Tuesday, May 22, 2018

Sense of the mandate



Congress and the BJP can never hope to dominate Karnataka

Forming the government after an election is a necessary part of the democratic process, but it is not sufficient. What is called the mandate, or what the people want or prefer, cannot be pushed under the carpet because it comes back like a bad penny at the next election. Karnataka’s fractured verdict, and it is one because even the Bharatiya Janata Party (BJP), with its 104 seats has fallen short of the minimum majority, the simple majority. But the BJP leaders, like those in the Congress and the Janata Dal (Secular), have chosen to be silent about it. Had they managed to rustle up those eight or nine seats which they needed to form the government, they would have continued their silence on what the mandate meant. There is little doubt that the combined figures of Congress and the JD (S) helps cross the magic line of the minimum majority, and despite their 58.6 percentage of the vote share as opposed to the BJP’s 36 per cent, they do not have the mandate. One can pretend that in the context of the exigency of forming the government, it is futile to look at the niceties of the mandate, which is clearly negative in the case of JD (S). And given the electoral system of first-past-the-post, the Congress is straining credibility when its leaders argue that they have the popular mandate.

Whatever the politicians and the pundits may think, the people are not going to let the parties forget this issue of the mandate. When elections are held the next time round, it is quite likely that those who presumed that they have been mandated to rule will be punished. The BJP will make up the deficit in the next round. The JD (S) will not be able to better its position because it has managed to form the government, and the Congress’ numbers will not improve either. There is a parallel to this in the national politics, from 1996 to 1999. The BJP was the single largest party in three of the Lok Sabha elections, though its vote percentage was at best modest. In 1996, the BJP had 161 seats (20.29 per cent of popular vote) to Congress’ 140 seats (28.80 per cent) and Janata Dal’s 46 seats (8.08 per cent). It was inevitable that then BJP’s prime minister Atal Bihari Vajpayee failed in his attempt to form the government, and we witnessed the second largest party, the Congress with 140 seats supporting the JD with its leader H.D.Deve Gowda as the prime minister. The anomaly could not be sustained. In 1998, BJP fared better with 182 seats (22.59 per cent) to the Congress’ 141 seats (25.82 per cent) and the Janata Dal was reduced to 6 seats (3.24 per cent). The BJP led the National Democratic Alliance to form the government. After the Congress brought down the Vajpayee government in 1999 by a single vote, the BJP returned with the same number of seats as before, 182 and with a barely improved vote percentage – 23.75. Congress was reduced to 114 seats but with an improved percentage – 28.30. The Janata Dal had split into JD (Secular) which was reduced to 1 seat (0.91 per cent) and the JD (United) to 21 seats (3.10 per cent).

A close look at the Karnataka assembly election results over the decades shows a certain pattern, with the Congress retaining a strong foothold even when it lost elections. For example, in the 1983 assembly elections, the party had 82 seats (40.89 per cent) to Janata Party’s 95 (38.21 per cent). And in the 1985 election, the Janata Party’s unmistakable triumph under Ramakrishna Hegde for a second time with 139 seats (47.62 per cent), the Congress had 65 seats (41.03 per cent). And in 1989, Congress came back with 179 seats (44.2 per cent), with Janata Party reduced to two seats (11.68 per cent) and Janata Dal winning 24 seats (28.86 per cent). But in the 1994 assembly election, Congress crashed to 34 seats (27.36 per cent) and Janata Dal won a handsome 1115 seats (34.02 per cent).

The BJP’s story in Karnataka is interesting and instructive. In 1983, the party had won 18 seats (16.21 per cent), was reduced to two seats (7.59 per cent) in 1985, got four seats (7.70 per cent) in 1989. It improved its position tremendously in 1994 when it won 40 seats (17.05 per cent), and in 1999 it won 44 seats (30.99 per cent). It won 79 seats (31.68 per cent) in 2004 and 110 seats (33.93 per cent) in 2008, before it went down to 40 seats (20.07 per cent) in 2013.

All the three parties – the Congress, BJP and the JD (S) – are now permanent players in the state politics. It would be wrong to believe that if BJP is able to form a government in the state, then it turns into a permanently saffron state as it had happened in Gujarat, Madhya Pradesh and Chhattisgarh. Despite the rhetorical bombast of BJP president Amit Shah and Prime Minister Narendra Modi, Congress is a force to reckon with the state politics. And it is true of the BJP and the JD (S) as well. The JD (S) will be a permanent third in the political league of state unless it is able to recover its pre-split Janata Dal vote of 1994. Karnataka cannot be reduced to a bipolar polity though both Congress and the BJP would prefer it.

So, how do we make sense of the mandate in this context? The BJP has failed the test because the other parties together have larger number of seats, and their combined vote percentage is a statistical frill and nothing more. The presence of the third party makes it difficult for the other two major parties to play the bully. In many ways, the Karnataka scenario replicates itself across the country, where the presence of third parties keeps the arrogance of the Congress and BJP on the leash.




Wednesday, May 16, 2018

IT sector hovers in mid-air




Information Technology (IT) export earnings are what keep India going. It is India’s face abroad and the country is proud of the vibrant IT sector. The 2016-17 Reserve Bank’s annual survey on computer software and information technology enabled services exports gives a general picture how the sector, which is what makes the India a big player in the world, is faring in terms of the services it offers and the dollars it fetches in turn. There are of course illusions among politicians and spin-doctors that IT exports make India a major global economic power, which is not really the case. The survey reveals that India is among the top Information and Communication Technology (ICT) exporters, that it is ahead of China, Ireland and France, close to Germany, and far behind United Kingdom and the United States. India is exactly in the middle of the IT exporters pecking order.

In 2016-17, India’s software exports brought in a net invisible surplus of $97.1 billion (71 per cent), and it helped in reducing the current account deficit of $112.4 billion to $15.3 billion. But where do these earnings come from? They come by way of computer services (69.2 per cent) and Information Technology-enabled services (30.8 per cent). The computer services segment accounts for 66 per cent of the earnings and software product development has a share of 3.2 per cent. In the ITes segment, 23.7 per cent is accounted by the business process outsourcing (BPO) and engineering services contribute 7.1 per cent of the share. There has been encouraging improvement in terms of software product development and engineering services, but earnings from those segments are still small. The Indian IT sector stands at the lower end of the value chain, and though its dollar earnings provide ballast to the crucial foreign exchange cushioning, it would be an exaggeration to call India an IT superpower. India is the IT service hub of the world, but it is not the leader in the sector in terms of spearheading technology with its brainpower.

In terms of the industry, BPO services corner the share of 76.8 per cent and engineering services 23.2 per cent within the sector. Within the larger BPO services, the share of customer interaction services is 5 per cent, which is half of what it was in 2012-13 (10.9 per cent), financing and accounting, auditing, book-keeping and tax consultancy services is 10.3 per cent. Segments like medical transcription (0.8 per cent), HR administration (0.6 per cent), content development, managing and publishing (0.8 per cent) reveal diversification but not significantly so. Similarly, on the engineering services side, product design engineering (electronics and mechanical) has a share of 7.7 per cent

Experts are aware where India stands in the IT league table, and there are attempts to improve the position by increasing the share in software product development and in engineering services. A change can also be seen in the profile of the companies dominating the sector. In 2012-13, the public limited companies dominated the scene with a 64.6 share of the sector’s space, with the private limited companies occupying 35.3 per cent of the share. That is the big companies with a larger shareholder base were the lead players, though the small companies existed. In 2016-17, the private limited companies increased their share to 49. 2 per cent, while the public limited companies’ space shrunk to 50.3 per cent. This marks a major change in the profile of the sector. It means that there are more players, and the smaller players have almost an equal share of the IT business along with the big ones. It also means that those employed in the sector get lesser pay and the jobs are also insecure because the private limited companies operate on tight and stringent budgets. The low wage bill of the private limited companies keeps the Indian IT sector competitive. It is estimated that the total work workforce directly employed in the IT sector stood at 40 lakhs or 4 million, while those indirectly employed stood at 1.3 crore or 10.3 million in 2017. The IT sector should be expanding and growing in terms of technology upscaling, but India is not the leader in this field.

IT sector will generate disproportionate foreign exchange earnings compared to its capacity to create jobs. India’s growth story cannot depend on IT alone. Policy-makers recognize it and they have been flailing their hands desperately to boost manufacturing and agriculture. Due to unavoidable reasons, India is unable to find a way out of the logjam in the primary and secondary sectors. The Indian economy looks like a skyscraper standing on stilts. Not an assuring sight.


Friday, May 11, 2018

Knotty issues in history of Marx


A slightly
                                                                          

A slightly modified version has been published in The Times of India (May 11, 2018)

He was not the global icon he became after the Bolshevik Revolution



The eulogies for Karl Marx on his bicentenary (1818-2018) and elegies for communism will be the order of the day. They are deserving. There would have been no Union of Soviet Socialist Republic (USSR)(1917-91) of Vladimir Lenin and Josef Stalin and successors, there would have been no People’s Republic of China of Mao Zedong, no Vietnam of Ho Chi Minh and Cuba of Fidel Castro without Marx and Engels’ clarion call for a revolution in the Communist Manifesto of 1848. The mid-19th century Manifesto was the mantra of revolutions in the 20th century. (At the time of writing of the manifesto, Marx was a few months short of his 30th birthday and Engels was 27. The manifesto did not have any impact on the revolutions that had erupted all over Europe that year, all of which had failed. Historian Lewis Namier had described them as the “revolution of the intellectuals”.) It was not surprising that Marx and his intellectual collaborator Friedrich Engels became demigods across the Third World.

The irony cannot be overlooked that Marx and Engels did not attain cult status in England where Marx lived in exile for 30 of his 65 years in England and spent a large part of that time in the Reading Room of the British Library poring over the reports of the factory inspectors and the Factory Acts that were enacted by the British parliament in the 1830s. (The first Factory Act 1833 prohibited the employment of children below the age of nine in factories, those between the ages of 9-13 were to work for nine hours, and those between 13 and 18 for 12 hours, and a two-hour daily compulsory schooling. The Factory Act of 1844 extended the rules that applied to children to women.)

The ideas of Marx and Engels did not have much sway in the politics of western Europe or in the United States of America, the core capitalist countries. It was politicians and theorists – yes, there was such a combination in 19th century Europe – like Louis Blanc and Auguste Blanqui in France, Ferdinand Lassalle in Germany who played a significant role in pushing forward the socialist agenda. The socialist legislation carried out by Bismarck, an example of state socialism – in the 1880s – was due to Lassalle’s influence over the conservative leader. The trade unions too emerged in the second half of the 19th century as a response to the emergence of an expanded industrial economy and the large industrial working class that was a necessary part of it. Marx and Engels were stern critics of all varieties of socialism and trade unionism.

Marx had a devout following and he seemed to have been irritated by it, and he was forced to say that he was not a Marxist. Engels was the chief among the followers of Marx. There were enough in Marx’s camp in the factional feud that took place at the First International, which was the first meeting of the International Working Men’s Association dominated by French and British trade unionists. The clash was between the followers of Joseph-Pierre Proudhon, of Auguste Blanqui, of Mikhail Bakunin and of Marx. There was a split in the First International in 1872 at its conference at The Hague. The First International was moved to New York, apparently nudged by Marx, to escape the influence of the followers of Bakunin, but it was disbanded in 1876 at its conference at Philadelphia. The anarchists held sway over the First International in Europe till 1881 when it ceased to exist.

Though Engels could be called the first commentator or exegete of Marx, it seems that it became institutionalised in the Soviet Union. The official version emerged. But there were Marxists before the Soviet era, like George Sorel in the 1890s, Paul Laforgue, Marx’s son-in-law and a co-founder of the French workers’ party, Wilhelm Liebknecht, one of the founders of Social Democratic Party in Germany, and Georgi Plekhanov of the Russian Social Democratic Party. And of course, V.I.Lenin, the Russian émigré. We have Rosa Luxemburg and Karl Liebknecht of the German communist party in the immediate aftermath of the First World War who were avowed Marxists. There were also the much-reviled revisionists, Eduard Bernstein and Karl Kautsky, German theoreticians who broke with Marxist orthodoxy very early.

It is after the Second World War that followers of Marx felt that the master was misinterpreted by the Soviets and tried to retrieve him. And in the 1970s it led to French theoretician Louis Althusser positing a younger, romantic Marx as opposed to a mature, scientific Marx, something that was mooted by Bernstein even when Marx was alive. Bernstein called it the immature and mature phases. There was also an attempt to re-invent Marx as a sociologist during the same period.

Despite fluctuations in the intellectual fortunes of Marx, quite a few on the Left everywhere seem to persist in the belief that his critique of capitalism is invaluable and powerful. It looks more powerful than invaluable in retrospect. The reading of the first volume of Das Kapital, even in English translation (originally written in German as was the Manifesto)), remains an interesting experience as you come across a quotation from Shakespeare’s Timon of Athens, where the protagonist denounces gold in a soliloquy. What is lacking in clarity in Marx is made up through passion.  It seems to be the case that it is his passionate argumentation more than logical rigour that keeps his text alive. He however believed that he was dispassionately dissecting capitalism. His economics became antiquated even as he published his first volume in 1867, and his philosophy remained in the shadow of Hegel. Many of the ardent Marxists, in and outside academia, are now invoking Hegel as a means of understanding Marx better. Marx is struck in the historicist groove and scientific socialism cannot extricate him out of it.
















Sunday, April 08, 2018

Blackmail (2018) a bad movie made with good intentions


Perhaps, bad movies are good because you try to unravel the mystery of why the movie was bad. You are trying to find out reasons. And a bad movie sometimes reminds you of other bad movies you have seen. So when I saw Abhinay Deo-directed Blackmail at Rivoli in a crowded upper stall -- the lower stalls were empty --it reminded immediately of two other bad movies -- Juari of 1968 starring Shashi Kapoor, Tanuja, Madhavi, Nanda and directed by Suraj Prakash, who had also made the successful Jab, Jab Phool Khile starring Shashi Kapoor and Nanda in 1965 and Joel and Ethan Coen's Burn After Reading (2008). Of course, there are some mindless admirers of Coen brothers' movies and they would be offended immensely if I were to class Burn After Reading along with Blackmail as a mindless movie. The reason I lump these movies together is because there seems to be a lot happening in them and each scene makes sense in itself though it does not connect with the other scenes. Each scene promises that the film could turn out to be a good one but the other scene which passes muster in itself again raises hope and so all the hopes raised by each of the scenes is left hanging in the air.  It could be argued that this kind of a splintered movie experience offers an aesthetic pleasure of its own. It really does not however much one tries to do it.
Abhinay Deo, son of veteran character actor Ramesh Deo, has been praised by the cognoscenti for his Delhi Belly (2011), which I did not see and which I think I would not have liked if I had seen it, promises a dark, intense and complicated movie in Blackmail and fails to deliver on the promise. Something like that other much talked-about Iranian movie, Asghar Farhadi's The Salesman (2016).which was bad. Blackmail disappoints because it had competent players in Irrfan Khan, Divya Dutta and Kirti Kulhari but their roles are reduced to those of caricatures, lacking in dignity and meaning. Deo's tries to turn Blackmail into a black farce and it does not work. He seems to have been carried away by the cleverness of the plot and loses the plot of good film-making, which needs a good story, that is with a story that has a credible sequence, and characters which provoke curiosity as well as respect. The characters in a movie cannot be treated as pawns or props to be moved around at the director's whim and pleasure even as the director is absorbed in the maze of the plot. It is a good thing that Abhinay Deo took the risk of making Blackmail into a bad movie because he was experimenting with idea and plot.

Sunday, March 11, 2018

L'Enfance du Mal (2010), or Sweet Evil, a twisted, convoluted tale of misandry told with admirable brevity


This is a French film, and therefore the unexpected is to be expected. There is the delinquent under-aged teenager, who cleverly traps a wanderer, a fellow-teenage conspirator and boyfriend and an overaged judge. She has a sad story to tell, especially to the judge and his wife, which changes in details. The judge believes in law and rules, and he is aware that all that one can do while delivering a judgment is to be as fair as possible. His wife is the daughter of a clockmaker and she fixes clocks and she is a member of an association which fights for the rights of women. There is the usual sense of European loneliness beneath the orderly life in the judge's house and the teenage intruder causes enough ripples right from the beginning. The girl's mother is in prison. The girls wants to get her out.
Director Olivier Coussemacq handles the narration with great dexterity. It is supple and there are moments of psychological violence which are kept on leash.
Anais Demoustier plays the role of the young girl, Celine, Pascal Greggory is the judge and Ludmila Mikael, the judge's wife. It is the tense interactions among the three that holds this 120-minute plus movie. There is also an underlying theme of misandry but a triumphant one at that. At each stage, the girl outguns the men through sheer cunning and subterfuge. This is indeed the interesting part of the movie. But it is never out in the open. One can infer it only after seeing the movie and ponder over it.
It is a crime thriller in one sense, but there is the complexity of the social situation, the war of the classes and the sexes.
This movie was shown at the Bombay International Film Festival in 2010, and it has done the festival circuit, including Karlovy Vary. 

Majoritarianism and illiberalism




RSS, BJP, caste panchayats and AIMPLB exemplify politics based on group identity



Prime Minister Narendra Modi speaking of125 crore people of India poses a challenge to any political scientist who wants to deconstruct the nationalist rhetoric, as does Mr Modi’s slogan of ‘Sab Ka Saath Sab Ka Vikaas’. The Prime Minister has been careful not to mention the name of any caste, including Dalits. He praises Dr. B.R.Ambedkar, the icon of Dalits but never utters the word, ‘Dalit’. He does not refer to Muslims and Christians in his public utterances though in his election speeches he would not hesitate to hit out against the Muslims without mentioning their name as he did during the Uttar Pradesh Assembly elections when he referred to land being made available to burial grounds and not for crematoria.

It might appear rather naïve to ask the question: When he talks of 125 crore people, is he or is he not including the 17 crore to 18 crore Muslims and the crore or two Christians? It appears that the phrase “125 crore people” for Mr Modi and the ideological mentor of the BJP, the Rashtriya Swayamsevak Sangh (RSS), stands for the Indian nation, and by implication different identities are homogenised in the rubric of “the nation”.

Pressing forward with the logic, if Muslims and Christians are part of the nation, then will they have equal rights with everyone else or are they to be treated as a class apart? RSS Sarsanghchalak Mohan Bhagwat’s argument that Muslims – he avoids mentioning the Christians – are Hindus though their religious faith may be Islam is enough to raise the hackles of Muslims, secularists and liberals. But visceral reaction to Bhagwat’s dialectic is to walk into the RSS trap of a nationalism that is confined to Hinduism as religion.

The words ‘Hindu’ and ‘Hinduism’ are meaningless. Hinduism is a word that does not make sense to Hindus except to the few who are members of the RSS. The various Hindu sects – and we can leave out the castes for the moment – are not at all comfortable with this pseudo-term called Hinduism. Social reformers from south India like 12th century Ramanuja, a Vaishnavite from Tamil country, and 11th century Basava, a Veera Shaivite from the Kannada-speaking region, and their followers in the subsequent centuries, would not consider themselves as belonging to the same group called Hindus. People who have been labelled Hindus do not consider themselves Hindus. The differences between the sects are rooted in philosophical and theological concepts. They may all be drawing from a common pre-Vedic, Vedic and post-Vedic pool of gods and goddesses but they do not subscribe to the common identity. It is true that modern Hindus have begun to worship all gods and all spiritual gurus without discrimination because they are totally overwhelmed by this compulsion to conform to the imposed label of the Hindu.

But even today god-fearing Shaivites and goddess-regarding Shaktas from eastern India have no interest in a Ram temple in Ayodhya. Of course, they all love the Ramayana story as told by Valmiki and those who followed him, but when it comes to the question of godhead, Shaivites and Shaktas politely withdraw. Rama, the incarnation of Vishnu, does not inspire them. Of course, in the complex and confusing theogony of the so-called Hindus, Vishnu, Shiva, Brahma, Kali and many others interact and there are sufficient piquant situations when they are juxtaposed. Usually, each of the gods and goddesses remains the master or mistress of their respective universes.

Syncretists, and there have been many through the centuries, may argue that Vishnu is Shiva is Brahma is Kali ad infinitum, and that there is an undifferentiated godhead called Brahman does not wash with old believers. All modern temples in cities and villages and among Indian habitations abroad have niches for all gods, mainly Rama, Sita, Lakshmana, followed by Ganesha, followed by Shiva and Parvati. And most of the 20th century temple-goers have no sense of theology, and bow before all the idols. It does not deepen their religiosity in any way but then they are not bothered.

So, the BJP and the RSS are grappling with this protean Hinduism, which cannot be contained, which cannot be identified with a god or goddess. How are they to unite the Hindus? It looks like they have given up the attempt because they know that once they are sucked into the religious sphere they will sink in the quick-sands of the multi-headed, multi-armed Hindu faith. Hindutva without the Hindu religion is a safe proposition. And Hindutva for them is a geographical tag, which in modern political terms becomes nationalism. It is for this reason that Mr Modi refers to 125 crore people, and Mr Bhagwat slips through the cracks by resorting to Hindu as a geographical term, which in fact it really is ever since the times of Achaemenid Persians in the fifth century Before the Common Era (BCE).

The Central Asian tribes, the Yueh-Chi, which came into India at the end of the first millennium BCE and established the Kushana empire, and the other Central Asian tribes, the Sakas and the Hunas, who destroyed the Gupta empire in the fifth century of the Common Era, who later became the Jats and Rajputs of northern India and became followers of Buddhism, Shaivism and Shaktism, too did not think of themselves as Hindus as understood by the Islamised Turks. The Islamised Turks did not understand the bewildering complexity of the religious practices of the people of the country and they used the portmanteau term, Hindu.

Following Modi and Bhagwat, what we have then is majoritarian nationalism, which is part of the logic of democracy in its crude form. The delicate and subtle liberal democracy is a phenomenon of recent origin, where individual is the basis of society and individual rights are sacrosanct. Most people may enjoy the freedoms that come with liberal democracy and its privileging of individual rights, but they do not hesitate to return to group identities, whether it is of caste or of religion. So, the Jats want privileges for Jats but they would not concede privileges to the individual Jat. Muslims want protection as Muslims but they will not allow freedoms to individual Muslims.

When larger groups ride roughshod over the rights of the smaller groups, it is called majoritarianism, and when groups override the individual it is called illiberalism. What we find in the India ruled by the BJP and mentored by the RSS at one end, and dominant caste panchayats and All India Muslim Personal Law Board (AIPMLB) occupying the other end, is a deadly combination of majoritarianism and illiberalism.

Tuesday, January 30, 2018

Economic Survey 2017-18 avoids telling lies, and does not tell the truth

Chief Economic Adviser Arvind Subramaniam emerges as a market economist who knows the devil in the details



The first paragraph of the first chapter – State of the Economy: An Analytical Overview and Outlook for Policy – shows the dilemma of the author/authors of the Economic Survey. They are compelled to highlight what the government considers to be its great achievements, but at the same time facts demand that the problems and roadblocks had to be stated as well. One might call it intellectual honesty, but a more critical analysis would have offered a clearer picture. The first paragraph:

The past year has been marked by some major reforms. The transformational Goods and Services Tax (GST) was launched in July 2017. With a policy of such scale, scope and complexity, the transition unsurprisingly encountered challenges of policy, law and information technology systems, which especially affected the informal sector. Expeditious responses followed to rationalize and reduce rates and simplify compliance burdens.”

 There was a lack of understanding and preparation on the part of the government. It wanted to take the plunge in a spirit of bravado, and it created stresses and strains to everyone except itself. And constitutionally speaking, the GST Council, comprising the finance ministers of the states and the Union Territories (UTs) with the Union Finance Minister at its head and consensus as its mode of decision-making, turns out to be an administrative monstrosity, and it goes against the very principle of federalism. Prime Minister Narender Modi and Finance Minister Arun Jaitley use the euphemism of ‘cooperative federalism” to describe the short-circuiting of federalism. What the GST does is to take the away the powers of each state to tax according to its own economic viability. The government’s tendency to concentrate powers of administration is given a futuristic hint in Chapter IV with the title, “Reconciling Fiscal Federalism and Accountability: Is there a Low Equilibrium Trap”, where the financial viability of the rural local government (RLG) and the urban local government (ULG) is questioned, and especially the RLG, who depend on devolved tax revenues, and the question is asked whether state governments are doing enough on devolving the revenues, the demand which the states make on the centre. The Modi-led BJP government is looking for efficient ways of collecting the tax at one point and assuring that the revenues will be devolved each according to his need. This is fascism in governance.

There is further hint of what cooperative federalism could lead to with the caveat: “Cooperative federalism is of course not a substitute for states’ own efforts at furthering economic and social development.” The suggestion is that the “cooperative federalism technology” could be used by the GST Council to create a common agricultural market, amalgamate inefficient electricity markets, solve inter-state water disputes and also tackle air pollution. The monstrosity of cooperative federalism as frozen as in the GST Council unfolds.



The next interesting part comes in the third paragraph:

Macroeconomic developments in this year have been marked by swings. In the first year, India’s economic temporarily “decoupled” decelerating as the rest of the world  accelerated – even as it remained the second best performer amongst major countries, with strong macroecomomic fundamentals. The reason lay in the series of actions and developments that buffeted the economy: demonetization, teething difficulties in the new GST, high and rising real interest rates, an intensifying overhang from the increasing TBS [Twin Balance Sheet] challenge, and sharp falls in certain food prices that impacted agricultural incomes.”

In the second half there were “robust signs of revival” because “shocks began to fade” and “corrective actions” taken and “the synchronous global economic recovery boosted exports.” But that is not end of the story of premature and unthinking decisions taken and corrected. “Fiscal deficits, current account, and inflation were all higher than expected” and part of the blame was laid at the door of rising international oil prices ‘’India’s historic macroeconomic vulnerability.”

We now know as to why the growth rate for 2017-18 was pegged at a modest, sub-optimum 6.75 per cent, and very much less than the 7.3 per cent estimated by the International Fund (IMF). The projection of 7 to 7.5 per cent growth rate for 2018-19 is not sanguine. The situation has been aptly, if cleverly, described as “dualities of revival and risk”.

The other issue that comes for praise followed by a cautionary statutory warning is about shift from subsidies to “public provision of essential private goods and services at low prices, especially to the poor.” But this can be termed a success only if toilet building leads to toilet use, bank accounts lead to financial inclusion – the opening of bank accounts in itself is not sufficient –, cooking gas connection leads to gas offtake and village electrification leads to household connections. That is a tall order indeed. The government can claim that it has started the process and it will not be its fault if all of this does not lead to fruition. The truth that cannot be hidden is that transformation cannot be achieved through government fiat.

And there are some stark confessions about the limitations of government policy interventions. It is pointed out “that while there are significant social and economic benefits to attacking corruption and weak governance, addressing those pathologies entails challenges. In the vase of the GST and demonetization, informal cash-intensive sectors were impacted.”

And about the much-touted advantages of auctioning of natural resources, the Survey points out the embedded ambiguity: “In the case of spectrum coal and renewables, auctions may have led to a winners’ curse, whereby firms overbid for assets, leading to adverse consequences in each of the sectors; but they created transparency and avoided rent-seeking with enormous benefits, actual and perceptional.” The use of the word “perceptional” is very interesting. The “perceptional” benefit could be more than the “actual”.

The Survey tackles the moot question of how much a state can do things at a time when Prime Minister Modi believes that he will wrought magic in the country through governmental intervention. The Survey notes: “But Indian is in a grey zone of uncertainty on the role of states and markets. Limitations on state capacity (centre and states) affect the delivery of essential services such as health and education. At the same time, the introduction of technology and the JAM (Jan Dhan—Aadhaar--Mobile), now enhanced by the Unified Payments Interface (UIP) holds the potential for significant improvements in such capacity.” The words to be noted are “potential”, “significant improvement”.

And as to manufacturing in India, the problem it has not made the grade of international competitiveness which is reflected in the “declining manufacturing-export-GDP ratio and manufacturing trade balance”. This combined with “real effective exchange rate appreciating about 21 per cent since January 2014” has only added to the woes of manufacturers. The government is in a fix and it is not its fault. There are too many problems, and the achievements pale before the problems!








Sense of the mandate

Congress and the BJP can never hope to dominate Karnataka Forming the government after an election is a necessary part of the democ...