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August 14, 2011




Page: 8/29

Home > 2011 Issues > August 14, 2011

From ‘India Shining’ to ‘India Stinking’
By M D Nalapat

DURING 1947-92, those businesspersons in India permitted to undertake their trade by the colonial governance structure retained by 'Father of Indian Democray' Jawaharlal Nehru were unsure as to how long they would be permitted by the authorities to remain in business. At any point in time, their businesses could be taken over by the state or its agencies, their funds confiscated and even their liberty extinguished.

All this was facilitated by the British-era laws continued past “Independence” by Nehru. At the same time, neither the primitive infrastructure and communication systems that were in use during this period, nor the regulations introduced by him and his successors encouraged sufficient expansion in the size of operations to benefit from the economies of scale. Of course, while local technologies were primitive, import from outside was blocked except to a handful.

Hence the focus of the mercantile community in India’s Nehruvian democracy was to (i) make as much profit out of (ii) as few units as possible (iii) in as little time. The result was economic stagnation. The consumer suffered while the middleman flourished. Now, after seven years of what may most accurately be termed the Maino Era — which is in tone and content a close cousin of the Nehru era—a similar situation has once again descended on the Indian economy. Knowing that the prosperity—or indeed the survival—of their businesses hinge on the inclinations of The Madam and those fixers and manipulators in her confidence, businesspersons in India are being forced to return to the mindset of the first three decades of “freedom”, that places a premium on a cap on growth combined with a concentration of effort on managing the “governmental interface”, rather than tending to business operations with care and consistency so as to compete globally. Even more so than during the Nehru Era, in the Maino Era those who are favourites of The Madam and her courtiers get huge windfalls despite their rapacity and incompetence, while the others languish. Small wonder that India Shining has by now got converted to India Stinking. In just seven years, Sonia Maino has saved Europe the nightmare of competing with a tigerish India Inc just when it was losing ground to China Global.

An economy depends on its future on those who are efficient and innovative. However, such people are swept aside in the Nehru-Maino Eras by those whose only expertise is in greasing the palms of the powerful. Most of such operators are asset strippers. An example is coal, which was nationalised by Indira Gandhi in the 1970s so as to serve as a cornucopia for politicians and officials. While all subsequent governnents have given away this precious natural resource for a song, none had done so on the scale of the UPA. During the NDA period, an allottee of a coal block had to be running a power plant, or some other unit requiring large amounts of coal. Under the direction of their political masters in Congress HQ, the Manmohan Singh ministry did away with this requirement, instead alloting coal to favourites who had merely to “promise to set up a power plant” later. None of the Maino favourites who were given coal blocks during the years just before the 2009 elections have thus far generated even a kilowatt of power. However, they have since been allowed to sell the coal in their possession on the market, thereby getting a return of several thousand per cent on their investment. As most orders were conveyed orally, the official then within the PMO who ensured that the AICC core was kept satisfied on the issue of coal blocks has little reason to fear that he will be held accountable for placing the interests of the party leadership over that of national needs.

While Andimuthu Raja is now in jail—and hopefully will remain there for a long time, unlike other well-heeled folk who usually escape after a few days or weeks of incarceration — it needs to be remembered that Spectrum was given away almost free of cost by previous Telecom Ministers to a handful of companies, who enjoyed a monopoly for more than a decade. During this time—and despite the free Spectrum—they imposed a high cost regime on the consumer, and blocked efforts at reducing call charges. Even such everyday advantages as Mobile Number Portability were blocked. The TRAI functioned more as a PR instrument for the telecom operators than as a consumer protection agency. It was in the disgraced Raja’s time that more players were permitted into the telecom market, and of course, they must have paid for the privilege. For reasons that are obvious, even the new players initially paid very low sums for Spectrum, although more than the piffle they parted with in the past, at least on record.

What needs to be done by the JPC is to investigate the gift of Spectrum since 2001, and to ensure that those who gained this advantage finally pass on the bulk of this benefit to the consumer. Both the JPC as well as the Supreme Court-monitored CBI need to investigate the functioning of TRAI as well, as there are credible reports that the agency has often been suborned by those it is supposed to oversee, just as ONGC has been regarded as being since the 1970s, sabotaging crude oil production rather than boosting it.

In a system where the only rules of the game are decided by the few who rule, there is a deliberate absence of direction. There is drift, because only such ad-hocism can create the massive bribes that are these days flowing in unprecedented profusion to offshore banking accounts. There is confusion in both policy formulation as well as in its implementation, and the Maino Era is marked by the withdrawal of those mandated by the Constitution of India to administer from any pretension to leadership. The resultant vacuum in policy and implementation has got filled by decisions taken in an ad-hoc manner by officials and politicians close to the ruling establishment. Each such action has been designed to favour select beneficiaries.

In agriculture, which is still the major employer in a country that has for long limped in comparison with that other Asian giant, China, ever since the 1920s, only middlemen have taken away the cream. The deliberate neglect of the creation of effective storage facilities, and the absence of transparent markets and adequate credit, have meant that farmers have been forced to sell to those who savagely add markups of 400 per cent and higher on the crops that they purchase. Only a few “political” farmers benefit, while much of the rest have the option of suicide or starvation. Clearly, such a situation is not cricket, and yet it has deliberately been allowed to continue, so that speculators and profiteers—including some large companies—can benefit through artificial scarcity, the way their progenitors did during the 1943-44 Bengal famine. Millions died during that tragedy, and because of that catastrophe, a few traders became billionaires. Of course, they gave over a tiny part of such famine-created to the Congress Party and to the Mahatma, who never lacked for affluent friends willing to host him and those—including dedicated young men and women— who accompanied the saint wherever he travelled.

Increasingly, the Maino Era is beginning to take on the contours of British India. Then, as now, the functions of governance were to choke off innovation and enterprise in India, except for the few favoured entities linked to alien interests, so that industry in Europe would be protected from competition originating in India. Another characteristic of British rule was to make the accumulation of revenue the sole—rather than just the primary —purpose of governance. This is exactly the approach introduced by Palaniappan Chidambaram in the Union Finance Ministry in 2004. Another feature of colonial rule was to give back substandard facilities and zero social security, or precisely what is the case now.

The 99.998 per cent of the population not blessed by the Maino Court is forced to endure power cuts in heat waves, get spondylitis by bumping along “roads” that would make the surface of the moon look smooth, and watch helplessly as state-funded schools and hospitals are such that no rational human being would be satisfied by them. If since 1992 the private sector was given some freedom, including the education sector, this is now being taken away, so that private facilities will fall to the same standard as public. This is the paradise made available to those who pay more than 70 per cent of their income in taxes, if we club the higher rates of income-tax with service tax and taxes on commodities. In other words, 70 per cent of the income earned by an individual is spent on a governmental system geared towards the interests of those few families wallowing in the benefits that come with power in the present era, and 30 per cent on the taxpayer himself and his family. Naturally, such a state of affairs suits elite politicians, including those in the so-called Opposition, as they know that the merry-go-round of Indian politics should ensure that they have their chance at amassing illegal wealth within a relatively short time. In the meantime, they can disappear on their holidays in London or Miami.

A decade more of such “governance”, and the people of India will once again be as dependent on foreign shores as they were in the 1930s. Not accidently, an effort is now on to ensure that private education in India cease to challenge schools in the UK or elsewhere favoured by the elite. Soon, private hospitals will follow. Government-mandated quotas and restrictions will destroy quality education and health care in India, so that those seeking such standards will need to once again go to the US or the UK for treatment. This will gladden the hearts and fill the wallets of those such as Lancet, who seek to demonise Indian health care in order to protect their own monopolies. Over the past few years, standards in India are being pushed down leaving China as the only Asian giant still posing a challenge to the dominance of the US and the EU.

As if to mock the people of India, favourites of the Maino Court write multiple tomes about how Jawaharlal Nehru “brought democracy” to a heathen populace. In fact, Nehru ensured that the substance of democracy was eliminated, and that only the form remained. The laws, institutions and procedures that served the British so ruthlessly and faithfully for more than a century were protected in their entirety. As in the British era, discretion belongs to the State, obligations to the people. Whether it is an individual or a corporate, any of several dozens of officials can convert life into hell, all for lack of a bribe. In the past, during the British Raj, whites were regarded as being divine, able to handle any task. These days, the “honorary whites” are the Central Services. An IAS officer is presumed to be able to competently handle anything from Agriculture to Science to Commerce. The situation in the country shows that Nehru’s insistence on retaining the colonial structure and rules and laws in a so-called “free” India was an error of historic proportions. We need an IAS seeded with people from industry and academe, together with those taking a civil service examination. We need such examinees to take 3-year sabbaticals in industry and elsewhere, not at the top (as at present) but in far lower levels. These days, the only passion of the IAS and the IPS is to insert their people into as many nooks and crannies of the governance system as popssible. Small wonder that the country has remained desperately poor even seven decades after “freedom”.

Natural resources, including land, are taken away from the poor and handed over to those adept at carrying suitcases of cash around. The reality is that the people of India are still bound in colonial servitude. Only the substitution of the British colonial system continued by Nehru with a genuinely democratic one can ensure that the people of India get freed from slavery. Till then, for those outside the ranks of the privileged, it will continue to be India Stinking. Only the Friends of Maino will enjoy the benefits of India Shining




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