Editorial/ Bills of populism past
Cultivating commerce
The Telegraph/ Diary
Letters to the editor

 
 
EDITORIAL/ BILLS OF POPULISM PAST 
 
 
 
 
A beleaguered ministry of finance is trying to hold the fiscal line against greedy telecommunication workers, a spendthrift civil aviation minister and an absurd oil pricing structure that threatens the national economy. In each and every case, the underlying reason is a legacy of political populism. Whether it is mollycoddling idle public sector workers or “rob the rich to pay the poor” policies, the government took stances that won votes in the short term but guaranteed economic bankruptcy in the long run.

The financial travails of the Indian government are empirical proof of the oft quoted line, “There is no free lunch.” The Nobel prize winning economist, Mr Milton Friedman, coined the phrase to explain that any freebie or populist gesture made by a government carries a price tag. Eventually someone or something has to pay the bill. And going by the present turmoil in the telecom, oil and civil aviation sectors, it is clear the final cost is almost far more than the supposed social benefits of such populism.

Knowing New Delhi has committed itself to corporatizing the department of telecom services by October 1, grasping unions are using the opportunity to bleed the state’s coffers. They are encouraged by a Union telecom minister, Mr Ram Vilas Paswan, who can never say no. The unions are now demanding wage increases that would break the already grossly generous ceilings of the fifth pay commission. If conceded, the same call would most assuredly be taken up by all other government workers. As it is, the fifth pay commission is already driving most state governments to the brink of bankruptcy.

To show a minister can outdo a union in fiscal irresponsibility, the civil aviation minister, Mr Sharad Yadav, has asked for funds and loans totalling Rs 90 billion to buy new aircraft for Indian Airlines just before it is sold to private partners. In other words, the government pays for new aircraft and then instantly auctions them off at second hand prices. If Mr Yadav really wants to make the airlines more saleable, he should reduce its bloated payrolls.

The ultimate populist folly, however, is the oil pool mechanism. The pool overpriced petrol and used the money to cross subsidize oil products used by the poor. As in most subsidies, only a fraction of the subsidy makes it to the poor — most of the money ends up with blackmarketeers or in the pockets of the middle class. More importantly, Indian oil prices have become politicized thanks to the deliberate efforts of spineless petroleum ministers like the present incumbent, Mr Ram Naik.

Elsewhere in the world, such prices automatically rise and fall. In India, they have to be set by the cabinet. The result: when global prices rise, prices remain fixed, the oil pool goes into deficit. Rocketing global oil prices have led to a deficit that has already crossed the Rs 90 billion mark. The burden falls on the public sector oil companies. Fast running out of money, they are now sending warnings: either the government covers the deficit or it raises prices, or India will be unable to import oil.

In each of these cases, populist thinking has left huge unpaid bills. Not just in terms of money. There are many intangible costs in the form of telecom workers who get paid to do nothing, airlines that lose money despite the world’s highest ticket prices and a petroleum sector that is unable to find new oilfields. Paying for all this soaks up huge amounts of government revenue.

New Delhi responds by slashing expenditure on social or infrastructural investment or allowing creeping inflation. The rich can always find an alternative to sagging public services. The poor cannot. Which is why, in the long term, they are the real losers of a red ink public sector or the subsidy    


 
 
CULTIVATING COMMERCE 
 
 
BY RAMACHANDRA GUHA
 
 
It is a strange admission to make now, but as a student of economics in the Seventies I was in thrall to the public sector. With others of that generation, I had been taught to see dams like Bhakra and factories like Bhilai as the hope of the new India. These projects, we thought, usefully married technology to the state to produce prosperity and justice. Private companies, and still more, foreign-owned companies we viewed with disgust, as they were motivated exclusively by personal gain.

I have never been able to completely shake off those beliefs. When I applied for an email connection sometime ago, I chose a public sector provider rather than a private one. However, I was to discover that my gesture at political nostalgia was a half-hearted one. A friend who is an exact contemporary asked for my email ID, and when I said it was [email protected], he answered, in disgust, ‘Dotcom! Could you not have chosen dotnet?’

To many Indians the wrong side of forty, the word “commerce” once had a deep and altogether distasteful resonance. We were encouraged to distrust commerce and commercial people by the example of such men as Rabindranath Tagore and M.K. Gandhi. Psychoanalysts will doubtless see in their rejection an Oedipus complex at work, for Gandhi was born into a merchant caste, while the Tagores had made their money by trading. In any case, the rejection was complete. Tagore eschewed the family business in cultivation of the higher arts: poetry, painting, and spiritualism. Gandhi showed more interest in economics, but in an economics conducted without benefit of the market. The India of his dreams had 7 lakh self-sufficient villages, each based on the voluntary exchange of goods and services. In this marketless world there would be no place for priced “commodities.”

Tagore died six years before India became free, Gandhi a few months after independence. Neither had any influence on the direction of economic policy in the new nation. The person who did, Jawaharlal Nehru, exceeded them in his contempt for commerce. Although a political democrat, he was a statist in his economic thinking. He worshipped at the feet of the British Fabians, who in turn worshipped at the feet of the Soviet central planners. These held that the rational and all-seeing state was a more reliable instrument of economic progress than the anarchic market. It was argued, with some plausibility, that private companies could not be trusted upon to bring about social justice. But it was also claimed, on the basis of dogma rather than fact, that the state was a more efficient economic agent as well.

All politicians, wrote John Maynard Keynes, are beholden to the ideas of a long-dead economist. But Jawaharlal Nehru’s preference for state over market was a consequence as much of aesthetic preference as economic theory. By temperament and upbringing he would have as his heroes scientists and artists, not traders and entrepreneurs. Nehru was known to cancel or postpone an important political engagement for the opportunity of a conversation with the anthropologist and poet, Verrier Elwin. However, there was generally no place in his appointment book for the likes of G.D. Birla and J.R.D. Tata.

The educated Indian’s distaste for commerce and enterprise was thus a product equally of intellectual arrogance and cultural snobbishness. But history’s residues might also have contributed. For Indian intellectuals and decisionmakers have come overwhelmingly from the top two varnas, Brahmin and Kshatriya. These valorize brain power and military power and profess a disdain for the traditional pursuits of the trading and working groups, placed below them in the caste hierarchy.

In very recent times, however, this ancient distrust of commerce has been spectacularly challenged. The collapse of the Soviet bloc and the success of an open economy have produced a new cultural climate. The politicians and technocrats who now rule India have been swept, or perhaps swept away, by its winds. The media and international agencies have called vigorously for a new attitude to those who make money. Words like profit, productivity, efficiency, market, trade, and commerce, which once had a pejorative currency, now have a wholly positive one.

No event has more decisively signalled this 180 degree shift than the recent visit to New Delhi of the Microsoft chairman, Bill Gates. Sixteen chief ministers air-dashed to New Delhi to have the privilege of being seated at the same dinner table as the richest man in the world. The three or four chief ministers who were granted a 15 minute interview with Gates saw this as a vindication of their states’ economic promise and of their own individual personas.

There has, indeed, been an astonishing, and astonishingly swift, change in the attitude of Indian professionals and Indian politicians to private enterprise. Even ten years ago, a foreign capitalist like Gates would have had to apply through proper channels for an interview with a chief minister. Were the request granted, he would have had to make his way most humbly to the state capital concerned, and be made to wait when he got there.

But perhaps the change has come too soon and been too categorical for our own good. The deification of commerce is as harmful as the distrust of it. For politicians to roll out the red carpet to visiting entrepreneurs might be as harmful as the old habit of shutting one’s doors to them. It promotes an uncritical attitude towards Gates and his ilk. By approaching them as supplicants we lose the chance to drive a hard bargain, to take what they have to offer on our terms instead of on theirs.

We once tended to exaggerate the benefits of state-built dams and steel plants, and to disregard or suppress their costs. There is every danger now that we are doing the same with private initiatives. Is this, I wonder, because of our belief in miracles? Is it that mythologically inspired Hindus seek a spectacular way out of social difficulty, and are prone to seek redemption through glamourous acts by godlike figures? We once hoped that Bhakra and Bhilai would be the mystic inspiration for the transformation of India. We have, it seems, now transferred those hopes to Microsoft and Infosys. Their undeniably gifted promoters have acquired the same status that nuclear physicists and dam-builders previously did. The political system, eagerly aided by the media, is encouraging us to cast Bill Gates and N. R. Narayanamurthy in the same heavenly light as was once enjoyed by Homi Bhabha and M. Visvesvarayya.

There is no question that the extreme distrust of private economic initiative in the first few decades of free India was unnecessary and unproductive. There is no question, either, that the present worshipful attitude is harmful as well. Market forces and private firms can help generate and circulate wealth and thus raise living standards. But unless we are vigilant they might destroy the environment in the process. And what they cannot do is promote health and education for all, to thus equalize life chances. These are justly the responsibility of the state, a responsibility that the current climate asks it to ignore.

It used to be said that Jyoti Basu was the only communist who had a pragmatic, rather than dogmatic, attitude towards private enterprise. It was notable, in this context, that he refused to make the trip to Delhi to shake hands with Bill Gates. In that refusal lies a lesson for all of us.

The author is a historian and sociologist whose recent book is Savaging the Civilized    


 
 
THE TELEGRAPH/ DIARY 
 
 
 
 

Health is wealth

All’s well that ends well? Not quite. The United States state department had checked with the senior doctors about how well the prime minister of India was before the trip began. The response it got was, “Vajpayee has a problem in his right knee and the left knee, but his biggest problem is Advanee (sic)”. Neat answer. American holiday over, the ailments might get more nagging. The symptoms are there. Happy as a lark, LK Advani recently told an informal press gathering the raaz or secret of his fitness — “Main kum khata hun, khush rehta hun” (I eat less, I am happy). The remark might have been harmless, but some didn’t want to miss the chance of interpreting it as a dig at our man straight from America whose weakness for food is so general a piece of knowledge that KBC might have a question on it any day. AB Vajpayee also makes no secret about his mood swings when problems crop up, the Atal pout now as famous as the Narasimha Rao pout had been. Surely, Advani couldn’t be meaning that ill?

After the dress rehearsal

One thing is for sure. The Indians in America meant well, though the concept of a dress code did not go down as well. While the American hosts followed the rituals to the T, the Indian guests followed their own instincts. Take the 25 Indians who made up the official delegation for the arrival ceremony, for example. Expected to wear either dark Western suits or bandhgalas, the gang turned up merrily dressed in grey suits, others in colourful jacket and trouser combinations, and still others sporting ties that could stop any show. The only ones to stick to the rules were the journos who were made fools of by the prime minister’s media managers. Scribes who were invited to the moment of a lifetime — the official dinner for Vajpayee — were instructed by these managers to wear a tuxedo or a bandhgala. Most rented tuxedos for a hundred dollars, one bought himself a brand new one with new shoes, satin shirt, black cummerbund and the black bow tie at an astronomical sum, while others borrowed bandhgalas that didn’t fit. There was a bad surprise waiting. The Indian delegation turned up in the normal lounge suits and ties. HK Dua, media adviser to Vajpayee, told a very angry scribe that he had had no intention of wearing a tuxedo and that the dress code had been changed at the specific request of the Indians. Only there was no press meet to pass on the information.

Through the proper channels

It takes the right connections to get somewhere. At present that is what the Union minister of state for telecommunications, Tapan Sikdar, is depending on to settle the ongoing telecommunications strike. His connection is a former Janata Party man from West Bengal, TS Srinivasan, who runs a non-governmental organization and has considerable clout in the department of telecommunications because of his proximity with the striking employees. The hobnobbing with Srinivasan has however evoked strong reactions from the state BJP. Party members believe Srinivasan, who has no base in the state, might in turn use his connections to get an entry into the party’s state unit. Some members in fact are in so belligerent a mood that they are thinking of taking up the matter with the party’s all India president, Bangaru Laxman, who is scheduled to visit Calcutta soon. Won’t it be like complaining about connections to a man who has himself used his connections to get somewhere?

All in a double barrelled name

Delhi chief minister, Sheila Dixit, wants to be in the Nehru-Gandhi good books again. She wanted Priyanka’s baby to be the first to take the pulse polio shot. As expected, Grandma Sonia overruled her. Madam argued the baby was too young to face the camera. The baby, by the way, continues to be called Chunnu. The Nehru-Gandhis and the Vadras have agreed on the shortlisting of four names. Jawahar Vadra Gandhi is the favourite among these. So the name Gandhi has stuck?

Driving Ms Dixit

The Delhi government will soon have Maruti Balenos for its ministers and officials, thanks to the good taste of the transport minister, Parvez Hashmi. He argues that this is to cut down on pollution. Meanwhile Sheila Dixit continues her “austerity drive” with frequent visits abroad. She was in Kuala Lumpur to oversee civic administration while her ministers hop continents to explore the possibility of flower culture exports.

Footnote/ For the cutting edge

From Mayavati to Maya memsaab. The BSP leader and former chief minister of Uttar Pradesh is a changed woman. Harping on parivartanor social change for the past two decades, Mayavati has decided to set an example before the Bahujan samaj by transforming herself. After becoming chief minister of the state she, quite apparently, started to develop urban upper class habits. For one, there were reports that she regularly visited beauty parlours. She also allegedly developed a taste for diamonds. Now, Mayavati sports a new look. She has cut short her hair. The long hair was arguably “time consuming”. “Now I can rush off anywhere without wasting any time on tying my hair,” says a busy Mayavati. Backbiters have other ideas. They believe Maya’s transformation on the eve of the assembly polls is an effort to woo the urban upper class upper caste women voters who have been rejecting Mayavati because of her Dalit background. Mayavati, no doubt, needs all the help she can get to come back to power, to be another balkati in the hallowed corridors. But will a haircut alone help the BSP’s standing in UP?    

 
 
LETTERS TO THE EDITOR 
 
 
 
 

Creative solutions

Sir — One cannot help but be amazed at a news item like “Koreas on road to Berlin Wall” (Sept 18). Thousands of Korean soldiers will collectively put the Korean War of the early Fifties behind them and come together to build railway lines and a highway and thus abolish the last of the Cold War frontiers. The bitter animosity between North and South Korea is legendary. The armed truce that ended the war has not been replaced by a peace accord. But despite this history, the Koreans are managing to create an atmosphere of effective diplomacy by seeking creative solutions. Why is it then that India and Pakistan cannot do the same?
Yours faithfully,
Aurobindo Basu, via email

Soccer on display

Sir — The gigantic electronic screen at the Salt Lake stadium is hardly ever properly used during any important soccer match. It is used only to display the names of the two competing teams and the goals scored by them. It was a pleasant surprise to see the electronic screen coming alive during the finals of the IFA Shield on September 16 this year.

It showed for the first time the players’ roster of both teams, East Bengal and Mohun Bagan. Then again, when East Bengal scored first, it was wonderful to see the name of Chandan Das being displayed on the board as the scorer of the goal. This is essential, since people find it difficult to figure out who scored the goal in the huge stadium.

But for all the good work Indian Football Association had done with the electronic screen, it repeatedly goofed up matters by informing on the screen that the IFA Shield is the oldest soccer tournament in Asia.

In soccer-crazy Calcutta, most of the spectators could figure out this glaring mistake, except perhaps, the IFA, the organizers of the tournament. The Durand Cup, which started in 1888, is the oldest tournament in India and Asia and the second oldest soccer tournament in the world, after the FA Cup in England, which started in 1872. The IFA Shield started in 1893.

Yours faithfully,
S. Pal Chowdhary, Calcutta

Sir — The present state of Indian football requires greater involvement of the government. Indian football used to be wellknown throughout Asia. Today, it has lost much of its glory. Losses against average English clubs do not shock us any more.

IEven the South Asian Federation cup has gone beyond our reach now. In the National League, foreign players are turning out to be the real heroes.

The government should be more concerned about the state of soccer in the country so that we can fare well in international matches. Or is this such an impossible task that the authorities do not even attempt building up better infrastructure? Soccer needs a lot more exposure to the public.

IInternational standard coaching is a must. Goalkeeping, an area in which Indian football is markedly underdeveloped, needs to be improved. All these, no doubt, are impossible to achieve without financial assistance from the concerned authorities.

IThe All India Football Federation president, Priya Ranjan Das Munshi, should look into the matter immediately, so that the standard of football improves, not by importing good players from outside the country, but by bringing in good coaches from outside, if necessary, to improve the techniques of players here.

Yours faithfully,
S. Chatterjee, Durgapur

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