TIMES OF INDIA SUNDAY COLUMNS BY GURCHARAN DAS
(Appears every other Sunday. This archive contains columns from January 1998 to September 2002)

GOD IS IN THE DETAILS January 6, 1998

If there is a widespread consensus on economic reforms, as everyone says, why are there such frustrating delays in implementing them? If we are agreed on what is to be done, why don't we just do it? One reason is that we haven't had a true reformer at the top, such as a Deng or a Thatcher. The agenda of our political class is also at odds with what the world believes is necessary for the prosperity and well being of our citizens. Moreover, we haven't had reformers heading our ministries dealing with infrastructure. The most important reason, however, is that our discourse is disfunctional. We continue to waste our energies in debating "the what" when we ought to focus on "the how". How to reform is a more difficult challenge and it is not for lazy minds. It needs the full application of the mind; it needs problem solving ability; and it needs mental toughness. Most of all, it requires acute attention to detail. It is not for drawing room amateurs. We Indians are good when it comes to defining the broad picture. But we fall apart when it comes to detailed planning and tactics which lead to successful implementation. This is a flaw which attaches both to our public and private sectors. Hence our products and governance are both shoddy. Most of our politicians and businessmen suffer from this disability. Our political parties are mentally lazy. The leftists want more money for the poor. No one grudges them the money if it actually reaches its beneficiaries. But people resent that most of the poverty funds are lost in corruption and administrative expenses. Why don't the leftist parties apply their minds to showing how subsidies can be cut and redesign poverty programs so that the poor actually receive the benefits? The voters will respect them and might even vote for them. The BJP wants Indian companies to became strong and competitive. This is a laudable objective and few will contest it. The BJP wants to achieve this objective by eliminating foreign competition in consumer products. But it doesn't offer a criteria to decide what is a consumer product. The BJP merely says that it wants high tech and not consumer products. However, even the simplest consumer product today contains high technology. Potato chips are easy. But isn't a car or scooter, a personal computer, a telephone a consumer product? Will the BJP yuppies give up their Marutis and go back to driving bullock carts? For even the Ambassador was based on foreign technology. Because the BJP has not mentally applied itself to these issues, it will turn over the task to bureaucrats. And what will happen? Since there is no objective way to make the distinction, between a consumer and non-consumer product we will return to the bad old days of the licence-permit raj. These are the consequences of mental laziness. Every Indian wants electricity. However, putting up a power plant costs money. Everyone knows that our government doesn't have money. But the global private sector does. Thus, the only alternative to living in darkness is to have private power. Why, then, have we lost six years in endless debate over each private power project? The problem with private power is that our state electricity boards are bankrupt, and no sensible supplier will sell electricity to a bankrupt customer. This is a genuine problem of "the how" and this is what we should be debating. It is no good moaning about bad MNCs. Fortunately, this U.F government had made some real breakthroughs in solving these difficult problems. If the U.F wants to go down in glory, it should now complete this job over the next few months and leave us with some showcase power plants which have achieved financial closure and are ready to start construction. The citizen will be forever grateful and might even vote for them. Instead of berating multinationals, let us learn from them. One of the first lessons that a young MNC manager learns is that "God is in the details." It is not enough to have a broad strategy; success depends on penetrating the details of an issue. One has to be mentally tough in choosing between unpalatable alternatives. It is this attention to detail which allows MNCs to deliver awesome performance--e.g. reducing costs by 30 per cent across the globe within 9 months by involving 100,000 people, as Nissan did in 1989.

Can BJP a True Conservative Party January 20, 1998 

The centre of gravity of Indian politics has shifted perceptibly to the right since 1991. At the same time the BJP is showing hopeful signs of moving into the moderate mainstream. This is an opportune time for the BJP to bring together the large number of decent, conservative, God fearing Indians of all types, who have been disenchanted for two generations with the irresponsible politics of socialism and subsidies, as much as with the cynical promises of an empty secularism. However, only by shedding its narrow sectarianism can it hope to offer the voter a responsible right wing alternative. A modern democracy needs a viable second party in order to have political stability. We have learned this lesson painfully in the last few years. The Congress, despite its waning popularity, represents a viable left of centre alternative. The BJP has the historic opportunity to become a stable right of centre party. We must accept the reality that only these two national parties can provide stability, and stop searching for third party coalitions. The BJP, on its part, must realize that to became a mainstream party it must rethink its identity. Rightist parties all over the world have only succeeded at the polls when they have distanced themselves from the fanatics and lunatics at the fringe. If it wants to find resonance with decent, sensible Indians the BJP must abandon the politics of hate and communalism. Indian intellectuals for their part, can no longer dismiss the country's largest political party as contemptible. The responsible thing for them to do is to begin a dialogue with the BJP and help it to discard its extremism and shepherd it into the mainstream. As a conservative party it is right and proper for the BJP to be drawn to tradition. But it should look to the rich, tolerant, syncretic tradition of India's past, rather than its own specious, narrow and sectarian version. A Hindu worships all dieties and the Indian mind is stubbornly eclectic. Buddhism disappeared from its birthplace partly because Hindus started to worship the Buddha as one of their Gods. A similar fate might have befallen Islam and Christianity had they not been more vigilant. The BJP should tap into the rational and worldly tradition of India's past. Most Indians have got it wrong in thinking that India's past is mainly other-worldly. Look at the marvellous animal stories of the Panchatantra, the love poems of Vidyakara, the realpolitik of Arthasastra, and the great Indian texts of astronomy, mathematics and medicine. Even the ancient religion of the Vedic texts is speculative and not dogmatic. This India is positive, upbeat and self-confident, in contrast to BJP's India which suffers from feelings of inferiority and hurt pride from recent domination by Muslims and British. To be a true right of centre party the BJP needs to demonstrate greater commitment to free markets and economic reform. The voter distrusts Congress' commitment, despite Mr. Manmohan Singh's historic achievement. No one has attempted to sell the economic reforms--least of all the Congress--as the right thing to do in order to to build a vibrant competitive economy which will do more for the poor than the tired, old socialist and populist solutions. The Swatantra Party attempted this task thirty years ago but its timing was wrong--the nation's centre of gravity was too far to the left. Today, Indians understand that the socialist party is over, that we need to dismantle controls, and that 5 per cent of Indian workers cannot hold to ransom the other 95 per cent. What should be BJP's economic agenda? Given its misguided commitment to swadeshi, it is impractical to expect it to drop it now. However, there is a vast area of domestic reform which lies untouched. The BJP should commit to: (1) sell or close the loss making public sector, (2) revise our socialist labour laws, (3) allow an entrepreneur to close an unviable business, (4) dramatically upgrade infrastructure, (5) work with the states to remove "inspector raj", (6) abolish actroi and substitute VAT in place of irrational state sales taxes, (7) repeal the urban land ceiling law, amend rent control, and have rational land use policies, (8) remove trading restrictions on farmers, including delicencing sugar and cotton, (9) dramatically improve the delivery of primary education and health, and (10) implement financial sector reforms, including opening insurance to the private sector. This is a huge agenda of domestic reform which does not touch the sensitive area of swadeshi and external reform. If the BJP can implement this ten point agenda, it will make a better and more competitive India. We can live without further external reform for the next 5 years--the WTO, in any case, will ensure that we do not reverse ourselves.

IN PRAISE OF UNSELFISHNESS February 17, 1998 

"In the arena of human life the honours and rewards fall to those who show their good qualities in action," wrote Aristotle in the Nicomachean Ethics. It is good to be reminded of Aristotle's words for we suffer in India from a bias against action (and in favour of contemplation.) Because the Brahmin always had the upper hand the author of the Bhagvadgita felt compelled to extol nishkama karma and the path of action. It is not often that a human worth is recognised but it does happen once in a while and it did last month, when one Satya Pal Dang was awarded the Padma Bhushan for a life lived for the sake of others. For a brief day it restored my faith in Delhi. Satya Pal Dang decided to light a candle when others were cursing the darkness. But he was different from other do-gooders who are so busy doing good that that they find no time to be good. Satya Pal is a palpably good man. The secret of his benevolence rests in a fellow feeling that puts him on the same level with the fellow who suffers. He has been lifelong communist. But unlike most communists, Satya Pal and his lovely wife, Vimla have lived their life in the trenches. In the fifties and sixties they organized industrial labour in Chherta, near Amritsar. For twenty five years they selflessly ran its municipality, and the community reciprocated by showering them with affection. In the eighties Sat Pal turned to fight terrorism in the Punjab through community action. Vimla created a successful campaign to rehabilitate the widows and the children of the terrorist's victims. Till today they remain on the hit list of the terrorists. Sat Pal, as the Punjabis call him, was born in district Gujranwalla in the old Punjab, in a village called Ramnager, which flickered briefly into history as the place where the British forces decisively defeated the Sikh army. It came to be known in our history books as the "Second Anglo Sikh War," and paved the way for a hundred years of British rule in the Punjab. Sat Pal came from an Arya Samaj family and went to the Government College in Lyallpur (now Faisalabad). There he won all the prizes. His family dreamt of a glorious career for him, until one day, to their horror, they discovered that their boy had become a Marxist and a card carrying member of Communist Party. It was a great blow to their bourgeois hopes of power, wealth, and prestige. Sat Pal was thrown out of college in Lyallpur for organizing a strike. He shifted to Government College, Lahore, where he joined the circle of famous leftists--Rajbans Khanna, Romesh Chandra, Surinder Sahgal Inder Kumar Gujral (Yes, Inder Gujral!). There he also met Vimla, who was also an ardent activist. In that charmed circle, Vimla was admired for her good looks, her deep convictions, and her glamorous background. Her father worked for the BBC; her mother had been trained in Italy in the Montessori teaching system; all her brothers were communists. Her mother taught at Sir Ganga Ram College, headed by the famous Miss Chattopadhyay who was connected to the nationalist movement through her sister, Sarojini Naidu. They used to meet at the Indian Coffee House in Lahore and listen to the poetry of Iqbal and Faiz Ahmed Faiz. But Mijaz was their favourite, and Sat Pal used to recite his famous lines: 'Tere chehre pey yeh anchal / bahut hi khub hai lekin / tu es anchal se ek parcham bana let / toh accha tha.' It was natural for the brilliant Sat Pal and the vivacious Vimla to fall in love. I happened to lunch with Sat Pal and Vimla a few months ago in Chherta. After lunch, Vimla brought out an album of photographs of their younger days. One of the pictures was taken in a Bengal village. It showed Sat Pal and Vimla, two idealistic faces, helping out during the terrible famine in 1943. "After returning home from Bengal we raised a lakh of rupees for the starving victims." said Sat Pal. Another photograph showed Vimla in Prague in 1947, where she had gone to attend the first World Youth Festival. There was triumph in her eyes. She had been elected Vice President of the World Federation of Democratic Youth. Her self assured smile conveyed the wonderful confidence that she felt as a youth leader at the peak of the international communist movement. She had every reason to believe that right was on her side, and they would rule the world. Stalin's genocides had yet come to light. Nor had the Soviet tanks moved to crush freedom in Prague one spring morning. How was this innocent face peering out in sepia tones to know that her God would turn out to be false? What was never false, however, was Vimla and Sat Pal's life long fight against injustice and poverty. Their small share of happiness exists because they ceased to think of themselves.

THE BRAHMIN AND THE SAMURAI MARCH 3, 1998

No one reads Arthur Koestler any more. But in the forties and fifties Koestler was a powerful, iconoclastic, intellectual presence. First, he destroyed the communist god in his celebrated Darkness at Noon. This was at a time where everyone was, at least, a socialist. Then, he visited India and Japan and punctured the myth of Eastern spirituality in the The Lotus and the Robot. The Indian government was so put off that it banned the book--but only after everyone, who was going to read it, had, in fact, read it. Koestler wrote munch nonsense in the book, but there were great moments of insight as well. In it, he compared India and Japan--"the most traditional and the most 'modern' among the great countries of Asia." He is worth another look today, because we are embarked on the same brave journey to join up with the global economy that Japan took forty years ago. Japan, with all its troubles, is regarded as a great nation capable of defining the future of the world. India is still perceived to be puny, mostly irrelevant to the world's material destiny. It need not have been so. Our paths diverged in the fifties. When Japan decided to become an exporting nation, we decided to close our doors to trade. Japan was optimistic that it could compete in the world economy. We were pessimistic. It was a high risk decision for Japan because its earlier efforts had not been successful--"Japani maal" meant inferior goods. But Japan showed the courage of a Samurai whereas our Brahmins in the North and South Block played safe. Koestler found that India and Japan had similar social structures, based on the family with its clan extensions and a caste hierarchy. In both societies the old sought respect from the young; the male dominated over the female; teachers were meant to be venerated by their pupils; conformity was valued more than individuality. Both approached Reality intuitively rather than rationally and empirically. Koestler also noted important differences between the two. Japan's caste system was fluid; India's was rigid. A Japanese commoner could pass into the Samurai class by adoption and marriage. Rich moneylenders often bought Samurai status for their sons by marrying them to the daughters of the Samurai during the Shogunate. When the feudal economy changed into an industrial economy, the new entrepreneurs and the zaibatsus became the adopted son-in-laws of the feudal state. In India, inter-marriage and even inter-dining between castes in unthinkable, especially in the villages. This is because caste is sanctioned by religion and is part of one's dharma. In Japan, caste is a matter of social hierarchy, to be dealt with pragmatically. In India authority has a religious character. The guru imparts spiritual darshan by his presence; the sensei imparts wisdom, but it is of a worldly nature. The Indian is careless in dealing with society but he is careful in dealing with the deity. In Japan it is the reverse. The Japanese non-chalantly claps his hands at the Shinto shrine to attract the attention of the gods, but in matters of social etiquette he is watchful, elaborate and punctilious. He knows thirty-five ways to wrap a gift parcel, and his worst tragedy is to lose face in society. The Indian is full of religious anxiety; the Japanese worries about prestige. The Indian thinks that sex is only for procreation; the Japanese understands that sex is also for recreation. The Indian is consumed by guilt over masturbation; the Japanese thinks it a casual pleasure, almost like smoking. The Indian woman is a temptress who saps a man's strength; the Japanese woman is a provider of manifold pleasures. The Indian child is deluged with affection and his education starts late and remains lax. The Japanese child is subjected to strict social conditioning from a very young age. Koestler's insights have obvious implications for national competitiveness. Japan's secular spirit explains, for example, its love affair with technology. Indians, in contrast, are less curious about how the world works. It is fashionable for India's policy-makers to wring their hands, and moan that Indian companies do not invest in R & D. Lest we forget India was lost to the Mughals at Panipat in 1526 because of Babur's superior technology. Eleven months later Rana Sangha and the Rajput confederacy also succumbed at Khanua to Babur's superior cannon. The fault lies in our caste system. Brahmins used to be the only educated persons, who had little interest in the world. Nor did they like to dirty their hands. The artisans, who could have made technological advances, were uneducated. But now there is hope, for the 1991 economic reforms have unleashed the long-suppressed commercial energies of the Indian people. Everyone wants to be an entrepreneur--especially the sons of the Brahmins. India is in the midst of a social revolution, similar to Japan's redefinition of its merchant class during the 1868 Meiji Restoration. It is no longer comptemptible to be a Bania or to work with one's hands.

WHY INDIANS HATE CAPITALISM MARCH 17, 1998 

"There is an eternal dispute between those who imagine the world to suit their ideas, and those who correct their ideas to suit the realities of the world," wrote Albert Sorel. It is this problem which is at the heart of Mr. Shanti Swarup's attack on me (TOI, 27/2). He accuses me of trivializing the modernisation vs westernisation debate in "Culture Complexes" (TOI, 9/12/97). He may well be right, but I think the real difference between us is that he has fallen into Sorel's trap in believing that the world fits his obsolete ideas, rather than in understanding a changed reality. I sometimes ask myself why is it that so many Indians, especially intellectuals, hate the market. There are two reasons I can think of. One, is that no one is in charge in the market economy and this causes enormous anxiety. The second reason is that we tend to equate the market with businessmen. Since we think that businessmen are crooked we tend to transfer this negative image to the market. Hence, we feel the need for the heavy hand of government to keep the market in line. Because the market is invisible nothing one can say will convince people that the market is morally blind--that it is merely an arena in which people buy and sell. We forget that the market is, in fact, the best ally of the ordinary citizen, because it forces businessmen to compete. It is like democracy, in this respect, which forces politicians to compete. This suspicion of markets is magnified when it comes to the global marketplace, for there truly no one is in charge. Hence all our anxieties get multiplied and for this reason MNCs, FIIs, become obvious targets. And to diminish the anxiety we take comfort in Hindutva and the familiarity of swadeshi objects. Mr. Swarup and I agree that to be modern is to subject our ideas, and attitudes, as well as our production methods and systems to the test of reason and experience and retain what is tenable and shed what is not. In light of the experience of the last eighty years, it is clearly irrational and unmodern to retain our attachment to socialism (despite the historical irony.) The problem with socialism is of performance, not of faith. If socialism had worked we would all be socialists today. It was the noblest vision that man even had--to build a compassionate society which would wipe away poverty and oppression. Alas, every time it was tried it led to statism and oppression. That evidence is no longer in dispute. A series of controlled experiments were conducted in the last fifty years on a scale that is the envy of every social scientist. Germany, Korea, Vietnam and China were sawed into two and capitalism was installed in one part and socialism in the other. In every case the capitalist part not only out-produced the non-capitalist one, but it also delivered freedom and opportunity. Yet most Indians do not accept the market economy. Even my mother, who thinks that socialism was the work of the devil, believes in "fair" prices and "decent" wages. Although she accepts that people must earn vastly different salaries in order to give incentives for performance, she complains that there is now too much greed in our society. Like most educated Indians she does not think, as I do, that better results will be achieved if people shamelessly follow their self-interest in the bazaar rather than lofty moral principles. Mr. Swarup says that Japan is a poor example of a modern society. He may well be right from the perspective of the five per cent well-fed, upper middle class Indians. But for the majority of our countrymen, who live degraded lives in desperate poverty, Japan is a modern utopia, which has delivered unparalleled prosperity, education, health and welfare to all its citizen--all of this in a couple of generations. Japan has its flaws, to be sure. But so does every society. We Indians, who are at the bottom of the heap on any scale of human welfare, would do well to put ourselves in the shoes of our less fortunate compatriots before we pass judgement on other nations. Mr. Swarup has written much nonsense on the obsolete technology of MNCs, which keeps Indian firms permanently dependent. It is the usual gibberish from the over-active minds of the "dependency school," which has no basis in the real world and shows a total lack of understanding of how companies operate. An MNC, like any company, invests in order to succeed in the market place, and it will employ whatever technology it takes to win. If it employs old technology against a competitor with the latest technology then it clearly shoots itself in the foot. MNCs have no interest in neo-colonial constructs. Mr. Swarup has not addressed the main issue in my article: can one be modern without becoming Western? This is unfortunate, for if he had then he would have truly furthered the debate on  modernization.

ONE POINTEDNESS TO GLORY MARCH 31, 1998 

There is a concept in Yoga called one-pointedness (Ekagrata in Sanskrit.) Successful governments, like successful companies, have an uncanny ability to be one-pointed, while seeming to do hundreds of things in the routine of the day. One such government was Deng's in China; another was Thatcher's in Britain; and going back a couple of generations, Churchill's government during the Second World War was an obvious example of Ekagrata. All these governments had focus and purpose. Not since Nehru's days have we had such a government in India. The only lesson to draw from our recent unhappy election is that the Indian voter has given no party the right to pursue a controversial agenda. A mandate, so fractured between provincial, local, caste and religious identities, can only mean that the ruling coalition will have to govern through consultation, compromise and consensus--both with its allies and with the opposition. The BJP certainly does not have a mandate for hindutva or swadeshi. Hoerver, this does not mean that it can't govern purposively. There is a vast unfinished agenda of economic reform. Much of it is uncontroversial, but it does require commitment and will power. To debottleneck infrastructure, for example. But if I were to select only one point on the reform agenda, and make it the one-pointed purpose of the new government, I would unhesitatingly choose education reform. Eliminating illiteracy will do more for the average Indian than almost anything else. An educated work force will give Indian companies competitive advantage in today's workplace which demands a "knowledge worker"; it will raise the backward castes far more than reservations by making them employable. It will lead to better governance as the voter becomes more responsible. It will liberate Indians--as Epictetus says, "only the educated are free." Of all the parties, only the BJP took the trouble to define a vision and program of education reform in its manifesto. It spelled out an outstanding program in 21 steps with which no sensible Indian can disagree. If only it would now implement it with Ekagrata it would make India an efficient and compassionate society. The BJP document emphasizes both the quantity and quality of education. It promises to deliver "near complete functional literacy in 5 years" by mobilizing societal participation and progressively raising spending from 3 to 6 percent of GNP. Its reform package includes a massive expansion of vocational training in high schools in order to build employment skills; teach agricultural studies in rural schools; create incentive for attendance in primary schools through mid-day meals and free test books; involve NGOs in the expansion of primary education; introduce an anti-cheating law (with safeguards against abuse); provide autonomy to colleges and universities and academic freedom to scholars; select 10 to 20 centres of higher learning and make them world class; preserve traditional knowledge and skills; provide low interest bank loans for meritorious students; expand ago-industrial and technical schools with the help of industry; and remove gender disparity. The main deficiency of BJP's program is its silence on teacher re-training, which is the single most important step in raising the quality of primary education. This retraining, as Krishna Kumar says, ought to focus on the child's view of looking at the world and develop curriculum materials which employ local resources and reflect the local milieu of the child--i.e. make education less bookish and more relevant. Even more crucial however, is to bring teachers back into the classroom. Jean Dreze and Amartaya Sen noted in their recent book, India: Economic Development and Social Opportunity that in the four districts they studied in U.P. two-thirds of the teachers were chronically absent. Panchayati Raj offers an opportunity to bring the teacher back into the classroom. The 11th schedule to the Constitution has placed primary education under the panchayats. In theory, this means that the local community and the parents should be able to hold the teacher accountable. In practice, however, this is not easy because the grip of the state education departments is very tight and will not be easily loosened. One solution is for Doordarshan to telecast primary education classes in different languages in the mornings to supplement the teacher's input. Electronic education can raise the quality of education and moderate absenteeism (but it cannot replace the teacher.) In our enthusiasm for primary education, however, we should not fall into the trap of de-emphasizing higher education. Our experience of the past six years, since the reforms began, is that cheap, educated, wired professionals represent our true competitive advantage in the global economy. The common element of all successful developing societies, regardless of the type of economic policies they pursue, is elementary education. If the next government achieves only one thing--a revolution in primary education--it will find, to its happy surprise that it will be voted back to power. If this is not the stuff of politics, then what is the point of politics?

ONE POINTEDNESS TO GLORY APRIL 14, 1998

Literature is about passion. But so in business. How else do you explain the insane behaviour of otherwise ordinary, sensible Indians who have pulled out all their hard earned savings from the bank in order to start a business and chase a dream. Don't they know that nine out ten business close down after twelve months? Even since the Revolution of 1991 I keep running into these mad heroes.. The most remarkable feature of a vibrant, healthy economy is the very high failure rate of its entrepreneurs. Success in business goes against the odds. In India, there is also the indignity of having to grovel before and bribe a dozen inspectors .Thus, an entrepreneur has to be a gambler or a lunatic with a fundamentally impaired judgement about life. Some will call this courageous, others stupidity. But it is passion at the root which inspires this behaviour. These entrepreneurs are as mad as our medieval Rajputs from Mewar who went to battle time and again, when they knew in their hearts that defeat was their only prize. The opposite of this big chested behaviour is bureaucracy and statism. The bureaucrat is cold, calculating, risk averse and mean hearted. The entrepreneur is decisive and in a hurry; the bureaucrat is indecisive and likes to delay things. No wonder the bureaucrat hates the entrepreneur's passion. Although bureaucrats are mostly found in governments, there are plenty of them in big companies as well. Large companies tend to become enormous socialist enterprises and have to be periodically shaken up. This has been happening in America where large companies have been viciously downsized during the last decade. Many large Indian companies face a similar fate. Those companies who are able to destroy the disease of bureaucracy will emerge competitive and successful in the future. The others will face extinction. We Indians have got so used to bureaucracy over the past 50 years that we are horrified at the loss of jobs in our big public sector companies. We forget that a couple of thousand Englishmen ran India before 1947. We don't know what it is like to breathe the free air of a non-bureaucratic society. My grandfather used to say that sometimes he felt freer during the British Raj than under the "licence raj." Statism is bad no matter where it is found --whether in the public or the private sector. On the othe hand, we must celebrate our chaotic entrepreneurial bazaar economy, whether in Delhi's Chandini Chowk, or in Bangalore's Silicon Valley or Bombay's Dalal Street. What is common to all three places is the risk taking passion of entrepreneurs? Why does one entrepreneur succeed while the other nine fail? That is a mystery. But Peters and Waterman came closest to unravelling it In Search of Excellence (unquestionably the best book written about business.) They said, successful enterprises exist for their customers, treat their employees like decent human beings and they innovate constantly. When I left the corporate world four years ago I was Managing Director, Worldwide Strategic Planning at my company's headquarters in America. There I saw a lot of bureaucracy in my office. I saw very highly paid executives in their plush glass tower offices pass weighty memos from the left side of their desk to the right side of their desk. The most important lesson that I learned in my job is that a strategic planner should not be a planner. He should be a "discoverer", in Henry Mintzburg's words, "who pursues wildflowers in the fields". He should constantly seek new ideas sprouting here, there and everywhere. Whether inside the company or without, he should latch on to the most promising entrepreneurial possibilities and fertilize them. A good strategic planner should look for experiments that have been started by others, and like a good venture capitalist nurture them. He should focus the company's resources and attention to these innovations. Good companies like Hewlett Packard and Cisco Systems do an outstanding job of acquiring these small experimenters. This is what the wise Austrians, Hayek and Mises called the discovery process in a capitalist economy. As we approach the 21st century we in India must re-evaluate our old ideas about business. We were taught to think of our banias as black-marketeers and profiteers. We must shed these cliches, just as we must cleanse our minds of the statist bias in our thinking. Max Weber got many things right about the ethic of the entrepreneur, but he missed the notion of passion. Fortunately, the internet has levelled the playing field for our entrepreneurs. Many of the huge, hierarchical MNCs, who strike such terror in the hearts of our Bombay Club, are faced the same threat of extinction unless they reinvent their business and make them less hierarchical and open. As new players to the global game, we can take heart from the fact that in the next 25 years the way that business is done will change so dramatically that and whoever can forsee the changing needs of the market will go to glory. No MNC has a head start. Any mad, passionate Indian entrepreneur can write his own future.

ONE POINTEDNESS TO GLORY  JUNE 23, 1998

There is nothing like a good nuclear bang to focus the mind. As we begin to adjust to living in the post-bang world we must ask ourselves what is important to us as a nation. What are our national goals? Where does the bomb fit into our objectives? The BJP wants us to be counted and respected in the community of nations. That obviously cannot be a goal, for respect is the result of something that we achieve. Military power, however, can be a national objective. But history teaches us that unless military power is backed by economic power it cannot be sustained. Russia has many atom bombs; Japan has none. But the world respects Japan. We too have discovered to our chagrin that the atom bomb has not won us the respect of the world. The reason is that it is not backed by economic stature. On the contrary it has made us a laughing stock, and put us in the company of rogue states like Iraq, Libya and North Korea. Even our best friends, who do not condemn our atomic tests, regard us with sad puzzlement. Our national goal could be to achieve a certain quality of life for our people. Or it could be to socially raise the lowest castes. Or to achieve harmony between different religious communities. But I believe the only sensible goal for India has to be economic. Economics is not everything, but it has to be the most important thing in a country where one third of the people live degraded lives of unimaginable poverty, and another third live in constant anxiety about making ends meet. If we agree to define our goal in economic terms, there are many ways to express it--in terms of employment, inflation, productivity, as a poverty index, competitiveness, literacy, exports, and so on. Generally, economists like to express it in terms of growth. That is not a perfect way, but it is better than any other. When an economy grows strongly, a lot of good things seem to happen it. High growth creates jobs, slows down inflationary pressures, raises tax revenues of the government, which can be wisely invested on schools, roads, electricity, and on poverty programs. If we agree on economic growth as our national goal, then we must be prepared to measure all our actions against this criterion. We must also eshew the temptation to have multiple objectives. Nations, like companies, are most effective when they are one-pointed. We must evaluate every action of every politician and bureaucrat by asking, "does it promote economic growth?" For example, law and order, speedy justice, political stability--all good in themselves--also promote growth by creating a sound climate for investment. Can the bomb promote high growth? It can, conceivably, if it helps to reduce the defence budget on the grounds that conventional forces can be cut once there is a nuclear deterrent, and the savings are plouged into infrastructure. But this is a specious argument. The experience of the last fifty years shows that no nuclear country has been able to cut its conventional arms. Spending on nukes has invariably been an add-on to the existing defence burden of the country. In fact, the bomb will push us into a costly arms race, escalating our defence expenditures and deny funds for economic development. Does the bomb offer any other benefits? The bomb could possibly have furthered our security if Pakistan did not have it. But how does it help if both sides have the bomb? It only makes the subcontinent a danger spot. To this the BJP responds with the classic deterrence argument. It is that the unthinkable horror of a nuclear disaster will deter self-interested, non-suicidal leaders on both sides to even start a conventional war. And thus, it will, paradoxically, promote peace. The empirical evidence in support of this argument is that none of the members of the nuclear club has fought a war. While this argument has some logic, I believe the logic of disarmament is far greater. Meanwhile, the sanctions are going to hurt. They are going to succeed in denying funds for our power plants, roads, ports, and drinking water programs. Foreign companies are also going to think twice before investing. A potential German investor is reported to have said, "Why should I invest in India? It might blow up and with it my factory." It is true that Pakistan's pain will be greater. It is also true that American companies will suffer more. But how does this help the Indian child who can't do his homework because of load shedding? The budget was our great hope. But that hope is also dashed. A bold, reforming, growth oriented budget would have dramatically changed global sentiment in India's favour. In the end, our rulers have to remember that our national goal is not to prove anything to the world or to our enemies. It is to improve the lot of our people

ONE POINTEDNESS TO GLORY  July 7, 1998

There are three kinds of companies, according to Professor Birch of M.I.T. He calls them elephants, mice, and gazelles. The elephants, of course, are the large Fortune 500 companies like General Motors. At the other end are the vast majority of tiny enterprises in the bazaar--retail shops, restaurants, and services. These are the mice. The third are the gazelles, which start small and grow extremely rapidly through innovation. Microsoft, Intel and other high tech companies are examples of gazelles. Sometimes gazelles create entirely new industries, as in the case of Federal Express or UPS, who have pioneered the courier industry. Professor Birch's research shows that 70 per cent of the new jobs in the United States have been created by the gazelles. And its worth noting that the US has been extremely successful at generating employment--having created 26.4 million jobs in the last two decades! The elephants have not added to employment; in fact, they have downsized in the past decade. Neither have the mice: for every new one that comes up, another usually dies. The gazelles eventually become elephants, but on the way (as they ride the "s-curve") they create enormous number of productive, high quality jobs. Successful economies, thus create conditions for the gazelles to come up and to succeed. In India, we too have had our gazelles--Reliance, NIIT, Jet Airways, Titan Watches, Infosys, Ranbaxy, to name a few. Our challenge as a nation is to find the small entrepreneurs who have a vision and a dream, and who will be the gazelles of tomorrow. Once found we have to make it possible for them succeed. This is not easy. For the scarcest resource in any society is entrepreneurship. And four out of five entrepreneurs fail. So it is a real art to find the one who will succeed. How do we find and nurture the gazelles of the future? And who should do it? Clearly, the government should not. It should be kept as far away from them as possible--it does not understand business and it will only succeed in killing them. The answer is venture capitalism. Many of America's gazelles came up through this path. Venture capitalism is a risky business. It consists in spotting a potential winner from among a large number of business start-ups. A venture capitalist doesn't go into business himself. He looks for a young person with an idea, and offers to provide him or her with capital (and management help) in exchange for a share of future profits. Since banks are risk averse and won't lend to a young person with an idea, every entrepreneur is always short of capital and welcomes a backer. When the business takes off after three to five years, it usually needs another dose of capital to fund expansion. By now, the business has built a track record of profits, and the sensible thing is to take the company public, and raise the expansion capital through the stock market. This is also the opportunity for the venture capitalist to book his profit, sell his shares, and exit from the venture. And look for another gazelle to nourish. In the past few years, a number of successful businessman have asked me for advice on philanthropy. Typically they say, "I have made my money and I am not getting younger. What I should do? Where should I donate my money?" When businessmen think of philanthropy they usually think of temples, hospitals, schools and scholarships. These are good things, but I generally turn them in the direction of a good NGO, because I find they are doing a better of social uplift than private charities. But now that I think of it, spotting and nourishing gazelles would be an excellent form of philanthropy. What could be a better idea than to provide seed capital to a young person with a dream, and thereby create lots of productive new jobs in the economy and build competitiveness at the same time? There is not an entirely new idea to India. Some business communities--notably, the Jains in Gujarat--provide risk capital to youngsters in their clan, with the understanding that they will repay it later in life. In the 19th century there existed a similar support system for Marwari youngsters, who went off to Calcutta from the villages of Rajasthan. These young men learned to do business as apprentices in existing Marwari firms before setting out on their own. They also lived together in dharmashalas, and at night they would recount their exploits of the day. Thus, they learned from each other's mistakes and these dharmashalas became their Harvard Business School. Many people will argue that venture capitalism is not philanthropy, it is business. Call it by whatever name--but if you agree that entrepreneurs are one of scarcest resources of society, that they generate productive jobs and wealth for our country, then spotting and nourishing gazelles in one of the best things that we can do in India.

WHY INDIANS MAKE POOR TEAM PLAYERS July 21, 1998 

It is the height of our monsoon season, but the damp, humid air is filled with a middle-aged conservatism, which paralyzes our corporate life into inaction. A dogged resistance to change is compounded by the lack of cohesion at the top of our companies. That Indians don't make good team players is a well known fact. A Swiss manager of a multinational company, who has been associated for many years with its Indian subsidiary, said the other day that a sure way not to get action is to put two talented Indians on any task force; they will never agree with each other and brilliantly argue the proposal to death. There is also the story of two Indians who meet in New York and decide to form the India Association. When a third one arrives, they form a Tamil Association; with a fourth comes the Bengali Association. And so on, until there are 15 regional associations and the old Indian Association is forgotten. One day some one has the "brilliant idea" to join the regional associations into an Indian Association. So back they go to square one. It's a funny story, and it makes us laugh, but it also illustrates the divisiveness in our character. Take any institution in India--scratch the surface and you will find factionalism at the top. Whether it is a university, a hospital, a village panchayat, or a municipal board, it is beset with dissension. What is the cause of our divisiveness? Is it our diversity? Is it the caste system? It cannot be caste alone for even in the most homogenous Marwari companies brothers, uncles, nephews incessantly fight with each other. I have observed this problem in family-run business, public sector enterprises, even multinational subsidiaries. I think it is serious enough for businessmen to be concerned about it. To some extent, jockeying for power exists in every company, everywhere. It is natural for directors to build empires, quarrel over turf and squabble in board rooms. But in good companies around the world these conflicts are contained so that they don't hurt competitiveness. In India, I fear, they tend to spill out, and when they do the effect is devastating to younger managers. Not only do they get caught in the cross-fire, but also they tend to emulate this damaging behaviour of their seniors. It is an old problem. Every schoolchild knows that foreign invaders were able to conquer India because our armies were not united. According to Arrian, Porues lost to Alexander in 326 B.C., partially because of poor co-ordination among his generals before the Macedonian phalanx. "While the defenders of the Punjab were brave...(and) each man fought to the death...(the soldiers) were unable to make a mass movement in concert with their brethren of other corps." Similarly Babur's victories at Panipat and at Khanua (against the Rajput confederacy led by Rana Sangha) are partly explained by the divisions in Indian society and poor co-ordination on the battlefield. Although the Marathas had more cohesive armies, they too suffered because some sub-castes armed themselves against others. The British Empire professionalized the Indian armies. And after 1947 the Indian army has been "an island of discipline." Despite that, however, there have been problems between generals in the battlefield. In the 1962 Chinese War, the commander of the Fourth Division at Se-La confessed that "private animosities, personal weakness and in many cases lack of mutual confidence among the commanders...led to disaster." In even the wars that we won--1965 and 1971--there were major failures of co-ordination, according to General Harbaksh Singh and Sukhwant Singh. Harvard Professor Steve Rosen states in a new book on India's armies, "The only justifiable conclusion is that in 1965 the Indian Army displayed low levels of cohesion within infantry units, which led to their early collapse in battle; low levels of cohesion among infantry units which affected their ability to co-operate on the battlefield; and perhaps even lower levels of cohesion between tank and infantry units." Does poor teamwork have to do with our character and personality? Psychologists he tells us that the Indian male is exassively indulged as a child by the mother and the female relatives and he lacks a close identification with the father. He tends to submerge his identity within the family, and this results in a weakly developed ego. When he grows up, he tends to have hierarchical or dependent relationships, rather than good, co-operative relationships with peers based on equality. This is an interesting hypothesis but it needs broad empirical data to validate it. Is it a problem of trust? Where people spontaneously trust each other there is a high degree of co-operation and lower transaction costs. Does our caste based society makes us suspicious of non-kin? My economist friends has no patience with this theorizing. They say that once there is sufficient competition in the Indian market, and companies are fighting for survival, then you will get excellent teamwork. I hope they are right. Meanwhile, businessmen ought to be aware of the problem and do something about it.

.REVOLUTION IN THE INDIAN BAZAAR AUGUST 4,1998

There is a palpable sense of excitement in the Indian bazaar. From Pathankot to Burdwan and Bikaner to Tellicherry young people everywhere are galvanized and are flocking into the new computer schools of NIIT, Aptech and others. These are the hip places to hang around these days. It is even more thrilling than the last time around, almost ten years ago, when the STD/PCO booths first arrived in the towns and villages across India. And now, if this government has its way, the bazaar will soon experience a third information revolution when internet kiosks begin to offer the world wide web at local call rates. All of us remember the wonderful things that happened when STD first arrived in our bazaar. Mothers could suddenly speak to their sons working across India and the world. Apple farmers in Himachal began to make harvesting decisions based on a quick call to the wholesale markets in Delhi and Bombay. My father could consult a doctor in America from a village in Punjab. We suddenly experienced the empowering nature of communication. We could make things happen on our own, without depending on the government. The second revolution was even more significant. In the mid-eighties a few entrepreneurs saw what the government did not: that the world was changing and no one would be employable without computer skills; that the market had a huge and growing appetite for IT professionals; that our schools and colleges were still creating an army of unemployables. NIIT and Aptech stepped into this vacuum, and began to offer computer lessons in a few cities. They were immediately successful, but they could not cope with the demand. Smaller companies entered the market, but they could not deliver the quality. Since NIIT and Aptech did not have the capital or the human resources to expand across the country, they hit upon the idea of franchising their schools (like McDonalds and Titan watches.) They looked for entrepreneurs in small towns who had the space and the capital, and they made them their partners. They helped their partners to design the schools and buy the computers. They selected and trained their teachers and conducted exams under their watchful eye. Soon there were NIIT and Aptech centres flourishing even in the smallest towns. Today these centres are training quarter of a million students a year. The secret of their success lies in attention to detail and consistent quality. On May 22, the Prime Minister announced a task force on information technology. By June 9th the task-force had posted a background paper on the net, inviting reactions from the public. On July 5th the task force published its first action report on the website. On July 15th the Finance Minister announced a sweeping IT tax package which has electrified the industry. On July 30th the cabinet cleared the time-bound action plan of the task force. On August 15 the PM is expected to announce that Internet access nodes will be available through private providers at all district headquarters at local call rates. Thus, the Indian bazaar will soon add another three letter word, PTC (Public Teleinfo Centre), to its vocabulary, and every schoolchild will have access to a PC and internet as easily and ubiquitously as his access to the chaatwalla. In fact, many of the STD-wallas will upgrade to become PTC-wallas. If this PM does nothing else but implements the full IT Action Plan, his place in history is assured. India's rank on the Global Competitiveness Report will leap upwards instantly. What our schools and colleges could not do the great Indian bazaar has done it. The bazaar succeeds because the businessman knows that his existence depends on his customer. If he offers courteous, cost-competitive service, the customer rewards him. The shopkeeper shows you a hundred sarees even if you don't buy one. Your thali arrives in three minutes flat in the Udipi restaurant. Compare this to buying a railway ticket, or paying your telephone bill or dealing with the linesman of the state electricity board. The government companies are monopolies where the customer is a nuisance. Many large Indian companies also behave like our public sector. But there are a few companies, like HDFC and Sundaran Finance, who offer unparalleled service, and they are rewarded. There are only three ways that a company can achieve competitive advantage--with superior products, or superior costs or superior service. Indian companies are primarily focused on superior costs to help them compete in the world market. But this strategy is vulnerable to devaluations in competitor countries. And our companies are at least 20 years away from offering superior technologies and products. So their only choice is to offer superior service. I tell every Indian company with global ambitious to learn from our bazaar and adopt a superior service strategy. The beauty is that it is practically free compared to the other two strategies. But it needs every employee to acquire the mindset of the Indian bazaar.

SWADESHI & ADITYA BIRLA AUGUST 18,1998 

This BJP government is finally beginning to make some solid and sensible moves. Its new I.T. policy has electrified the computer industry. It has unilaterally opened imports of two thousand products from our neighboring countries-it is the boldest action taken by an Indian PM for freer trade in the subcontinent. It has settled the self-destructive dispute with Maruti. It is taking quiet decisions in power, telecom, and the privatization of PSUs that should soon bear fruit. The bad news, however, is that it is constantly having to fight swadeshi forces from within, who are playing the same negative role that the leftists did in the last government. Its proposal to open up insurance (permitting 26 per cent foreign ownership) was shot down by swadeshi hard liners in the cabinet. A pity, for this single action would have done more to turn foreign sentiment in our favour than anything else. Those who espouse swadeshi would do well to remember Aditya Vikram Birla, the most dynamic Indian entrepreneur of his generation. During his short 52 year life, Aditya built 70 factories in six countries and notched up Rs 16,500 crores in sales and Rs.1500 crores in net profit, fully half of it emanating from overseas. He became the world's largest producer of viscose staple fibre and palm oil; the world's third largest maker of insulators and the sixth largest of carbon black. What is more significant is that Aditya Birla was the first Indian to have faith in globalization, which he once described as follows, "We produce staple fibre in Thailand, for which we buy pulp in Canada. This fibre, made in Thailand, is sent to Indonesia for converting to yarn in our unit there. This yarn is then exported from Indonesia to Belgium, where it is made into carpets, and finally the carpet is exported to Canada!" We should pause and reflect that Aditya Birla was an Indian, and yet India does not figure in this global value added chain. Why? The reason is simple--our economy was closed. Our rulers had decided to follow swadeshi. Instead of promoting exports, they wanted our swadeshi industrialists to substitute imports and make everything at home. For four decades we practiced swadeshi and denied our people access to new knowledge, new technologies, new ways of organizing business, and a chance to participate in the enormous expansion in global trade and investment which brought prosperity to country after country in the second half of the 20th century. Thus, we deliberately suppressed growth and sacrificed two generations to a misconceived ideology. This tale of missed opportunities is enough to make one weep. If Aditya Birla put his trust in the world economy he was rewarded in seeing his foreign enterprises become globally competitive. There was little swadeshi protection in Southeast Asia and his companies in Thailand, Indonesia, Malaysia faced savage competition from the Japanese, Americans, and Europeans. Because he was confident, he did not run away from competition. He chose to fight and he won in the end. Ruthless competition was the school which taught his companies to become strong. What pushed Aditya Birla out of India were Mrs. Gandhi's damaging policies. It is sad irony that at the very time that the countries of East Asia were beginning to open up and liberalize, Mrs. Gandhi turned inwards. Her brand of swadeshi socialism also suited the bureaucracy nicely. Aditya Birla once recalled that he was invited to be a director of a foreign company, promoted by his own joint venture. "My becoming a director would have resulted in foreign exchange inflow to the country, from director's commissions and from substantial exports of goods from India. But I needed to get permission from our government. For nine months the permission was not forthcoming. I finally went to meet the concerned officer, who said, 'Mr. Birla, we could even prosecute you if you accepted the offer to become a director of the foreign company!' Imagine my embarrassment with the foreign company's board of directors who were unable to comprehend why it would take anyone nine months to accept a directorship. Finally the permission came, but after a heavy drain on precious management time." Aditya Birla contrasted this situation with the Nissan Corporation, which gives serious thought to any suggestion that saves even 0.6 seconds of a manager's time. Here in India, man-years are wasted to secure trivial permissions which should not even be required. Take another minefield-our company law. The text of India's company law extends to over 500 pages and consists of 658 sections. In Thailand, company law is covered in thirty-four pages; in Indonesia seven pages. Aditya Birla was ahead of his time in globalising his business, but today's swadeshi proponents should remember that theirs is not a new idea. It has been vigorously practiced in India for four decades with incalculable harm to two whole generations.

THE ONLY GAME IN TOWN  SEPTEMBER 1,1998 

"Indians are among the brightest people on this earth," said a German statesman recently. "Yet India can't seem to take advantage of the global economy. Why can't they understand that there is only game in town? Those who learn to play it will enter the 21st century; the others will be left behind." No nation in modern times has grown rich or economically strong without becoming a successful trader. No developing country has lifted its economic growth without exports. India's finest years since Independence were 1994, 1995 and 1996 when its economy grew seven per cent a year. It is not surprising that exports also boomed, increasing twenty per cent a year during those three years. India and China had the same level of exports in 1994, around $13 billion. Today, China's exports are over $150 billion and India's are languishing at $33 billion. This explains why the world respects China and not India. This is why Clinton goes to China but ignores India. Everyone knows that East Asia's miraculous success was built on exports. Export-led growth transformed Japan into an economic superpower and put teeth in the four Asian tigers. But few realize that to be top exporter you have to be a top importer. And India has always been bitterly antagonistic to imports. This partly explains India's failure with exports. The world's top 15 exporters are also the world's 15 importers-and virtually in the same order- -according to the WTO. It makes sense: the more output you want, the more input you need. If you want to export toys, you need to buy raw and packing materials, machinery, and computers. If these are not available at home, you need to import them. "But we have always allowed imports for export purposes," say the bureaucrats. That's true. But our systems and procedures are so hostile to imports, that they break the back of any honest exporter. One back-broken exporter told me that "only stupid people export from India." A second reason for our export failure is our damaging SSI policy, which reserves 800 products for the small scale industry. These are simple products like garments, toys, shoes etc. But they are precisely the one's where we have a competitive advantage with our cheap labour. The Far East countries, built their export success on these same products. The global economy needs these products in large quantities but our SSI policy inhibits large volumes. Nor can our SSI exporter compete with large companies from the Far East, who have large plants, financial muscle, marketing and distribution networks. At CEO of Procter and Gamble India we tried and failed to make India a sourcing base for one of our products. However, the cost of the high technology machine exceeded the SSI investment limits and $500 million in potential exports were lost to India. For these and other reasons the Abid Husain Committee has recommended scrapping small scale reservations. But this has not happened. Meanwhile, China's exports of toys, garments, small appliances has risen from $3 billion in 1985 and $70 billion in 1997 whereas ours has gone from $2 billion to $14 billion in the same period. According to the 1996 World Investment Report, as much as one third of all trade now takes place within transnational firms, and another third between transnationals and other companies. The bulk of world trade is not the export and import of finished goods but a highly complex exchange of components among the subsidiaries of multinational companies based in different countries. UNCTAD data shows that U.S. multinationals exported 40 per cent of the sales of their subsidiaries in 1993. It was high as 64.4 per cent from developing countries of Asia and 84.9 per cent from Malaysia. However, it was only 4.1 per cent from India (in 1986). Multinationals do not export from India because it is still not a good place to do business. MNC's are willing to put up with our inefficiencies when it comes to the domestic market but they won't risk their global business to the uncertainties of our red tape, corrupt customs officials, congested ports, and unionized dock labour. Hewlett Packard seriously looked at India for globally sourcing print heads for its ink jet printers. But it picked Malaysia instead because it was more reliable. HP wanted a turnaround time of 24 hours from order to shipment; the best India could do was 5 days. Our red tape and poor infrastructure scared them away. The truth is that every politician, bureaucrat, and customs officer has tried his hardest to kill exports. If India wants to win the game and become a successful exporter, it must open imports, reduce duties and non-tariff barriers; it must scrap SSI reservations; it must improve infrastructure--especially port handling; it must--cut red tape permits, and discipline customs officials. Thus, it will become better place to do business and MNC will begin to export from India

Find a dream 12 March, 2000

Not since the heady days of the Green Revolution in the late sixties have we seen the same excitement and fever amongst our people. This time it is the educated young in our largest cities that are leading the charge. The last time around, I remember Daniel Thorner, an extraordinary American academic, used to travel extensively in Indian villages in the 1960s, and he wrote passionately about capitalist stirrings in the Indian countryside. He described how thousands of farmers in Punjab, Haryana, and Western Uttar Pradesh were electrified by the arrival of the Mexican seeds and rushed to adopt the new technology. While leftists complained in the Economic and Political Weekly, these courageous farmers went on to transform India from "a basket case" to a food surplus country. I have just returned from a tour of college campuses, including IITs and IIMs, where I found the same energy and fire that Thorner wrote about thirty years ago. Once again, it is the thrill of a new technology that is electrifying young Indians. This time it is the Internet. Although the subject of my talks was different, students on the campuses wanted to talk only about how to become Internet entrepreneurs (because of my association with a venture capital fund.) They had the most amazing ideas, which they referred to as their ``inner dreams''. I encouraged them to pin their dreams to a business model, and quickly seek venture funding. "`The moment is yours,"' I reminded them, for God's sake, seize it. Some brave ones have found the religion and have taken the plunge. They are beginning to burn the midnight oil as Internet players. And venture companies are falling over each other to grab the best early players. Companies like NIIT are setting aside funds to incubate hundreds of entrepreneurial ventures. You have only to read The Economic Times and Business World to follow this revolution from week to week. My fund alone has evaluated more than 500 business plans in the last three months. Young managers in our industrial companies and banks have also been bitten by the Internet bug and are beginning to leave their secure jobs and become partners in Internet start-ups. These ventures will soon face tough competition from our established companies and from Internet companies from the US, the home of the Internet. This is happening in Japan where Sony and Fujitsu are linking with American dotcoms. NEC has recently acquired a 30 per cent stake in eBay, and Yahoo Japan's share price is quoting at 2,000 times projected earnings for fiscal 1999. I am also associated with traditional Indian firms and the contrast is dramatic. Whereas older members of bania families usually run our established companies, it is rare to find someone over 40 at the head of an Infotech company, and they come from various caste backgrounds. The average age of Internet entrepreneurs is 25. The old companies are tight-fisted; the new ones spread their wealth-typically 15 per cent of the shares are owned by employees in the form of ``stock options''. The older firms are unionised with a thin layer of professional management. Everyone is a professional in the new companies and he feels like an owner. Because of the boom in infotech stocks, many have become rich beyond his wildest dreams. Our industrial companies are generally not globally competitive and they focus only on the Indian market; our new companies in the information economy have their customers overseas and their employees think globally. Many people ask if the Internet is a fleeting fancy or is it here to stay? The answer is that there is hype but there is also solid base in reality. The Internet will change everything we do, and it will revolutionise business. Last year in America 15 per cent of shares and 5 per cent of books were sold on the Web and 40 per cent of car buyers consulted the Net. Traditional travel agencies are beginning to disappear. Although Web businesses have still not any made profit and e-commerce in America is only 1 per cent of retail sales -- no company can afford to ignore the Internet. The mania for infotech stocks, however, is a technology bubble. Their shares are over-valued and 3 out of 4 Internet stocks in America now trade below their issue prices. When dotcoms can raise capital so easily, they will tend to waste it. Having said that, the Internet is like the discovery of electricity and young Indians are right to chase their ``inner dreams''. This moment is theirs, and they must seize it.

American Beauty April 23, 2000

I have just returned from New York, where I had gone to sell my new book to American publishers. The book, India Unbound, is being released this month in India by Viking, and it is the story of how a rich nation became poor and will be rich again. The average American, I discovered, is not interested in India although he is obsessed with China. ``Why couldn't you have been Chinese?'' said one publisher wistfully. There is, however, a growing realisation among a section of America that India is poised at the cusp of history. They understand that the new digital economy is likely to transform India, which will turn increasingly middle class in the early part of the 21st century and might even conquer poverty. Clinton has focused on this theme since he went back home and the New York Times and other papers have run extensive stories on the new Indian and Indo-American entrepreneurs. Americans instinctively understand this message because they have experienced the power of the new information revolution. They have seen their productivity surge in the last five years. As a result, the American economy today carries the rest of the globe on its shoulders. It is the world's market, and its dynamism exerts a strong pull on economic activity around the world. After the Second World War, America experienced unprecedented prosperity and all income groups shared in it. This pattern changed after 1970 as the growth in American productivity slowed down. Rich Americans in the top 20 per cent bracket continued to get richer while the incomes of the bottom 40 per cent stagnated or declined. This disparity in incomes continued until late 1995 when suddenly American productivity began to surge again, reaching an astonishing 6.4 per cent annual rate in the last quarter of 1999. At the same time, unemployment fell to its lowest levels for decades, inflation remained low and wages of the poorest began to rise. The ranks of the long-term jobless plummeted from almost 2 million in the 1993 to just 637,000 today. The unemployment rate of high-school dropouts declined from 12 per cent to 7 per cent and among blacks it came down to 7.3 per cent, the lowest since 1972. In the face of these promising numbers Americans are for the first time in decades cautiously optimistic that perhaps inequality may finally have been tackled and the rising tide of the new economy may lift up all the boats. The question is whether America's productivity revolution is exportable, and can the new digital economy do the same for India. Many are sceptical. They argue that only a tiny minority will have access to computers and the Internet. Instead of broadly lifting the masses, the new economy will create a digital divide between the haves and the have-nots. ``When there aren't enough blackboards, how can we expect all Indians to become computer literate?'' they say. The answer may well lie in a little known experiment by NIIT in 371 schools in Tamil Nadu where NIIT instructors are providing subsidised computer education to school children. After school hours, NIIT's school facilities are thrown open to the residents of the town to enable NIIT to make up for profits lost during the day. If the Tamil Nadu experiment succeeds, the country might have found a model for taking computer education into government schools, and computer literacy could explode across the country. If there is profit to be made, competing education companies like Aptech will scramble to replicate this across the country. Punjab and Karnataka have already started the bidding process. When the Prime Minister Vajpayee's IT Task Force offered us the dream of making all school children computer literate by 2010 we thought it was a pipe-dream. If this model works, that dream might well come true. If we can solve the education challenge the rest will be easy. The Indian economy is embarrassingly sound today with high growth, low inflation and swelling reserves. And the forces of the information economy are relentless, profound, and are spreading like virus. Capital is no longer a hurdle, and capital-rich nations do not have an inherent advantage. Neither does inherited wealth. Nor does it help to be white. Anyone with a powerful idea can succeed. One-third of the new economy millionaires in Silicon Valley are reportedly Indian or Chinese. Thus, the new economy is far more democratic. Indians will undoubtedly succeed in the new economy, but will the masses be able to ride on the wave? The answer to that question lies in the quality of our governance, which remains the soft-underbelly of India.

DESPERATE LOVERS 7 May 2000

V.S. Naipaul was in India recently and he was speaking once again on his old theme-the Muslim invasions of India. This is a delicate subject, and it takes courage to confront it in these inflammatory times. But Naipaul has never lacked courage. His thesis is that the creative urge dried up on the subcontinent with the Muslim invasions as all our talent was slaughtered. It disappeared so completely that it took us five hundred years to recover from this terrible tragedy. Naipaul may well be right, but I think he overlooks at least one powerful example of creative flowering in the interface of Muslim Sufis and Hindu saints. I refer to the bhakti movement, which swept across India after 1400 and touched the lives of ordinary people as nothing did since Gautama Buddha. The central idea of bhakti is the passionate belief that I can be united with God through unconditional love and devotion. Love has long been a metaphor for religious experience in India. An ancient passage in the Brihadaranyaka Upanishad compares the attainment of freedom and enlightenment to the experience of a man in his wife's embrace. A person, it says, 'in the embrace of the intelligent Soul [knows] nothing within or without…[H] is desire is satisfied, in which the soul is his desire, in which he is without desire and without sorrow'. Tamil saints first popularised this idea of bhakti, and later it was spread across India by a galaxy of medieval bhakti saints-Kabir, Mira, Nanak, Tulsidas, Lalla, Chaitanya, Tukaram, Ravidas, and many others. The chief mood of bhakti poetry is erotic (sringara), as seen from a woman's point of view, whether in its phase of separation or of union. When Mira addresses love poems to Krishna she adopts the feminine personae of a wife, illicit lover, a woman with a tryst, even Radha herself. Krishna is her god but he is also her lover. The most common sentiment is the pain of separation from the lover and the constant theme is self-surrender of the beloved. In classical times Indians sensibly pursued multiple ends in life. These were virtue or righteousness (dharma), wealth and power (artha), pleasure and sex (kama), and release or enlightenment (moksha). During the prime of life a worldly householder (grihasta) pursued wealth, power and pleasure. Only later in life did he turn to moksha. Thus, in antiquity there was a nice balance in the aims of life and Indian civilisation was not as "other-worldly" as it became later in medieval times when a fifth objective (pancham purushartha) swept the minds of hearts of men and women. This was love and it supplanted the other goals, becoming the highest, higher even than moksha. By reaching out to the masses in their everyday languages, the bhakti saints created a veritable social revolution. By offering entry to the lower castes they forced reform on Hinduism and prevented mass conversion to Islam. Since boundless love of God was the only requirement all were rendered equal. By promoting a direct relationship between the soul and God, the bhakti saints eliminated the priests (as Martin Luther did in the Reformation and Buddha did two thousand years earlier). They offered confidence to the poor masses and helped bind together the diverse elements of the subcontinent into a single functioning society. A new form of musical composition also took shape in their songs, which continue to be performed even today in concerts, on the radio and television. Although saints like Mira subverted the traditional ideals of Indian womanhood and challenged the social order, her mystical love for Krishna did not create the sort of problems for her as Saint Joan's visions did in the West. The conservative Rajputs thought she was mad, or a liar or a sorceress but she was not burned at the stake. (Joan was burned, remember!) Critics contend that bhakti flowered because Muslim rule prevented most men from pursuing worldly power. Society had become more rigid, the caste system more entrenched, which checked the ambitions and mobility of men. Turning inwards was a natural response, allowing people to accept their unhappy material condition. They argue that bhakti permanently damaged the Indian psyche by making us ambivalent about the value of human action in this world, and this places us at a competitive disadvantage today. Personally, I am shy of such cultural explanations. I do believe, however, that whether one is a believer or an agnostic, these desperate medieval lovers made a great contribution to world civilisation, and traditions like bhakti provide us today with a safeguard against the onslaught of the mindless global culture.

HANG DOWN YOUR HEAD AND CRY 21 May, 2000

One evening last week, as I sat down to watch the news on television, I was assaulted by a series of confused images: there were heart-rending faces of the drought in Saurashtra, confident youngsters in Chennai preparing to launch a dotcom company, a corrupt bureaucrat caught stealing from tribals in MP, and Lara Dutta beaming under her crown. I asked myself, how does one begin to make any sort of sense out of all this? We are used to thinking of India in terms of dualisms-the rich vs the poor, upper vs lower caste, illiterate villagers vs sophisticated urbanites. But the real dualism that these TV images portrayed, I thought, is the contrast between the vibrant private space of India and the impoverished and callous public space. And no single institution has contributed more to our disenchantment with public space as our bureaucracy. No single institution has disappointed us more. When we were young we bought the cruel myth of the 'steel frame.' We were told that Britain was not as well governed because it did not have the Indian Civil Service. Today our bureaucracy has become the single biggest obstacle to development. Indians think of bureaucrats as self-servers, rent-seekers, obstructive, and corrupt. Instead of shepherding economic reforms, they are responsible for blocking them. Experts widely believe that East Asian bureaucrats helped in engineering their economic miracle. Why did they succeed and Indian bureaucrats fail? A Korean businessman told me that man for man your bureaucrats are smarter. 'But, whereas your bureaucrat is a know-it-all, ours listens to us and collaborates with the citizen.' Secondly, East Asian bureaucrats are specialists, who are not shifted from job to job, and they acquire expertise and commitment. Third, their bureaucracies are smaller, with shorter lines of authority and this makes for quicker decisions. Fourth, when you bribe, your work gets done; in India, even after a bribe you are never sure. The competitor is the enemy of businessmen in other countries. In India, it is the bureaucrat. Compare this with China. Mr. Sahgal, an executive of Phillips Carbon Black, visited China two years ago to set up a plant. A senior Chinese official met him at the Shanghai airport. He was short of time; so the bureaucrats came to see him at his hotel. The land officials promised him a plot within thirty days. The tax officers in their uniforms and epaulettes patiently explained their seven-page income tax code and three-page excise code. The head of the electricity board agreed to give a two-km transmission line in thirty days. The mayor came in the afternoon to take him in his car to his factory site in Wuxi, 200 km away-a distance they covered in two hours on the new highway. In contrast, Phillips Carbon Black took nine months and a half dozen bribes only to acquire the land in Durgapur and six months to get an electricity connection, with a full-time person chasing after the officials. It is too easy to blame politicians in a democracy. The idealistic Mr. Nehru wanted a regulatory framework for his 'mixed economy,' but the bureaucrats gave him License Raj. In the holy name of socialism they created a thousand controls and killed our industrial revolution at birth. In my 30 years in active business I did not meet a single bureaucrat who really understood my business, yet he had the power to ruin it. In the end, our failure has been due less to ideology and more to poor public management. In the summer of 1991 we did finally get rid of the License Raj. We put DGTD out of the way, but we did not get rid of the DGFT, which together with Customs continues to destroy our exports. The Inspector Raj is also well and alive, and its victims are not only businessman, but the poorest rikshaw-pullers in our city. Since the reforms began, the bureaucracy has blocked investment in infrastructure because it does not remove the policy infirmities in the way. Liberalisation is the economic independence of the nation, not from foreign rulers but from our own desi rulers. If I were a bureaucrat today I would hang down my head and cry because my son is ashamed of me. What is the answer? Clearly, it is not to abolish the bureaucracy. Every country needs governance. But we must cut down our government and make it results oriented. The Vajpayee government must understand that the second-generation reforms will not take off without serious administrative reform. It can be done as Britain has shown-it has 40 per cent less people in government than in 1979, saving a billion pounds a year.

The goodly middle class June 4, 2000

It has been a long hot summer and almost everyone seems to be having fun criticising the economic reforms. The Congress party has taken leave of its senses and wants to undo all the good work of its worthiest member, Manmohan Singh. The RSS continues to make noises against globalisation. The Left parties want to protect the labour aristocracy in the public sector against the interests of the labouring masses. Sharad Yadav has shamelessly given away free telephones to all telephone company employees. That leaves only the Prime Minister to fight for India's future all alone, with only a handful of reformers to depend upon. The reforms are anti-poor this is the constant refrain of the critics. Talk of the poor, I am convinced, confuses the debate on reforms. In the short term, the reforms will have no impact on the poor. In the longer run, the reforms will pull up the poor into the middle class. In any society, the top 15 per cent of the people will do well and look after themselves. The bottom 15 per cent will fail and will need to be looked after. In between is the 70 per cent or the vast majority of the people, which in successful economies becomes the middle class. Our real tragedy in the last 50 years is not our poverty but that we did not create the middle class. Our socialist policies suppressed initiative, jobs, economic growth and middle class opportunities. Hence, our middle class was barely eight per cent of the population in 1980. After the economy started seriously growing from the 1980s, the middle class has tripled, according to the National Council of Applied Economic Research, and is now 18 per cent of a much larger population. Given the right incentive system, the middle class invariably pulls itself up through hard work, self-help and education in a competitive society, and the task of the economic reforms is precisely to create such an incentive system. If the reforms are successful, they will succeed in making a majority of India's population middle class within a generation. And then, it will also be easier to look after the poor when they are 15 per cent of the population rather than forty. Who have the reforms hurt so far? Scrapping licensing has only hurt the corrupt bureaucrat and businessman. It does not immediately affect the poor. Similarly, opening the economy to trade and investment has only hurt the inefficient Indian producer and his labour. Neither of them are the wretchedly poor. Reducing controls on the economy has only brought efficiency, removed monopolies, and liberated new entrepreneurs. It is true that the second phase of reforms will cause job losses and pain. But these jobs belong to our pampered organised labour, primarily in inefficient public sector companies. This labour has amongst the lowest productivity in the world, is insensitive to consumers, and gives Indian industry a bad name. By no stretch of the imagination can we call it poor. Nor will cutting subsidies significantly hurt the poor. Experts are unanimously agreed that over 75 per cent of the subsidies do not reach the poor. Fertiliser and power subsidies are enjoyed by the rich and the middle class farmers the rural poor are mainly landless labour. Similarly, the food subsidy through the PDS does not reach the poor, especially in Bihar and UP. Food subsidy has largely been enjoyed by the urban middle class. Economists around the world have been arguing that subsidies are the worst way to help the poor because they distort the price mechanism for the whole economy and misallocate society's scarce resources. Instead of subsidies it is better to give money to the poor (which, of course, has its own problems, for all Indians, including millionaires, will stand in a queue to be counted among the poor). The reforms, thus, do not hurt the poor. Unlike our past policies, the reforms focus on prosperity and not on poverty. They assume that the poor do not want handouts; they want viable jobs so that they can pull themselves up into the middle class. By making the economy efficient and productive the reforms will create jobs, growth, and the middle class. Our politicians need to understand this, and proclaim from the rooftops: "The reforms are not anti-poor!" Meanwhile, the experts in the academia, the NGOs, and the development institutions need to dig deeper into the explosive growth in our middle class to gauge the success of the reforms (and not be mesmerised by our controversial poverty figures). Finally, let us remember what Aristotle said: "The most perfect political community is one in which the middle class is in control and outnumbers both of the other classes."

THE TRUTH ABOUT KERALA 18 June, 2000

Ever since Amartya Sen we have come to believe that Kerala is a model of successful government policies in education. We avidly read V.K. Ramachandran's essay on Kerala's achievements in Indian Economic Development-Selected Regional Perspectives, edited by Sen and Dreze, and we discovered that the communists at least educated their people. We concluded that the answer was for the state to raise its spending on education and everything would look after itself. Thus, our battle cry throughout the 1990s was to lift India's spending on education to 6 per cent of GDP. Now we learn that we were wrong. Digging deeper we have found that the real reason for Kerala's success lay not in government policies but in community action. The initial spark for the spread of education began more than hundred years ago with the Christian missionaries who set up the first modern, open-to-all schools in the old state of Travancore. This spurred the Nairs, led by Mannathu Padmanabhan, to set up a vast number of community schools. Muslims and Ezhavas did not want to be left behind and they followed the example. Kerala's community initiatives also led to the famous reading room movement and libraries came up in the smallest villages. After Independence the Left parties unionised the teachers, brought the schools under state control, and forced the government to pay their salaries. But even today 65 per cent of Kerala's 12,400 schools are in private hands. The lesson from Kerala is that success in education usually comes from private and community efforts, and not from the state. Americans have learned the same lesson. Their best schools are in communities where parents are involved and Parent-Teachers Associations are strong. Even a few volunteers can make the difference. Wherever this American idea of community initiative been tried, such as in gram shiksha samitis in Madhya Pradesh and Andhra or by NGOs in other parts of India, it has made all the difference-despite enormous opposition from the bureaucracy. We have learned from painful experience that the state is highly inefficient in providing education, just as it is inefficient in producing steel, watches, power, or banking services. The Indian state spends Rs 3000 per child per year in primary education, but a third of our children are illiterate. Teachers earn Rs. 10,000 to Rs. 15,000 per month but a shocking number don't show up in classrooms. The ones that do are uninspired and pour rote learning into students. The reform of Indian education has to begin with the conviction that schools have to become accountable to parents and neighbourhoods instead of to bureaucrats at state capitals. We have to fight for the autonomy of our schools and make teachers responsible to parents. Since the state has failed as a producer of education, its role should change to one of enabler. Parth Shah in his Agenda for Change suggests that the state should completely get out of classroom teaching and NGOs or panchayats or the private sector should run schools and charge fees. The state should give parents coupons worth Rs 3000 per child per year. The central idea is competition among schools and choice for parents. If their neighbourhood school is bad they should be able to move their child to a competing school. Some schools will charge the basic price of Rs 3000 a year; others will charge more and offer higher quality education; and some parents will be willing to supplement coupons with their own funds. Thus, schools will compete for students and become innovative in providing better education. Parents will be empowered, teachers will be forced to become 'customer friendly' and Indian education will blossom. This may sound radical but the idea of putting parents in charge of the Rs 3000 per child per year that we spend on education today is sensible. The key is that we don't need to increase spending to dramatically improve the quality of education. But will our parents return the compliment and get involved in Parent-Teacher associations? I think they will because they want their children to get ahead. Murali Manohar Joshi, our minister for human resource development, thinks that education is about Saraswati Puja, packing research bodies with saffronites, and deleting Marx from history books. All of this has nothing to do with educating our young. He should be aware that in the 21st century winners will be divided from losers, not on the basis of capital or natural resources or skin colour. They will be divided on the basis of useful knowledge. This applies to individuals and to nations. Hence, smart nations are racing to reform their education systems, and we too should bring education centre stage in our second phase of reforms.

ONCE AGAIN, DEMOCRACY VERSUS CAPITALISM 30th July, 2000 

It is the height of our monsoon season, the air is heavy with dampness, and our reactions are slow. Fortunately, our economy is moving nicely it continues to be among the fastest growing in the world which is why it is so difficult to understand the behaviour of our capital markets. Our weakness, however, is governance. This is ironic, for we have had much greater experience with the institutions of democracy than of capitalism. We began our schooling in democracy fifty years ago, but we did not give a free play to the market until a decade ago when our reforms began. Yet, governance at all levels is appalling, all our states are bankrupt, and our confidence in government institutions is at its lowest. We need both economic growth and robust political institutions to be a successful nation. Although we now rely more on markets, we still need clean and efficient civil servants to regulate them. The slow pace of the reforms is also a symptom of the weakness of our politics, which allows vested interests to hijack policies for the common good. Politicians blame our failures on the reforms and the ordinary person confuses the ills of government with those of the market. At the best of times it is difficult to appreciate the market system. Over the centuries human beings have dealt with the problem of survival through tradition or command. They organised society around custom and usage, the son following the occupation of his father from generation to generation. Adam Smith tells us that in ancient Egypt, every man was bound by a principle of religion to follow the occupation of his father. In India, as we well know, our caste system assigned us occupations in the same way. The whip of authority has been the other method of organising the jobs of society. The pyramids of Egypt and the temples of India were built by the command of pharaohs or maharajas. More recently, the Five Year Plans of the Soviet Union were carried out by the command of the Politburo in the same manner. It is only in very recent times that human beings invented a third solution to the problem of making a living. Called the market system or capitalism, it gives individuals the freedom to follow their inclination to do what is in their best interest. And the lure of gain (not tradition or authority) steers a person to his task or occupation. And yet in this interplay of self-interested individuals, the tasks of society get done by an invisible hand, as Adam Smith called it. Because it is invisible, this system is more difficult to grasp. It lacks the simplicity of custom or command, which are visible for everyone to see. It is harder to understand how a society can function or how the dirty jobs in society get done cleaning toilets, for example if there is neither a ruler or tradition to command it. Banias and bazaars have been around for thousands of years, ever since there was an agricultural surplus. Historians tell us that this began between 8,000 BC and 10,000 BC, when the first towns emerged as centres of exchange. But markets are not the same thing as the market system. For one thing, it requires that money making be regarded as respectable, and we know thathistorically, commerce has had a bad odour in all societies, including India. Although we see today the wondrous spectacle of thousands of young Indians, starting new business ventures all around us, the idea that their struggle for personal gain might actually promote the good of the whole society is too bizarre for most people. Even the most sophisticated Indians distrust the market because no one is in charge. Hence, politicians find it difficult to win votes by appealing to economic reforms. No wonder Samuel Johnson said, There is nothing which requires more to be illustrated by philosophy than trade does. Democracy, in contrast, is easier to understand, but it is more difficult to achieve. Capitalism is easier to achieve (because exchange is natural to human beings) but more difficult to understand. The irony in India is that we have established the more difficult political institutions of democracy over the past fifty years. But it is the younger institutions of capitalism that are currently more successful. Sadly, it is our political institutions of governance that are letting us down. The lesson in all this is that we cannot take democracy or capitalism for granted. Neither do they necessarily go together, even though they have human freedom in common.

THE USES OF NATIONALISM 27 August, 2000 

For good or for bad we have a nationalist government in power. Nationalism is generally not a pleasant virtue and the world has grown rightly suspicious of it after all the damage it has inflicted during the last two centuries. Nationalism drove the European nations to colonise the world; it made Germany and Japan militaristic and this caused two world wars; it led to the murder of six million Jews in the holocaust. These were terrible tragedies of nationalism. However, nationalism also has its uses when a nation is young. It can help a country modernize and develop with a sense of urgency as Japan did after the Meiji Restoration in 1867-1868. It can help a people to unite to throw out a foreigner as India did in the years before Independence. Nationalism can also help a country become cohesive, which is useful for a diverse and plural country like ours. We have suffered heavily in the past because we were disunited and did not act as a team. India was lost, first to Babur and then to the British because of parochial quarrels and intrigues among our divisive rulers. Independence too might have come a dozen years earlier if Gandhi, Nehru and Jinnah had been able to work together as a team. Bernard Lewis once observed that "when people realize that things are going wrong, there are two questions they can ask. One is, 'What did we do wrong?' and the other is 'Who did this to us?' The latter leads to conspiracy theory and paranoia. The first question leads to another line of thinking: 'How do we put it right?'" In the second half of the nineteenth century Japan asked itself "How do we put it right?" Contrary to what many believe Japan was not always unified. Before the Meiji revolution the feudal Shogunate was divisive. There were dissension and dissents, often violent. The lords of the great fiefs of the Far South and the West, once enemies, finally united against the Shogunate. After the emperor replaced the shogun, the Japanese decided to become one, under the slogan. "Honor the emperor!" The second thing they decided was to catch up with the West. So, they hired Western technicians and sent Japanese agents abroad to learn Western technology. They did not complain. Japan began to modernize by sending a high level delegation, including Okubo Toshimichi to Europe and the United States, visiting factories and schools to learn how the West had modernized. The delegation returned to Japan after two years "on fire with enthusiasm" to reform. One of the reforms that it implemented with characteristic intensity was to give universal schooling to boys and girls. The schooling imparted knowledge but it also instilled punctuality, discipline and a sense of national unity that helped create the modern Japanese personality. In contrast, Latin Americans and some Indians complained. They said that our poverty and backwardness were the misdeeds of world capitalism. Multinational companies replaced the colonial rulers in their script. Raul Prebisch, the Argentine economist, who created the "dependency theory," argued that poor nations would always remain dependent on Western nations because of unequal terms of trade. After the Asian miracle in the 1980s this second rate theory was rightly discarded. It is always easy to blame the "Other". It feeds into the hands of narrow nationalists who want India to return to isolationism and become a cocoon economy once again, cut off from competitive stimuli and opportunities for growth. Our nationalist government should reflect deeply on Japan's experience with modernity. It will quickly realise that the first thing it must do is to redefine its nationalism and become inclusionary and shed its antipathy for the minorities. The idea is not to be Hindu but to be Indian. Only then will it realize the power of national unity. Meiji Japan did the job so well that Japanese teamwork has become the envy of the world. Next it should be "on fire with enthusiasm" to reform the economy like Okubo Toshimichi. Third, it should with equal intensity overhaul our education system and not only ensure education to all Indian boys and girls but improve its quality. Finally, it should remember that all nationalisms run the risk of becoming militaristic and it should create powerful safeguards against that eventuality, including giving up the nuclear bomb in a negotiated settlement with Pakistan and China. Only thus will India realize the positive benefits of nationalism. If it were my world I wouldn't have nationalists, but since it isn't, the second best thing is to make the best use of what we have

THE LIBERAL FALLACY 10 September, 2000 

I find it difficult to understand why there has been almost no appetite for education reform in India when there is universal consensus that education is not only good in itself but it also helps a nation to become competitive. It is just as incomprehensible that India, which followed a socialist path before 1991, progressed so slowly in education over its forty socialist years. After all, education is one of the few things that socialists around the world generally did fairly well. My historian friend, Sabyasachi Bhattacharya, reminds me that I am guilty of the liberal fallacy--that is, I naively assume that reasoning will prevail over interests. Hence, I tend to get surprised when the opposite happens too often in the real world, whether in democracies or autocracies. The road to power is through satisfying interests, Jeremy Bentham tells us. It is not enough to point out what the wrong policies are, as liberals tend to do, but one has to go beyond the irrational policies and trace them to the interests--both economic and political. The agenda of the state is set by interest equations and the discourse of knowledge is effective only to the extent that it is congruent with the discourse of power. Reasoning about right and wrong policies, while not entirely irrelevant, is of limited use if one's agenda is, in fact, to shape a new reality. India's democracy has an overwhelming majority of poor voters. This too makes a difference to the way things work. The journalist, T.C.A. Srinivasa-Raghavan, points out that in the long run the forces that drive markets and democracy will converge; in the short run these forces often tend to pull in opposite directions. Since politics is a short run game and growth is a long run one there will never be a situation that is completely optimal, with the result that at every point in time most of the people will be disappointed. Hence, no one bothers about education because results take a long time to come. When a politician promises rice for two rupees a kilo when it costs five, he wins the election. N. T. Rama Rao did that in the 1994 state elections; he won the election, became the chief minister, and went on to bankrupt the state treasury. He also sent a sobering message to Prime Minister Narasimha Rao in Delhi, who slowed India's reforms because he realized that votes resided in populist measures and not in doing what is right for the long term. Since the 1980s politicians have vigorously competed in giving subsidized electricity to farmers--in Tamil Nadu and Punjab, they have actually given it away free. When politicians do that, where is the money to come from for creating new schools or improving old ones? But there are now some signs of hope. At least two reforming chief ministers might have won their elections as a result of reforms. Digvijay Singh in Madhya Pradesh opened schools with vigour and made them accountable to village panchayats. Chandrababu Naidu in Andhra, among other things, turned over the management of water to its users in villages; he also raised electricity rates to farmers and brought transparency in governance through the use of information technology, much to the annoyance of his bureaucracy. It is exceedingly important for political scientists to study these two elections and tell us exactly what happened. If it is true that the reforms won the elections, then it might embolden political leaders in other states to pursue education and economic reforms. George Bernard Shaw wrote, "Reformers have the idea that change can be achieved by brute sanity." He was telling us the same thing--reformers must create a coalition of interests behind sensible policies if they want to succeed. This seems to be happening in many countries. Politicians everywhere are realising that their countries will be left behind in the globalised knowledge economy unless they improve their education systems. In the United States, both candidates are competing to demonstrate to American voters that if elected they will undertake the biggest education reform in American history; to prove it, they have each visited over a hundred schools since their campaigns began. Recent surveys show that mothers in India, including the poor, also understand that the passport to their children's future is good schooling. They seem to care more about literacy than promises about free electricity and two rupee rice, which they know to be false. This may be why they have been booting out the incumbent politicians at regular intervals. Now is the time for our geriatric political class to get smart, tap the huge unsatisfied demand for schooling among voters, create a coalition behind education, and start winning elections

OF LIFE AND DEATH 24 September, 2000 

Early this month I read in the papers that a celebrated and attractive couple had killed themselves in Bristol, England in a death they had planned for forty years. It was a tragic and haunting love story: the wife had terminal cancer, and instead of being divided by disease the couple chose to be united by death, taking a lethal overdose and breathing their last in each others arms. The news item caught my eye because one of them, Stephen Korner, was the author of a book on the German philosopher, Immanuel Kant that I read as an undergraduate in college. The book had made me reflect on my own beliefs about right and wrong and had taken away some of the pain of reading the almost unreadable Kant in the original. Ironically, Kant had argued that it was wrong to take one's own life. I discovered from Anajana Ahuja's moving account in the London Times that this was not an ordinary couple. They were both handsome and brilliant. They had fled to Britain from Czechoslovakia, met in London, and married during the war, and then rose to distinguished positions in British public and academic life. She became a pioneer in the National Health Service and an eminent magistrate and he a famous professor of philosophy. When their daughter was twelve they told her about their suicide pact. It was an unusual conversation to have with a child, but the Korners had always treated their children as adults. Their daughter grew up to become a molecular biologist and married the Noble laureate, Sidney Altman at Yale. When the suicide finally happened, the daughter was devastated. Her parents had left a note for the police and Schubert's Trout Quintet, their favourite music, was played at the funeral. She exclaimed that no one should ever emulate her parents. Suicide is an old subject and people have debated it over the centuries. In recent years, however, it has acquired significance because modern medicine has made it possible to live far beyond one's useful life. Doctors can keep one alive even when all other organs have stopped. This has raised the question of social cost. Experts calculate that sixty per cent of Western society's health care costs occur in the last nine months of a person's life. Is it fair, people ask, to prolong someone's life at the expense of the rest? Activists of the "right to die" movement strongly advocate that a person has the right to end his life rather than face the indignity of life support systems at a hospital. This issue has got connected in America to the debate on abortion, where "pro-choice" liberals support the individual's right to choose to have an abortion; the "pro-life" conservatives counter that the foetus is alive, and they would jail the mother for terminating a pregnancy. One of my readers, Dr. Pankaj Shah, an orthodontist in Rajkot, has written an unusual letter. Many of mankind's problems, he says, would be solved if men and women were to know their date of death in advance. They would plan their life better, would not indulge in misdeeds, become religious, and love their families and friends. However, Dr. Shah says that his friend doesn't agree. The friend says that on his last day he would get an AK47 and finish off not only his enemies but all the politicians. As a liberal, I certainly think that a person ought to have the right to commit suicide. It is his or her life after all. The stigma that attaches to suicide in most societies is unfortunate. But, perhaps, it would go away if the legal framework were changed. In the abortion debate I am also strongly pro-choice, and I think it is disgraceful that the extreme right in America has forced this onto the Republican agenda. As a social democrat, I could never vote Republican, in any case. Neither do I have a desire to live a long life-and certainly not in the humiliating surroundings of hospital. I have always desired a short and intense life. Like most people, I would prefer to die a natural death. But if it meant prolonging life unnecessarily I would not hesitate to pull the plug. Yet, I am a conservative when it comes to re-engineering human beings. I like people as they are--with their foibles. Like George Kennan, I wouldn't want human beings to be perfected or tampered with. (Sorry Dr. Shah!) Who knows what we might unleash if we started on that genetic route? I'd like human beings to remain "cracked vessels" in Kennan's words or "crooked timber" in Kant's famous description. In the same vein, I would resist attempts by science to meddle with our imperfect weather.

THE WILL TO LIVE 8 October, 2000 

The Korners' suicide last month, and my column on it, has brought an unusually large amount of mail, and some phone calls, as well. My mother admonished me, saying that no one has the right to take his life-it is God's gift, she says. Another reader reminds me that one's life is not one's own, but it also belongs to one's family and society. If one commits suicide, then not only does one place one's parents' old age in jeopardy, but also infringes on the rights of one's children and grandchildren to whom one owes the sharing of one's lifetime of experience, thereby ensuring that culture is passed on. The most moving letter came from Gujarat, and it reminded me of King Lear. After leading an honest life and discharging his obligations, my middle class correspondent retired to live with his children. But now he finds that he is unwanted by his children for whom he sacrificed everything. He feels humiliated and wonders if it might not be better to opt for mercy killing. There is but one truly serious problem, wrote Albert Camus, and that is suicide. Judging whether life is worth living or not amounts to answering the fundamental problem of our existence. Since the beginning people have debated whether it is natural or perverse to escape from life's difficulties. As for me, I have come to believe like Montaigne, that to die well requires greater moral stamina than to live well. Heroism consists in facing death with equanimity, and this reflects the highest qualities of a well-resolved life. I want to comfort my letter-writer and tell him that human life is the mystery of undeserved suffering. The innocent always suffer. This is not only the central problem of the human condition, but it also gives birth to tragedy. I commend to my Gujarati friend Nietzsche's famous definition of tragedy: "a reaffirmation of the will to live in the face of death and the joy of life's inexhaustibility when so reaffirmed." Nietzsche had Greek tragedy in mind, especially that of Aeschylus, the first writer of tragedy, who revealed to the world the strange power that tragedy has to present suffering and death in such a way as to exalt and not to depress. The ancient Greeks had a wonderful ability to see the world clearly and think it beautiful at the same time. They thought freely and deeply about human life, without the burden of religion and priests, and were willing to confront the giant agony of the world. In India, the Buddha also saw that the world is made up of individuals, each with a terrible power to suffer and there is this awful sum of pain in the world. His solution to sorrow was to turn inwards and deny our everyday world of experience. The Greeks were aware that injustice was built into the nature of the world, but they dealt with it in the spirit of enquiry and poetry. And when enquiry met poetry tragedy was born. We tend to misuse "tragic" in everyday discourse. We confuse the word with disaster. Tragic pleasure, as the Greeks knew it, and as Aristotle defined it, is the emotion of pity and awe, which purges and purifies us in the end. The result is a feeling of exaltation that Nietzsche spoke about. Aeschylus' Prometheus is an innocent sufferer, who passionately rebels and defies the gods and the powers of the universe. To the messenger of the gods who bids him to yield, he replies that he cannot, just as the wave in the sea cannot fail to break on the sand. With these last words, the universe comes crashing upon him, and he proclaims, "Behold me, I am wronged!" Thus, the tragic poet shows us that mankind can meet disaster grandly, forever undefeated. The same is the case with Sophocles' Antigone, the high-souled princess who goes with open eyes to her death rather than leave her brother's body unburied. Rather than give in to her uncle's unjust law, she cries out, "Courage! The power will be mine and the means to act." In another play, Euripides' Trojan Women, Troy has lost the war to Greece and a handful of women are waiting for the victors to carry them away to all that slavery means for women. The Greek messenger comes to tell the Trojan queen, Andromache that her son is to be thrown from the wall of Troy. She says to the child: "Go die, my best beloved…" When we see Prometheus, Antigone and Andromache on stage, we feel pity and awe; as we identify with their defiance and affirmation of life, we feel purified and freed and better able to face life and death.

THE ENEMY IS INSIDE 22 October, 2000 

ur old family companies are woefully depressed. What a contrast to the heady days after 1991 when they were exhilarated-finally, they thought, their day had come. Now, no one gives them respect. The stock markets have punished them, and any corporate raider lurking in the dark can take over their company at a fraction of its book value. The raid on Mr. Nusli Wadia's Bombay Dyeing has sent a shiver. The economy, too, has irreversibly changed from a sellers' to a buyers' market and is moving, like the rest of the world, from manufacturing to services. Globally, competitors have increased the gap by re-engineering, downsizing, and other harsh measures. Many of our industrialists' problems are, unfortunately, of their own making. For the past decade they have been screaming for protection against foreigners when all along the enemy was inside. The fault is not with external liberalisation-our import duties are still among the highest in the world. The real problem is that India is still not a good place to do business. And the reason is that we have not had enough domestic reform. Indian companies do not have the freedom to downsize, restructure and close companies. Our road transport is hugely inefficient and expensive, but there is no alternative because railways are even worse. Truckers can put up with bad roads but not with the delays and bribery at octroi and police posts. Thus, it costs more to ship some products from Haryana to Mumbai than from Mumbai to London. Industry would not mind our absurdly high cost of power-as high as Rs. 6 per unit-but it is unreliable and leads to work stoppages. Fortunately, thanks to the Prime Minister, we have substantially reformed our telecom, but we shall not have quality communications until the timid TRAI decides to protect the consumer rather than DOT. At a 13% prime leading rate, our cost of capital is 50 per cent higher than it should be. Most Indians cannot begin to fathom how we have suffered from reserving more than 700 industries for the small-scale sector. Our policy rewards a small manufacturer for remaining small and prevents him from achieving economies of scale. Ironically, Chinese small industry is sweeping the world because their policy encourages them to mechanise, grow, and become large. Foreign buyers give credit and take equity in small Chinese firms and focus them on exports. Our competitors don't have to put up with our venal "inspector raj." The excise inspector frivolously hauls up industrialists. The customs inspector stops their shipments for insufficient reason. Even software exporters suffer because labour inspectors walk into their offices and demand a bribe in order to allow their employees to work more than eight hours a day. The factory inspector challans them up for not whitewashing their staircase. This harassment is a terrible distraction for top management, especially in smaller companies. Whereas our competitors are focused on building customer relationships and supplier networks our top managers continue to worry about the "midnight knock". Other countries also suffer from corruption, but nowhere does it lead to inefficiency the way it does in India. Foreigners say that it takes nearly twice as long to start a factory in India than it does in other countries. When asked why his company preferred Malaysia to India as an export base for the manufacture of electronic products, a multinational executive bluntly replied that India is still not reliable because of uncertainties and delays related to customs, excise, power, octroi, and a host of bureaucratic hassles. Hence, smaller countries like Vietnam, Thailand and Malaysia receive more foreign direct investment that we do. Of late, people insistently ask why Indians are doing so well abroad and foreigners, including the largest multinational companies, are doing so poorly in India? The answer, I am afraid, is that India is still not a good place to do business despite a decade of reform. Hence, our ranking is 49th out of 59 countries in the Global Competitiveness Report 2000. The irony is that the BJP recognised this in its last election manifesto and promised vigorous domestic reform, but our own industrialists, backed by swadeshi-wallas diverted its attention towards protection. The lesson for our industrialists is blindingly clear-the next time you are tempted to open your mouth to complain about foreigners and imports, stop; take a deep breath; instead of asking for protection, ask the government for domestic reform. Every well-meaning swadeshi person that wants his nation to be great should stop whining about multinationals and demand domestic reform. There are no shortcuts to creating competitive advantage-you have to become the lowest cost producer, make outstanding products, and give unsurpassed service. But Indian business will only be able to rise to that challenge when we conquer the enemy within.

ANOTHER REVOLUTION IS COMING 5 November, 2000 

What wondrous times we live in! A bolt of rationality seems to have struck the planet, and our world is beginning to turn into a freer, democratic, and a more humane place. More than fifty per cent of the world's people live under market based democracies today compared to less than twenty per cent in 1975. The liberal revolution that is sweeping the world is being fed in turn by a series of technological revolutions. In the 1980s it was the telecommunication breakthroughs which destroyed the old state monopolies and are liberating us from state control. In the 1990s it was the Internet which is leading to a digital economy. Now, we are on the verge of an electricity revolution, which holds the promise of producing power, quite literally, in every backyard over the next two decades. In a recent cover story, the Economist described dramatic breakthroughs in "micropower" technology, which will allow the generation of clean electricity from small fuel cells and small gas turbines. Because of large inflows of venture capital funds (estimated to be $800 million dollars in 2000) and the involvement of multinationals like GE and ABB, micropower could soon become a commercial reality. Experts predict that the world market for these backyard generators will be $60 billion a year in a decade. Localised power generation has finally become economically competitive, partially because there are few transmission losses since power does not have to travel across distances. The biggest advances have come in fuel cells, which consist of two electrodes separated by an electrolyte; in the cell hydrogen combines with oxygen from the air to produce power; and water is the only waste product, much to the joy of environmentalists. Companies working on this technology expect that the cost of these fuel cell systems will come down to Rs. 25,000 per kw within eighteen months compared to Rs. 50,000 per kw currently achieved by coal-fired power stations around the world. The second advance is in micro-turbines that are powered by natural gas. Because these turbines have only one moving part-a compressor-cum-rotor that moves at very high speed-it now costs only one-third of the running cost of a comparable diesel generator. The third advance is in photovoltaic solar cells where high equipment costs have so far hindered commercialisation. Here, too, costs have finally come down to a fourth of what they were twenty years ago and are likely to further decline because of breakthroughs in making silicon wafers. Solar energy is everyone's dream fuel because it is clean, reliable, and the fuel is free. The whole world will benefit from the electricity revolution, but India will be one of its biggest beneficiaries, because we have failed to deliver decent conventional power. Before we can be worthy of this revolution, however, we have to do further reform. We have to allow private trading of power for every "backyard" generator will produce more energy that it needs. Even today, many of our power plants have surplus power at various times. But government holds the trading monopoly and it is making a mess of it. A smart trader would hustle, make forward contracts and take risks and a spot and futures market in energy would develop. By recently refusing Enron permission to trade in power, the government has lost a huge opportunity. Power trading entails taking big risks, and bureaucrats are incapable of taking risks. Instead of becoming a trader, the government should run a "power stock exchange", which allows buyers and sellers of power to transact in an orderly manner. The promise of micropower should not slow our resolve to implement our current power reforms. Unlike in telecom and insurance, where there is light at the end of the tunnel, power reforms have failed to take off. The key is to privatise distribution, and some states are indeed moving forward--for example, Orissa, Karnataka, Andhra, Delhi and Maharashtra, and U.P. The other states may soon go dark if they don't act. Unless politicians learn to say "no" (to free or cheap power for farmers) and bureaucrats learn to say "yes" (to liberalising and creating a free market for distribution, generation, transmission and trading of power) there will be little hope. Most of the world is currently liberalising its power markets. Roughly half of America's states have broken power monopolies and created competition. As energy markets liberalise, consumers are winning the right to select their suppliers. The next step is energy trading and spot markets as hundreds of micropower units will get linked together in microgrids. ABB is currently building microgrids that will be operating by 2001 in Europe and America. Just as competition in telecom has led to furious investment, jobs and innovations in India and abroad, the same should happen in power.

THE WATER OF LIFE 19 November, 2000

"It has no taste, no colour, no smell, no definition in fact, yet it is life itself," wrote Saint-Exupéry on the wonders of water. What could be more fundamental to life? Yet a third of our people do not have access to safe, drinking water, and this is the most damning measure of our failure. And the main reason is the myth that water must be free. Because we get it so cheaply we tend to squander it. The myth in our collective unconscious harks back to an idyllic past when few people inhabited the earth and they would drink from the streams. Hence, the Biblical saying, "Whoever will, let him take the water of life freely." Today we are a billion people and it costs money to bring water to people. Unless we learn to pay what it costs, we will continue to waste it. The controversy over the Sardar Sarovar Dam has recently focused attention on the charmed liquid. I shall not enter into the dams' debate today, but only point out that we need large storage spaces because water flows unevenly in rivers. During the rains river basins overflow and run off. In the dry months the flows slow down. But people need water year round; hence, storage of river water is a necessity, especially as our need for water is expected to double over the next fifty years. The answer to the Gujarat dam is to resettle the 41,000 displaced families brilliantly and get on with the job of creating more reservoirs in the future. There is a saying that we never know the value of water till the well runs dry. The starting point of the political economy of water is to appreciate that we are running out of fresh water and the greatest scarcity in the 21st century will be of water-not of oil or fossil fuels. The second point is to acknowledge that we waste much of our water today. Despite great shortages in many parts of the country we do not meter homes or farms so there is no incentive to turn off taps or pipes. Worse, we charge only a fraction of what it costs. Though our local governments spend thousands of crores on water, the main benefits flow to the middle and upper classes while the poor rarely get piped water. Our wonderful old canal systems are falling apart because water rates to farmers (like electricity rates) are so low that there is no money to maintain the canals. Because of these subsidies farmers over-pump ground water to grow water guzzling crops like rice and sugarcane. Cheap water is inevitably overused and this has turned vast stretches of land into water logged and saline wastes. Economists have always argued that subsidies are bad. Subsidies distort prices in the whole economy, send wrong signals to producers, who go on to produce the wrong things. Subsidies also eat away funds meant for investment in infrastructure. Worse, the benefits of subsidies go mainly to the rich and the middle classes. Thus, it is always better to give money or vouchers to the poor rather than subsidise products and services. The answer is price to water properly to reflect its true cost. Once this happens, people will conserve it. It will also attract efficient private firms to invest in improving water delivery and give access to safe drinking water to many more, including the poor people. The poor will pay for water-even today they often pay while the rich get it free. Private supply of water may seem radical, but in France private firms have managed water for more than a century. Britain handed over its water assets to private companies a decade ago. From Indonesia to Mexico, private firms are helping governments to improve bill collections, reduce leakage, and expand water supply to the poor. Buenos Aires has recently handed over its water works to a private company, which invested $1 billion to upgrade equipment and this has given water to 1.6 million additional people without significantly raising water rates. Where did the money come from? From cutting out the huge, corrupt and costly municipal bureaucracy. Country after country is learning that it is easier to get efficiency and good behaviour from private companies than from its own bureaucracy. Besides, governments today do not have the funds to improve water supply. Private companies, on the other hand, have the money and the management skills. The answer, then, is to begin the liberalisation of water. This means that we must transfer the management of water from populist politicians and corrupt bureaucrats to professional managers. If we learn from the best practices in the rest of the world we too will begin to give our thirsty the fountain of the water of life.

WILL JUSTICE PREVAIL? 3 December, 2000

I have always believed that individuals make history rather than other way around. Our Green Revolution would not have happened without C. Subramanium's wilfulness. England would not have possessed Bengal without Clive's stubborn wish to teach Siraj a lesson. In the same way, the Lok Adalat in Chandigarh would not have cleared 20,000 court cases in 17 months without S.K. Sardana. And, the Supreme Court would not have disposed of 76,000 cases in 12 months were it not for justices Venkatachalliah and Ahmadi. We have long despaired over judicial delays, but we did not know how bad things were until Bibek Debroy, an economist, collected the data. Soon after the 1991 reforms, we began to realise that a market economy could not succeed unless contracts between buyers and sellers in a free market could be speedily enforced in the courts. Debroy headed a project in the Ministry of Finance and discovered that the backlog in our legal system is more than 25 million cases. It takes up to 20 years to settle a dispute, and it would need 324 years to dispose the backlog at the current disposal rate. 1500 out of 3500 central laws are obsolete and should be scrapped, and half the 30,000 state laws as well. Digging deeper, Debroy found that things were not quite as alarming as they first seemed. He found that the average civil case is, in fact, settled in two years once you exclude tax disputes, land and tenancy quarrels and government to government litigation. When the VAT comes into force, the tax area will come under control. With computerisation of land records, land disputes too will get sorted out eventually. What has shocked the nation's conscience is that the main culprit behind judicial delay is the government, which appeals automatically all judgements and proceeds to lose them again. Thus, it crowds out the private individual. This happens because the decision to litigate is made at the lowest level in the bureaucracy but the decision not to litigate is made at the highest level. If this process were simply reversed, government litigation would come down. Pressure is building to punish bureaucrats who launch frivolous litigation, but nothing will come of it because of poor accountability. Another practical solution is to remove the disputes between government departments and settle them outside the court system. This was agreed, in fact, in the 1994 conference of state law ministers. Lawyers are the other reason for judicial delay. They have been fighting the amended Civil Procedure Code. It is not ideal, but it will speed up the system. It permits summons to be sent by registered post (rather than via a corrupt bailiff); it introduces pre-trial hearings, which disciplines both lawyers and judges; it shortens verbal arguments in favour of written submissions; it reduces adjournments, and speeds up post-trial decree. The new code has passed both houses of parliament, and if Mr Jaitley is courageous and honourable, he will notify it immediately, and score six runs for speedy justice. How did Lok Adalat Sardana and chief justices in the Supreme Court achieve their miracles? First, they computerised the cases. The computer found that most pending cases were related. The chief justice then made the judges specialise-e.g. all environmental cases went to justice Kuldip Singh. Computerisation ensured that all related cases were scheduled on the same day. If the Supreme Court can do it, so can the High Courts. Wilful Sub Division Magistrates (SDMs) can also achieve the same miracles in the lower courts. Why don't they just do it? S.K. Sardana also discovered that the computer was his best friend. He found that most of the 100,000 cases pending in the union territory related to landlord-tenant, motor traffic, and divorces. He brought together retired judges and social workers, gave them desks, called in the feuding parties and they conciliated and mediated between them. Since lawyers were the reason for delay, he forbade lawyers and court processes, and pressured the parties to reach a voluntary agreement, which was final and could not be appealed. In the same way, mediation has dramatically reduced the backlog in Andhra, indirect tax cases in Tamil Nadu and land cases in Gujarat. We have Lok Adalats in most states, and if S.K. Sardana can do it, why can't they? I have learned from long years in business that it is not intelligence but will that moves the world. The more you believe in a thing, the more it exists. If we want justice to prevail we need wilful men like Sardana, Venkatachalliah, and Ahmadi. Better still, hundreds of SDMs across India should say, "we too can do it." Remember, the feeling of injustice born of delay is insupportable to the human spirit and when justice does not prevail the judge is condemned.

STOP THIS WICKED BILL 17 December, 2000 

The principle of competition, Hesiod pointed out long ago, is built in the very roots of the world. There is something in the nature of things that calls for a real victory and real defeat. The competitive spirit is at the heart of a vibrant economy, and it is precisely what we have been trying to foster through our economic reforms. In the end, competition guarantees individual liberty far better than laws or regulators. Now a Competition Bill is being introduced in Parliament this winter for fostering competition, but ironically, it will result in having the opposite effect. With all good intentions, it wants to ensure that no company becomes dominant in the market and abuse its monopoly power. The bill gives a proposed Competition Commission the power to investigate any acquisition or merger between companies whose combined assets exceed Rs. 1000 crores or turnover exceeds Rs. 3000 crores. According to Omkar Goswami, 144 of our listed companies already exceed that asset limit, and among them are our best companies, the very ones with the potential for building infrastructure and competitiveness. The Commission can also investigate an acquisition by an "industrial group" whose assets exceed Rs. 4000 crores. The bill has revived foul memories of the MRTP days because it gives "experts" (read retired bureaucrats and judges) once again the power to decide the fate of our successful companies. They will be able to stop, for example, companies like Reliance or Infosys from acquiring other Indian or foreign companies to become competitive in the global market. Mergers are an essential part of a vibrant economy and they are just beginning to bloom in India. They are already subject to clearances under SEBI's take-over code and the Companies Act. Do we really need a third hurdle of a Competition Commission? If we are worried that an Indian company may become monopolistic, the simple answer is to protect the consumer by opening our markets to imports and lowering tariffs. We live in a global economy and market dominance can no longer be measured in simplistic terms. We are also a small economy-a little larger than Belgium-that has only recently found its path to growth. Only growth will help us to escape from poverty, and growth will come if we allow our companies to grow larger and efficient so that they compete in the world. The new bill will only cut them down. Fifty years ago other developing countries envied us because we had robust companies belonging to Tatas, Birlas, and others. But the MRTP commission came and destroyed their drive and ambition. Meanwhile, our competitor countries created giants with global empires. Do we want a repeat performance? People assume that market concentration inevitably leads to monopoly profits (following Bains' work). This assumption has been thoroughly discredited by recent empirical data (including the idea that economies of scale and advertising create barriers to entry for new firms.) Baumol's theory of "contestable markets" reaches the same conclusion. Even where there is only one firm left, its behaviour is not necessarily monopolistic. On the other hand, Stigler has shown that companies inevitably capture government regulatory agencies that regulate them. Thus, a Competition Commission could actually create entry barriers. Having said that, this bill has laudable provisions related to unfair and restrictive trade practices. These are needed, but they can be incorporated in the Consumer Protection Act. We don't need another bureaucracy for that. America, with its giant multinationals can afford the luxury of chopping down its companies in the name of dominance. It has mature policy makers who can be trusted not to destroy the institutions that create wealth. India's bureaucrats, however, have been destroying wealth for fifty years. This bill could seriously undermine investor confidence. America does not have the same worry--it is the investment destination of the world. It was able to withstand Microsoft's shock. But our investment confidence is fragile. As it is, we do not receive enough foreign investment, and a poor judgement by the Competition Commission could totally undermine our frail edifice. The only benefit, as far as I can see, of this law is to reassure people who are opposed to liberalisation. But a law that could undermine our fragile companies, stifle liberty and prosperity is a huge price to pay for this reassurance. It is sad! Here is a huge country with a potential to grow 10 per cent a year, and it is held back because it gets diverted by irrelevancies like competition laws. India should focus single-mindedly on growth. It should concentrate one-pointedly on fixing infrastructure, liberalising agriculture and reforming education. India needs more competition, but a competition law will not create it. It will come from freer trade and an investor friendly environment.

THE INDIAN WAY 31 December, 2000

Tomorrow really is the first day of the new century, experts tell us, but it is also a second chance to sit back and look at the big picture. It is now plausible that India will solve its economic problem in the first half of the 21st century. The problem, of course, is our age-old worry that there is not enough to go around. Some parts of Asia are already affluent and others have seen the light. For the first time in history Indians will also emerge from the struggle against want, and it will not happen evenly. Some regions will get there before others-e.g. Gujarat will be twenty years ahead of Bihar. The reason this will happen is simply a matter of arithmetic. India has experienced five to seven per cent sustained annual economic growth over the past two decades, which has more than tripled the middle class. More recently, population growth has begun to slow, and in 1998 it was down to 1.7 percent compared to our historic 2.2 per cent. Literacy has also begun to climb-it had reached 62 percent in 1997 compared to 52 in 1990. If our economy continues to grow at its current par rate of seven percent for the next two to three decades-and there is no reason why it should not--then half of India (that is, the west and the south) should turn middle class in the first quarter of the century and the other half should get there in the second quarter. If growth accelerates to say eight per cent with greater reforms, then this happy day may well arrive sooner. At that point poverty will not vanish, but the poor will become a manageable fifteen per cent of the population, and the politics of the country will also change. The question is, then what? Once anxiety about making ends meet diminishes, then people's thoughts will turn elsewhere, perhaps to culture. Some believe that by then India, like the rest of the world, will have turned into "McWorld", the phoney and fictitious global culture of American consumerism. I disagree. The Indian way is robust, and has been built into our psyche for centuries. The antiquity of Indian tradition is less impressive than its extraordinary continuity, and this is because it has been able to adapt to alien virtues. We survived the Mughals, the British, and we will survive Coca Cola (although, the latter's challenge is far stronger.) What is the Indian way? An American scholar, John Koller, writes that its central idea (at least, for 85 per cent of Indians) is the possibility of human liberation from our fragmented, finite and suffering existence. It is based on the insight that the basic energising power of the cosmos and of human beings is the same. Because we have an impressive capacity for thinking, imagining, and acting to shape our world, the writers of the Upanishads believed that there must be a link between the dynamic energy of human beings and of the universe. Our world of distinct and separate objects must be manifestation of a more fundamental unity. Initially developed in the Vedas and Upanishads, this idea of undivided wholeness went on to inspire various Indian ways of the Buddha, the Jains, the Yoga systems, and even the Sufi and Bhakti saints. Indians have always known that their gods and goddesses are symbols of reality rather than reality itself. As symbols they point beyond themselves to the ultimate. That is why a Hindu can say in the same breath that there are millions of gods, but only one God. Within a family the father may be attached to Ganapati, an uncle may worship Vishnu, the mother Krishna and the son could be an atheist. In this syncretic attitude originates the spirit of tolerance of the Indian way. Although Indians are fond of rational argument, they all seem to agree that reason is limited when it comes to comprehending the deepest reality. Reason differentiates and compares and is thus a good faculty for exploring the empirical world. It fails when it comes to comprehending undivided and undifferentiated reality. Hence Indians of various persuasions look to meditation and direct insight. We regard our day to day life as superficial and in bondage to the law of karma, which determines mundane happiness, suffering and repeated births and deaths. We can free ourselves from karma in various ways-by knowledge according to Jains, by self-less action according to Gita, by devotion according to bhakti saints and Sufis. Whatever way one chooses, the Indian way is a way to freedom from human bondage based on the wonderful potential for perfection of ordinary human beings. It is also our strongest defence against "McWorld".

MIRACLE IN PATAN 14/01/2001

I was in Kathmandu recently, where I had gone for my nephew's wedding. It turned out to be a warm family affair with plenty of good food and good feeling. This was before the Hritik Roshan episode, and there was lots of sunshine, attractive women, and beautiful clothes. But what took my breath away was the Patan Museum, which is arguably the best museum on the subcontinent with plenty of lessons for us in India. The museum displays the traditional sacred art of Nepal in a wonderful setting. Its home is an 18th century royal palace of Kathmandu's Malla kings, restored lovingly by Gótz Hagmúller and others, with funding from Austrian and Nepali sources. Its gilded door, guarded by two ferocious bronze lions, faces one of the beautiful squares in the world. Inside is an exciting collection of 200 sculptures and objects that transport one into the rich living traditions of Hinduism and Buddhism. This in itself is not exceptional. Many Indian museums are housed in grand buildings and contain equally rare treasures. What is exceptional is the world class presentation, the quality of the display, accompanied by educative commentary, impeccable maintenance and expert management. There is no dust, filth or anything shoddy, which alas, are the defining qualities of our museums. Museums in India are usually run by bored bureaucrats, who don't even have the authority to replace a light bulb. The treasures are poorly displayed, poorly guarded and poorly maintained. They depend on annual government grants, which are eaten up in staff salaries. The end result is that our museums appeal neither to local people nor to foreign visitors. They don't achieve their educational aim or their tourist potential. The creators of the Patan Museum were aware of these pitfalls, and their biggest victory was to convince the government to let it be a semi-autonomous body, with an ability to raise revenues, employ its own staff (not bureaucrats), and manage its pricing policy and budget. Its entrance fees are Rs. 10 for Nepalis, Rs. 30 for SAARC tourists and Rs. 120 for foreigners. It supplements the fees through revenues from an outstanding Museum Café in the landscape palace gardens, which is run by professionals and a gift shop that sells lovely posters, art books, and post cards. The end result is a self-sustaining, world-class museum that attracts 40,000 annual visitors or 5 per cent of all tourist arrivals in Nepal. It has been acclaimed around the world and its growing popularity guarantees it a sustainable, self-reliant future. A decaying old building has won a new lease of life as a cultural preserve that will be Nepal's pride for generations. Now, here is an idea for India's many languishing museums. Some will ask, how can we allow our national treasures to be managed by non-government institutions? Others will protest why do we need foreigners to restore our palaces and design our museums? The simple answer is that museums need people with special skills, a unique knowledge base, and a passion for art history and aesthetics. Museums are public spaces, but they don't have to be run by governments. The best museums in the world, especially in America, are managed as autonomous citizens' trusts. Expertise has no colour, and the issue is not swadeshi versus videshi. The challenge is to get passionate experts to run our institutions rather than bored bureaucrats. To be afraid of foreigners is the sign of an inferiority complex, and Tagore reminds us that "Whatever we understand and enjoy in human products instantly becomes ours, wherever they might have their origin." So, are there high-minded Indians who care enough about their heritage to come together, raise funds in India and abroad in order to upgrade our museums and be willing to convince our government that our museums should become semi-autonomous, self-sustaining institutions? To be sure the cultural bureaucracy will resist, but the truth is that our government doesn't have money. It might welcome a Patan type initiative, which will make our museums self-reliant. Once that happens we can dream of a Gótz Hagmúller to create magic one day in the Chola bronze gallery in Chennai. In these troubled times between Nepal and India, this will be our best compliment to our neighbour. While on the subject I, for one, do not think that Ayodhya needs a new building. But if there is "national sentiment" in its favour, as Mr. Vajpayee believes, I hope it will be a world-class monument to India's multi-faith diversity. I would invite one of the world's top architects--a Frank Gehry, Richard Meir, I.M. Pei, or Charles Correa--to design it. That will do more for Ayodhya's pride and tourism. Recall, Nehru had the courage to invite Corbusier to design Chandigarh. Now, here is another idea, Mr. Vajpaye.

DON'T ROB PRASHANT'S FUTURE 28/01/2001

For the past twenty five years we have owned a small coconut farm in a village in Maharashtra. If this does not make me a full blooded Maratha, it does make me at least an honorary Maharashtrian in my neighbours' eyes. Bhiku, our gardner,looks after our wadi, and we have seen his children grow up nicely over the years. I have always taken a special interest in his eldest boy, and when the Enron power plant came up I confidently predicted thatPrashant would have a shining future. The main obstacle to our village's prosperity is perennial shortage of power, which inhibits commercial activity. Although Enron has made Maharashtra surplus, our village still does not get power on Fridays and brown-outs define our other days. Across the harbour is Mumbai where people get plenty of power, and entrepreneurs set up industries, call centres and software companies and create thousands of jobs every day. Who is robbing Prashant's future, especially when our state now has abundant electricity? Most people blame Enron, and they expend enormous amount of negative energy in blaming the foreign devil for selling expensive power. The truth is that Enron's power is not more expensive than similar new plants. Enron's power appears expensive because Maharashtra's electricity board (MSEB) buys only half the power that Enron can produce and this makes Enron inefficient. If Enron could run its plant full blast, then the cost of its power would be Rs. 4.02 per unit. Even a new thermal plant like NTPC's Kayankulam plant produces power at Rs. 4.50 per unit. Enron's notorious Rs. 7.80 tariff was a fluke for the month of July when MSEB bought only 30 per cent of Enron's power. The rise in oil prices and the rupee's depreciation have not helped, but the main problem is MSEB's inability to buy enough power from Enron. If you buy a monthly train pass for Rs. 100 and use it only once then your journey costs you Rs. 100. But if you use it 100 times then each journey costs Re 1. If you create a fixed asset you should use it as much as possible. Maharashtra's electricity board behaves in this irrational way because it is bankrupt. It doesn't have money to buy Enron's power because it sells power below its cost. If a mango seller buys mangoes for one rupee and sells them for 50 paise, she too becomes bankrupt. MSEB has 13 million customers and of these 11.8 million get power below cost. 9 out of 10 Maharashtrians pay 42 paise per unit and 1 out of 10 pays Rs. 5.40. In addition, many of its customers steal power. Hence MSEB loses Rs. 5 crore per day. Mumbai, however, has plenty of power because MSEB does not distribute it. Professional private companies like BSES do, and they ensure that their bills are collected and they don't let anyone steal their power. Hence, Transmission and Distribution losses are only 9 per cent in Mumbai while they are 31 per cent in Maharashtra. The truth is that if some people have to pay 13 times more than others then no amount of policing by MSEB will help. The answer, of course, is to charge customers what it costs to produce electricity. This is easier said because no politician has the courage to raise tariffs to farmers and risk losing his assembly seat at the next election. MSEB must also learn from Mumbai and privatise power distribution. The crux of the problem facing Enron and every other independent power producer in India is that they have the freedom to generate power but they do not have the freedom to sell it. In a power starved country we should encourage Enron and all our power plants to produce as much power as possible (which will lower production costs). Put this power on the national grid, and open the trading of power to private entrepreneurs. Private companies will bid for power from generators and sell it directly to consumers. Those who want high quality power, without interruption will be willing to pay more. So will customers who live in power scarce areas. Consumers will be able to choose between different suppliers and from a menu of prices. During peak hours rates will rise, but eventually when supply exceeds demand prices will decline, as they did when cement was liberalised. So Prashant, don't blame Enron for spoiling your future. Blame Maharashtra's ugly politicians and the incompetent MSEB. In the next election vote for the candidate who promises to make everyone pay the real cost of power, privatise distribution, and sack MSEB linesmen who steal power. Remember, only insecure people blame foreigners for their own troubles.

SEEDS OF GODLIKE POWER  11/02/2001

Inspired by one of Emerson's essays, Mathew Arnold, the English poet, wrote in the 19th century about the "seeds of godlike power". He was referring to a human being's great potential for progress, but his happy phrase fits the new miracle seeds that will help India create a "second green revolution". The seeds are a product of biotechnology. They are resistant to pests, and the farmer doesn't need to spray his crop with pesticide. Farmers love them because they don't have to spend on costly pesticides and they raise yields and income by 30 to 50 per cent. Consumers like them because the food is less toxic and more nutritious. Many seeds are also nutritionally enhanced. For example, you won't feel guilty eating the new potatoes because you will get protein in addition to starch in your diet. No wonder, the seeds cover 44.2 million hectares in 13 countries on six continents. Eight of these countries are industrialised and five are developing. In the past five years, genetically improved crops have grown 25 fold in acreage--a dramatic rate of adoption for any new technology. Tragically, India's farmers have not been allowed to experience this miracle. China, our rival, has beaten us in this race as well. The new cottonseed, called Bt cotton, is especially popular because it is resistant to the dreaded bollworm, which attacks 70 per cent of India's cotton crop and destroys 35 to 50 per cent of it every year. Hence, 36 per cent of the US and 10 per cent of Chinese cotton crop is planted with Bt cotton. If our Andhra farmers had used it, their crop would have survived and we might have prevented suicides. Bt cotton is not available to Indian farmers because our regulators have not approved it despite 6 years of successful trials by Maharashtra Hybrid Seed Corporation (Mayco), the seed company. Similarly, Proagro's mustard seeds have been tested to death for 7 years and they have not been yet been approved. Chinese bureaucrats, in contrast, take a more practical approach. They saw that Bt cotton was being extensively used in America and a dozen countries, and it had cleared the rigorous requirements of the US FDA. So, they decided not to re-invent the wheel, but to merely check Bt cotton's bio-safety in their soil and climates. Hence, 18 months after trials, Chinese farmers had begun to enjoy its fruits while Indian farmers were committing suicides. Our two largest cotton growing competitors, the US and China have, thus, taken a lead over us. When global agricultural markets open up--and the day is not far--our rivals will be better positioned because their costs will be lower and their yields higher. As with any breakthrough, genetically improved seeds have plenty of critics, especially in Europe, including Prince Charles. They are creating a scare in people's mind without a shred of scientific evidence. Since most seeds are the discoveries of international companies, there is also the usual anti-MNC prejudice. European NGO's have funded Indian NGOs in order to stop transgenic seeds here and they are spreading plenty of disinformation. They have even taken the Indian government to court for approving the Bt cotton trials. Meanwhile, Professor Nanjundaswamy instigated 3000 farmers in Karnataka on January 3, 2001 and they approoted Mayco's trials in 2 locations. According to scientists, the European stand is emotional and based on unknown future risks and not on data. But these vocal critics have slowed our bureaucrats and made them timid. Fortunately, our bio-safety regulations are in place and our trials are well advanced. If they are not stopped either by obstructive bureaucrats, or eco-terrorists or the courts, the Indian farmer will be able to plant the miracle cotton in the next season, mustard in 2002, potato, tomato, cauliflower and brinjal in 2003. Transgenic wheat is ahead of rice but the farmer won't see it before 2005. Remember, India has only 2 per cent of the world's arable land, 1 per cent of the world's rainfall but 16 per cent of world's people. Indian farm yields are only half or one-third of our competitors. The hybrids of the first green revolution have stopped giving productivity gains. Remember, also, that our first green revolution in the sixties was not an accident. Bold individuals created it--they flew in the new dwarf wheat from Mexico and distributed it to Punjab's farmers. Had they waited for endless trials, our first green revolution would not have happened. In comparison, our second green revolution so far is a sordid tale of apathetic, timid bureaucrats, misguided NGOs and eco-terrorists who are robbing our farmers' future.

A HERO FOR OUR TIME 25/02/2001

Every nation must have its heroes. Having lost its stars of the Independence age, Indians have been desperately seeking new ones who can inspire them in these dispirited post-reform, post-Mandal, post-modern times. Narasimha Rao, like Deng could have been one such hero. Deng has become a hero to contemporary China and has supplanted Mao in Chinese hearts. Although Rao created an economic revolution between 1991-93, he was not a visionary; he was only a reluctant reformer. Now mired in corruption cases, he is no longer respected. V.P. Singh could have been a hero. He released a social revolution as he attempted to raise the backward castes in our society. But most Indians saw through his electoral ambitions. In the end, he divided society and seriously compromised standards. If he had genuinely cared for the backwards he would have delivered them education and health, and that would have truly lifted them over the long term. Manmohan Singh and P. Chidambaram are hero candidates. Indeed, with a solid record of achievement in reform, they are already heroes to the young. But politics has not been kind to them and they have been languishing in recent years. We are shy of politicians today and look to individuals with narrower but concrete achievements--to V. Kurien, for example, for making India the largest milk producer; to Sam Pitroda for inventing the STD call centre in the bazaar; to C. Subramaniam for our green revolution. Who ought to qualify to be our hero in the post-reform age? Many would agree that it is individuals who succeeded by helping themselves, who made a difference to society through their own efforts rather than the patronage of others, especially the government. Leftist intellectuals call this ethic "selfishness" and "greed", but it is rags-to-riches stories like Narayana Murthy's that resonate with our times. Recently I was reading Ashish Nandy's fascinating, An Ambiguous Journey to the City, where he discusses Karna, and it struck me that the mythic hero of the Mahabharata, might qualify as a hero. Of uncertain birth, insecure and defiant, Karna represents the predicament of a self-made person in an insensitive society that is not quite ready for individualism and competitiveness. His fight against the Pandavas is an attempt to break out of his lowly status as a charioteer's son and affirm the values of personal achievement and competitive individualism. If we cannot find a hero in the flesh we might as well import one from mythology. Karna, as every school child knows, was born of the princess Kunti, who had a boon that allowed her to have a child by any god that she wished. Whilst still young and unmarried she invoked through her prayers, the sun god. As a result, she conceived and gave birth to Karna. Fearing a scandal, she stealthily placed the child in an ornate casket and left it to float on the Ashva river, where a humble charioteer, Adhiratha and his wife Radha found him, and bought him up to be their son. Meanwhile, Kunti married the sickly Pandu, the prince of Hastinapur, who was cursed to die if sexually aroused. So Kunti exercised her boon and had children by the gods. These were the famous Pandavas who went on to fight the Kauravas in what became the Mahabharata. Meanwhile, Karna grew into a brave and gifted warrior, but he was subjected from birth to jibes about his humble birth and his princely ambitions. When young he challenged his half brothers to competition. They refused--competing with princes was a princely privilege. Karna was again humiliated when princess Draupadi refused to marry a charioteer's son even though he had won the right to do so in fair competition. Embittered, Karna turned to the Kauravas for friendship. This worried Krishna, who revealed to Karna the secret of his birth on the eve of the great battle and pleaded with him to join the Pandavas. He offered him, in return, the prize of Hastinapur's kingdom and Draupadi's hand in marriage. Kunti and Surya, his natural parents, begged him as well, but Karna was loyal to his word, and refused to betray the Kauravas, who had elevated him to a kshatriya and a prince. In the end, like a good hero, Karna knew when to die, and he went down unvanquished, killed through Krishna's trickery. Although he walks out of the pages of the Mahabharata, this Karna seeks power and legitimacy for a new ethic and a new mindset. He defies his low caste; he celebrates achievement in a competitive society; he stands for individualism and a "can do" attitude. He seeks legitimacy for the rustic and lowborn in a secular city. He could well be a hero for our times.

Hail, a new dawn! 11/03/2001

Praise has been showered on Yashwant Sinha's Budget, and deservedly so. There is much to laud and everyone has his favourite measure, but I am happiest that agriculture has finally entered the reform agenda. I am pleased because we have a comparative advantage in agriculture--something we do not enjoy in industry. By investing in agricultural reform we will get a "bigger bang for our buck" as the Americans say. The timing is good because we sit comfortably on a grain mountain, forty million tonnes high. Both domestic and international prices are down. So, no one seriously worries about food security. Agricultural reform is a big agenda and there is no point talking of globalisation or WTO when the Indian market is not free. Our farmers are victims of archaic laws that prohibit them from selling their produce freely within the country, traders face limits on how much they can buy and stock, mills face levy burdens on rice and sugar, prices are distorted by politicians. All this is incompatible with a modern, successful economy, but the biggest change we need is in our mindset. We still labour under a scarcity mentality. All our policies are aimed at achieving self-sufficiency when we achieved it 20 years ago! Year after year we produce wheat and rice surplus that piles up into a mountain for the enjoyment of rats. How can a nation be so stupid? Instead of a defensive mentality we need an offensive, exporting, "can do" attitude, which regards the WTO as an ally, not an enemy. No country became a successful agricultural power through peasant farming--this is the second mindset change. Farming is not a "noble profession"; it is agri-business. Ask any peasant--his son doesn't want to be a peasant. We must treat farmers as businesspeople. Our green revolution succeeded because we treated Punjab's farmers as capitalists. Our farms need a huge infusion of capital and technology in order to raise yields and compete globally. Peasants cannot make this investment. Neither can the government for is it bankrupt. Hence, we must free peasants to lease their lands to agri-business professionals with capital and technology. Thus, we will stage the second green revolution and become an exporter in a world economy. All our agricultural institutions are stagnant or defunct and incapable of reform--extension services, co-operatives, FCI and dozens of others. Five ministries interfere in our farmers' lives--Agriculture, Fertilisers, Water, Food, and Consumer Affairs--and there is no co-ordination, professionalism, or result orientation. It takes 6 months to import a commodity, and by then we don't need it, and 5 months to export it when prices have plunged. Hence, we need to trust the individual and the market and not the government--this is the third change. Mr. Sinha has struck a big blow for agriculture reform, not through budgetary measures, but by challenging these old mindsets. He has promised to free inter-state trading--this means he will amend the archaic Essential Commodities Act. He will lift storage and stocking curbs, which hurt farmers and diminish their incentive to produce. A 24 per cent expansion in rural credit (to Rs. 64,000 crores) is significant, especially for creating rural godowns and cold storages to boost the farmer's holding power. Chopping the Food Corporation's role and decentralising food management will bring down subsidies, avoid needless stockpiling, and rat feasting. The introduction of a futures market ensures a soft landing for sugar decontrol. Perhaps, the boldest move is to remove excise duties on food processing, which could usher a horticultural revolution and transform our fruit exports. My favourite measure is agri-clinics or agri-business centres, financed by NABARD loans, which could unleash thousands of agricultural graduate-entrepreneurs. It leverages knowledge and marks a new era of private farm services--in testing soils, plant protection, seeds, marketing, post harvest handling, etc. Farmers will pay for result oriented, private consultancy instead of free, apathetic government extension service. Just as our IIT graduates become millionaires, it is now the chance for our 17,000 annual graduates of agricultural colleges. Each clinic will need on average 3 graduates and 9 technicians, and this could also create vast employment for the educated in rural areas. I have two criticisms though: One, the absence of a food-for-work program to reduce the present grain mountain, and two, the absence of reform in our mandi or post-harvest system. With 15 per cent of our food (worth Rs. 24,000 crores) wasted, we must at least experiment with a modern system of silos and mechanised, bulk handling. India is not a tiger but an elephant--hence our reform process is frustratingly slow. As a first step, agriculture needed to be placed on the national reform agenda. This Mr. Sinha has done.

IF INDIA CAN, WHY CAN'T WE? 25/03/2001

The English have been surprised by Professor James Tooley's observations that India can teach Britain something about education. This is unusual spin over the usual foreign expert who patronisingly offers us advice on how to improve ourselves. Indeed, when Tooley wrote about this in the Times Education Supplement his editor was so perplexed that he inserted a photo of an impoverished school in Bihar with a caption, "Education in India has a lot to teach the British"--implying, may be, that the good professor had lost it. The professor of education from Newcastle has been documenting a "self help" revolution in Indian towns and villages as education entrepreneurs are opening private schools and creating opportunities for the poor to rise. Most Indians would agree that private schools are indeed mushrooming across India (although they worry about their indifferent quality.) This may explain, in part, why literacy has grown at double our historic rate--1.4 per cent a year between 1992-1998 versus 0.7 per cent between 1950-1990. Professor Tooley argues that India's blossoming spirit has much to teach England's poorer inner city areas. Most of us were shocked 18 months ago when the government sponsored Public Report on Basic Education in India (PROBE) disclosed that teaching was going on in only 53 per cent of government schools in M.P., Bihar, U.P., Rajasthan villages. Teachers were absent in one-third; many had brazenly closed their schools and were busy running shops. Some teachers were found drunk and a few even expected pupils to bring them "daru". A few were asleep; others engaged children in domestic chores, including minding their babies. Given this, is it surprising that parents are turning to private schools in more and communities? PROBE confirmed that village private schools, in contrast, had "feverish classroom activity" and more dedicated teachers. The reason, it said, was that teachers were accountable to managers (who could fire them) and to parents (who could remove their children). Research shows that these private schools charge modestly--from Rs. 35 to Rs. 50 per month in villages and Rs. 65-100 in towns. They are also popular because they teach English. In the slums behind the Charminar, in Hyderabad, a private school exists in every alley. 500 such schools belong to the Federation of Private Schools, and they are mainly in poor communities. They are run on commercial principles charging Rs. 750 per year and do not depend on state subsidies or private charity. Typical parents include rikshaw-pullers and vegetable and fruit sellers, and many schools offer free seats to roughly 20 per cent of the poorest students. Professor Tooley has observed this same phenomenon in Thailand, Columbia, Tanzania, and Chile. Cheap private schools are doing more for the poor since state education has let them down. What should we do? We must not only fix the shocking state of our government schools, but we must also nurture and encourage private schools. Today, private schools face great hostility because we have not got used to the idea that education can be commercial. Indeed, the infamous Unnikrishnan judgement of the Supreme Court prohibits "commercialisation" of education. The bureaucracy exploits society's prejudice and has created a virtual license raj. It makes it impossible to start a new school without paying a bribe. Education entrepreneurs face a plethora of regulations, which limit competition, create artificial scarcity, and allow existing schools to exploit parents. Their major problem continues to be "recognition", which requires that schools have playgrounds among dozens of other requirements. All very well, but private schools for the poor cannot afford these middle class luxuries. Indeed, the PM's Economic Advisory Council has recognised this problem and has recommended that "education must be liberalised and all entry-exit restrictions and bureaucratic hurdles faced by [private] schools and colleges should be abolished." We should also ask hard questions. Given the shocking state of government schools, can we trust the state to deliver education? If we can't trust it to produce bread, how can we trust it with the minds of our young? It is one thing to believe that the state must provide money for primary education, it is quite another that the state must be in the business of running schools. Wouldn't it be better if our state schools were managed by NGO's, education professionals and entrepreneurs on a contract that was renewable based on performance? Indeed, there exist NGOs today who already run parallel schools (inside government schools during off-hours) and they deliver excellent results. This change won't occur overnight, but meanwhile we can make a beginning and become more understanding of these new private schools and fight against the license raj in education.

REVISITING INEQUALITY 08/04/2001

Last week I walked into our neighbourhood chemist's and the shop assistant gave me a look that spoke a thousand words. He looked me straight in the face and his eyes said "treat me as an equal". He sought equality based on dignity and mutual respect, and his disarming expression, it seems, had already got him in trouble. For the Punjabi woman ahead of me complained to the chemist. She used the nice Urdu word "tamiz", which roughly means "courtesy", but in her feudal mind it really meant that the shop assistant was not sufficiently servile. When she left the chemist confided in me, "this boy is good and efficient, but he is a Dalit from Bihar and his manners seem to put off my customers." Walking back I was reminded of George Orwell's description of social equality in "Homage to Catalonia." There he describes the waiters in revolutionary Barcelona "who looked you in the face and treated you as an equal." The Indian middle classes, used to feeling superior to the lower castes, are now going through disconcerting times as Laloo Prasad and Mayawati have given the OBCs and Dalits a new sense of confidence. We are in the midst of a social revolution that has been created by the ballot box. As economic reforms deepen and prosperity becomes widespread this will only accelerate. The latest poverty figures confirm what we are seeing around us. The Planning Commission reports that people below the poverty line have declined in the nineties by ten percentage points. Somehow cold percentages don't quite capture the enormity of the achievement until one realises that 10 per cent of one billion means that 100 million people have been lifted out of poverty in less than a decade. China, incidentally, achieved more or less the same in the eighties. Nevertheless, there exists huge inequality in our society and between rich and poor nations. Leftists claim that inequality has grown in recent times and globalisation is its cause. This is plainly false. In fact, for the first time in two centuries global inequality has actually begun to decline since the 1980s, and this is mainly because living standards in China and India (to a lesser extent) have begun to rise as growth has accelerated in both countries. China has done far better than India because it has taken better advantage of globalisation. Its reforms have gone deeper, its exports have grown brilliantly, and it has received far more foreign investment. Critics of reform and globalisation--such as the powerful voices in the Congress, RSS, and CPM--should seriously learn from China before they force India to turn inwards, and condemn our poor to perpetual poverty. Soon after the chemist episode, I was at a social gathering where people were avidly discussing the six recently minted MBAs at IIM, Ahmedabad, who had won starting annual salaries of more than a crore and the average for the class of Rs. 18 lakhs was not bad either. The gathering felt righteously indignant, and people blamed liberalisation. I felt, like Justice Holmes, that their passion for equality was merely "idealised envy". These two episodes--the equality sought by the Dalit and the inequality created by the IIM graduates--left me vaguely uneasy. The cause of our discontent, I'm increasingly convinced, is that we confuse inequality with poverty. Everyone agrees that there should be equality of opportunity. This means that every child should have access to a good school, primary health care, and safe drinking water irrespective of birth and ability, and we should minimise the headstart that some children have over others based on caste, gender, or birth. This however, is very different from an equality of result or an equal standard of living that leftists seek. Absolute equality is desirable but it is not possible because it goes against human nature. Most of us would happily accept rich people or an increase in inequality among the middle classes provided it leads to even a small improvement in the conditions of the poor and the most disadvantaged. It is more important to raise the poor than worry about inequality. Economic reforms are bound to increase inequality that comes from open and free competition. But that does not mean that they will worsen the situation of the poor and the most disadvantaged. It is stupid to think that every inequality worsens the condition of the worst off. The IIT students' crores are the result of a competitive economy which in the long run will accelerate economic growth and eventually reduce the disabilities of caste, gender, and birth. Hence, economic reforms are not anti-poor, but they must be accompanied by an equal passion for reforming primary education, health and the delivery of our poverty programs.

WERE WE ONCE RICH? 22/04/2001

I am on a book tour of America as I write this column, and Americans sometimes ask, "Was India once really rich? Then why did it become so poor?" I remind them that Columbus had gone in quest of the riches of India but discovered America instead. Thinking he had found India, he called the natives "Indians." The name stuck and so has the linguistic confusion. It took the Portuguese five years to get over the humiliation that Spain, their enemy, had discovered America when it could have been theirs. In 1497, they sent Vasco da Gama the other way round the world. He did indeed find India's legendary wealth. He informed Portugal's King Manuel of "India's large cities, large buildings and rivers, and great populations." He spoke about spices, jewels, and mines. But he added that Indians were not interested in European trinkets and clothes. They made far better fabrics and trinkets themselves. In the European mind "Golconda" became the symbol of the haunting wealth of India. "The discovery of America and the passage to the East Indies by the Cape of Good Hope are the two greatest events in the history of mankind," wrote Adam Smith. At the end of the 16th century, economic historians tell us, India's wealth sustained more than a hundred million people. With plenty of arable land, its agriculture was vibrant with productivity comparable to the best in the world. There was a vigorous and large skilled artisan workforce that produced not only cottons but also luxurious products for the zamindars and the courts. The economy produced a great financial surplus, and the annual revenues of the Mogul emperor Aurangzeb (1659-1701) were more than ten times those of his contemporary Louis XIV, the richest king of Europe. This surplus supported the vast and growing Mughal Empire and financed spectacular monuments like the Taj Mahal. When the English later got to this wealth they found that India produced the world's best cotton yarn and textiles. To this huge industry they provided the powerful stimulus of European demand, and made it even richer. Thus, by the end of the seventeenth century India had a sophisticated market and credit structure and controlled a quarter of the world trade in textiles, according to Paul Bairoch. It had 22.6 per cent share of world GDP (or roughly America's share of the world's wealth today), confirms Angus Maddison. Indian cottons transformed the dress of Europe, and cotton underwear changed the standards of cleanliness and comfort in the West. The Indian peasant, however, was very poor. Francois Bernier, a French physician who spent twelve years in India, wrote about the decrepit houses of the poor, their humiliating lives and the dramatic inequality between the tiny rich and the impoverished many. Because the rapacious Mughal State took away something like half the agricultural product there was little incentive to improve the land. The merchants hid their wealth for fear of the tax collector. There is no easy answer to the problem that the country was prosperous and the people were poor. Lest we forget, 250 years ago peasants everywhere were poor and today's great disparities in income between nations did not exist then. The difference between Europe and India (or China) was 1.5 to 1 versus 20 to 1 today. The English, who learned about textiles from India, soon turned the tables in the late 18th century. They began making textiles with machines and this began the West's industrial revolution, and brought it amazing prosperity. As a result, handloom weavers were destroyed all over the world, including India. We blamed the Britain for impoverishing us, but the question is why did India not experience an industrial revolution? The truth is that pre-British India was significantly behind Western Europe in technology, institutions and ideas. A scientific revolution had not occurred. How to make a poor nation prosperous is a more difficult question. The answer seems to lie in technology and institutions. Since Britain's industrial revolution there been for the first time in recorded history a continuous flow of inventions. Moreover, these have been absorbed commercially as profitable innovations. History teaches that a nation's ability to absorb these innovations and create an industrial revolution depends on having the right institutions in place--for example, property rights, schools, and stable governance. In the second half of the twentieth century, the Far East nations demonstrated that it can be done--a poor nation can become rich, and very quickly. They took less than thirty years to transform their societies, whereas the West needed a hundred. After the reforms India too is poised to do it soon--as long as we keep vigorously reforming our damaging socialist institutions and investing in education

DARKNESS TRIUMPHS 06/05/2001

There is no use pretending that the departures of N.K. Singh and Montek Singh are not going to hurt. They are. Two very different men--Montek is an elegant economist and NK is a natty networker, who knows how to turn every screw in the government's machine. But both are reformers. N.K. Singh has been transferred from the Prime Minister's office (PMO), where he coordinated the PM's economic agenda, to the Planning Commission. Montek is leaving to head the Independent Evaluator's office for the International Monetary Fund. Earlier, he was Finance Secretary, where he had spearheaded many an economic reform ever since the summer of 1991. Both men have fallen victim to the RSS and the swadeshi lobby. Although, Muralidhar Rao and Datta Pengdi may have precipitated N.K.'s recent departure, all anti-reformers are delighted. The communists, the leftists--the Samtas and Mamtas--and the considerable forces of darkness in the Congress would rather live with inefficient and corrupt public sector monopolies than have anything to do with competitive markets. Montek's achievements are well known, but NK too leaves a considerable record of reform, culminating in the recent path-breaking budget with dramatic reforms in labour, agriculture, and industrial policy. It contained both Mr. Vajpayee's and Mr Sinha's reforms, and was a product of teamwork between North and South Blocks, and NK's networking skills with the ministries were crucial. NK has left a mark on many Vajpayee initiatives: for example, the current momentum in building highways, the new "open skies" policy (held hostage for so long by the malicious civil aviation ministry), the decision to lease five major airports, the new energy behind ports privatisation, resolution to the telecom tangle via an excellent telecom policy--the ruckus over WiLL notwithstanding, and the soon to be announced liberalisation of drugs price control. Against these successes is failure in the power sector and the centre's inability to get the states to reform SEBs. The lack of initiative on Enron is also inexplicable. India cannot afford to let Enron blow-up and destroy our credibility with the world. At one go we could lose our reputation for honouring contracts. Remember, Enron's board members, James Baker and Kenneth Lay, are George W. Bush's closest friends. Reforms don't happen without reformers. Even the most reform minded minister needs a reforming officer to help build pro-reform coalitions in the bureaucracy, the party and in parliament. Few realise A.N. Varma's stellar role when he was Prime Minister Narasimha Rao's secretary. His legendary Thursday meetings with economic secretaries became the crucial instrument for the blistering pace of reform between 1991 and 1993. Mr Varma was a terror and ran his committee tightly. No one was allowed to travel on Thursdays. The committee met for only two hours, when the reform in question was openly discussed. Varma summarised and minuted the outcome and the reform proposal was taken to the cabinet for approval, and then on to the parliament. Many of us remember our excitement in those golden years as a new reform was announced every week. Just as Narasimha Rao had Varma, so Manmohan Singh had Montek. Chidambaram had Jairam Ramesh, and Vajpayee had N.K. Singh. These minister-officer partnerships have been crucial in making reforms happen. Those who criticise the PMO for becoming too powerful forget that in our political model ministries are independent and someone has to coordinate our chaotic government. It used to be the cabinet secretary, but when you want strategic management of change, then you require initiative and pro-activity. Who knows, a powerful, hands-on secretary might have been able to prevent the Fifth Pay Commission disaster--the lowest point in our economic history of the 1990s. To our worthy anti-reformers, who are gloating over N.K. and Montek's exits, I ask: how can you oppose the work of reformers who are trying to, for example, reduce the theft of electricity by employees of the state electricity boards? If this theft is reduced from 30 per cent today to only 18 per cent, there will be enough capital to build sufficient new power capacity. But the only way to stop thievery is by privatising distribution, for no private distributor will allow his power to be stolen. Thieves don't steal power in Bombay and Calcutta because distribution is private. Our anti-reformers retort, "don't privatise power, just catch the thieves!" Well, for fifty years we have not been able to catch them. Should we wait another fifty? Think about this--the next you oppose reforms and reformers you vote for public sector thieves rather than competitive markets. Liberalisation is not a matter of ideology. It is common sense to want clean, uncorrupt services. The only losers in privatisation will be thieves and lazy workers. The winners will be the Indian people.

A SENTIMENTAL EDUCATION 20/05/2001

We are well into our Indian summer and for teenagers this is a time to recuperate from the slogging drudgery of tuitions, coaching crammers, computer classes, board exams and college entrance tests. The summer job has not yet arrived in India. So, what does one do for "time-pass" in desi-land? My secret recipe for the enviably happy summer is to draw the curtains, turn on the cooler, sit in a comfortable old cane chair and begin to read. Feel your youth like a nimbus, and start to create a self. You don't inherit a self; you build it. One way to do it is to read the great books. Take a break at noon with lassi. Read some more after lunch and in the evenings treat your friends to dahi chaat and gossip-in part, about the books you are reading. For you never accept a text passively; you interrogate it. Smell the jasmine at night and go to sleep reading. There is no royal road to nirvana but only the many roads large and small, the innumerable curving paths, a thousand steps and turns leading to education. Begin with the Mahabharata, and feel the brute vitality of the air, the magnificence of chariots, wind, and fires; the raging battles, the plains charged with terrified warriors, the beasts unstrung and falling. Like the brilliant first scene in the Oscar-winning Gladiator, see the men flung facedown in the dust, the ravaged longing for home and family and the rituals of peace, as the two sets of cousins, bitter enemies descended from King Bharata, fall into rapt admiration of each other's nobility and beauty. It is an apocalyptic war poem, with an excruciating vividness, an obsessive observation of horror that causes almost disbelief. Since you are unlikely to read it in the original Sanskrit, look for R.K. Narayan's readable translation, and if that is not available try C.V. Narsimhan's version. Feast also on the great books of the West. Begin with Homer's Iliad and Odyssey in the Lattimore translation. Follow it up with the great tragedians--read Aeschylus' Oresteia, Sophocles' Oedipus and Antigone in the Grene translation and Euripides' Electra in the Vermeule translation. Then a bit of history-read Thucydides' History of the Peloponnesian War in Penguin classics. Finally, philosophy-read Plato's Symposium, Apology, and The Republic in the Hackett translation, and end with Aristotle's Nicomachean Ethics in the elegant Ross translation. The magic of an American undergraduate education is that it breathes life into the humanistic classics. Whether your field is chemistry or engineering, you are required to read the great books and learn that life and literature are inseparable. With a good teacher like Edward Tayler at Columbia you learn to read as though your life depended on it, and you are carried along on the crest of excitement and high adventure of ideas that will resonate throughout your life. Indian students are not so lucky. Not only does our traditional insecurity for jobs push our youth early into careers, our silo-like curriculum does not permit cross fertilisation of disciplines. Now, I ask you honestly, Shri Murli Manohar Joshi, isn't this what our mandarins in the Ministry ought to be thinking about? Instead of dabbling in the dubious mysteries of astrology, let's make our students immeasurably richer by breathing life into the great books of the East and the West. To experience the romance of a liberal education, I recommend David Denby's Great Books: My Adventure with Homer, Rousseau, Woolf and Other Indestructible Writers of the Western World. In 1991, thirty years after graduating from Columbia University, Denby went back to college and sat with eighteen-year-olds and read the same books that they read. Not just the ancient classics above, but also modern ones. Together they read Goethe, Kant, Milton, Cervantes, Marx, Conrad, Woolf and others. Denby was certainly a most unlikely student: forty-eight years old, film critic of New York magazine, a husband and father, a settled man who was nevertheless unsettled in someway. Was it just knowledge he wanted? He had read many of the books before. Yet nothing in life seemed more important to him than reading these books and sitting in on those discussions. Denby's book is an account of his journey, sometimes perilous, sometimes serene, through the momentous ideas he consumed with such hunger in middle age. He took the two "great books" courses, devised earlier in the century at Columbia, which spread to the University of Chicago, and in the 1940s to other colleges in America. In India, the triumph of the IIT-IIM culture and our current mania for computers, is producing too many graduates with a tunnel vision. We are not producing leaders for tomorrow's challenges. Reading great books is one way to make it happen.

INDIAN PARADOXES 3/6/2001

India, truly, is a land of paradoxes. For forty years political scientists have been debating how we became a vibrant democracy despite our poverty, low literacy and ethnic violence. Adam Przeworski's empirical study of 135 countries recently concluded that, given everything, India ought to have been a dictatorship (in his "Democracy and Development"). Indeed, the late and gracious Myron Weiner of M.I.T. wrote a charming book called "The Indian Paradox", in which he wrestled with the contradiction of how democratic politics could endure in our diverse and violent society. Now, here is another paradox. By any yardstick, the 1990s have been the best years in our recent economic and social history. Yet, it was also the decade of the greatest political instability. How does one begin to explain this contradiction? Conventional wisdom says that prosperity and stability go together and economic growth needs political stability. Does this mean that our economic sphere is slowly becoming autonomous from the political realm? Is this another example of Indian exceptionalism? There are five good reasons to believe that the last decade was our best, economically. First, our wealth or GDP grew at an average real rate of 6.4 per cent per year (and crossed 7.5 per cent for three years). No wonder President Clinton said the world's best-kept secret is that India has been the second fastest growing economy in the world. Second, our population growth has begun to slow down for the first time in decades--against a 2.2 per cent growth rate it had come down to 1.67 by 1998. Third, literacy growth doubled in the nineties--from its historic climb of 0.7 per cent a year to 1.4 per cent--hence, literacy rose from 52 to 65 per cent during the decade, with the biggest gainers being women and the backward states. Fourth, at least 90 million Indians rose out of poverty as the poverty ratio declined from 36 to 27 per cent between 1993-99--this is almost the same pace as China's in the 1980s. Fifth, we may have finally found our global competitive advantage in our booming software and IT services--what the economists call the "lead sector" that can transform the whole economy. These hopeful numbers offer a dramatic contrast to our political instability. We had six prime ministers in the nineties. Between 1989 and 1999 we changed our government every two and a half years compared to every four and a half years between 1951 and 1989. No single party has won an overall majority since 1984. Roughly half the incumbent representatives lost their seats in the nineties. And the once mighty Congress Party, which ruled the republic for almost forty years, has been humbled. Today, we have forty weak and silly parties and the ruling coalition has around 20 partners. Compared to India's vibrant economic space our political stage is a comedy, peopled by clowns, who do everything except govern. Not only is our economic sphere alive, our social sphere is humming. Lower castes have risen through the ballot box as a social revolution has taken place in the north. (The south experienced its social revolution decades ago.) We may laugh at Laloo and Mayavati, but they have given a new confidence to the backwards, and you can see it in the "walk" of the Yadavs and the Dalits. Cable television and other interventions have also decolonised millions of young, urban minds. Daler Mehndi, A.R.Rehman, Arundhati Roy, and Aishwarya Rai are products of this liberated mindset. More women are working outside and this is gradually liberating them from the old tyrannies of the family, the caste, and the village. We have also lost our hypocrisy about money, as the sons of Brahmins and Kshatriyas are getting MBAs and becoming entrepreneurs--this social revolution is, perhaps, rivalled only by the ascent of Japan's merchant class during the 1868 Meiji revolution. How, then, does one begin to explain the paradox of an economic and social revolution happening in the midst of political instability and poor governance? Professor Devesh Kapur at Harvard has found an answer in our polymorphic institutions which, he says insulate our political system. While the old formal institutions--the bureaucracy, the parties, public enterprises--have decayed or got clogged by interest groups, new institutions have emerged and old moribund ones have been rejuvenated, such as the Election Commission, CVC, the judiciary, NGOs, and the new regulatory agencies. This simultaneous cycle of decay and rejuvenation gives our system a certain resilience when political actors keep changing. Weak parties mean unstable coalitions, but they have also brought more federalism, less misuse of the evil Article 356, and a dilution of the BJP's economic nationalism and identity politics. Certainly, it a believable answer to another Indian paradox!

A HAPPY SURPRISE 17/06/2001

We are a nation so disappointed with itself that we have become immune to good news. So when it does come, we either ignore it or cynically dismiss it with a shrug. The latest census is an example. It has brought the happy news that literacy in India has jumped from 52 to 65 per cent during the last decade. This means that our literacy growth rate has doubled from 0.7 per cent a year in the past to 1.4 per cent. Millions of children have been liberated in the 1990s from the bondage of ignorance, with the greatest gains having come from rural areas, the Hindi states, and among girls. How did this happen? On the demand end, it is parental motivation--parents are increasingly realising, even in the most backward villages, that education is the passport to their child's future. On the supply side, it is a combination of things. First, Literacy campaigns in some states, supported by the internationally funded District Primary Education Program (DPEP) have begun to make a difference. Their central premise is that teachers must be made accountable to local communities to overcome the problem of chronic teacher absenteeism--the scourge of primary education in Hindi rural areas. Because states are bankrupt, they have resorted to employing para-teachers on performance contracts ("shiksha karmi"), and they are outperforming regular teachers. We now have an astounding 500,000 para-teachers in India today! Second, private schools of varying quality, in towns and villages across India have mushroomed. State schools, especially in the Hindi belt, had grown so rotten that people took matters into their hands and pulled their children out of government schools and put them into these private schools, where, at least, the teacher shows up and some teaching does take place. Third, there have been outstanding initiatives in states like Madhya Pradesh, where mass literacy has risen from 44 to 64 per cent in the 1990s. Against this 20-percentage point gain, literacy had risen only 6 points in the eighties, 11 points in the seventies and 6 points in the sixties. Female literacy has also gone up an impressive 22 points--from lowly 28 per cent, it has risen to 50 per cent. Thus, Madhya Pradesh has begun to replicate Himachal's education miracle, and soon it too will stop being a contemptible Bimaru state. Rajasthan and Andhra too are not far behind. Finding the state treasury empty, subversive warriors inside the M.P. government have created an alternative system of 26,000 schools. This is the famous Education Guarantee Scheme, which I wrote about two years ago. Through it, the village creates its own learning space, hires a local teacher on a performance contract, who is accountable to parents through "shala shiksha samitis". Having recognised that "job security" is partially the cause of the disease, the reformers have now ensured that all future teachers in the formal system will be "shiksha karmis" on performance contract. As a result, primary education is gradually being de-centralised and de-bureaucratised, despite resistance from teachers unions. It is becoming community based and this has visibly reduced teacher absenteeism and improved teaching quality. Some critics are dismissive. They see in these initiatives a conspiracy by the state to off-load the burden of primary education to the village panchayats. They rightly point out that para-teachers are sometimes relatives of the village pradhan. They worry that alternative schools might institutionalise dualism. Also, an unscrupulous politician might make shiksha karmis permanent. These are valid concerns. The critics, however, overlook the richness of the achievement. In tests administered by independent experts, children in non-formal schools run by para-teachers in M.P. have consistently outperformed those in the formal government schools. The "joyful learning" curriculum by an NGO, Eklavya, is also making a significant difference in young children's development. The teacher's commitment is turning out to be more important than a B.Ed degree. High salaries and fancy buildings seem to be less important than accountability. The other lesson we are learning is that instead of flaying the state for the umpteenth time for its failure, let us admit the state's limitations in broadly delivering quality education. If it cannot produce bread how can it realistically develop the minds of our young? However, only the state has the resources for universal primary education in our vast country. Hence, the solution is "state aided" schools--government must gradually give up running schools, and become a non-interfering funds provider. Running schools is best left to education professionals, NGOs and "edu-preneurs". Once this happens, new schools will emerge, creativity will blossom, and parents will have choice. The miserable state schools will also improve when they are forced to compete. And if they do not, then parents will pull their children out, and they will either have to close down or be sold off.

HOW THEY GREW RICH 01/07/2001

Contrary to what many believe the economic lives of our ancestors is a story of almost unrelieved wretchedness. Everywhere a small number lived humanely while the great majority lived in abysmal squalor. We forget their misery, in part, by the grace of literature, poetry, and legend, which celebrate those who lived well and forget those who lived in the silence of poverty. The eras of misery have been mythologised and are remembered as golden ages of pastoral simplicity. They were not. In truth, survival was the only order of business. Only recently have progress and prosperity touched the lives of somewhat more than the upper tenth of the population. In the last 200 years the West (and recently the Far East) grew fabulously rich. This miracle was based on harnessing technology and organisation to the satisfaction of human wants, while keeping their economies free from political control, ensuring that private individuals made decisions rather than bureaucrats. The striking character of the West's miracle was its gradualism. There was no sudden change--just gradual year-to-year growth at a rate that somewhat exceeded population growth. The gains at first were not noticeable and it was widely believed that only the rich experienced them. As growth continued through the 20th century, it became obvious that working classes were increasingly turning into middle classes. Poverty also declined from 90 per cent of the population to 20 per cent, or less, depending on the country. The West's prosperity originated in innovations in technology and organisation. As economies expanded, so did their stocks of capital, their expenditures on education and public health, and the accumulation of skills by their work forces. Virtually without thought or discussion, the West delegated to enterprising individuals decision making in the innovation process. But innovations needed to be tested in the marketplace. This required money and competence in engineering, manufacturing, and marketing, especially if the innovator was to capture the rewards of the innovation. These resources came to exist in the ordinary firm. Comparatively free of political and religious controls, markets determined who won the rewards of innovation. The response of the market was the test of success or failure of an innovation. And competition became central to innovation. The market rewarded innovators with a high price for a unique product or service until such time as it was imitated or superseded by others. In the seventeenth century, the West developed a scientific procedure, associated with the names of Galileo and Bacon, based upon observation, reason and experiment. Although artisan inventors invented their own technology in the beginning, the contributions of science to industrial technology became more numerous with time. Did the West grow rich through colonialism? Karl Marx thought so, and he attributed part of the new wealth of the West to its imperialist acquisition of raw materials and markets from overseas. I tend to doubt this because poor, colonised countries did not provide large enough markets. Moreover, imperialist Spain and Portugal did not achieve long-term growth; Switzerland and the Scandinavian countries were not imperialist countries; Germany and United States, which achieved long-term growth, were latecomers to imperialism. And Japan's growth after 1868 totally undermines the case. In India, we have not so far experienced this miraculous transformation. But we will in this century if our economy keeps growing as it has in the last two decades. Compared to the West's historic 3 per cent economic growth we are growing at more than 6 per cent. The key is to keep reforming our institutions. Prosperity is not a matter of national character but of institutions. As East and Southeast Asia have shown, all countries can move from poverty to prosperity. Our economic reforms are creating an autonomous economic sphere from political interference. They are slowly replacing the licence-raj institutions, where bureaucrats made economic decisions with competitive market institutions where entrepreneurs, firms, and markets make economic decisions. In a democracy this process will inevitably be slow unless we can throw up an economic reformer like Margaret Thatcher. However, it will take more than de-regulation to succeed. Widespread prosperity needs the reform of our education and health institutions as well. Even after we replace bureaucrats with competitive markets, we will still need honest constables and efficient judges to dispense speedy justice. Hence, we need to strengthen our administrative institutions. We should not unduly worry that our firms are not delivering innovation, which was at the heart of the West's industrial revolution. We are only ten years old as a free economy, and innovation takes time. Japan has only just become an innovator. Korea and Taiwan are not yet innovators. At this stage we ought to be content to imitate, for innovation often emerges out of imitation. Latecomers have this advantage, and smart nations, like smart entrepreneurs, don't reinvent the wheel.

READERS AND WRITERS 15/07/2001

Since I give my address at the bottom of this fortnightly column, I usually get a fair amount of email and snail mail. And being a diligent sort, I endeavour to read and reply most letters. However, recent events have called into question this process of civilised exchange. One outraged reader wrote recently to say that two of his articles had been rejected by the Times of India. "Why is it," he demanded, "the Times rejects my work, and publishes a fourth rate writer like Gurcharan Das?" I took his letter to a friend at the Times, and tried to sound casual, but my friend could tell that this was no ordinary fan mail. He gave me a sympathetic smile, and clearing his throat, he said, "your writing is not fourth rate--it is third rate, at least". I thought that I had misheard, but he added, "Well, third rate is better than fourth rate, and I hope your head won't get too swollen now" Another provocation came in May, from a reader in Mumbai. In elegant calligraphy, he wrote the most inelegant things. "You disgusting pig, yes, you, Gurcharan Pig. Unfortunately I subscribe to the Times of India, because of which, week after week, I am forced to read the pigshit you punctually keep defecating--glorifying globalisation, free markets, reforms, bullshit, blah blah. Everyone knows that the only real beneficiaries of globalisation are America and MNC's who cheat, exploit and pauperise the rest of the world, particularly, Third World economies. Here is an example of how they cheat…." Strong and dramatic prose, you will agree. My colourful reader went on to give the example of a computer he had purchased, which did not contain the promised software to drive the DVD-rom. He had complained to the dealer, the company, and finally to its headquarters in America. But to no avail. He ended his letter characteristically, "What do you, free market Bastard, have to say about it?" My advice to my reader is that he first cleans his mouth, either with an MNC or non-MNC toothpaste. Better still, like the "nearlynine" Saleem Sinai in "Midnight's Children", he scrub his roof-of-mouth with non-MNC Coal Tar Soap. Next, re-write a straight forward business letter to the same cast of characters, deleting this time all the colourful expletives referring to animals, their excreta, and those that raise doubts about the reader's paternity. I realise that this might sacrifice his natural style, but it might pay-off, and the global capitalist system would also be saved. A reader from Nagpur complains that I am coming between him and his son. "You see, we always read the Sunday paper together as a family under a Banyan tree in our courtyard. We drink tea leisurely and there is harmony in our ancestral home, until we read your column. Then we begin to argue like mad and our peace is shattered. My wife always seems to take my son's side and my brother mine. I fear that my son and I are drifting apart, thanks to you." I wish sometimes that I could write weekly, like Swami Aiyar or Jug Suraiya. The great American columnists, I'm told, wrote five, even seven days a week. I wonder how they had something to say everyday of their lives. Apparently, one of them, Bob Considine, I think, couldn't find anything to write about one day in 1973, and he solved the problem by writing a column, which in its entirety read as follows: "I have nothing to say today." My favourite is the liberal American writer, E.B. White, who wrote for years for the New Yorker. He was more of an essayist than a columnist--the difference being that the essayist's writing seems to endure while the 780-word rectangle, such as this one, loses its appeal in a few days. Flip through the pages of old newspapers and you will find that you are more likely to read the ads than the articles. E.B. White had an endearing modesty and a sense of one's limitations. He taught me to use simple, everyday colloquial English, to adopt an informal and relaxed manner, to claim a deficient memory, and to be flexible--that is, never be afraid to change your mind. The problem with writing in the first person, I have found, is to constantly run the risk of sounding irritatingly egoistic and self-absorbed. George Orwell solved it by pretending to be more modest that one is. He opened his famous essay, "Shooting an Elephant," in a way that both established his importance and downplayed it: "In Moulmein, in Lower Burma, I was hated by large numbers of people--the only time in my life that I have been important enough for this to happen to me."

TWO CONCEPTS OF INDIA 29/07/2001

General Musharraf has come and gone. Whatever maybe the long term impact of his entertaining visit, he did achieve one thing--he made us look within ourselves, and ask once again, who we are as Indians, and how are we different from our neighbour. For the past fifty years, we have grown up with the belief that Pakistan is a monolithic, theocratic state with one religion, one language, and one mind. India is the opposite--with many religions, many languages, many communities and many minds. In the 1990s, with the ascent of the BJP, a second conception of India became popular with, perhaps, a quarter of our voters. Instead of the plural India of the first conception, it views the nation as singular and essentialist, which will be energised by Hindu nationalism. In its view, India has been victim of a thousand years of foreign invasions, and is now threatened by multinationals and particularly American culture. It wishes to restore it subliminally to a pure, pre-invasions, and eternal Hindu past and advance rapidly toward superpower status in the future. The first concept of India, by contrast, is more relaxed, liberal and self-confident. It celebrates the opening up of India in the 1990s to foreign trade, investment, and most importantly to ideas. It thinks of India as a mixture of different peoples and cultures that settled here. In this view, India never had an authentic past; it was always a moving feast and the moments of mixture were in fact the most creative. Historic migrations and wanderings of many peoples and tribes over thousands of years created this India. The subcontinent, in this view, is a deep net into which various races and peoples of Asia drifted over time and were caught. The tall Himalayas in the north and the sea in the west, east, and south isolated the net from the rest of the world and brought into being a unique society. Our caste system may have had its origins in this net, for it made it possible for such a vast variety of people to live together in a single social system over thousands of years. Hence, diversity is India's most vital metaphor--it is a "multinational" nation. It is what plural Europe would like to be--a united economic and political entity in which different nationalities and minorities continue to flourish. In recent years a new generation of historians has enriched this plural conception of India. Their innovative studies have illuminated our regional identities, showing how our national identity is superimposed from above and created usually by the grab for power, with little to do with how ordinary people saw themselves. Moreover, our recent politics are further reinforcing our regional identities. This liberal view, however, does not deny a shared sense of India. It merely warns us to be careful in positing a unifying conception of India based on nationalism. That our minds have finally got de-colonised gives this liberal view of India a quiet reassurance and self-confidence. The year 1981 was the symbolic watershed in this respect, when "Midnight's Children" appeared. The moment Salman Rushdie began to "chutnify" the language of Shakespeare, he opened the minds of the Indian sub-continent. Ever since, contemporary Indian history, "has acquired the air of a fancy dress party…full of chatter, music, sex, tomfoolery, free drinks, and rock and roll, an occasion to which everyone is invited provided they can join in the fun", says Amit Chaudhuri. Dileep Padgaonkar, who produces the worthy 750 word rectangle above mine, reminded us two weeks ago about Sam Huntington's thesis--that an "indestructible fault line" exists along Islamic borders and clashes with neighbours are inevitable. Hence, he says, there will be trouble with the Serbs in Bosnia, the Jews in Israel, Hindus in India, Buddhists in Burma, Chinese in Malaysia, and Catholics in Philippines. Those who hold the second, singular concept of India fully accept Huntington's premise; they believe that permanent peace between India and Pakistan is impossible. Prime Minister Vajpayee is obviously not one of them; otherwise, he would not have invited General Musharraf. Mr. Vajpayee understands better than his colleagues in the Sangh Parivar that India and Pakistan's future will be determined far more by the relentless push of the global economy and communications, supported avidly by our rapidly growing middle classes. The future preoccupations of both peoples will be with rising living standards, social mobility, and the peaceful pursuit of consumer goods. As a result, obsessions with religious identity and fundamentalist attitudes will slowly fade. The issue is not whether Mr. Vajpayee holds the singular or the plural conception of India, but which of the two is likely to prevail? Or will India evolve uneasily from the constant clash of these two competing conceptions?

IT'S ALL ABOUT EXECUTION 12/08/2001

Foreigners often remind us that Indians are a bright people. But foreigners are too polite to add that Indians can also be 'over-smart', and this creates its own problems. We think and argue too much, see too many angles, and don't act enough. It makes hiring and recruiting talent particularly difficult, for all Indians come out sounding well in an interview, and how do you separate the doers from the talkers? National stereotyping can be dangerous and is usually wrong. We have learned this only too well from the history of the violent 20th century. Hence, I prefer to rely on institutions and economic laws to explain human behaviour rather than national character. However, the gap between thought and action is so pervasive in Indian life that I have begun to despair in recent months and I wonder if our weakness in execution is, in fact, a deficit in character. My experience with dozens of Indian companies in the past decade is that while most have acquired a reasonably robust strategy, they implement poorly. I am also associated with a venture capital fund that has invested in 15 Indian I.T. companies, and its experience is that the best firms are not the ones with the best business model but the best executional ability. This may appear tautological--we perform poorly because of poor performance--but it isn't. McKinsey, the respected management consultant, has found the same weakness. In a survey of 35 major companies and interviews with more than 600 executives, it has concluded that "while many Indian companies perform well on strategy, there are lagging in execution". It conducted similar studies around the world, and its international data shows that the best performing companies in the world distinguish themselves from mediocre ones in their ability to execute. High performers, such as General Electric, Sony, and Singapore Airlines, consistently implement better and this is ultimately reflected in their market share, profitability, and share price. Does our national bias against action explain why there isn't a single Indian company with a global presence? Is this also the reason why so many Indian companies are floundering ten years after the reforms? While it is tempting to blame character, the culprit, I am afraid, is more mundane--it is poor skills. And the reason is the historic lack of competition in our market. These skills are learned typically when rivalry is intense and survival is at stake. We have only had real competition in the last decade. So perhaps, it's early. Hence, our business leaders should stop crying for protection, honestly face up to poor execution as the cause of their troubles, and go to real world school of competition and learn these skills. There are outstanding Indian performers, to be sure, but they are exceptions. Reliance owes its consistent success, partially at least, to its awesome project management skills, which allows it to build plants faster than anyone does. A few years ago I was on the jury to select the best among 40 Aditya Birla's companies and I observed the same executional excellence in company after company. No wonder, Hindalco for example, has become a world class aluminium producer. It is the same with Jet Airways. Ask its passengers--they will tell you that it is always on time. HDFC and Sundaram Finance have consistently demonstrated outstanding service levels for decades. A jewel of a company in Bangalore, Himatsingka Seide, is able to command Rs 8,000 per metre for its luxurious silks in Europe and America because it consistently delivers defect-free fabric and always on time. Why do these companies have executional ability when the majority does not? It begins at the top. Their leaders, I have observed, are not content with laying broad policies, but insist on getting into the messy details of the business--monitoring day to day performance, removing obstacles, staying close to employees and motivating them. They reward managers who act and take initiative, and punish those who play safe and behave like bureaucrats. They set clear, measurable goals and create small implementation teams so that people become accountable. Reliance's top management, for instance, monitors daily the number of kilometres of optic fibre that its telecom teams lay on the ground, and motivates them to improve the next day's performance. Thus, these companies get ordinary people to do extraordinary things. Successful executives follow the British scientist, Jacob Bronowski's advice that the world is not understood by contemplation but by action--"the hand is the cutting edge of the mind". The best lesson I learned at Procter and Gamble was how to write its legendary one-page memo, which was its language of action. Good executives, I have observed, do few things. They make sure they are the right things, and they do them brilliantly.

ONE POINT AGENDA 26/08/2001

We commonly make the mistake of blaming our character, or ideology, or even democracy for our nation's failures when the real felon is more pedestrian. The same unhappy inability to translate thought into action that I wrote about two Sundays ago with regard to our companies afflicts our public life with devastating consequences. Nehruvian socialism need not have deteriorated into licence raj had our civil servants possessed better management skills. East Asia grew twice as rapidly as India between 1965 and 1985, not because it saved and invested more, but because it had the ability to make its investments more productive. During the last decade every government has wanted to reform the economy. Yet, why have we suffered heart-breaking delays in implementing the reforms? If we are all agreed about what's to be done, why don't we just do it? We continue to waste our energies on debating "the what" when we ought to focus on "the how". How to reform requires mental application and the ability to implement. And this is precisely what our public figures-both politicians and civil servants-seem to lack. Our hopes rose earlier this year when Mr. Yashwant Sinha announced a brilliant Budget. Mr. Vajpayee said, "People want action, not talk." Finally, we thought, we are going to see the second phase of reforms. But what has happened? The government has been in a repeated state of distraction. First, it was Tehelka, then the stock market scam, then Musharraf's visit, and now UTI's problems. Everything, in short, but the implementation of the Budget, and the Indian people are weary of excuses. Our politicians and civil servants, like our businessmen, seem to be good at defining the broad picture, but they fall apart when it comes to detailed planning, monitoring, readying alternative courses of action, following through and showing the determination to stay the course that eventually leads to delivering results. We don't give enough credit, I think, to Narasimha Rao's executive abilities. The reforms happened in those golden years between 1991 and 1993, not only because Manmohan Singh and he set clear goals, but also because he encouraged his principal secretary, A.N. Varma, to create an executional structure. This was the famous, hands-on Thursday committee of secretaries (of the economic ministries) which coordinated, monitored, gained cabinet consent and implemented reforms week after week. Lest we forget, Mr. Rao's was a minority government at the time, and it too had its share of distractions and scams. Ironically, there appear to be better performers in the states today than in the centre-for example, S.M. Krishna in Karnataka, Chandrababu Naidu in Andhra, Digvijay Singh in Madhya Pradesh. They are quietly transforming their states with the help of handpicked doers from the bureaucracy. One of them, S.R. Mohanty, a civil servant in Madhya Pradesh, succeeded last year in getting patients to pay for services in state hospitals against huge opposition. As a result, the quality of medical care in the hospitals has improved dramatically. Now, as head of the State Bridge Corporation, he has got the country's longest toll road, connecting Indore and Edalabad, going. How he went about it is instructive. Mohanty and his team of three discovered that the PWD had a Rs 120 crore road maintenance fund. With the Chief Minister's support, the team put this money into a sinking fund, and used it to raise Rs 500 crores through bonds with the help of SBI Caps. Having overcome the single biggest hurdle-of financing infrastructure--the team focused only on 3 per cent of M.P.'s roads, which carried 80 per cent of the state's traffic. It opened tenders for the Indore-Edalabad segment on July 2; it got all government clearances by July 11; it issued LoIs by July 18; and developers began constructing the world class highway on July 29. This is implementation. Implementing this Budget (and the second generation of reforms) will need huge administrative skills because of thorny labour, agriculture, and privatisation issues. The Prime Minister has also lost a doer and networker in N.K. Singh, who had so far been quietly coordinating the reform agenda, including the successful telecom reform. Now, Mr Vajpayee and Mr Sinha, if you are serious, you will wake up each morning and remind yourself that nothing is more important to yours, your party's and India's future than implementing the reforms. You will make it your one point agenda as Mr Deng and Ms Thatcher did. You will cancel your six foreign trips because you impatiently want results. Thus, you will bring bite to your Independence promise of making 2001 the "Year of Implementation". Remember, good leaders do a few things, but they bring all theirs and their organisation's energies onto that single focus, and they execute brilliantly. And history does not forget them.

MONSOON IRONIES 09/09/2001

Another splendid monsoon is coming to an end and its effects are lingering in the sultry air. The nights are lazy and green trees rustle pleasantly around the small off-white houses in our compact neighborhood. My mind is uneasy, however, and at odds with tranquil nature. Like many Indians, I am morally outraged that we should be sitting on the largest mountain of grain in the world and yet people go hungry, especially in areas affected by drought. Meteorologists tell us that this is the thirteenth good monsoon in a row, but we know that even in the years of plentiful average rainfall some areas don't get enough rain. The Food Minister is shedding crocodile tears, insisting that he has offered free grain, but "the states are not lifting stocks". The states claim that they are bankrupt and cannot afford to pay for transporting and distributing the food to the poor. Most of us in the cities, despite our reputation for callousness, would be happy to see the poor fed, but we are cynical of the government's ability to implement poverty programs. Rajiv Gandhi's famous warning rings loudly--that only fifteen per cent of the poverty money reaches the poor. Whether it is fifteen or thirty per cent the truth is that a vast sum leaks out. There are two main sources of corruption and inefficiency in our food-for-work programs. One is in honestly distributing food to the poor in return for a fair day's work. The second is in the movement of grain. Now, there is evidence to show that both leaks can be plugged and there are models of success that we can follow. The main disease afflicting food-for-work programs is that the wrong people corner the benefits. Typically, local officials collude with the sarpanch, create bogus rolls, and siphon the food grains. States like Madhya Pradesh have now found an answer--neither local officials nor sarpanches are allowed to decide the food-for-work project or the beneficiaries. It is the gram sabha or the assembly of all adults in the villager. When a food-for-work program is announced, all village men and women assemble together, vote for what asset they want to create in the village--a water tank, or a school building, a road. Those who want to work in exchange for food come forward in the assembly. Although the panchayat executes the poverty project, the gram sabha meets again to ratify the panchayat's accounts. Several sarpanches have already been sacked by their gram sabhas for stealing funds and NGOs in some drought-affected districts of M.P. have confirmed that corruption has declined markedly this year. After the 73rd amendment to the Constitution, one third of the panchayat members everywhere are now women and another quarter or so are also dalits or tribals. Moreover, one third of the sarpanches are also women. Hence, the old upper caste landlords and local BDOs and VDOs are an unhappy lot--they are seeing power and money slipping away. In Rajasthan, corruption has declined thanks to the "right of information" movement, as local officials are forced to open government records to the people. The second source of corruption and inefficiency is in the movement of food. Many welfare experts now advise governments that it is more efficient to give vouchers or food stamps to the poor rather than incur the huge cost of moving, storing and delivering the food to thousands of places. There is evidence from Iraq, U.S., Sri Lanka that vouchers work, and very simply. Instead of food, the beneficiary receives a voucher, which she (or he) exchanges for so many kilos of rice or wheat from her normal store--it doesn't have to be ration shop. The shopkeeper, in turn, exchanges these vouchers for grain when replenishing his stocks. Thus, grains only move through normal retail and wholesale channels. When the state doesn't physically move the food, costs come down and corruption diminishes. And state governments can no longer hide behind the excuse of lack of money for not implementing food-for-work programs. As prosperity has grown in the past two decades, we have learned that the poor are eating other food beside grain. So, a grain-for-work program, if it has to be attractive to the poor, will have to offer far more grain per day's work than in the past. This will increase the subsidy, but it will lower the costly grain mountain faster. With the two biggest obstacles to food-for-work overcome, can we now expect the morally offensive hunger amidst plenty to disappear? Will our leaders now implement massive food-for-work programs? If they don't, rats will get to the food. If they do, the poor might re-elect them. So, they can choose--feed rats or people. It doesn't seem to be a difficult choice since rats don't vote.

A TELLING TALE 23/9/01

This is a tale of two districts, one virtuous, the other vicious. Jhabua, in western Madhya Pradesh, is a success story where forests have regenerated, bodies of water have sprouted, and incomes are growing-all this, because people have learned to help themselves. Kalhandi, in Orissa, is a failure-there is chronic starvation and parents sell their children to pay for food. Both districts are uplands and home to tribal people. Both were once covered with splendid forests, mainly teakwood, but these have been dying in recent years. As forests vanished rains became irregular; village water tanks fell into disuse as government took over their ownership. Increasingly, the two districts became prone to drought, and people began to migrate for six months a year. In the mid-1980s both districts were in the news when Rajiv Gandhi visited them following reports of food riots in Jhabua and the sale of children in Kalhandi. The Centre for Science and Environment reports that in Orissa, the soil conservation department has spent more than Rs. 90 crores in the past 15 years to build 1400 water-harvesting structures. The central government has poured huge sums for constructing micro-watersheds. But these projects have been poorly implemented and massive corruption charges have plagued them. Lazy district collectors allegedly don’t work and the budgeted funds of the drought prone area program (DPAP) and the employment assurance schemes (EAS) are consistently under-spent. Whatever is spent is largely lost in corruption, according to NGOs. “We get complaints of corruption in watershed activities, but the officials belong to the state (rather then the centre) and we can’t punish them,” says N.C. Saxena, former secretary of rural development. It is the opposite story in Madhya Pradesh, where local communities created 706,304 water harvesting structures between February and June alone this year and they will irrigate 52,000 hectares of additional land. The benefits too have come quickly. Decent rains in late June and July filled these village tanks, ponds, and earthen check dams (johads). Madhya Pradesh is succeeding because it is involving people (and NGOs) in managing water and energising institutions of local self-government, while Orissa depends on apathetic bureaucrats to do the job. The people of Jhabua district tell their own story. Residents of Kalakhoont removed three metres of silt from their village tank that had accumulated from the erosion of surrounding hills. The very first rains in June filled the tank and “the stored water will be enough to irrigate more than 61 hectares of land and recharge our old, unused wells,” Nana Basra excitedly told reporters of “Down to Earth.” In neighbouring Datod, villagers built a community dam on the seasonal Mod River to irrigate the surrounding villages. “This is something unheard of in our drought stricken district,” said Balusingh Bhuria, president of the block panchayat. People contributed a quarter of the cost through their labour in these initiatives in Jhabua, and they were ably assisted by an NGO and supported by the state watershed mission. As a result of hundreds of these efforts over the past five years the water table in Jhabua is rising. Satellite pictures confirm that water tanks, lakes, and village ponds have grown visibly and so have trees, shrubs and green cover. The people in Ambakhoda have stopped migrating. “Our hills have become green again and I have crops in my field,” says Manna, a 65-year-old farmer. In Kakradhar “we have plenty of fodder for our cows”, says Jhitra, chairwoman of the village’s forest committee. In Kalidevi, the cropping pattern has changed-villagers get two crops because ground water has risen dramatically and there’s plenty of water after the monsoon is over. The greening of Jhabua district though 218 micro watersheds is an example of people’s participation through watershed committees-its members are water users, self-help groups, and panchayat representatives. And one third are women by law. The watershed committee is ultimately accountable to the gram sabha or the village assembly. For the first time in history, it seems to me, we are dealing with water and drought and water in a different way. Gujarat and Rajasthan have also reported plenty of miracles of community effort during the last drought, but these states are not pushing power down to the people as single-mindedly as M.P. This Gujarat government, in fact, is notorious for sabotaging panchayati raj. The challenge for the future is to look after these people’s water structures, and keep recharging the ground water. Environmentalists tell us that four years is enough for ecological regeneration, and if you maintain a structure for 5 to 8 years then the community will be able to withstand three droughts in a row. That is why I am betting on Madhya Pradesh because it is creating long term, sustainable institutions of local democracy.

THE TERRORISTS ARE INSIDE  7/10/02

On that terrible Tuesday, September 11th, I was visiting my aged mother in a village in the Punjab, at her guru’s ashram by the banks of the river Beas, when my son called from China. “Turn on the TV,” he said urgently. And we began to watch in stunned disbelief the barbarous tragedy unfolding on the other side of the globe. The second tower of New York’s World Trade Center came down before our eyes. It is three weeks now since that macabre dance of death, but I am not sure that we have come to grips with these mind-bending events. Ironically, faceless terrorists in Kashmir had set September 11-the same dreadful day-as the deadline for what women could wear. Tailors in the valley had been busy making burqas for weeks. But an innocent 15 year old girl, whose tailor failed to meet the deadline, found acid sprayed on her face as she was rushing home from school. She lost an eye and her pretty face was disfigured for life, and I discovered that I was far more moved by her tragedy. Two years ago Osama bin Laden announced from his hideout in the mountains deserts of Afghanistan, “India and America are my biggest enemies and all mujahideen groups in Pakistan should come together to target them.” Since then I have wondered why he singled out India and America as his targets. Migrations of diverse people created both America and India. America, of course, is a nation of immigrants, but India too was created by the historic wanderings of many peoples and tribes of Asia over thousands of years. America, until recently dealt with its diversity through the “melting pot”; India accommodated its migrant minorities through the caste system, which made it possible for a vast variety of people to live together. For example, Jats became a separate jati. Today, India and America are unusually open, diverse, and pluralistic societies, but they constantly have to appease minorities. Both present a challenge to fundamentalists, who are only comfortable in monolithic states with one religion, one language, and one mind. (Indeed, both Hindu and Muslim fundamentalists have this problem in India.) Both societies are vulnerable to terrorists because they are so open. We have to be careful what slant we give to these events. It is not a war against Islam, nor is it a conflict with Pakistan. Pakistan has a more difficult problem because its identity is at stake. It has to decide whether it wants to be a fundamentalist Islamic state or a modern Muslim nation. By allying with the U.S. it has, in fact, been forced to choose. It must now learn that to be “modern” means that it has to be tolerant. Indians too would prefer a stable Pakistan under the watchful eye of America, rather than a fragmented, dysfunctional and terrorist country guided by mullahs. Thus, General Musharraf may be our best bet. In the long run India will benefit from what has happened. The world will now be much more sensitive to terrorist activities in Kashmir. The U.S. will keep Pakistan on a tight leash, especially since it possesses nuclear weapons. Instead of worrying about Pakistan we should seek economic gains from this conflict-both as a supplier of goods to the coalition armies fighting this war or a rest and tourism destination for their soldiers. Let’s remember that our national objective is economic and not military. We will only become a great nation if we become economically strong. Our real enemy is not Pakistan but the people inside who keep India weak economically. These are the corrupt employees in the Customs department who scare young entrepreneurs, the filthy excise inspectors who drive away foreign investors, the SEB employees who steal electricity, the forest officers who plunder our jungles, and Railways officials who fight corporatisation. Our real terrorists are government officials who are thwarting our second green revolution by denying our farmers the new miracle seeds. Cotton farmers in both our competitor countries, the U.S. and China, have taken a lead over us because they have planted their fields with Bt cottonseed, which protects their crop from bollworm--the dreaded disease that destroys half our cotton crop every year. As a result, American and Chinese cotton yields have risen 30 per cent and their cotton has become cheaper. But in India, officials have once again refused Mayco, the Maharashtrian seed company, permission to sell the same Bt cotton, even after six years of successful field trials. Some say that the company was unwilling to bribe, but what matters is that farmers in China and America are in the midst of prosperity while many of our cotton farmers have committed suicide. Our real enemy is within.

THIS IS NOT JUST AMERICA’S WAR 21/10/02

It is more than five weeks since the world turned upside down, and we are now in the midst of a war. Some Indians are uncomfortable and ask who is America fighting? Others are filled with fear and wish that they were not fighting in our neighbourhood. Americans too are confused, and insistently ask why were they made targets of the September 11 attacks? They wonder why is America disliked? And in this case, so hated that a few young men were willing to defy the basic human instinct for survival and die for what they believed to be a worthwhile cause. By and large, however, Indians have welcomed Bush’s global war on terrorism, partly because it has strengthened our own government’s resolve to fight terrorists. Indians believe that Maulana Masood Azhar is our Osama bin Laden--the mastermind of Jaish-e-Mohammad, a Pakistan based terrorist group that claimed responsibility for the suicide bombing in Srinagar that killed 38 people on October 1. Hence, we were relieved when America banned this organisation and froze its bank accounts. Azhar believes in jehad like Osama, and we want our government to go after him with the same vigour that America is going after Osama. Yet, despite supporting this war, Indians are ambivalent because we have been offended time and again by America’s indifference to non-American lives. America has historically propped up dictators in Latin America and backed tyrants in Africa and Asia, who in turn have killed millions of their people with America’s knowledge and support. The present, heinous Taliban regime is merely one example. One has to remember the millions who were killed in Vietnam, and Cambodia; the thousands who died in Lebanon in 1982; the countless millions who were victims of American government supported dictators in Haiti, Chile, Nicaragua, and El Salvador. It is this disregard for non-American lives that might begin to explain why America is disliked around the world. We also have the usual anti-Americanism, which is just as fashionable in our influential left wing and academic circles as it is in Europe and Latin America. These people are fulminating against this war. Many of them are the same people who oppose economic globalisation, technology, free capital flows and foreign influences. They charge that America is arrogant, hypocritical and is exporting an unhealthy consumerist way of life. However, this sort of anti-Americanism does not resonate with the common person, who loves America’s movies, rock stars, and uninhibited style, and admires the achievements of American scientists and athletes. I am not a fan of consumerism, but I am resigned to it because it reflects the rise of the poor into the middle class. I have sometimes wondered that when intellectuals consume books, classical music and art, we call it “gracious and elegant”, but when the poor consume, we call it “consumerism”. The average person is not anti-American because she realises that despite its huge flaws, America it is perhaps the least territorial and the most idealistic among the all the great powers in history. When Europeans were dilly-dallying it was America that came to the aid of Muslim minorities in Bosnia and Kosovo. It led the attack on Christian regimes in order to defend Muslim victims. And it did so even when there was nothing to be gained from it. Our Islamic population is also ambivalent about this war. Muslim Indians are more ready to argue the Palestinian case, and believe rightly that America could have done more to restrain Israel. They are upset that half a million Iraqi children have died as a result of American economic sanctions. They are consumed by the irony that Taliban and Osama bin Laden are America’s creation from the cold war. We have a few Islamic fundamentalists as well, but the truth is that the average Indian Muslim has reacted to this war in a moderate and mature way. Hence, we have not seen Indian Muslims protesting in the streets. Amidst all the confusion, uncertainty and fear, ordinary Indians understand that in the end this is a war against fanaticism and terror, and for decency and civilised tolerance for other religions and cultures. They realise that in all wars some innocent people will be killed. But they also know from their unhappy experience of the past decade that almost every victim of terrorism is also an innocent person. Thus, this is not America’s war. It is also our war. But President Bush has to be sensitive as he prosecutes it. He needs to convince the world that non-American lives are just as precious as American ones. Otherwise, for all the good that America will achieve, the world will continue to dislike America.

THE AMBIGUOUS VILLAGE 04/11/01

We have been obsessed too long with events outside, and it is time to return to our own concerns. I turn this Sunday to a tragedy that occurred in U.P.’s Muzaffarnagar district this summer. “Teenage lovers hanged to death as hundreds look on” read the bald headline, and the page five news report told the tragic story of Sonu, a jat girl, and Vishal, a brahmin boy, who were neighbours and had been in love for months. Their families had tried to break the alliance because they were of different caste, but when Vishal’s father caught the young lovers “in a compromising position in field nearby,” he summoned the families and the village elders. They held an impromptu village meeting, “ordered a death sentence”, and took the couple to the roof and hanged them. The next day the police arrested the families and the villagers who had taken part in the event. The parents, while consoling each other in jail, said without remorse, “We had to do it for the village’s honour.” The police chief added, “They will be let off, of course, because witness wont come forward. But then this sort of thing is not uncommon around here,” and he recalled three such incidents during the past year. I was aghast, and I thought, how, indeed, does one begin to make sense of the Indian village? B.R. Ambedkar, one of our founding fathers, shocked many in the Constitutional Assembly in November 1948 when he said: “What is the village but a sink of localism, a den of ignorance, narrow-mindedness and communalism?” Some British administrators, however, were more generous. Charles Metcalfe, the governor general in the 1840s, called our village communities, “the little republics,” and Lord Ripon, the Viceroy in the 1880s, thought that the Indian village “contained a reservoir of intelligent and public-spirited men”. He proposed local boards of elected village representatives, and with that he struck the first blow for local self-government. Mahatma Gandhi was a man of the city but he had the most romantic view of the countryside. He dreamt of building a modern India around the self-governing village: “My idea of village swaraj is that it is a complete republic independent of its neighbours for its own vital wants and yet inter-dependent for many others.” Karl Marx too, curiously enough, was struck by the independent nature of the Indian village because it contained both agriculture and industry. But like Ambedkar, he condemned it as closed, and stagnant. He felt it “restrained the human mind within the smallest possible compass, making it the unresisting tool of superstition, enslaving it beneath traditional rules, depriving it of all grandeur and historical energies.” Jawaharlal Nehru also disagreed with Gandhi, saying that “a village, normally speaking, is backward intellectually and culturally and no progress can be made from a backward environment.” As in all things, I think the truth lies somewhere in between. The majority of the villages, I am sure, are deeply unjust, many are chronically fractious, and some are tyrannical to the lowborn. But even if a quarter are decent, just and peaceful then we ought to lend our whole hearted support to the revolution that is quietly bringing self government to our villages. Rajiv Gandhi fought courageously for panchayati raj, and this culminated in the 73rd Constitutional amendment. Today, panchayat elections have been held in all major states and there are more than three million local legislators, of which one million are women. This could be the greatest change in the Indian village in a thousand years and the grandest blow for women’s freedom. Yet many Indians are sceptical and almost no one in our political classes is enthusiastic about village democracy. The urban middle class is too busy with its own problems and the village has receded into a remote memory. When we do think about it, we think of caste wars. State politicians and bureaucrats oppose panchayati raj because they will lose power. The villagers themselves lack confidence and education. Only in a few states--West Bengal, Kerala, Karnataka, and Madhya Pradesh--have expectations grown, along with skills and confidence. People here have seen a new class of village leaders come up, corruption has begun to decline, and there are better schools, primary health clinics, and cleaner water. It is a matter of time, I think. Plenty of heart-warming (and heart-rending) stories of panchayati raj come every day from across the land, and Delhi’s Institute of Social Sciences meticulously records them. As villagers in the other states gain experience, they too are becoming more assured and determined, and are beginning to stand up to the feudal forces. Although, like the economic reforms, this liberal revolution is half-complete, it is going to change the way we judge the village.

INESCAPABLY ENGLISH 18/10/2001

Ever since the British left we have heard constant carping against the English language. Then one day in the 1990s it suddenly seemed to die, and quietly, without ceremony English became one of the Indian languages. English lost its colonial stigma, oddly enough, around the time that the Hindu nationalists came to power and realised that Hindi had failed them. Hindi protagonists lost steam because they lost their convictions. Their own daughters wanted to learn English and get ahead in the world and their wives reminded them that English was their child’s passport to the future. Based on present trends India will become the largest English-speaking nation in the world by 2010, crossing the United States, according to the English linguist, David Dalby, the author of Linguasphere Register of the World’s Languages and Speech-Communities. Dalby predicts that India will then become “the centre of gravity of the English language”. Thus, it would seem just as intrusive to want to remove English from India today as it was to introduce it during the time of Rammohun Roy and Macaulay. We are more comfortable and accepting of English today, I think, partly because we are more relaxed and confident. Our minds have become decolonised and “Hinglish” increasingly pervades our lives. For a hundred years the upper middle classes have mixed English words in their everyday talk, but the present media argot is a creature of the new satellite and cable channels. Zee, Sony and Star, supported by their advertisers, have created this uninhibited hybrid of Hindi and English. Avidly embraced by the newly emerging middle classes, this new popular idiom of the bazaar is rushing down the socio-economic ladder. The purists disapprove, but most of us are resigned to it-we know this is how languages have usually evolved. Over the decades we have learned painfully that it is often better to go with the tide than to impose one’s will--all those damaging experiments in Bengal, Gujarat and other states, which deleted English from the school, have ended in decimating millions of futures! That English is one of our Indian languages should neither be cause for mourning nor of rejoicing. It is the way the world is going. English has become the global language at a time when technological breakthroughs have shrunk the globe. Yet, one wonders why Hindi nationalists did not invest more energy, enthusiasm and creativity in making Hindi richer and a more attractive alternative. Why did they not translate all the world’s great literary and scientific works into Hindi? Why have we not had an efflorescence of regional writing in the past half century? Certainly a few fine writers have emerged, but not the renaissance that we had hoped for. It is a sad thing that our own languages are not esteemed by their speakers. Mothers prefer to send their children to English medium schools as vernacular schools have poorer standards. Learning English also means a better job. The deck has been stacked against our vernaculars for a 150 years ago, but our language intellectuals could have done more. Whatever the reason, more and more Indians are growing up today more comfortable in English than their mother tongue. It is still a minority, but if this trend continues for a couple of generations then one day that minority will become a majority. What could stop this is a sudden resurgence in the quality of vernacular schools, and a renaissance in their literatures. But given the global ascent of English, this appears unlikely. We have made a pact with the devil. Fluency in English gives us a competitive advantage in the global society, on the one hand. But losing our mother tongue does impoverish our personality, on the other. For language is not only a means of communication, it is a source of new ideas and emotions. We realise that we cannot think without language, but we forget that we cannot feel without it either. I am able to feel certain emotions when I speak Punjabi that I do not in English. I have always wished that I could write in Punjabi for then I could express a whole range of new feelings. It is unclear where we are headed. What is clearer is that more and more Indians are speaking and writing English and getting published. They are finding a market for their writings both in India and abroad. Since the publication of Salman Rushdie’s Midnight Children in 1981, Indian writing in English has become not only more visible, but also respectable. Earlier, Indians were suspicious of their countrymen writing in English-they argued that one could only write creatively in one’s own mother tongue. But they forgot to notice that English was becoming a mother tongue to more and more Indians.

What is wrong with our temper? 02/12/2001

Each age seems to have a unique temper, and it reflects the mood and the spirit of the people. The most famous mood, as far as I can tell, belonged to Europe at the end of 19th century when a spirit of intense vivacity--an almost desperate joy at being alive--led to some bold experiments in the arts. It came to be called “fin de siecle” and it was a rebellion, in part, against the Victorian “middle class morality” that Bernard Shaw had satirised with great wit. The Americans, of course, have built a publishing industry around their moods--hence, “the roaring twenties”, “the swinging sixties”, etc. If I had to define the present Indian temper based on newspaper reports, I would conclude that we lived in pretty dispirited times--a sort of post-reforms, post-Mandal, post-Nehru, and post-modern menopause. What accounts for our low temper? Why is there a general feeling of malaise and that too at the beginning of a new century? It is a puzzle, all right. Here, we have experienced a veritable revolution in the 1990s in our political, economic, and social lives. Our minds are freer and less colonised. Politically, we have been liberated from the rule of a single party and dynasty at the centre, and power has begun to travel to the villages via “panchayati raj”. Economically, liberalisation has begun to free us from the heavy hand of bureaucrats and politicians. Socially, the lower castes have risen through the ballot box, and there is a palpable feeling of confidence among the backwards. Technologically, our educated young have found a new hope in IT. Our day-to-day lives too have changed perceptibly. No one talks about inflation and shortages these days. Telephone services have gradually improved and we don’t need to bribe to get a railway berth as ticketing is computerised. Gone is our constant insecurity over foreign exchange and food grains. Neither are we hostage to the stiff news bulletins of Doordarshan. Nor do we run after the minister’s PA for a cooking gas connection. We have quietly accepted these changes and they have unthinkingly become a part of our lives. We have also had world-class performers to root for--Arundhati Roy, Vishwanath Anand, Amartaya Sen, not to mention our beauty queens. Even in the recent Afghanistan war, the world has noticed the exemplary behaviour of Indian Muslims, as Tom Friedman pointed out in the New York Times and attributed it to our open democratic society (which allows a Muslim, Azim Premji, to become the richest Indian). And yet, despite all this our national mood is down and out. Is it because we are in the midst of an economic slowdown, and this affects our mood? After the sensational years, 1993 to 1997--when economic growth averaged 6.8 per cent a year--the truth is that growth has slowed down in the last five years to an average 5.8 per cent. But let us not forget that despite being in severe slowdown, we remain one of the fastest growing large economies in the world. The real culprit behind our malaise, I think, is the depressing state of day-to-day governance in the country. What blackens our day is that state electricity employees steal forty percent of the nation’s power. They don’t steal power in Bombay because distribution is in private hands; yet knowing this, we haven’t been able to privatise power distribution elsewhere. If only half this theft stopped there would be enough money to build new power plants. It costs more to ship goods from Delhi to Bombay than from Bombay to London because railways have failed to carry freight economically and honestly and truckers continue to be victims of poor roads and incessant delays and bribes at octroi and police posts. In U.P. and Bihar one third of the teachers don’t show up in village schools, and sixty percent of the contraceptives of the health ministry are stolen or misused. No one has calculated the cost of loss of trust in our system because judicial delays allow people to get away with “bounced” cheques. Contributing to our unhappy mood is the loss of idealism and ideological certainties. We feel betrayed that Nehruvian socialism has led us into a ditch, and secularism has turned out to be hollow--out of tune with the people’s ethos and unable to stop the rise of Hindu nationalism. It is difficult, meanwhile, to feel enthusiastic about the market because the “invisible hand” is, in fact, invisible. The loss in today’s jobs is more obvious than tomorrow’s rewards that trickle down subtly. What we can see instead is the failure of our politicians to invest in education and health to build the capabilities of our young. So, maybe there is a reason for our low spirits.

Who will roll the chapatis? 16/12/2001

I tell my young niece that this must be the best time in history to be a woman. Around the world women have never been freer and this has to be one of great achievements of the 20th century. The consciousness of women’s oppression came to us from the West, but women’s organisations in India passionately took up the rallying cry, and their prize has been a third of the legislative places in village and municipal governments and a third again as heads of these governments. We have thus witnessed the great spectacle of almost a million women panchayat members begin to govern our villages, and of these almost a quarter of a million are chairpersons. Studies by academics reveal that women are increasingly exercising a benign influence over local affairs and panchayats headed by women outperform those headed by men. Having said that, there still remains a huge gap between aspiration and reality-the sobering truth is that millions of women either die in childbirth or are never born, and thousands are victims of domestic violence, rape, and dowry deaths. In the summer of 1994, Basanti Bai, a dalit, made history by becoming the first woman sarpanch of Barkhedi gram panchayat in Sehore district in Madhya Pradesh. Her family remembers those days when the upper caste villagers repeatedly threatened her and registered fake complaints with the police. After she resigned no one in the village would give her work and she had to go outside to look for work. Eventually the village realised its mistake--she had been an excellent sarpanch--and they voted her back at the next election. Today, the village hand pump is a proud testimonial to her leadership. Fatimabai, a sarpanch in Kurnool district in Andhra, wears a burkha and can neither read nor sign her name. She lacked confidence at first, but later managed to do what no man had done. She metalled the village access road, built a schoolhouse, repaired the public water tap, registered land ownership pattas, and physically led the village to clean up a large tank. Above all, she refused to lease the village pond to her biggest supporter; instead, she held an open auction, which yielded a lakh of rupees for the panchayat fund. A decade ago during the debate on the Constitutional amendments, we constantly heard this refrain: if women get on the panchayats, who will make the chapatis? Who will look after the children? Well, no one talks like that anymore, as Bishakha Dutta’s book shows. Today women members travel long distances, sometimes escorted by male relatives. A survey by CWDS finds that 65.5 per cent of women attend panchayat meetings regularly. Studies also contradict the common belief that women representatives belong to influential families with political connections. Susheela Kaushik’s study of six states confirms they are mostly OBCs and 40 per cent belong to families below the poverty line. But there is a darker side, too. In Madhya Pradesh, Kusum Bai, the OBC sarpanch of a gram panchayat in Khandwa district, defeated another woman candidate, whose husband, along with three others, gang-raped her. Two days later, completely traumatised, she tried to commit suicide. A primary school teacher, who became sarpanch in Pune district, was beaten up by the rival male candidate (and his hired goons) simply because she had won the election and he had not. The overwhelming evidence, however, suggests that the Indian village is changing. Studies confirm that women panchayat leaders perform better because they focus on the right priorities--installing water pumps and wells, constructing toilets, village roads, schoolhouses and appointing good teachers. The women themselves report that they now receive new respect from their families and the community. Those elected have realised that they need to acquire an education. Inspired by the example of Mayawati, the dalit leaders of Uttar Pradesh are keen to see girls in their villages attend school regularly. Govind Nihalani’s film, Sanshodhan, sums up the picture. In it a woman member of the panchayat in Rajasthan mobilises the village to build a primary school and successfully foils the local Thakur landlord who is bent on stealing the school funds. It is a simple political film, which shows how Thakurs and the elite will try to subvert the democratic process when it goes against their interest. They try to pack the panchayats with their relatives and friends, but eventually they fail and have to reconcile to sharing power. They say that the measure of civilisation is how it treats its women. If this is true, then we are certainly becoming a more civilised nation day by day, and panchayati raj has something to do with it. There is much to be done, but we have come a long way from Manusmriti to Madhuri.

A HAPPY CONSENSUS 30/12/2001

We have always known that a successful nation has three attributes: politically, it is free and democratic; economically, it is prosperous and equitable; and socially, it is peaceful and cohesive. But it is rare to find a nation, which scores on all three counts. Most Western countries have democracy and prosperity, but they suffer from social disintegration. The nations in the East have prosperity and social cohesion but they suffer under authoritarian political regimes. For decades India used to score high on the political front, middling on social criteria and low on the economy, but in the 1990s it has reported considerable gains in all three areas. Politically, our elections have become fairer, thanks to the interventions of the election commission; democracy has also gone down to the village after the 73rd amendment to the Constitution; but governance at all levels has deteriorated. Economically, we have become more prosperous as our growth rate climbed up, yet our economy has remained half reformed. Socially, lower castes have risen, especially in the north and after Mandal, but our peace has been continuously shattered by turmoil and violence in Bihar and other places. The world has fought bitterly over how to achieve these three goals. Even in the last fifty years when there was relative peace in the world, the Cold War ensured that we remained divided. Now, after the collapse of communism and the slow erosion of ideology in the world, a remarkable consensus seems to be emerging, at least on one of these goals-how to make a poor nation prosperous. It is a consensus based on empirical data, painstakingly gathered by researchers covering a half-century, and can be found in Gerald Meirer and Joseph Stiglitz’ Frontiers of Development Economics: The Future in Perspective. Not surprisingly, the starting point in moving from poverty to prosperity is sustained high economic growth. Nothing reduces poverty like growth. Since India and China together account for more than a third of the world’s people, and since both have experienced high growth for two decades, the world as a whole has become less poor and more equal. More than a half billion people in the two countries have risen out of poverty between 1980-2000. What makes for this poverty reducing growth? Two things-one, a healthy climate for business and investment and two, the poor empowering themselves to take part in the growth. A healthy climate is not just about attracting multinationals (although foreign investment is very important in raising the savings rate of a society). It means keeping inflation low, for example, so that ordinary people can enjoy the rewards of their efforts. A healthy climate is also one where small entrepreneurs are not at the mercy of inspectors and petty government officials, who want a bribe before they will put signature on paper. This is the shame of India, as the Global Competitiveness Report keeps reminding us, and explains our low levels of foreign investment. The most troublesome officials are in the excise, customs, and tax departments-all of them in the Finance Ministry-yet neither Manmohan Singh, Chidambaram, nor Yashwant Sinha succeeded in cleaning up his own stables. The widest consensus is on opening the economy to trade and investment. The record shows that open economies have consistently outperformed closed ones, and the link between economic growth and openness is so overwhelming that it should silence swadeshis and protectionists forever. So, if we wish to be a great exporting nation, we must lower our tariffs, which are still amongst the highest in the world. There is widespread evidence that an attack on poverty does not succeed through government programs, where majority of the funds leak out in corruption and administrative expenses. It is vastly more successful when the poor take part. This happens where the poor have access to schools, primary health care. Also, where panchayati raj has taken off, communities report lower teacher and student absenteeism and better run poverty programs. The history of poverty is one of inadequate property rights. A fourth consensus is on the crucial importance of enforcing property rights if one is realise the benefits of the market. In India, we have an independent judiciary, but judicial delays and our inability to dismantle the accumulated legislation of the socialist raj nullify our advantage. Finally, people everywhere are disappointed with the massive state intervention of the socialist age. The consensus is to redefine the role of the state to give us only good governance and to build up human capabilities that are so crucial in raising our productivity. For the rest, the state should be kept out, and we should observe the Chinese proverb: the people are happy when the king is far.

PLAYING TO WIN 13/01/2002

The stubborn persistence of our software exports is a source of some embarrassment to our armchair intellectuals who have been regularly predicting their crash. Instead, they have kept growing by an amazing 50 per cent a year for more than a decade, and even in this worst year in the industry’s history they will grow 30 per cent. Any other industry would die for this sort of constancy, and so would our cricket team. Critics of the industry contemptuously described its work as “body shopping” and surely how could such lowly activity last? Then, it was the Y2K bug that was keeping it afloat; well, the bug went away, but our software industry refused to slow down. Next, they said, the American recession will surely stop it; the recession has hurt, but not to the extent that everyone predicted. Finally, September 11 would be its death knell, but the industry seems to have quickly recovered from this crisis as well. What accounts for its resilience, I think, is that India has emerged as the only serious candidate for outsourcing software. Philippines is not an option. Ireland has out priced itself. Israel competes in a different segment. China is at least three to five years away. The only thing that could stop India is a war with Pakistan, which would raise the risk of outsourcing to unacceptable levels in our customer’s eyes. The major American companies have doubled their outsourcing budgets, reports the latest Forrester survey. Another report says, “185 of the Fortune 500 companies are now doing offshore work with Indian companies.” Giga expects offshore outsourcing to grow 23 per cent in 2002. All the major software suppliers in the U.S. (including Accenture and EDS) have recently announced that they are coming to India, which raises the prospect of fairly vigorous acquisition activity. All this, however, does not convey the pain suffered by the industry in the past year. The best companies have seen their benches grow, prices and margins diminish, engineers laid off, empty buildings, expansions delayed and hopes destroyed. But from the pain is emerging a stronger and more sophisticated industry. What are the lessons it has learned? First, larger, brand name companies will do better in tougher times; weaker, smaller ones will not survive. Second, it is paramount to stay close to the customer. Some CEOs of the software companies have physically relocated to the United States. Where they haven’t, they now spend much greater time there, supported by a strong white American head of sales. Both Wipro and Infosys have increased their physical presence in North America. The pay-off too has been immediate--they are getting their best ideas for new products and services from their customers. Third, while it is important to target new customers, the bigger rewards come from harvesting existing ones. Hence, “key account management” has become a powerful tool. Companies are placing teams of engineers at the customers’ disposal to show them newer ways to save costs, improve returns from existing investments, introduce newer applications. Fourth, vigorous interaction with customers allows a company to demonstrate “domain expertise”. Infosys has hired a medical doctor to enhance its credibility with its health care customer. An airline customer feels more comfortable talking to a former airline employee, who now works for NIIT software. The customer feels that my software supplier understands my needs, and this removes some of the pressure from the sensitive subject of pricing. It leads to longer-term contracts and dedicated offshore centres. Domain knowledge, if captured and retained is wonderfully aggregative--what you learn from one customer adds value to the next. Fifth is the power of alliances. For example, Mastek, a software company in Bombay, has formed a 50:50 joint venture with Deloitte Consulting, which has close to $ 2 billion in worldwide revenues. A Deloitte executive runs this joint venture, and Deloitte’s customers derive comfort from outsourcing their work to someone they trust. Thus, our companies are becoming sophisticated. They are rising in the value chain by offering enterprise resource planning, applications maintenance, and Internet services. They have broken into retail and distribution, professional services, communications and utilities. They have come a long way from the “coolie days” of Y2K. Those companies who sneered at Y2K work now realise that they lost an opportunity because it opened the door to many large customers. It seems to me that the export of software and IT services are to India today what textile exports were to Britain in the early 19th century. If you were a Londoner in the 1820’s you would have seen lots of textiles going off to India, but you wouldn’t have seen an industrial revolution. Similarly, I think we can see these technology exports, but we cannot see a services revolution that is transforming India.

IGNORE PAKISTAN, HEED CHINA 27/01/2002

A few years ago the respected head of a multinational company observed the unreal quality of our public discourse. He said that he had read our newspapers voraciously for two weeks and for every report on China he had counted eight on Pakistan. “To the world at large only China and India matter in Asia,” he said. “When people say that the 21st century will belong to Asia, they have China in mind, and then India. Japan doesn’t count, because its demographics are wrong. Pakistan doesn’t even exist in the big picture. Although China is currently ahead, India is the only country that could counter-balance it. I realise Pakistan is your neighbour, but so is China.” Listening to him I was reminded of one of Patanjali’s yoga aphorisms: “What a man thinks, so he becomes.” Patanjali was referring to controlling our thoughts during meditation, but what is true for an individual is also for a nation. We are obsessed with Pakistan and so we will become like Pakistan--a failed economic and political state. Instead, we should engage with China, the most dynamic economy in the world for two decades. Pakistan is a distraction and pulls us down. China will push us up. What can China teach us? The first lesson is to have clear national objectives. For twenty years China has had only one objective--to become an economic superpower and lift its people out of poverty--and it is pursuing it single-mindedly. Nations, like individuals, perform best when they are one-pointed. The Chinese have learned that law and order, speedy justice, political stability--all good in themselves--also promote growth by creating a sound climate for investment. Chinese leaders wake up in the morning and they think only one thought--the prosperity of their people. What do our leaders think about? The New York Times just reported that there were five Chinese delegations in Bangalore in the last month alone, trying to understand India’s success in software. “They have beaten us in everything, now they also want to defeat us in software,” said the CEO of an Indian company who refused the Chinese entry into his premises. Premier Zhu Rongji visited Bangalore this month to woo Indian companies to come to China; he went to Delhi not to talk about Aksai Chin or Pakistan but to establish a Beijing-India airlink. “Foreign investment has been the fuel behind the Chinese miracle”, reported the Wall Street Journal. “Every dollar of foreign investment yields five dollars of additional output to the Chinese economy. That compares with less than two dollars in the state owned sector.” More than fifty per cent of China’s phenomenal exports come from foreign enterprises. Even assuming that 70 per cent of Chinese FDI is from non-resident Chinese, the 30 per cent that is not is four times larger than ours. Yet Indians are the ones who fear foreign investment. Our concerns over swadeshi reflect our inferiority complex and our lack of confidence in our ability to compete in the global marketplace. How did the notoriously insular Chinese manage to change their attitude to foreign capital? This is a second lesson China can teach us: how to get more foreign investment. Why China is growing so fast is the result of a phenomenal rise in labour productivity, according to a study by Zulin Hu and Mohsin Khan of the IMF. They trace this not only to foreign enterprises, but also to Chinese town and village enterprises, “which have drawn more than 100 million people from low productivity agriculture into higher value added manufacturing.” Started initially as simple agricultural processing factories, many are now world-class exporters. China’s reforms started from below unlike ours, and the third lesson we can learn is to shift the focus of our reforms onto agriculture and the village. Another secret of Chinese productivity is flexible labour laws. The Chinese are able to hire and fire workers based on customer demand. Chinese workers in state enterprises are routinely punished for indiscipline. This is not possible in India. Even when a company is sick and has stopped production, India’s public sector workers earn full salary. Hence, a fourth lesson is to reform our labour laws. There are many more lessons. But first, let’s first learn to ignore Pakistan and heed China. Every Indian leader should scrawl “China” in big letters in his office to remind him everyday who is our real competitor. While China is currently ahead--it also has a twelve-year head start in economic reforms--our economy has performed well in the past two decades, and if we accelerate our reforms, especially in agriculture and education, we will gain ground. If we don’t, then China is going to push us around and humiliate us in the 21st century.

TURN ON THE LIGHTS 24/02/2002

Nothing in our country diminishes us more than our power situation. It reminds us everyday that we are a Third World country. We have lost ten years since we began electricity reforms, and had we made the same progress as we have in telecom, we would have been able to say proudly what a Chinese woman said to me in Shanghai recently, “I feel I am living in a different country.” Our biggest mistake has been to forget the central idea behind our economic reforms-create competition in the market, and this will bring consumer choice, lower prices, better quality and improved service. To create a competitive power market we have to allow anyone to produce electricity and sell it in the market. If we did this there would be plenty of good quality electricity for everyone, prices would come down, and service would improve. In our enthusiasm over the Orissa model, we began to break up our State Electricity Boards, privatise distribution, but we forgot that there must be more than one player in each distribution circle. For creating competition we don’t need to lay new lines, because each producer of power ought to have open access to the central grid and connect its power to the lines that are already laid. And any distributor, supplier or bulk consumer of power ought to have open access to this power, and by paying a charge for the use of the network it should bring power to our doorstep. This is what we are beginning to do in telecom. We must separate in our minds carriage (the wires or lines) and content (the electricity that runs on the lines). Two momentous events are happening over the next few weeks, and they can still set the country on the right path. One, the Electricity Bill 2001 is before a select committee of Parliament and is currently being debated. Two, Delhi is about to privatise power distribution. The Electricity Bill accepts the idea of open access in distribution, but it does not specify when. The original draft bill specified that it would happen in 3 years but the monopolists in the ministry deleted this date. Our well-intentioned power minister, Suresh Prabhu is trying hard to solve the power crisis. He is bright and energetic, but he has unfortunately been captured by the vested interests in the ministry and the SEBs, who want to preserve their monopolies. Otherwise, why should they suppress part of report of the Expert Group that included Montek Singh Ahluwalia, Deepak Parekh, Rakesh Mohan, Jairam Ramesh, K.V. Kamath, and Harish Salve? The Group studied data from around the world and concluded that our power prices would only come down if we allowed more than one company to sell power to the final consumer. It also cited the example of Bombay, where competition between BSES and TEC had lowered power prices. Mr Prabhu should look at international experience (e.g. U.K., Australia and New Zealand) where residents have multiple providers of power, and this competition has resulted in lower prices and better service to their consumers. The European Union has been so impressed with U.K.’s Electricity Act of 1989, which has brought down electricity prices by 30 percent over the last decade, that many European countries are restructuring along similar lines. Mr Prabhu should also learn from the telecom sector, where vested interests in the Department of Telecom (DoT) had tried to stop competition, until the Prime Minister in frustration had to take away the telecom reforms from the telecom department. Until he passed the authority to the Jaswant Singh committee, nothing happened because the Department of Telecom blocked every reform. Mr Prabhu will have to begin to value competition or Mr Vajpayee will have to change the minister, as he did in the case of Telecom. Delhi’s impending privatisation has two tragic flaws. First, Delhi has been divided into three circles and we are about to invite bids for one company per distribution circle. Thus, we will replace a public monopoly by a private one. Although the massive theft of power may diminish, prices will not because 16 percent cost-plus return is guaranteed to each monopoly. Hence, Delhi’s Electricity Regulatory Commission must insist on at least two competing players. The private companies will protest because no businessperson likes competition, but we don’t want another Enron on our hands. Delhi’s second fatal mistake is to give monopoly status to the state transmission company, which will become the sole buyer and seller of bulk power. We should undo this quickly to allow any distributor to buy power from anyone. Similarly, bulk consumers should have the right to buy directly from competing producers or suppliers. Only thus will the public interest be served.

TRAIN TO NOWHERE 10/03/2002

Like many Indians I was stupefied to read that the railways plan to bottle water. In that case, I thought, why don’t they also grow tea (and wheat and rice) for their catering department? And cotton for their conductor’s uniforms, and make shoes for the drivers while they are at it? Perhaps then we can get someone to run the trains safely. The issue is not bottled water but the astounding mindset of the railway board that is ignorant of the basic managerial concept of “core competence” and thinks that the railways with its inefficient, high cost labour can do it cheaper. The purpose of the Indian Railways is not to serve India’s citizens but to tend to the comforts of its 15 lakh railway employees. This is seven times more manpower per kilometre than in the developed countries. The railways admit that five lakhs employees are surplus-that is, one out of three persons should not be there. Railway families occupy on the average train 40 out of 100 berths in the two-tier (AC) sleeper class, and they (and their relatives and friends and friends of friends) get priority in bookings because of “connections”, and this explains why you and I cannot get a berth. Staff accounts for 50 per cent of total railway costs with productivity that is amongst the lowest in the world. Because of rising payroll costs, expenses on repairs and maintenance have been steadily declining, while employee negligence (called “human error”) is the main cause of accidents. When a serious accident occurs, the site managers are typically found tending to the visiting ministers and board members, while accident victims are left to fend for themselves. When the Rajdhani derailed on the Tundla-Kanpur section in January 1992 the chief area manager of Kanpur was transferred because he was aiding the injured passengers and not looking after the chairman of the Railway Board. There was a time when railway journeys were filled with pleasure. Now, filth on the tracks at the premier New Delhi station puts off every decent citizen, and the first 20 km of the journey are a sanitation disgrace. It is easy to blame the filthy habits of our people, but couldn’t some of the five-lakh surplus employees be deployed to clean it up? When questioned the railway authorities frankly admit that the low caste safaiwallas mark attendance and for the rest of the day pursue their real profession, which is to play in marriage bands. These examples are symptoms of a bigger disease that has infected the railways management and it is destroying a great institution that will soon be 150 years old. The railwaymen blame the politicians, and to some extent they are right. Among its chief destroyers have been three ministers in the past twenty years whose names are well known. But we now have a good minister, Nitish Kumar, whose budget has finally reversed a pernicious ten-year trend (wherein freight subsidised passengers), but does he have the will to do the surgery? It is easy to blame politicians, but the real problem is in the managerial culture and systems of the railways. It begins with a Railway Board that centralises decisions, which should be taken at the operating level. Board members are mediocrities who have come up through a perverse seniority system. When they reach the board level they have only a few months left; they see it as a reward, enjoy a few foreign trips, and retire happily without upsetting the status quo. The downslide began in the late eighties when the chairman reduced the tenure of the fulcrum of system-the Divisional Railway Manager (DRM) to two years in the interest of “giving everyone a chance.” The railways have ten officer cadres and officers place loyalty to their cadre above the good of the system. Only when officers have sufficient tenure as division and general managers are they able to shed their departmental bias. Thus, the DRM is the grooming ground for preparing future leaders, and this single bad decision cut this short and reinforced the disease of “departmentalism”. Yet, the situation is not hopeless for the railways can be turned around. This happened between 1980 and 1982, when a good CEO, M.S. Gujral, came in and stemmed the rot. The railways had declined so badly in the 1970s that power plants used to shut down because railways failed to deliver them coal. He transformed the institution so dramatically that India enjoyed the fruits of his labours through the eighties. Fortunately, we now have an excellent blueprint for reviving this great institution in Rakesh Mohan Committee’s report. It raises many issues, and in my next column I shall write about how to reinvent the railways and create a vibrant, outward looking, commercial institution with a customer focus.

WAKE UP CALL 24/03/2002

Every Indian seems to have one impossibly romantic railway memory, and mine is of a journey from Kalka to Simla as a five year old when I feasted for the first time on the snow tipped crests of the Himalayas, and I later recounted it in “A Fine Family”. But these memories are rapidly dying, as are the railways. Today, the Indian Railways are in financial crisis, and if something drastic is not done, they will wither away like the state in Bihar. The railways are the Indian government in miniature--inefficient, corrupt, hopelessly over-manned, utterly politicised, with shoddy, callous service. They weave the nation together, as they carry 4.5 billion passengers (or 4.5 Indias) a year. They have made the poorest Indian mobile--for fifty rupees one can travel 200 kilometres. They are cheaper than anywhere in the world because extortionate freight prices subsidise passenger fares. Hence, nobody dreams of transporting goods by rail, not only because of high tariffs but also constant delays. Even coal, petrol and diesel are inefficiently transported by road. To become a modern, efficient institution the railways have to shed urgently 500,000 overpaid and under worked employees, who demoralise the ones who do work. There are three ways to do this: one, don’t replace the people who retire; but this will take ten years and by then the railways will be dead. Second, retire two out of four persons compulsorily at age 55, retaining only the outstanding ones; this too is slow, but it will help create a climate of excellence. The third way is to offer surplus employees the generous voluntary retirement scheme just announced by the government, but implement it like the best companies--get rid of the deadwood and retain the good people. To succeed they will have to employ all the three ways. To cut their losses the railways will have to also shed non-railway activities. They have to stop manufacturing, running hotels, hospitals, schools, printing presses, cargo terminals, parcel offices, and a host of activities that are best performed by experts. The factories making locos and coaches should be spun off as joint ventures to technology suppliers so as to bring in capital and the latest technology. The French Railways (SNCF) did this successfully. Not only will out-sourcing save money, it will improve their train services. Managers around the world have learned that a good organisation focuses only on its core activity and does it brilliantly. In order to survive the railways have to lower bulk freight rates and regain market share lost to trucks. It is scandalous that it costs more to send goods from Delhi to Mumbai than from Mumbai to London. Because of uncompetitive freight rates thousands of trucks bring coal from Bihar to Punjab. Indian steel makers have become price competitive internationally, but they cannot compete domestically because of high freight charges to their customers. Freight costs can no longer absorb the cost of excess labour, and if labour is rationalised, studies show that freight rates could be halved and the railways would still make a profit on freight. But to regain freight primacy they will need new container terminals with new operators, to raise the speed of freight trains, improve communications and signalling, and link its processes through information technology. Most importantly, they have to change their monopolistic ‘take it or leave it’ attitude to the customer. The threat of early retirement will help here. Finally, the most important way to save the railways is to distance them from the government. Politicians have played havoc on them. The Rakesh Mohan Committee studied practices around the world and discovered that the best railways have achieved autonomy from their governments by becoming independent companies, governed by an autonomous regulator, who sets tariffs in a transparent manner and who might have more guts than politicians to raise second class fares. But the railway board opposes corporatisation because it will bring their accounts into the public and enforce accountability. It might not reduce government interference either and they could end up as another fourth rate public sector undertaking--and they are at least third rate today! But corporatisation does offer the hope of bringing in an outstanding CEO, rather than the mediocrities of today’s seniority system. Moreover, you can build safeguards to guarantee commercial autonomy into the contract between the government and the railways at the time of corporatising. This may not be enough, but if the status quo remains then a once great institution will just wither away, and just at the moment when our vibrant, growing economy needs it the most. Railways have to be saved from their own leadership. Hence, the radical and urgent reform of this institution should not be entrusted to the railways, as we have learned from telecom reform.

HOME, SWEET HOME 20/04/2002

When I was young, owning a home was a hopeless dream. Either the company or the government provided shelter to the salaried middle class, and at retirement one scrambled to find a place of one’s own and a lower standard of living. But today, this is all changed. Even a young person starting a career can put down a deposit of ten per cent of the cost of a house and can easily raise a fifteen-year mortgage loan, and this explains why the housing finance business has been growing 30 per cent a year for the past four years, and why there is a boom in middle class housing in Gurgaon, Thane, Powai, and many cities of India. This is good news for everyone. A construction boom can become the engine of growth for the entire economy, and especially depressed sectors like steel and cement. Every rupee invested in housing adds 78 paise to the nation’s wealth or GDP. House building is also a great generator of employment--a million new houses create 5 million new jobs directly and 7.5 million jobs indirectly. Moreover, owning a home brings social stability, as homeowners tend to be more law abiding and caring of the community. It is not often that one can link growth to reforms, but one can in this case. The housing boom is the direct result of a dramatic fall in interest rates in recent years, from 17.5 to 11.5 per cent, combined with rising tax deductions on home loans. The repeal of urban land ceilings in many states is increasing making land available for building, and soon housing loans companies will be able to repossess houses from those guilty of not paying back their loans. All these factors are encouraging banks to give more loans and owning a house is more affordable. Having said all that, this has been a small revolution, and the dream of owning a home is still distant for most. Of the thirty million middle class families only half a million take home loans each year, which is about the same number of cars that are cars sold in India every year. For an economy that has been growing between 5 to 7 per cent a year for two decades, we ought to have experienced a series of construction booms, just as Shanghai, Bankok, Kuala Lumpur and any number of cities did in the Far East. Like Singapore, these now look like first world cities, and by contrast our Mumbai and Kolkota look like slums. Why is that? The reason is the same sordid tale of bad, unreformed laws, corrupt and lazy bureaucrats, suspicion of the private sector, and “a government that is far too big for the little things and far too small for the big things”. First of all, unclear titles keep land away from the market--by one estimate fifty per cent of the India’s land does not have a clear title. If Thailand could fix this problem, and Andhra Pradesh is also doing it, why can’t the other states? Second, municipalities in India require roughly fifty separate permissions in order to develop land, and this takes 3-5 years, which is enough to break the back of any honest builder. Third, Rent Control is a powerful disincentive for new building; it penalises the young, and makes our cities look like slums. Again, the answer is simple: enact Delhi’s Model Rent Control Law everywhere--it protects the interests of both tenants and owners in a sensible way. Although enacted by Parliament in 1995, traders in Delhi have prevented its implementation. Fourth, stamp duties in India are high--they average 10 percent compared to around 2 per cent in the rest of the world, and this adds to housing cost and restricts demand. On the other hand, property taxes in India are too low--0.002 per cent compared to 1.5 percent in the world--and this means little incentive for municipalities to develop urban infrastructure. Fifth, half the states have still not repealed the vicious Urban Land Ceiling Act, which has kept land away from the market and meant artificially high home prices. These land market barriers mean that India’s land costs as a proportion of GDP per capita are the highest in the world, and housing construction has stagnated at only 1 per cent of GDP, compared to 6 percent in Brazil, 5 per cent in Korea, and 4 per cent in the U.S. The same goes for housing’s share of employment, which is only 1 per cent in India compared to 4 per cent elsewhere. The answers are, thus, blindingly clear. And they are contained in the government’s wonderful 1988 National Housing and Habitat Policy. All we now need is for the government to act on it!

DISAPPOINTED IDEALISM 05/05/2002

Like any great tragedy, the communal violence in Gujarat is full of other sadnesses. One of these is that we have begun to lose faith in our ideals. We had already lost faith in socialism, but now we have begun to question the efficacy of secularism as well. Part of the reason is that it has been unable to prevent or stop this murderous carnage. A major failure of contemporary Indian public life is that we do not hear voices of moderate Hindus or Muslims. We only hear the shrill voices of extremists at both ends. It was not always so. Earlier, we had sensible public figures who were also steeped in religion. Mahatma Gandhi, Maulana Azad, Vivekananda used to speak with credibility on behalf of the vast majority of religiously minded Indians. Today, there is an unfortunate polarisation between an influential and articulate minority of secularists and the vast majority of silent, religiously minded Indians. Neither takes the trouble to understand the other, and what we have as a result is a dialogue of the deaf. The problem with many secularists is that they are or were once socialists. Not only do they not believe in God, but they actually hate God. They only see the dark side of religion--intolerance, murderous wars and nationalism. They forget that religion has given meaning to humanity since civilisation’s dawn. Because secularists speak a language alien to the vast majority of Indians, they are only able to condemn communal violence but not stop it, as Gandhi could in East Bengal in 1947. Gandhi trudged through the Bengali countryside like a one-man peacekeeping force and kept Bengal quiet during the partition. Unfortunately, there were not Gandhi’s--had there been a second one, then Punjab might have also escaped much of the partition tragedy. Our secularists have been influenced by a number of 19th century European thinkers, starting with Nietzsche, who declared famously that God is dead. Ludwig Feuerbach argued that God was a projection of the human imagination and thus an illusion. Marx said this illusion originated in the alienation of the capitalist worker to whom religion was like opium, a drug that soothed his pain. Once capitalism was destroyed the drug would not be needed. Marx understood religion’s power and he saw it as socialism’s main competitor. "Criticism of religion," he said, "is the prelude to all criticism," as he attempted man’s most ambitious attempt to supplant religion with a doctrine about how life ought to be lived. But Emile Durkheim, a Frenchman, regarded religion a projection of society; its shared rituals and sentiments bound people together, and thus it wouldn’t easily go away. Sigmund Freud, the founder of psychoanalysis, wrote in the "The Future of an Illusion" that religion, despite its many negative qualities, helped make civilisation possible. Without it life in society would be impossible unless everyone could be educated to behave morally. The media has rightly focused on Modi’s failures of governance in Gujarat. His hands are covered in blood, and he should be sacked. But once he is gone, what happens next? Whom will we blame for the next communal riot? Communalism is surely more than governance issue. We need to ask once again, why did a million people die in the 1947 riots? Why couldn’t we prevent that tragedy? Fifty-five years have gone by and we still do not have an answer to that question. And, as a nation, until we do, we shall not be able to sleep in peace. That answer too will not come from analysis, I expect, but from literature. But while we wait for our "War and Peace" to emerge, we have begun to realise that communal harmony in India will not come from converting India into an image of a secular non-religious West by weaning people away from religion, as the secularists had hoped. It will come when moderate religious leaders come forth in public life and begin to lead ordinary decent he people in the direction of a secular polity, and snuff out the evil voices of fundamentalism. Until these moderate voices emerge triumphant, we have to live with the sad truth that we have all manner of extremists amidst us who feel a passionate ethno-nationalist claim to a vision of a homeland, and a willingness to condone violence, plus a story line that many Indians will buy, in part because it plays into existing prejudices. With that they have probably got a winning hand, whether or not the interests they advance are noble. Meanwhile, I take consolation from a European woman’s reaction to Gujarat, who says that in a country of a billion people, all of them with strong religious emotions, it is remarkable that there is so little violence. She finds that life on the Indian street is safer than almost anywhere.

PEACE, NOT WAR 02/06//2002

It is difficult to speak of the murder of innocent people, but it is also impossible to remain silent. First it was Gujarat, now it is Jammu. The nation’s mood has turned angry, and far too many sensible people are ready to go to war. In these troubled times, I sometimes think we are fortunate to have a hesitant poet for a prime minister. But our hawks accuse him of indecision and clamour for an American or Israeli style response. The Prussian master of strategy, Clausewitz, teaches that one must only start a war that one can win. Winning in this case would mean the end of cross border terrorism, and will a war with Pakistan achieve this objective? The answer is, no. A warlike Israeli response has not stopped Palestine suicide bombings, nor has a victorious war against the Taliban diminished America’s fear of terrorist attacks. Those who talk of a “limited engagement” in Kashmir also know in their hearts that wars can never remain limited once they begin. Thus, it is senseless to think of war in order to stop terror. Counter-terrorism, it seems to me, would be a more effective, lower cost, and lower risk alternative; recruit the jehadis from the ranks of the VHP and Bajrang Dal and we will kill two birds with one stone. The real question in Indian minds is whether we are doomed to live in perpetual conflict with our neighbour. Many believe that even if we were to give Kashmir away to Pakistan, permanent peace would not come to the subcontinent. Historians explain that the reasons lie in the origin of the two states. While saints and idealism created India, distrust and hatred created Pakistan. Hence, Pakistan defines itself in relation to India and is obsessed with it, while India is more relaxed and its neighbour is peripheral to its national psyche. Economists have other reasons to feel pessimistic. For a decade India has been growing at almost twice the rate as Pakistan--6.3 vs. 3.6 per cent; hence, India’s national income (in ppp) is now nine times bigger, although it has only seven times more people; and, its per capita income (ppp) is 22 per cent higher. India’s population growth rate is fifty per cent slower, while its literacy growth rate is fifty per cent higher. Pakistan’s capital formation is 66 per cent lower and it spends less on health and education than it did a decade ago. Unfortunately, it only excels India in its defence expenditure as a proportion of GDP. If these trends continue Pakistan’s economy will soon become one-tenth of India’s, and its military expenditure will become unsustainable. Then it will collapse, as the Soviet Union did because its economy could not match its military ambitions. But we cannot simply wait for Pakistan to collapse. As the stronger, and hopefully maturer nation we have to keeping trying to seek peace--even if it means a hundred failed Agra and Lahore summits. The alternative is much worse.

A MATTER OF CIVIC PRIDE 19/05/2002

This government often reminds us that we ought to have more national pride, but I think that civic pride is more important, more durable, and a stronger foundation for nationhood. Indeed, a more civic-minded citizenry might have been able to contain the damage in joyless Gujarat, if not prevented the tragedy. Mahatma Gandhi, a Gujarati, often counselled Indians that they would not be worthy of independence until they became more caring and considerate neighbours. The word “civic” comes from “city” and is related to “civility”. A “citizen” originally lived in a city and a civilised person showed concern for fellow citizens; and in this kind act was born “civilisation”. In the early years of our republic we were rightly occupied with nation building, and our cities took second place. Also, people and votes were primarily in rural areas, and to show too much concern for the city was considered “elitist”. But as the middle class began to grow seriously in the eighties, our cities gained in importance, and with the passage of the 74th amendment in the nineties municipal government also became mandatory. However, the track record of our municipal governance remains poor, and the few examples of well-run cities--Surat, Thane, Mumbai and Bangalore--are the work of outstanding officials. If there is one word that attaches to Indian cities today it is filth. Many of us make the common mistake in thinking that poverty and dirt go together, but they do not. One can be poor and clean. The poorest Indian homes often have the cleanest kitchens. Japan was very poor after World War II but its cities were extremely clean. In fact, East Asia was always much cleaner than South Asia, and even in India, communities in the south were cleaner than the north, even when they were often poorer. I find that our dirt bothers Japanese investors, especially. Once, a Japanese businessman excused himself to go and vomit in the bathroom after visiting a government office. When he returned, he politely asked how Indian civil servants worked effectively in such surroundings. Gandhi used to worry constantly about our public hygiene. At a momentous annual session of the Indian National Congress--in the late 1920’s, I think--everyone expected Gandhi to deliver a rousing keynote address demanding swaraj; but he shocked the assembled gathering and began to speak gently about the hygienic way to defecate in public spaces consistent with public health; he then went on to admonish the honourable delegates from Bihar of caste prejudice and for not eating together. Why are our public spaces dirty? Is it a function of education or is it a cultural problem? Certainly in our private space, we tend to be relatively clean; we bathe daily; our homes are clean, and our kitchens positively shine. Our national stereotype is the Indian family that proudly cleans its home, and then throws the dirt outside its door. Some anthropologists have blamed this anti-social behaviour on the other-worldliness of Hindus and our excessive concern with our own moksha, unlike Buddhists and Christians who seem to show greater concern for others. While there may be some truth in this, I am sceptical of cultural explanations and in this case I’m certainly not persuaded of the link. Last year a reader of this column, Anand Bhardwaj, wrote enthusiastically from Mumbai to say that citizens of Santa Cruz West had succeeded in cleaning their neighbourhoods beyond the Milan subway. They had worked closely with the BMC, to remove open roadside garbage dumps, and had replaced them with closed bins inside each colony. This is a wonderful example of civic pride, and it is initiatives like these that will make our nation resurgent. Imagine, how our cities and villages might look if every Indian family were to become responsible for keeping clean only one metre of public space outside its boundary wall! Some neighbourhoods in Mexico City, in fact, practice this idea, and families vie with each other to beautify the strip outside their homes.

WHEN LESS IS MORE 16/06//2002

Soon after he became prime minister, Winston Churchill wrote to the First Lord of the Admiralty to ask, “Pray Sir, tell me on one side of one sheet of paper, how the Royal Navy is preparing for the war.” Churchill knew that if he did not qualify his request he would have received an unreadable 400-page report. Brevity is a great virtue, and nowhere more needed than in India. Our judges write judgements that are too long; our lawyers ramble on; our executives try to impress with lengthy memos; our politicians--well, try to get in a word. Our public affairs would improve tangibly if our power to be silent were equal to our power to speak. That less can be more is especially true in good writing. I discovered this at Procter and Gamble, a company as famous for its legendary one page memo as for its products. Its wondrous one page memo was created out of the same confidence in reason and technology that built America, and is as elegant as Panini’s grammar or Euclid’s geometry. Based on the reasonable assumption that all managers suffer from an overload of paperwork and files, it is simple, factual, and logical. The reader can scan it in minutes and grasp its contents. It has just enough data that a manager needs to make decision and no more. It is clear, precise, eschews hyperbole, and it actually improves the speed and quality of decisions, and hence it can be a source of competitive advantage. The one page memo consists of five short paragraphs, and its first sentence tells the reader what to expect--why should you be interested in what I have to say? Hence, the smart writer puts his best foot forward and states upfront the conclusion or recommendation. There is an inherent conflict between the reader and the writer’s interest--the writer wants to build a case slowly, leading to a conclusion, but the busy reader wants the conclusion quickly, and is only interested in the rationale later. Since this is not a detective story, a good first paragraph ought to focus on the “what” and not the “how”; but it must also, of course, offer one or two compelling reasons to believe in the conclusion. The second paragraph offers background--it is historical, factual, filled with data, and tells the reader why the problem or opportunity has arisen. The third para is the detailed recommendation--the “what” and the “how”, but don’t confuse the reader here with the “why”. The rationale should come in the next paragraph--“here are three reasons why you should accept my recommendation”--and typically one cites precedents, benefits (financial and otherwise) and risks. The fifth paragraph tells the reader that the author has looked at alternative courses of action, and why this is the best. Finally, the last paragraph addresses the next steps and lays out a plan of actions that will flow from the decision. The Maharashtra Administrative Reforms Commission is so impressed with this one page memo that it is recommending it to the government in order to make its bureaucrats more efficient. We Indians are verbose, and need to be reminded that human beings were born with two ears and two eyes, but with only one tongue, so that we should see and hear twice as much as we say. Shakespeare too, I think, must have had us Indians in mind when he wrote in Richard III: “Talkers are no good doers”. Hence, he offers us this advice in Henry V: “Men of a few words are the best of men.”

GARBAGE 30/06/2002

It is a relief that Indo-Pak tempers have cooled and we can once again get back to our lives. As we do, let us ponder over Isaiah Berlin’s words, “Men do not live by fighting evils. They live by positive goals.” Berlin was a great intellectual presence in the mid-20th century, and one of his positive goals that many Indians seem to be seeking today is a clean city. I realised this after reading the unusually large mail that my column on civic pride generated last month from communities across the country. Residents of Aashiana, a colony in Lucknow, proudly report that they are managing their own garbage collection, although it costs each family Rs 30 per month; they have also persuaded the Lucknow Development Authority to let them build a vermi-composting pit in the green belt. Govindpuri, a resettlement colony in Delhi, is well ahead of the posh colonies of south Delhi in its solid waste management program. Residents there now segregate garbage, and green rickshaws collect organic waste while red rickshaws the inorganic; their yuva manch performs street plays to educate the people about the new system. Even Patna, famous for its cowsheds and garbage mountains, has begun to change. Tired of waiting for the municipality, some middle class mohallas, with the support of voluntary organisations, have privatised street cleaning and garbage collection. The most impressive story of collective action is that of Civic Exnora in Tamilnadu. A resident of Vadapalani Road in Chennai tells this story: “Our street used to be one big garbage dump; the bin outside our home was always overflowing because the corporation van did not often show up. My neighbour in frustration would set the garbage on fire, but the smoke irritated my asthma and I would douse it with water. So, we fought all the time. “One morning the dustbin disappeared and a brightly painted cart stood at my door with a boy in uniform and gloves. Called the ‘street beautifier’, he taught us to separate our garbage at home. Each morning he empties the organic waste into the green section of his cart and the recyclable waste into the red section. When he has covered the street, he takes the cart to our Zero Waste Centre, where he empties the organic waste into a storage tank that has holes at the bottom and where it is converted to compost. He sells the recyclables and the compost to augment his income. I pay Rs 20 a month and our street is now spotlessly clean. Where there was garbage outside each home, we have now planted trees.” All this happened because residents of Vadlapani Road decided to form an Exnora Club. Started by M.B. Nirmal, a bank manager, this civic movement is so successful that it is rapidly spreading across the South. It now covers 40 per cent of Madras city, 75 per cent of its suburbs and has clubs across Tamilnadu and the three southern states. Its 17,000 street chapters provide clean, scientific garbage collection to approximately 17 lakh homes. Having realised their collective negotiating power, many clubs are solving other civic problems (sewage, street lighting, water supply) through their municipality. Exnora was recognised by the United Nations Conference on Human Settlements in 1996 among the 100 Best Urban Practices. If you too want to transform your community, write to: Exnora, 20 Giriappa Road, Chennai-17, (exnora@vsnl.com) or call 044-8153377. There are two ways to look at these examples of civic virtue. One is to deplore the failure of the state, which has forced citizens to act. The other is to applaud this collective action for it is not easily achieved anywhere. Game theorists say that dumping garbage on the street is rational behaviour for individuals because it is cheaper (even though it is socially undesirable). The benefits of a clean street are public whereas the costs are private. Cooperation, in examples such as Exnora, demonstrates that commitment of individuals can overcome this negative rationality. Here is to that commitment!

GUIDING YOUR KARMA 14/07/2002

The recent World Cup of football entertained 1.5 billion around the world, and people drew all sorts of lessons, but it confirmed to me once again the role of luck in human affairs. At crucial moments, it was not skill that separated winners from losers but chance, and part of the peculiar beauty of human excellence on the football field is, I expect, its vulnerability to things we cannot control. If it was skill alone Brazil should have won all the 14 World Cups, as the German coach confessed. Yet, I want to believe that human excellence and governance play a bigger role in our lives than blind luck. Something in me says that luck is something that we can earn, and it seems to favour the determined ones like Dhirubhai Ambani, who had the skill to know how to guide his luck even while waiting for it. EB White used to say that luck is not something you can mention in the presence of self-made men. Even in football the success of the underdogs--Korea, Turkey and Senegalcame more from determination than fortune. In a wonderful book, The fragility of goodness: Luck and ethics in Greek tragedy and philosophy, Martha Nussbaum writes that we sometimes find ourselves, through no fault of our own, in situations where catastrophe, revulsion and remorse are inevitable. We cannot make ourselves entirely safe from bad luck but as rational persons we try to plan our lives to avoid it. One of the ways that we try to reduce the role of chance is through politics--by electing leaders who will deliver us peace, law and order, and good governance. A few months ago we were aghast when a truck killed the lovely Puja Mukerji near our home in Delhi. We knew her--she had recently acted in my play, 9 Jakhoo Hill. Some of her relatives consoled themselves, saying it was her karma, but I thought that it was a failure to enforce traffic rules. I am afraid to drive in Delhi because I fear that the driver next to me on the road may have got his licence by bribing someone. In the Mahabharata, Draupadi argues that one has to strive even if the fortuitous drift of events may nullify one’s effort. She says that a farmer fulfils his duty when he has ploughed his field and sown the seeds. After that it depends on the rain. If the rain fails and the crop withers, the fault is not his--blame it on his karma. Today India’s farmers, however, talk less about karma and more about irrigation. Enforcing traffic rules and providing rural infrastructure are some of the ways that a good state reduces the role of luck in our lives. Nonetheless, our lives remain contingent, and in attempting to cope with the unexplainable, I find the Indian notion of karma comforting and elegant although I do not subscribe to its metaphysics. Karma places moral responsibility squarely on the individual for his moral attitude and acts and makes fate an outcome of the individual’s deepest longings. My favourite karma story is that of Gautami in the Mahabharata whose child is bitten by a snake and dies. A hunter catches it and wants to punish it, but the snake pleads innocence, saying that it acted under instructions of Death. Death claims that it was under orders from Time; and Time argues that it was not its fault because the child died as a result of it previous actions. At this moment Gautami realises that she too might be responsible for the tragedy for she had committed certain wrongs in her past. At that moment she becomes a moral agent. The sensible Vyasa, the author of the epic, seems to agree with Nussbaum that the peculiar beauty of human excellence is its vulnerability, but human beings have to be accountable for their lives. Hence, we can admire and praise the Brazilian striker, Ronaldo, even though we know that he is not entirely in charge.

A SOUTH ASIAN PUZZLE 28/07/2002

The stubborn persistence of child malnutrition in India is truly one of the tragedies of our time. Many of us have long agonised over this preventable problem, and we continue to ask, why do half our children not get either enough or the right food or adequate care? Even in sub-Saharan Africa only thirty percent of the children are malnourished versus fifty percent in South Asia. And this 20-point gap exists despite our much higher levels of per capita income, education and even safer water access. One-third of the babies in India are born with low birth weight compared to one-sixth in sub-Saharan Africa. This is heartbreaking given the dramatic improvements in our agriculture, advances in literacy, and great strides in economic growth. For more than 20 years, India has even “sustained the greatest effort in history to improve nutritional standards,” according to UNICEF, through its Integrated Child Development Services Programme. So, it is not for lack of effort. Nor is it due to poverty, which has been steadily declining by one percent a year for two decades. What then accounts for this puzzle? In 1996, India’s famous physician-nutritionist, the late Professor V. Ramalingaswami (with others) wrote a groundbreaking article on this anomaly called “The Asian Enigma.” After considering different factors, including access to food and income and our vegetarianism, he concluded that the lower status of women in South Asia might be the reason. The link between women’s position and child nutrition seems plausible. In many Indian homes men eat first; women have to make do with leftovers. And this is perhaps why 83 percent of women in India suffer from iron deficiency anemia versus 40 percent in sub-Saharan Africa. A malnourished mother will give birth to a baby with low birth weight--the single most important predictor of child survival. Moreover, the pressure of domestic work often forces a mother to delegate to older siblings the irritating chore of feeding solid food to her baby. If women had more control over family income and decisions they would devote them to better pre and post natal care and to their children’s needs. So far this was the theory. But now an extensive empirical study by the International Food Policy Research Institute and Emory University seems to confirm Ramalingaswami’s hypothesis. The study brought together data from 36 developing countries, spanning over one hundred thousand children under the age of three and an equal number of women. It measured a woman’s position in the home in various ways--whether the woman works for cash, her age at marriage, and the difference in age and education between husband and wife. The study concludes that the lowly position of women in the family compared to men is the single most important reason for the gap between South Asia and sub-Saharan Africa in children’s nutrition, followed by sanitation (e.g. the lack of latrines) and urbanization (slum living). A woman’s low place in society also prevents the active use of health services by women and children. While reading this report I wondered why is the position of women in India so much worse than that of women in other societies? The report seemed to suggest that the South Asian women were not so far behind African women as the way their inferior status limited their ability to nurture their children. I also questioned whether the tragedy of children’s well being is only a woman’s issue, or is it a family concern where men play a crucial role. I suspect there are no easy answers, but they are worthy subjects for further research. Women everywhere suffer from a lower status, but in India it appears to have devastating consequences. The policy implications are clear: if we want to reduce child malnutrition, we must combine our child programs with efforts to improve the situation of women in our society. To succeed in the knowledge-based economy, we need healthy children who will become tomorrow’s innovative adults. If we ignore gender inequality, we will continue to produce stunted children, wasted lives, and untold misery.

A FINE BALANCE 11/08/2002

Last week I met a young lady from Japan. We got talking and she said that she was travelling around India exploring our spiritual traditions. In an unguarded moment she admitted that she was seeking solace from her lonely, banal and desperate life and hoped that India might offer her a spiritual guide to the art of living. Nothing unusual in that, I thought. She is part of a great tradition of travellers to India who have sought consolation from the material world. The tendency goes back to Fa Hien and Huan Tsang, two Chinese travellers in the first millennium AD, who came looking for Buddhist wisdom. And today young tourists come in hordes seeking an alternative way to live their lives. We in India respond to this with pride. We are not shy to contrast our spirituality to the materialism of the West, often as a way to shore up our self-esteem. But in the process, our view of ourselves has become lopsided, and we have forgotten that other worthwhile goals always informed classical Indian life--for example, artha (prosperity) and kama (pleasure). We have also forgotten our many wonderful rational traditions. Life in ancient India was more balanced and moksha (spiritual liberation) was only one of the multiple ends of human beings. There were renouncers to be sure, and many like the Buddha and Mahavira became extremely celebrated, but the mainstream followed the normal life of the householder pursuing a balance between the mind and the spirit. When around 500 BC, asceticism became widespread and an increasing numbers of intelligent young men “gave up the world” to search for spiritual peace, Brahmins responded by devising a theory of the balanced life of four ashramas, dividing the life of the twice-born into four stages: the brahmachari (celibate student); the grihastha (married householder); the vanaprastha (forest dweller); and sannyasin (wandering ascetic). There was always some tension between asceticism and sensuality, between the aspiration to liberation and the heartfelt desire to have descendants, between an active life of meritorious works (pravrtti) versus the renunciation of worldly activity (nivrtti). The Upanishads valued renunciation; the dharma texts argued that the householder who maintains his sacred fire, procreates children, and performs his ritual duties also earns religious merit. However, in medieval times we lost this fine balance, partly under the sway of bhakti and the devotional cults, and too many began to think of the world as maya (illusion). Oddly, the same thing happened in the west. Christianity overwhelmed life in the middle ages and people lost their balance. But beginning with the Renaissance in the 15th century and culminating in the Enlightenment in the 18th century, the west recovered its Graeco-Roman past of plural ends, and Christianity ceased to be its ‘informing principle’. Westerners relearned Aristotle’s teachings that the good life had multiple ends, with friendship being a prominent one. Thus, a multi-dimensioned modern personality appeared in the west, which kept religion in one compartment. Some Bengalis became aware of this in the 19th century; they questioned, attacked, and began to cleanse and contemporise our religious traditions and they went on create a mini-renaissance. Their movements gained confidence from the work of western scholars, who had discovered the historical foundations of our culture, a confidence which not been shaken since. But clearly these movements did not go far enough and we continue to be under the sway of superstitions and obscurantism. We need once again to restore the classical balance between the sacred and the secular. Indian spirituality is a wonderful gift to the world. So is our individualistic tradition--the only land where the renouncer has successfully challenged kings, priests and the social order. However, if we want to be a successful modern society, religion must not be the defining principle of our rich, multi-dimensioned lives. Every other Sunday I have been writing about unbinding India. My emphasis has been mostly economic--securing our freedom from the licence raj--but now I realise we will not be truly unbound unless we recover this fine balance.

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