Thursday, October 16, 2014

“Empowerment” must replace “Subsidies”


According to a World Bank Report (2008), the poorest 20% of world population consume only 1.5% of resources, middle 60% consume 22% while the richest 20% consume more than 76% of resources. This is the pathetic state of affairs we live in.

Inequality is a fact of life; society being an extension of individuals/ families, there would always be inequality in the society. As famously put by Karl Marx, there would always be two classes in the society- the Bourgeoisie (owners of resources) and Proletariat (workers). The control of resources makes the Bourgeoisie powerful and prosperous and the workers weak. The solution as suggested by Marx was a class-less society without private ownership of properties.

However, as evident from the history of the world, this kind of a system based on socialism has failed. The principal reason is that such a system kills the human motivation to excel and thus results in inefficiency. On the other hand, we have also seen the perils of capitalism. The same motivation that makes people efficient, is also responsible for the greed and the unmindful exploitation of people and the planet, which today challenges the very existence of humanity.

So, what is the way out?

The possible middle way can be achieved through a two-prong strategy that balances good things of both the capitalist and socialist systems, i.e. creating an equitable structure within the capitalist system.

(1)    The Government needs to be highly proactive in empowering the poor (proletariat) and making them efficient by enhancing their skills and expertise, i.e. their intellectual resources need to be strengthened as the way to physical and financial resources is through the intellectual resources. Appropriate institutions need to be created to work for the education and training of the sections of the society with very little physical and financial resources.These institutions include educational/training institutions, financial institutions, community based institutions, primary producers’ institutions and support institutions; the legal structure of the institutions does not matter much, they can function either under the government or private or civil society domains. Another important factor is the creation of infrastructure that works for the poor. So, the points emphasized by Amartya Sen hold huge significance: invest in education, health and other social overheads. The points have been appreciated by very few of the countries of the world. This partially explains why there is so much poverty and inequality in the world today.

(2)    The initiatives for the proletariat has to be funded through the taxes raised from the Bourgeoisie class; so they cannot be discouraged in their endeavor in any way. Appropriate policies those make their work easy have to be in place. Monetary grants for this class have to be discouraged; in its place, economic infrastructure needs to be created (like roads, communication network, etc) 

Moreover, an enabling environment needs to be created for both the classes of the society. “Empowerment” has to replace “Subsidies”. Empowering people means making them go up the income ladder forever. On the other hand, subsidies make people complacent. The beneficiaries of subsidies believe that there is a Government which will always give them low-priced grain and they need not work hard to earn them. The capitalist system is efficient because it motivates people to excel; the same spirit is lost when the government extends mindless subsidies. Subsidies result in large scale wastage too. There is nothing worse than a situation where people are complacent and inefficient in a capitalist system.


But the political parties everywhere would waste the hard earned money of its citizens on unnecessary subsidies for their political benefits. It has been proved beyond doubt that giving two pieces of bread to a poor man never solves their problem; they have to be enabled to earn their bread. A strong and wise leader can see the flaw in the socialist system and amend it by using the capitalist means.It requires a vision and high political will.

Tuesday, May 13, 2014

End of an Era!

This man Manmohan Singh is one of my heroes of early young days. Today, when he leaves office as the 13th PM of India, I feel compelled to pay him my tributes.

India is going to have its new PM in a few days' time; but this man deserves a good farewell. I appreciate the fact that BJP leader Arun Jaitley found time to write a piece on him; pretty good assessment of his contribution to India.

I started studying Economics in 1993, just after he became the Finance Minister for the first time in 1991, a watershed year in India's economic history. The path-breaking step of 'liberalization' launched India into a trajectory from which we never came down. The same year I won an award for writing a seminar paper on 'liberalization of Indian economy' and MMS became my inspiration, my HERO.

Looking back at his career, one can see what a brilliant and outstanding career he has had....few in the world can boast of such accomplishments; that's why it's no wonder why the world listens to him when he speaks. Just a few highlights to make the point:

  • Education: Cambridge
  • Served at United Nations
  • Chief Economic Advisor (GoI)
  • Governor, Reserve Bank of India
  • D.Chairperson, Planning Commission
  • Finance Minister, GoI
  • Leader of opposition Rajya Sabha
  • Prime Minister, India
(Wow.....Man! You have done everything in a career spanning almost 50 years!!! Along the way, you also have shown incredible personal integrity in public life; a lot of our political leaders of today can learn from you.)

It's only for the last few years that he has been much criticized. The last few years have been really bad for him; he could have taken much more proactive stance on crucial occasions rather than being mute spectator to the misdeeds.

I am of the opinion that no Technocrat without a mass support of the people should be the PM of India. But we can not fault him for taking up the challenge! We must remember that it was he who was the PM of UPA-1 and was re-elected to the office! So, he must have done something good as PM. The last few years can be excused in a long illustrious career and his contributions to the India growth story.

We wish you the best for the rest of your life, Sir!

Thursday, February 27, 2014

Modi’s time has come

The writing is on the wall- Narendra Modi is going to be the next Prime Minister of India. He has proved to be a leader who can galvanize popular support quite quickly. He has led the aspirations of the majority in Gujarat for some time now and a large number of people (at least the middle class) elsewhere in the country have shown faith in him. In a country doing badly on economic front at the moment, he represents ‘hope’ of millions. Congress will come down to two-digits and AAP is not quite there; third front, as always will just be in the ‘also ran’ category. So, Modi’s time has truly come. However, there lies my concerns.

1. Modi has all the traits of Indira Gandhi (if not a Hitler), who subverted democratic systems and undermined individual freedom. He is authoritarian and deals with aggression any dissenting voice. He can be even dangerous than Indira. I hope my fears will be proven wrong in the long run.

2.  Modi’s developmental propaganda is only a rhetoric. He has been able to maintain Gujarat as a developed state, but Gujarat has not moved ahead among the top performing states in his time. Gujarat has always been a developed state, since time immemorial. Once upon a time Ahmedabad was called the ‘Manchester’ of the east. So, Gujarat’s development is because of its entrepreneurial people, not the political leaders- not in the past, not now. I hope he can set a development agenda for the country and deliver too.

3. Modi's record of governance in terms of corruption is not bad- but if 'governance' also includes living up to the expectations of the minority communities, he fails miserably. The Supreme Court's acquittal in the riots case not-withstanding, the minorities still feel insecure under him. Somehow, he and BJP have to reach out to the minorities and make them feel safe and cared for. The idea of India is not based on a 'one faith' model; India is pluralistic and Mr. Modi has to uphold that. If he can do this, it would be good enough as there is hardly any other major difference between BJP and Congress. Let's hope Modi will be a leader for all, and not just the majority community.

Monday, January 27, 2014

Gujarat- a land of entrepreneurs

Ever since I started studying Economics, I have always wondered why some societies/communities are more developed than others even while existing within similar constitutional and legal boundaries. The conventional factors of 'poverty' or 'development' given by text books and professors are like 'endowment', 'opportunities', 'saving/ investment', 'skills', 'infrastructure', etc. But none satisfied me. 

My understanding changed completely when I started living in Gujarat. It was in late 2005 I came to Gujarat for the first time. I saw relative development everywhere, even in villages in tribal areas. The tribal villages of my state Odisha and those in Gujarat are completely different- income levels, livelihood options, roads, electricity, water....everything. Why? I wondered.

Then I saw the law and order situation. On the very first morning, I saw motor cycles and cars parked outside houses all night, a thing that is unthinkable in Odisha and many other states. 'Theft' and 'murders' are rare events; in my 8 years in Gujarat I have hardly come across a street fight or fight in the public. Girls and women can roam around in the cities late in the evening all alone without fear. 

So, why are people prosperous and peaceful in Gujarat?

I think I have got the answer- 'entrepreneurship'; it is in their genes, in their culture, in their tradition; entrepreneurship is a way of life in Gujarat. A common farmer, a carpenter irrespective of the occupation, the Gujarati knows how to start a business and flourish. It is this spirit that makes the Gujaratis apart from others. They neither have the need nor time for criminal activities. When one can create wealth, one would hardly be interested in illegal ways of income. 

In Odisha, parents would marry their daughter to a low-earning government servant rather than a high-earning business man (exacly opposite in Gujarat). I have seen pretty salary earners in Gujarat come home in the evening and open a petty shop in the evening (a phenomenon unthinkable in Odisha). There is virtually no Gujarati family with only one source of earning. Once I met an auto-rickshaw driver who told me that he had just retired as a class-I officer in the Government!!! (huh....!) Another important thing is that they are aware of their wealth and invest their money very intelligently. One would be surprised to see the large number of housewives investing in the stock market. The people hardly think any work is small as long as the returns are positive and their time is productively utilized. 

As a development professional, I do not have to push people into any business; I just have to show them that it is a positive-worth business and he/she has the skill to do the same. Then the rest is taken care of by him/her. This explains why government projects are relatively more successful in Gujarat rather than in other states.

Gujaratis understand the value of money like no one else. I had read 'Reach dad poor dad', but I learnt the value of money more by living in Gujarat. Once I was travelling with a Gujarati friend; I paid one rupee for him to the auto-rickshaw driver as he did not have the change. I was amazed to see him return the rupee to me the next day. Though I resisted accepting it, I had to take it back in the end as he insisted on the same.

Though the factors of development mentioned in the first paragraph are important, the most important factor is the 'entrepreneur'. In the absence of this, all other factors are useless; on the other hand, 'entrepreneurship' can develop all other factors. The biggest positive in Gujarat is that the whole society is entrepreneur. The politicians and leaders are just an extension of this society; so most of them have always been progressive and development oriented. 

Since pre-independence time Gujarat has been developed- both economically and politically. Two of the most important leaders of the freedom struggle- Gandhi and Sardar were Gujaratis. Ahmedabad and Surat were known all over the world as a major industrial destinations. So, it is but natural that in the post-independence period the same continued, both under the Congress and BJP Governments. One of the few successful industrialists of the pre-1991 era, Dhirubhai Ambani was a Gujarati. Most of Mumbai's (and India's) business is controlled by Gujaratis. They are everywhere on the earth; a prosperous and peaceful community. I am lucky to have come here to study,work, live and marry! 

Friday, January 10, 2014

The AAP phenomenon

Two years back,when the Anna movement against corruption started, I was a little sceptical about the whole thing. Though as everyone else, I wanted to see some concrete action against corruption, I thought there was enough institutional mechanism in place and the need was to make them work. However, Anna and Arvind thought differently. Even after two years, when the act has come to life, I think the idea of of Lokpal will succeed only if there is enough political will and for that the political leadership needed to change. 

This is why when Arvind and co. formed this new entity (Aam Admi Party), I thought it was a good idea. The system can be changed and made to work from within; the scope of doing so from outside is very limited (though the pressure groups can work to some extent, there role is very limited by their nature). However, a political entity in power has tremendous power and authority to make the system work. Forming a party is one thing and winning elections is another. The first challenge before AAP was the Delhi elections; the passed the examination in flying colours. A wind of hope is blowing in India like never before. A political party within its first year of formation would form a government, is unprecedented. 

 What does the AAP symbolize?
- AAP represents the aspirations of the common man
- They have shown that elections can be won without muscle and money power
- They have changed the VIP culture in the country
- They have shown good intentions can stop corruption in this country Their success has led to a huge churning in the political system in India already.

These are all good news.
- The traditional national parties
- Congress and BJP have started to look inwards and change themselves.
- The vast numbers who wanted a good alternative to Congress and BJP have got one; Congress is corrupt and arrogant; BJP is majoritarian and authoritarian (not in the rigid sense). India deserves better
- The youth of the country who wanted to join politics but had big entry barrier to cross (money and power), now see a good opportunity
- Democracy is all about options; for the first time, people will not be voting for a 'lesser evil', they can vote for a 'better one'

However, AAP's success is not guaranteed. Their inexperience at governance is already showing. Subsidies and freebies have never solved any problem. Saying no to decent accommodation and offices, etc is not required; you can live decently and govern well. So, AAP needs to focus on governance rather than silly changes here and there. Facilities have to be institutionalized; populist measures are not going to help. If AAP can not deliver, the good revolution will fail. people will lose faith in revolutions. 

The challenges in front of them are very big; but with good intention and efficient people in their ranks, they can succeed in course of time. We can give time to this new and novel phenomenon; it is worth an experiment.

Renewing the interest in blogging...

The last time I posted a blog article was in may, 2010. I don't know why I discontinued the practice...but some of the possible reasons may lie in a few questions in my mind: - Is blogging really useful? - Can a not-so-famous person reach out to the public at large through blogs? - Is the time and energy put into writing a blog worth it? (in my initial times of blogging, I had very limited success) I do not have the concrete answers even now. However, I do realize that it may help in the long run; there is a strong possibility; let me explore. Thus, this year I have renewed the interest and have decided to write regularly.

Wednesday, May 19, 2010

Naxals cannot be allowed to dictate terms

The recent carnage at Dantewada that saw more than 30 innocent people lose their lives exposes the Naxals. I always sympathized with the Naxals to certain extent for their cause, even though I did never approve of their violence. I thought these are people who have been left out of the India growth story. When India is growing to become one of the most influential nations of the world, both economically and politically, a huge number of these people languish in abject poverty throughout India. Hence I thought their anger against the state is a natural outcome of their desperation. But the latest mayhem has left me asking me two questions:

- Do these Naxals really care for the people they say they are fighting for? If so, how come they can kill the same people!
- Have their political ambitions got bigger than their so-called fight against injustice?

It seems that the Naxals have lost sight of their vision. They need to quit the path of violence and fight for their cause peacefully. There are a lot of people and organizations who support their cause.

Development is a slow process; whatever the Government is doing would take some time to reflect on the field. Besides, 'Development' is a complex process; even with best of endeavours, one finds it difficult to achieve it. The Government is trying to push forward the ‘Development’ agenda in the Naxal affected regions. But the Naxals seem to be non-cooperative and desperate.

The Government must now adopt a two prong strategy: (i) Establish the rule of law in these places; the Naxals can not be allowed to dictate terms to the state. It is one of the primary duties of the state to protect its citizens (ii) Accelerate the development process.The efforts of development must be immediate and on a war footing. Better education, health facilities, public distribution system, employment opportunities, etc will go a long way in solving the problem.