Nobody Stopped the GDP / The Sunday Standard/ June 03, 2012

POWER & POLITICS

Nobody Stopped the GDP from Growing and Nobody Saw it Coming

We have heard enough about coalition politics where all partners conspire to keep themselves in power. We rarely hear of a coalition of economists who confabulate to promote the same market agenda all over the country. First as a student, and later as a teacher of economics, professors would always remind me never to forget one basic trait of economists: “If five economists get together, they would offer six different opinions.” For the past 40 years, I kept that golden economic rule in mind while analysing the minds of modern economists. Surprisingly, now I find scores of economists, from New York to New Delhi, are giving only one opinion and one prescription for the ailing and failing global economy. From Nobel laureates to economic advisers to the government and multinational corporations, all speak one language and use the same grammar. None of them see anything terribly wrong with either the private sector or government policy. In spite of the global meltdown, one hardly hears a contrarian economist’s views, which throw light on the real cause for the economic collapse of the US, Europe and the BRICS (Brazil, Russia, India, China and South Africa).

Last week, when India’s GDP growth slipped to 5.3 per cent—the lowest since 2002—both the government and its coalition of economists blamed the abysmal growth on the absence of investment sentiments. None was willing to admit failure in predicting the massive decline. From Planning Commission Deputy Chairperson Montek Singh Ahluwalia to corporate-sponsored unknown economic experts, all failed to offer any credible explanation for their faulty knowledge about the complexities of Indian economy. Even a well-respected economist like Dr C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, has been optimistic about India’s future. Dr Kaushik Basu, chief economic adviser to the finance ministry—who left a lucrative foreign assignment to serve India—has been blaming everyone else except the government for the fall in India’s economic fortunes. For the past three years, all of them have been painting a rosy picture of the economy. The latest Economic Survey has predicted that GDP would rise by 8.6 per cent during the current fiscal year. All the wise men and women of the Planning Commission have been reeling out statistics, which never predicted doom. For them, everything and every sector was booming. For them, the India Growth story was a permanent growth model for the rest of the world. Either they were ignoring ground realities despite data collected by staff on the ground, or they simply decided to sing the song of success that has eventually turned into a litany of sorrow.

India and South Asia became the voice of the West probably in 1991-92, when three World Bank-trained economists took over as finance ministers around the same time: Manmohan Singh in India, Hafeez Shaikh in Pakistan and Saifur Rahman in Bangladesh. Since then, all economists have been speaking in the same tongue. Two decades later, it is no coincidence that even global agencies are parroting the Indian establishment’s views. It is difficult to fathom the source of information which has led both domestic and foreign agencies to arrive at the same conclusion. One suspects it was a hidden hand guiding them to propagate and project a positive India story for the benefit of their benefactors. Or else, they have forgotten basic economics after reading Manmohanomics.

The Asian Outlook Report for 2012 released by the Asian Development Bank in April boasts that India’s GDP is poised to rise by 7 per cent during 2012-13. In 2010, the rating agency Fitch had made a fanciful prediction that India’s economy would grow by 8.5 per cent in 2011. Much more hilarious are the explanations being touted for the end of the India story. From Finance Minister Pranab Mukherjee to corporate megaphones, all are blaming the absence of an investment climate and the Eurozone crisis for India’s economic plague. Barely three years ago, they were patting and promoting the government and themselves for saving India from global meltdown. Manmohan Singh and Pranab Mukherjee claimed that it was their robust management of the economy and correct fiscal policies, which saved India from slipping into depression. Today, when the real impact of supply side economic policies is staring at them, they are conveniently passing the blame to external factors. Current policy paralysis is the outcome of the unholy nexus between political and economic cabals, which are unwilling to read the writing on the wall. The past two decades have seen the coming together of political leaders, economic thinkers and cultural tsars to frame and pursue economic policies that work for them and theirs only. The line that divided Marx and Market Economics has either blurred or completely disappeared. Unfortunately, the Greedy Coalition of Market Economists has turned even bad politics into worse. The message is clear: India has to get rid of bad economics and ignorant, ill-informed and over-rated economists if it has to revive its growth story for the masses and not just for the classes.

prabhuchawla@newindianexpress.com

Follow me on Twitter @PrabhuChawla

All cakes and no Bread in Aam Aadmi's diet/The Sunday Standard/November 13, 2011

POWER & POLITICS

All cakes and no bread in Aam Aadmi's diet

Abnormal responses to an abnormal situation can be justified. But how does one justify an abnormal response to a normal development? As poor and middle class India struggles with rising food prices, various well-spoken economists, foreign educated administrators and homegrown politicians have a bizarre explanation for the stratospheric prices of food grains. They don’t find fault with policies, the flawed distribution system or the absence of a regulatory mechanism. Instead, they sing the same tune, blaming the people for causing inflation by consuming more and changing food habits. A few samples.

> Prime Minister Manmohan Singh in Cannes, November 8: “What prices are going up are those of vegetables, eggs, fish that are secondary and tertiary food items. That is a reflection of the demand for these commodities exceeding supplies... That in turn, to some extent at least, is a sign of growing prosperity of our country.”

> Finance Minister Pranab Mukherjee, November 3: “Food inflation is still going high. It’s dangerously above the double-digit figure. This is the effect of festive season demand. November onwards, the trend for the remaining four months (of the fiscal) would be available.”

> Chairman of Prime Minister’s Economic Panel, C Rangarajan, addressing the Economic Editors’ conference, New Delhi, October 20: “I believe that even if in this particular week, it (inflation) has risen, it will come down. I believe that the monsoon has an effect on the availability of food grains which you will see in months ahead.”

> Union Food Minister K V Thomas, October 29: “Food habits of people are changing. Their purchasing power is up. This is causing food inflation,” and added, “There is no inflation in foodgrains, it is in items like milk, poultry, meat and vegetables.”

The PM’s super-advisor on all economic issues, and Chairman of the Planning Commission Montek Singh Ahluwalia said, “High inflation number points towards people eating healthier food, better lifestyles.” From the PM to his food minister, all are trotting out the same reason, as if together, they have decided to blame aam aadmi for sabotaging their ‘Great India Growth Story’. None of them have, however, described the precise eating habits of Indians. Perhaps they themselves don’t know, a Congress functionary observed, since they rarely visit markets or get direct inputs from those who voted them to power. He raised an earthy question: “Have the PM, the finance minister or their colleagues changed their own eating habits?” Has the PM, a frugal eater, given up eating less fish and more continental food than before? Has the food minister given up appams or rice? If politicians are sticking to their conventional dishes, why should ordinary Indians eat anything else than what they been having for years? No ‘Breaking News’ on the 200-odd TV news channels has declared that now Indians are consuming only eggs, meat and green vegetables! The Press Information Bureau tells us that India had a record foodgrain production of 234 million tonnes in 2010-2011. We are also informed that India produces over 112 million tonnes of milk—the highest in the world. But the government’s publicity machinery doesn’t reveal the retail price of sugar has risen by 100 per cent in the past three years; wheat by 150 per cent; dal by 300 per cent and vegetables by 300 per cent. Fuel inflation is over 12 per cent thanks to 10 increases in fuel prices in 15 months.

Frankly, those who collect, collate and circulate official figures have no clue about the consumer basket. Over 90 per cent of Indians can’t afford poultry, meat, milk or green vegetables on a daily basis; if prices change dramatically, it will not affect them. If the government believes that high inflation is due to excessive demand for luxurious dishes, then it is dishing out wrong information, because retail prices of goods consumed by low-income groups have risen dramatically. Once this reality is reflected in the retail price index, the real food grain inflation may cross 25 percent. The `63,000-crore foodgrain subsidy is only helping the rich through leakage and patronage. The real cause behind food inflation is a skewed food policy that encourages hoarding, speculation and leakages.

Of course, the other excuse for rising food prices is the growing gap between demand and supply. This, again, is farcical. India has faced much worse food crises during the 1960s and 1970s, when lines appeared at ration shops. Not anymore. The number of people asking for foodgrain is more. But the pocket and stomach of the average Indian hasn’t swollen in size as much as the egos of the small leaders who rule India. The new elitist establishment looks at India through what happens in their personal lives. Their changing lifestyles and wishlists are spelling disaster for aam aadmi.

www.prabhuchawla@newindianexpress.com

Teekhi Baat_Montek Singh Aluwalia_Prabhu Chawla/October 08, 2011/IBN7

Interview with Montek Singh Ahluwalia, deputy chairman, planning commission on Teekhi Baat for IBN 7.

Excerpts:.

PC: Straight question, how do you decide the definition of poverty.

MA: The latest position on the poverty line is that about two years ago, we got to know that there is a lot of discussion, particularly about rural poverty line being low. That is why we set up an expert committee, under the chairmanship of Suresh Tendulkar, he gave report in 2009. He recommended that the earlier poverty line in rural areas should be adjusted a bit upwards. The latest numbers are the numbers of the Tendulkar committee.

PC: Tendulkar sahab decided, after that there was the Arjun Sengupta’s report, even he had defined poverty line, and how many people are below poverty line, he had not said Rs. 28 or Rs. 30, he had talked of numbers. After that Jairam Ramesh came to you, the question is every person has his own definition. Different definition of Montek, different of Tendulkar, one of Prabhu Chawla (smiles).

MA: Official poverty line is what Suresh Tendulkar’s committee has established, which has been accepted by the planning commission. What we say regarding the numbers of below poverty line population, they have all from Tendulkar sahab’s report. Arjun raised a point, he said, this is a poverty line, we agree anybody below this line is poor, but he also said that the people above this line too are vulnerable.

PC: You said poverty line, which means somebody below that line is even poorer.

MA: No, no, I am talking of cut off line.

PC: Then those people are in the condition that they can even perish, people who are below that level.

MA: Certainly, people who are below that line are known to be very poor. Arjun Sengupta said, poverty line is one thing, many people are above this line but that economic condition is not so good. Hence, he said vulnerable. He said that if the poverty line is doubled, then 77 per cent of the population would be below the poverty line. Actually there was some arithmetic errors in that but the it is right to say that if the poverty line is doubled, the old poverty line not the new one, then 65 per cent of the population will be below that line. Now Tendulkar sahab increased it but not that much.

PC: He says it is 32 per cent.

MA: Now the poverty line as said by Tendulkar sahab, if compared with year 2009 data, comes to around 32 per cent.

PC: That means 32 per cent of India’s population of below poverty line, which means their income is less than Rs. 28 per day.

MA: Correct

PC: Do you think a man can stay alive in Rs. 28, Tendulkar sahab thinks.

MA: The Rs. 28 number is a bit misleading, because the number which we gave in court, we had given details of family expenditure, which in rural areas is around Rs. 3900 and Rs. 4,800 in urban areas.

PC: Let’s say it is Rs. 100, Rs. 125 and you think in that amount, an average family in India, which comprises of four-five people, can sustain itself.

MA: No,no,no,no, that 32 per cent figure is per person, now when talking of a family then it should be multiplied by five.

PC: Hence I am saying that Rs. 125

MA: Around Rs. 125, Rs.150.

PC: Do, you think Montek, that Montek Ahluwalia, Tendulkar are qualified to define poor, and none of them experienced poverty.

MA: I clearly agree that I am not an expert in this.

PC: You are not expert in defining poverty.

MA: I myself say that we took recommendations of expert committee.

PC: Was Tendulkar an expert in defining poverty.

MA: In this area is has worked a lot. Whatever has been written, on poverty, the amount of research that he had done in this area, many few people would have done it. He was not himself poor, ordinary simple academic.

PC: I agree with you, you went to St. Stephen college, I didn’t, studied in Delhi School of Economics later, before that I studied in Deshbandhu College. So, do you think that doing research and measuring poverty by going in villages are different things?

MA: Yes, there is a difference.

PC: How many times, Tendulkar would have gone to villages, stayed there and measured poverty, do you think he would have gone in villages.

MA: He would have gone, if you compare him with other economists, actually he knows more.

PC: How many classes of people are there in India from rich to poor, if an eminent economist like you classifies. We keep on talking about castes, if you divide on economic criteria, then how many types will emerge.

MA: If you divide on economic criteria, then you have to distinguish many classes. One is Tendulkar’s poverty line, it is very low line, I don’t say

PC: Whom you will say poor.

MA: Poor and very poor. Ok, now many people who are above Tendulkar poverty line, it has to be estimated, but they can be said as vulnerable. They are living in difficult economic situations, they would have many problems, even if there is somebody takes ill in the family, and they are vulnerable. After which comes aam aadmi, which means that their basic needs are all being met but even they have problems during inflation. Now Tendulkar’s sahab’s line says 32 per cent.

PC: No, about aam aadmi

MA: I will tell you. Now in the food security bill draft, according to the numbers given by the government, 41 per cent population will get subsidised food. If you add 10 per cent over Tendulkar sahab’s line, they can be called vulnerable, hence it becomes 40 – 41 per cent. From 41 per cent , I will say till 80 per cent is aam aadmi. They are workers, have jobs, but are not rich. The 20 per cent above 80 per cent can be called upper income classes. But rich, really rich are only top one per cent.

PC: You spoke about four to types of people.

MA: officially there is only one line; you asked a question so I discussed my assessment with you.

PC: You are the deputy chairman of the planning commission; your work is to implement the manifesto of the government in power. Hence, you are working for the aam aadmi, being the centre of the whole budget. Hence, can I think that you don’t think about 40 per cent of the people who are below the aam aadmi level.

MA: No, certainly not. The 12 five year plan approach paper which we published recently and is on our website. In that poverty line has been given much importance, we have to do something to help these people. Other than them, economic policies should also help aam aadmi, they should get benefitted.

PC: People below them are left, you don’t talk about them.

MA: No, no, if you read our approach paper we have specially mentioned that poverty alleviation is very important.

PC: There is a separate ministry for that.

MA: The second point is that there are many schemes of the government, which is specially targeting this group.

PC: Montek, one Teekhi Baat there is no consensus on definition of poverty line. It is arbitrary, subjective.

MA: You are right, if somebody says Rs. 4800 is not right, make it Rs. 5500, there can be no scientific basis on this.

PC: There is no agreement on anything, on poverty line.

MA: Please see, Tendulkar committee report was published in 2009. In 2010, when midterm appraisal was published, it was written that this is the report, it has been accepted, these are the numbers. That time percentage of poverty was 27.50. We said that number of poor are more than this, Tendulkar sahab’s report says that it is 37 per cent, we agree it at 37 per cent. That time nobody said that Tendulkar line is wrong.

PC: No but when the figure of Rs. 28 was revealed, then the people came to know.

MA: Now there has been a controversy, people are observing, the line is Rs. 4800 plus but it seen as per person per day then it comes to Rs. 32.

PC: There can be one definition of poverty line in Montek Singh Ahluwalia and Dr. Manmohan Singh’s government, other in CPM government, in BJP, then there is no sanctity, it has no parameters, it is for academic discussion, otherwise it has no meaning.

MA: No, I would not say that. One thing you can say, what the level is, is the basic food requirement being met, basic.

PC: Even now you are agreeing that a person can stay alive in Rs. 28.

MA: You please read Tendulkar’s report, he has said.

PC: I am asking you, Tendulkar ..

MA: No, no

PC: I and you have read many books in Delhi.

MA: Whoever is below the poverty line, theoretically they should get benefit of BPL and PDS. Their education should be given free by the government; medical assistance should also be free. Problem is that this all is not happening. People below BPL are not getting cards.

PC: Put your hand on your heart and say, can a person in rural area stay alive in Rs. 28 per day.

MA: If they get medicines and rations free, if their education is free, then basically at that level survival is possible.

PC: That means if government subsidies are delivered, then Rs. 28 is fine. Otherwise it is not right.

MA: Please see, otherwise it is not right.

PC: You are the deputy chairman of the planning commission. I have seen you since college times, you had trust in planning, but now let us agree that you have to now.

MA: No, that is not the case.

PC: Have to now, now whatever policy is being made with regards to poverty line, now a technocrat like you, economist, even Dr. Manmohan Singh is an economist, don’t you think that politicians decide everything now. Like Jairam Ramesh forced you to change the line.

MA: In a democracy, politicians should decide. Technically, people support, but in this issue, as you would have seen on tv, we have said, Jairam also said, and this was the earlier policy too, which household should be identified in what manner. Earlier, the government policy was that BPL population would get subsidised food. But for the past one year we are discussing that it should not be limited to BPL. Hence, the food security draft which has been made, in which 41 per cent people should be getting entitlement , which we are not calling BPL, they are called by a new name, priority sector. That means there is BPL, vulnerable and priority sector.

PC: I talked about politicians because they have to garner votes. You have seen what has happened in the planning commission in the past five seven years. You are not reducing poverty, but distributing money to the poor in the name of schemes. How much money have you spent on the social sector in the name of MNREGA and other schemes.

MA: It is not right to say that people are getting no benefit from this.

PC: Votes are being garnered.

MA: No, not about votes. Now if you go anywhere, farmers are saying that they are facing a problem because wages have increased. Now keep the problems of the farmer separate, if the wages have increased then people who have no land may be getting benefitted.

PC: Have you assessed that since MRNEGA scheme started, how many tangible assets, productive assets have been created in villages. You have distributed money, what assets did you create in the name of MNREGA, have you don’t an audit.

MA: Many evaluations are being done, and we are clearly saying

PC: Are you not happy with them.

MA: No, no, not happy. There is a lot of scope to improve its implementation.

PC: There was an idea of creating employment, you will give minimum wage of 100 days.

MA: Many people used to think, leave the issue if assets, the idea is to give wage to poor people, many people used to think.

PC: In a way you gave bheek to them, the poor fellow takes Rs. 100, Rs. 120 from you.

MA: No, if you see the guidelines of the MNREGA programme, plan documents and even yourself ask Jairam Ramesh, giving money to a person is very important, but the program should be used for creating assets.

PC: That means, Montek, you are yourself and economist. Every year, inflation will rise, which means his DA would also have to be increased, from Rs. 120 to Rs. 150, from Rs. 150 to Rs. 175, you are creating an army of people who are just getting cash, work is not being done.

MA: No, I think in every scheme of the government there are some shortcomings.

PC: Dr. Saab cash is being distributed.

MA: See, just cash is not being distributed, people are working, they are making bunds, roads, check dams. Idea is that they make something like check dams, wells.

PC: Indian government is such that there is no estimate about unemployment. Unemployment is increasing, which is true, you don’t have an estimate.

MA: If you see the employment being generated through MNREGA, it is not so much that the poor is solely depending on that. He is getting a little extra support. If you go to farming area, people are saying two things, one is that wages..

PC: Those have increased because you have started doling out cash, then why will he go to work, he has to work in farms to get money.

MA: No, it means, by giving this little support, wages of others have increased. So, people who were working in farmers fields are getting more wages. If you see it from the point of view to labourer, then it is better, and the second point, if you go to Punjab, then they say that migration has stopped.

PC: Even people from Bihar say that migration has stopped. If you give me money at my house, why will I go anywhere to work

MA: Please see, what average employment is being given under MNREGA, 45 days.

PC: It is a fact that unemployment has increased in this country. Absolute unemployment has increased. Take NSS data.

MA: Everytime, unemployment is calculated in percentages. Please see latest data, percentage unemployment has decreased. If people are getting 45 days employment under MNREGA, then 100 days at 45 multiplied by 100, then he is earning Rs. 4500 through this. Now you will say that nobody can exist in Rs. 4500 a year. But people who are working there have benefitted as wages have increased.

PC: You are an economist, I have also studied a bit of economics, and you studied a bit more than me. I want to ask what kind of government is this which runs on loan, you are running these kinds of schemes, in 2004, you were taken loan of Rs. 200 crore per day from the market, in today’s date you are taking Rs. 1200 crore from market. Where is all this money going?

MA: You are talking of fiscal deficit.

PC: No, am talking of expenditure, there are expenditures that is why you are taking loan.

MA: Expenditure is happening, partly it is being financed through taxes, we are taking some credit.

PC: Do you think Rs. 1200 crore deficit is right, when technocrat is minister, then deficit is less, when a politician becomes..

MA: No, if you are talking of central government, the deficit is increased in the past two three years. But this happened because in the past two three years there globally economy had severely slowed down and not in India but in every country fiscal deficit increased. People said that there is a slowdown, the government should spend a little more, and form this year onwards, there is a plan to reduce fiscal deficit, now there is a target..

PC: You take a loan of Rs. 1200 crore every day, and secondly in your budget give concessions of Rs. 5 lakh crore to corporate sector, revenue forgone. Rs. 5 lakh crore, even when you were there, you have forgone capital gains, then rich got even richer by selling his shares. Is there any country where for so many years, no capital gains tax was imposed. You gave so many concessions to the rich..

MA: No if you are talking about tax concessions, then total effect has to be seen, you cannot pick up one thing and say. The thing is that if you think that tax concessions should be tightened, then it is a technical issue.

PC: You give concession of Rs. 5 lakh crore on one hand and tax the poor on the other. There is less interest on cars and more if a poor man wants to build a house.

MA: This you are picking one thing from here and there and giving a number.

PC: Am talking about policy.

MA: This may be the impression but it is not the reality. Policy is directed at helping ordinary persons, many things are being done. Many schemes are there, which directly help aam aadmi and poor people, rural areas. See the Pradhan Mantri Gram Sadak Yojna, I think it is an excellent scheme. Roads are being made in villages which had no connection to the road network, and the quality of those roads, if compared from the last time, are much better.

PC: Hope that you would have gone in vehicles to small cities, the prime minister would have gone, I have gone there and come back. The infrastructure, except of cities, is worst in the villages. In small towns there is problem, no water, no hospitals, no schools, there is nothing.

MA: From many years, there have been shortcomings. But if you see the latest data of the past three four years since the national rural health mission has started, infrastructure for health, infrastructure for schools, all this is improving. The percentage of children in schools is increasing, almost 100 per cent has happened. There is no doubt in this. The point is that earlier there were no schools, then schools were made, then there were no teachers, now children are coming, they are getting mid day meal. But now people are saying that they quality of teaching is not good, it will take time, there are many shortcomings. But we cannot say that nothing is happening.

PC: Do you think that there is a need of a planning commission in this country, of who you are the deputy chairperson. Earlier you used to believe there is no need.

MA: No, no I always used to believe; I used to think all the time that planning should of such which is right for the situation. Now there is no need for old fashioned planning. The economy of today..

PC: There has to be a direction.

MA: No direction per se, I will say the growth strategy we are following, from which people have benefitted a lot, high growth and all that. This dominantly is private sector led growth, this is correct, market led, private sector led. Hence, our assessment is that the private sector capability, and when I am saying private sector, I don’t mean the big ones, small businessman, everybody, they have a lot of capacity, hence we have to allow policies which support their initiatives. That is a framework. But secondly, our view is not that the government should not do anything. Our view is that the government would have to be many things, making infrastructure number one, number two is special schemes for poor, number three health, education and services like that for aam aadmi, till these would not be provided, they would not get the benefit of growth. This all has to be done.

PC: Dr. Manmohan Singh believes that good economics is good politics. But now good politics has become good economics, you people say that Singh darbar is running the government well. Singh darbar has made a view that we will do good politics, and put good economics in the wilderness.

MA: No, take the period of UPA 1 and UPA 2, seven years have passed, if you compare growth rate in this, then compared to the first time, growth rate of economy is better. The amount of high growth happened this time, has never happened before.

PC: Montek, I will stop you on this point. You have said a good thing, growth rate, you would have read list that comes in the Forbes, you must have read it. There are 50 people in the country, whom we call billionaires, they have wealth of 225 billion dollars of wealth, in the past 15 years, you have taken only Rs. 500 crore wealth tax from them, is this your growth of seven per cent. 50 people have wealth of 225 billion dollars according to Forbes, they give merely Rs.500 crore wealth tax in the whole year.

MA: I have not read the article which you have mentioned. I will dig it out and read it. If you talk of taxes, wealth tax, this tax, that tax, we must see how the total tax collections are going. And total tax in the past seven years has been going very good.

PC: You and we are giving taxes, not the big people, who sold their shares.

MA: No, no, yeh toh kehene ki baat hain

PC: One last question, personal, if you ever become finance minister, you might have been offered sometime, there might have been discussion, news appears in papers.

MA: You keep on writing, but it is not true.

PC: You never thought about it, not was there any talk of appointing you to the post.

MA: No, no.

PC: Will you try to go into politics, because since you know economics, there you will be able to implement it.

MA: Please see, I am of 69 years old, now where; there is time of venturing into politics.

PC: Dr. Saab became Prime Minister at 76, it is not late.

MA: I am quite happy, with the work I am doing, if I do it right, then I am very happy.

PC: What do you think politics should be dominant over the government or economics.

MA: In a democratic government it is wrong to think that politics is on the one side and economics on the other. Actually the name of game should be how to make good politics into good economics and good economics into good politics.

PC: First good politics, if there is good politics, then there can be good economics.

MA: You can also say this, this can also happen. If there is good politics, then economic policies will succeed and politics will also improve.

PC: If there would be good politics, then people like Montek Singh Ahluwalia would not have to defend ministers everytime.

MA: No, no, no, no this I am not saying.

PC: Sometimes you defend on telecom, sometimes on poverty line, hence your credibility is more than politician hence you are called every time.

MA: To run a democracy, a poor country, I mean India is not a high income country. What we are achieving, the country is achieving, I am not, is a major achievement. There is no other country at this income level, which is running a democratic system and performing so well. Earlier, we had democracy, but nobody was saying that India’s economic performance is good. Now it is being said second fastest growing market, emerging market, etc etc, hence something good might be happening.

PC: Something good is happening, even if the poor many be more, rich may be more, there is not much discussion on that. Poor is becoming poorer, rich is becoming richer.

MA: No, no I don’t believe that. Poor is not becoming more poor, but I agree that the poor are not getting the benefit that they should get.

PC: At least you agreed on something, thank you for coming to our studio.

Race Course Rouad/The Sunday Standard/June 19, 2011

The New, Inside-Out Free Market Strategy

The Planning Commission, socialism’s surviving symbol, has become the most sought after post-retirement sinecure for retired babus and market-friendly academics. The marketwallas’ new mantra: if you can’t demolish it, join it. Former Cabinet Secretary K M Chandrasekhar joined this elite group last week when he was appointed Deputy Chairperson of the Kerala Planning Board with Cabinet rank. As Cabinet Secretary, he had pushed the Prime Minister’s economic reform agenda for four years. We expected Chandrasekhar to get a better posting, but he chose to settle for a post in his home state with massive clout and access to both the Central and State governments. Ever since the Deputy Chairperson of the Planning Commission acquired political authority, civil servants and academics have been lobbying hard to be appointed as members. The current Deputy Chairperson Montek Singh Ahluwalia’s enormous clout is the benchmark. Ahluwalia, who is the 24th Deputy Chairperson since Independence, will be breaking all records by completing a second term. He will be the first non-political person to stay in the job for a decade and also attend all Cabinet meetings as a special invitee. Barring three, all attendees are either planning ministers or politicians. Prime Minister Atal Bihari Vajpayee started the practice of inviting the Planning Commission Deputy Chairperson to Cabinet meetings—Jaswant Singh and then K C Pant. Both were former Cabinet ministers and Vajpayee sought their guidance. But neither enjoyed the influence over government policy that Montek does. The commission is flooded with former World Bank officials. It is the Planning Commission that has devised and framed policies that encourages an enhanced role for the private sector at the cost of the government. Private-Public Partnership in the social sector is the most favoured instrument to boost the private sector. Taking the cue from her husband, Isher Judge Ahluwalia had accepted the deputy chairpersonship of the Punjab Planning Board in 2005 when the Congress was in power. A couple of years later, N K Singh, her former finance ministry colleague, joined Nitish Kumar’s government as the Deputy Chairperson of the Bihar Planning Board. Since all Planning Board Deputy Chairpersons are expected to attend all meetings of the Planning Commission and the National Development Council held in Delhi, the emerging New Planners Club will soon become yet another non-elected parallel power centre dictating the economic agenda.

The Chewing Gets Tough for Maken

Is Union Sports Minister Ajay Maken fighting a losing battle? Ever since he mooted legislation to reign in the sports mafia by fixing the tenure and age limit of sports administrators, an unofficial multi-party power coalition is plotting to thwart Maken. The minister’s cabinet note suggesting drastic changes in rules and regulations regarding sports body elections got a boost after the Commonwealth Games scams were exposed. Since the Government had no power to remove a sports official, the sports ministry brought in a model Bill to ensure greater transparency and accountability. The new rules will force most sports administrators to quit and hand over management to professionals. Currently, players are treated like dirt while sports managers splurge on travel and hotels abroad. Maken’s clean-up crusade has rattled many, including some senior political leaders who met recently to chalk out a strategy to counter him. But Maken is no Uma Bharti or Mani Shankar Aiyar who espoused sports reform but were forced to either withdraw or lose their jobs. Happily, both youth and his High Command appear to be on his side for now.

What’s with Thakurs and Minorities?

Most Congress leaders are baffled over the conduct and utterances of AICC General Secretary Digvijaya Singh. Even Congress allies are embarrassed with his vocal stance on minorities and Naxalites. Now a bizarre but interesting explanation for this behaviour has surfaced which says that only Thakurs with Congress backgrounds have taken up cudgels on behalf of the minorities. Since they are obsessed by religious rituals and most follow a baba or a deity, Thakurs go out of their way to prove their secular credentials in the party. It began with Thakur leaders like V P Singh and Arjun Singh. Both chased and wooed the minorities. Even former Samajawadi Party leader Amar Singh made no bones about his passion for minorities. Arjun Singh converted his HRD ministry into a major source of funding for various minority institutions and NGOs who promoted his agenda. V P Singh lost his prime ministership but didn’t compromise on his love for minorities. In fact, he firmly believed that only an upper caste Hindu can win Muslim trust as they don’t have a national leader of their own. Diggy Raja, a distant relative of both Arjun Singh and V P Singh, perhaps believes that the minority plank is the only way to stage a comeback.

Maran Paranoia Comes Full Circle

Union ministers from the DMK are paranoid about security and privacy. M K Alagiri and Dayanidhi Maran avoid visiting Chennai, and are also careful about government employees who visit their offices to handle the maintenance of infrastructural amenities like telephones. Until recently, Alagiri was thinking of replacing the rotary telephone of the RAX (secret) line in his office. Since the Intelligence Bureau handles the RAX exchange, Alagiri has decided to use his fingers to make secret phone calls rather than get tapped.

Snippets/ Mail Today, October 19, 2009

PM & Montek don’t see eye to eye for once

LIKE two great minds that think alike, Manmohan Singh and Montek Singh Ahluwalia have rarely disagreed on anything. Ahluwalia has been a Manmohan favourite for long and if the economist turned prime minister’s hands were not tied politically, Montek would have even been made the finance minister when the new government assumed office in May.

Last week, for the first time perhaps, the prime minister and the Deputy Chairman of the Planning Commission differed publicly. In 1985, then prime minister Rajiv Gandhi, on a visit to Kalahandi in Orissa, one of the poorest districts in the country, had said that of every rupee that the government spent on welfare schemes for the poor, only 17 paise reached the intended beneficiaries.

Statements of top government and Congress functionaries in recent times make it clear that after all these years, Rajiv’s words still ring true. During a campaign rally sometime in April this year, Rahul Gandhi recalled his father’s words and said the situation had only become worse since then.

Last week, while addressing a seminar in New Delhi, Ahluwalia too quoted Rajiv Gandhi and said it was a tragedy that even after a quarter century, the government had not figured out how to plug the leaks.

But the very next day, the prime minister refuted Ahluwalia’s remarks. “ Leakage of funds earmarked for development does exist but I don’t admit these leakages are as big as is being mentioned”, Manmohan said in Mumbai.
I am no judge to decide who is right, but what I do know is that since Rajiv uttered those words, government allocation for social sector spending must have gone up by more than 200 percent. Considering that last year the Centre and states together earmarked nearly Rs 3,51,000 crores on social sector spending, the scale of the loot by crooked politicians, middlemen, agents and contractors can only be imagined. And as the already filthy rich become richer, the poor can only become poorer. Manmohan and Montek can differ on the quantum of pilferage, but implied in this is an admission of a huge, faulty delivery system. The shame is that they can’t seem to do anything about it.

FINANCE Minister Pranab Mukherjee found instant stardom when he wielded the axe on External Affairs Minister SM Krishna and his junior Shashi Tharoor and asked them to move out of their 5- star hotel rooms. As if to show that austerity was serious business, Pranabda himself took a economy class flight to Kolkata one day; Sonia Gandhi flew by a commercial airline to Mumbai and babus began to get used to sitting cramped in cattle class. In the last few weeks, however, the signals have been mixed. Pranabda flew in a chartered aircraft to Kochi for a INTUC function; Rahul Gandhi took a private jet to Kerala and bullet proof cars for travels within the state were flown in by the IAF. How gratifying then it is to note that there are people who still swear by austerity.

Last Wednesday, I called up Anand Sharma, the Commerce Minister. He was in the US. And, get ready for this, he told me he was actually on a train from Washington to New York. Last month, P Chidambaram, on his first visit to the US as home minister, also travelled by train on the same leg. The proof of the austerity pudding will of course be if, on their return, they condescend to travel by Mamata Didi’s Indian Railways. We shall wait and see.

RSS sends out warning to BJP’s allies

THE RSS seems to be getting tired of being repeatedly bitten by the hand that it feeds. Under its new chief Mohan Bhagwat, there is a new mood of aggression in the organisation and this was evident in its decision to hold the three day national working committee meeting last week in Rajgir, near Patna. The venue was deliberately chosen. The RSS feels that Bihar’s JD( U) chief minister Nitish Kumar has been following a policy of minority appeasement and cites the government’s decisions to allot land for setting up of a centre of the Aligarh Muslim University in Katihar and to give scholarships to Muslim girl students as the latest in a chain of steps aimed at appeasing minorities.

By holding the session in Rajgir, the RSS hopes to tell Kumar, who heads a coalition government, that the BJP’s support will be conditional to the government not compromising on the core issues of Hindutva. Nitish had earlier irked the BJP by asking both LK Advani and Narendra Modi to stay away from the Lok Sabha poll campaign. The RSS didn’t spare the BJP’s deputy chief minister Sushil Modi, a good man if ever there was one in Bihar politics, for lying low while the government pursued its minority appeasement policies.
There is a feeling in the RSS that the BJP is being used by allies to stay in power even as they expand their base at the cost of its own ideology. The message from Rajgir was: in a coalition, the BJP should insist on following its agenda and force alliance partners to agree to a common minimum programme that does not compromise on the core values of Hindutva. No one would have failed to notice the paeans of praise that Bhagwat had for the home minister P Chidambaram’s efforts to squeeze the life out of the ultra leftists.

Snippets/ Mail Today, September 14, 2009

Post- retirement blues of the babus

THE balance of post- retirement power is gradually shifting and superannuated bureaucrats are beginning to feel a sudden sense of loss. All along, most IAS and IFS officers approached retirement knowing that there was a new life waiting for them. Many of them managed to get themselves plum post- retirement jobs which, at home or abroad, entitled them to continue to enjoy all the perks they were used to. But Manmohan Singh’s preference for technocrats is increasingly seeing many a glamorous job slipping out of their hands.

The appointment of Dr Arvind Virmani, Chief Economc Advisor to the Finance Ministry, as India’s Executive Director to the International Monetary Fund, to replace Adarsh Kishore, an IAS officer, signals the PM’s determination to put technocrats in key slots in the future. The government had earlier made similar changes in the Asian Development Bank where an IAS officer was replaced by a technocrat.

With rumours swirling that Pulok Chatterjee, a 10 Janpath loyalist, is being brought back from his World Bank job in Washington for apprenticeship before taking over as Cabinet Secretary when incumbent KM Chandrashekhar retires next year, all eyes are on the selection of Chatterjee’s successor and the odds are on another technocrat being sent. The prime minister’s preference for professionals is nothing new. When he first took office more than five years ago, friendly TV channels had reported his preference for Montek Singh Ahluwalia in the Finance Ministry, but stiff opposition from the political class scuttled the move and Montek never got to occupy the office, instead settling for Deputy Chairman of the Planning Commission, a post he holds to this day.

I know it for a fact that he was never quite comfortable in the initial days, dealing as he was, with chief ministers and such like who never spoke the language ( I don’t mean literally) that he did. Montek has come a long way since then, as will the many technocrats who are edging aside bureaucrats to take up the many attractive jobs on offer.

Some are even willing to forego fancy cars for the humble Tata Indigo, as some technocrats who recently joined showed. If you are close to South Block, power is seldom measured in terms of BHP.

Police chiefs’ annual ritual begins today

FOR three days, starting today, DGPs and IGPs from all states will meet in Delhi. As usual, when they return after their deliberations, no one will be the wiser. And nothing will ever change.

I say this because it is a farce that has gone on for nearly 90 years now. The first ever conference of IGPs was organised by the IB back in 1920. Since 1973, it has become an annual affair attended by heads of police from states and union territories and the chiefs of about a dozen central police and paramilitary organisations. As with similar meets, this will be at best another exercise in tokenism where no major policy is initiated.

There will be platitudes from the PM and the Home Minister about fighting terror and naxalism, etc. Our structure is federal and all state police forces report to their respective state government. The aim of the conference “ is to provide an interactive platform for senior police professionals to freely discuss and debate diverse national security related” issues.

I am sure such lofty ideals have been spelt out in each of the 43 conferences held since independence but the country is still waiting to see these move beyond mere words. There are as yet no visible efforts to develop a platform for effective police coordination among the states which will guarantee minimum acceptable national standards in policing.

The meeting comes barely three weeks after the prime minister convened a meeting of chief ministers where policing and internal security figured high on the agenda. The meeting witnessed sharp differences between UPA and non- UPA chief ministers.

That’s why I forsee a lot of cross talk during the three day meet. Officers from the states will be ready with briefs from their state governments. Will the DGP of Uttar Pradesh be ready to bury those and take orders from the people at the Centre or will he go by Mayawati’s brief? Ditto for those from Gujarat.

THE last time a revolt happened in the Congress, it was exactly a decade ago when Sharad Pawar, Praful Patel et al walked out to protest “ foreign leadership” and formed the NCP. They have since teamed up with Sonia once again but that’s another story. The party has seen dissent since then, but this been in the form of gentle murmur. For the first time now, the Congress is faced with the real prospect of a revolt in one of its strongest units — Andhra Pradesh.

Last week I had written about Jaganmohan being a man in a hurry. It is now clear the man is nothing less than impatient. The party old guard’s capitulation to one of its youngest members may have more to do with safeguarding their political and financial interests than total faith in his political instincts. The happenings have sickened the toughest of stomachs. The battle has reached the worldwide web. More than a handful of sites, appropriately named “ SaveAndhra. com” or saveap, have sprung up in recent days and Reddys, Khammas and Kapus, wherever are taking frequent breaks from duty and business to flood the net with the pros and cons about Jagan and Rosaiah.

One mail I got from a Telugu in Chicago was detailed about YSR’s contribution to the rebuilding of Congress in Andhra. YSR’s contribution cannot be belittled and in death he has become even bigger. But the manner in which these are being flaunted makes me wonder whether Jagan himself is behind this frenzy. If so, he better watch out. Sonia hasn’t lost an intra party war in a decade. She is not about to start by losing to a greenhorn.THE last time a revolt happened in the Congress, it was exactly a decade ago when Sharad Pawar, Praful Patel et al walked out to protest “ foreign leadership” and formed the NCP. They have since teamed up with Sonia once again but that’s another story. The party has seen dissent since then, but this been in the form of gentle murmur. For the first time now, the Congress is faced with the real prospect of a revolt in one of its strongest units — Andhra Pradesh. Last week I had written about Jaganmohan being a man in a hurry. It is now clear the man is nothing less than impatient. The party old guard’s capitulation to one of its youngest members may have more to do with safeguarding their political and financial interests than total faith in his political instincts. The happenings have sickened the toughest of stomachs. The battle has reached the worldwide web. More than a handful of sites, appropriately named “ SaveAndhra. com” or saveap, have sprung up in recent days and Reddys, Khammas and Kapus, wherever are taking frequent breaks from duty and business to flood the net with the pros and cons about Jagan and Rosaiah. One mail I got from a Telugu in Chicago was detailed about YSR’s contribution to the rebuilding of Congress in Andhra. YSR’s contribution cannot be belittled and in death he has become even bigger. But the manner in which these are being flaunted makes me wonder whether Jagan himself is behind this frenzy. If so, he better watch out. Sonia hasn’t lost an intra party war in a decade. She is not about to start by losing to a greenhorn.