Thursday, February 12, 2015

Call Jhadoo a Vacuum Cleaner and it starts to act as one - Aam Aadmi Party's Victory


An AAM analysis



With an emphatic and thrilling win in Delhi Elections, the Aam Aadmi Party has emerged as a viable alternative to the Congress and regional parties as a voice of opposition against the ruling pro-business BJP. The victory margin has generated a buzz that the jhadoo should now be replaced by a vacuum cleaner.

As there were so many analysis post 16th May-2014, there are bound to be this time around too, though the reasons for BJP's defeat more or less have already been mentioned by ‘eminent’ experts at the 24 hours news channels.
Apart from stating some very obvious reasons that led to BJP's downfall, such as parachuting the candidates, excessive negative campaign, arrogance, Ghar-wapasi, Sadhvis & Maharajs, and even the Pinstripe suit, the discussions have been rhetorical (& sometimes confusing – Kiran Bedi being brought late in the campaign v/s the pathetic speaker that she is). The twitter-journos have only confirmed their standing on hollow bases, their euphoria for an AAP victory overwhelming their reasoning abilities. I call these factors obvious not because their negative impact has been empirically established, but because they were prominent in the discussion agenda preceding the election - both as an opposition's offence and BJP's defence, and clearly in retrospect it can be argued that the defence was rather appalling.

The acknowledged but unanalysed factor has been that of perception - the perception that BJP has failed in its 9 month rule at the centre and that AAP's 49 day rule was at least satisfactory, if not heavenly; the perception that if BJP comes to power it is going to be indifferent to say the least and AAP would truly be a people's government, sans dharnas this time. Here, let me say that the appealing but unrealisable promises alone do not explain the basis of AAP's victory. In fact, everyone had their own list of such populisms. What turned the wave in favour of AAP was that their leader had managed to get the perceptual upper-hand. The 'obvious' factors continue to be debated in media, so I will focus on the not-so-attention-generating 'perceptual' factor.

1.       As soon as Arvind Kejriwal resigned from his 49 day dharna-cum-governance stint, AAP supporters were spreading the achievements of the government in its 49 day rule. Even though little of note happened during that time, the list looked like achievements of 'Ram-Rajya'. Empathetic behaviour of government officials, distribution of lifeline water, disappearance of police-hafta, etc. were endlessly repeated so as now they have the status of accepted facts. Another initiative of Mohalla Sabhas, which are little more than Resident Welfare Associations, was cited as a radical step in democracy. If the experience of RWAs is any guiding step, this was a redundant gesture, if not futile. But, perception matters and these 'inclusive' steps were billed as ushering in 'Swaraj'.

2.       BJP's perception as an anti-poor party has been amplified by the reactions to the Land acquisition ordinance and the ongoing disinvestment program. While the criticism by some policy experts has been factual and insightful, the discourse has been hijacked by the political parties, who very well realise that not much can be affected until the laws have been passed in the Parliament. On the macroeconomic front, the opposition is shedding croc-tears for tangible outcomes, as if Modi needed to build certain kilometres of highways and erect some industries to earn a certificate from them. Even the never satisfying industry bodies echo such sentiments, ostensibly to extract further concessions. There is a growing current that nothing has happened in the 9 month Modi rule, but nobody steps forward to elaborate on this. On the contrary, the recent ordinances suggest that the government will not be held hostage to the opposition's obstructionist tactics and is committed to pursue its reform agenda. Again, the perception that has been created is that this government is little different from the previous one, with the added baggage of it being favourable to certain industrialists, especially the punching bags of Arvind Kejriwal.

3.       On the front of the promises made, only time will tell whether this positive expectation turns into legitimacy. The current economic reading, although, leaves little doubt about the fictitiousness of these claims. Just like Narendra Modi's victory in Lok Sabha elections created an atmosphere of heightened macroeconomic expectations, Arvind Kejriwal has managed to 'push the envelope further'(sic).

To get the impact of perception, a comparison is necessary. When Modi talked about bringing black money and getting 15L in the accounts of everyone, very few took notice and ignored it as an election gimmick (honestly, I, who has listened to so many of his speeches, did not even know he has made such a ridiculous proposition). When 100 days passed, the Congress made the nation take notice of this promise and generated a nation-wide debate on the issue, in process generating an absolute negativity for the government. Making such a promise was ill-conceived, as it invited a clever reaction from the opposition which capitalised on this blooper. Here, AAP's case is on a better footing as it has already got the 'undoable' certificate from the opposition. (Unintentionally)Well Played!

Similarly, the Jan Dhan Yojana, an excellent scheme with an outstanding objective and even more outstanding implementation has managed to garner much negative publicity. More than the incentives given to attract the customers, the intricacies of the scheme have attracted mocking. As if the people who were already made to expect Rs.15L from the black money suddenly have Rs.5000 more to get in doles from the overdraft facility.

I will end by giving an unrelated example which serves as an anecdote to realise the impact which false perceptions create. The pharmaceutical industrial units in India which cater to the west have some of the best hygiene standards found anywhere in the world. Given the stringent norms laid down by the USFDA and other regulators and also the political-business pressure of major pharma MNCs, Indian pharma firms adhere to the strictest cleanliness practices. But because of the Ranbaxy episode, the dominant narrative that has been established is that there is little regard to hygiene in India. Not only do foreign MNCs now use this argument to their advantage in USFDA hearings, but also the prescriptive economic-journalists have elevated this narrative to the status of a fact, probably without visiting any of the manufacturing facilities. It is a different matter that Indian firms are consistently ‘disappointing’ the regulatory inspectors with their state-of-the-art facilities. And our journalists are blind to such information. Perception and prejudice fuel into each other. (I have visited the premises of an American-German firm in New Jersey. In India, I have confirmed the practices with my relatives and friends who work in Indian firms).

The conclusion is that offence wins - on policy front, not on personal front. On personal front it has only backfired in a growing polity where people crave more for outcomes rather than personal duels. On the policy front it is conclusive that whatever you do, you must communicate it sincerely and proactively, before the opposition gets to you. By you giving the avenues to the opposition to attack, the narrative gets hijacked and the agenda gets derailed. BJP has already a lot to learn from the obvious factors of defeat, it might as well pay attention to its perception in the masses.


Tuesday, June 10, 2014

SATYAM BRUYAT - Justice Katju : Needham's Grand Question

Reply to SATYAM BRUYAT - Justice Katju : Needham's Grand Question

Sir, I think Needham's Question regarding China (& India) has been poised romantically. There are two instant but desultory answers that come - (1) That we lagged because of Colonization, and (2) That we lagged because of decay of our culture due to successive parochial interpretations.
While both are true to some extent, we must know that Hindsight blinds. Path of history is so clearly lit with events of magnanimous importance that it becomes impossible to construct an alternative without occasionally straying on the actual path.
Therefore, when we say that it was because of Britishers or Mughals or other rulers that we could not attain/ maintain the past glory of Indian culture from science to society, we are actually understating the prevailing conditions in the country(or more precisely 'Indian Landmass' ) which led the people to choose solutions which led to deterioration of the scientific thought.
The answer lies in defining 'prevailing conditions'. It does not begin with usual agricultural, exploitative, poverty ridden society. These are the end products of the first cycle. Thereafter, they provide 'feedback' to the system and the tale goes on.

By 'prevailing conditions', I mean lack of decentralization of knowledge. While caste system acted as closed door - exclusivist guardian of knowledge, over the centuries it even alienated the 'Upper-Castes' from its reservoir. Result - Only the dogmas and prejudices survived and no discussion and percolation of knowledge to the society could take place. Illiteracy and atrocities 'blossomed'.

It is a well documented fact that Industrial revolution was greatly facilitated by press-revolution. The ideas disseminated freely from researchers, institutions(which had active support of state) and from across the borders. The chain reaction is what came to be known as Industrial revolution and manifested itself in massive energy of 'The bomb' (well, literally!)
The decline of the 'Argumentative tradition' of our culture is therefore chief, if not sole answer for the Needham's Indian question. The sporadic efforts by mahrajas and badhshahs notwithstanding, it was the wholesome decay of the education system that kept us in dark ages. And as quote goes, "An age is called Dark, not because the light fails to shine, but because people refuse to see it." (James A. Michener)

To conclude, I will state some current controversies - be it AFSPA or Art 377 of IPC or Reservation system, we find that there is no meaningful public discussion. Answers by both supporters and dissenters are almost dogmatic and tread a uniform line - Indepence/ Liberty/ Merit or Law&Order/ Unnaturalness of Act/ Past Exploitation. While one side is dismissed as elitist, others are denounced as trolls or paid 'Bots'. By engaging in healthy discussions, we can not only arrive at accepted solutions but more importantly open ourselves to variety of viewpoints and advance our knowledge. 

Saturday, April 19, 2014

[Response to the Aam Critic] - Modelling Gujarat

Jean Dreze and Amartya Sen have long discarded the Gujarat Model of growth in favor of a seemingly more equitable and inclusive model followed by the Bihar Govt.(under Nitish Kumar) and Union Govt(UPA I & II). Also, other economists-journalists have also lamented the so called Gujarat Model and heaved heavy praises on economy under Dr. Singh and P. Chidambaram. Planning commission has also stepped up the critique recently. I will not place the criticism by AAP here lest it lowers the discourse (They have already hijacked the tedious work of above authors just like the way they did with Gas prices issue when Mr. Gurudas Dasgupta was waging a lone battle without media support)

Here let me compare the indicators with a few of the model states : Kerala, Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka and Bihar. These are states comparable in terms of area and income. Bihar is included as it has become the recent favorite of all welfare economists due its turn around story.

The common criticisms against the Gujarat Model are:
- Incidence of malnourishment in Gujarat.
- Gender Inequality (as reflected in Infant Mortality Rate and Female Literacy)
- Unequal benefits of growth

Since these matters have been brought up by economists of such eminence, I would presume that they certainly did a cause-effect study with multiple dimensions accounting for current social and economic indicators. It is a different story that they being colored by ideological preferences chose to gloss over some obvious facts before stating their conclusions in public. Hence my answer is not to them but to the public whom they wish to provide results on a platter.

Geographical factors- 2/3rd of Gujarat is arid/ semi-arid.(Rainfall less than 60cm annually). Despite this, the govt has made arrangements for drinking water as well as irrigation in Kutchh region. Compare that to any of the above states where water is scarce (MH, Telangana, TN(partly)) or abundant (Kerala, Bihar, Seemandhra). Only AP and TN are marginally better off than Gujarat here with access to safe drinking water in 90.5% & 92.5% households against Gujarat's 90.3%.

Demographics of Gujarat- Among the above states, Gujarat has the highest Tribal population(15%, A.P. has 9%). That will partly explain the backwardness in indices of health and education, especially for women. Since health and education indices amongst tribals are comparatively low, averaging out takes place in a composite measure. It goes without saying that it calls for more concentrated efforts in mainstreaming them.

Malnourishment & Inequality & Gender Disparity- 44% of Guj kids are malnourished. But in which demography are they prevalent?- tribal, rural or urban areas? And what is the class incidence. If we have the data, we can determine to what extent does malnourishment depend on culture and on economic deprivation. After all, sub-Saharan Africa has much less levels of malnourishment even though its economic indicators are nowhere near Uttar Pradesh even.
Also, given the fact that income distribution in Gujarat, as measured by Gini coefficient(0.24-Rural and 0.28-Urban) is far more equitable than any of the above states and much less than the national average of 0.28 and 0.36 respectively, the myth of unequal distribution is also shattered. In fact, Gujarat saw a decline in Lorenz ratio from 2009-10 to 2011-12.

That leaves the possibility that state intervention in Gujarat in distribution of health services is not quite effective as that of TN or Kerala. Let's evaluate that.

Now, for Infant Mortality Rate(IMR) the drop has been better (48 in 2009 to 41 in 2011)as compared to All India indicators(50 to 44). But still comparisons with Kerala and TN are not possible.
Yes, the sex ratio in Gujarat is still less than All India level(918 against 940), but I fail to understand what major impact can a Chief Minister have in that. The Hindu ran an editorial comparing two events- Modi's marital 'record' and poor female health indicators. Anyhow, Female life expectancy in Gujarat has risen more compared to above states and is fast approaching them.

One thing which is certain is access to health facilities is crucial if the negative effects of malnourishment are to be mitigated. The State govt's health insurance scheme, Mukhyamantri Amrutam(launched in 2012) has a decent record of enrollment of 54% of BPL population (Only AP's Rajiv Aarogyashri (launched in 2007) has a higher enrollment of 75%)
As far as literacy rates go, Gujarat has seen a jump of 10 percentage points in the last decade(69.2% to 79.3).
The point is, no doubt the achievements of southern states have been stunning, but to dismiss Gujarat Model as insufficiently sensitive to social indicators is willful ignorance.

Comparison of expenditure on health as a percentage of total expenditure shows inconclusive results. All the above states have an increasing trends in health expenditure, but if it was the only determinant, Uttar Pradesh, which has the highest (12%) spend, would be the healthiest state. If there is one govt. which has shown a decreasing trend in health expenditure(as a % of total expenditure) - It's our very 'inclusive' Union govt.- probably due to slash in expenditure necessary to contain the deficit. 


But let's look at the reason why these govts are able to provide a better healthcare environment even though it looks like Gujrat govt should be more effluent.
Further, Kerala does not even have any industrial base to boast of so that its revenues can be justified. The answer lies in two things (1) The LDF-UDF governments in Kerala and DMK-AIADMK govts. in TN have competitively doled out some welfare measures too along with freebies. As a result their debt comparison with Gujarat govt does not even merits mention, & (2) The expatriate community remittances- Kerala and TN account for 3lakh of the 5.5 lakh workers which are cleared every year. Of the total Rs.60 billion, these states account for almost half (and along with Punjab and UP, almost 3/4th). This means that without having to worry much about provision of jobs to people, these states can concentrate on social issues. Otherwise, what explains that Kerala being the most literate state for decades has the highest unemployment rate? It's not solely because of large number of seekers, but also because of inability of state to generate employment opportunities. And this exactly is the Gujarat MODEL of development - To have fair balance of spend on job creation and social schemes. 

Of course, no defense of poor health indicators should be used to justify them. These reasons are not a pretext to laxity in implementation. These are just the reflection of a bigger picture of what the Gujarat govt under Modi has been able to achieve due to its good governance standards. As is evident from the data above, Gujarat is not the No.1 state it is made out to be by some NaMoniac chauvinists. Rather it is a state that has achieved high growth with improvement in social indicators and is on its way to be placed better in sectors where it has lagged in past.

Now lastly, a comparison with Bihar. Since metric based comparison would be an exercise in unfairness, let's concentrate on the issues. The argument in favor is that it has achieved more equitable growth due to its spend on health and educational schemes. Really? Nitish govt has been in power for only last 8 years and for these indicators to prove their worth, it will take considerably more time. So why is Bihar the fastest growing state in the country? I guess they forgot to ask Nitish and rather decided to sell their 'differences with Modi' packaged as 'Success Story of Bihar'. The simple reason is maintenance of law and order in Bihar. It has had huge impact in bringing hidden money in circulation due to changing spending appetite. Also, migration from Bihar is at all time high. and the migrants(mostly outcastes) have purchased land in their native villages at exorbitant prices. As far as industry is concerned, I have no knowledge if there is one. Infrastructure wise, Yes- National Highways have prospered (or planned) but state projects have only undergone a shila-nyaas and nothing more.

So let's debate more on these issues directly, rather than venting out ideological differences in the garb of manufactured, cherry-picked indices. It serves no purpose.