the Obama administration’s cavalier attitude to India than those of us who have fought for all these years for a closer Indo-US relationship. Manmohan Singh put his government on the line for the civilian nuclear deal. Not just that, the Indian electorate voted his government back to office with an increased majority.

The Obama administration’s Asia policy puts the Singh government in jeopardy; it fought long-held anti-American mindsets to align with America. This is further underlined by the changed Indian positions on world trade and global warming that are now more in line with Washington’s thinking. As a huge supporter of better and more intense Indo-US relations, I am troubled by this president’s neglect of India; it feeds into the knee-jerk anti-US mindset of the establishment.

As such we are headed for a period of rocky relations with the US government. It happened under Indira Gandhi in the 1970s. It was a different India then. Today it is among the world’s fastest growing economies that is raising millions of people out of poverty. Obama does not seem to realize that. I am now not sure Obama is good for India, even though to many Americans and Europeans, he is Jesus Christ resurrected.

Those of us who support a strategic alliance with the US, including the Prime Minister, feel badly let down. The joint communiqué in Beijing apart, Obama has made protectionist noises about the outsourcing business. Little wonder then that the Indian foreign ministry with its deeply-rooted anti-American mindset issued a truculent statement in response to the communiqué.

Obama’s unthinking approach to relations with India will only embarrass and weaken the growing tribe of opinion leaders who support a strategic alignment with America. Willy nilly, it will strengthen the knee-jerk anti-Americanism that is always at play in India’s foreign policy. “I told you so,” is a refrain that is increasingly louder in Delhi. After the romance with Bill Clinton and George W Bush, pro-American opinion is silenced, not knowing what to expect from Obama and his slick PR machine.

The Prime Minister’s upcoming visit to Washington promises to be just a ceremonial exercise. In the event, it will be all style and no substance. There will be a banquet, many speeches, including a stirring one by Obama. Then it will be over. What does the Indian prime minister have to say to Obama in any case?

To begin with, he could take a firm line on the emergent market for nuclear power plants in India. Given Obama’s faux pas, the Indian government could take the view that American firms that do business with China are not welcome in the nuclear power industry for reasons of national security. After all, China has jut asserted that the northeastern state, Arunachal Pradesh, is part of China. It could do the same with other security-related sectors such as the purchase of aircraft and other military hardware. It could disengage from Afghanistan, where it supports the American development effort. Plus, the Indian delegation could take a hard line on Obama’s view on outsourcing.

Time to play hardball.

Copyright Rajiv Desai 2009

Delhi Journal

George Bush, Indian Hero

At a recent event in the Taj Palace Hotel in New Delhi, I found myself with my arm around his waist and his arm around my shoulder, posed for a photo opportunity. George W Bush, the much reviled former President of the United States, was in an expansive mood that evening. Aside of his “base” in America, this was fawning that had to be seen to be believed. He is the unquestioned hero of India’s elite. A senior member of the ruling Congress party said he would recommend him for the Bharat Ratna, the highest civilian award.

In his early sixties, Bush is sprightly and amazingly friendly. He mingled with guests and stayed on to have what I consider the Taj’s most fabulous spread. Bush has been a divisive item in my immediate family and my friends in America. They hate him for the "shock and awe" bombing of Iraq; his assent for the atrocities in Guantanamo. It is truly terrible. For me though, those are American problems. Why should I get worked up about it?

Having worked closely with the US mission in Delhi and the Prime Minister to steer the Indo-US civil nuclear deal to its completion, I was proud to shake hands with him, be photographed with him. Bush, for India, has been the best ever US President. Bill Clinton, whom the Indian establishment still admires, set the trend. Bush accomplished what seems to have not occurred to Clinton. He brought India into the global mainstream. If Richard Nixon is held in esteem for opening China, Bush should be acclaimed for his outreach to India.

“President Bush, thank you for your support,” I said to him. Hated, reviled and caricatured among my liberal intellectual and activist friends in the US, Bush to me has been an icon; he overcame the traditional US highbrow establishment’s “attitude” about India. Between my friends in the US embassy in Delhi and in the Prime Minister’s office, we worked to see the deal through. It wouldn’t have happened without the unflagging support of Bush and Prime Minister Manmohan Singh.

With the Prime Minister committed to the deal, the diplomats in the US Embassy in Delhi led from the front. They overcame bureaucratic hurdles on both sides to push the deal. We always knew there would be opposition. For one thing, there was the Left, a key supporter of the Congress-led UPA government. It was also not very clear that the Congress Party was enthusiastic about the deal. Once assured of US support, the Prime Minister put his government on the line and the Congress Party fell in line thanks to Sonia Gandhi’s enlightened world view.

In the event, much drama happened. There was a vote in Parliament and the deal was sealed. Of course, Dr Singh is the hero and Sonia Gandhi, who backed him. Nobody can, however, deny that Bush’s enamored view of India was the driving force. Not to forget, the Congress managed to win another term in 2009.

That’s why I was thrilled to meet him, never mind that my friends in America won’t talk to me. They may have questions about Bush; for India, he is the greatest US President ever. It showed that evening.

Copyright Rajiv Desai 2009

From The Times of India, May 21, 2009

TOP ARTICLE The Decency Option
Election Result Is Key Step in India’s Political Evolution

21 May 2009, 0010 hrs IST, RAJIV DESAI

On Sunday, television viewers witnessed the denouement of the media's noisy and often distorted coverage of the elections to the 15th Lok Sabha.

Just an hour or so after counting began, it became clear the Congress was on its way to a renewed and enhanced mandate. Some saw this coming; indeed, it was there for all to see. The election had taken place under the most extraordinary circumstances: an acute global financial crisis and the aftermath of terror attacks in Mumbai late last year. It was fairly obvious that voters would plump for stability by providing a decisive verdict as they had in 1977 and 1984.

Like the one in 2009, those two elections were held at a time India felt its future was at stake. In 1977, voters decisively rejected Indira Gandhi after she suspended the Constitution, jailed political opponents and muzzled the press during her two-year Emergency. Seven years later, after she fell victim to the bullets of her Sikh bodyguards, the electorate gave her son Rajiv the biggest-ever mandate. These two extraordinary outcomes were useful in predicting the result of the most recent parliamentary election.

One of the most stirring moments in the post-result euphoria was when Prime Minister Manmohan Singh told reporters assembled at 10 Janpath, Sonia Gandhi's residence, "I urge all the political parties to forget their past disputes...We should stand one as a nation." The comment is important because it represents the return of civility in pairs. Unlike the triumphal note the BJP, the Left and various regional formations customarily sound on their various victories, Singh's sober tone signalled his intention to steer a conciliatory course in his next term. Under the new dispensation, public discourse would move beyond matters of probity to decency in public life. This is a major step in the evolution of the political system.

Sadly though, various self-important Congress factotums hit the high registers of arrogance in their dealings with former allies like Lalu Prasad and Mulayam Singh Yadav and with current supporters like the DMK.

This acrimonious beginning raises troubling questions about the future. The vindictive elements need to be reined in swiftly. Unchecked, their arrogance could undermine the new credibility the Grand Old Party has won. If the Congress is to implement what P Chidambaram called its "crisp" manifesto, it will need broad support from the non-Left, non-BJP members of Parliament.

So what's on tap? Take monetary policy. With the resurgence of investor confidence, the Reserve Bank is likely to cut interest rates to facilitate the flow of credit into the domestic economy. In the event, it must also provide incentives to banks to lend to businesses, especially cash-starved small and medium enterprises.

Concerning fiscal policy, huge investments are needed in surface and mass transport, civil aviation, sanitation, water supply, power generation and what have you. One obvious way to raise funds is to sell public sector assets. The railways, ports trusts and various other agencies own vast tracts of prized real estate that could fetch princely sums. The telecom department is widely known to have the biggest network of auto repair shops in India. The tourism ministry's crumbling hotels are obvious targets of divestment as are government-run airlines.

Hobbled by the Left and its fellow travellers in the Congress and its allies, the government hedged its bets on attracting foreign investment. Complex bureaucratic hurdles made FDI dwindle in sector after sector. In retail, insurance, pensions, civil aviation, you name it, opening up remained at best an unfulfilled promise. Ominously, the commerce ministry's Kamal Nath breezily told a television channel, "We already have a liberalised (FDI) regime." He followed that up with a clear no on retail sector reform.

On higher education, despite the National Knowledge Commission's recommendations, policy remained confused and corrupt, dominated by a venal bureaucracy (the All India Council on Technical Education comes to mind) and obtuse politicians. The sluggish human resources development ministry, by its acts of omission and commission, spawned the paradox of growing unemployment despite a huge demand for qualified personnel.

With trade, India adopted the spoiler's role at World Trade Organisation conferences, playing the victim of rapacious developed countries. The rhetoric employed was from another era, when India played a prominent role in the Group of 77, the commercial foil of the Non-aligned Movement. Without the Left calling the shots, its acolytes in the Congress-led ruling coalition will find themselves adrift. It is likely that India will pursue a more reasonable line.

On foreign policy, the strategic alliance with the US, embodied in the nuclear deal, achieved a long-standing objective: to overturn the discriminatory non-proliferation regime. In the neighbourhood, South Block welcomed US pressure on Pakistan seeking to curb its military's anti-India fixation and focus attention on domestic problems caused by a resurgent Taliban. In Sri Lanka, India supported Colombo's final assault on the LTTE ridding the region of a major terrorist force. In Bangladesh and Nepal, the approach has been somewhat mixed, lacking strategic focus.

Despite the show of hubris by vindictive apparatchiks in the Congress and nagging doubts about its leftist bloc, the overall message is that the election results are a game changer.

copyright rajiv desai 2009

Cutting Through the Election Noise

Confusion Has Made its Masterpiece

A burgeoning middle class, a slowing economy, a creeping intolerance, a terrorist challenge, and a growing voice in the world: these are the challenges and the opportunities that face the country as it prepares for the next general election. Yet the issues being raised in the campaign are largely about caste and religion; the debate is about yesterday, not even today.

The BJP is floundering over Varun Gandhi’s intemperate outburst against Muslims, afraid to alienate its communal “base” and worried about losing the new middle class support it has gained in the past decade. It went ballistic over the shoe-throwing incident at a Congress press conference and sought to revive, after 25 years, anger over the anti-Sikh riots that followed the assassination Prime Minister Indira Gandhi in 1984.

Perhaps the worst case of the BJP’s growing irrelevance is Gujarat chief minister Narendra Modi, who, in a recent campaign speech, pejoratively called the Congress Party a 125-year-old woman. Modi is not just the fascist shame of Gujarat; he is obviously prejudiced towards women and old people. We know that like Shakespeare’s pathetic Macbeth, he harbors ambitions of being Prime Minister.

Given his intemperate ways, Modi is a poor player like bloody Macbeth, who “struts and frets his hour upon the stage …full of sound and fury, signifying nothing.” Meanwhile, Gujarat, like Macbeth’s Scotland, “sinks beneath (his) yoke. It weeps. It bleeds and each new day a gash is added to her wounds.”

Commissars of the Left and bosses of various regional factions are pushing aggressively for a “Third Front” government that excludes both the Congress and the BJP. Chieftains of the various caste formations in the Hindi heartland are busy posturing over the prospect that their “Fourth Front” could emerge as a key power broker in the event of a hung Parliament. Neither front has a coherent strategy except to fish in troubled waters.

As always, the Congress maintains a stoic silence amid the din of its rivals; its game plan is to emerge as the single largest party and then gain adherents from the various fronts. Amazingly, it has never been forced to defend its record of governance in the past five years. Its economic policies have included questionable populist giveaways and timid monetary policies. Its foreign policy has been reactive and tactical in the face of challenges from all around the neighborhood including Pakistan, Bangladesh, Sri Lanka and Nepal.

More than at any other time, there seems to be a complete disconnect between politics and the new reality. The nearly 20 million new voters of 1991 vintage have grown up in an India where possibilities are endless. More important, they believe that tomorrow has to be better than today. This is in stark contrast to the generation of “Midnight’s Children.” We were wracked by uncertainty so we voted with our feet and pushed off overseas, ostensibly to study but truly to make our fortune.

Today’s children want to go to America like we did. The difference is they want to gain skills and expertise and come back home to lucrative jobs. Their worldview is different. Never mind if they are rural poor, urban slum dwellers or middle class youth. They have no patience; they want it all and they want it now. The political class simply doesn’t understand this driving force largely because it runs on a feudal ethic.

Also in evidence is a curiously cynical lethargy: not a single party has outlined a plan to deal with the rapidly growing middle class and the concomitant demands for good governance. Mindsets of yesteryear preclude the recognition of the middle class. The focus is exclusively on the poor, one segment of the population that is declining in number. This particular quirk is the single most powerful sign that the political class is out of touch with the rapidly changing demography.

Consequently, voters must decide without the benefit of an informed debate on the issues. This election is the first one in which men and women born in 1991 will cast their votes. This is a brand new generation that has grown up in an era of liberalization and globalization. Seen against the rise of a 300-million-strong middle class, it is clear that a consumer economy is taking root.

What’s worse, the media simply don’t get it. Thus we are told that Mayawati is a candidate for the top office. This is simply incredible. With the 30 or 40 odd seats she may garner, mostly in Uttar Pradesh, it is difficult to imagine such an outcome. Yes, V P Singh, Chandra Shekhar, H D Deve Gowda and I K Gujral did make it. All of them were supported on the outside by the Congress or the BJP. They ran rump governments that lasted few months.

It ain’t gonna happen with Mayawati, who wins sympathy as a Dalit woman but is nevertheless accused of milking her supporters to build statues of herself. Shamelessly, she has built herself a Xanadu-like palace called BSP House on Delhi’s pricey Sardar Patel Marg. Just because you happen to be a Dalit woman doesn’t mean you cannot be questioned on ethical considerations. It’s all very well to say that everyone’s corrupt in the political domain. But why should the same scrutiny not apply to her?

Whatever the pundits say, it is clear that neither Advani nor Mayawati, never mind the other pretenders, is about to become the next Prime Minister.

A Version of This Column Appeared in The Times of India, April 14, 2009

copyright rajiv desai 2009

Halfway Point for the UPA

The Way Things Are Going…

When the Congress Party came to power nearly three years ago, middle class hearts were gladdened. Having supported the Neanderthal Democratic Alliance led by the BJP, many were dismayed by the 1998 nuclear tests, following which India became a pariah of the international community. In 2004, the Congress-led UPA won a mandate. Tragically, the Congress think tank, which consisted largely of people who played the role of the palace guard for 10 Janpath, interpreted the result as a vote against the BJP’s “India Shining” campaign.

The Congress continues to believe that Indira Gandhi was their talisman with her garibi hatao and her 20-point program. They see in Sonia Gandhi glimpses of Indira, when really she represents a continuation of her husband Rajiv Gandhi’s vision of ushering India into the 21^st century. Many of us who worked closely with him remember when he met Jack Welch, the head of GE, who started the first BPO operation. The rest is history. Today, we are not just the world’s back office; we are solving complex business problems on the basis of our information technology expertise.

Yet the Congress rank-and-file believes that the socialist nostrum is the way forward. They now talk about “inclusive growth.” There can be no denying that the fruits of India’s screaming economic success, led by the BPO industry, should also include the poor and that the government must play an active role in ensuring that they are equally distributed. But that’s not why the BJP-led NDA coalition was defeated. The middle class that voted it into power in 1998 deserted them, frightened by the communal agenda and more so by their incompetence in governance.

The BJP sees things in black-and-white: they propagate that the Congress is an anti-Hindu party and seek votes by raising the basest communal passions that were tweaked by the Partition. The Congress also takes a similar zero-sum view and pits the rich against the poor, stoking the fires of class conflict. It is unable to shake the Soviet mindset of state control over all aspects of human endeavor.

Both parties tend to ignore the middle class. In the old days, the middle class was small and easily forgotten; today it is a substantial, creative force that chose to oust the communal die hards of the BJP. And this is the very group against which the Congress seems to have taken up cudgels, with its divisive agenda of class and caste differences. It has increased taxes, squeezed credit and supported irrational quotas based on caste.

Neither party has taken into account the aspirations of this fastest growing segment of the population. There is something abroad in the world; it’s called the India story. No political party seems to understand it. After Manmohan Singh, as finance minister, scrapped Soviet-style controls on private enterprise in 1991, the economy boomed. Unfortunately, the sacking of the Babri Mosque derailed the reforms the very next year. The economy began to drift and that saw the comprehensive defeat of the Congress in 1996 and the emergence of carpetbagger politicians, who slept in different political tents every night.

In 1996-1997, there were two weak Congress-backed governments under whose dispensation the bureaucracy was able to stall any further reforms. In 1997, when it was clear that the Gujral-Deve Gowda regime had run it course, the bureaucracy unleashed a series of demand management measures including a rise in interest rates that reined in the growing economy. The recession that followed lasted until 2003. In the interim, BJP-led coalitions came to power but proved unequal to task of reigning in the demand managers. It resorted to ad hoc measures such as the poorly designed national highway program. In the event, the BJP-led NDA crashed to defeat in the 2004 election.

For two years, the UPA government focused on setting things right. But the internal contradictions in the Congress and the nihilism of the Left saw its goodwill erode. The Congress is losing elections everywhere but its sycophantic leaders believe that Rahul Gandhi will deliver them from the morass of ignorance and intrigue that is sapping the party. Such complacency will cost them dearly.

from daily news and analysis april 18 2007

The Fall of India’s Berlin Wall

Comrades Sent Packing

"Free at last! Free at last! Thank God Almighty, we are free at last." (Martin Luther King).

Prakash Karat cuts a sorry figure today. His ideological posturing has cost the Left dearly. In 2004, his predecessor, Harkishan Singh Surjeet offered the UPA support and enabled the Congress-led coalition to form the government. In 2005, Karat replaced Surjeet and almost immediately the relationship between the Congress and the Left turned sour.

The dogmatic new general secretary unveiled a new era of hectoring the Congress and pushing an unreconstructed ideology that survives only in Jawaharlal Nehru University. Elsewhere in the world, the communists have been pushed to the fringes after the fall of the Berlin Wall.

Between April 2005, when Karat replaced Surjeet, and Tuesday July 8, 2008, when he foolishly withdrew support to the UPA, the Indian Left enjoyed more influence over the Indian government than Israel has over various US governments. And they blew it.

Karat’s obduracy has painted the Left out of the reckoning. Beijing’s mandarins cannot be very pleased. This is abundantly clear from foreign secretary Menon’s statement that China will support the Indian application to the Nuclear Suppliers Group. His dour, immature brinkmanship cost the Left its invaluable influence over government policy. The current crisis is of Karat’s making; it has rocked the India story that the world believes is crucial both in geopolitics as well as in international economics.

What the commissars don’t understand is that the entire world in banking on India’s emergence from a regional to a global power. US President George W Bush was among the first to grasp the importance of the transformation. As Prime Minister Manmohan Singh says, the whole world is rooting for India to emerge from its poverty and its Third World victim mindset. Should India succeed, it will set an example for poor countries. It did that in the 1940s when the Indian National Congress won independence from Britain and presided over a relatively smooth transfer of power.

India’s economic transformation will send a more powerful signal to the world than China’s phenomenal growth. The only other large nation that succeeded in wiping out mass poverty is the United States more than two centuries ago. Sure, China has lifted more people out of poverty than India; at the same time, it has clamped down on political opposition. “An iron fist in a velvet glove,” a Chinese-American scholar once called it.

What China lacks is soft power. That’s what the Olympics exercise is all about. The fact is that without the fuzzier aspects of power, it will always be an outsider wanting in to the world milieu. On the other hand, between cricket, Bollywood, the increasingly competitive and aggressive business community and the English-speaking, highly accomplished emigrant community in the West, India has more global influence than China.

The charge that India’s communists are a Chinese fifth column is not lightly made. Many in the highest levels of government believe it to be true. Any rational explanation of Karat’s latest move must factor it in. If, we give Karat and his commissars the benefit of the doubt, the only conclusion left to draw is that they are irresponsible and dogmatic. Any which way, they do not deserve to have a veto on government policy. Either as Quislings or as juvenile ideologues, they should be banished to the fringes from whence they sprang.

So Karat has now wrought his masterpiece of absurd theatre. It reminds me of a scene from the acclaimed film, “Butch Cassidy and the Sundance Kid.” With the forces of the law closing in on them, the duo found themselves at the edge of a cliff with a river flowing furiously below. They had no option but to jump. Sundance was hesitant because he couldn’t swim. Butch told him not to worry “because the fall will kill you anyway.”

That’s the fate of the Left today. They have pulled the plug and find they are the ones who will be flushed down the drain. The Congress is a mighty political player with over a century’s experience. It ran circles around the juvenile commissars and emerged triumphant.

from the times of india july 14 2008