The 'riot' game!

Those who instigate riots know the rule to be 'fireproofed'—and to thrive on dangerous fundamentals. Beyond such calculated moves, the sufferers and their humane observers live in oblivion.

Quite often, we see the frail silent image of Manto hanging on wall and his literatures meeting disdained responses, likewise as: I'll fly all from here--not to listen, these are at service, always at service!

Akbar Illahabadi wrote: “They hold the throne in their hand. The whole realm is in their hand. The country, the apportioning of men’s livelihood is in their hand. The springs of hope and of fear are in their hand—in their hand is the power to decide who shall be humbled and who exalted.” But who they are? Why they enjoying such sinful authority?

Their authority powered from the effects of fragile public dismay—and by the electoral design, which allows the representative of particular interest group, winning the ground. The riot cannot be secular—however time and again, political parties have tried falsifying this kind of simple argument.

Most recently, the Samajwadi Party government in UP termed their handling of Muzaffarnagar riots as ‘secular response’—though outside the ‘ambit of reasons’ and nailed in no time, its leaders and sycophant bureaucrats have made all efforts to keep the state government away from imminent legal and moral scrutiny.

As a nation, India was born in the atmosphere of fractured communal harmony—by that account, year 1947 was intensely grim coated. That year, the partition theory reached swift action mode and resulted the bloodiest outbreak of riots and exodus across the imagined borders of two nations in making.

The ‘two nation theory’ worked as planned by the ‘White Sahibs for Brown Sahibs’—and British left not one but two ‘free countries’—both scare-faced and terribly handicapped in keeping alive the momentum of great sacrifices, made during the independence movement.

The scores of people butchered, displaced to never return their home—and most shockingly, women raped for being identified with particular religious identity, had not really shook the minds and souls of system.

But the man who spearheaded the non-violent fight against the tyranny of empire, Gandhi, was in deep shock. He avoided the well deserved happiness for independence and tried to control the frenzied communal clashes in Calcutta.

Sadly, the ruling political classes at that time and later in the history of modern India— remained unflinchingly inactive and unimpressed with an option of ‘straight shooting’ against the hooliganism of unparalleled distort.

Why so? Because only being complicit in the communal riots goes against the ‘law of the land’? Then such law must come under the scanner, which spares the state’s role in commanded violence—with a few rounds of hiccups. Beyond the political overplay, ‘riots’ need to be relooked—much more seriously than the other currents of history.

And this must start with India’s partition, which not only bifurcated the nation but left it permanently vulnerable, to be marred by the ‘communal elements’ and opportunist users of secularist ideas.

During the Delhi riots in 1984, Bhagalpur riots in the late 1980s, Gujarat riots in 2002 and most recently at Muzaffarnagar, the superficial political inquisitions surpassed the real grief of human tragedies. Thousands were murdered, most of them without realizing the actual spectre of politics behind the riot—they simply vanished, as easily as they appeared destined for it!

The ‘riots’ in Indian contexts have been driven through certain ‘political intents’—and communal assertion intermingle them at certain stage. In such wild state of affairs, ‘personification’ takes place at high stage. With each incident of riot, our collective memory recalls a face behind it—the real issues get no attention in public memory or by the restless and assumptive media.

Henceforth, the riot victims presented as numbers and court seeks evidences—only evidences, and not anything reasonable.
Those sheltered in riot camps are treated like ‘citizens on margin’—and ‘the rulers’ of state claims such inhuman arrangements, charity.

A young—undeserving—and untimely CM of UP, Akhilesh Yadav will never ever understand what his government has done in follow-up action on the wake of communal outbreak in politically charged Muzaffarnagar.He could have easily done without Saifai extravaganza or Europe trip for his party rank and file, when people were freezing in relief camps, away from their homes.

They are still in camps, winter was harshest for them. Most of them are facing health issues, which arise by the lack of basic nutrition and hygiene. Like normal human being, they too require elementary amenities—circumstance to go back home, which are burnt and need to be repaired. Though they know, the soul of their home has withered away—as only a few good neighbours want to see them back.

Something similar happened in Kashmir in 1990—still we talk about relief camps, and we recall the grim faces of Kashmiri Pandits. Now they are settled everywhere, except at their home in valley—my fear is the same for those uprooted from the villages of Muzaffarnagar.

The victims live in reality—as they have no command on resources. Their ‘dignity’ is compromised—the kids are trying to learn the lessons, through experiences and self efforts. But there is a limitation of self-learning. The young girls are being married, to suppress the extra amount of insecurity and helplessness.

The terror outfits are, reportedly visiting these camps to negotiate with ‘anemic sheltered citizens of India’—and they return without much success, as people have still trust in state, if not in leadership. They collect relief to survive—as survival is not less than a virtue, for both ‘fit& frail’.

This way, the riot works in India. Knowingly or unknowingly, political animals help each other to float in the dirty stream—and they really triumph the alternative wisdom. In the coming general elections, the ‘secularism claim’ must be tested by the electorates in UP, and wherever the land is India!
-Atul K Thakur
Email: summertickets@gmail.com
(Published in Governance Now on March22,2014)

Skill Development in India: Big Promises, Tall Failures

The globalised world demands skilled manpower to convert growth opportunities into jobs and stable incomes. With millions of new job-seekers entering the job market every year, skill development has become one of India’s urgent priorities.

The 12th Five Year Plan (FYP) has highlighted skill-building as an imperative need to reap India’s so-called demographic dividend. Indian universities and professional institutions churn out hordes of degree and diploma holders, most of them are unemployable because they lack the skills manufacturing and services industries look for.

The bulk of employment is still being created through agriculture, which is subject to seasonal fluctuations. Even skill-based manufacturing sector is sensitive to these seasonal changes as the processing of agricultural products majorly determines its overall production cycle.

It’s true that India has comparative advantage in terms of having a younger workforce than China and all OECD countries, but the drive to scale-up high on these is missing. The world will witness unprecedented shortage of skilled workforce in coming years, but it’s unlikely that with the existing policy framework on skill development, India will be able to tap this chance.

The 11th FYP’s recommendations on the matter led to a three-tier structure: the PM’s National Council, National Skill Development Coordination Board (NSDCB) and the National Skill Development Corporation (NSDC).

The NSDCB has spelt out policy advice, and direction in the form of “core principles” and has given a vision to create 500 million skilled people by 2022 through skill systems (which must have high degree of inclusiveness); it has taken upon itself the task of coordinating the skill development efforts of a large number of central ministries/departments and states.

The NSDC has geared itself for preparing comprehensive action plans and activities which would promote public private partnership (PPP) models of financing skill development. In policy outlook, these changes have made the issue of skill development a vital agenda for the governments. The state governments have clearly given more space to channelize the skill development initiatives and reap its benefits as well.

But the challenges on skill development in the 12th FYP are numerous and those are blocking the developmental spirit: the government’s monopoly over the skill training is foremost of them. Therefore, a greater emphasis on PPP model could have best way forward in achieving the real goal of skill development. Through proactive regulation or leverages, individual employers and various industry associations should be given more space for meeting the mammoth challenges of skill creation.

Besides, the need is for better institutional mechanism to carry out impact evaluation and surveys of actual job aspirants. Even today, only about 8 percent of the total workforce in India is employed in the organized sector. The rest are employed in the informal sector, without social safety nets.

Obviously, the quality of employment is better in organized sector but it has limited capacity to absorb a large number of workforces. So the role of services either in organised tertiary sector or through self-employment is important. In given circumstance, it’s essential to promote a balance between labour and capital intensive sectors. Agriculture, tourism and SMEs would be the areas, where suitable action will bring better results.

The amendments to Industrial Disputes Act, 1947, and Contract Labour (Regulation and Abolition) Act, 1970, and workable social security schemes for both organized (like Rajiv Gandhi Shramik Kalyan Yojna-under ESIC, EPFO etc) and unorganized (like Rashtriya Swasthya Bima Yojna etc) could make livelihood attainable for all citizens.

So far, the flagship government programmes for sustainable livelihoods (such as Mahatma Gandhi National Rural Employment Guarantee Scheme, Swarnajayanti Gram Swarozgar Yojna and Swarna Jayanti Shahri Rozgar Yojna ) have not only failed to alleviate the poverty but these all have made corruption firmly established at the lower tier of bureaucracy and on the panchayat level.

Ministries such as Labour& Employment, Human Resource Development, Rural Development and the Urban Development& Poverty Alleviation have launched their skill upgrading programmes, but they are not producing desired results.

Creation of National Skill Development Mission in PPP mode was a good move, but its performance is far from satisfactory. The chances of the NSDC setting up 1,500 new ITIs and 5,000 skill development centers in targeted time are bleak, too.

The Modular Employable Skills (MES) and Skills Development Initiative Scheme (SDIS) adopted by the Ministry of Labour and Employment provide the framework for skill development for school leavers and workers, especially in the unorganised sectors, but again, the results are sub-optimal.

The reason why well-meaning government plans on skill development come to grief is that the existing strategic and implementation models of skills development don’t correspond well with the competitive global requirements of skilling. Of course, India’s IT sector is a beacon of hope but lack of skill development explains why manufacturing has not taken off as a major growth component of India’s economy.

Today, the slow employment generation and its inflationary impact haunt badly. The Phillips Curve reveals it: “lower the employment, higher the rate of inflation”.

A report of Boston Consulting Group and the Confederation of Indian Industries (CII) tells that India’s workforce in 2006-07 numbered 484 million: out of this, 273 million were working in rural areas, primarily in agriculture, while 61million were working in manufacturing and about 150 million in services.

The study exposes that 40 percent of the current workforce is illiterate and another 40 percent is represented from school dropouts. Those who have completed formal schooling comprise 10 per cent, meaning that only 10 percent of the overall workforce could be counted as trained.

On the technical front, NASSCOM says that of the 400,000-odd engineering graduates who pass out every year, only 20 percent would meet the industry requirements. The rest would have to go through rigorous training before businesses could find them useful.

However Rita Soni, CEO, NASSCOM Foundation, sees the context in diverse shades: "The role that technology has played in empowering the most marginalized sections in India, be it people from remote areas or persons with disabilities, cannot be completely overlooked. While there are no true silver bullets that the industry can list down as it continues to face challenges, it is encouraging to know that it is already treading the path of inclusive development."

According to the Economic Survey 2011-12, 63.5 million new entrants would be added to the working age group during the period 2011–16. Consultancy majors IMaCS and Aeon Hewitt have added a caveat in this respect: “An incremental shortfall of nearly 350 million people will be surfaced by 2022 in 20 high-growth sectors of the Indian economy, including the infrastructure sector and the unorganized segment.”

Lack of universal access to institutional credit and other financial services is a critical factor that hobbles entrepreneurship in India. The suppressed entrepreneurial impulse adversely impacts skill development.

The problem inherently rests with the financing model of Indian banks, which lays unrealistic emphasis on collaterals or guarantees--the victims of such credit policies are mostly belong to the lower strata. The RBI has to act swiftly on this. But the structural and financial initiatives for the skill enhancement and livelihood would not come into effect until the industry will follow a clearer definition on the employability.

The primary concern of the lending should be to target the prepared individual, who is capable to run a business and nurture entrepreneurship. Though SMEs comes under the priority sector lending tag, it has not obviously helped in big deal by formal lending agencies to assist weaker sections pick their way out of poverty and the aspiring entrepreneurs liberate their animal spirits.

Micro Small and Medium Enterprises Development Act, 2006 became operational with effect from October 2, 2006. The Act replaces the concept of “industry” with “enterprises”. This Act notionally facilitates the promotion, development and enhances the competitiveness of Micro, Small and Medium Enterprises and for matters connected therewith or incidental thereto.

But the ground reality is stark, as MSMEs have no proper advocacy/industry association (barring few obscure and ineffective organisations, like CIMSME /SME Chamber of India) to look after on their interests. The leading industrial chambers-FICCI, CII or others are mostly run for pursuing the interests of big corporations and their attention on MSMEs comes only for keeping ‘high moral ground’.

National Small Industries Corporation (NSIC) has been working since 1955, and over the decades it has proved itself a big elephant of government. With its over-sized secretarial set-up, but shabbily planned programme structures, NSIC mimics the entrepreneurial aspiration of Indian youths. Its website too appears short on informations and high in offering ‘self help tips’ – it drops the dream liner with no tenability-how to become successful entrepreneur?

FICCI Survey on Labour / Skill Shortage for Industry sings a different escapist tune: “Despite having a favorable demographic profile, labor and skill shortage continues to be one of the key concerns for the Indian industry. This problem has been compounded by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). It seems that MGNREGA has made a perceptible difference to the ‘choice of work’ of the casual labor in rural and semi urban areas.”

Though another study done in 2010 by FICCI -IMACS comes with clearer insight: “There is a need for an independent system to assess quality, comprising all elements of the skill development value chain, right from need assessment and student mobilisation up to training and placement. Current systems are primarily oriented towards quality checks (through trade tests) during the phase of assessment and certification.”

CII has launched its own Skills Development Initiative, which shares the goal of the National Skills Development Agenda to skill 500 million people by 2022. In this endeavour, CII, has set up its first skills centre at Chhindwara, MP, to train people in bar bending, grinding, pipe fitting, welding, etc. (although its functional dividends have yet to be visible, which stands opposite of CII’s hyper exuberance).

CII, along with HPCL, have also launched the ‘Swavalamban’ project to train 2,200 youth in multiple trades. The programmes have local concentration, relevance and in-built flexibility. So far, CII has released five sectoral studies on skills requirements in the constructions, auto, retail, healthcare and banking & financial services sectors. CII has also taken skills development initiatives beyond national boundaries (in Afghanistan, South Africa among the others). For the sake of record, these appear impressive, but still they are not changing the course for desirable outcomes.

T N Thakur, ex-CMD, PTC India and former Deputy Secretary, Ministry of Personnel (GOI), looked after training policy, plan and non-plan training programmes-he also spearheaded the major reforms in UPSC in Rajiv Gandhi government, he shares his views:

"India has very large young population, 70 percent of India's 1.2 billion populations is below 30 years of age. Such young population is a great strength if they are gainfully employed, otherwise they will turn to be a great liability. It's, therefore, imperative for India to have massive skill development programme and create employment opportunities through growth oriented schemes. We cannot distribute wealth if we don't have it. Only a balanced growth alone will bring prosperity and equity."

National Skill Development Corporation (NSDC) CEO & MD, Dilip Chenoy, puts his perspectives on this with incorrigible optimism:

“For a country keen to make its way in to the league of advanced nations within the next decade by leveraging its favourable demographic profile, skill development offers the best solution to realize this aspiration. In consonance with this philosophy, the National Skill Development Corporation (NSDC) through its private sector training partners has been steadfastly engaged in empowering Indian youth by equipping them with the skill sets that would allow them to participate in and contribute to the process of inclusive growth and development.”

He adds: “Till March31, 2013, NSDC Partners-which range from marquee names of corporate India such as NIIT, Future Group, IL&FS, TVS, Aptech, Apollo Hospitals etc to NGOs such as Pratham, and from start-ups such as Empower Pragati and Talent Sprint to educational institutions such as the Centurion Group of Institutions in Orissa-had skilled nearly 6lakh people nationwide. By establishing a presence in 333 districts in 25 states and 2 Union Territories through2, 598 physical and mobile facilities, NSDC Partners have been imparting outcome-linked job-oriented training in a wide array of sectors.”

Many of the NSDC’s Partners such as IL&FS Skills Development (a Special Purpose Vehicle formed between NSDC and IL&FS), NIIT Yuva Jyoti (the NSDC Special Purpose Vehicle with NIIT) or Future Sharp Skills (the NSDC Special Purpose Vehicle with Future Group), for example, have embarked on large-scale training projects capable of training over a hundred thousand or more persons in 10 years either on their own or through consortiums. These could not be said practical, as the big corporations involved with NSDC hardly needs any outside support for their skill needs.

In any case, if NSDC will start thinking for the Infosys or other big corporations’ skill requirements--the rational of its existence would be naturally questioned. A specialized body like NSDC is meant to cater the skill requirements of mass people and small enterprises, which simply cannot afford the professional skill feeding from the open source on commercial rate. A big industry entity should neither seek NSDC’s services and nor NSDC should offer them-MSMEs, must be the vantage point for NSDC.

Presently, its initiatives like: Gram Tarang (Special Purpose Vehicle formed by Orissa-based education major Centurion Group of Institutions), operates in the Naxal (ultra-left wing extremist) belt of Orissa and Andhra Pradesh, and Udaan that empowering graduates and postgraduates of Jammu&Kashmir to join the mainstream and find gainful employment opportunities, hold better promises than high shot collaborations with undeserving big companies.

Dr S Ramadorai, Adviser to the Prime Minister in the National Council on Skill Development, Govt. of India in his interview given to The Times of India, on March12, 2013, pressed for a new rational rapproach from industry on skill creation: “the Industry needs to play a major role in the skilling initiative. With a highly demand-driven labour market, apprenticeship with industries is an important way forward. Currently, such ‘earn while you learn' models have been highly under-leveraged. More wages should be paid to highly skilled people, else training is disincentivised.”

To conclude, today the definition of skill development is fast changing. Under the industrial requirements, skills are supposed to be in consistent updation; so, there is a need for re-ordering the priorities and shifting from the one-dimensional model, which has wrongly viewed economic progresses only by statistical growth. Industry and governments must think seriously, why their well carved out plans are not working?

The failures to live on the promises are pathetic and unsustainable; at any cost, the outlays on the skill development initiatives and their outcomes have to be proximate. Unless this is realised, the exuberance on principled structures would not be meaningful. In simpler terms, the poor and the underprivileged have to be protected and involved under the new growth agenda. For that, the livelihood programmes have to be better democratized.
-Atul K Thakur
Email: summertickets@gmail.com
(Published in Governance Now on February17,2014)

Poornomics!

India’s growth story has failed to percolate down the layers of the society. To ensure citizen’s empowerment the leadership needs to invest in a more engaged effort.)

Adam Smith was a moral philosopher and a pioneer of political economy. He is best known for his second seminal book: An Inquiry into the Nature and Causes of the Wealth of Nations, which strongly emphasizes on the role of ‘self-interest’ and religiously (read wrongly) taken by the believers of free enterprises as the capitalist scripture.

This has been in practice with overlooking his much humane earlier work The Theory of Moral Sentiments—where he defined "mutual sympathy" as the basis of moral sentiments (the capacity to recognize feelings that are being experienced by another being).

This he had written about seventeen years before, his magnum opus permanently stuck to the mind and soul of European intelligentsia and later crossing the geographical boundaries. So, still a better part of capitalist ideas remains seriously compromised.

The opposite school—Marx’s ideas hold that “human societies progress through class struggle: a conflict between an ownership class that controls production and a proletariat that provides the labour for production”—here the argument is sharp and firm.

But looking into the context of India’s poverty debate (surprisingly which is in limelight just after a month, when Jean Dreze had shared his concern for lowering footfalls from the policy circle on poverty issues) —it appears that more than the confrontation of ideologies and adding enlightened partitions, the poor need the merit of both capitalism and socialism working genuinely in their favour.

After all, the ideological convictions shaped during the 18th and 19th centuries too need some brushing up now—even the staunchest Marxist scholar like Prabhat Patnaik doesn’t deny it. However, they require to be understood through the complex interface of Indian democracy and economic reform, which essentially walks on a non-linear path.

It is already in reckoning of many of us that the key characteristic of a democracy rests on electoral contest. More than any other democratic processes—election and subsequently formation of the government shapes the turnouts of policy debates.

Nevertheless, this is high time, when the Indian government should officially declare macro-economic policies out from the rigid purview of non-resident economists, who are more political than the obvious political tribes of Central Delhi and have in fact no or shrugged opinion on most of the pertinent matters.

The ongoing trash debates between Amartya Sen and Arvind Panagariya shows the frivolous determination of these two top placed economists for real causes haunting a large number of Indian populations. This started with a review of Amartya Sen and Jean Dreze’s An Uncertain Glory: Indiaand its Contradictions, in The Economist.

The piece published in the magazine said that this book has greater relevance than Bhagwati and Panagariya’s latest book in advocacy of market linked reform (also for ‘market linked politics’ that later substantiated in interviews/numerous articles by Panagariya) Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries.

The debate went awful when Bhagwati took Sen and Dréze much lightly than they are. In reciprocation, Sen reminded everyone his old love (not in public memory) for growth although that should be packaged with heavy public expenditure for making it ‘notionally inclusive’.

Later, they both added their views on an ideal candidate for the next PM in Delhi and rims of paper were wasted in support of their PR affairs by India’s faithful mainstream media.

Shaped in the culture of non-reading and bandwagon effect, most of the top brass of the fourth estate has written about the spat of Sen and Panagariya and only few have actually remembered the national sample survey organization’s (NSSO) recent unbelievable dossier, asserting in a worst economic phase India has been able to slide almost 2% poverty annually in last eight years.

These NSSO figures, calculated according to the Tendulkar methodology, reveal that poverty levels in India had reduced by 15 percentage points, from 37 percent to 22 percent between 2004-05 and 2011-12.

According to the data, the total number of people below the poverty line in the country is 26.89 crore as against 40.73 crore in 2004-05. The national poverty line was estimated by Planning Commission at Rs. 33.33 in cities and Rs. 27.20 in villages per day per person.

This was brainstorming for thinking people and those chosen not to think too doubted these numbers. This is acceptable that over the last two decades of reform have changed the course of Indian economy—some for good reasons. However, as a rising economy, Indians should not be complacent with rise of fortunes of a segment of population.

Through popular yardsticks—it is impossible to judge the actual numbers of poor in this country. Though lately, Deputy Chairman of Planning Commission, Montek Singh Ahulwalia has also shown his differences with NSSO’s data, prepared by an expert panel. In his opinion, the actual data would be much different, when the poverty measurement would take place in absolute terms.

These data will appear even more unreal if given little more thought on ‘relative deprivation quotient’. The growth, sans equity is a ground reality in India. Public expenditure alone cannot ensure inclusive growth—the citizen’s empowerment would take much more engaged effort than the leadership is intent to lend on this as of now.

In the meantime, the poor debates on politics and economics will not halt for sure!
Atul K Thakur
Email: summertickets@gmail.com
(Published in Governance now on August12,2013)

The politics of better economics

It seldom happens when economic wisdom wins political argument. This is a reality of our democracy, which has consistently been ignored the basic temptations of its economy for achieving ‘unknown benefits’.

It is surprising to see Bihar chief minister Nitish Kumar pitching for seeking special status for Bihar as his gameplan for upcoming elections and ahead. Undoubtedly this would be epoch-making for Bihar and the nation.

His renewed politics appears fair in crucial dimensions as he is determined to go ahead with ‘development’ and without accepting BJP’s unholy leadership. This move will strengthen the acceptance of his efforts for getting Bihar on the map of investment destinations.

As expected, Bihar’s CM saw huge gathering at his rally in Ramlila Maidan. As Congress is seriously considering on Bihar’s demand for special status, chances are of a smooth coalition in future. Bihar has come long way between 2005-3013.

Although the state can’t claim for ‘satisfactory’ overturn of all odds in its way, perhaps such realisation would do well. At this point, Bihar would be able to materialise its quest for industrialisation and farming sector with improved energy supply and additional developmental funds from center that would come through a special status.

For decades, Congress sailed on Bihar’s inert politics, which was dangerously thrived on the plagued socio-economic scenario. Congress has lost even its footprint in the state. It has lost its credibility long back in Bihar’s politics.
The CPI’s base almost diminished from its traditional basin-North and South Bihar.

It’s not surprising that Nitish Kumar has many takers. The BJP is out of touch and its Bihar unit has suddenly found the coalition with JD (U), nothing beyond the misunderstood Machiavellian notion of auxiliary services for a greater ally.

This is a misnomer, which no one is willing to understand. With many power centres but few recognisable leaders, BJP is trying to forget the good part, where its role was formidable in bringing Bihar back on track. Allured with non-issues and wrong choice of placing the baton of 2014 elections on Gujarat chief minister Narendra Modi will make NDA, a larger platform for chauvinistic politics.

With no appearance of third front, Congress would benefit in the emerging political scenario. However, it will be difficult for UPA-III to maintain the ‘complacency’. I am sanguine with the upcoming elections would make the position of country’s top executive post competitive and in action. For close to a decade, India has missed a leader in the PMO. Things would get uglier if this trend turns into a ‘norm’.

In a situation when Congress and BJP stand on low moral grounds and have no clear macro policies to revive our sinking economy, a leader like Nitish Kumar could bring much needed balance. It’s shocking to see left parties are not making mind for such alternative coalition, this is wrong on their part to believe that such democratic alliance would take place more effectively after the poll.

When the desperation from current regime is on an all-time high and the BJP is chasing its target, the time is conducive for bringing back progressive element to the economic and political governance. India’s corporate structure is bleeding with corruption and inherent incompetency.

The grammar of Indian politics has to be corrected to keep the country as an ‘emerging nation’.
Beyond the poster-hijacking, undeserving PM candidates would prove fatal. India can’t walk the Gujarat way, though Gujarat has to follow India’s footprint.

‘Profit’ can drive trade but not the democratic politics, and this Nitish Kumar knows well. He speaks for pluralism, he also understands the ‘economics’ better than most of the ‘over-rated economists’ ruining the country. Bihar is one example where good politics and economics coexist.

Nitish Kumar’s populism could do well to the masses. As a leader of Bihar, he is doing fairly well and would not fail in Delhi either.
-Atul K Thakur
Email: summertickets@gmail.com
(Published in Governance now on March22,2013)

The irony of paradoxes!

Studies show that the overall effect of micro-credit is not essentially income enhancing but mostly in income smoothing, in making credited people more capable to buy goods or services that they cannot otherwise afford.
In all the ideas of financial accountability, financial inclusion is most important. Nevertheless, the policy circle represents it awkwardly and measures it by the number of new enterprises created which is flawed. The primary concern of the lending should be to target the prepared individual, who is capable to run a business and nurture entrepreneurship. In most cases, beneficiaries of the institutional credit do not use it for the sake of enterprise or for the purpose of income-generation.

Rather they spend credit given to them on conspicuous objects or for household expenses. Studies show that the overall effect of micro-credit is not essentially income enhancing but mostly in income smoothing, in making credited people more capable to buy goods or services that they cannot otherwise afford. The need is to create more micro-enterprises through the credit disbursement, but that requires the Indian financial sector to be more robust and responsible.

The wrong driving notion of ‘innovation’ is sabotaging the basic aims of banking in India. The point should be that we need something more than buzz of mobile banking and business correspondents. Giving prominence to undeserving ideas causes as much irritation as seeking ‘financial inclusion’ through the ambiguous financial products like-Participatory Notes and Sovereign Wealth Funds. The grim fact is, banking in India has failed to either catch the best spirits of socialistic planning or the goodness of open economy.

One of the big issues of financing in India is the ‘credit culture’. This is not strong and effective. In blurred vision of lending and unethical faith in not returning the credit makes the credit culture highly unsustainable. The proof of ‘Priority Sector Lending’ holds primacy among those India’s beautifully made constitution has absorbed this to ensure fair credit to the weaker sections and enterprising activities at bottom level.

Unfortunately, it was totally mistaken by the banks operating in India as guard against any extra demand of inclusive banking. Except Regional Rural Banks (RRBs), no other banks in India completely follow the constitutionally enforced PSL-the commercial banks lend as required, 1/3of the total credit on easily sourced fictitious enterprises or by buying the loans of RRBs or from some functional cooperative banks.

Even this worst comes up when RBI makes tight effort of attainment.

Though the small businesses are important, they cannot be a major source of job creation. They create jobs but many walk away from business. Growing or established businesses can create sustainable jobs. In that case, small local banks such as RRB benefit by lending to SMEs to keep them floating. If business thrives on bank credit, naturally the lending banks will be equally benefitted. Private MFIs have failed to function in desired competency, as their working model is not supported by the rationale of inclusiveness.

The static structure of large banks is a disadvantage when it comes to offering micro-credit. For SME credit in an example, an important consideration is the kind of structure which enables them for credit.

That is less transparent and recede chances of positive lending. In effect, the engines of growth/SMEs starve for funds. Here the basic argument is India’s large banks are relatively bad in giving customised loans. They ignore the marginal utility of the time and specific financial requirements, which matters earnestly to the small local customer.

This tendency mars the idea of inclusive banking, whatever the size, Indian banks could reach by having segmental business focus, but it would be not able to hide the unrelenting follies at ground. The local area banks, like RRBs are still doing well and could do better, if given them the parity as equal as the PSBs are getting from the government and regulators. The smaller banks can serve local populations much better and here requires lot of work to be done.

In popular perceptions, nationalised banks are trusted because these could be identified with the government. But the concern is their service levels, which is not good in rural areas. Another grave trend is not having the private sector banks’ concentration on agri-business or in promoting the farming. It’s very surprising as all second generation Indian private sector banks have presence in tier-III&IV towns.

The RBI has to act fast in making banks more open for compliance and also infusing the spirit through policies. The understanding should be that ‘social concern’ doesn’t make any adverse impact on core banking businesses. At this point of time, India banking cannot afford the ‘static mode’ in which Western financial institutions are addicted to function. Comparatively, Indian banks are stood with better chances to thrive on the huge domestic demands; this way the aim of ‘financial inclusion’ will be also meet.

But the RBI has to work very hard for this as Indian banks follow no voluntarism most of the time. After the long spell of policy inertia, the RBI is finally making plans to allow more licenses to new banks but that alone will not guarantee its entering of bonhomie with the finance ministry. Still they stand at distances while discussing the fate of economy. This dumps the prospect for change.

Progressing into 21st century amid volatile global financial scenario, Indian policymakers must heed on the larger questions related to the economy.

It will be nothing more than ‘complacency’, believing that Indian economy has really overcome the harsh outcomes of economic meltdown. With a directionless capital market, almost fridged insurance sector and passive banking structure, this claim will not go too ahead. Lately, the realization about mishandled policies and passed time would be more rational. Also this will help in dealing the situation, which is no longer as rosy as it was before 2008.

The double digit growth is now a distant dream and even for a timid target, struggle has to be intense!
Atul K Thakur
Email: summertickets@gmail.com
(Published in Governance now on February05,2013)

India’s financial regulator at loggerheads!

At the height of the ongoing worldwide recession, the Fed chief, Ben Bernake’s predictably shocked appearances used to discourage we all, who so far didn’t stopped believing in the might of otherwise a foregone power-‘central banks’. The current case of RBI’s Chairman-D.Shubbarao is not much different after escaping his contagious ‘smile’ that essentially translates nothing much than invisible ‘unease’ around him. And here, common men have to pass through a sort of ‘illiteracy syndrome’ every-time while decoding such unbreakable code.

Ironically, unrelenting mysterious smiley’s from the RBI’s head is troubling for this dreaming nation alike, as finance ministry responds every such move with the irritated doses of ‘we will march alone’ and other principles, which are practically unconquerable. A close look on the financial policy making suggests the inherent contradiction within it. The ambiguity on two goals, respectively, lower inflation and high growth is the basic reason behind the unusual mock and verbal tussle between north block and mint street. This unworthy raw is a fruitless exercise without having any clear end in its sight.

The RBI’s stubbornness on keeping interest rates in anti-growth mode has deteriorated the chances of bouncing back for Indian economy, which is grappling with a very odd combination of high inflation and lower growth. In all, the rational part of governance is completely lacking even now, for pushing up the momentum in right course. Earlier, the meltdown sentiment had favoured RBI and its conservative role with ‘no touch and playing safe’ approaches were hailed like ‘concert of chimes’.

Those difficulties have given a new sort of complex time for the Indian financial market, where the issues of working or not on the stated agenda are heavily depends upon the rapport, finance ministry and RBI maintains. It utterly disappoints, the way RBI is losing ‘ease’ with the government and attention from the core issues. Here, it will be also worthwhile to recall that somewhere government too is overstepping in the shoes of central bankers-the abrupt announcement of more private sector banks in the budget speech of Pranab Mukherjee and later lax handling by the RBI on this shows the prevailing s state of affairs.

After twenty-one years of liberalisation programme, Indian economy has grown up in the size and maximization of the wealth is also no longer a ‘non-reality’ for the different income groups. But in these years, the income gap has also spiraled up like never before and the ‘income security’, which both the good socialistic and capitalistic system necessitates, as the programme to execute has been cornered over the years. The system, which walks with the two foremost powers- regulation and capital, is not keeping concern for an equitable system under immense pressure from the cronies and political classes, with large though hidden business interests.

However, not to miss the case of allowing fair and advanced banking in the country, the RBI must ensure the action requires without stopping the strict regulatory watch over the players in the fray of financial sector. As at some point of time, the buzz of innovation too needs careful handling. On this count, the RBI has so far responded well with treating the exotic financial products quite stringently. But its proactive part remained in hibernation, when chances arose to lift the Indian financial market out of working below potential.

Once the RBI was a well shaped moderator but under the changing pattern of financial businesses, it’s falling in the league of its peers, where the desperation is virtue in dealing with the stagnant economies. Much to dismay of the optimists, finance can no longer be handled with the extreme of liberal or stringent set of rules; instead believing in the capacity of spontaneous action by the leadership would make tone much better. In all weather and season, the RBI’s governor should know the pulses of economy down from the rural terrains to the up-market areas of metro cities.

The balancing exercise would be critical here to the further course of action for India’s financial market. The combination of populist politics and over mechanized economic bureaucracy would do no well to the India’s economy, which is in perplexed state on its own future. Knowing where to act effectively in the policy making would solve the petty issues in the high circle that causes endless troubles to the believers of sound financial administration. Access to the institutional finance plays vital role in ensuring the fair chances of employment for the youths.

The entrepreneurial zeal is not weak in India albeit more practical banking approaches are the need of this hour. Still, it would be wrong for the RBI or finance ministry to compare India with the western economies, which have shaped through the different historical developments and ofcourse with the support of colonial projects. India can’t go artificially in the history for overlooking on odd economic issues.

Unlike, India as a new nation and old civilisational land, needs to keep growing and under the aegis of its commendable democratic system. Neither the totalitarian China nor the lightly floating USA would make India, what its majority of people dreams relentlessly. The loggerheads must stop and RBI should think for the common men and business communities too, as nothing would go untoward hereafter!
Atul K Thakur
November2nd, 2012, Friday
Email: summertickets@gmail.com
(Published in Governance now,dated on November10, 2012)

The RBI's unsavoury policy dictates!

The RBI has been the master of all weathers and seasons concerning India’s financial sector. It holds the pulse of the national economy with tempestuous effects. But even with all its prominence, the RBI has seldom crossed the contoured spirits which obfuscate the existing macroeconomic scenario. The scrimmages from its side are causing for the fixture of topsy-turvy status in the policy domain, finally making the broad-brush more frequent than the desirable spunky actions. Until two years back, world was witnessing the central bankers sullen acts; India was indeed a sort of exception so far. But things have entered in torsion once the India’s impregnable finance ministry and the RBI got struck in the endless war stimulated by the ‘egoists’.

It’s clear that, the finance ministry is the most important place in India after the Prime Minister’s Office --this sounds awkward but becomes evident when seen against the recent reshuffling in ministries, when the serving home minister was called to hold the command of economy. This marks the moral bankruptcy, as the new finance minister will be hardly reckoning the plight of the economy which originated through the clash of interest between real and rave components -- moreover, he lacks the critical tributes like acceptance and expertise for handling a diverse economy like India’s.

This mischance will boost many inside the RBI, who earlier relied on static and soft monetary policies that at least in last one-and-half-years have cut India from both of its central economic ideologies based on ‘half-willing socialism’ and ‘half-sighted dreams of reform’. Among the list of blunders, the RBI’s extraneous policy regarding the licensing of new banks under the private sector refers the unique misunderstanding of the whole issue. It’s obvious that, the RBI is not keen on banking licenses for corporates, not to work with any neo-egalitarian model of banking based on ‘maximum happiness’ of clients of different types and figures but for securing the power to superseded the boards of existing banks and leaving the case of banking expansion in its backyard.

The insistence of the central bank on amendments to the Banking Regulation Act by the Parliament as a prerequisite for any potential flex on banking licensing is flawed and objectionable. It may be true that none of India’s NBFCs are fit enough for the award of baking business, though the many interested public sector entities could be taken for a ride under the joint venture in private partnership. Also, there would have been nothing wrong by downing the obstination on allowing corporate world at large to enter the fray of banking based on competency, not by the channel of cronyism.

By the impression of numbers, India’s corporate sector is performing but by the spirits, in no manner it’s worth of calling ‘robust’. By an example, almost all heads of India’s private sector banks have downplayed the chances for few more private banks, citing the already high competition and its aftereffects on their businesses. These were all untoward statements with no technical precision or understanding of a height of possible stagnation with which India’s banks will be reckoning sooner than the later. Banking should be means for the profit but not for the oligopoly; unfortunately, the reverse is the case in India today -- not surprising in present scenario, if the SBI has lost its tag of being the most valued bank in market terms from one of its shrewd peers.

Notwithstanding its actual role, the RBI is maintaining silence over the future growth of India’s financial sector, which has been safe more for its undersized ambition than the claimed ‘prudence’. This is totally ironic watching the curtain down on the future of India’s more than 55 percent unbanked citizens and overall the growth of financial sector at large. The path India’s banking has travelled so far hardly allows one to part the views between progressivism and ultra-materialism, here the things have to be seen in the right context. Public sector banking was more a hedging intervention, so it would be unfair considering the nationalisation of banks as the complete socialistic manifestation. PSBs/RRBs played their role immensely well and would do more good under the perfect competition around the every nook and corner.

Not even remotely, the arrival of few more banks would harm their business; contrarily it would help the sagging market sentiments to get an upward touch. Instead fearing and sharing those misleading apprehensions, the RBI should create a true healthy work culture in PSBs/RRBs, which are remarkable by their business and reach.

RRBs especially deserves much better deal in terms of human resource policies. It’s shocking to see the RBI/finance ministry’s dualism in taking them as at par with the PSBs, where the service benefits like pension is now the part of system. This discrimination should be ended by introducing the service provisions including of pensions for the RRBs employees on the line of PSBs With more than 17,000 branches across the India’s rural heartlands and the small towns, RRBs can be seen as the engine of rural growth in India -- so they need an immediate broad unification at the national level with an effective professional board, which can lead the rural banking for more inclusive businesses.

India’s jobless growth or the slow industrial momentums are the outcome of chronic passivism from the RBI for the mass issues. It’s not more than an excuse in passing the fault on global financial uncertainty by the India’s policy regime for the present mess-up at domestic front. The last two decades of India’s growth story was based on the domestic consumption strength, rather than on any other fancied factors. This should be the time of reckoning by India’s central bank, moving clearly and with a goal must be the basic catch which it has been missing for long under its mix of placid shows off and painful affects. Until India’s central bankers will rise from their very long slumbering, any hope to see the financial sector on bloom would be near about the day dreaming in a rainfed season like the present!
Atul Kumar Thakur
August31st2012,Friday
Email: summertickets@gmail.com
(Published in Governance now on August27th 2012/ http://governancenow.com/views/columns/rbis-unsavoury-policy-dictates )

The case of agricultural diversification in India

The decline in the share of agriculture in India’s GDP has been rapid in the post-liberalisation era; despite the fact that the growth of agricultural income during the 1990’s has been marginally better than the corresponding rate of growth in the 1980’s. Growth in agriculture stagnated towards the end of the 1990’s and has decelerated thereafter. In this context, the composition of income from agriculture and allied sectors of the economy has been suited.
Agricultural diversification has been achieved as a larger area of land is now utilised for the cultivation of high value corps. With trade liberalisation, the relative prices of exportable commodities have increased rapidly and those of importable commodities have comparatively decreased. In the short run, a continuous increase in the relative price of a commodity enhances its production more often by substituting it for importable commodities without any statistical effect on the cropped area. As a result, the share of exportable commodities has increased in the total value of agricultural output.

Here it would be apt to rely on a study based on alternate measures ( namely the Simpson index),of diversification for understanding the state of affairs and concentration of non-food corps on several factors such as income, land distribution, irrigation intensity, institutional credit, road density, urbanisation and market penetration. Regression analysis suggests that increased road density, urbanisation encourages commercialisation of agriculture and with commercialisation, farms in a region are increasingly specialised in the production of certain crops and crops-groups as per the resource infrastructure and institutions of the region.
Considering the multi-dimensional importance of agriculture diversification, it is important to understand the drivers of agricultural diversification in the country. Changes in the relative prices of corps have influenced the crop enterprise mix immensely. Price is basically a reflection of the demand and supply situation. In a closed economy, the prices that farmers receive alternately, farm harvest price is influenced by the minimum support price (MSP) and the MSP has been influencing acreage under crops. But in several growing economies, minimum support prices (MSPs) for agricultural commodities have been increased in recent past. Apart from contributing to food price inflation, this increases the spread between prices paid to producers and subsidised prices charged to consumers, fueling the fiscal burden. Since MSPs need not always extend to all agricultural commodities and public procurement need not cover all commodities either, this creates perverse price signals and distorts resource allocation.
Triggered by food price increases, there have been interventions on the consumption side, including price controls, consumption subsidies, food aid, food for work arrangements, cash transfers and the elimination of taxes on consumption across a range of countries. Are these fiscally sustainable? Do they lead to additional distortions? Do they lead to supply-side adjustments or are they knee-jerk reactions? But in India’s case, agricultural diversification has not affected much through the price rise or policy response directed on that —so the case of agricultural diversification remains positive in India.
The per capita income is hypothesised to affect the diversification as measured with the percent of non-food crops in either way. The non-food crops more specifically, fruits and vegetables are increasingly recognised as a new source of growth in agricultural income. On the other hand, an increase in the per capita income is the cause of a shift in consumers’ preferences from staple food items to fruit and vegetables. Such changes in the dietary pattern are the causes of a diversification in the production portfolio. This implies a positive effect of income on the percent of gross cultivation areas (GCA) under non-food crops in the country.
The size and the quality of land has always been an important factor in agricultural production relations. The average size of operational holding is often considered an important determinant of crop diversification. These variables are supposed to have a negative effect on diversification indices. Many populous states of India such as Bihar, UP etc are witnessing the growth of small size of farmland, which is affecting productivity and income involved with this. After an extent, the role of technology in improving productivity while alternately reducing the unit cost of production and conserving natural resources cannot be overemphasised. Thus, land management is the need of hour to sustain the welcome pattern of agricultural diversification.
The kind of growth in agriculture during the 1990’s has widened rural inequity. Leakage in the rural economy has increased with the inequitable growth of income in the system. Some of the increased leakage in the rural economy is also associated with the kind of growth of manufacturing and how the process of rural development is being handled by the (state) governments and policy agencies. Consequently, it’s evident that very few policy measures are properly responding to the haunting problems in rural areas under the inefficient local administrative machinery that instead forward the pace of implementation of central plans and create many bottlenecks for stretching the project for all wrong ends.
A forward looking, speedy metamorphosis of India’s bottom tier administration would be the pre-imminent step for retaining agriculture as an occupational option and further for thinking of carrying on with its bright materialistic side that comes through diversification and knowledge based farming.
Atul Kumar Thakur
June 24,2012, Sunday, New Delhi
Email: summertickets@gmail.com
(Published in Governance now,June 2002/http://www.governancenow.com/news/public-reporter/case-agricultural-diversification-india )