Perfidy In The Name Of The Common Man

Perfidy In The Name Of The Common Man

India may be a country that has suffered a disgraceful 2% GDP growth and 20% retail inflation per annum for nearly four decades. This self-inflicted economic violence was perpetrated using misguided copycat Soviet style policies. These led us, undeniably, into a miasma of economic under-achievement, with a few bright spots like the green and white revolutions and food sufficiency.

India only started to open up to other possibilities, the capitalist path diluted to Indian political sensibilities,  more mechanisation, computerisation, taking inspiration from America, not the USSR, in the second half of eighties. It promptly unleashed a near double-digit rate of growth. But the damage to the Indian psyche was profound, deep rooted, and had already been done.

Forty years of regarding oneself as poor would tend to cripple anyone mentally! Today, it appears, we, even amongst the seven hundred plus elected or nominated representatives to the two houses of parliament, cannot conceive of this nation, a collective of over a billion and a quarter souls, being anything other than forever poor. Indians, perverse as they have become, can live easily with being individually rich,  just as long as they stay collectively poor.

Is this povertarianism of the psyche reversible? Perhaps, but it is difficult to be sanguine about it. There are bound to be relapses into socialist dogma because it has been the default programme for so very long.

A Congress Party talking head, oddly enough, one Mr. Shergill, given that Rahul Gandhi brags about being more Left than the Left, recently said on TV that ‘In India, good economics is bad politics’.

By implication, Shergill was saying, not without irony, that shouting rhetoric at the TV cameras about the common man and the farmer was, ‘as above, so below, the whole of the law’.

It matters little how it becomes a povertarian obscenity of beggar-thy-neighbour negativity; because it purportedly wins votes, and nobody supposedly cares about results beyond that. For a socialist ethic, it holds the actual, real, living breathing people, and their future outcomes, in a great deal of contempt. But, it is a little like sleep walking- unremembered and unawares.

So, if there is a halt to new industry because of labour or land difficulties, or if everyone continues to pay more indirect taxes because a GST law can’t be passed, so what?

A national railway system that is in dire need of upgrading is stymied by its trade unions resisting all reform, aided and abetted by the railway employees themselves, and, astoundingly, even its well-informed board of directors. And again, so what, scream the embedded socialists, we are looking out for the people, not the capitalists!

The national carrier, Air India, over staffed, under equipped, inefficient, has been making whopping losses. The power generation, transmission and distribution system is losing money hand-over-fist, threatening to sink the banks that fund them, while providing unaffordable, expensive, electricity. Yes, but who cares, when a subsidy financed by deficits can take care of things?  

The armed forces have no state-of-the-art weapons to defend the country with, because orders have not been placed, and neither are they manufactured in the country. So who needs locally made defence equipment in collaboration with international greats, when millions in foreign purchase kickbacks can swell our common man loving coffers? Why break with the most lucrative mercantile traditions of the past?

Elected representatives and senior bureaucrats keep voting themselves more pay, perks, and subsidies, while refusing to do any constructive work, but who can check them in the anarchic, leftist scheme of things?

And if a Speaker in the Lok Sabha suspends slogan shouting, placard carrying legislators from the Lok Sabha for five days so that some house business can, at last, be conducted, it is called undemocratic by the miscreants themselves!

The big question being put to the test with parts of the opposition going for broke, or hysteria, whichever comes first, is, does the lure of socialism really work anymore in India?

These people know the tide may be turning irrevocably the other way, with the public demanding results instead. Many do not like the  daily tamasha in parliament. The decisive election of Narendra Modi, even though some of his lustre has worn off, is a manifestation of this yearning for self- propelled growth. The public is stirring into self-respect. It is perhaps fed up of demeaning charity in lieu of development.

The ideal gentle and decent common man, despite his many would be champions, has been created by ace cartoonist, the late RK Laxman. The version put out by a procession of hypocritical netas  is a chimera; but many have prospered and fattened in his name.  

The ‘principal opposition’ may have decided, in the face of the severest challenge to its very existence, that it must assume extreme positions.  And so, there are shades of the fiery anarchy echoing  Lohia, JP Narayan, George Fernandes, Mamata Banerjee - all in their flood. Curiously, there is very little of the gentle determination and accommodation of MKGandhi. Not even once did the mattresses and the fasting Anna Hazare style come to the fore.  

One thing is clear though- if the socialist emotion being drummed up so very stridently wins out, then we can kiss goodbye to the growth trajectory. The threat is real enough, because plumping for growth and options is unfamiliar territory for Indians.

Fortunately for the forces of change, most of the population, a fulsome 65% are between the ages of 15 and 35, and do not carry much baggage. Still, the lure of the freebie is always compelling, and cannot be underestimated. And the young get frustrated easily if their aspirations are not met.  

But is this likely? Will it be yesterday once more? There is no doubt a lot of pain in enforcing fiscal discipline, bureaucratic accountability, speed of execution, growing the GDP for real, instead of profligate welfare spending on the never-never, to the exclusion of efforts, or means, to pay for it.

All over the world the capitalist economies are indeed in turmoil, after a long spell of spectacular, debt-fuelled growth. The socialists and communists may have failed in their dogmas, but capitalism is also badly bruised. It needs to balance out its excesses, and also the fact that it seems to enrich a miniscule minority much beyond reasonable multiples.

India has been no different. It has leap-frogged over its earlier possibilities since 1991, despite its many Nehruvian hesitations and codicils. But, somehow, the second stage of confidence and conviction has not come, even after 24 years.

Even now, a large proportion of the articulate and expressive are hostile to big business, wealth, unbridled growth that does not have a guaranteed omnibus compartment where the masses can be accommodated, a fondness for the inefficiencies that serve vested interests, and so on.

We want to keep our socialism, but somehow grow individually rich at the same time. For the everyman version, it is par for the course for Norway or Kuwait with tiny populations and much wealth. But how feasible is it for a resourceful nation but with 1.27 billion people going on 1.50 billion? It can be done of course. If we have been able to feed ourselves with huge surpluses we can raise every person’s living standards too.

But something of an idea far more massive than an equitable distribution of  poverty is called for. That was wrong even when we were less than 400 million strong, in 1947. But now, just printing notes to cynically give away money for votes in the name of subsidy and welfare cannot work. We have to develop  a voracious appetite for growth instead. This seems impossible with socialism sleeping insouciantly in the same bed. 

Welfare does have its place, but cannot define the narrative. To get where we must go we have to build the economy to $ 5 trillion, and then more.   

For: Swarajyamag

(1,312 words)

August 6^th, 2015

Gautam Mukherjee

Land: Too Cheap, Too Dear, Too Hot To Handle!

Land: Too Cheap, Too Dear, Too Hot To Handle!

Land acquisition from 1947 to 2013, operated under the colonial 1894 Land Acquisition Act. Combined with ‘land use’ legislation, also inherited from the British, the political-bureaucratic nexus is omnipotent. The 1894 law, with its overwhelming discretionary powers, was most serviceable for the State, as well for those it wished to favour.

This old law was only thrown over, via a radical act of parliament in the dying days of UPA rule, in 2013. And this, after elaborate debate and broad bipartisan support, most notably from the BJP, albeit under different leadership, that wanted to go even further with it!  

The new Act’s content went to the other extreme. It feather-bedded the land owner/farmer with elaborate consent clauses, and pumped up the compensation clauses to what many say are unrealistic levels.

Of course, how much is eventually paid out, despite the enshrinement of double the market rate in near urban areas, and four times that in rural regions, and how, will depend on the interpretation of the fine print.

But, notwithstanding the process, many interested parties have been wondering, how the government and private industry propose to finance land acquisition? What will bloated acquisition costs do to the viability of envisaged projects? Alternatively, how realistic is it to partner with landowners and farmers unconnected with the businesses, industry, housing, offices, or the infrastructure being built on their land?

When the pro-development majority government of Narendra Modi came to power in 2014, it immediately set about removing the excessive empowerment of the 2013 Act, without however disturbing the original compensation clauses.

But the initiative ran into stiff opposition, both from within the supporting organisations and cadres of the BJP/RSS, and NDA constituents such as the Shiv Sena and Akali Dal, plus large sections of the Opposition. The proposed dilutions of the consent clauses of the 2013 Act were dubbed ‘anti-farmer’, and began to gain more than a little political traction, portraying the government as ‘pro-big business’.

The government initially took a muscular stance, and promulgated the changes as an ordinance, and kept renewing it every six months. However, they made little headway with getting the amendments passed in parliament. But tellingly, the ordinance was hardly used by its intended beneficiaries!

Now, 14 months into its tenure, the government has decided to abruptly bow out of the fracas, thereby stealing the Opposition’s thunder. It will now accept the joint parliamentary committee’s report coming on August 7^th and leave it to the individual states to modify the 2013 Act to suit. The tactical retreat, is also thought to be good for the cause of cooperative, and competitive, federalism, that Modi seeks to promote. The BJP states, however, are expected to use it well.

Government compensation for land acquisition, in any case, has not worked very well. It has led to farmer agitations in Noida and Singur in recent memory. In Haryana, under former Congress chief minister Hooda ,while  the pay-out was marginally more than others, it came in dribbles and drabbles. Interest was computed on outstanding amounts, and developed plots in lieu of acreage taken over, were to be allotted; but only as and when the state was able.  

For the private sector, under the 2013 Act, apart from an 80% consent clause, it is an open negotiation with farmers/landowners, and then having to contend with huge additional expenses under ‘land use’ and plan sanctioning laws too.

The present realty sector, languishing for lack of demand, may perk up via this circumstance alone, because new developments could grind to a halt, except on existing land banks!   

The cost of acquisition is the sticking point. So Congress, and its friends, may not have much to crow about after all.  

But seeking private and foreign investment, demands a more welcoming and pragmatic attitude. The Tata-Singur land agitations of 2006-2008 did propel the TMC and Mamata Banerjee into power. But, industry in West Bengal, seven years on, is still a non-starter.

Modi’s  seemingly abject surrender may just win him Bihar, now that he is rendered ‘pro-farmer’ again, even as he goes out to bat calling Congress ‘anti-progress and development’.

For: The Quint

(682 words)

August 5^th, 2015

Gautam Mukherjee

Speculators Come Back, All Is Forgiven!

Speculators Come Back, All is Forgiven!

The Modi government has played the classical Keynesian card by boosting infrastructure investment to stimulate the sluggish economy. This, in the absence of private sector or foreign investment, at least for the moment, and where there is a degree of scepticism on the growth statistics computed so far. This sarkari booster initiative has come about not a moment too soon, and should, alongside the soft oil prices, start showing further growth at the bottom line shortly.

Moribund infrastructure building may be starting up after a long pause, but the state of the residential and commercial construction industry country-wide is truly alarming.

Organisations connected with the broking, management/security/maintenance services provided to this sector,  that nominally accounts for 17% of GDP, such as Magicbricks, Knight Frank, 99 Acres, Cushman Wakefield, etc. have put out very disturbing reports.

They, more or less uniformly state, that thousands of semi-built apartments and millions of square feet of built office and showroom space are going a-begging for customers and are unsold.  This is the case in every metro and large city and its environs, across the length and breadth of the country. The secondary market too is very soft, up and down the spectrum, with serious buyers few and far between. Rental rates also, never more than 2% of capital value for residences, and about 7-9% for commercial area, have stagnated or fallen as well.

And the situation is more acute in newly commissioned sectors on the more distant edges of the cities. This is sometimes due to the absence of promised government infrastructure and connectivity, delayed for years in the implementation.

Sometimes, as in the case of NOIDA, a confusion of retrospective rules have apparently been violated, but this is revealed after the flats have been allowed to come up, and millions in home-buyer money has been invested!

The other huge problem currently is the mass exit and total absence of the speculators that used to keep this sector pumped up. This, even as the largely self-funded and loosely regulated construction sector went on a building boom that has the potential, even on a competitive and private basis, to solve a large proportion of the housing and commercial space shortages in the country.

And all of it was self-generated,  the land banks and construction funded via internal accruals and investor money, in addition to bank, institutional, venture capital and informal sources of finance. This was driven by market forces, and a large dollop of optimism, even ‘exuberance’, most recently from 2008 onwards, when the outer world collapsed!

The speculators, alas, have all exited real estate, ever since the returns began to barely keep up with the inflation rate of an estimated 10%. This came to pass sometime around 2013, when the economy slowed to its lowest ebb, and with their departure, the demand scenario promptly collapsed.

The speculators had to leave because the retail cost of capital is at least 10-13% in the banking industry, and more in the informal banking system, and a return of 10% and under, in sluggish conditions, is a net loss, illiquid, and certainly not worth the candle.

The residential and commercial property market, in other words, cannot survive at much under 20% return on capital per annum. 

Even in a largely end-user market where 80% or more are the ultimate buyers, and the ticket sizes are modest, the rate of return is faltering. This is because it barely keeps pace with  retail inflation at a minimum of  8-10% , even as the most competitive housing and commercial loans, over long tenures, are at rates a tad higher.

And the situation has remained stagnant ever since, though prices have not dropped more than 20% , despite such dismal conditions, because the underlying land prices are persistently high, even as it becomes increasingly difficult to find.

The speculators, ‘financiers/underwriters,’ considered the life-blood of the ‘ construction industry,’ have no choice but to sit tight on their money, living the ‘cash is king’ principle for uncertain times. Or, yes, they are making cautious forays into the stock market.

At least on the bourses, with talk of a ‘long term secular bull market’ doing the rounds, prospects of earning the 20% or more per annum they need to, levels which give them a real return on their capital, are much more likely in the near term. This will most probably result in speculative profits eventually, some of which are traditionally, and will be once more, channelled back to real estate. This is the outlook for some time in the future though, in the cyclic fashion that features in every boom and bust.

The worry is, however, that company earnings are not picking up, and the Modi government is not able to implement its development agenda anywhere near fast enough. 

Also, in the interim, the assumption is that the construction industry will receive new lines of credit/rescheduled debts from the banks and lending institutions to finish their half-built projects. Otherwise, there will be a blood-bath of attrition, a great deal of distress selling, and many of the present prominent developers will have to give way to better funded newbies.

These cash rich new players may well buy the half-built assets, leveraged cheap, but will only do so in the expectation of making substantial profits on their investments. The end-user buying community, will not get the 50% slashed prices that they dream of.

The speculators, who are bold enough re-enter the construction market early, will much prefer it if prices rise, because that is how they make money! And a stock market or property market without its speculators, will be hard pressed to survive. It is they who place and pay a premium on the better times to come, without waiting for them to actually arrive.

The entire residential and commercial sector is presently left to the tender mercies of the ‘end-user’, that constitute no more than 15% , on average, of the primary buying community. These worthies, expecting a crash in prices as the crisis deepens, are gleefully seeking ever more unrealistic bargains before committing themselves.  To them, the builders are profiteers, bloated on black money, and unethical, one-sided, contractual arrangements.

The builders, their excesses and sharp practices notwithstanding, are flirting with bankruptcy, and the entire house of cards, here in India, as it is in China, is tottering. This is not going to feel like just desserts at all, when, and if, an implosion comes about; because it will sink a large section of business, industry, banks, and employment alongside.

Combined with the fact that industry, including the populous SME sector, which also accounts for another 17% of GDP, has also been languishing, things are looking grim for 34% of the economy! And this is before counting the rural sector, that houses 60% of the population, including about a fifth of the number actually in farming, and accounts for another, rather paltry, calculated on a per capita basis, 17% again.

Industry is showing drastically reduced profit margins, lower sales/revenues, under-utilisation of capacity, and high debt burdens. It is struggling to service the debt accumulated at high interest rates. Thomson Reuters data cites the example of Hindustan Construction (HCC), which had its stock prices soaring as it was building a bridge to decongest the Mumbai ‘commute’ circa 2008.  Back then, it owed $674 million, ballooned to $1.6 billion in 2014/15, in drastically reduced market conditions.

But what is the government, specifically the RBI and Finance Ministry doing about the high interest rates, the recapitalisation of banks, and renegotiation of all the stressed loans to builders/industry, about to become irretrievable NPAs?  

Amazingly, nothing dramatic certainly, even in the face of an impending avalanche  promising financial ruination for a very large section of the economy.

The RBI has reduced interest rates by 0.75% to 7.25% this fiscal, but is reluctant to move faster. This despite the fact, as Reuters points out, that ‘wholesale inflation has declined for eight consecutive months,.. and consumer inflation is within the RBI’s target of 2-6%’.

Business confidence in the future is actually plummeting. A recent ASSOCHAM survey, looking back at the April-June 2015 period, with a projection to the July –September quarter, has only 54.8% of the respondents ‘hopeful of improving economic conditions in the coming months,’ down from over 80% a year ago.

The US also toyed with the idea of ‘moral hazard’ which sees retribution for financial excesses as just retribution, before wisely going in for the biggest quantitative easing programme (QE) in history. This because they wanted to avoid another Great Depression far worse than the one seen in the 1930s.

It doled out 85 billion dollars per month for years together at practically zero per cent interest, in order to revive its fortunes. And while the US is much better, it is still not out of the woods.

India has a choice in front of it now, before the situation in three vital sectors of the economy, at least, falls into the abyss. But the window of opportunity is not going to stay open indefinitely.

For: Swarajyamag

(1,508 words)

August 3^rd, 2015

Gautam Mukherjee

BOOK REVIEW: HUBRIS by MEGHNAD DESAI

BOOK REVIEW

Title:                              HUBRIS

Why economists failed to predict the crisis and how to avoid the next one

Author:                          MEGHNAD DESAI

Publisher:                    Harper Collins Publishers, 2015

Price:                             Rs. 399/-

Meghnad’s Magisterial Mystery Tour

The author Meghnad Desai, is a Professor Emeritus of   The London School of Economics (LSE), Lord of the realm, Bollywood movie/music buff, a distinguished British/Gujarati economist named interestingly, after a towering Bengali mathematician.

Desai is also a popular talking head on Indian TV, adviser to the British government on its monetary policy and financial institutions, columnist, author, well regarded by his peers in academics both for his erudition and intellectual honesty. With his distinctive mane of hair and affable mien, Meghnad Desai is indeed a man of many parts.

HUBRIS may be a short book, but it is magisterial in terms of Desai’s deft grasp of European and American economic theory from the dawn of the modern era, meaning, Meghnad style, around the 1500s.

He points out the postulates of the early economic theorists, elements of whose ideas, most notably the search for economic ‘equilibrium’, are quite often carried over to the present day, but these notions are from an era when the commercial world was a very different place.

Desai writes fascinatingly of ‘cycles’ that seem to occur as an inevitability in all economic endeavour, much before the 1870s, when economics ‘had become a professional subject’. The meditation of this book is how to influence if not control these seemingly involuntary cycles, that can create both great prosperity and havoc in the lives of people around the world.

Many rather cosy theories fuelled by the realities of imperialism and colonialism persisted for a century under the ‘Pax Brittanica’, although every other major European power was working the same logic, with varying degrees of success. Everything changed however with the cataclysmic paroxysm of WWI in 1914.

The famous John Maynard Keynes makes an appearance soon after. Desai clearly likes him: ‘He did not stay in his ivory tower and pen articles and books. He was a man of affairs-speculator in the stock market, chairman of an insurance company, journalist, author of a bestseller, civil servant, controversialist, patron of the arts, husband of a ballerina, Fellow of King’s College, Cambridge’. ‘Controversialist’ is a word Desai seems to have coined just for Keynes.

Keynes found the nostrum for the Great Depression of the 1930s. But something similar or worse seems to be lurking about, threatening the world once more in 2015, wages  of sin for decades of debt fuelled growth. Desai seems to suggest a combination of manoeuvres may save the world, in case disaster strikes, rather than any one all-encompassing formula.

Keynes was the first to advocate government spending on projects that employed many people, because they would collectively foster a consumption boom as they spent their wages. ‘The money would circulate’ as Desai paraphrases the Keynesian outcome, and the goal was ‘full employment’, as near as possible.

It was also Keynes who coined phrases such as ‘propensity to consume’ inspired by psychologist Sigmund Freud, and ‘the exotic notion of animal spirits’, the unleashing of which is the ambition of everyman’s economic policy to this day.

Still, Keynesian economics, from the 1920s and 1930s, that persisted through WWII and the post war boom, particularly in America, is no longer thought of as the Holy Grail.

The ‘Achilles heel of Keynesian policy was inflation’ greatly aggravated by the ‘oil shock’ because the price had not risen for fifty years till 1973. And then, in one year, the price of oil quadrupled in 1973! The boom and bust cycles were back with a vengeance. And this was accelerated by the ‘influence of speculation’.

In 2008, ‘on the eve of its bankruptcy, three different potential purchasers were trying to read the accounts of Lehman Brothers and were none the wiser as to the assets/liabilities situation.’ And so, as Desai puts it: ‘If the model admits no possibility of failure of prediction, and the regulator accepts the model’s assumptions, the results are that both the poacher and the gamekeeper will lose’. The ‘malaise’ is embedded ‘in the theory’.

The ongoing eurozone crisis began in 2010 and is the ‘second leg of the crisis that had started with the collapse of Lehman Brothers’. What is the solution? Some, like post-Keynesian economist Hayek, say ‘deleveraging’ is the answer. But of course, this is another name for austerity, and imposing it is easier said than done for the pain it causes.  Besides, this time around, all the liquidity at near zero rates of interest cannot seem to raise the inflation rate off the floor in the West!

Meghnad Desai says the government in Europe are trying to stoke inflation but admits that the outcomes per earlier economic theorists have changed.Desai’s HUBRIS is in his own words ‘a journey through the history of economic ideas,’ an exploration and recounting, without claiming to have all the answers. 

The economic cycles afoot, according to Desai, are actually more like three concentric rings working simultaneously, and together. There is a long cycle, perhaps 70 years or more, postulated by economists such as Kondratieff and Schumpeter, a shorter cycle ‘in the income shares of wages and profits’, of some ten years duration, put forward by economists Marx-Goodwin, yes the Marx; and a shorter one still, ‘caused by the gap between the market rate of interest and the natural rate’, theorised upon by economists Wicksell and Hayek.

Meghnad gives an interesting account of how these cycles may have worked in the past, via the clarity of hindsight. He thinks Europe and America are currently in a Kondratieff style downswing, to last for the next twenty five years to come, with growth rates that will be much lower, at 1 to 3%, than the boom rates of 1992-2007 that were as high as 6 to 7%.

The emerging markets, including India and China, will grow much faster, in comparison, though China has now slowed from double digits to around 7%   .

The last word from Desai is: ‘Capitalism is a dynamic system but it works through creating cycles and crises. It is a disequilibrium system’.

And to sign off, he quotes the old discredited bug-bear Karl Marx: ‘Mankind sets itself only such tasks as it is able to solve,’ before saying, on his own bat: ‘We shall solve the problems yet. No one can say just how’.

For: The Pioneer, BOOKS

(1,032 words)

July 31^st 2015

Gautam Mukherjee

Date With The Hangman

Date With The Hangman

The inordinate focus and debate that has been raging on the hanging of Yakub Memon on the 30^th of July 2015, a man who was, undeniably and substantially, involved in the terrorist carnage of 1993, is nothing short of remarkable.  

He was not only deeply involved in the planning and execution of the Bombay blasts of 1993, but was probably his brother Tiger Memon’s key henchman.

As the saying goes, the real story is rarely in the crime, but in the cover-up. There has been much said and written, of late, once Memon’s hanging date was announced a couple of weeks ago, oft citing a 2007 article by RAW official, the late B Raman, about how Yakub Memon had turned approver.

He indicated that Yakub Memon practically allowed himself to be caught, with multiple Indian and Pakistani passports, and quite a bit of other incriminating paperwork. Raman, on his part, thought he should not have been condemned to death by the courts, way back in 2007, when it happened for the first time, and wrote as much.

The ‘liberenzia’ has seized upon the exaggerated notion of Yakub Menon’s supposed ‘innocence’, driving multiple appeals to the Supreme Court and the President of India, and taking supportive positions publicly on social media, the press and on TV. But everyone knows approvers might qualify for a reduced sentence, but are hardly ever deemed innocent!

Did Yakub Memon, if he was actually an approver, deserve to hang? Who knows why the Supreme Court found merit in hanging him anyway, even after multiple reviews, but it suggests that there is no substance to the ‘approver’ theory.  

Was Yakub Memon then, a sacrificial lamb or decoy, thrown to the Indian authorities by his own co-conspirators, so that the Indians could also save face, and desist from huge covert retaliation across the border?

Perhaps, but we will never quite know. Besides, no conspiracy on this scale goes without insider help from the politicians and officialdom and this applies as much to 1993 as it does to 26/11.

Dawood Ibrahim, himself the son of a Bombay policeman, is renowned for his  enduring clout, to this day, amongst the power elite in Maharashtra, police structures, the  big builders, the stars/producers of Bollywood,  plus other influentials in Bombay/Mumbai. This, according to crime reporter and author Hussain Zaidi, who has written two very well received books on the subject, one of which has even been made into the acclaimed film Black Friday.

The willingness of the Supreme Court to apply itself to the maximum on such a matter of  Yakub Memon’s life and death however, is borne out by the late night sitting, that still resulted in a thumbs-down for the final time on the night of the 29^th of July 2015.

But it is yet persistently rumoured that Yakub Menon provided much of the hard evidence, documentation and details on who precisely was involved in the attacks, and to what extent, and what they individually and collectively did, how the Pakistani establishment was in cahoots up to the hilt. But unfortunately, none of it, even if it is true, was found to be provable in the very proper criminal courts of our system.

Intelligence gathering however is a process very different from how the Indian civil and criminal courts work. Yakub Memon, if he turned approver, presumably to mitigate the consequences of the law upon himself, did not do so ‘officially’, presumably because he spoke to our ‘spooks’ and other shadow boxers.

What came out clearly in the courts however was Yakub Menon’s culpability and guilt, and that he was careless enough, or miscalculated the benefits of, straying into the hands of the Indian intelligence agencies.

The explanation for this too exists. It is said that Yakub thought he would be better off in India. Better off than at the mercy of the ISI in Pakistan, virtual prisoners and ‘strategic assets’, like his brother Tiger, Dawood Ibrahim and other fugitives from Indian law. They are there still, apparently cowering in gilded cages, but, out of our reach.

Still, the stark facts from 22 years ago speak for themselves, as if it were yesterday once more. Not only were 257 people killed in the blasts, scores more wounded and maimed, and millions in property destroyed. All of it, ostensibly in retaliation for the demolition of the Babri Masjid in Ayodhya, where an ancient edifice that was both temple and mosque, was brought down by Hindu activists, including a large contingent from Mumbai’s Shiv Sena - without, however, any loss of life. Except that is, for the ‘Bombay riots’ that followed it.

So the ‘revenge’ that Tiger Memon allegedly spoke of, is mostly for the riots in Bombay of the time. But the perpetrators, as explained very well by Hussain Zaidi in his two books , extended to random innocents, Hindu, Muslim, others, and not the big-wigs in the Shiv Sena, for fear of savage and stiff retaliation.

That Yakub Menon was the only key terrorist caught after the blasts, condemned to death, and hanged, after spending 22 years in jail, is indeed ironic. But, the fact that many who were accused of involvement, but let go and acquitted, because of inadequate evidence, is no less remarkable.

Is the civil and criminal justice system equipped to pronounce on terrorism given its elaborate processes? The truth of the matter is that much is rotten in the Indian legal system, including being over-burdened and the curse of extreme tardiness.

It took an inordinately long time, many years too, for Pakistani Ajmal Kasab, who was captured, as it were, with a machine gun in his hand, and scores of victims strewn around him at 26/11, and the Kashmiri Afzal Guru, who plotted to kill parliamentarians and blow up the parliament buildings during the Vajpayee administration, to reach the gallows as well.

It must therefore be said, the Indian State could have saved a lot of time and money by having such cold-blooded killers, treasonous conspirators, and out-and-out terrorists, domestic, or from abroad, tried by a military tribunal, before being executed forthwith, if ever they are caught alive.

Going forward, we need a separate military tribunal that applies the laws and protocols used when a nation is at war if we want to end this travesty  and circus  that we can ill afford. Its working also polarises and traumatises civil society to have this kind of wound opened up again and again in the name of justice.

That the usual civil and criminal law processes, applied to terrorists and traitors, who in a very real sense have waged war on the nation, killing soldiers and policemen and civilians- men, women and children at random alike; is probably  a bizarre and perverse misapplication of a genteel justice system.

How can the same due process be made available to bloodthirsty enemies of the state? It is also enormously tardy, expensive and wasteful, and not what the criminal and civil legal system  was best designed for.

This legal system must assume a person is innocent unless proven to be guilty. This burden of proof is not always possible to dovetail, with the methods of guerrilla warfare perpetrated by well-trained killers. Terrorists,with huge amounts of weaponry and technology at their command operating by stealth on soft, mostly unarmed, targets. Why then is this nicety of a civilian justice machinery being offered to such terrorists and traitors?

Perhaps the raging debate on whether the death penalty should be repealed, as a badge of our civilised sensibilities, cannot, and emphatically should not, apply to people who wage war on the nation! Otherwise, we run the additional risk of rendering meaningless the sacrifices of our policemen and soldiers who lay down their lives fighting terrorism on every given day!

And to date, the key perpetrators of the terrorist blasts that wracked the city, Yakub’s brother Tiger Memon, and underworld don Dawood Ibrahim, their henchmen, trained, armed, motivated by the ISI of Pakistan, are free, and at large. They are living comfortably abroad, allegedly in the custody of, but also under the protection of, Pakistan.

India, as a nation, has not, apparently, managed to take the battle to the enemy, the allegations of Indian involvement in fomenting violence in Karachi and Baluchistan unexcepted. If we have meddled in those places, perhaps we need to step it up, so that the battle of attrition is truly joined and tilted in India’s favour. We have, of course, reserved the right to retaliate of late, in a manner, scale, time and place of our own choosing, and again after the recent terrorist attack in Gurdaspur district in Punjab.

But, there is a decided gulf between a government that wants to take terrorism head on, and a liberal presence amongst civil society and some of its luminaries, that wants India to be lofty and take the moral high ground, even in the face of  repeated provocation. Mahatma Gandhi’s borrowed statement on an eye-for-an- eye is much quoted to justify this kind of pacifism.

However, because we are a diverse and pluralistic people, it may be best to let both schools of thought survive, contend, even thrive, in parallel! The liberals should be allowed to constitutionally amend capital punishment for a list of crimes that stop short of premeditated first degree murder in the common course.

But every act of treason against the country, and terrorism involving loss of life, should be handed over to a military trial that is swift and final, and determined to punish the guilty with summary execution.

For: Swarajyamag

(1,593 words)

July 30^th, 2015

Gautam Mukherjee

The Missing Cradle Of Innovation

The Missing Cradle Of Innovation

Prime Minister Narendra Modi will soon be visiting Silicon Valley, the first Indian prime minister since Nehru to visit California, or indeed the west coast of America.  

Going to a part of the country where India is, in reality, pretty remote to folks who are not ethnically South Asian, is fairly bold. California is mostly untroubled by and distant from the nuances of geopolitics that Washington DC specialises in, but is quintessentially American nevertheless. Though people seem laid back, productivity has not suffered. Silicon Valley has spawned some of  the US’s biggest multi-billion dollar corporations, all the more remarkable for having emerged out of the proverbial ‘garage start-up’. 

In Silicon Valley-ethnic Indians, from India, as opposed to people who ceremonially wear feathered headdresses, have distinguished themselves. Indians have actually done so in many fields in the US, doctoring, politicking, business, academics, management, finance, but most noticeably in what people call that high-growth digital technology ‘incubator’.

This fact needs to be contrasted with the recent observation of Mr.Narayana Murthy, lead founder of the iconic  IT company Infosys, that regrettably, not a single game-changing innovation, invention, or discovery, has come from India in the 69 years since independence.

To conclude that this is not due to the intellectual dullness of the Indian people is entirely reasonable, because Silicon Valley would probably not be what it is, without its Indian contingent. So, it must be a matter of atmosphere, style of education, opportunity, and encouragement, at one level, and financial incentive in the millions and billions of dollars, at another.

Silicon Valley has made scores of millionaires and billionaires out of very young people on the strength of their ideas, ramping them up swiftly, often within a single year, to multiple applications, assisted by a highly appreciative and savvy venture capital scenario, magnified manifold by a dynamic stock market. This, besides the NYSE, even has a separate listing vehicle and index of its own, namely NASDAQ, also in New York.

While the US is renowned for its high academic standards in its Ivy League colleges, other academic/research institutions, and some of the leading state run universities; Silicon Valley is populated by a large number of brilliant college drop-outs. But these are obviously people, iconoclasts perhaps, but with the vision to create game-changers and breakthroughs.

That collectively they have succeeded in making a massive global impact is a tribute to the spirit of American ingenuity, embedded no doubt in the very air and water and can-do culture of the country. It is this that has seen America surge ahead of the world in practically every field of endeavour.

Many of the Nobel laureates who are ethnic Indians, owe it to the time they have spent living and working in America. India, on its part, quite often, has educated these very same achievers through school and college and even post graduate levels, in its IITs and IIMs. But their best abilities have not flowered at home but ‘over there’.

So what can we do about it, to address Narayana Murthy’s implied question?

Probably not a lot, at least while we resident Indians are in transition, both with regard to our attitudes, our lack of original thinking, and our economic circumstances. In broad terms, we are both the ‘argumentative’ individualists we are, per Nobel laureate and welfare economist Amartya Sen, and slavishly conformist and hierarchical at the same time; based perhaps on our social organisation and history.

This is beginning to change amongst the youth most definitely, aspirational as they are and unburdened by our socialist history. That young people now constitute 65% of the population in India will certainly provoke a gain in momentum as the time goes on.

But the fact is, at the same time, that there is little or no social security, as it is understood in the West. There is no economic safety net, except perhaps at the subsistence level, that too most imperfectly. This circumstance breeds conformity, even fear, certainly not innovation, except amongst the stoutest of hearts.

On top of this, despite multiple methods of calculating what constitutes dire straits, more than 50% of our people are under pressure to just make a day-to-day living. The oft touted statistic of between 50 -60% of our population that lives in the rural areas and contributes only a modest 16-17% to the GDP, is crying out for urgent reorganisation – because, our countryside is spectacularly over-populated and under-productive.  

Out of 1.27 billion people today, no more than 1% are rich, comparable to the rich anywhere, and no more than 5% inclusive, belong to the upper middle class, with standards of living as good as, if not better, than their counterparts in the West.

Yet at the same time, with some 15 to 20 million new births every year, usually at the bottom of the pyramid, the struggling 50% of the population that includes the lower middle class, can, and do, afford servants in this country. This certainly eases our day to day burdens of drudgery, even as it continues to promote the dictation of the traditionalist in our psyches. However, many of us would not be keen to trade in our daily privileges, inequitable as they might be,  for a more self-reliant set up.

Traditionalists however, a nation full of them, cannot generally innovate. Our only hope to become here, at home, what we are in so distinguished a manner abroad, is to challenge our own systems and assumptions. We cannot do this without pain, both felt, and inflicted and so, the reluctance to sally forth, is understandable. 

As a multi-lingual collective, in a country that is sub-continental in its pluralism and diversity, we probably cannot muster the coherence, discipline and determination. This, despite several movements like the Arya Samaj and the Brahmo Samaj, both induced perhaps by the Anglican Church in British times. They, and other reformist movements, from time to time, have achieved some limited success in changing attitudes, manners and mores, to be sure, but clearly not enough.

But there is hope, about that which seemingly cannot come about as a social movement, might well be brought about politically, by the power of the ballot and by a visionary government that radically changes the situation on the ground.

The Modi government has been promising much. It has plans to get rid of the babu’s files with digitisation. It wants to reform agriculture towards much greater productivity, and supported by a distribution and materials handling backbone. Smart cities will be built and millions are expected to be housed in them. A massive defense industry is in the process of being built from scratch. Other infrastructure in power, ports, roads, green energy, nuclear power, modern mining, and so on, are being created.  

The intentions of this government, if brought to fruition, are indeed capable of changing the status quo beyond recognition. Of course, the vision must sustain the slings and arrows of vested interests that would destroy it, and the people must afford it the time to execute it.  This government will need much more than the five years of the current mandate. It will need to stretch into a decade or more, and others that come after it, have to carry the process forward.  

But, if all this happens, will be capable domestically of  the game- changing innovation that Narayana Murthy spoke of?  Logically extrapolating on the  unleashing of spirit, and possibilities it will bring about, as the American expression goes: ‘You bet!’

For: Swarajyamag

(1,243 words)

July 27^th, 2015

Gautam Mukherjee

Labour Reforms: Federated Consensus?

Labour Reforms:  Federated Consensus?

Labour Reform in India calls for a change in mind set from its staunchly socialist past. To come about, it must jettison its highly defensive anti-capitalist-pro-worker stance. The changed thinking needs to produce balanced legislation that helps the scaling up and facilitation of big and sophisticated manufacture, and the massive, well-paid employment it will engender.

In 1991, the infamous licence-permit raj that produced bizarre distortions too, was finally dismantled.  And now, the Modi government, with the first majority mandate in over 30 years, seeks to usher in many elements of long awaited stage two of the structural reforms.

In this, attracting enhanced foreign capital, relaxing rigid labour laws, easing land acquisition/purchase, quickening the pace of granting government permissions, bringing the country under a single general sales tax (GST) regime, freeing up space for the private sector in insurance, auctioning national assets to the highest bidder, are all of a piece.

In the matter of labour law reform so far, the most substantive beginning has been made at state level, with Rajasthan taking the lead, most notably its Factories Act, allowing establishments with up to 300 workers, from the previous 100, to unilaterally close down or dismiss workers; this without having to take the government’s prior permission. Maharashtra, Madhya Pradesh, Haryana and other BJP ruled states are likely to follow suit, much to the annoyance of the trade unions.

The central government, on its part, wants to merge the Trade Union Act, The Industrial Disputes Act and the Industrial Employment (Standing Orders) Act into a single law for industrial relations going forward. However, it is hamstrung because of inadequate strength in the Rajya Sabha. This makes it difficult to pass any contentious legislation without opposition support. And the opposition sees labour reform as pro-business and anti-worker.

So far therefore, the centre has only managed to amend the Apprentices Act 1961, to boost the future trained work force, and do away with some reporting and register-keeping functions.

At the 46^th Indian Labour Conference, which the prime minister inaugurated recently, he stated that future ‘changes in labour laws will be made with the concurrence of the unions’. This may have come from a desire not to open any new fronts as he braces for an expectedly stormy monsoon session of parliament. But it may nevertheless be a difficult, if not impossible, ambition to fulfil.

India does however have some of the most rigid labour legislation in the world. As a consequence, most manufacturers prefer to stay small. A 2009 statistic from McKinsey &Co. has an astounding 84% of Indian factories choosing to stay miniscule, even as manufacturing overall contributes just 16% to GDP out of the $ 2 trillion economy today.

This is tiny compared to China,  that is now slowing down, but has had 32% of its GDP which has reached $10-12 trillion, coming from manufacturing. And China had no more than 25% of its factories employing less than 50 people in 2009. But then, manufacturers in India are probably afraid to grow, given the rigours of our labour laws, plus other extensive and oppressive red tape.

The antipathy to labour reforms in manufacturing are immense, even though, in India, according to a recent Reuter report, ‘just 8% of manufacturing workers are in formal employment. The rest are short-term contractors who enjoy minimal security benefits’. This, no doubt is another distortion meant to get around impossible labour laws. The indignity and unfairness of this practice of appointing ‘contract workers’ without rights caused violent riots in Haryana not so long ago.

But the allergy to reform doesn’t stop with manufacturing organisations alone. The Indian Railways, India’s biggest employer, involved in providing a service and manufacturing/engineering/maintenance/catering etc. has run into an early wall of opposition at the suggestions of the Bibek Debroy Committee. This from the trade unions, employees, its controlling senior bureaucracy, all the way up to the Railway Board.

Ultimately, this government may have to make do with as much labour reform as it can implement in the states, with ‘labour’ matters conveniently placed in the concurrent list. For bigger things, it may have to wait for a majority in both houses of parliament, perhaps post 2019. 

For: The Quint

(695 words)

July 21^st, 2015

Gautam Mukherjee