Onsen mein sab nange hain!

Onsen or Hot Springs are quite common in Japan and Japanese like their hot springs so much that apart from the many natural ones, you now have man –made, indoor ones and even in households. On my 1st trip (on work of course) to Japan way back in 1999, I went to the picturesque city of Nagano which had just hosted the winter Olympics in 98.  The travel from Tokyo to Nagano to cover a distance of about 240 Km took less than 1.5 hours by Shinkansen. Yes, the same bullet train system which is being questioned mindlessly in India, now that the government in Maharashtra has changed!

That evening, after the day’s meetings were over, our host asked us to join him at the lobby at 5.10 pm (as typically it is with the Japanese w.r.t time!) to take us to an Onsen for a relaxing bath. The excitement of having a nice, natural hot spring bath experience vanished completely when our host revealed that as per Japanese culture one doesn’t wear a piece of cloth when inside an Onsen!! We could also see the reservations among a few westerners when they were told of this!

For Japanese though, as per their culture it was quite common to have group baths naked in these hot springs. For, they believed that ‘Onsen mein sab nange hain’! I guess that the popular Hindi phrase – ‘Hamam mein sab Nange Hain’ owes its origin to the Japanese hot spring bath culture. This gained quite a bit of traction In Maharashtra in the aftermath of the assembly elections in October!! With the drama over government formation getting over finally this week, one can safely conclude that none of the political parties involved, came out of the bath covering itself with glory!  This is notwithstanding the virtues being peddled out by journalists of all hue in favour of the parties they endear themselves to!

For the BJP, which took moral high ground and adopted a wait and watch approach initially just when Sena started acting truant, the cookie crumbled when the Sena was about to crack a deal with the NCP and the Congress! By rushing itself to align with Ajit Pawar of the NCP, BJP had egg all over its face, when Ajit Pawar back tracked and couldn’t bring in the required numbers. Even if the BJP had managed to form the government by breaking the NCP, it would have had to deal with the permanent stain of having aligned with a leader who it had dubbed corrupt all along!  Only in Surf ads, Daag Ache Hain! Not in politics. Today, even the most loyal bhakt is questioning the Saturday morning wisdom of the BJP for taking oath in stealth!  Chanakya in his grave must be cursing the BJP for bringing a bad name to him!

For the Congress, which didn’t even take this election seriously, this was an opportunity too good to miss, to just have a crack at shared power! For all its grandiose pretensions of being the vanguard of secularism and the binding force for all secular forces in India, it just needed a few days to shake off all its ideological moorings and tie up with Shiv Sena!  Suddenly we were fed with how Bal Thackeray supported the Emergency and how he liked the authoritarian streak of Indira Gandhi and so on!

As far as NCP was concerned, since 2014, it was a facing an existential crisis. And since the 2019 Lok Sabha elections, not a day would pass without a NCP leader jumping ship either to the BJP or the Sena. In the elections, it came 3rd in terms of number of seats after BJP and Shiv Sena. Its strong hold remained in the Western Maharashtra/Sugar Belt areas.

When the results were out, Sharad Pawar kept saying that the mandate for them was to sit in the opposition and would happily sit in the opposition benches. At the same time, NCP was in the forefront of discussions in cementing an alliance between Shiv Sena, Congress and itself. In a small, close knit party like the NCP, it is difficult to believe that Sharad Pawar didn’t have a whiff of the defection being engineered by Ajit Pawar to align with the BJP. Probably, this was plan B for NCP which got aborted when the terms were not in its favour!

This probably explains why there was not a single strong condemnation, leave alone expulsion of Ajit Pawar when he did what he did. Contrast this to what Karunanidhi, the DMP leader did to his son Azhagiri when the latter revolted. Azhagiri was summarily expelled from the party just for opposing the leadership. Here, the nephew does the unthinkable act of breaking the party and still he is welcomed back to the party just in a few days in public display of bonhomie. And it is rumoured that Ajit Pawar may still end up becoming the Deputy Chief Minister after all!

And coming to the last actor in this drama – the Shiv Sena, less said the better. Clearly, the whole drama was precipitated in the 1st place by the Sena. Having gone to the voter with a pre-poll alliance with BJP and got the numbers it eventually did, the Sena did not have any qualms in betraying the electorate. It might have managed to achieve its ulterior objective of having its person on the Chief ministerial chair, but it would be very difficult to shake off this image of a petulant partner in a coalition for long.

We have seen parties fighting against each other virulently during polls and then coming together to form a government through a post poll alliance. Now in another twist, parties fighting under a pre-poll alliance, win the mandate and then decide to separate and align with other parties whom they opposed, to form a government. For the common voter, it is clear that – What you see is NOT what you get! This raises a few pertinent questions. Is democracy just about conducting elections timely and getting people to vote? Is it not ultimately about mirroring what they need? There needs to be a debate and eventually changes in the constitution which will not make voter feel slighted at the end of the election process!  Looking at what has happened in the past few elections, this is a SOS need.

 

On the positive side, my Japanese friends can be now happy to see that in India also – ‘Onsen mein sab nange hain’ just like in their wonderful country!

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.

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)!

From Mission Kashmir to Fusion Kashmir!

No one else could have put across what “Status Quo” actually meant, better than Ronald Reagan! He said, “Status quo, you know, is Latin for the mess we’re in”! In the context of Kashmir, this Reagan’s definition fits very aptly! In India, the strategy of successive governments has been to maintain status quo as far as Kashmir is concerned, the cost of which has been quite high.  This, while knowing it very well and doing nothing concrete about the mess we were in.

By now, we all know that this Government under Narendra Modi has an allergy for Status Quoism.  So, we shouldn’t be surprised at all that it went about systematically this week, to nullify Articles 370 and 35A. But, that they put this issue on such a high priority and got it done early into this term, came as a big surprise to me. With this move, the liberal circuit had another melt down – its 2nd, since May 2019 as can be seen from the many pieces one gets to read, since the 5th of August. The commentary on this issue post 5th August are at three levels – wisdom behind the decision, execution of it and hypothesis over cause and effect.

Coming to the wisdom behind the decision of nullifying articles 370 and 35A, liberals see it as India’s betrayal of Kashmiris and going back on the terms of Kashmir’s accession with India.  The original article was indeed a temporary provision and was to be repealed when the preferences of the Kashmiris were to be understood and acted upon. As a country, all along we approached the Kashmir issue with a defensive mind set, as due to various circumstances we failed to find out what the Kashmiri on the street wanted, back then. And this was complicated by the definition of who is a Kashmiri – the one in Jammu or the one in the Valley or the one in the hilly Ladakh!

70 years is a long, long time and much water has flown under the Jhelum Bridge. And much blood too! Now the only objective for any Government should be to stop the flow of blood and let just water flow.  Since successive Governments have been stressing that Kashmir is an integral part of India, it was high time that it was made so. So, doing away with the articles 370 and 35A were the logical steps in embracing Kashmir as part of India. The much tom-tommed about provisions like any Indian from other states being able to purchase land in Kashmir … are in my opinion not the major issues today! Doing away with any constitution within constitution of India and stuff like Special powers, dual citizenship….are. In my blog just in the aftermath of the Pulwama attack, I had written that shedding the historical baggage and moving forward on scrapping all special status to Jammu and Kashmir as an important step (not the only step) towards lasting normalcy in Kashmir.

For those who are asking that, anyway 370 of today is a much watered down provision compared to the original and hence what was the need to nullify now, the answer is simple. Why then have it, if its existence today anyway doesn’t make any material difference to the Kashmiri on the ground?

There has been much criticism and take downs on the Government’s execution part. Why didn’t the Government discuss with “stake holders” and take them into confidence? Why was this done when there was no elected Government in J&K? Scrapping 370 & 35A is O.K. but why division of the state into two Union territories? Why has been curfew and press muzzled in Kashmir? So on and so forth. These questions, coming not so much from the common public but from the liberal intelligentsia have their own pitfalls. When we read such criticisms at times we wonder if liberals live dividing their time between Utopia and some fantasy land!

For decades, we have been wasting time in talking to the so called stake holders without any outcome! “Keep talking” in diplomacy most likely means “Do nothing”! I have lost count of the number of times successive Governments appointed interlocutors to talk to stakeholders. Has anything concrete in terms of a road map emerged out of these engagements? And who are these stake holders? The separatists? The book “Kashmir – The Vajpayee Years” written by Ex-RAW Chief A.S.Dulat gives details of talks L.K.Advani had with separatists, during Vajpayee’s NDA rule.

In the 2nd meeting Advani asked, “What is it that you want?” Not one single Hurriyat leader said anything. Finally, Prof. Ghani said, ‘Next time we will come prepared with our ideas.”

So much for talking and taking these leaders into confidence. Having said that, we must not forget that during Modi’s 1st term, the then Home Minister invited all stake holders for talks and even appointed another interlocutor to engage with sections of Kashmiris with no result!

If Kashmiri politicians of the like of Abdullahs and Sayeeds are part of stake holders, the less said the better. There can be no other clan of politicians which has been more ambiguous on their stand viz a viz Kashmir than the Abdullahs. For long, the Abdullahs carried the tag of being on the India side. But when they had the opportunity, Farooq earlier and more recently Omar did not use their political heft to take Kashmiris into confidence once for all and get them to gravitate towards India. They, for their own political reasons kept their ambivalence of keeping one leg here and one leg there going! Do you see any other state political leader calling and addressing the Central Government as “New Delhi” or “Delhi”??? And we know very well what Mehbooba Mufti and her party were up to in helping to bring normalcy in Kashmir when they were in power! So, I don’t think the Government could have engaged with such stake holders and made any progress!

The brains of liberals are wired to react to ideal situations and that explains why they are up in arms against the way the Government went about this. But the situation in Kashmir was never ideal or normal in the 1st place. Ergo, it required out of box solutions executed in an out of box manner. If everything was normal and was a question of another state bifurcation, I am sure that the Government would have followed the Standard Operating Procedure (SOP) as prescribed in the text book.  So, using the Governor’s rule to revoke the powers of Article 370 and dividing the state into two Union Territories are all par for the course.  In short, an issue which is festering without a solution for decades cannot be handled with standard approaches. The only pitfall I see is the “tyranny of precedence”! Future Governments may opt to follow this as SOP even when the situation is normal showing this as precedence!

In today’s viral age, social media would be easily misused to just create a panic by circulating fake news and pictures. So, clamping down on internet services till situation settles down makes sense. But, was there a need for a control on the press from covering?

For those coming down heavily on the Government for the clamping down and heavy deployment of forces… if these were not done and trouble erupted on the streets, the same commentariat will rip apart the Government for not learning from past episodes in Kashmir like during Burhan Wani’s death!

And finally coming to the cause and effect. It is certain that all will not be happy in Kashmir over the changes that has been foisted on them. Vested interests who have been taken off guard by the move may not keep quiet. Pakistan may crank up their covert channels to fester trouble in India.  But then, all these are not new. Even while we were trying hard to maintain status quo in Kashmir, all these were in play.  I am sure that the Government is more than aware of all the risks before they moved deftly on these moves. Let us hope better sense prevails among the Kashmiri youth for whom the best chance is to be aligned with a prosperous India than an Azad Kashmir!

I have been reading that this is Modi’s Mission Kashmir! But I think Mission Kashmir has been the one earlier governments have been trying all along which failed. This is Modi’sFusion Kashmir” and let’s hope this succeeds in its attempt to break the status quo!  After all status quos are made to be broken!  The time is now and the ball is in the court of Kashmiris!

Pic Courtesy: Businesstoday.in