Nationalistic Congress Sena!

Indian politics in the past seven decades has seen bizarre things. But nothing more bizarre than this. It must be the first time that a pre-poll alliance, after emerging victorious with a clear majority is not forming the government in a show of one-upmanship! When the wrangling between Bharatiya Janata Party (BJP) and Shiv Sena was going on a week ago over the Chief Minister’s post essentially, there was a post which was going viral on social media which said that it is Shiv Sena’s “Grim Trigger Strategy” at play. As per that post, this concept is explained as a special case of non-cooperative strategy in Game Theory, in which co-operation will leave everyone better off and non-cooperation will leave everyone worse off.  Back in 2014 after the Maharashtra state elections, I had alluded to Game theory at play again between BJP and Shiv Sena in my post titled “The Maha Gam(e)ble”! (read here).

The bottom line is, one of the oldest allies in the NDA namely the BJP and Shiv Sena, in the past 6 years, have contested together and stayed together (2014 LS polls), have contested separately but formed government together in a post poll alliance (2014 State polls) and have contested together and not forming the government together (2019 State polls)! This clearly indicates the fragile nature of the relationship between the two allies! Even while being an ally of the BJP, Shiv Sena has been the most non-cooperative and virulent critic of the Modi government since 2014!

It is not clear what the understanding was between the two parties when they sat together and decided to contest the Lok Sabha and then later the state elections together. Notwithstanding the same, having gone to the electorate and sought votes in an alliance and now not honouring the mandate, after the winning a fairly clear verdict in favour of the alliance is a mockery of the elections! It is taking the voters who voted in favour of the alliance for a wonderful ride.

If one looks back at the performance of Shiv Sena in the past many years, it is obvious that the Sena is on a slide. It terms of vote share, in the recently concluded elections, it is back to the 16.4% levels which it had way back in 1995!  On the contrary, BJP’s vote share has grown to 25.75 % levels from under 13% in the same period. Even in the last BMC elections, BJP stormed the citadel of Shiv Sena and got almost the same number of seats as Shiv Sena.  This explains the nervousness in its belly!

As per me, the performance of BJP in the BMC polls should have rung the warning bells for Shiv Sena.   Between BJP and Shiv Sena, there is a clear overlap of the vote bank. In the past, BJP was more concerned about the centre and hence was okay to accede more space to Shiv Sena in the state polls while pitching for a larger space in the Lok Sabha polls. While BJP has been growing its presence in the centre, the problem is, Shiv Sena did not do much to improve its presence within the state in the last 10 years! This is where the crux of the problem lies for Shiv Sena.

Here, ideally the Sena could have taken a leaf out of the books of a similar regional parties like the DMK or ADMK. These parties would always strike alliances with parties in the centre for the Lok Sabha polls essentially based on their strength within the state. While remaining in an alliance, they never let the so called “National party” grow beyond them in the state at any point in time. This means that the National parties, whether it is the Congress or the BJP had to play subservient to the regional parties in the alliance.

In the case of Shiv Sena, due to its own follies, it never grew its presence beyond its conventional vote bank. And in that, it let the BJP erode its core base as well!  When Shiv Sena got their first opportunity to form a government way back in 1994 in alliance with the BJP, it messed it up royally. The Chief Minister was openly dubbed as a puppet in the hands of the then Shiv Sena Chief Bal Thackeray, who took glee in letting everybody know that the remote was always in his hands. The Chief Minister was changed interim and it was not long before that the government was thrown out of power. The backlash was so high that even during the emergence of the NDA and Vajpayee at the Centre could not help the NDA in Maharashtra!

In the past, when parties after having fought against during the elections came together to form the government in a post poll alliance, I have called it a blot on democracy. And we found such similar instances very often in the last 5 years when both BJP, Congress and regional parties were all involved in such post poll alliance arrangements just to be in power! As we saw in Jammu and Kashmir first and later in Karnataka such opportunistic tie-ups remained such and never lasted too long. At the end of the day, the contrasting world views, ideologies, pulls and pressures among these parties cut short the life of such governments. The voters have been repeatedly left high and dry with Maximum filibuster and Minimum Governance in such spells!

It is extremely unfortunate for the voters of Maharashtra who were presented with a pre-poll alliance and voted for the same. I don’t think that this act of betrayal by Shiv Sena will go un-noticed and un-punished by the electorate in the future.  As we speak, Shiv Sena is in extensive talks with the NCP and the Congress to cobble together an alliance. One can imagine the machinations which will be at play in those meeting rooms!

It is funny to see the Shiv Sena Chief Uddhav Thackeray citing the example of BJP and PDP who are ideologically poles apart coming together.  That the experiment failed miserably is there for all to see! Why would one take so much pains to emulate a failed experiment??? Similarly, it is also funny hearing some experts citing the instance of Bal Thackeray supporting Indira Gandhi’s emergency to justify this coming together of the Sena and the Congress! That happened way back in 1977 almost 40 years ago!

Coming back to Game theory and the players involved, BJP has emerged with its stature and image enhanced. It would rue the day it decided to go along with Shiv Sena in the Lok Sabha and state polls!   Shiv Sena is now being seen as a party which would do anything to just have its Chief Minister! As of now, it seems that it may not be a Sena Chief Minister but a Nationalistic Congress Sena Chief Minister! Irony just put its head into a Tiger’s mouth!

Coming of age of the Indian voter and a Wake-up call for the States!

This article has been written for the news website Newslaundry and was published on the 4th of Oct, 2019. You may read the same here:

https://www.newslaundry.com/2019/11/04/a-wake-up-call-to-states-its-time-to-invest-in-good-governance-to-win-assembly-polls

The latest season in the continuous cycle of elections in India ended last week, this time the Assembly polls in Maharashtra and Haryana. The dust hasn’t quite settled since Maharashtra still hasn’t seen its next government, even after what seemed like a clear verdict in favour of a pre-poll alliance. It can’t get stranger than this!

However, a detailed look at the results of the state elections before and after the Lok Sabha polls reveals a pattern. It discloses the coming-of-age of the Indian voter. Here’s how, and why.

May 2018: Karnataka state election 

The Congress, which governed the state in the last term, received a clear verdict against the party in Karnataka. At the same time, the Bharatiya Janata Party, while emerging as the single largest party, fell short of majority. However, in the 2019 Lok Sabha poll almost a year later, the BJP got an overwhelming mandate winning 25 of the 28 seats on offer.

November 2018: Madhya Pradesh state election 

The BJP, which had helmed the state for three terms, was unseated by an anti-incumbency vote. The party was pipped by the Congress. Yet, in the May 2019 parliamentary poll just six months later, the BJP swept the state, winning 27 of the 28 seats!

November 2018: Chhattisgarh state election

Here also, the BJP was voted out by a strong “against” vote and the Congress captured the state with a decisive mandate. It’s vote share was just 33 per cent. In the May 2019 Lok Sabha election, the story was different. The BJP won nine of 11 seats with a vote share of 50.9 per cent.

November 2018: Rajasthan state election

Again, the state went against the incumbent party, the BJP, and voted the Congress to power. But in the Lok Sabha poll, the BJP swept the state with a decisive vote share of 58.47 per cent, winning 24 out of 25 seats. Even the final seat went to an ally of the BJP.

December 2018: Telangana state election

The Telangana Rashtra Samithi managed to beat anti-incumbency in the state and retained power with an overwhelming mandate. It got a three-fourth majority and won 88 of 119 seats. The Lok Sabha poll flipped this win: TRS secured only nine out of 17 seats.

May 2019: Odisha state election

The governing Biju Janata Dal returned to power with a decisive mandate, winning 111 of a total of 147 seats in the Assembly. There was no trace of anti-incumbency. In the Lok Sabha poll held simultaneously, the BJD managed to win only 12 of 21 seats. Its vote share also fell by 1.9 per cent.

October 2019: Maharashtra state election

The BJP and its ally, the Shiv Sena, secured 161 seats with a combined vote share of 42.16 per cent. As a pre-poll alliance, they managed to get a majority. This result comes six months after the Lok Sabha poll, where the same coalition had bagged 41 of the 48 seats with a comfortable vote share of 51.34 per cent. What this means is the alliance lost a vote share of 9.18 per cent in just six months!

October 2019: Haryana state election

Though the BJP emerged as the single largest party, it fell short of a majority. Only with the support of the Jannayak Janata Party could the BJP eventually form the government. Compare this with the Lok Sabha election where the BJP won all 10 seats in the state, implying it lost a vote share of almost 21.71 per cent in the Assembly election.

Only in the northeastern states of Tripura and Nagaland, where the state elections happened in February 2018, the electorate voted for the BJP alliance in both the Assembly and Lok Sabha polls.

What are voters looking for?

Voters know what they’re doing. There are different combinations: voting for the same party in state and central polls; different parties being given the mandate in the state and central polls; or the extent of mandate differing if the same party wins in both elections.

If this trend holds — which I believe it will — this augurs well for Indian democracy. The voter is sending a clear signal that she understands the issues for which she is voting in a particular election. This is different from the general commentariat opinion that voters do not know what they are voting for.

This brings us to the next section of this piece: understanding the different issues voters vote for in the Assembly and Lok Sabha elections. Glancing at the results of the 2014 and 2019 general elections, here’s a quick breakdown of what, perhaps, voters are voting for in the Lok Sabha poll.

– For a face. The Lok Sabha polls are increasingly becoming presidential. Voters like to know the face of the prime minister they’re voting for. If parties do not project a clear prime ministerial face, they start with a handicap.

– For a party whose leader is seen to be strong, decisive and communicative.

– For a party’s stance on nationalistic issues related to India’s defence policies, the way we deal with our neighbours, the way we conduct our foreign policy, and so on.

– For a party’s overarching welfare programmes related to health, education and other issues.

– For an overall image of an honest, non-corrupt and functional government.

On the flipside, a voter clearly expects their state government to deliver on day-to-day issues like living conditions, infrastructure and delivery of the Centre’s welfare programmes.

Hence my hypothesis that the emerging voting pattern must serve as a wakeup call to the states to double down on governance issues. Even if a party receives an overwhelming mandate in the Lok Sabha polls, it does not translate to a resounding mandate in an Assembly poll unless it gets its act together on delivery of governance. States can no longer ride on the charisma of a central leader if they haven’t done their bit on the governance front.

It’s also time the commentariat shifts its focus and scrutinises the governance levels of states. This means analysing state budgets and not just the Union budget, and regularly evaluating a state’s financial health. It implies comparing the appetite for reforms within states, not just at a central level.

I firmly believe next generation reforms, which can make a difference to the economy, lie at the doorsteps of our states. Labour reforms, DISCOM reforms, land acquisition reforms, PDS reforms, agricultural reforms — multiple issues related to the daily livelihood of the poor are in the hands of states. It’s time chief ministers wake up to this and invest in running key ministries at a state level that deliver governance. If the results of the last few Assembly elections haven’t served as a wake-up call to the states — nothing will.

The Dream of a Swachh Bharat!

2nd Oct, 2019 marked the 5th Anniversary of the launch of Prime Minister Narendra Modi’s pet campaign – the Swachh Bharat Abhiyan. And ever since the campaign was kicked off, this is my 5th post on the topic with the central theme being the same which I will come to, just in a while. While launching the program way back in 2014 just after coming to power, I remember Narendra Modi clearly saying that a “Clean India” would be a fitting tribute we would give to Mahatma Gandhi on his 150th birth anniversary in 2019.  Even back then, I had said that the very noble thought notwithstanding, turning India into a Swachh Bharat cannot happen in 5 years.

If one takes stock today, India would not have turned into a squeaking clean nation but a valiant beginning has indeed been made. After the program got launched, within the government a Swachh Bharat Mission was kicked off, breaking down the overarching objective of a Clean India into many, many micro goals with measurable targets. This included stuff like constructing toilets in rural and urban India, making India Open Defecation Free (ODF) completely, achieving rural sanitation, sustainable solid waste management and so on.  The thrust given to this program from a top down push and resources point of view has been unprecedented. Just purely looking at the results from a data stand point they are impressive.

Going by the numbers presented in the budget in May 2019, in the 5 years since the program was kicked off, 9.6 crore toilets have been constructed while more than 5.6 lakh villages have become Open Defecation Free. The Finance Minister had then said, “More than 95% of cities have also been declared ODF. More than 45,000 public and community toilets across 1,700 cities have been uploaded on Google maps, covering more than 53% of India’s urban population”! Now considering the sheer magnitude of the task in hand in India, these are not mean achievements and credit needs to be given to the Government, where due.  And when the Prime Minister on 2nd Oct said that “rural India and its villages have declared themselves “open defecation free” there were the usual sneers and sniggers around the same, questioning if there will not be any person who will defecate in the open from the next day in India!

In spite of all this capacity building and pouring in of resources by the Government, has India become clean? The answer is probably “No”. But from 2014 levels, it has perhaps become cleaner.  People who visited Varanasi, the Prime Minister’s constituency say that the city is much cleaner, the Ghats are approachable and clean. All over India we keep seeing public clicking pictures from Railway stations and posting in social media regularly as to how cleaner they have become since 2014. It is undeniable that many places of tourist interest look much cleaner now than ever before. So far, so good. At the same time, we still see islands of squalor even in urban centres. Garbage is littered all over the place.

So what has been the problem? While the Government has been doing its bit in running awareness programs around cleanliness, placing dust bins all over the place, constructing toilets, making sanitation accessible so on, we as public have failed the country. Our attitudes towards cleanliness haven’t changed a wee bit.

  • We have not stopped littering in public places.
  • We have not stopped spitting in the open.
  • We have not stopped painting the town red with paan spitting day in and day out.
  • We have not stopped urinating or shitting in the open even when toilets can be found in the vicinity.
  • We don’t clean the dog poop even inside our posh apartment complexes while walking them every day.
  • We have not stopped throwing garbage in all areas except into the dustbins in the streets.
  • We have not stopped mixing wet and dry garbage though the authorities have been requesting for a while now.
  • We have not stopped feeding our pets and others from the balconies.
  • And we have not stopped from wanting the Government/Corporation/Authorities to keep cleaning the filth we create.
  • And finally we have not stopped dreaming about a “Clean India” without putting any effort from our side.

Coming back to my pet theme which I referred in the beginning, if we think that Swachh Bharat is about cleaning, then we are grossly mistaken. SWACHH BHARAT IS NOT ABOUT CLEANING, BUT TO REDUCE THE NEED FOR CLEANING IN THE FIRST PLACE!

It is an oft repeated take that the same Indians when we step out of India change our attitudes towards public cleanliness like “Switched On robots” while in India we behave as “Switched Off Morons”!

Having observed closely how things are in our country and world over, I have come to the conclusion that the attitude towards public cleanliness is not a Rich Vs Poor thing. It is not an Educated Vs Uneducated either. It is not even Urban Vs Rural divide. It has nothing to do with Caste, Creed, Religion and so on.  It is complex function of a combination of things like Awareness, Empathy, Upbringing, Education, Access, Priority, Laws etc. In short, having an empathetic attitude towards cleanliness not just in one’s own private spaces but more importantly in public places!

This is why I am of the opinion that, since transforming attitudes is a generational thing, it will take at least a couple of generations from here for India to be called a “Clean India”. That is about 50 years from now! And the key to make it happen is investing in resources and time in schools to create, nurture and spread the importance of having the right attitude towards Swachata!  While the present Governments at the centre, states, districts and at panchayats continue to work on what they are doing currently, admirably, they and the future Governments must focus on schools at all levels to “indoctrinate” kids at a young age about cleanliness. Investing in the future generations is the only hope we have to achieve the dream of a Swachh Bharat!  Cannot wait that long for a Swachh Bharat? Then we must stop complaining of what the Government is not doing and start reducing the need for cleaning! Basically stop some of the things I have listed above.

Does that mean that the campaign is a failure? Certainly not. The Swachh Bharat Abhiyan has helped to bring “Cleanliness” to the mainstream agenda of the country. Far long, we had neglected such basic issues of Nation building. So, kudos are in order to Narendra Modi for waking up India towards Swachata! Swachh Bharat may still be a dream for us now, but certainly not a pipe dream!

Reminiscing the Navarathri of the 70’s!

Today is the 1st day of Navarathri and one can see social media replete with pictures of colourful Golus and other sundry posts related to the festival. From what it was when we were kids, the festival has come a long, long way!

Growing up in Trichy, our school timed the 1st term examinations just before Navarathri. Always. So that we had our vacation exactly for 9 nine days to coincide with Navarathri. School promptly re-opened for the 2nd term on the 10th day i.e., Vijayadasami – a day when it is prescribed to mandatorily study after Saraswathi Pooja. So, as a kid I have fond memories of Navarathri which was exciting, busy and religious while also masquerading as holidays!

The excitement starts even as the last couple of papers of the term exams painfully drag themselves.  The Golu needs to be put up and more importantly a theme for the park adjoining the same had to be thought of. Back then, it was all DIY (Do It Yourself). And I now get it that the phrase “theme park” owes its origin to Navarathri! Shelves, Benches, Trunks, Suitcases, Father’s mayil kann veshtis and Mother’s marriage day but now out of fashion Kanjivaram silk sarees all come together to become the Golu steps. The Golu Idols which were wrapped up nicely with old, discarded Veshtis and stored in old trunk cases and cartons are all unpacked carefully and inspected first to check if the hands, limbs, noses, legs of the various God forms are in order. Once clear, they are cleaned amidst a session of pest control that happens with all of us dancing and prancing around. The house is freed of cockroaches, their babies and eggs. Temporarily.

Once cleaned, the easy part was to arrange the Golu idols on the steps. There is usually an order for at least the important idols like Dasavatharam, Ramar Pattabhishegam, Samudra Manthan, Chettiar bommais etc and they are quickly put in their places. The raking of the brain starts for the park set up. This needed creativity as well as access to resources within the house. Once an idea for the theme is cracked, we as an entire family got into the act to put together the same. If it was a Trade fair exhibition one year, it was a circus another year and Kallanai dam yet another year!  All made of things we had at home without embarking on a shopping spree for sourcing the same elsewhere! There was no competition, yet there was intense competitiveness in being one up on others as far as the theme park goes! The final act was to get the colour lighting and effects right, to complete that year’s Golu!

I said that as kids those nine days were extremely busy not without reason. Kids performed the role of today’s WhatsApp! In the absence of WhatsApp, Mobile phone, SMS and even Land line phones, the job of going to the houses of near and dear was entrusted upon us. If this kept us busy for the 1st couple of days, the later days were consumed by visiting other houses to check out the Golus and the sundal that ensued. Typically, there were certain houses where the sundal was always tasty where we didn’t mind visiting every day!! Also which house to visit that day depended mainly on the type of sundal. Usually a house which made Puttu or Vella Payaru on a particular day attracted a bigger crowd and one had to be there early before it gets over! And if it is stuff like paruppu masiyal and all, one avoids that house for the day! So, those days the mamis have to go all out to get people and kids to come to their place to exhaust the stock of sundal!  The other job for us was to cut newspapers and make packets of the sundal every day for distribution.

Coming to the religious aspect, during Navarathri, the nearby temple used to have different alangaram for the Devi idol as per the day. So, visiting the temple every evening to check out the same was also part of the routine. Some more pious amongst us also used to attend the Lalitha Sahasranamam rendition at the temple every day!

I don’t at all recall if the nine days of Navarathri were observed with different colour dresses by ladies those days as it is today! Probably this is an influence from the North of the Vindhyas which has spread over South also these days, I reckon!

After the nine days are over, the busy schedule continues for a day when we had to re-pack the idols and put them in the trunk cases in the lofts.  For Hindus in South India, “Boxing day” was actually the day after Navarathri!  The steps are dismantled and they get back to their original avtars as benches, shelves, suit cases and the like!

So, in short, the nine days of school vacation just flies in a routine filled with fun, festivities, religion and camaraderie!

On the Vijayadasami day, when the school re-opens, time for all the fun and excitement to be boxed up.  And as one by one answer paper started unravelling, one hoped that the Devi will incarnate once again to put an end to the ultimate evil called Examinations!

As I walk down memory lane to reminisce the Navarathri of the 70’s, I realise that 4 decades hence, this remains still an unfinished agenda!

Postscript – For a more light-hearted take on Navarathri of these days, please do read my post – “Engaathu Golu” here! On that note, Happy Navarathri!

Image courtesy: Scroll.in

 

Howdy Economy?

“Howdy” is in the air in India these days! With Prime Minister Narendra Modi set to address the global Indian audience from the NRI platform at Houston, which has been branded as “Howdy Modi”, this American slang has got into the Indian vocabulary!  But, in India, ever since the 1st Quarter poor GDP results were out, the commentariat has been asking just one question “Howdy Economy?” Because, Indian economy is believed to be in ICU where the Chief Doctor was not giving much attention!

In India, the time tested tradition has been to undertake reforms when there is a crisis. Economist and Author Shankkar Aiyyar explains this beautifully in his book – “Accidental India” with back stories behind every single historic economic initiative of post independent India. The bottom line being, we take such drastic steps only when push comes to shove!

It looks like the latest decision of the government to slash corporate taxes drastically in one go from 30% to 22% is one such initiative which will have a lasting positive impact on the economy but which was taken when the answer to Howdy Economy question was very, very feeble. Naysayers notwithstanding, simplifying the tax structure, eliminating the myriad exemptions and having a reasonable low rate is a welcome move. It will make the industry competitive, make it more profitable, attract both foreign and domestic investments thereby have a trickle-down effect on the economy.

I saw some commentary that, this is more of a long term treatment and not an answer to the short term woes. Indeed yes. There is no silver bullet that can get the economy growing at 8% and more. It needs a combination of measures that are short term and long term. My belief is that, irrespective of the condition of the economy, a simple and low corporate tax structure was anyway required to grow the economy from the 8% levels we were couple of years ago, to 10%. With the economy struggling at 5% levels, the crisis like situation galvanised the government into action. Finally, the progressive reduction in corporate tax from 30% to 25% which was promised by the then Finance Minister Arun Jaitley in the 2015 budget has been executed by his protégé Nirmala Sitharaman. She has done it in one stroke and has gone a step further reducing the rate to 22%.

While the reduction in corporate taxes is a supply side reform, steps are required in the demand side as well. With the transition to the GST regime, the government has less flexibility to announce stimulus like in the past where excise duty or Sales tax cuts used to be announced to boost demand and consumption. In the present GST regime, the GST council has to take a call on the same and make those adjustments. Some of the announcements on GST rate reduction on hotel tariffs are in this direction.

With the reduction of corporate taxes, there is a loud clamour for reduction on the personal taxes front. Experts keep saying that this will put more money in the pockets of the salaried class which will make them spend more. I am not too sure of this. In the past, whenever there has been some personal income tax slab changes and effective rate reduction, we hardly came to know of the savings or reduction. And I don’t think anyone then consciously went to spend the money saved! Of course, it is more of a mood lifter and gives a feel good effect to the salaried class. Beyond that, I am not sure if a personal income tax rate reduction will boost the consumption in the short run which is what experts claim!  Nevertheless, as I have opined in the past, simplification and reduction of tax rates is essential.  This will also remove the peeve that there is now too much gap between the corporate and personal income tax rates!

One positive signal from the last few weeks is that the Government is listening.  In today’s world, any government of the day can choose to ignore the mainstream media. However, it cannot afford to ignore popular opinion which manifests in social media. As someone said, in India, we have as many economists as we have cricket experts! But the good part is, thanks to social media, apart from the secluded voice of the commentariat, there is an opening for “People like us” to give our opinions.

Ever since the tax cut announcements, there has been much discussion and debate as to whether it is right, whether it is sufficient, whether it is too little – too late, if it is pandering to corporates and so on. And if things can turn around quickly? With the festive season coming up in India, it is all about signalling and lifting the spirits and mood. When there is bad news which usually reaches us through the media, even if we are not directly connected to it, we all start talking about it, isn’t it? I refer to this as the economy suffering from “Headlines syndrome”! So similarly, when there is positive cheer emanating from even a single but important decision like this, it has a ripple effect. So, I hope this corporate tax cut move leads to such positive ripple effect in the coming days! And the answer to “Howdy Economy?” becomes loud and cheerful in the coming days!

Postscript:  In my earlier posts, I had said,

As a purely short term stimulus, any capacity building in manufacturing industry by way of new factories, expansion of plants,.. should be provided with tax relief”

And

With respect to taxation, “In simple terms, the mantra should be lower tax rates with no or very few genuine exemptions

Glad both these found resonance with the government and have been implemented!

Turning the GDP (Gross Disappointing Product) tide!

Many years ago on my visit to China, I found most of the newspapers there giving a lot of attention in their front pages to decline in GDP, tapering of FDI into China and other such economic issues. In a blog post that visit, I rued that in India, our media doesn’t still focus on economic Roti, Rozgaar issues but spend disproportionate amount of columns on mundane political news and views. For the past few months, it has been good to see in India too, the media at last waking up to the slow down blues in the economy.  For more than a year or so, the entire country was pre-occupied with the Modi re-election issue and everything else did not matter.

Since the re-election of Narendra Modi and his government that too with a majority better than last time, the euphoria and the resultant expectations have been very high.  However, the party has been cut short by the bad news coming in on the economic front, day in and day out. There was a great opportunity for this Government with a new face as the Finance minister to have seized the opportunity when she presented the Union budget on the 5th of July and fire the economy. The budget was a decent one but one that was devoid of Out of box, bold ideas which would set the economy on fire. In doing away with the brown brief case and opting for the bahi kaatha, Nirmala Sitharaman’s budget was a ritual breaker but, was not a path breaker! Hence, ever since the budget, there has been quite a few negative reactions as manifested in the tanking of the markets, depreciation of the rupee and a massive FPI pull out!

The initial reaction of the Government to these reactions were in expected lines that our economy was still resilient, one of the fastest growing and hence no need to panic. However soon enough, with bad news emerging on the Automotive sector first and then even on FMCG, the Government was forced into action and from then on we have been seeing a slew of measures, cabinet decisions and sops to revive the economy. Q1 GDP at 5% turned out to be the last straw.  Coinciding with the Q1 GDP results, the Government announced the merger of PSU Banks as a way forward in banking reforms. Economy was finally on top of the news cycle and the Government’s attention, Kashmir notwithstanding!

It was widely expected and hoped that some of the important initiatives of the Modi Sarkar in the 1st term like the thrust on Highways construction, massive investments in improving Railways infrastructure, improving air connectivity to the smaller towns, making electricity available to the last village and so on would start yielding results in terms of improving economic activity and fuel growth in the country. Added to this, Modi Sarkar has been constantly increasing outlays on MGNREGA in every budget. Why these measures have not started yielding results on the ground both in terms of economic growth and job creation is mysterious. It may be a good idea for the Chief Economic Advisor to come out with a White paper on the outcomes achieved for the massive outlays in Modi Sarkar 1.0.

In the back of all these, the question becomes, are the measures so far announced by the Government enough to resuscitate the economy? The reversal of some of the proposals in the budget are certainly welcome moves but those just contain the damage.  And the other measures like opening up of FDI and so on are necessary but not sufficient to get us back to where we were last year (8%) and then hit our dream goal of 10% GDP growth which increasingly is becoming a pipedream.

During Modi Sarkar 1.0, the Government leveraged well on the windfall it had from the crude prices and not passing on the entire benefit to the consumer to “manage” the economy with heavy public investments. The hope was that gradually the private investments will pick up once the sentiments change. But unfortunately, due to the NPA and the overall banking crises, it did not fire up the economy so much but, just kept the wheels of the economy going. Now, under the current circumstances however, continuing of public expenditure alone may not be sufficient. The recent red herring on the increasing debt of NHAI may in fact become a dampener here. For India as a country, the next few months are supposed to be very high on economic activity with the impending festival season. And the fact that the monsoons have been bountiful for most parts of the country notwithstanding the floods in some parts, there is still hope even for this year.

So, in order for the economy to fire up, ways and means have to be found for increasing private investments and individual spending/consumption. I am no economist but here are some thoughts:

To get private corporate investments going:

  • Modi Sarkar should bite the bullet and announce 100% FDI in Multi Brand Retail. Though India as a country missed the retail bus 10 years ago, it is still not late. Some of the global retail majors may not be as bullish today as they were a decade ago on India due to our policy flip flops and the current industry shift to E-Commerce. But still considering the country’s size and the potential it offers, India is still an exciting market for say specialised vertical retail stores. In announcing this, we should do away with the myriad sourcing conditions and allow the retail water to find its own level. Retail gives fillip to low end jobs, manufacturing industries as well as commercial real estate.
  • Copy the STPI (Software Technology Parks of India) strategy that helped in boosting the software industry in India in the 90s and come up with a similar framework for boosting Electronic hardware manufacturing in India. This will help India in becoming a preferred country for those who are looking at alternatives to China. Again we are late in this game and today Vietnam has emerged as an alternative to China for low cost manufacturing. But still considering the long term view, I believe we still have opportunities here.
  • Every Government recognises the potential of Tourism as an industry to provide jobs and improve economic growth. However, to unleash and unlock the true potential of India, we need massive capacity building in hotels, recreation facilities, connectivity and infrastructure. Government should provide time bound tax cuts for investments to private sector in this area to targeted locations in India which need infrastructural boost. The tax cuts must be linked to time bound completion of projects.
  • As a purely short term stimulus, any capacity building in manufacturing industry by way of new factories, expansion of plants,.. should be provided with tax relief.

To improve consumption and spending:

  • Holiday season is upon us. Provide relief on Income tax to individuals for money spent on holiday travel and stay in select locations in India which require boost on tourism (Uttaranchal, North East, Leh for example) with a cap of say Rs. 1 Lac. This will motivate public to take vacations and boost tourism in certain locations which have potential, decent infrastructure and connectivity but are untapped. Usually this has a spiral effect. When more people throng these places, automatically investments start pouring in for development.  For every 3 years, the locations can be changed in order to make it widely spread.
  • On the real estate front, today the supply is high and the demand low. This is mainly because the property rates are artificially pegged high and the home loans still high. This jinx needs to be broken. Though I have seen the Government announcing a slew of measures in the past few years, the housing market has not taken off. Considering the fact that the private real estate lobby is not going to cut prices ever, there is a need for the Government to intervene and disrupt the market. Like in countries like Singapore, Malaysia,.. Government must float either own companies or joint ventures to construct affordable housing in a massive scale and allot to citizens who do not own a single house in a transparent manner. The Government can offload its equity and then exit after say 20 years from these companies once the overarching objectives are reached. This will also disrupt the existing real estate industry and make it fall in line in terms of pricing and best practices, both of which are found wanting in the current scheme of things.

To revive the “animal spirits” in the Indian economy. Animal spirits are related to the points mentioned above i.e. both consumer and business confidence. I have put this separately as there are some low hanging fruits here which can be taken:

  • Sell Air India as of day before yesterday!
  • Get going on “Actual” disinvestment of Public Sector units already identified as non-strategic. Identify another Arun Shourie to make this happen in this term!
  • It is not enough to merge PSU Banks but to offload equity, get professional management and turn them to “HDFC Banks”!
  • Today many of the Government’s grand projects are stuck or going slow due to land acquisition issues. Identify the issues and fix them by bringing about the necessary changes in the Land bill!
  • Use the current crisis of job loss to build consensus around Labour reforms. Adopt the “GST council” approach for labour reforms. Today all state governments will eagerly come on board considering the pressure all states have on generating jobs.

As I write this blog, I am seeing that the Finance Minister is addressing a press conference. This is her 3rd one in the last 2 weeks. Glad to see the Government demonstrating the needed sensitivity to the economic situation and willingness to take steps. Our only urge is that instead of incremental small steps, we need big leaps.

Only that will ensure we turn the tide over Gross Disappointing Product and achieve real Gross Domestic Product rates quickly!

A Tale of Two FMs!

In the last week, two Ex-Finance Ministers of India, pushed Kashmir out of the headlines and debates, though for reasons completely different. Palaniappan Chidambaram (PC), an Ex-Finance Minister in the UPA ministry hogged the headlines for being a political heavy weight who finally got close to the long arm of the law. Arun Jaitley (AJ), the other Ex-Finance Minister but of the Modi 1.0 cabinet, dominated news since yesterday when he passed away after prolonged ill health. The lives of these two successful personalities have many common strands but, what is striking is the way it is finally diverging and in this lie key lessons for aspiring politicians.

The similarities first. Both PC and AJ came from privileged backgrounds and were never the “rags to riches” type leaders. They were lawyers by profession and extremely successful at that.  If they weren’t full time politicians, they would have been among the top 10 highly paid lawyers in the country for sure. Both were extremely articulate.  Both made their first impressions through their communication skills within their parties.  And that also turned out to be the lasting impression. In the last few years, the most interesting debates in the parliament were, when PC and AJ were pitted against each other – whether it was the GST or the Aadhaar debates. Both were tailor made for TV interviews and discussions. Both came extremely prepared for interviews and were at their combative best in putting across their views. More often than not, one tended to change opinions after listening to their points of view on a subject.  PC through his weekly columns and AJ through his blogs have also been using the written medium to get across their views effectively.

Both PC and AJ with their legal backgrounds, would give key inputs in drafting of bills to their respective parties. Their opinions were always sought in all issues related to passing laws in the parliament. In spite of not having a background on economics, both got the opportunity to be Finance Ministers. Both showed alacrity in dealing with numbers.  And when the situation demanded, they were the chosen ones to step in, as In-charge for other ministries. In the wake of the 26/11 terrorist attacks in Mumbai during Manmohan Singh’s regime, it was PC who was asked to take over the reins of the Home Ministry from Shivraj Patil who was found wanting in terms of responding to the situation. In AJ’s case he was asked to handle Defence Ministry as well, till Narendra Modi could convince Manohar Parrikar to take up the job.  One point of time he was handling three key portfolios concurrently.

In spite of these strengths, both PC and AJ were never mass leaders. PC did win elections from Tamil Nadu but that didn’t make him a mass leader. AJ could not manage to win the election even amidst the “Modi wave” in 2014 when he contested from Amritsar! And I also reckon that their elitist background, their success in their profession and thereby their high net worth made them easy targets for “not fit for public life” barbs.

Now, coming to the divergence in their personalities. AJ has been more loyal to his ideological moorings. Having started as part of the ABVP, he stuck to the Sangh parivaar during his entire life. PC, though known as a Congress man, left the party in between to be part of Tamil Maanila Congress. He was rewarded with the important Finance Ministry by both Deve Gowda and I.K. Gujral.

While AJ is known to be congenial with his staff and peers, PC always came across as arrogant and rude. He was known to be firm in his views and not one to suffer mediocrity. This projected him as an aloof politician who won more enemies than friends. On the other hand, as can be seen from the obituaries since AJ’s death yesterday, his friend circle cut across professions and political parties. And this turned out to be going against AJ most of the time.  Among the hard core BJP followers or Bhakts, AJ was viewed with suspicion of protecting his friends from other parties and corporates in corruption and other charges.

The same goes with relations with media.  AJ had many among the media who are now calling him as “My friend Arun” in their obit pieces. I suspect PC has few friends in the media!

PC while in Government had many run-ins with his ministerial colleagues. His spats with Pranab Mukherjee and Jairam Ramesh are in public domain. Who will forget that “patching up” Press conference he did along with Mukherjee? With AJ, we have not heard of any spats he had with his peers.

PC was seen more of a self-centred person even within his party and there was always a question mark over his commitment and loyalty to the party and the leadership.  But here, AJ was always seen as a party man. When not in power and not a minister, AJ was handling the poll strategy and electioneering. Before the Amit Shah era, AJ was the master strategist in putting together the poll campaigns for BJP in states including Gujarat when Narendra Modi was fighting the elections. PC apart from being a member of the manifesto drafting committee he was not known to be a poll strategist or an organisational man.

It is to AJ’s credit that many of today’s senior ministers in the Modi cabinet were all at some time mentored by him. Whether it is Piyush Goyal or Nirmala Sitharaman or Dharmendra Pradhan, they have all been coached and guided by AJ in the past. Similarly most of today’s BJP spokespersons have been mentored by AJ. PC has no such reputation.

In terms of handling the Finance Ministry, I always thought that PC did a better job. He took over as FM in 2012 from Pranab Mukherjee during UPA-II, when the economy was at its lowest ebb. He quickly put in measures in place to arrest the Rupee slide and restore investor confidence by drawing a clear red line on fiscal deficit. That the mood of the country had already set in for a change that time is another matter.  But, it always seemed like he was a right person in the wrong party under a wrong leader. I personally felt that under a stronger government and a more decisive PM, PC would have relished his job better and would have made a bigger impact in governance.  AJ, though armed with the luxury of heading the Finance ministry of a majority government, showed very little appetite for getting into a “Mission mode” on the economy front.

The introduction of the landmark tax reform – GST shows who is a consensus man. The work on GST which started during the UPA era couldn’t see the light of the day during UPA. The then Finance Minister PC was not accommodative on many of the requests from the states like revenue compensation… However, during Modi 1.0, AJ could build a clean consensus and despite stiff opposition from Congress (in particular PC) on certain clauses could get GST off the ground in 2017.

Amidst all this, if there is a big divergence between PC and AJ, it is how they managed their families, which has now become PC’s Achilles heel.  The legal troubles PC is facing today all claw back to the conduct and involvement of his son Karthi Chidambaram. We wouldn’t know if PC was a wilful partner in all his son’s business misadventures.  However, the fact that he didn’t and he couldn’t reign his son from misusing the office of the Finance minister, makes PC a partner in crime. And today he is paying for the same.  On the other hand, AJ had a spotless track record. Except for pointing fingers at him for developing friendships across the board and being a gossipmonger, there is no charge of misconduct or misappropriation against AJ or his family. He had kept his family away from his political and public office.

In public domain, Chidambaram is seen most of the times in spotless white shirt and dhoti. However, his public life has not been spotless. On the other hand, Jaitley while being in a similar political boat, lived his life without a blemish. And kept his family away from tapping his political influence.

In analysing the lives and career of these two fascinating politicians, there lies a key lesson for many a politician – Control thy Son(s)!