Economic Graffiti: The anti-argumentative Indian

More disappointing than the attacks on Amartya Sen is that leaders in government have not countered the chant of abusive trolls.

Amartya Sen is an iconic world figure. In that treacherous space between economics and philosophy, he may well be the most famous living personality, having published papers in the world’s best philosophy journals and the most highly-regarded economics journals. When he got the Nobel Prize for economics in 1998, it did not come as a surprise to anyone in the profession. I have a confession though. That year, I was visiting the World Bank and there was a Nobel lottery among the staff. Having taken a bet on Sen the previous two year’s and lost, I decided it was time to change my guess. And I lost my money again.

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I was fortunate to do my PhD with Amartya Sen. In fact, it was his lectures at the London School of Economics in the mid-1970s in jam-packed auditoriums, with students spilling over on to window sills, that made me change my life-long career plan to be a lawyer.

I first met Sen, fleetingly, in Delhi, when I was a student at St Stephen’s College, and he was a professor at the Delhi School of Economics. But I got to know him properly in London in 1972 when I joined the London School. I did my PhD with him, when he was at the height of his career, working mainly on social choice theory, mathematical logic and moral philosophy.

There is no surprise, then, that Sen has been a major influence on me, and that I often cite his works in my writings. What has been a shocking experience in the last three or four years is the amount of trolling attacks unleashed on Sen whenever he is cited in popular writings; these come almost entirely from India. The attacks do not have any substance. Clearly, those crafting the attacks, if crafting is the word, do not have the capacity for serious debate. So what they unleash is merely a volley of completely fact-free name calling. Sen, they scream, is an agent of the Congress party, he is a slave of the West, a brainless puppet and they go on, using language so crude that it is not worth repeating.

What is sad for India is not that a few people may want to shout invectives at him, but that the leaders in government have not said anything to counter this crazy chant of abusive trolls.

I am not saying that the trolling should be banned. People should have the freedom to express their opinions no matter how inchoate, but we need leaders, even those who oppose Sen’s views, to signal their disapproval of this kind of uncouth character assassination directed at one of the most celebrated intellectuals of our time.

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I have known Sen long enough to know not just about his outstanding mind, but that he is totally without prejudice against groups — caste, religion, race. Like Nehru was, he is an atheist, who respects other people’s religion; he is totally secular.

Though Sen has openly said that he does not support the present BJP government, he belongs to no party. In fact, the only time he has been a member of any political party, it was that of the left, when he was an undergraduate student in India, at Kolkata’s Presidency College.

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What is ironic about these politically-inspired attacks on Sen is that they come from the very Hindutva groups that are perennially pointing out how Indians do not recognise the contributions of Indians to science, philosophy and scholarship. What they do not realise is that whether or not that has been true historically, their behaviour provides evidence in favour of their own thesis.

Not for a moment would I say that Sen’s ideas must not be challenged, contested and rejected if one is so persuaded. It is through arguments and contestation that democracy thrives. These troll attacks on Sen are unfortunate because they are attacks on the very matters on which India, despite being a poor country, stood out and commanded respect around the world. It is a tribute to Nehru and his self-confidence that he nurtured scientists, philosophers and intellectuals, including those who were openly critical of Nehru’s politics.

If I take my own field, economics, it is a remarkable fact that there are few nations outside America and Europe that are so well represented in the frontline as India. In the 1960s and ‘70s, the talent that came out of India was quite astonishing. There was, of course, Amartya Sen but even apart from him it was a string of personalities who started out in India and were doing cutting-edge research in economics. K N Raj, Jagdish Bhagwati, Sukhamoy Chakravarty, T N Srinivasan, A L Nagar, and if we were to go to a slightly younger cohort, Avinash Dixit and Partha Dasgupta stand out among them.

For a nation’s progress, nothing is as important as the nurturing of science, philosophy, literature, and mathematics. Economics is a relatively young science that is now critical for a nation to navigate today’s complicated, globalised world. And in assessing the power of ideas, we must realise that ideas must be assessed for their own worth. Doomed are societies in which people, after hearing about Pythagoras’ theorem, want to know Pythagoras’ political party affiliation in order to decide whether the theorem is correct.

Source: Indian Express, 14/12/2018

Fight the good fight for our children

The saying in the Hindi belt – The poor have to suffer in every circumstance – was ringing in my head like a sledgehammer. The question that was bothering me the most: Till when will we allow this dastardly game of turning injustice into an aphorism and the aphorism into infamous tradition to continue?

It was a lazy morning of October 14, 2010 but I was seething with anger. The saying in the Hindi belt: Garib ki har jagah maut hai (The poor have to suffer in every circumstance), was ringing in my head. The question that was bothering me the most: Until when will we allow this game of turning injustice into an aphorism and the aphorism into infamous tradition to continue? My colleagues in Kanpur, Lucknow and Delhi were thinking on similar lines.

By the time it was afternoon we had collectively resolved to prove this saying to be incorrect, at least this time round. What had happened was that a girl student of class six in Kanpur had been assaulted yet had been left outside her residence by the school authorities. Her parents made a living as daily wage workers. The girl was bleeding and was not even in a position to explain who had contributed to this dreadful condition. Short on resources, her parents somehow took the help of neighbours to take their daughter to a hospital. The doctors declared her dead the same evening.

Could there have been a more tragic end to an innocent life?

By this time, her distraught parents had just one recourse left -- going to the police. A report was somehow registered and a police procedure was initiated. The Mayawati government was in power in Uttar Pradesh at that time. She was renowned for following a zero-tolerance policy towards crime and criminals. The administration of the local police was with an officer perceived to be close to the chief minister. Mayawati assiduously followed the principle of implementing procedures irrespective of whether the officer was her favourite or not. The case involved a heinous crime with a girl from a modest background and the media was presenting it in a manner they deemed fit. Therefore, the police had to produce some progress as soon as possible. The easiest option was exercised to achieve this goal. The neighbourhood rickshaw-puller, who sometimes dropped the girl to school, was charged with rape and murder and instantly apprehended. Not just this, mud was flung on her mother’s character in a systematic manner.

Don’t you find this astonishing? The daughter of a poor man is killed and another poor man implicated in the murder. It seemed facing misfortune was embedded in their destiny.

At that time our correspondent interviewed the accused rickshaw-puller in the prison. His version of proceedings was frightening and Hindustan decided to bring it to light. Seeing their so-called good work being put under the scanner flustered the police officers. But, so ingrained was their arrogance that they even implicated two correspondents of Hindustan in false cases. Not just this, a mob was sent to our Kanpur office in order to intimidate the staff.

Despite all this, my colleagues in Hindustan didn’t waver from their path. By pursuing the case of Divya (name changed) we worked towards empowering disadvantaged women. We knocked on the doors of Kanpur city’s biggest intellectuals. We reached out to schools and colleges to raise awareness among young girls and saw the gradual emergence of a mass movement. News about the case reached the power corridors of Lucknow. Not just was a directive issued from the secretariat to suspend the alleged confidant of the chief minister but a number of other officers and policemen were also suspended. Not just this, the probe was handed over to the Crime Branch-Criminal Investigation Department. The newly-appointed officers began the probe on a clean slate. They discovered that the son of the director of the school in which Divya studied had carried out the crime. He was arrested. But the case didn’t end there. Only the first round in the battle for justice had been won. To ensure that probe moved forward logically, the police reached the court with all the relevant evidence and the perpetrator got the punishment he deserved required some more effort. With that unfinished task was linked our morale which still continued to be high.

Ultimately, on December 5 this year, a court in Kanpur pronounced life imprisonment to the culprit. The idea of narrating this entire story to you wasn’t to glorify Hindustan or my colleagues. Even as I write these lines, there is one question that is still bothering me: Divya may have got justice, but when will the judicial process become sensitive in a country where 106 incidents of rape take place every day?

Clearly, justice was delivered to Divya. But the fight for the protection of the rights of women and children is far from over.

Shashi Shekhar is the editor-in-chief, Hindustan

Source: Hindustan Times, 10/12/2018

More than formalising informal jobs, we need to create productive ones

For the future job market, remove barriers to productivity, ensure that wages rise in tandem, enable voice for workers and expand a portable social protection framework that is de-linked from employment.

India is a complex nation strengthened by geographic, linguistic and resource diversity, but still challenged by social divisions on the basis of caste, gender and religion. Its labour markets are as multifaceted as the nation itself.Yet, the discussion largely hovers around informality and formality.This tidy binary posits informality as always bad with poor quality work and lack of skill with low productivity and wages.

In actuality, the spectrum of employment is a continuum based on graduating levels of productivity, associated wages, social protection and tax compliance. This covers those with contracts, health care and retirement benefits, to those with regular wages but no social protection, to daily wage workers with no written contracts and, thus, who can be dismissed at will. All these categories of workers can be found with all types of employers, whether working for households, family firms, formal registered large enterprises or government agencies.

Going forward, the tech-fuelled changing nature of work forces us to recall the past, which used to have a stable lifetime job with health and retirement benefits. Most jobs in large firms and even government jobs no longer have a defined pension and health benefits are diverted through insurance schemes. With limited employment security, soon there will be little to distinguish such formal work from informal employment with social protection.

Instead of being fixated on the dichotomy between informality and formality, it is time to think of the quality of work as a matrix where one axis reflects various forms of social protection and the other indicates types of employment — from uncertain daily labour to permanent employment.Once social protection is delinked from work, it is possible for a daily wage construction worker to have access to retirement benefits and health insurance, as is already possible, but not widespread, in India.The other imperative is to enable workers to leverage skills acquired without formal certification. For this, recognition of prior learning is key and our existing initiatives need to be improved and scaled up significantly.

Beyond social protection and skill recognition, the challenge of improving productivity and raising earnings remains.This needs support to smaller firms, not through subsidies but by access to reliable infrastructure, affordable and accessible finance and linkages to global value chains.

Much is made of technology and the rise of the platform economy and its flexible work arrangements. A worker who earned a fixed and low wage can, in principle, now earn more as part of the platform — at times, by self-exploiting himself or herself by working longer hours.It is not as if flexibility is absent from traditional work arrangements. Even today, manufacturing is outsourced to home-based workers, often women, allowing them to balance socially constructed domestic responsibilities with income generation activities, bringing a few more women into a workforce from which they are conspicuously absent. A key difference is that the platform enables a direct link to the consumer, enabling workers to retain more of the surplus.

But more than flexibility, a major benefit of platform arrangements is the increase in visibility of the worker. This is also true for contract workers employed through formal suppliers. In addition to better tax compliance, it can be leveraged to connect workers to social security frameworks. Workers like contract manufacturing workers, drivers, delivery persons, carpenters, domestic workers and beauticians are all ordinarily invisible to the social protection system. But once on a platform, they become visible and potential beneficiaries of a universal social protection system, with benefits that continue even if they change jobs or migrate. This breaks the conflation of informal employment with lack of social protection.

Concomitantly, while platform arrangements can be used to skirt tax and labour regulations, it also brings together disconnected, self-employed workers. Despite their uncertain legal status as employees, they can organise to make demands. Some nascent research suggests the emergence of new forms of organising and bargaining in the platform economy. These forms use digital technologies and social media to organise, and find creative ways to subvert the power asymmetries between ‘employers’ and workers, leading to new forms of collective bargaining.

The Indian labour market was already much too heterogeneous to fit into simple dualism frameworks.Technology and migration only make it more complex. Our challenge is not about formalising the informal, but rather the production of more just jobs — work that is productive and remunerative. It is removing barriers to productivity, ensuring wages rise in tandem, enabling a voice for workers and expanding a portable social protection framework that is delinked from employment. Only then can we confidently navigate the transition to the future of work.

Sabina Dewan is president and executive director, JustJobs Network, and senior visiting fellow, Centre for Policy Research. Partha Mukhopadhyay is senior fellow, Centre for Policy Research. This is the second in a series of articles for the CPR Dialogues starting shortly in New Delhi. Hindustan Times is the print partner for the event. For more: www.cprdialogues.org. The views expressed are personal

Source: Hindustan Times, 14/12/2018

Resolution, Then Action

Life is being and becoming. We exist; that is being. We desire; that is becoming. Each one of us wants to be something other than what we are. So we are not content. Becoming involves effort — a search for new ways of living, ending of laxity and the creation of a new environment. We want to attain the truth, and we long for success, health and growth. It is our nature to be preoccupied with results and it is this that gives rise to problems. Our whole attention is concentrated on achievement; natural aptitude or inclination is often ignored. We tend to have a superficial view of things; we should go deeper to know the truth. We need to distinguish between disposition and essential nature. Do away with anger, evil, ignorance, indiscipline, aggression and acquisitiveness. Don’t be concerned only with removing ills; try to understand it. Violence is an effect, an outward manifestation. So is anger. If the root is not destroyed, the result flowing therefrom remains. Anger arises out of a particular disposition. The inner overcomes the outer. To remove outward ills, bring about a fundamental inner transformation. To resolve to do or not to do something is not enough. If one could ensure nonviolence through mere exertion of one’s will it would be wonderful. Mere utterance of a word cannot accomplish results. With discipline comes fulfilment and nonviolence. So resolve first to spare some time for meditation.

Source: Economic Times, 14/12/2018

What is sure thing principle in decision theory?

his refers to a logical principle which states that it is unnecessary to consider uncertainties while making a decision if these uncertainties will not affect the eventual decision taken by a person in any way. If an investor, for instance, will buy a stock regardless of the earnings of a company, it makes no sense to worry about whether it will report a profit or a loss. It is used to emphasise the point that it may be a waste of effort to consider the probability of various uncertain events if these events are effectively irrelevant to the final decision. The principle was proposed by American statistician Leonard Jimmie Savage in his 1954 book The Foundations of Statistics.

Source: The Hindu, 5/12/2018

The City’s Own

The centre and states must ensure that migrants are not denied dignity, rights

Prithvi Pankaj Shaw, whose original surname is “Gupta” and is based in Mumbai, hails from Gaya in Bihar. The 18-year-old cricketer has already broken most domestic records, before he was included in the Test team. However, there were reports doing the rounds recently about this talented boy being traumatised by certain nativist groups after he revealed his Bihari origins post his maiden ton, in the recently-held Hyderabad Test against the West Indies. Parallelly, an engineer and six plumbers of Bihari origin, working at a construction site in Vadodara, were beaten up for wearing lungis. All these incidents indicate a quintessential negative profiling of Biharis and Bihar. In the “metropolitan” city of Delhi, Doman Ray, a 32-year-old Dalit from the Katihar district of Bihar, got drowned while working in a Jahangirpuri sewer tank.

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The recent exodus of mainly Bihari migrants from Gujarat started when a Bihari labourer allegedly raped a 14-month-old girl in the Sabarkantha district of Gujarat on September 28. He was arrested soon after. But his dastardly act led to regional uproar and triggered a movement against Biharis and other north-Indian migrant workers. No doubt the incident was diabolic and shamed all right-thinking people in the country. The outrage may be genuine and not totally contrived. However, the Sabarkantha incident was indeed an aberration. The following outrage, therefore, can only be explained in terms of serious loopholes in the development model of Gujarat, the state which is now facing the crisis of overproduction.

Incidentally, the entire edifice of accumulation and super profits in the state is built around the migrant labourer, who faces dismal wages and poor working conditions. It is mandatory for the industries and employers in Gujarat to provide 85 per cent jobs to locals, but this was never followed because cheap migrant labour is available in abundance. The present problem of overproduction arose out of demonetisation, the absence of a new markets and a situation of almost stagflation. The consequent “banish migrant” movement in Gujarat is similar to the Datta Samant-sponsored strikes in Bombay during the early 1980s to bail out textile industrialists from the tangles of overproduction. One should also note that the efflorescence of Gujarat’s economy will not be complete without scripting the generosity of its industrialists towards its local employees, mostly at higher levels.

To dispel the stagnation in Gujarat’s economy, the news of a Surat-based diamond baron gifting 600 cars and 900 fixed deposit certificates as a Diwali bonanza to his employees, was highlighted. To give an extra punch to the event, it was so arranged that Prime Minister Narendra Modi himself handed over the car keys to those select few employees. There is, obviously, a clear contrast between the employers’ attitude towards local employees on the one hand, and the migrant labourers on the other.

Historically, in contrast to the present scenario, Gujarat and Bihar have had a close relationship. Not only were the nuts and bolts of the national movement worked out by M K Gandhi in Champaran, the conservative political figures of both the states shared a close relationship. Sardar Patel had supported Rajendra Prasad as the first President of India, even when Jawaharlal Nehruhad reservations about him. Later, in the Seventies, there was talk of Kanti Desai, son of Morarji Desai, fighting a parliamentary election from Begusarai in Bihar. Apart from close political equations with its associates, Gujarat was mindful of market cohesion, both national and international. The introduction of GST is also a powerful step towards the economic union of India. Thus, the recent “banish migrant” movement in Gujarat appears to be purely an anarchist exercise.

If the Indian Union is to function in a robust manner, it cannot allow centripetal forces to gain momentum. India has been home to two levels of nationalism, one pan-Indian and the other regional. Both have functioned parallelly without being in conflict. Tamil, Telugu, Gujarati, Marathi, Punjabi or Bengali subnationalism peacefully co-existed with Indian nationalism. In contrast, a subnational anchor was missing in the Hindi heartland. In the process, the sense of ownership of the state was also missing. In Bihar, there are only two identities, caste or national. And most of the migrants from Bihar realise their subnational identity only when they move outside the state and are tormented by local goons. It is the responsibility of the central and respective state governments to ensure that migrants are not tormented thus. Otherwise, the Indian Union will not survive.

Source: Indian Express, 5/12/2018

Lost opportunity

India missed the chance to usher in second generation reforms and free up private enterprise

Legend has it that a governor in 18th century Russia tried to impress Empress Catherine during her tour of Crimea by building facades of impressive villages along the way. These facades would be dismantled as soon as she passed them and reassembled further along her path. The recent schizophrenic commentary on the state of health of the Indian economy cannot but raise questions on the true state: Is India doing really well or are we just seeing a sequence of Potemkin villages?

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After averaging an annual GDP growth rate of 6.4 per cent (yoy) during 2012-14, growth in India increased to 7.3 per cent during 2015-17. Indeed, the growth rate for the latest available quarter was 8.2 per cent. And all of this despite the collective headwinds created by the demonetisation of November 2016 and introduction of the Goods and Service Tax (GST) last year. Simultaneously, the inflation rate has declined from 8.6 per cent during 2012-14 to 4.4 per cent during 2015-17.

Ordinarily, this growth and inflation record combined with improvement in indices like the “Ease of Doing Business” would end all debate about the health of the economy. Yet, we are treated to the spectacle of the same government that cites the positive growth and inflation statistics also claiming an imminent collapse of small and medium enterprises (SMEs), an implosion of the economy due to the absence of liquidity, a huge credit squeeze due to regulatory restrictions on banks, export weakness due to the rupee being too strong, rupee weakness due to interest rates not being raised enough, etc! How can all of these be simultaneously true?

To form a better understanding of the story, it is instructive to start by noting that world oil prices (WTI price) fell from $91 to $44 per barrel between July 2014 and July 2017. Given our daily imports of 5 million barrels of oil, this represented a cumulated saving of around $228 billion, or approximately $76 billion annually (around 3 per cent of annual GDP). The fall in oil prices did not, however, translate into a reduction in pump prices for consumers in India. Rather, it turned into a gigantic increase in government revenues to the tune of 3 per cent of GDP annually through an incipient increase in the excise tax on fuel.

This increase in revenue could potentially have been used to reduce the consolidated fiscal deficit, which had been running at an average of 6.7 per cent during 2012-14. However, the combined fiscal deficit of the Centre and states during 2014-17 actually increased to 6.9 per cent of GDP. In effect, government spending during this period grew by over 3 per cent of GDP annually. A different way of summarising this is that the growth pick-up in India over the past 3-4 years has come almost entirely out of this huge increase in government spending.

The oil party unfortunately has now ended. Over the past year prices have risen by around $20 per barrel. The choices have become stark. Either pump prices have to be raised in order to protect the tax revenues of the government. But this becomes politically unpalatable quite quickly. Alternatively, government spending has to be reduced to absorb the fall in oil tax revenues. But cutting government spending is problematic since it has been the main source of growth for the past few years.

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How does one solve this political-economic conundrum? One option is to find alternative sources of fiscal revenues. The current attempts at extracting $50 billion from the RBI’s capital reserves are one possibility. There are two problems with this. First, two-thirds of the RBI capital base of $145 billion are actually revaluation funds, which are only accounting entities rather than reflecting earned income. Moreover, the optics of raiding the central bank’s capital in order to fund a fiscal deficit is so fraught with institutional degradation of the RBI that markets might react negatively to such a move.

The second option is to get non-governmental agencies like scheduled commercial banks to open up the spending tap by lending much more. But this is problematic since a bunch of them are rife with non-performing assets and whose balance sheets are undergoing significant restructuring under the direction of the RBI. The increasingly shrill demands to weaken the Prompt Corrective Action (PCA) norms as well as the demand to ease up liquidity for SMEs are ways of squaring this circle. Unfortunately, forcing the RBI to relax existing regulatory norms has the rather big downside of the government owning responsibility for any subsequent banking sector problems.

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The last option is to somehow convince the RBI to lower real rates by cutting the policy rate. This runs the risk of undoing the gains on inflation that have been achieved over the past few years. Those who ignore this risk need only think back to the years between 2008 and 2012 when the RBI accommodated booming growth by delivering negative real interest rates for most of that period. The cost was that inflation ticked along at double digit rates.

The story of the Indian economic turnaround after 1992 was one of large productivity gains induced by removal of industrial and trade policy restrictions. Those reforms worked mainly through a better allocation of resources across different sectors of the economy. But that was a one-shot gain. The country now needs a second generation of reforms wherein factor markets including land and labour are liberalised. The last four years blessed India with a wonderful external climate along with widespread domestic support for reforms to free up private enterprise. Having missed that opportunity we are now reduced to parading Potemkin villages.

Source: Indian Express, 5/12/2018