Delhi can never be improved — until the rest of India improves!

As a general rule, capital cities are economically unproductive places. They neither grow food nor create industry. What they produce, or are supposed to produce, are public discussion, debate, decisions, as well as data and information for governance of the country as a whole.  People who come to capital cities — whether politicians or foreign diplomats or businessmen or students or even bureaucrats and journalists — should come there only for  temporary purposes, and then, once their work or business is done,  leave for their own “native places”… 

Of course only one city is a capital city.  Other cities and towns develop naturally in response to economies of scale in commerce and industry. My second piece of academic research at Cambridge back in 1976-77, which I talked about at the Delhi School of Economics in 1977-78 as a  Visiting Assistant Professor, had to do with India and other developing countries markedly being “Dual Economies”, where city and countryside, towns and metros and hinterland, are linked continuously by that wonderful two-way mass movement known as internal migration….

There is obviously seasonal migration of agricultural workers in search of urban employment during the time a crop is growing in the ground, returning home for the harvest and other festivals.  Beyond such seasonal flows, we may expect  rural-urban migration to continue depending on individual family calculations of expected employment, income, benefits etc, until as it were, the last person who has been thinking about migrating from village to town or from town to city decides not to move but to remain where he/she is.  Families typically maximise their well-being by having some members here, other members there or there etc, meeting up again during seasonal festivals when they can.  Besides, with modern commuter railways, large numbers of day-workers and vendors travel in and out of cities from the towns and villages every day.

The academic literature is vast and excellent, starting with Dale Jorgensen “The development of a dual economy”, 1961 EJ, Harris-Todaro, 1970, AER, and easily available, Jerome Rothenberg’s 1975 MIT discussion paper “On the economics of internal migration” http://dspace.mit.edu/bitstream/handle/1721.1/63948/onmicroeconomics00roth.pdf?sequence=1… See too e.g. from 2010 http://www.csae.ox.ac.uk/conferences/2010-edia/papers/275-eberhardt.pdf

In case of Delhi, despite its lack of water and its inhospitable climatic conditions on the edge of the Rajasthan desert, the British stamped it to become their Imperial child in India for ever more…  Yet even the British routinely fled to Simla or England every summer — as the current Delhi elite flees abroad to their exported children in America, Europe, Australia etc…  

Since British times, Delhi has been pampered with India’s public resources.  Not making its own food or clothing, it must import everything from the rest of India. After 1947,  millions of Hindu & Sikh refugees from the new Pakistan set up shop… then came migrants from all over, Bengal, the South, North East, UP, Bihar, Haryana, Rajasthan, Punjab, Kashmir — everywhere.  Now Delhi’s problems can never be solved until the endless migration slows down. Delhi is India’s capital and the more it is pampered, the better it seems to become and hence the more attractive it seems to India’s many millions of free people.  It is not hard to see that Delhi can never do enough for its residents because, since, qua capital city, it does not grow food or create industry (and is supposed to produce only public debate, decisions etc as a service industry), whatever it spends on public services comes from India’s exchequer, which in turn creates incentives for mass migration to continue from everywhere with no equilibrium being ever reached. 

The fascist solution that was, as I recall, suggested momentarily by a former Congress CM of Delhi, would be to forcibly prevent people from coming in from the outside.   Apparently the PRC as a totalitarian regime has some kind of system of internal passports which restricts citizens from travelling into metros on their own free will.  That cannot work in free India, where the Constitution would forbit it. Hence the correct long-term way to help Delhi solve its problems probably involves trying to improve the rest of the country!  It is something for the AAP Government to think about when it talks to Narendra Modi: seek to help the aam admi *outside* Delhi if you want to really help the aam admi inside Delhi!  In the meantime, try to improve efficiency in the local public goods the local government is supposed to produce, and do not ask for more resources from India.

This has been a 15 minute analysis…More to come…   

Silver Jubilee of “Pricing, Planning & Politics: A Study of Economic Distortions in India”

May 29 2009:

It is a quarter century precisely today since my monograph Pricing, Planning and Politics: A Study of Economic Distortions in India was first published in London by the Institute of Economic Affairs.

ppp1984

Its text is now available (in slightly rough form) at this site here.

Now in May 1984, Indira Gandhi ruled in Delhi, and the ghost of Brezhnev was still fresh in Moscow.   The era of Margaret Thatcher in Britain and Ronald Reagan in America was at its height.   Pricing, Planning & Politics emerged from my 1976-1982 doctoral thesis at Cambridge though it came to be written in Blacksburg and Ithaca in 1982-1983.   It was the first critique after BR Shenoy of India’s Sovietesque economics since Jawaharlal Nehru’s time.

The Times, London’s most eminent paper at the time, wrote its lead editorial comment about it on the day it was published, May 29 1984.

londonti

It used to take several days for the library at Virginia Tech in Blacksburg to receive its copy of The Times of London and other British newspapers.    I had not been told of the date of publication and did not know of what had happened in London on May 29 until perhaps June 2 — when a friend, Vasant Dave of a children’s charity, who was on campus, phoned me and congratulated me for being featured in The Times which he had just read in the University Library.  “You mean they’ve reviewed it?”  I asked him, “No, it’s the lead editorial.” “What?” I exclaimed.  There was worse.  Vasant was very soft-spoken and said “Yes, it’s titled ‘India’s Bad Example'” — which I misheard on the phone as “India’s Mad Example”  😀

Drat! I thought (or words to that effect), they must have lambasted me, as I rushed down to the Library to take a look.

The Times had said

“When Mr. Dennis Healey in the Commons recently stated that Hongkong, with one per cent of the population of India has twice India’s trade, he was making an important point about Hongkong but an equally important point about India.   If Hongkong with one per cent of its population and less than 0.03 per cert of India’s land area (without even water as a natural resource) can so outpace India, there must be something terribly wrong with the way Indian governments have managed their affairs, and there is.   A paper by an Indian economist published today (Pricing, Planning and Politics: A Study of Economic Distortions in India by Subroto Roy, IEA £1.80) shows how Asia’s largest democracy is gradually being stifled by the imposition of economic policies whose woeful effect and rhetorical unreality find their echo all over the Third World.   As with many of Britain’s former imperial possessions, the rot set in long before independence.  But as with most of the other former dependencies, the instrument of economic regulation and bureaucratic control set up by the British has been used decisively and expansively to consolidate a statist regime which inhibits free enterprise, minimizes economic success and consolidates the power of government in all spheres of the economy.  We hear little of this side of things when India rattles the borrowing bowl or denigrates her creditors for want of further munificence.  How could Indian officials explain their poor performance relative to Hongkong?  Dr Roy has the answers for them.   He lists the causes as a large and heavily subsidized public sector, labyrinthine control over private enterprise, forcibly depressed agricultural prices, massive import substitution, government monopoly of foreign exchange transactions, artificially overvalued currency and the extensive politicization of the labour market, not to mention the corruption which is an inevitable side effect of an economy which depends on the arbitrament of bureaucrats.  The first Indian government under Nehru took its cue from Nehru’s admiration of the Soviet economy, which led him to believe that the only policy for India was socialism in which there would be “no private property except in a restricted sense and the replacement of the private profit system by a higher ideal of cooperative service.”  Consequently, the Indian government has now either a full monopoly or is one of a few oligipolists in banking, insurance, railways, airlines, cement, steel, chemicals, fertilizers, ship-building, breweries, telephones and wrist-watches.   No businessman can expand his operation while there is any surplus capacity anywhere in that sector.  He needs government approval to modernize, alter his price-structure, or change his labour shift.  It is not surprising that a recent study of those developing countries which account for most manufactured exports from the Third World shows that India’s share fell from 65 percent in 1953 to 10 per cent in 1973; nor, with the numerous restrictions on inter-state movement of grains, that India has over the years suffered more from an inability to cope with famine than during the Raj when famine drill was centrally organized and skillfully executed without restriction. Nehru’s attraction for the Soviet model has been inherited by his daughter, Mrs. Gandhi.  Her policies have clearly positioned India more towards the Soviet Union than the West.  The consequences of this, as Dr Roy states, is that a bias can be seen in “the antipathy and pessimism towards market institutions found among the urban public, and sympathy and optimism to be found for collectivist or statist ones.”  All that India has to show for it is the delivery of thousands of tanks in exchange for bartered goods, and the erection of steel mills and other heavy industry which help to perpetuate the unfortunate obsession with industrial performance at the expense of agricultural growth and the relief of rural poverty.”…..

I felt this may have been intended to be laudatory but it was also inaccurate and had to be corrected.  I replied dated June 4 which The Times published in their edition of  June 16 1984:

timesletter-11

I was 29 when Pricing, Planning and Politics was published, I am 54 now. I do not agree with everything I said in it and find the tone a little puffed up as young men tend to be; it was also five years before my main “theoretical” work Philosophy of Economics would be published. My experience of life in the years since has also made me far less sanguine both about human nature and about America than I was then. But I am glad to find I am not embarrassed by what I said then, indeed I am pleased I said what I did in favour of classical liberalism and against statism and totalitarianism well before it became popular to do so after the Berlin Wall fell. (In India as elsewhere, former communist apparatchiks and fellow-travellers became pseudo-liberals overnight.)

The editorial itself may have been due to a conversation between Peter Bauer and William Rees-Mogg, so I later heard. The work sold 700 copies in its first month, a record for the publisher. The wife of one prominent Indian bureaucrat told me in Delhi in December 1988 it had affected her husband’s thinking drastically. A senior public finance economist told me he had been deputed at the Finance Ministry when the editorial appeared, and the Indian High Commission in London had urgently sent a copy of the editorial to the Ministry where it caused a stir. An IMF official told me years later that he saw the editorial on board a flight to India from the USA on the same day, and stopped in London to make a trip to the LSE’s bookshop to purchase a copy. Professor Jagdish Bhagwati of Columbia University had been a critic of aspects of Indian policy; he received a copy  in draft just before it was published and was kind enough to write I had “done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems!”

Siddhartha Shankar Ray told me when  we first met that he had been in London when the editorial appeared and had seen it there; it affected his decision to introduce me to Rajiv Gandhi as warmly as he came to do a half dozen years later.

Within a few months though, by the Fall of 1984, I was under attack by the “gang of inert game theorists”  who had come to  Blacksburg following the departure of James Buchanan.  By mid 1985 I had moved to Provo, Utah, really rather wishing, as I recall,  to have left my India-work behind me.  But by late 1986, I was at the University of Hawaii, Manoa, where the perestroika-for-India and Pakistan projects that I and WE James led, had come to be sponsored by the University and the East West Center.

The unpublished results of the India-project reached Rajiv Gandhi by my hand on September 18 1990 as has been told elsewhere.  A week later, on September 25 1990,  Rajiv appointed a small group that included myself, to advise him.  It was that encounter with Rajiv Gandhi that sparked the origins of the 1991 economic reform.  Yet in 2007 one member of the group, declaring himself close to Sonia Gandhi, brazenly lied in public saying it was Manmohan Singh and not I who had been part of the group — a group of which I had been in fact the first member!  Manmohan Singh himself has never claimed to have been present and in fact was not even in India at the time it was formed.

I have explained elsewhere here why I believe this specific  lie  came to be told by this specific liar who shared membership with me in the group that Rajiv had formed:  because I had also pleaded with  many and especially within this group that Rajiv had seemed, to my layman’s eyes, very vulnerable to assassination, and none of them had lifted a finger to  do anything about it!  Such is how duplicity, envy and greed for power make people mendacious and venal in politics!

As for Pricing, Planning and Politics, Dr Manmohan Singh received a personal copy from my father whom he had long known through the Kaul brothers, Brahma and Madan, both of whom were dear friends of my father since the War and Independence.   From a letter Dr Singh wrote to my father,  he would have received his copy in late 1986 when he was heading the Planning Commission in his penultimate appointment before retirement from the bureaucracy.

Readers of Pricing, Planning and Politics today, 25 years after it was published, may judge for themselves what if any  part of it may be still relevant to the new government that Dr Singh is now prime minister of.   The work was mostly one of applied microeconomics or the theory of value; in recent years I have written much also of applied macroeconomics or the theory of money as it relates to India.  My great professor at Cambridge, Frank Hahn, was kind enough to say in 1985 that he thought my “critique of Development Economics was powerful not only on methodological but also on economic theory grounds”; that to me has been a special source of delight.

Subroto Roy

“I’m on my way out”: Siddhartha Shankar Ray (1920-2010)

I  am grieved to hear of the death of Siddhartha Shankar Ray last night.

I was introduced to him by an uncle who had been his college-buddy, and he took up a grave personal matter of mine in the Supreme Court of India in 1990 with great kindness, charging me not a penny, being impressed by a little explicit “civil disobedience” I had had to show at the time towards Judge Evelyn Lance.

He also told me he and his wife had been in London on May 29 1984 and had seen *The Times*’s leader that day about my critique of Indian economic policy. He invited me to his Delhi home where I told him about the perestroika-for-India project I had led at the University of Hawaii since 1986, at which he, of his own accord, declared

“You must meet Rajiv Gandhi.  I will arrange a meeting”.

That led to my meeting with Rajiv Gandhi, then Congress President & Leader of the Opposition, on September 18 1990, which contributed to the origins of India’s 1991 economic reform as has been told elsewhere. https://independentindian.com/thoughts-words-deeds-my-work-1973-2010/rajiv-gandhi-and-the-origins-of-indias-1991-economic-reform/

Rajiv’s assistant George told me Rajiv had said he had not heard more fulsome praise.

In Bengal, he took me as a guest to visit the Legislative Assembly in session when he was Leader of the Opposition; it was the legislature of which my great grandfather, Surendranath Roy, had been a founder, being the first Deputy President and acting President too; Surendranath had been friends with his maternal grandfather, CR Das, leader of the Congress Party before MK Gandhi, and he said to me in the car heading to the legislature about that relationship in Bengal’s politics some seven decades earlier “They were friends”.

He introduced me to all the main leaders of the Bengal Congress at the time (except Mamata Banerjee who could not come) and I was tasked by him to write the manifesto for the State elections that year, which I did (in English, translated into Bangla by Professor Manjula Bose); the Communists won handily again but one of their leaders (Sailen Dasgupta) declared there had never been a State Congress manifesto of the sort before, being as it was an Orwell-like critique of Bengal’s Stalinism.

In a later conversation, I said to him I wished he be appointed envoy to Britain, he instead came to be appointed envoy to the USA.

In Washington in September 1993, he said “You must meet Manmohan Singh”, and invited me to a luncheon at the Ambassador’s Residence where, to Manmohan Singh and all his aides, he declared pointing at me

“The Congress manifesto (of 1991) was written on his (laptop) computer”.

In later years I kept him informed of developments and gave him my publications.   We last met in July last year where I gave him a copy, much to his delight, of *Margaret Thatcher’s Revolution: How it Happened and What it Meant*.

I said to him Bengal’s public finances were in abysmal condition, calling for emergency measures financially, and that Mamata Banerjee seemed to me to be someone who knew how to and would dislodge the Communists from their entrenched misgovernance of decades but not quite aware that dislodging a bad government politically was not the same thing as knowing how to govern properly oneself.

He,  again of his own accord, said immediately,

“I will call her and her main people to a meeting here so you can meet them and tell them that directly”.

It never transpired.

He and I were supposed to meet a few months ago but could not due to his poor health; on the phone in our last conversation I mentioned to him my plans of creating a Public Policy Institute — an idea he immediately and fully endorsed as being essential though adding

“I can’t be part of it,  I’m on my way out”.

“I’m on my way out”.   🙂

That was Siddhartha Shankar Ray — always intelligent, always good-humoured, always public-spirited, always a great Indian.

I shall miss a good friend, indeed my only friend among politicians other than the late Rajiv Gandhi himself.

 

Land of my fathers: Why I am Indian

From Facebook:

 

Subroto Roy  says to Mr Tripathi: “An oath is an oath. For myself, my love for America, where I lived some 16 years, age 25-41, was enough for me to wish to become an American — if I did not have to abandon the land of my fathers which needed me perhaps more.”

 




see too https://independentindian.com/life-of-mk-roy-19152012-indian-aristocrat-diplomat-birth-centenary-concludes-7-nov-2016/


Just how much intellectual fraud can Delhi produce?

Today’s English-language newspapers report a front-page story that suggests the extent of intellectual fraud emanating from our capital-city’s English-speaking elite may be unending and limitless and uncontrollable (and this  Delhi-based elite has spread itself to other places in the country too).

Such  may be a source of our ridiculous politics, paralleled by the corruption in organized business in both public and private sectors.  Delhi was perhaps the wrong place to which to move India’s capital  one hundred years ago; the geography was such that it made ordinary survival hard or at least highly stressful, and when you have a capital-city in which the elite have to work so hard all the time merely to remain within the city-limits, it was inevitable perhaps that truthfulness and honesty would become  major casualties.

Subroto Roy

Pakistani expansionism: India and the world need to beware of “Non-Resident Pakistanis” ruled by Rahmat Ali’s ghost

The Government of Pakistan is said to be due to release its initial report on the involvement of Pakistanis in the Mumbai massacres.  It is reportedly expected that the G o P will partly if not mainly or wholly attribute responsibility for the planning of the massacres to expatriate  Pakistanis  in other countries, perhaps in Europe and Britain.  If so, a fact the Government of India might find prudent to recall is that the Government of Pakistan in bygone decades did deny citizenship to Rahmat Ali himself    (who invented the acronym “P, A, K, I, S, T, A, N” ) and even deported him back to Britain from where he had carried out his vituperative and bigoted campaign against Hindus.

Rahmat Ali’s British grave has become a site of pilgrimage for expatriate Pakistani extremists and his ignorant hate-filled ideology from the 1930s has been inspiring their modern manifestos.  I said this in an article published in Karachi’s Dawn newspaper in 2005, which also pointed to Iqbal and Jinnah’s disdain for Rahmat Ali’s views (see “Iqbal and Jinnah vs Rahmat Ali” republished here).  American nationals and  British subjects of Pakistani origin inspired by Rahmat Ali’s  ghost are spreading theories of Pakistani territorial expansionism at the cost of the destruction of the Indian Republic and many other countries.

The fact that at one such website recently I myself, presumably because of my Hindu name and Indian nationality, have been referred to as a “monkey- or donkey-worshipper” 😀  may speak to the somewhat  rabid nature of such ideologies.  (Drat! And there I was expecting some elementary Pakistani courtesy and acknowledgment let alone gratitude for having created, at great personal cost at an American university twenty years ago, the volume with WE James titled Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s with its mundane chapters on agriculture, macroeconomics, education etc!)

Incidentally, British newspapers are reporting today that America’s  CIA has been deeply concerned about British subjects of Pakistani origin being a source of international terrorism. It may be pertinent to recall  that terrorism in India’s Punjab had much support among numerous Sikh expatriates and immigrants in North America and Britain, and the same kind of thing may be true of Tamil expatriates from  Sri Lanka.  Being isolated and alienated as immigrants in a foreign country may lead to psychological conditions that contribute to such phenomena, whereby political and other events in the faraway country-of-origin take on exaggerated proportions in an individual’s mental make-up.   Certainly Rahmat Ali himself was a rather tragic lonely figure who wasted his own potential to properly contribute to Pakistan’s political history  through his own self-blinding hatred of Hindus.

SR

Become a US Supreme Court Justice! (Explorations in the Rule of Law in America)

 

For almost two decades, Since the summer of 1988 when *Philosophy of Economics* got accepted for publication, I have found myself in a saga exploring the Rule of Law, the nature of justice and freedom, and the nature of racial animosity and xenophobia in the United States. Judge it here for yourself. Files 1 and 2 marked SCOTUS are the front-matter and Petition for Writ of Mandamus as received by Circuit Justice Sandra Day O’Connor of the Supreme Court of the United States in February 1996. Files 3 to 10 constitute the Appendix of Record giving the rulings of the US District Court for the District of Hawaii and the US Court of Appeals for the Ninth Circuit, including especially in File 8 the “after-discovered” evidence of how my attorney had been covertly purchased by my opponent. An example of perjured trial testimony is contained in File 2. In September 2007, I asked my opponent — the Government of one of the 50 States — to voluntarily admit its wrongdoings to the present Chief Judge of the US District Court as is required by law. Government lawyers should, after all, try to act lawfully.

file1scotuswritofmandamuspetitionfronmatter

file2scotuspetitionforwritofmandamus

file3recordcoverandcontents

file4judgekayon60b6rehimselfb1tob7

file5ninthcircuitbriefingscheduleb8tob9

file6ninthcircuitunlawfulordersb10tob13

file7nnthcircuitdocketb14

file8evidenceofraudoncourtb15tob20

file9districtcourtdocketb21tob331

file10recordendmatterb34tob39


Become a US Supreme Court Justice! (Explorations in the Rule of Law in America) Preface

For almost two decades, I have found myself in a saga exploring the Rule of Law, the nature of justice and freedom, and the nature of racial animosity and xenophobia in the United States. Judge it here for yourself. There are 10 pdf files in a password protected post of the same name. Please send me an email identifying yourself and offering any reason, including curiosity, that you may have to want to examine the matter.

Files 1 and 2 marked SCOTUS are the front-matter and Petition for Writ of Mandamus as received by Circuit Justice Sandra Day O’Connor of the Supreme Court of the United States in February 1996. Files 3 to 10 constitute the Appendix of Record giving the rulings of the US District Court for the District of Hawaii and the US Court of Appeals for the Ninth Circuit, including especially in File 8 the “after-discovered” evidence of how my attorney had been covertly purchased by my opponent. An example of perjured trial testimony is contained in File 2. In September 2007, I asked my opponent — the Government of one of the 50 States — to voluntarily admit its wrongdoings to the present Chief Judge of the US District Court as is required by law. Government lawyers should, after all, try to act lawfully.

For the files with the evidence please see https://independentindian.com/2008/11/09/become-a-us-supreme-court-justice-explorations-in-the-rule-of-law-in-america/

 

 

 

On Indian Nationhood

On Indian Nationhood
From Tamils To Kashmiris And Assamese And Mizos To Sikhs And Goans

First published in The Statesman, Editorial Page

May 25 2007

By Subroto Roy

In the decades before 1947, imperialist critics of Indian nationalism accused the movement of being less about creating Indian nationhood than about supplanting British rule with local Indian oligarchies. Sydenham, for example, in the upper house of Britain’s Parliament in August 1918, gleefully quoted from the “Madras Dravidian Hindu Association” (forerunners of today’s DMK etc): “We shall fight to the last drop of our blood any attempt to transfer the seat of authority in this country from British hands to so-called high-caste Hindus, who have ill-treated us in the past and will do so again but for the protection of British laws.” Also quoted were “Namasudras of Bengal”, allegedly numbering “ten million men”, protesting “gross misrepresentation” by “so-called high-caste leaders” of the desirability of “Home Rule or self-government”. Besides caste and class there was always religion too by which India’s inhabitants could be classified and divided, and it must have delighted Sydenham to quote the “South Indian Islamic League” saying “Nothing should be done which will weaken British authority in any manner whatsoever, and hand over the destinies of the Moslem community to a class which has no regard for their interests and no respect for their sentiments”.

Home Rule League

Sydenham was attacking the Montagu-Chelmsford Report which had stated that India had “a core of earnest men who believe sincerely and strive for political progress; around them a ring of less educated people to whom a phrase or a sentiment appeals; and an outside fringe of those who have been described as attracted by curiosity to this new thing, or who find diversions in attacking a big and very solemn Government as urchins might take a perilous joy at casting toy darts at an elephant.”

Annie Besant, herself an Englishwoman, was, along with BG Tilak and MA Jinnah, a pioneer of Indian nationalism at the time and headed the new Indian Home Rule League on the Irish pattern. The League stated its membership at 52,000. Sydenham multiplied that by five and asked if a quarter million could purport to rule 244 millions in an Indian democracy. Where, he demanded, was the “voice that cannot yet be heard, the voice of the peoples of India”? The imperialist jibe was that the British Raj would be replaced at best by a “Vakil Raj” of “high-caste” Hindus and at worst by anarchy and bloodshed.

Thirty years later India’s was partitioned and independent under Attlee’s Labour Party. Churchill took over the imperialist mantle and found solace in the new India agreeing to remain in Britain’s “Commonwealth”, saying that India doing so as a Republic did not impair “the majesty of the Crown or the personal dignity of the King”.

The ghosts of Churchill and Sydenham today would heartily cheer our Republic’s current President APJ Abdul Kalam agreeing to receive the “King Charles II Medal” from the Royal Society, and our current PM Manmohan Singh accepting honorary British degrees also while in office. Britain’s Crown Prince has proposed a cricket match between India and Pakistan to mark the 60th anniversary of 1947, and what, after all, could be less inappropriate to mark the event in British eyes? All that Indian nationalism would have been firmly put in its place.

Now Pakistan mostly goes unmentioned in the history of Indian nationalism because the new Pakistanis as of 14 August 1947 hardly felt or even wished to be independent of the British. Instead they longed only to acquire control over any kind of Muslim-majority Government that they could, and as much of the resources and joint military assets of the old India they could get their hands on.

The Kashmir dispute and India-Pakistan conflict have not been ones between Hindus and Muslims, regardless of what the BBC, CNN etc make themselves believe. As much as for any other reason, Kashmir escalated out of control because of British irresponsibility during the process of disintegration of the old Indian Army between the two new Dominions. Newly demobilised Mirpuri soldiers who had formed loyal British battalions were drawn into the cycle of Partition-related communal violence and reprisals in Punjab, which inevitably spilt over into Jammu and culminated in the attack on J&K State that commenced from Pakistan’s NWFP in October 1947 ~ plunging J&K into civil war with Sheikh Abdullah and Bakshi Ghulam Mohammad’s National Conference allied to the new secular India and Sardar Ibrahim’s Muslim Conference allied to the new and soon to be Islamic Pakistan. Field Marshal Auchinlek, the Supreme Commander of both Indian and Pakistani Armed Forces, had the decency to resign and abolish the so-called “Supreme Command” as soon as he realised his own forces were at war with one another.

It would not be too inaccurate to say Pakistan and Britain continued in a neo-colonial relationship throughout the 1950s and 1960s ~ all the way until Ayub Khan (who had been warmly entertained at Chequers during the Christine Keeler-Profumo matter), overplayed his hand by attacking India in 1965. That war followed by the East Pakistan cyclone in 1969 brought to a head the inherent political contradictions of the Pakistani state accumulated until that time, and soon led to Bangladesh’s creation in 1971. Britain has had no real interest in Bangladesh but as Pakistan had allowed dual nationality with Britain, Britain found itself with a lot of Bangladeshi immigrants whose “Indian” restaurants give modern Britons today something to look forward to every weekend.

Britain and its American ally continued to have deep interests in Pakistan, mostly because of the geopolitical importance of Pakistani real estate and the generally obsequious and compliant nature of the Pakistani military and diplomatic elite. All that began to change fundamentally when the real declaration of Pakistani independence occurred in the world with the AQ Khan nuclear bombs exploding in 1998 followed by the September 11 2001 attacks upon the USA.

Nationalism today

As for ourselves in India, we have developed some coherent and recognisable design of a modern political economy with a Union Government and more than two dozen State Governments, and we have abolished the imperialist lackeys known as the “princes”. Our Governments at Union and State levels change peacefully by periodic elections under the 1950 Constitution. This in itself would be seen as an astonishing democratic achievement relative to where we were one hundred years ago at the time of the Morley-Minto policies. Thanks to Jawaharlal Nehru, we have had universal franchise since 1952 (at a time when the USA still had its Jim Crow laws against black citizens) ~ yet the imperialist jibe of an infinitesimally small elite purporting to represent hundreds of millions of India’s people remains to be addressed.

It would be interesting to know how many descendants of the 52,000 members of Annie Besant’s Home Rule League remain in India and how many have emigrated to the USA, Britain, Australia etc. The children of our top military, bureaucratic, business, professional and academic elite have cheerfully led an exodus out of the country. E.g. the son of a former commanding general of the Indian Army’s Artillery Regiment is now a British businessman and member of Tony Blair’s new House of Lords. Indian Nationhood in the 21st Century no longer has to include Bangladeshis and Pakistanis who have ended up seeking to develop their own nationalisms, but it remains hard enough to try to include everyone else ~ from Tamils to Kashmiris and from Assamese and Mizos to Sikhs and Goans. Cleaning up our government accounting and sorting out our public finances nationwide so as to establish a sound money for everyone to use for the first time in sixty or seventy years, is among the first steps in defining our common goals as an independent nation.

(Postscript: The original text stated Independence and Paritition came “forty years” after the only date mentioned until that point in the text, which is of the 1918 Montagu-Chelmsford period.   Unconsciously, I was counting from the Morley-Minto period of 1906-1908 which was the constitutional precedent to Montagu-Chelmsford.)

India’s Macroeconomics

(NB This is one of a set of articles that include “India in World Trade & Payments”, “Fiscal Instability”, “Fallacious Finance”, “Indian Money & Credit”, “Indian Money & Banking”, “Against Quackery”, “Indian Inflation”, “Monetary Integrity and the Rupee”, “The Dream Team: A Critique” etc., as well as “Mistaken Macroeconomics” etc. See My Recent Works, Interviews etc on India’s Money, Public Finance, Banking, Trade, BoP, Land, etc (an incomplete list) )

India’s Macroeconomics

Real growth has steadily occurred because India has shared the world’s technological progress. But bad fiscal, monetary policies over decades have led to monetary weakness and capital flight

by

Subroto Roy

First published in The Sunday Statesman Editorial Page Special Article

January 20 2007

Anyone wishing to understand India’s macroeconomics today must seek to grasp how Government expenditure and taxing behaviour have become related over decades to Government’s rapid creation of paper-money and bank-deposits. Even those policy-makers who have caused this phenomenon (notably our present PM during his long career as the top economic bureaucrat, as well as his many acolytes and foreign and domestic flatterers) seem to have failed to grasp this. Thus they may be unlikely to identify let alone carry out the key political task facing India today, which is to transform the feeble existing state corroded by corruption and waste into a robust modern one with public institutions of a quality meeting or exceeding world standards.

Government expenditure in a democracy is supposed to be representative of real public needs. But democracy is everywhere imperfect, and spending tends to follow instead the pattern of special interest groups, i.e., who has how much organised lobbying power in the polity. “Whatever can be rescued from useless expenditure is urgently required for useful”, said JS Mill. How can public spending be made more productive (or less unproductive) by cutting waste, fraud and abuse, and instead better alleviate mass ignorance, poverty and destitution? And how can there be reduced chance of a collapse of confidence in public institutions, especially currency and the banks as has happened in other countries at different times? These are central questions for serious macroeconomic policy-making in India today. In fact, it is likely the Indian people are at present both over-taxed and under-taxed: we are over-taxed by the corroded, corrupt wasteful polity that has actually arisen, while we are under-taxed relative to the fiscal and monetary needs of a robust modern democratic polity yet to exist.

India has shared the technological progress the world economy witnessed in the 20th Century. Private ingenuity, enterprise and business acumen at all scales of operation are manifest in countless examples across the country every day. Real economic growth has taken place steadily as a result, and there is no doubt average levels of health, education, and material well-being have improved almost everywhere ~ often despite government action, sometimes thanks to it. Our legendary population has grown mainly due to lowering of mortality rates via better health, nutrition and awareness, causing longer life-spans than ever before. Our village festivals, market-towns and city-streets are filled with bustling shops with busy people and merchandise, while large concrete buildings are being built everywhere by invisible builders. There is no apparent lack of a potential basis for taxation of private resources for public uses in the country.

At the same time, monumental problems of absolute poverty, ignorance, destitution and inequality remain obvious to the naked eye everywhere in India, affecting hundreds of millions of citizens. A rare candid Government study said: “It does not require clever tools of measurement to demonstrate that there are millions of children in India who are totally deprived of any education worth the name. And it is not as if they are invisible, remote, and therefore unreached. They are everywhere in the cities: on the streets, wiping cars at traffic junctions, picking rags in mounds of waste; in the roadside eateries; in small factories, as cheap labour or domestic help; at ‘home’ completing household chores. In the villages again they are everywhere, responding to the contextual demands of family work as well as bonded labour.” (India Education Report, 2002, p. 47). Such and similar children, their parents and kith and kin constitute the hundreds of anonymous millions of India today.

Less than 30 million people are employed in the “organised” sector, about 18 by government and 12 by the “organised private sector”. Even if four dependents are assumed for each, that hardly makes 15% of the whole population of one billion people today. So while there may be some 150 million people in India who in one way or another engage with the “organised sector”, there may be 850 million who do not ~ reminiscent of Disraeli’s “Two Nations” of Dickensian England.

India’s tax-revenues are raised in proportion of about 30% direct to 70% indirect, where the same ratio for an advanced economy like the USA is about 90% direct to 10% indirect. A mere 10 million income-tax returns are received in a given year in all of India. The masses are being taxed, perhaps heavily, though they are mostly unaware of what is being indirectly extracted out of their household budgets through ubiquitous archaic systems of Customs and Excise. From long before the British arrived in India, there was a tax on salt via government monopoly, and long after MK Gandhi’s march to the Arabian Sea to produce salt freely, indirect taxes bear down invisibly upon the masses of democratic India today. Nicholas Kaldor approved the current system in 1956 but by 1959 had retracted and recommended widespread direct taxation instead, which has never happened. Kaldor’s best known Indian student is today PM of the country.

Also, everyone’s holdings of monetary assets in India have been taxed by inflation, without people realising it except for a continual feeling or memory of the dwindling value of the rupee and other paper assets. Government debt, the quantity of money and general price-level of real goods and services (the inverse of the price of money) have been on exponential growth paths, most conspicuously since the compulsory government take-over of banks in the early 1970s, though origins reach back to the start of pseudo-socialist “planning” in the 1950s (see graph).

When transparent visible taxation cannot be proposed and voted for in the “real” economy because it needs too much political effort or insight, governments resort to invisible, undemocratic means of taxing the public’s monetary resources by the subterfuge of inflating currency and bank deposits. Inflation has everywhere raised real resources for governments too weak to administer proper tax systems or resist the onslaught of organised pressure-groups in incurring public expenditure.

Taxation via inflation “does not require detailed legislation, and can be administered very simply. All that it requires is to spend newly created notes. The resulting inflation automatically imposes a tax on cash balances by depreciating the value of money” (Cagan). A routine means of meeting a government’s deficits can become “use of the printing press to manufacture legal tender paper money”, either directly by paying its creditors “with new paper money specially printed for the purpose”, or indirectly by paying its creditors “out of loans to itself from the Central Bank”, issuing money to that amount in exchange for government debt (Dalton). Because public memories are short and economic models and data unavailable to ordinary people, a large scope exists for governments to extract real resources by inflation before “money-illusion” comes to be dispelled. Briefly, such has been how India’s continuous budget-deficits have been financed ever since Independence – made possible with impunity because our rulers have also kept our currency from being internationally convertible (except for themselves).

These quite subtle facts remain practically unknown to the Indian public whose lives and those of future generations are deeply affected by them, though in recent decades elite elements like bureaucrats, academics, military officers, businessmen, politicians etc with better information and access to resources have sensed monetary weakness in the country and exported their adult children and savings abroad expeditiously. The sphere of knowledge and concerns of most people are so close to needs of their own survival that they make easy prey for the machinations of others with better information or access to resources. This may help explain why we, who for more than a century and a half have seen a vast political awakening take place and can take pride in having a free press and the world’s largest electorate, at the same time have had our political life and public institutions wracked by enormous corruption, fraud and venality, enfeebling the political economy by widespread cynicism and loss of confidence, and inducing capital flight abroad on the part of a vapid elite.

Racism New and Old

Racism New and Old

Subroto Roy

Editorial page, The Statesman September 8 2006

When Iraqi Sunni terrorists killed 11 Pakistani and three Indian Shia pilgrims on the same bus to Karbala the other day, they did not check passports or wait to hear discourses from their victims about the validity of Jinnah’s Two-Nations Theory or the RSS’s views on Akhand Bharat and Bharat-Mata. All Indians and Pakistanis of whatever religion are pretty much “Hindis” to the average Arab. If Pakistanis (much to their own chagrin) are indistinguishable from Indians in many Arab eyes, Hindus and Sikhs are (much to their own chagrin) indistinguishable from Muslims in many North American and British eyes. Matthai Chakko Kuruvila, the San Francisco Chronicle’s Religion Writer (and whose own splendid ethnicity may appear obvious to us from his name), reports Paul Silverstein, an American anthropologist, saying “Muslims are the new Jews… They are the object of a series of stereotypes, caricatures and fears which are not based in a reality and are independent of a person’s experience with Muslims.” Kuruvila says: “The Muslim caricature has ensnared Hindus, Mexicans and others” across the USA “with violence, suspicion and slurs”, giving new form to America’s “age-old dance around racial identity”.

Assimilation

The subcontinent’s Muslims, Hindus, Sikhs, Christians and others are from pretty much similar racial populations, so when we wish to distinguish ourselves from one another as we tend to do on the subcontinent, we wear turbans, beards, long hair, veils, bindis etc ~ symbols about which the average New Jersey “dot-buster” or British “Paki-basher” cares not a hoot. London last year even saw Jean Charles de Menezes, a young Brazilian electrician on his way to work in the morning, pinned down by an elite squad of Britain’s much-vaunted policemen and receive seven bullets point-blank in the back of his skull ~ merely for having “looked Asian”.

Subcontinental immigrant families in the West experience a defining moment when the wife first bobs her long hair and takes to wearing slacks, skirts or even shorts, just so she can leave home and assimilate better in the workplace or shopping mall. The saris, salwars and real jewellery are kept for the weekends when she meets people who will understand her as herself, namely, her friends and kith and kin in the immigrant community. When salwar or sari-clad women start fake-kissing one another in Western-style greeting at those weekends, the alternation of their identities (and confusion in their self-knowledge) may have become complete. A limiting point of such attempts at assimilation is reached perhaps when an Asian woman becomes a BBC or CNN newsreader, reading what she has been told to yet still narcissistically indulging in the extent of her external transformation.

Muslim-Hindu differences of religious and cultural beliefs and practices between racially similar peoples may be contrasted with the main fault-lines that have existed in Western societies in recent centuries: fault-lines of race and colour between European and African, and of race and religion between Jew and Gentile.

An eminent American legal scholar once said African slavery had been “the living lie” in America’s official heritage of democracy and individual freedom. Black America took one hundred years from Lincoln’s Emancipation Proclamation to Martin Luther King Jr., to begin to overcome the impossible odds against it. Sports, music, show-biz and the arts were obvious arenas for public demonstration of individual genius. Athletes like Jesse Owens, Joe Louis and Arthur Ashe, musicians like Duke Ellington, Nat King Cole and Eartha Kitt, “in-your-face” satirists like Sammy Davis Jr, Richard Pryor and Eddie Murphy upto and including modern rapsters and many thousands of others demonstrated that Black America was not going away anywhere, certainly not returning to Liberia, was going to stay in and permanently alter American life and culture, and wondered if anyone thought otherwise. The degree of assimilation into non-black cultures would be a matter of personal choice, not social or economic compulsion. During the Bush invasion of Iraq, Harry Belafonte re-ignited an old controversy when he referred to his fellow West Indian and perfectly assimilated Colin Powell in context of the “plantation slave”/”house slave” dichotomy: plantation slaves were externally oppressed but felt free within while house slaves had more comforts but were docile compradors inside their souls.

Immigrant communities from the subcontinent have had their share of the same. It has been all too easy for young people to reach academic highs in New Delhi or Kolkata only to escape to obscure corners of America and lead docile subservient unfulfilling lives forever afterwards, in exchange for material and ultimately meaningless rewards. It might be called the Madhuri Dixit Phenomenon of being transformed from celebrity-status in India to becoming a complete unknown in America.

Jewish-Gentile divide

The Jewish-Gentile divide in Western civilisation has been more insidious and damaging to mankind, and potentially remains so as the anger it generates has been transferred onto modern Muslims instead. At its unspoken roots is the frank Jewish theological assessment that Jesus of Nazareth was at most a wise and honest rabbi, not Christ Immanent ~ a veracious blow that seems to remove the corner-stone of all European culture and civilisation. The length of mutual recriminations and miscomprehensions as well as self-deceptions and cruelties over the millennia that have resulted on both sides, remains endless. On the Christian side there has been the vile persecution of Jews for centuries. On the Jewish side, there has arisen the vast myth that today’s Israel has something to do with the ancient Hebrews, when contemporary Jews likely descend mostly from the conversion to Judaism of the Khazar Khanate in the second half of the 9th Century (see e.g. Paul Meerts, “Assessing Khazaria”, International Institute for Asian Studies July 2004). In between Jewish and Christian self-deceptions and mutual misunderstandings has arisen Anti-Semitism, Zionism, and also Anti-Zionism (many thoughtful Jews having opposed the creation of Israel). As George Eliot, Hannah Arendt and many others noticed, the assimilation of 19th Century Jews into elite society in Vienna or London was only permitted where some exceptional individual genius was displayed, most prominently perhaps in case of Benjamin Disraeli who became Victoria’s Prime Minister. Even that acceptance of assimilated “exceptional” Jews came to disintegrate into the horrors of the 20th Century, from which we are yet to recover. Modern American foreign policy has been partly driven by the East and West Coasts’ understanding or misunderstanding of that history.

Fable of the Fox, the Farmer, and the Would-Be Tailors (circa Oct 1998)

Fable of the Fox, the Farmer, and the Would-Be Tailors

In the Land of Milk and Honey, there was once a great shortage of Tailors. So the King called for Tailors from all other Lands to come, and they would be each paid the princely sum of forty gold ducats for their work…

A Fox who lived in the Land of Stones and Dust heard of this. In the Land of Stones and Dust, people were hardworking but were mostly poor and destitute. If they worked hard all year, they could manage to keep only a half or maybe one ducat of gold. The Fox had an idea. Maybe he could start sending people to be Tailors in the Land of Milk and Honey. So he called a big gathering of the people and said: “People of the Land of Stones and Dust! I want to make you wealthy. All year long you toil and make only a few ducats under the blazing sun! I will make you into Tailors and send you within a few short weeks to the cool and lovely Land of Milk and Honey! Do you know how much a Tailor makes there? Forty gold ducats in a year! Think of that! You and your family will live in the lap of luxury!“ There was a sigh of disbelief mixed with happiness in the crowd at the mention of such an unearthly large sum of money. Nobody, not even the richest, could earn such amounts here, which mere Tailors could make over there! None of the people had been to the Land of Milk and Honey but they had heard many stories of its riches before.

“Come right up, sign right here, sign right here!” said the Fox, and many people crowded to sign on. “It will cost you a couple of ducats, just a couple, that’s all, and we will soon have you off to the Land of Milk and Honey where forty gold ducats are yours for the taking! Isn’t that something?!” When he mentioned the two ducats they had to pay, a lot of people stopped. “But how can we pay so much, you know that in our country we only earn a pittance every year; two ducats are beyond our reach, it means our life’s savings!” “Come now my friends,” said the Fox, “what kind of spirit is that? Can’t you see that soon within a few short weeks you will be in the Land of Milk and Honey, and as a Tailor you will be making forty ducats, now isn’t that truly a princely sum the likes of which you’ve never seen? Think about that! You are being asked to contribute a little something to that goal, what’s one or two ducats here and there, think of your future! If you don’t have the two ducats in your pocket, sell a few things you don’t need, even your house for soon you will be on your way to the Land of Milk and Honey!”

The Fox spoke so persuasively and with such a kind voice and generosity in his eyes that as many as one hundred and sixty people sold their belongings, and each confidently put two ducats into the Fox’s hands. The three hundred and twenty gold ducats brought tears of joy to the Fox as he counted them; this could become such a pleasant activity he thought to himself!

But now, he thought, I have a problem; the King of the Land of Milk and Honey has asked for Tailors, and these people I have are all woodcutters, weavers and candlestick-makers. Somehow, I have to make them all Tailors. Let me go to my friend the Farmer, maybe he can teach them some tailoring for a few ducats!

The Old Farmer listened to the Fox’s offer with increasing anticipation. He had always liked a good sum of money in hand though he was careful not to show it by any ostentation. He had many mouths to feed, and besides if something was left over he would like to visit the Land of Milk and Honey just once himself with all his family. “Certainly, my good friend,” he told the Fox, “give me the money and soon I’ll make tailors out of these people. Oh what fun we shall have together!” The fact he was a farmer and not a tailor himself or that he had never been to the Land of Milk and Honey and knew nothing about it did not seem to bother him. He was a man who felt he knew the substance of almost all the subjects under the sun beneath which he had toiled. Why, even on the subject of tailoring in the Land of Milk and Honey, he had an opinion or two which he felt to be surely among the very best. Besides, he said to himself, what he knew not himself he would rely on his many friends and relatives to provide. So he brought together his wife, who did some sewing, and a cousin who had once cut cloth for a coat, and three nephews who were apprenticed to a weaver, and two of his nieces who were supposed to knit wool so fast that it was said they could make a whole blanket in half a day, as well as a few trusted friends here and there, including one who had once been a tailor’s apprentice many years ago but had not succeeded because of his poor eyesight.

And the Fox brought all the Would-be Tailors to the Old Farmer, who put them all in a room with his kith and kin so they could be taught their skills every day and night for some weeks. A Traveller happened to pass through and find this in progress. “But will this help these woodcutters, weavers and candlestick-makers to become Tailors?” he innocently asked the Old Farmer. The Old Farmer made no reply. Instead, in the deep of night when the Traveller slept, the Farmer and the Fox arranged to have the hapless fool’s throat cut and then threw his body into the sea.

When the Would-Be Tailors came out of the room into the sunlight, the Fox had ships ready for them at the harbour to take them to the Land of Milk and Honey. He bundled them on board, and almost before they could say their farewells to their loved ones, the ships were quickly on their way. “But are we Tailors now?” shouted one from the decks. “What?”, the Fox said over all the noise, “are you Tailors now? Yes, yes, of course you are Tailors, what else do you think you are, don’t worry about anything, you are Tailors all right, you are just what they want in the Land of Milk and Honey, work hard now, and all the best to you, good luck!”

Alas, it was not to be. Some of the Would-Be Tailors never reached as their ships sank en route. Others reached but could not find work or were killed by the locals in the Land of Milk and Honey or were sent in slave ships back to the Land of Stones and Dust. A few Would-Be Tailors did manage to stay on somehow and per chance learned to become tailors and earn a modest living, but they too yearned for their homes and families and even the hot sun of their own Land of Stones and Dust. As for the Fox and the Old Farmer, life went on nicely enough, as they went from town to town speaking to people about the glories and riches that awaited them in the cool and lovely Land of Milk and Honey, and many crowds gathered to hear them everywhere they went.

Moral: Do not interfere with people when they are making money (or, for that matter, when they are eating, or making love).