V Kumaraswamy, CFO, JK Paper Ltd says the new indirect tax law will bring rural economy into the formal fold and, thus, help create an inclusive economy
V Kumaraswamy, CFO, JK Paper Ltd says the new indirect tax law will bring rural economy into the formal fold and, thus, help create an inclusive economy
My article with the title above (different in title between the Print version and e-paper version) appears in Financial Express today.
The government seems to be in a bit of bind over both employment and growth, not for all its as own making. One of the chief contributory to this morass is the inappropriate way the objectives of our monetary policy have been fixed or evolved over the last 6-7 years. The Chart shows clearly the increasing misalignment between the inflation, external value of Rupee (as reflected by REER) and the interest rates caused by the recent shifts in our monetary policy. The Chart uses the WPI instead of the new found CPI which is 57% out of control of RBI’s policies as the report itself admits.
Two main components as it operates in our Monetary Policy Framework are (i) to target a consumer price inflation of 4% with a tolerance of 2%. Both the variable and its levels are recent developments, and (ii) to aim at orderly conduct of the forex markets without seeking to target any particular rates.
Firstly, in both these, the targets are fixed without reference to any end goals in mind. As if these are desirable self-actualising end-goals in themselves. In economics everything is interconnected – inflation, interest rates, growth, employment, productivity, cost competitiveness, etc. To seek a deterministic nominal goal in a web of influences looks naïve at best.
Secondly, the objective that the economy desires to achieve may vary depending upon the stage of growth. It can vary for the same economy from time to time. For EU it is kick-starting growth now, for China is to stabilise it at a high rate, for Japan it is to grow – any growth – even if very low by international standards. For US it was achieving any growth after the meltdown but now slowly crossing over to stabilising inflation. A nominal fixed target does not address these contextual concerns.
Thirdly, economics is mostly about balance and trade-offs between what in general are opposing interests – buyers and sellers, producers and consumers, workers and producers, savers and investors, inflation and growth and so on. One isn’t sure how a nominal deterministic inflation number can work towards an optimal or at least desired equilibrium between savers and investors, between domestic investments and imports at all times even in the medium term.
Lastly, as is explained below, there is excessive and suicidal reliance on the nominal rather than real variables, which is what may be causing the current problem.
There seems no theoretical basis for the inflation targeting or its levels – not from IMF, not from Basle norms which aims at financial stability or RBI. While nothing can be exact about economics and hence a band is necessary for targets, a 2% tolerance on 4%, is like permitting Usain Bolt to run on his track or the adjacent tracks on either side and the penalties for trespass being imposed 2 Olympics away.
Just orderly movement of forex rates is no policy. When it is clear that it has a significant impact on domestic capacity utilisation, jobs and growth to just aim to only curb the volatility but not be concerned with the values is naïve shirking, much like driving without violating any traffic guidelines or speed limits but towards a wrong destination. By keeping the currency over valued for far too long (over a decade now), we are re-creating conditions of 1991 crisis.
Keynes had brought out the true nature of the real and the nominal economy, the rigidities exhibited by the real and how to tweak it by using the nominal to achieve real goals. The current constant 4% inflation (nominal) target can in no way balance the interests between savers and investors, forever. The government should move to a 2% +/- 0.25% real interest rate regime. Whether the inflation is 4% or 9%, such a real interest spread of 2% will be a fair compensation to savers. It will also not curb investment urges if what investors have to pay out is in line what they recover from the market through inflation in prices. This is a sort of inflation proofing both savers and investors.
Such a floating nominal interest (but largely fixed real interest rates) regime will largely ensure that fresh investments and savings do not grind to a halt.
But the existing outstanding stock of savings are in fixed nominal interest regime, which poses problems. It is therefore necessary to move to a floating nominal rate regime and increase its proportion. In the last few years, Bank loans have largely become floating rate with optional repayment and a significant progress has been achieved. It is necessary to increase the proportion of floating rate bank deposits from the savers side as well.
The second thing that is capable of derailing growth and employment in an open economy is the forex rates. An overvalued currency makes imports cheaper, exports far less remunerative which affects domestic employment and growth. A 20-22% overvalued currency as on date is a killer. Government should mandate RBI to walk it along in an orderly manner along the real values. RBI and Government should agree to maintain exchange rates within a band of 97 -103 REER. This REER should be calculated on a base year that is sound when most economic parameters (CAD, fiscal deficit, inflation, growth, etc.) are as close to our desired objective. As it stands now, 2004-05 is one such year. The government should also tailor its inward investment policies accordingly and the degree of capital account convertibility tuned appropriately.
Currently policy rates it appears are decided mostly or solely on inflationary expectations. This can result in fear mongering. In deciding the policy rates, perhaps the actual for the past 2 quarters should be given equal weightage.
By moving to the real from the nominal on both interest and forex accounts, we may have learnt the right lessons from Keynes. Excessive reliance on the nominal on both accounts have made India underperform its potential in the last 4-5 years.
Poverty. Or Lifestyle of Choice
Poverty alleviation to my mind is a patronising imposition on the unsuspecting impoverished as the rich see the poor. I have seen extreme ‘poverty’ at first hand in many parts of Eastern rim of Africa, East Asia and India in what are some of the poorest regions. Its not that the poor are exactly sending out distress signals for rescue.
Their smiles are broader, worry lines on their faces far lesser, leisure activities and small talks of humour reveal more enjoyable times, families better knit, better at peace with the rest of creation like Animals, rivers, environment, trees, etc. Their care for the rest – elders or younger- seems better and worries about what next and what will overcome their existence near non existent. Yes I am talking of the extremely poor. Of course I am talking of those in regions that would truly be called the poorest by any economic patronizers.
The rest of the paras is about a tribal village that we visited recently in Tanzania located between Gorongoro and Serengeti both world famous abodes of Wildlife – first a conservation area, which means both animals and native people are allowed to live together and the latter a National Park which means no human habitation is allowed.
There is nothing spectacular to further my arguments / conclusion in my description, so be prepared for some disappointment except some heat at the end.
Our Visit and What we were told
When one gets down from Gorongoro’s crater rim one could see from time to time people sleeping on hard rocks in baking Sun with just a crate of water. Or young children – alone or 3-4 at odd places with nothing else in visible distance. You wonder where they live and what they are upto – completely bewildering.
In the middle of nowhere is the tribal village (Bora by name) amongst the vast stretch from horizon on one side to the craters rim and small volcanic mountains on the other side. There is a small stream a KM or so away and a few trees near the stream. There is a vast area of pebbles, sand grains, mixed with goats droppings, a few blades of grass visible here and there and a disproportionate number of sheep grazing or trying to graze them.
The Village has 122 people all belonging to the same person. He and his 20-odd wives, their children and grand children. They spoke a dialect of KiSwahili. They belong to the Masai tribe which stretches from south west Kenya to west and north west of Tanzania.
The driver called out and a man of the tribe who spoke fluent english (and of 24 yrs of age as i later enquired, Seiko by name) came out to negotiate with us. He had studied Secondary in nearby town in a boarding school and was in line to pursue graduate studies after a year or so – there seemed no reservation for them – perhaps for noone in Tanzania).
We were told that the fees for our visit per person was $ 20 and we negotiated a consolidated $ 100 which Seiko agreed only after checking with his head tribesman.
they performed a dance for us in which they invited us to participate. We never understood the lines but it was all about jumping about with a staff and a kind of oversized wooden hammer shaped like a scoop – spoon. (see pictures). But when we finished some of them asked us ‘Barabar?’ in Hindi with an approval seeking smile on their face.
The Village: The village boundaries are marked with some twigs and Acacia branches, more for warning animals than human intruders. We understand that the whole village takes about 3 years to build but a single hutment about 2-3 months – all entirely made of twigs, acacia branches to lend strength and cow dung and some ash for binding. There must have been 40-50 houses in 2 concentric circles, with a central open space where they were displaying handicrafts for sale.
Their houses have a master bed may be 6’X4’ and an adjoining 4’ X 5’ and a fire pit hardly a foot away from them. The drawing cum dining cum kitchen cum store must have been another 5’X6’ – fire seemed eternally burning. In one corner was some firewood, water for cooking and some vessels in place. It is the duty of women to build and maintain them. They let out the entire village in case they have to shift out somewhere and some other tribe is willing to take it, though i was not sure what that contingency might be.
Each lady of this polygamist society had a separate house for herself and children.
2 Divisions of duties: The society we were told is divided into Children (boys and girls), Women, Warriors and Elders. Children play and sometime help out (of late some attend primary school) in grazing cattle. Its the duty of women to construct houses and maintain them, upkeep of village pathways, raise children, housework and cooking. Warriors are males who are trained to ward off dangers primarily from Animals during migration. They train in using some acacia staves and some wooden hammer (they weigh quite heavy and just one blow might throw the lion or leopard out of its wits and leave the tribe to itself). They don’t hunt for there is nothing that they can or are allowed to. The Elders are the judges, rule makers, administrators, liaison people with external communities or government, deciders of any changes to their customs, etc.
3 They follow a religion called Engarai (not sure if I got that right), which worships the volcanic (long extinct) mountain and fire. There was a lonely Christian (which the tribe had allowed) who had a neck chain with the cross. Apparently, he had attended some higher school or college in Kenya and had attended some Churches and developed some affinity to the religion. There were also a few others who had been to Iskcon temple but had not converted to the faith.
What to do with the dead seems to be in a state of flux of late. The long standing custom was to sacrifice it back to the God i.e the mountains. In between they thought it should be offered to water. But seas are a thousand kilometres away. So they thought that if they buried the dead they would be carried by the earth to the seas. They tried out cremations but are back to burying in the mountains now. Somehow they seemed undecided as of now, waiting for the next big thing.
4 Marriage custom. They are all polygamists each taking 3-4 wives. and there is no incest. so the women have to come from other villages. Once they come over, their contact with their parent community is near totally lost. The man has to propose and the female accepts or rejects. After the girls accepts, her parents have to approve and then they have to inform the village head which is usually the grand or great grand father. and then the Boys side, although none of them stand on their basic decision. (I could not get any answer as to how such a skewed ratio can be sustained unless the ratio of women to men is also similarly skewed). When the village headman dies his next eldest brother takes over and the line of succession is very clearly laid out.
5 Social upbringing. The children are born into the society, we were told – not just to the parents who biologically bore them. Its the duty of everyone to look after and bring up the children and the children in turn have to do whatever duty is assigned to them by the village elders – no saying no if not coming from your parents etc. Male children take cattle out for graze and females house building, maintenance, cooking etc. So both ways there is nothing individualistic or home centric – everything is village centric – belonging, upbringing, duties and responsibilities.
The skin tone was great, no cragginess or folds despite the harsh Sun they have to face thru the year. No worry lines – not at least as much as you see in similar aged people in cities. Smile but no giggle or ridicule, quite disposition no cynicism is how I would describe.
No exaggerated exuberance or garrulousness that is typical of most Africans. It was more a guileless dignified ‘easy to make friends’ kind of welcoming ness.
6 The Culinary. Basically the entire food chain revolves around the cows and the sheep. For a group they claimed to have 3000 cows and an equal number of sheep. Cows give them milk and blood and meat and sheep mainly for meat. They drink the blood of cow every morning for breakfast along with milk. The extract the blood by puncturing some blood vessel and letting it ooze, without killing the cow. There is meat at Lunch and a soup of herbs and plant roots along with meat in the evening. There is no fruits or vegetables for them – ever.
We did not see any cows during our visit. We were told because of lack of grass and water, cows had been taken to a nearby place – 2 days walk, for grazing.
The entire medicine is made up of herbs and plant extracts and only in very rare occasions people are sent to outside towns for surgery etc. Sanitation is primitive with near total open defecation out in the fields.
7 Economy : The entire economy revolves around Cows and sheep. When we entered they collected our fees in USD. They sell some handicrafts made by the women. The proceeds are used to buy their clothes – which looked neat and clean and i had no clue as to how they kept it that way, all in deep blue and red colour combination. The water in the stream is hard and incapable of being used for cooking or drinking. They buy their water in tankers (stored them in syntex tanks) and a tanker of 22,500 litres last for about 3 weeks- some economy indeed.
8 The School visit: (see the photo with a man walking towards a small hut. Thats the school). The school is primary and sets them all together for 2 sessions each day one on the morning and one in the afternoon. We saw a glimpse of the 2nd session. The students stood up and sang a song in Swahili – led by one and repeated by others – welcome to Bora, our holy land, Welcome to Gorongoro, welcome to Serengeti, and welcome to Tanzania. The teachers are sourced from within their colony and teach them english and how their native tongue is constructed (that too thru english alphabet) and basic arithmetic. Beyond that students go to boarding for secondary education and beyond that to distant cities in Tanzania or Kenya for even higher education. But those going outside are limited in number and is a recent phenomenon. The primary school itself was started in 2003/4 only. It will be interesting to see what influence the education has on their culture. There were 4-5 of outside graduates we could see and our guide was one. They spoke good english and one of them had become a Christian by choice and others had exposure to Hare Rama Iskcon movement.
The Warriors are trained in the use of their weapons and have the duty to protect their cattle and cows from animal intruders and from animal during migration. They smear some ash on their face – may be different patterns for different ranks. They don’t eat with others – they prepare and eat their meals outside the village near the stream – wonder what is the reason.
9 The Genius of Julius Nyerere – We also heard of another community of one Boni Louise who had 27 wives, 70 children and rest to make a community of 147 living somewhere in the stretch. The govt had offered to take them on board, provide for education and give them skills and jobs. But the Village headman had refused and the government had no problems with that. The Government made a standing offer for providing teachers for free should the village chose. After long years BL accepted it to forma school for his grandchildren and there ended the govt’s role. Basically Julius Nyerere has done a more commendable job of 2 types of integration after Tanzania’s independence – religious and cultural. Tanzania has 45% Muslims and 45% Christians and the rest making 10%. The population is one and no visible signs of tensions anywhere during the last 50 years. They are Tanzanians first and whatever religion they are, next.
Again he did not force development or education on any of the 120-odd tribes. They were given the option of integrating with the national mainstream but just an option. And where they just wanted to access only education they were allowed without precondition.
The net result after 50-60 years is that we have several societies or village communities who have their own rules and regulations, cultures, law etc. over which the nation has no say. But they also have a strong respect and love for the nation. Finest form of Democracy with no force or pressure tactics used anywhere, anytime – everything by choice. And no militancy or naxalism anywhere – all nationalists by choice. That explains the students’ song. In that respect Nyerere seemed to have done a far better job than his mentor Gandhi or even Mandela.
My Take on the people
The students in the school looked at peace with themselves like any of their city counterparts, seemed competent at what they were doing but not over eager to please us. The men looked healthy, again not too eager to prove themselves or ingratiate themselves as some of the country cousins tend to be when they come in contact with what they think are superiors. They dealt with us as equals I thought.
At a point in time when we asked them questions which appeared invasive, a silent pause to make us understand that we are off limits is exactly how you expect someone who is sure footed to handle a difficult situation. The ‘foreign returns’ and the outside educated did not betray any signs of dis-ease with their native surroundings nor any snootiness over the rest. They seemed well integrated and at peace with their community and no visible or subtle signs of dissatisfaction or Freudian slips anywhere that their true leanings were elsewhere or their desire to be in the cities or towns.
Their politeness, sensitivity, courtesy levels were laced by a sense of unhurried ease secure in the belief that the other person will not run away with what’s yours and hardly betrayed any rabid competitiveness. The village was neat and clean with no litter – even of food remains – to be seen.
On a Philosophical Note
My take is that they have lived exactly same lives the last millennium or perhaps the last million years. Other than perhaps the recent changes in clothing and education. It would be interesting to see how education affects them, whether it leads to any conflict between the educated and those without, whether it leads to younger ones challenging the Elders and all the civilizational conflicts. The younger ones seem to have come back out of choice and happy embracing the village life. As of now it appears that they wont move from their equilibrium. Happy as they are, with what they are, where they are, who they are…with their surroundings.
Their today is an exact carbon copy of yday, day before, last week, last year, probably the last 1000 years. The children would be doing exactly what their grandfather and head of the tribe would have done when he was similar age. The tribes head would be seeing his sons and daughters in law doing the exact thing he had observed his parents do. In a sense everyone had the script with him and his role was frozen in it. Nothing to strive for or compete for that the society would tolerate. Seniors juniors and young ones -they all have the same houses. There is no greed in such a situation, there is no competitiveness or need for savings or safety at individual level. Even concepts and words like regret, failure, lack of success, (all about the past) and fear, confidence, optimism, savings (all about the future) may be largely irrelevant or lot less diluted.
They are the perfect example of sustainability in my opinion. They have already proved it in my opinion. Lets come back after a thousand years or a million years. The tribes will and can subsist exactly as they are – their lifestyle wont destroy the river nearby (unless it dies by itself), they wont destroy the trees, they wont dig the hills or mountains for minerals or metals, they don’t eat the wildlife, they wont mishandle the cattle since any quick reduction of cattle will threaten their own existence. All the current notions in the developed world seems an apology or euphemism at best, in comparison.
Makes me believe its an ideal most Oriental spiritual heads or religious heads crave for. They live in time zero. Somehow happiness is inextricably fused it appears with time. You move away backwards and you long for or regret yesterdays and with it the unhappiness. You move forward you develop fear, greed, despondence, confidence or lack of it or successive waves of it, and you find people in the most affluent societies walk to their office with heavy worry lines as if they will face the yellow slip on arrival or go back to their residence as if when they reached there their spouse would have deserted them for a better choice.
Choice may not necessarily mean Welfare. Just get rid of the words Greed and Individuality …life can have a completely different meaning altogether. Like particles behave completely unpredictably under zero gravity, greed and individualism seems to make humanity to go berserk – no amount of savings is enough, no measure of success enough to satisfy – we are in a permanent pursuit to prove ourselves to others and earn their certificate, no end to competitiveness to prove others are not as good as you, destroy nature and its various creations in the name of development and give euphemistic proselytization to others.
They may be called poor. But there is no poverty in my opinion. Its their lifestyle. By choice … choice not to move away from what they have seen work. And no good Samaritans have a right in whatever name be it religion, democracy, freedom, women’s liberation, human rights, etc. have a right to interfere in their choice. For happiness you seem to need equilibrium not necessarily fly around in A380s or zip around in fast cars. And they seem to have that in plenty. They have inherited it from their forefathers and will bequeath it to their successors nth generation. And in doing so they would not use up an iota of nature, But most certainly we, the development champions, would have exhausted our Gas.
this artcile of mine has appeared in Financial express today (29/sept, 2017). Link below.
RBI’s Interest Rates can trip Modi in 2019
Ask any shop keeper, or the lonely looking private security guards, unemployed youth in urban slums or interior towns, or the taxi drivers as to what their main issue today is and pat comes the reply: be rozgari
Not many expected Vajpayee to lose 2004 with the groundswell of national passion over Kargil, Golden Quadrilateral, relative peace and quiet in domestic scenario, great government finances and the political networking he cultivated. Yet he lost.
The voter at the booth is not going to be thankful for how much wholesale corruption has come down (retail is still alive and throbbing), degree of digitisation India has achieved, how benign inflation is, etc. These are at best hygiene factors which can easily be washed away if joblessness persists. Without a job, a stable one at that, he can’t proposer.
High Manufacturing Real Interest Rates (RIRs).
If more people have to be converted from being losers during the on-going reforms to gainers, we need rapid job creation. Services sector (IT, BPOs, Call Centres, and Telecom) created jobs by the buckets till about 2011-12 but have reached stagnation now and have even started becoming uncompetitive now threatening imminent job losses. Agri sector is just incapable of creating further jobs; rather it would release lots that need to be absorbed.
Employment should come from only manufacturing and here is where the real interest rates facing Indian industry is proving an insurmountable barrier not just a hurdle. The accompanying chart compares the Real Interest Rates (RIRs) between China and RIRs facing Indian manufacturing. Manufacturing RIRs are derived by deducting manufacturing inflation from the nominal interests facing manufacturing sector. For the last over a decade Indian Mfg RIR is about 7.21% versus China’s 2.92% – (i.e 4.29% over China’s) a huge hole for anyone to be interested in investing in Indian manufacturing.
It is a mistake to compare the general RIR which is just 2.04% over China, the country with which we have maximum non-oil trade deficit. The General inflation is contaminated by Fuel oil, Food which have no bearing whatsoever for studying manufacturing investment competitiveness.
Why has it become important now?
Just but for one year, Indian Manufacturing RIRs have been higher than China since 1991. So why has it started affecting investment sentiments now. Starting Jan 2014, duties for imports from ASEAN has become Zero virtually (S Korea is not far behind) making India’s trade borders completely open. China (even with import duties) has cost structures lower than ASEAN for several commodities.
India’s capital account has also been steadily opening up and for practical purposes it is completely open. Even the per annum limits on debt are periodically reviewed and enhanced without even waiting for the year turns.
With open trade and capital flows one has to be more sharply competitive. Added to this is the 25-30% overall surplus capacity in Industry. Who would dare to invest with a huge handicap on interest rates and surplus capacities. It is better to source goods from China or set up facilities there and sell in India, which exports jobs.
Sources of competitiveness
As mentioned earlier, agriculture and services look spent forces as far as employment creation goes. It rests on manufacturing to create jobs, for which it needs to be competitive, which has to come from any of the 4 factors of production or natural resource endowments (part of Land).
India has tied itself up in knots where land is concerned. Our socialistic mindset has made a grand backdoor re-entry through LARR and a plethora of court rulings, restriction on land transfer and change in usage, etc. Any acquisition takes 5 years – far beyond the patience time for an entrepreneur to keeping waiting with his ideas. India has 375 people per sqkm where China has 142 (2015), increasing the pressure on land. So land as a source of competitive strength is ruled out.
Labour can be a source of strength given the wage levels now. But for that to happen we need to repurpose our education. Instead of (or perhaps alongwith) BE(Mechanical) and B Tech (Chemical) we need 8th Std (textile printing), 10th std (BPO assistant), 12th std (Source coders), etc. i.e. fit for purpose specialisation kicking in at far younger ages. This can perhaps reduce capital invested for turning an unemployed into productive force as well supply the skills that would increase productivity. Such increased productivity can make the labour cheap per output unit.
That leaves Interest rates. Even enterprise is a function of interest rates beyond a point, where it translates entrepreneurism into investments. With excess capacities and high RIRs in Manufacturing, no one will feel tempted to invest in India.
High real interest rates (when the whole of rest of world is underperforming) and an increasingly politically stable India is attracting excess of $s, that cannot be absorbed by a stalling investment economy. Oversupply / unutilised $s in the forex market causes its prices to decrease. With it, it brings down import prices and makes our exports un-remunerative. This causes imports to flare up. Sure we are also gaining in petrol, prices of Chinese goods, goods from ASEAN, etc. But then the jobs in making them is happening overseas. What’s more important now – employment or lower inflation? People who are gloating at low inflation are looking at just one side of the equation
In the last 6-7 years our Monetary economists have been failing their equilibrium mathematics exams, with their highly out of context imported monetary theories. But the political student to be detained may be Modi’s Government in 2019.
(The writer is the Author of Making Growth Happen in India (Sage Publications))
Vietnam’s Sensible Communism Vs India’s Dysfunctional Democracy
I started following Vietnam with my 1st visit to that country. Brief comparison of Per capita income (current $) with India between then and now is below:
I would attribute Vietnam’s faster progress to the following:
Respect for the government,
Fear/respect for law,
Better road discipline and public order,
Its sensible and sensitive communism,
Pragmatic Economic planning and policies – no dogmas and every regulator is sub-ordinate to the government, and
Focus on a select few industries.
I am not sure if our Democratic rights is worth this kind of price (if indeed the difference is due to this factor). I would largely prefer getting rid of our poverty first before aspects of freedom we are supposed to be enjoying. As a nation we spend so much to elect our representatives but tether them in every which way and make them as constrained, dysfunctional and impotent as possible. The judiciary, NGT, Johnny-come-lately Regulators, Independent Monetary agencies, NGOs, PILs, and of course the Opposition and the media which is answerable to none all play their part to this collective coma and inertia.
And of course ‘We the People’. We are perhaps the most argumentative and critical people on planet Earth. We mistakenly celebrate a right to abuse as right to criticise. I would think criticism to be constructive should exhibit the following characters:
You may say I am a dreamer… but so be it.
Vietnam has not lost its energies in vague policies and utopian and unpragmatic copycat controls like tight monetary and fiscal policies, demo, or swatch bharat, digitisation, corruption eradication, ease of doing business, etc. It just focussed on 4-5 industries where it had /developed cost competitiveness.
Like Textiles, Electronics, Tourism, Wood plantation, select spices. It reversed the conventional approach of economists and started at the delivery end. Wood plantation created 2 million jobs in remote rural areas, in textiles it zoomed past India in just 7 years (its current output of textiles is capable of generating 2.2 cr jobs by India’s standards of mechanisation) much of which has come at the expense of India’s unpragmatic approach in textiles…nose to the ground politicians engaged in job creating in select few industries.
I personally feel that we have more to learn from Vietnam (or South Korea, China, or Taiwan) than the stupid West (I mean West is not stupid, we are… in aping them) as far as it concerns Economics of development and salvation from Poverty.
I would think that PILs should be asked to prove their Public interest character. They should be made to submit signatures of at least 1000 people or 1% (some such thing), who shall be made to deposit a bond of Rs 1000 each. Select few should be called to testify in the Court. The lead sponsor should be made to deposit 10% of the likely damage being suffered by the Society (or some lumpsum amount which can be a % of what the Government alleges is the cost of delaying). This should be forfeited if the case is not admitted or dismissed.
I would also think an independent body should verify the proofs of news and broadcasts by Media and if found insufficient, the concerned channel should be made to show blackout of related programmes for 3 days. Unbridled criticism in our society has only been an invitation to chaos.
(the picture shows the Visiting Dy PM – HE Pham Binh Minh).
Singapore’s Economic Recession
Roads and Connectvity alone may not deliver rural development.
Got 2 days to drive around in Rayagada district in Southern Orissa, amongst the poorest 3-4 districts in India. One could not but admire the great strides Roads have made in the region. Govt also seems to have made a lot of progress thru residential school for tribal children which seem well maintained (I saw 3 of them within 20 km stretch). A few takes and lessons.
1 Our first stop was a plantation nearby under the aegis of co-operative group. while the increase in tree growth was visible due to better farm practices, what was not visible was the government funding agencies which recoil at the first sign of trouble. If risk aversion is the primary motive, development initiaves in such societies at the brink of economic existence will all fail. The Government has to take a more sanguine view – the farmers are never going to take advantage of legal loopholes a la a kingfisher nor dodge a bank manager, if he is solvent. if he has the money he will pay. counter party moral hazard is likely to be the lowest.
2 I met the farmers (slide 11) but it was a difficult conversation. My Hindi was not good currency; the accompanying colleagues’ local oriya was only a passable currency. Thank god we have one language across India. I asked the farmer in saffron T-shirt upto which class he has studied. He prevaricated but signalled something to the locals which was translated to Sixth Standard. (But barely convincing). The man in green T shirt seemed to own 2 plots. With some difficulty we could figure out it must have totalled 3 acres. I asked him what class he has been upto. He signalled to the first one and said something to the effect – to the same extent. (I couldn’t believe him either).
3 Visited the training centre of local SHG which had trained itself in book binding hoping to get some contract jobs in the local banks, factories and shops. (see the videos and the group conversation). We are not just short in financial inclusion alone. Of the sample of 20 i saw, none had been inside a train, only one had been upto class 10, 19 out of 20 did not know 3rd table, only one had gas. Surprisingly none of them had worked in NREGA. 2 claimed to own cell phones (but they all knew what i was talking about) and 2 others cycles. All had electricity and claimed that they toilets.
But i was deeply touched by their guilelessness and genuine warmth. The meeting had been arranged with just 15 minutes notice. They gave a locally made flower bouquet and coca cola (to everyone).
4 Many villages seem to be independent land locked republics within India. I could only with difficulty hold myself from asking if they knew that they belonged to a country called India or that it was once ruled by Moghuls or british and that it has got its freedom. (I did not know if it is lawful or will be deemed instigative; hence i stopped). But as you can see from the video they had very little to do with India or its development. The only ‘Indian’ they seemed to know was Naveen Patnaik.
Villagers (see slide 5) in this tiny hamlet had erected a bamboo toll gate and refused entry or exit unless we paid their toll. Toll collectors were 2 young girls of may be 9-10 yrs. There were chawls on the side each having rows of houses sharing walls with others on both sides. each such house would have been around 10ft by 10. I could see 3 or 4 ladies sitting inside and 1-2 hanging outside besides the children baking themselves in the sun. I could see a solitary hand pump, the cemented platform around which served as a open bathing spot for a village adult in full view of all those who cared to see.
5 We wanted to visit the solar pumpset which was to be inaugurated to supply water from below 200 ft to some 26 acre of land. we reached the spot at around 5 pm but found a group of people (nearly the population of the entire village) walking towards a spot very near the solar system, with 2-3 of them carrying what looked like spears. Later i learnt/saw that it was for the pre-marital prayer to thier chief temple/diety (see slide 3). After their modest prayers were over they perhaps ascertained from our guide the purpose of our visit. (Our guide knew the villagers since we had sponsored the project). There was quick confabulation amongst the villagers. They took some time off their routine to give me a ululating welcome (local custom) and performed an impromptu folk dance for me. (see video). Meaning i was told ‘bahooth dhoor se aaye hai our guest; lets welcome him’. Nice of them.
6 On the way we stopped by a hostel schooling tribal children. (see slide 4). I started asking the most grown up looking amongst them (the one to my right and the one in yellow T-shirt). But they were hardly able to speak but were stoic. the care taker intervened to say that it was their first day in the school and where they have come from and circumstances; I had difficulty preserving my tears within the countours of my eyes.
1 The region is poor and crop mainly cotton, hurhur, millets and in some places Rice. Recently they have added tree plantation to their kitty. Area is rain fed which imposes its own limitations.
2 False pride is good: Although efforts from several CSR activities, govt initiatives, etc seem to be on the area is largely illeterate. You can get a sense of what they mean by literacy in the video of SHG group. The men in slide 11 claimed they had done upto class 6 or 7 before dropping out. I doubted both. But on reflection found that kind of ‘false pride’ a welcome sign. It only indicated that thay have accepted that education is a desirable end state and they are craving for a better end state than they currently were in; this desire and higher aspiration is a prime requirement for any development initiative to succeed.
3 Thank God for Hindi: The areas were hardly 12-30 kms from the district headquarters. Imagine that we had not integrated India with one language formula – with every district and sub district speaking different dialect or variations and so much time and effort lost in translation -it would have been a massive waste of national energy. (Thank God we have saved ourselves this much at least due to proper actions on independence). Our politicians have done somethings right.
4 Can Roads and Connectivity alone achieve progress: I have been visiting nearby places for the last decade. The roads have come up very well. Most village roads are concretised. The times on most roads, district, sub district and state highways have become 1/3rd and it is much more certain and lot less damage on your spine and vehicle parts. Communication connectivity has also improved greatly. Most villages have someone or the other with cell phones. The progress in literacy and living standards seem nowhere commensurate with the progress in govt infrastructure. (guess not even 15-20%). We seem to be miscalculating the linkages between the 2. (I am not saying these are not important; but how much they are able to use them at this stage is questionable. Looks like a 25 terminal airport for 2 flight landings a day). Roads in most parts seem ready for the next 25 years. (see the photos).
Government may need to work on assessing the skill levels of each village and work on each village to boost their income. The focus has to be on increasing their ‘marketable surplus’. (elaborated later).
TV in each home (still a pipedream in many villages) and programmes for social change, advisories on agriculture, personal health and hygiene will all serve great purposes.
Gas seems economically misplaced. The payment for Gas goes out of the village system whereas the fire wood they were using was ‘manufactured inside’ the village boundaries. (this needs to be studied and validated)
5 There is great potential in increase in crop yields. Our scientst told me that soil should be so prepared that the loosened soil should just about envelope the aura of the root system. It will enable the root system in absorbing the nutrients and fertilisers without running off. Tight soil wastes them on top and loose ones enable run off. There is different requirements for different plant species but most places in India resort to uniform ploughing. Soil nutrients are different from place to place – may be even within the same village. Fertiliser and nutrients have to be adjusted accordingly. He claimed that such care alone can improve the crop yields (physical or financial) by about 60% in India.
The villagers also require better linkages to the markets (for many of them the universe ends at the village boundaries and their Government is the Village headman). Such increased linkages with partner end user corporates will bring them better technology, softer credit, better information, opportunity to add more value (like sorting and grading, washing and preparing them for markets and these can sometimes be significant 30-40% of mandi values) at village level itself. Government need not relax land ownership rights at all; just more facilitative of contract kind of farming will do.
6 Corruption to me seems a secondary issue in these places. For most of their transaction with the ‘outside’ world they need transactional interpretors who can (and do) take them for a ride in every possible way – be it in religious conversion, NREGA money distribution, freebees from government, etc. It is this that they have to be liberated from first even before corruption.
7 Trapping more income inside is essential at this stage: One of the villages had an electrical repair shop repairing fans, TVs, motors and pumpsets, and lighting earning Rs 4-5k per month. In most other villages this amount is paid to external people. Govt has to analyse such possibilities of retention of income within village as well enhance values of what they sell outside and prepare them for newer activities like vegetable growing, fishing, water harvesting, solar panels, sanitary pads making (may be for a few villages in the nearby areas), poultry and milch cow raising. This requires external help and may be investments. Government can rope in retired civil servants, local students, corporate and wealthy individuals as Village development sponsors and draw up a village level development plans and guide these villages along the path of development. India has just 6,00,000 villages.
8 Compared to what the individuals, NGOs, judiciary and media and voluntary systems have achieved, the work of the government in these areas is so far starkly ahead, at least in the last 10 yrs. The remedy of our constant carp may be redesigning the election systems so that it becomes lot less expensive and faster administration of punishment for political misadvantures. What can u achieve from a justive system which passes judgement on disproportionate wealth accumulation after 20 years and after the person has died). If these 2 can be addressed and we give the politicians some space, perhaps we can make faster progress.
If judiciary and Lawyers can together ensure that delivery is not derailed and delivered within 2-3 months for cirmes, crimes and thefts etc might even vanish. Even Politics will become a lot cleaner. Will our Lawyers accept the challenge. In fact the media should also concentrate on exposing lawyers who delay justice infinitely by misuing their priveleges.
9 India should perhaps have gone for European type co-operative model of corporate existance than English and American type Limited liability company types. We are high social animals and more susceptible to social policing and peer pressures than top down relatively more impersonal legal governance, audit and rules based systems, court trial and punishment systems. social pressures would have achieved the end result at a far reduced cost. (may be, I am foolish, but when no one can prove it otherwise let me take some liberties in being expansive).
(Sorry no videos in this piece)