“Haksar, Manmohan and Sonia”

My article “Haksar, Manmohan and Sonia” appeared today as an op-ed with the New Indian Express http://t.co/bRnQI1hrwy

 

In the summer of 1973, my father, then with India’s embassy in Paris, brought home two visiting colleagues separately, to advise me before I headed to undergraduate studies at the LSE. One was G Parthasarathi, India’s envoy in Karachi during the 1965 war [CORRECTION Nov 2015: Parthasarathi had left shortly before the war; Kewal Singh arrived as the war started] when my father had been acting head in Dhaka; G P was marvelous, strictly advising I do the hardest things I could find at LSE, namely mathematical economics. The other visitor was Manmohan Singh.

 

Manmohan, then in his early 40s, asked to meet me alone, and we plunged quickly into a heated debate about the demerits (as I saw them) and merits (as he saw them) of the USSR and its “planning”. He was taken aback by the lad, and at the end of his 40-minute visit said he would write to his friend Amartya Sen at LSE about me. An ambiguous, hardly laudatory letter of introduction to Amartya arrived, which I duly but reluctantly carried; I wish I had kept a copy but xeroxing was not yet a word back then.

 

When I told my father about the debate, he to my surprise said Manmohan was extremely highly thought of in government circles, had degrees from both Cambridge and Oxford, and was expected to become prime minister of India some day!

 

That prediction, more than 30 years before Manmohan did become India’s PM, was almost certainly a reflection of the opinion of P N Haksar, still at the height of his power as Indira Gandhi’s right-hand man. In a 2005 interview with Mark Tully, Manmohan acknowledged Haksar being his mentor in politics who brought him into government in early 1971. My father himself was sent by Haksar to the Paris embassy in anticipation of Indira’s November 1971 visit on her diplomatic tour before the Bangladesh War.

 

Fast forward to the afternoon of March 22, 1991, at Delhi’s Andhra Bhavan. I had met Rajiv Gandhi through S S Ray on September 18, 1990, and given him results of a perestroika-for-India project I had led at the University of Hawaii since 1986. On September 25, 1990, Rajiv formed a group consisting of Gen K V Krishna Rao, M K Rasgotra, V Krishnamurthy, S Pitroda and myself to write a modern agenda and manifesto for elections Rajiv said he expected by April 1991. Krishnamurthy later brought in A M Khusro to the group, and all these persons were present at the March 22 meeting—when I was unexpectedly challenged by Rasgotra demanding to know what Manmohan Singh would say about all this liberalisation and efficiency (and public goods, etc.) I had proposed.

 

That was the first mention of Manmohan in post-Indira politics. I replied I did not know what he would say but knew he had been on a project for Julius Nyerere, that the main thing was to get the world to see the Congress at least knew its economics and wanted to improve India’s woeful credit-standing.

 

The next day, on the lawns of 10 Jan Path, Rajiv launched Krishna Rao’s book titled Prepare or Perish. Rajiv was introduced on the occasion by none other than P N Haksar. I talked to Haksar briefly, mentioning his sending my father to Paris in 1971 and my father’s old friends the Kaul brothers, the elder being Haksar’s brother-in-law and the younger being Manmohan’s first boss in government. Haksar seemed unwell but was clearly delighted to have returned to favour after falling out with Indira during Sanjay’s regime.

 

The March 22, 1991, meeting was also one of several occasions when I, a complete layman on security issues and new to Delhi and in my 30s, warned as vehemently as I could that Rajiv seemed to my layman’s eyes extremely vulnerable to assassination. Absolutely nothing was done in response by anyone, other than saying I should probably speak to “Madame”!

 

One man’s response, in 2007 and 2014 publications, has been to deny he knew me at all and claim the group came to exist without me—when in fact it was created by Rajiv as a sounding board one week after I gave him the academic project results I had led since 1986. This same man had excitedly revealed to me on September 25, 1990, that his claim to a doctoral degree originated in the USSR in the 1970s; he has always concealed his experiences in that country. After Rajiv’s assassination, he rose to much background influence with Sonia, and one of his protégés is now apparently influential with Mr Modi too.

 

Sonia Gandhi I met only once to convey my condolences in December 1991, and give her a copy of a tape of conversations between Rajiv and myself during the Gulf war in January that year. She seemed a taciturn figure in deep grief, and apparently continued with the seven-year period of mourning traditional in her culture of origin.

 

Natwar Singh and Sanjaya Baru, in their recent publications, may have allowed basic misinterpretations of events to distract from what may be informative in their experience.

 

Natwar has said Haksar was central in May 1991 in the move (purportedly on behalf of Rajiv’s newly bereaved widow) to first ask S D Sharma to take the PM’s job, which Sharma declined. If so, this was a failed attempt by the “Haksar axis” of unelected non-politicians to maintain control of events. Natwar claims it was only then Sonia chose P V N Rao. In reality, P V N R was a highly respected leader who, though due to retire, was the acknowledged senior member in a group of regional leaders including S S Ray, Sharad Pawar and others. The Haksar axis failed to stop P V N R’s rise to the top job, though it managed to get Haksar’s protégé to become finance minister. Sonia was hardly involved.

 

As for Manmohan becoming Sonia’s PM, a senior Lok Sabha Congress leader with PM ambitions himself told me of his own accord in December 2001 that it was certain she would not take the top job herself and it was generally presumed Manmohan would get one term—the denouement of the Haksarian prediction my father made to me in 1973 in Paris. Contrary to Baru’s claim or even Manmohan’s own self-knowledge, it was never any “accident” that he became PM of India.

 

Finally on the issue of files being shown, the man named as the conduit is someone I became related to in law back in 1981. He and Manmohan, too, would have been sticklers for the rules. The real issue is this: given the 1970s brand of Soviet influence on the Congress, would anyone have said it was Kosygin as PM who did or could ever wield more power than Brezhnev the party boss? Of course not. The same with Manmohan and Sonia in India.

 

Much as I might love Russia, England, France, America, I despise their spies & local agents affecting poor India’s policies: Memo to PM Modi, Mr Jaitley, Mr Doval & the new Govt. of India: Beware of Delhi’s sleeper agents, lobbyists & other dalals (2014)

 

1 July 2014

 

Dear Bibek,

 

The very elderly man I refer to as “Sonia’s Lying Courtier” herein

https://independentindian.com/2007/11/25/sonias-lying-courtier/

is someone who has known you, leading up to your appointment as Director at Sonia’s “Rajiv Gandhi Institute” and later. He has now published a purported memoir whose main aim is to conceal his Soviet connections during the Brezhnev era 1960s-1970s, besides trying to rub my name out from my role with Rajiv in 1990-1991. The woman journalist in Delhi who is named as having ghost-written his new book is someone you know quite well too.

 

The man was someone whom I worked with and who was introduced to me by Rajiv Gandhi on 25/9/1990, a Soviet trained “technocrat” who had inveigled himself into Rajiv’s circle as he had been a favoured one of Indira (presumably via PN Haksar) when he returned from the USSR. He was also the link explaining, again via PN Haksar, how Manmohan first became FM in 1991 after Rajiv’s assassination, then how Manmohan came to Sonia’s notice and attention, and was later crucial in the so-called Rajiv Gandhi Foundation and in the formation of Sonia’s so-called National Advisory Council.

 

His mandate was to keep INC policies predictable and agreeable in the areas of Soviet/Russian interest, in which he seems to have succeeded during the Sonia-Manmohan regime.

 

He found me an unknown force, and worked to edge me out, despite the fact the 25/9/90 group was formed by Rajiv as a sounding-board for the perestroika-for-India project I led in America since 1986 and which I brought to Rajiv the week before on 18/9/90…

 

I send this to you as a word of caution as you are clearly close to Mr Modi and Mr Doval, yet none of you may know the man’s background and intent, even in his dotage. Certainly the purported memoir written by the woman journalist is something whose main aim is to conceal the man’s Soviet/Russian background. Had it been an honest intent, he would have had no need to conceal any of this but would have addressed his own Russian experience openly and squarely. He may have had his impact already with the new Government, I do not know.

 

For myself, I have been openly rather pro-Russia on the merits of the current Ukraine issue, but, as you will appreciate, I despise any kind of deep foreign agent seeking to control Indian policy in long-term concealment.

 

Cordially

 

Suby Roy

Sonia’s Lying Courtier with Postscript 25 Nov 2007, & Addendum 30 June 2014

30th June 2014

“Sonia’s Lying Courtier” (see below) has now lied again! In a ghost-written 2014 book published by a prominent publisher in Delhi!

He has so skilfully lied about himself the ghost writer was probably left in the dark too about the truth.

**The largest concealment has to do with his Soviet connection: he is fluent in Russian, lived as a privileged guest of the state there, and before returning to the Indian public sector was awarded in the early 1970s a Soviet degree, supposedly an earned doctorate in Soviet style management!**

How do I know? He told me so personally! His Soviet degree is what allowed himself to pass off as a “Dr” in Delhi power-circles for decades, as did many others who were planted in that era. He has also lied about himself and Rajiv Gandhi in 1990-1991, and hence he has lied about me indirectly.

In 2007 I was gentle in my exposure of his mendacity because of his advanced age. Now it is more and more clear to me that exposing this directly may be the one way for Sonia and her son to realise how they, and hence the Congress party, were themselves influenced without knowing it for years…

25 November 2007

Two Sundays ago in an English-language Indian newspaper, an elderly man in his 80s, advertised as being “the Gandhi family’s favourite technocrat” published some deliberate falsehoods about events in Delhi 17 years ago surrounding Rajiv Gandhi’s last months. I wrote at once to the man, let me call him Mr C, asking him to correct the falsehoods since, after all, it was possible he had stated them inadvertently or thoughtlessly or through faulty memory. He did not do so. I then wrote to a friend of his, a Congress Party MP from his State, who should be expected to know the truth, and I suggested to him that he intercede with his friend to make the corrections, since I did not wish, if at all possible, to be compelled to call an elderly man a liar in public.

That did not happen either and hence I am, with sadness and regret, compelled to call Mr C a liar.

The newspaper article reported that Mr C’s “relationship with Rajiv (Gandhi) would become closer when (Rajiv) was out of power” and that Mr C “was part of a group that brainstormed with Rajiv every day on a different subject”. Mr C has reportedly said Rajiv’s “learning period came after he left his job” as PM, and “the others (in the group)” were Mr A, Mr B, Mr D, Mr E “and Manmohan Singh” (italics added).

In reality, Mr C was a retired pro-USSR bureaucrat aged in his late 60s in September 1990 when Rajiv Gandhi was Leader of the Opposition and Congress President. Manmohan Singh was an about-to-retire bureaucrat who in September 1990 was not physically present in India, having been working for Julius Nyerere of Tanzania for several years.

On 18 September 1990, upon recommendation of Siddhartha Shankar Ray, Rajiv Gandhi met me at 10 Janpath, where I handed him a copy of the unpublished results of an academic “perestroika-for-India” project I had led at the University of Hawaii since 1986. The story of that encounter has been told first on July 31-August 2 1991 in The Statesman, then in the October 2001 issue of Freedom First, then in January 6-8 2006, September 23-24 2007 in The Statesman, and most recently in The Statesman Festival Volume 2007. The last of these speaks most fully yet of my warnings against Rajiv’s vulnerability to assassination; this document in unpublished form was sent by me to Rajiv’s friend, Mr Suman Dubey in July 2005, who forwarded it with my permission to the family of Rajiv Gandhi.

It was at the 18 September 1990 meeting that I suggested to Rajiv that he should plan to have a modern election manifesto written. The next day, 19 September, I was asked by Rajiv’s assistant V George to stay in Delhi for a few days as Mr Gandhi wished me to meet some people. I was not told whom I was to meet but that there would be a meeting on Monday, 24th September. On Saturday, the Monday meeting was postponed to Tuesday 25th September because one of the persons had not been able to get a flight into Delhi. I pressed to know what was going on, and was told I would meet Mr A, Mr B, Mr C and Mr D. It turned out later Mr A was the person who could not fly in from Hyderabad.

The group (excluding Mr B who failed to turn up because his servant had failed to give him the right message) met Rajiv at 10 Janpath in the afternoon of 25th September. We were asked by Rajiv to draft technical aspects of a modern manifesto for an election that was to be expected in April 1991. The documents I had given Rajiv a week earlier were distributed to the group. The full story of what transpired has been told in my previous publications.

Mr C was ingratiating towards me after that first meeting with Rajiv and insisted on giving me a ride in his car which he told me was the very first Maruti ever manufactured. He flattered me needlessly by saying that my PhD (in economics from Cambridge University) was real whereas his own doctoral degree had been from a dubious management institute of the USSR. (Handling out such doctoral degrees was apparently a standard Soviet way of gaining influence.) Mr C has not stated in public how his claim to the title of “Dr” arises.

Following that 25 September 1990 meeting, Mr C did absolutely nothing for several months towards the purpose Rajiv had set us, stating he was very busy with private business in his home-state where he flew to immediately. Mr D went abroad and was later hit by severe illness. Mr B, Mr A and I met for luncheon at New Delhi’s Andhra Bhavan where the former explained how he had missed the initial meeting. Then Mr B said he was very busy with his house-construction, and Mr A said he was very busy with finishing a book for his publishers on Indian defence, and both begged off, like Mr C and Mr D, from any of the work that Rajiv had explicitly set our group. My work and meeting with Rajiv in October 1990 has been reported previously.

Mr C has not merely suppressed my name from the group in what he has published in the newspaper article two Sundays ago, he has stated he met Rajiv as part of such a group “every day on a different subject”, another falsehood. The next meeting of the group with Rajiv was in fact only in December 1990, when the Chandrashekhar Government was discussed. I was called by telephone in the USA by Rajiv’s assistant V George but I was unable to attend, and was briefed later about it by Mr A.

When new elections were finally announced in March 1991, Mr C brought in Mr E into the group in my absence (so he told me), perhaps in the hope I would remain absent. But I returned to Delhi and between March 18 1991 and March 22 1991, our group, including Mr E (who did have a genuine PhD), produced an agreed-upon document. That document was handed over by us together in a group to Rajiv Gandhi at 10 Janpath the next day, and also went to the official political manifesto committee of Narasimha Rao, Pranab Mukherjee and M. Solanki.

Our group, as appointed by Rajiv on 25 September 1990, came to an end with the submission of the desired document to Rajiv on 23 March 1991.

As for Manmohan Singh, contrary to Mr C’s falsehood, Manmohan Singh has himself truthfully said he was with the Nyerere project until November 1990, then joined Chandrashekhar’s PMO in December 1990 which he left in March 1991, that he had no meeting with Rajiv Gandhi prior to Rajiv’s assassination but rather did not in fact enter Indian politics at all until invited by Narasimha Rao several weeks later to be Finance Minister. In other words, Manmohan Singh himself is on record stating facts that demonstrate Mr C’s falsehood.

The economic policy sections of the document submitted to Rajiv on 23 March 1991 had been drafted largely by myself with support of Mr E and Mr D and Mr C as well. It was done over the objections of Mr B, who had challenged me by asking what Manmohan Singh would think of it. I had replied I had no idea what Manmohan Singh would think of it, saying I knew he had been out of the country on the Nyerere project for some years.

Mr C has deliberately excluded my name from the group and deliberately added Manmohan Singh’s instead. What explains this attempted falsification of facts – reminiscent of totalitarian practices in communist countries? Manmohan Singh was not involved by his own admission, and as Finance Minister told me so directly when he and I were introduced in Washington DC in September 1993 by Siddhartha Shankar Ray, then Indian Ambassador to the USA.

A possible explanation for Mr C’s mendacity is as follows: I have been recently publishing the fact that I repeatedly pleaded warnings that I (even as a layman on security issues) perceived Rajiv Gandhi to have been insecure and vulnerable to assassination. Mr C, Mr B and Mr A were among the main recipients of my warnings and my advice as to what we as a group, appointed by Rajiv, should have done towards protecting Rajiv better. They did nothing — though each of them was a senior man then aged in his late 60s at the time and fully familiar with Delhi’s workings while I was a 35 year old newcomer. After Rajiv was assassinated, I was disgusted with what I had seen of the Congress Party and Delhi, and did not return except to meet Rajiv’s widow once in December 1991 to give her a copy of a tape in which her late husband’s voice was recorded in conversations with me during the Gulf War.

Mr C has inveigled himself into Sonia Gandhi’s coterie – while Manmohan Singh went from being mentioned in our group by Mr B to becoming Narasimha Rao’s Finance Minister and Sonia Gandhi’s Prime Minister. If Rajiv had not been assassinated, Sonia Gandhi would have been merely a happy grandmother today and not India’s purported ruler. India would also have likely not have been the macroeconomic and political mess that the mendacious people around Sonia Gandhi like Mr C have now led it towards.

POSTSCRIPT: The Congress MP was kind enough to write in shortly afterwards; he confirmed he “recognize(d) that Rajivji did indeed consult you in 1990-1991 about the future direction of economic policy.”   A truth is told and, furthermore, the set of genuine Rajivists in the present Congress Party is identified as non-null.

 

My Recent Works, Interviews etc on India’s Money, Public Finance, Banking, Trade, BoP, Land, etc (an incomplete list)

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My “Critique of Monetary Ideas of Manmohan & Modi: the Roy Model explaining to Bimal Jalan, Nirmala Sitharaman, RBI etc what it is they are doing” of 2019 is here.

 

 

My critical assessment dated 23 August 2013 of Professors Jagdish Bhagwati & Amartya Sen and Dr Manmohan Singh is here

 

 

My critique of PM Modi’s 8 November 2016 statement began on Twitter immediately, and is  summarized here “Modi & Monetary Theory: Economic Consequences of the Prime Minister of India”

 3dec

My critical assessment dated 19 August 2013 of Professor Raghuram Rajan is here and here.

My 3 Dec 2012 Delhi talk on India’s Money is now available at You-Tube in an audio version here

My July 2012 article “India’s Money” in the Caymans Financial Review is here and here https://independentindian.com/2012/07/21/my-article-indias-money-in-the-cayman-financial-review-july-2012/

My 5 December 2012 interview by Mr Paranjoy Guha Thakurta, on Lok Sabha TV, the channel of India’s Lower House of Parliament, broadcast for the first time on 9 December 2012 on Lok Sabha TV, is here and here  in two parts.

My interview by GDI Impuls banking quarterly of  Zürich  published on 6 Dec 2012 is here.

My interview by Ragini Bhuyan of Delhi’s Sunday Guardian published on 16 Dec 2012  is here.

 “Monetary Integrity and the Rupee” (2008)

https://independentindian.com/2008/09/28/monetary-integrity-and-the-rupee/

  “India’s Macroeconomics” (2007)

“Fiscal Instability” (2007)

 “Fallacious Finance” (2007)

https://independentindian.com/2007/03/05/fallacious-finance-the-congress-bjp-cpi-m-et-al-may-be-leading-india-to-hyperinflation/

 “Growth and Government Delusion” (2008)

https://independentindian.com/2008/02/22/growth-government-delusion/

 “Distribution of Govt of India Expenditure (Net of Operational Income) 1995”
https://independentindian.com/2008/07/27/distribution-of-govt-of-india-expenditure-net-of-operational-income-1995/

“India in World Trade & Payments” (2007)

https://independentindian.com/2007/02/12/india-in-world-trade-payments/

“Path of the Indian Rupee 1947-1993″ (1993)

https://independentindian.com/1993/06/01/path-of-the-indian-rupee-1947-1993/

“Our Policy Process” (2007)

https://independentindian.com/2007/02/20/our-policy-process-self-styled-planners-have-controlled-indias-paper-money-for-decades/

“Indian Money and Credit” (2006)

https://independentindian.com/2006/08/06/indian-money-and-credit/

“Indian Money and Banking” (2006)

https://independentindian.com/2006/04/23/indian-money-and-banking/

“Indian Inflation” (2008)

https://independentindian.com/2008/04/16/indian-inflation-upside-down-economics-from-new-delhis-establishment/

 How the Liabilities/Assets Ratio of Indian Banks Changed from 84% in 1970 to 108% in 1998 https://independentindian.com/2008/10/20/how-the-liabilitiesassets-ratio-of-indian-banks-changed-from-84-in-1970-to-108-in-1998/

indiasbanks1

“Growth of Real Income, Money & Prices in India 1869-2004” (2005)

https://independentindian.com/2008/07/28/growth-of-real-income-money-prices-in-india-1869-2004/

“How to Budget” (2008)

https://independentindian.com/2008/02/26/how-to-budget-thrift-not-theft-should-guide-our-public-finances/

“Waffle but No Models of Monetary Policy: The RBI and Financial Repression (2005)”

https://independentindian.com/2005/10/27/waffle-but-no-models-of-monetary-policy-the-rbi-and-financial-repression/

“The Dream Team: A Critique” (2006)

https://independentindian.com/2006/01/08/the-dream-team-a-critique/

 

“Against Quackery” (2007)

https://independentindian.com/2007/09/24/against-quackery/

“Mistaken Macroeconomics” (2009)

https://independentindian.com/2009/06/12/mistaken-macroeconomics-an-open-letter-to-prime-minister-dr-manmohan-singh/

Towards a Highly Transparent Fiscal & Monetary Framework for India’s Union & State Governments (RBI lecture 29 April 2000)

https://independentindian.com/2000/04/29/towards-a-highly-transparent-fiscal-monetary-framework-for-india%E2%80%99s-union-state-governments/

“The Indian Revolution (2008)”

https://independentindian.com/2008/12/08/the-indian-revolution/

Can India Become an Economic Superpower or Will There Be a Monetary Meltdown? (2005)

https://independentindian.com/2005/05/05/can-india-become-an-economic-superpower-or-will-there-be-a-monetary-meltdown-2005/

Memo to Kaushik Basu, 2010

Land, Liberty, & Value, 2006

https://independentindian.com/2006/12/31/land-liberty-value/

On Land-Grabbing, 2007

https://independentindian.com/2007/01/14/on-land-grabbing/

No Marxist MBAs? An amicus curiae brief for the Honourable High Court

https://independentindian.com/2007/08/29/no-marxist-mbasan-amicus-curae-brief-for-the-honourable-high-court/

Coverage in The *Asian Age*/*Deccan Herald* of 4 Dec 2012.

IICtophalf IICtalkbottom,half

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Posted in Academic research, Amartya Sen, Arvind Panagariya, Bhagwati-Sen spat, Britain in India, China's macroeconomics, China's savings rate, Economic Policy, Economic quackery, Economic Theory, Economic Theory of Growth, Economic Theory of Interest, Economic Theory of Value, Economics of exchange controls, Economics of Public Finance, GDI Impuls Zurich, Government accounting, Government Budget Constraint, Government of India, India's Big Business, India's credit markets, India's Government economists, India's 1991 Economic Reform, India's balance of payments, India's Banking, India's Budget, India's Capital Markets, India's corporate governance, India's corruption, India's currency history, India's Economic History, India's Economy, India's Exports, India's Foreign Exchange Reserves, India's Foreign Trade, India's Government Budget Constraint, India's Government Expenditure, India's Macroeconomics, India's Military Defence, India's Monetary & Fiscal Policy, India's Money, India's nomenclatura, India's political lobbyists, India's Politics, India's pork-barrel politics, India's poverty, India's Public Finance, India's Reserve Bank, India's State Finances, Inflation, Institute of Economic Affairs, International economics, Jagdish Bhagwati, Jean Drèze, Lok Sabha TV, Macroeconomics, Manmohan Singh, Microeconomic foundations of macroeconomics, Milton Friedman, Raghuram Govind Rajan, Raghuram Rajan, Rajiv Gandhi, Reverse-Euro Model for India, Sen-Bhagwati spat, Sonia Gandhi. 1 Comment »

Did Jagdish Bhagwati “originate”, “pioneer”, “intellectually father” India’s 1991 economic reform? Did Manmohan Singh? Or did I, through my encounter with Rajiv Gandhi, just as Siddhartha Shankar Ray told Manmohan & his aides in Sep 1993 in Washington? Judge the evidence for yourself. And why has Amartya Sen misdescribed his work? India’s right path forward today remains what I said in my 3 Dec 2012 Delhi lecture!

Did Jagdish Bhagwati “originate”, “pioneer”, “intellectually father” India’s 1991 economic reform?  Did Manmohan Singh? Or did I, through my encounter with Rajiv Gandhi, just as Siddhartha Shankar Ray told Manmohan & his aides in Sep 1993 in Washington?  Judge the evidence for yourself.  And why has Amartya Sen misdescribed his work? India’s right path forward today remains what I said in my 3 Dec 2012 Delhi lecture!

 

Contents

 

Part I:  Facts vs Fiction, Flattery, Falsification, etc

 

1. Problem

2.    Rajiv Gandhi, Siddhartha Shankar Ray, Milton Friedman & Myself

3.     Jagdish Bhagwati & Manmohan Singh?  That just don’t fly!

 4.    Amartya Sen’s Half-Baked Communism:  “To each according to his need”?

 

  Part II:    India’s Right Road Forward Now: Some Thoughtful Analysis for Grown Ups

5.   Transcending a Left-Right/Congress-BJP Divide in Indian Politics

6.   Budgeting Military & Foreign Policy

7.    Solving the Kashmir Problem & Relations with Pakistan

8.  Dealing with Communist China

9.   Towards Coherence in Public Accounting, Public Finance & Public Decision-Making

10.   India’s Money: Towards Currency Integrity at Home & Abroad

 

 

Part I:  Facts vs Fiction, Flattery, Falsification, etc

 

1. Problem


Arvind Panagariya says in the Times of India of 27 July 2013

 

 “…if in 1991 India embraced many of the Track-I reforms, writings by Sen played no role in it… The intellectual origins of the reforms are to be found instead in the writings of Bhagwati, both solely and jointly with Padma Desai and T N Srinivasan….”

 

Now Amartya Sen has not claimed involvement in the 1991 economic reforms so we are left with Panagariya claiming

 

“The intellectual origins of the reforms are to be found instead in the writings of Bhagwati…”

 

Should we suppose Professor Panagariya’s master and co-author Jagdish Bhagwati himself substantially believes and claims the same?  Three recent statements from Professor Bhagwati suffice by way of evidence:

 

(A)  Bhagwati said to parliamentarians in the Lok Sabha on 2 December 2010 about the pre-1991 situation:

 

“This policy framework had been questioned, and its total overhaul advocated, by me and Padma Desai in writings through the late 1960s which culminated in our book, India: Planning for Industrialization (Oxford University Press: 1970) with a huge blowback at the time from virtually all the other leading economists and policymakers who were unable to think outside the box. In the end, our views prevailed and the changes which would transform the economy began, after an external payments crisis in 1991, under the forceful leadership of Prime Minister Manmohan Singh who was the Finance Minister at the time….”

 

(B)  Bhagwati said to Economic Times on 28 July 2013:

 

“When finance minister Manmohan Singh was in New York in 1992, he had a lunch for many big CEOs whom he was trying to seduce to come to India. He also invited me and my wife, Padma Desai, to the lunch. As we came in, the FM introduced us to the invitees and said: ‘These friends of mine wrote almost a quarter century ago [India: Planning for Industrialisation was published in 1970 by Oxford] recommending all the reforms we are now undertaking. If we had accepted the advice then, we would not be having this lunch as you would already be in India’.”

 

(C)  And Bhagwati said in Business Standard of 9 August 2013:

 

“… I was among the intellectual pioneers of the Track I reforms that transformed our economy and reduced poverty, and witness to that is provided by the Prime Minister’s many pronouncements and by noted economists like Deena Khatkhate.. I believe no one has accused Mr. Sen of being the intellectual father of these reforms. So, the fact is that this huge event in the economic life of India passed him by…”

 

From these pronouncements it seems fair to conclude Professors Bhagwati and Panagariya are claiming Bhagwati has been the principal author of “the intellectual origins” of India’s 1991 reforms, has been their “intellectual father” or at the very least has been “among the intellectual pioneers” of the reform (“among” his own collaborators and friends, since none else is mentioned).  Bhagwati has said too his friend Manmohan Singh as Finance Minister participated in the process while quoting Manmohan as having said Bhagwati was the principal author. 

 

Bhagwati’s opponent in current debate,  Amartya Sen, has been in agreement with him that Manmohan, their common friend during college days at Cambridge in the 1950s, was a principal originating the 1991 reforms, saying to Forbes in 2006:

 

“When Manmohan Singh came to office in the early 1990s as the newly appointed finance minister, in a government led by the Congress Party, he knew these problems well enough, as someone who had been strongly involved in government administration for a long time.”

 

In my experience, such sorts of claims, even in their weakest form, have been, at best, scientifically sloppy and unscholarly,  at worst mendacious suppressio veri/suggestio falsi, and in between these best and worst interpretations, examples of academic self-delusion and mutual flattery.  We shall see Bhagwati’s opponent, Amartya Sen, has denied academic paternity of recent policies he has spawned while appearing to claim academic paternity of things he has not!  Everyone may have reasonably expected greater self-knowledge, wisdom and scholarly values of such eminent academics.  Their current spat has instead seemed to reveal something rather dismal and self-serving. 

 

You can decide for yourself where the truth, ever such an elusive and fragile thing, happens to be and what is best done about it.   Here is some evidence.

 

 

2.  Rajiv Gandhi, Siddhartha Shankar Ray,  Milton Friedman & Myself

 

Professor Arvind Panagariya is evidently an American economics professor of Indian national origin who holds the Jagdish Bhagwati Chair of Indian Political Economy at Columbia University.   I am afraid I had not known his name until he mentioned my name in Economic Times of  24 October 2001.   He said

 

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In mentioning the volume “edited by Subroto Roy and William E  James”,  Professor Panagariya did not appear to find the normal scientific civility to identify our work by name, date or publisher.  So here that is now:

 

 

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This was a book published in 1992 by the late Tejeshwar Singh for Sage.  It resulted from the University of Hawaii Manoa perestroika-for-India project, that I and Ted James created and led between 1986 and 1992/93.   (Yes, Hawaii — not Stanford, Harvard, Yale, Columbia or even Penn, whose India-policy programs were Johnny-come-latelies a decade or more later…)   There is a sister-volume too on Pakistan, created by a parallel project Ted and I had led at the same time:

 

 

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In 2004 from Britain, I wrote to the 9/11 Commission saying if our plan to study Afghanistan after India and Pakistan had not been thwarted by malign local forces among our sponsors themselves, we, a decade before the September 11 2001 attacks on the USA, may  just have come up with a pre-emptive academic analysis.   It was not to be.

 

Milton Friedman’s chapter that we published for the first time was a memorandum he wrote in November 1955 for the Government of India which the GoI had effectively suppressed.  I came to know of it while a doctoral student at Cambridge under Frank Hahn, when at a conference at Oxford about 1979-1980, Peter Tamas Bauer sat me down beside him and told me the story.  Later in Blacksburg about 1981, N. Georgescu-Roegen on a visit from Vanderbilt University told me the same thing.  Specifically, Georgescu-Roegen told me that leading Indian academics had almost insulted Milton in public which Milton had borne gamely; that after Milton had given a talk in Delhi to VKRV Rao’s graduate-students,  a talk Georgescu-Roegen had been present at, VKRV Rao had addressed the students and told them in all seriousness “You have heard what Professor Friedman has to say, if you repeat what he has said in your exams, you will fail”.

 

In 1981-1982 my doctoral thesis emerged, titled “On liberty & economic growth: preface to a philosophy for India”,

 

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My late great master in economic theory, Frank Hahn (1925-2013), found what I had written to be a “good thesis” bringing “a good knowledge of economics and of philosophy to bear on the literature on economic planning”, saying I had  shown “a good knowledge of economic theory” and my “critique of Development Economics was powerful not only on methodological but also on economic theory grounds”.  

 

I myself said about it decades later “My original doctoral topic in 1976  ‘A monetary theory for India’ had to be altered not only due to paucity of monetary data at the time but because the problems of India’s political economy and allocation of resources in the real economy were far more pressing. The thesis that emerged in 1982 … was a full frontal assault from the point of view of microeconomic theory on the “development planning” to which everyone routinely declared their fidelity, from New Delhi’s bureaucrats and Oxford’s “development” school to McNamara’s World Bank with its Indian staffers.  Frank Hahn protected my inchoate liberal arguments for India; and when no internal examiner could be found, Cambridge showed its greatness by appointing two externals, Bliss at Oxford and Hutchison at Birmingham, both Cambridge men. “Economic Theory and Development Economics” was presented to the American Economic Association in December 1982 in company of Solow, Chenery, Streeten, and other eminences…” How I landed on that eminent AEA panel in December 1982 was because its convener Professor George Rosen of the University of Illinois recruited me overnight — as a replacement for Jagdish Bhagwati, who had had to return to India suddenly because of a parental death.  The results were published in 1983 in World Development.

 

Soon afterwards, London’s Institute of Economic Affairs published Pricing, Planning and Politics: A Study of Economic Distortions in India.  This slim work was the first classical liberal critique of post-Mahalonobis Indian economic thought since BR Shenoy’s original criticism decades earlier.  It became the subject of The Times’ lead editorial on its day of publication 29 May 1984 — provoking the Indian High Commission in London to send copies to the Finance Ministry in Delhi where it apparently caused a stir, or so I was told years later by Amaresh Bagchi who was a recipient of it at the Ministry.

 

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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 there were inaccuracies in this and so replied  dated 4 June which The Times published on 16 June 1984:

 

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Milton and I met for the first time in the Fall of 1984 at the Mont Pelerin Society meetings at Cambridge when I gave him a copy of the IEA monograph, which he came to think extremely well of.   I told him I had heard of his 1955 document and asked him for it; he sent me the original blue/purple version of this soon thereafter.

 

[That original document was, incidentally,  in my professorial office among all my books, papers, theses and other academic items including my gown when I was attacked in 2003 by a corrupt gang at IIT Kharagpur —  all yet to be returned to me by IIT despite a High Court order during my present ongoing battle against corruption there over a USD 1.9 million scam !… Without having ever wished to, I have had to battle India’s notorious corruption first hand for a decade!]

 

I published Milton’s document for the first time on 21 May 1989 at the conference of the Hawaii project over the loud objection of assorted leftists… 

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Amartya Sen, Jagdish Bhagwati, Manmohan Singh or any of their acolytes will not be seen in this group photograph dated 21 May 1989 at the UH President’s House, because they were not there.  The Government of India was represented by the Ambassador to Washington, PK Kaul, as well as the Consul General in San Francisco, KS Rana (later Ambassador to Germany), besides the founding head of ICRIER who had invited himself.  

 

Manmohan Singh was not there as he precisely represented the Indian economic policy establishment I had been determined to reform!   In any case, he had left India about 1987 on his last assignment before retirement, with Julius Nyerere of Tanzania relating to the “South-South Commission”.  

 

I have said over more than a half dozen years now that there is no evidence whatsoever of Manmohan Singh having been a liberal economist in any sense of that word at any time before 1991, and scant evidence that he originated any liberal economic ideas since.  The widespread worldwide notion that he is to be credited for originating a sudden transformation of India from a path of pseudo-socialism to one of pseudo-liberalism has been without basis in evidence — almost entirely a political fiction, though an explicable one and one which has served, as such political fictions do, the purposes of those who invent them.

 

Jagdish Bhagwati and Amartya Sen were in their mid 50s and were two of the three senior-most Indians in US academic economics at the time.  I and Ted James, both in our 30s, decided to invite both Bhagwati and Sen to the Hawaii project-conference as distinguished guests but to do so somewhat insincerely late in the day, predicting they would decline, which is what they did, yet they had come to be formally informed of what we were doing.  We had a very serious attitude that was inspired a bit, I might say, by Oppenheimer’s secret “Manhattan project” and we wanted neither press-publicity nor anyone to become the star who ended up hogging the microphone or the limelight.

 

Besides, and most important of all, neither Bhagwati nor Sen had done work in the areas we were centrally interested in, namely, India’s macroeconomic and foreign trade framework and fiscal and monetary policies.   

 

Bhagwati, after his excellent 1970 work with Padma Desai for the OECD on Indian industry and trade, also co-authored with TN Srinivasan a fine 1975 volume for the NBER  Foreign Trade Regimes and Economic Development: India. 

 

TN Srinivasan was the third of the three senior-most Indian economists at the time in US academia; his work made us want to invite him as one of our main economic authors, and we charged him with writing the excellent chapter in Foundations that he came to do titled “Planning and Foreign Trade Reconsidered”.

 

The other main economist author we had hoped for was Sukhamoy Chakravarty from Delhi University and the Government of India’s Planning Commission, whom I had known since 1977 when I had been given his office at the Delhi School of Economics as a Visiting Assistant Professor while he was on sabbatical; despite my pleading he would not come due to ill health; he strongly recommended C Rangarajan, telling me Rangarajan had been the main author with him of the crucial 1985 RBI report on monetary policy; and he signed and gave me his last personal copy of that report dating it 14 July 1987.  Rangarajan said he could not come and recommended the head of the NIPFP, Amaresh Bagchi, promising to write jointly with him the chapter on monetary policy and public finance. 

 

Along with Milton Friedman’s suppressed 1955 memorandum which I was publishing for the first time in 1989, TN Srinivasan and Amaresh Bagchi authored the three main economic policy chapters that we felt we wanted. 

 

Other chapters we commissioned had to do with the state of governance (James Manor), federalism (Bhagwan Dua), Punjab and similar problems (PR Brass), agriculture (K Subbarao, as proposed by CH Hanumantha Rao), health (Anil Deolalikar, through open advertisement), and a historical assessment of the roots of economic policy (BR Tomlinson, as proposed by Anil Seal).  On the vital subject of education we failed to agree with the expert we wanted very much  (JBG Tilak, as proposed by George Psacharopolous) and so we had to cover the subject cursorily in our introduction mentioning his work.  And decades later, I apologised to Professor Dietmar Rothermund of Heidelberg University for having been so blinkered in the Anglo-American tradition at the time as to not having obtained his participation in the project.  

 

[The sister-volume we commissioned in parallel on Pakistan’s political economy had among its authors Francis Robinson, Akbar Ahmed, Shirin Tahir-Kehli, Robert La Porte, Shahid Javed Burki, Mohsin Khan, Mahmood Hasan Khan,  Naved Hamid, John Adams and Shahrukh Khan; this book came to be published in Pakistan in 1993 to good reviews but apparently was then lost by its publisher and is yet to be found; the military and religious clergy had been deliberately not invited by us though the name of Pervez Musharraf had I think arisen, and the military and religious clergy in fact came to rule the roost through the 1990s in Pakistan; the volume, two decades old, takes on fresh relevance with the new civilian governments of recent years.] [Postscript  27 November 2015: See my strident critique at Twitter of KM Kasuri, P Musharraf et al  e.g. at https://independentindian.com/2011/11/22/pakistans-point-of-view-or-points-of-view-on-kashmir-my-as-yet-undelivered-lahore-lecture-part-i/ passing off ideas they have taken from this volume without acknowledgement, ideas which have in any case become defunct  to their author, myself.]

 

Milton himself said this about his experience with me in his memoirs:

 

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And Milton wrote on my behalf when I came to be attacked, being Indian, at the very University that had sponsored us:

 

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My obituary notice at his passing in 2006 said: “My association with Milton has been the zenith of my engagement with academic economics…. I was a doctoral student of his bitter enemy yet for over two decades he not only treated me with unfailing courtesy and affection, he supported me in lonely righteous battles: doing for me what he said he had never done before, which was to stand as an expert witness in a United States Federal Court. I will miss him much though I know that he, as a man of reason, would not have wished me to….”

 

In August 1990 in Delhi I came to tell Siddhartha Shankar Ray about the unpublished India-manuscript resulting from the Hawaii project that was in my possession as it headed to its publisher. 

 

Ray was a family-friend whose maternal grandfather CR Das led the Congress Party before MK Gandhi and had been a friend and colleague of my great grandfather SN Roy in Bengal’s politics in the 1920s;  Ray had also consented to stand on my behalf as Senior Counsel in a matter in the Supreme Court of India. 

 

Ray was involved in daily political parlays at his Delhi home with other Congress Party personages led by PV Narasimha Rao.  These senior regional figures seemed to me to be keeping their national leader, Rajiv Gandhi, aloof in splendid isolation at 10 Jan Path. 

 

Ray told me he and his wife had been in London in May 1984 on the day The Times had written its lead editorial on my work and they had seen it with excitement.  Upon hearing of the Hawaii project and the manuscript I had with me, Ray immediately insisted of his own accord that I must meet Rajiv Gandhi, and that he would be arranging a meeting. 

 

Hence it came to be a month later that a copy of the manuscript of the completed Hawaii project was be given by my hand on 18 September 1990 to Rajiv Gandhi, then Leader of the Opposition and Congress President, an encounter I have quite fully described elsewhere.  I offered to get a copy to the PM, VP Singh, too but a key aide of his showed no interest in receiving it.

 

Rajiv made me a senior adviser, and I have claimed principal authorship of the 22 March 1991 draft of the Congress manifesto that actually shook and changed the political thinking of the Congress on economic matters in the direction Rajiv had desired and as I had advised him at our initial 18 September 1990 meeting. 

 

“… He began by talking about how important he felt panchayati raj was, and said he had been on the verge of passing major legislation on it but then lost the election. He asked me if I could spend some time thinking about it, and that he would get the papers sent to me. I said I would and remarked panchayati raj might be seen as decentralized provision of public goods, and gave the economist’s definition of public goods as those essential for the functioning of the market economy, like the Rule of Law, roads, fresh water, and sanitation, but which were unlikely to appear through competitive forces.

 

I distinguished between federal, state and local levels and said many of the most significant public goods were best provided locally. Rajiv had not heard the term “public goods” before, and he beamed a smile and his eyes lit up as he voiced the words slowly, seeming to like the concept immensely. It occurred to me he had been by choice a pilot of commercial aircraft. Now he seemed intrigued to find there could be systematic ways of thinking about navigating a country’s governance by common pursuit of reasonable judgement. I said the public sector’s wastefulness had drained scarce resources that should have gone instead to provide public goods. Since the public sector was owned by the public, it could be privatised by giving away its shares to the public, preferably to panchayats of the poorest villages. The shares would become tradable, drawing out black money, and inducing a historic redistribution of wealth while at the same time achieving greater efficiency by transferring the public sector to private hands. Rajiv seemed to like that idea too, and said he tried to follow a maxim of Indira Gandhi’s that every policy should be seen in terms of how it affected the common man. I wryly said the common man often spent away his money on alcohol, to which he said at once it might be better to think of the common woman instead. (This remark of Rajiv’s may have influenced the “aam admi” slogan of the 2004 election, as all Congress Lok Sabha MPs of the previous Parliament came to receive a previous version of the present narrative.)

 

Our project had identified the Congress’s lack of internal elections as a problem; when I raised it, Rajiv spoke of how he, as Congress President, had been trying to tackle the issue of bogus electoral rolls. I said the judiciary seemed to be in a mess due to the backlog of cases; many of which seemed related to land or rent control, and it may be risky to move towards a free economy without a properly functioning judicial system or at least a viable system of contractual enforcement. I said a lot of problems which should be handled by the law in the courts in India were instead getting politicised and decided on the streets. Rajiv had seen the problems of the judiciary and said he had good relations with the Chief Justice’s office, which could be put to use to improve the working of the judiciary.

 

The project had worked on Pakistan as well, and I went on to say we should solve the problem with Pakistan in a definitive manner. Rajiv spoke of how close his government had been in 1988 to a mutual withdrawal from Siachen. But Zia-ul-Haq was then killed and it became more difficult to implement the same thing with Benazir Bhutto, because, he said, as a democrat, she was playing to anti-Indian sentiments while he had found it somewhat easier to deal with the military. I pressed him on the long-term future relationship between the countries and he agreed a common market was the only real long-term solution. I wondered if he could find himself in a position to make a bold move like offering to go to Pakistan and addressing their Parliament to break the impasse. He did not say anything but seemed to think about the idea. Rajiv mentioned a recent Time magazine cover of Indian naval potential, which had caused an excessive stir in Delhi. He then talked about his visit to China, which seemed to him an important step towards normalization. He said he had not seen (or been shown) any absolute poverty in China of the sort we have in India. He talked about the Gulf situation, saying he did not disagree with the embargo of Iraq except he wished the ships enforcing the embargo had been under the U.N. flag. The meeting seemed to go on and on, and I was embarrassed at perhaps having taken too much time and that he was being too polite to get me to go. V. George had interrupted with news that Sheila Dixit (as I recall) had just been arrested by the U. P. Government, and there were evidently people waiting. Just before we finally stood up I expressed a hope that he was looking to the future of India with an eye to a modern political and economic agenda for the next election, rather than getting bogged down with domestic political events of the moment. That was the kind of hopefulness that had attracted many of my generation in 1985. I said I would happily work in any way to help define a long-term agenda. His eyes lit up and as we shook hands to say goodbye, he said he would be in touch with me again…. The next day I was called and asked to stay in Delhi for a few days, as Mr. Gandhi wanted me to meet some people…..

 

… That night Krishna Rao dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. Krishna Rao asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.  This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the VP Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization….. Proceedings began when Rajiv arrived. This elite audience mobbed him just as the farmers had mobbed him earlier. He saw me and beamed a smile in recognition, and I smiled back but made no attempt to draw near him in the crush. He gave a short very apt speech on the role the United Nations might have in the new post-Gulf War world. Then he launched the book, and left for an investiture at Rashtrapati Bhavan. We waited for our meeting with him, which finally happened in the afternoon. Rajiv was plainly at the point of exhaustion and still hard-pressed for time. He seemed pleased to see me and apologized for not talking in the morning. Regarding the March 22 draft, he said he had not read it but that he would be doing so. He said he expected the central focus of the manifesto to be on economic reform, and an economic point of view in foreign policy, and in addition an emphasis on justice and the law courts. I remembered our September 18 conversation and had tried to put in justice and the courts into our draft but had been over-ruled by others. I now said the social returns of investment in the judiciary were high but was drowned out again. Rajiv was clearly agitated that day by the BJP and blurted out he did not really feel he understood what on earth they were on about. He said about his own family, “We’re not religious or anything like that, we don’t pray every day.” I felt again what I had felt before, that here was a tragic hero of India who had not really wished to be more than a happy family man until he reluctantly was made into a national leader against his will. We were with him for an hour or so. As we were leaving, he said quickly at the end of the meeting he wished to see me on my own and would be arranging a meeting. One of our group was staying back to ask him a favour. Just before we left, I managed to say to him what I felt was imperative: “The Iraq situation isn’t as it seems, it’s a lot deeper than it’s been made out to be.” He looked at me with a serious look and said “Yes I know, I know.” It was decided Pitroda would be in touch with each of us in the next 24 hours. During this time Narasimha Rao’s manifesto committee would read the draft and any questions they had would be sent to us. We were supposed to be on call for 24 hours. The call never came. Given the near total lack of system and organization I had seen over the months, I was not surprised. Krishna Rao and I waited another 48 hours, and then each of us left Delhi. Before going I dropped by to see Krishnamurty, and we talked at length. He talked especially about the lack of the idea of teamwork in India. Krishnamurty said he had read everything I had written for the group and learned a lot. I said that managing the economic reform would be a critical job and the difference between success and failure was thin….”

 

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“… I got the afternoon train to Calcutta and before long left for America to bring my son home for his summer holidays with me. In Singapore, the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi….”

 

In December 1991, I visited Rajiv’s widow at 10 Jan Path to express my condolences, the only time I have met her, and I gave her for her records a taped copy of Rajiv’s long-distance telephone conversations with me during the Gulf War earlier that year.   She seemed an extremely shy taciturn figure in deep mourning, and I do not think the little I said to her about her late husband’s relationship with me was comprehended.  Nor was it the time or place for more to be said.

 

In September 1993, at a special luncheon at the Indian Ambassador’s Residence in Washington, Siddhartha Shankar Ray, then the Ambassador to Washington, pointed at me and declared to Manmohan Singh, then Finance Minister, in presence of Manmohan’s key aides accompanying him including MS Ahluwalia, NK Singh, C Rangarajan and others,

 

“Congress manifesto was written on his computer”.

 

This was accurate enough to the extent that the 22 March 1991 draft as asked for by Rajiv and that came to explicitly affect policy had been and remains on my then-new NEC laptop.

 

At the Ambassador’s luncheon, I gave Manmohan Singh a copy of the Foundations book as a gift.  My father who knew him in the early 1970s through MG Kaul, ICS, had sent him a copy of my 1984 IEA monograph which Manmohan had acknowledged.  And back in 1973, he had visited our then-home at 14 Rue Eugene Manuel in Paris to advise me about economics at my father’s request, and he and I had ended up in a fierce private debate for about forty minutes over the demerits (as I saw them) and merits (as he saw them) of the Soviet influence on Indian economic policy-making.  But in 1993 we had both forgotten the 1973 meeting.  

 

In May 2002, the Congress passed an official party resolution moved by Digvijay Singh in presence of PV Narasimha Rao and Manmohan Singh that the 1991 reforms had originated with Rajiv Gandhi and not with either Narasimha Rao or Manmohan; no one dissented.  It was intended to flatter Sonia Gandhi as the Congress President,  but there was truth in it too which all Congress MPs of the 13th Lok Sabha had come to know in a publication of mine they had received from me at IIT Kharagpur where since 1996 I had become Professor.  

 

Manmohan Singh himself, to his credit, has not at any point, except once during his failed Lok Sabha bid, claimed the reforms as his own invention and has said always he had followed what his Prime Minister had told him. However, he has not been averse to being attributed with all the credit by his flatterers, by the media, by businessmen and many many others around the world, and certainly he did not respond to Ambassador Siddhartha Shankar Ray telling him and his key aides how the Congress-led reform had come about through my work except to tell me at the 1993 luncheon that when Arjun Singh criticised the reforms in Cabinet, he, Manmohan, would mention the manifesto. 

 

On 28 December 2009, Rajiv’s widow in an official Congress Party statement finally declared her late husband

 

left his personal imprint on the (Congress) party’s manifesto of 1991.″ 

 

How Sonia Gandhi, who has never had pretensions to knowledge of economics or political economy or political science or governance or history, came to place Manmohan Singh as her prime ministerial candidate and the font of economic and political wisdom along with Pranab Mukherjee, when both men hardly had been favourites of her late husband, would be a story in its own right.  And how Amartya Sen’s European-origin naturalised Indian co-author Jean Drèze later came to have policy influence from a different direction upon Sonia Gandhi, also a naturalised Indian of European origin, may be yet another story in its own right,  perhaps best told by themselves.

 

I would surmise the same elderly behind-the-scenes figure, now in his late 80s, had a hand in setting up both sets of influences — directly in the first case (from back in 1990-1991),  and indirectly in the second case (starting in 2004) .  This was a man who in a November 2007 newspaper article literally erased my name and inserted that of Manmohan Singh as part of the group that Rajiv created on 25 September following his 18 September meeting with me!   Reluctantly, I had to call this very elderly man a liar; he has not denied it and knows he has not been libeled.

 

One should never forget the two traditional powers interested in the subcontinent, Russia and Britain, have been never far from influence in Delhi.  In 1990-1991 what worried vested bureaucratic and business interests and foreign powers through their friends and agents was that they could see change was coming to India but they wanted to be able to control it themselves to their advantage, which they then broadly proceeded to do over the next two decades.  The foreign weapons’ contracts had to be preserved, as did other big-ticket imports that India ends up buying needlessly on credit it hardly has in world markets.  There are similarities to what happened in Russia and Eastern Europe where many apparatchiks and fellow-travellers became freedom-loving liberals overnight;  in the Indian case more than one badly compromised pro-USSR senior bureaucrat promptly exported his children and savings to America and wrapped themselves in the American flag.

 

The stubborn unalterable fact remains that Manmohan Singh was not physically present in India and was still with the Nyerere project on 18 September 1990 when I met Rajiv for the first time and gave him the unpublished results of the UH-Manoa project.  This simple straightforward fact is something the Congress Party, given its own myths and self-deception and disinformation, has not been able to cope with in its recently published history.   For myself, I have remained loyal to my memory of my encounter with Rajiv Gandhi, and my understanding of him.  The Rajiv Gandhi I knew had been enthused by me in 1990-1991 carrying the UH-Manoa perestroika-for-India project that I had led since 1986, and he had loved my advice to him on 18 September 1990 that he needed to modernise the party by preparing a coherent agenda (as other successful reformers had done) while still in Opposition waiting for elections, and to base that agenda on commitments to improving the judiciary and rule of law, stopping the debauching of money, and focusing on the provision of public goods instead.    Rajiv I am sure wanted a modern and modern-minded Congress — not one which depended on him let aside his family, but one which reduced that dependence and let him and his family alone.

 

As for Manmohan Singh being a liberal or liberalising economist, there is no evidence publicly available of that being so from his years before or during the Nyerere project, or after he returned and joined the Chandrashekhar PMO and the UGC  until becoming,  to his own surprise as he told Mark Tully,  PV Narasimha Rao’s Finance Minister.  Some of his actions qua Finance Minister were liberalising in nature but he did not originate any basic idea of a change in a liberal direction of economic policy, and he has, with utmost honesty honestly, not claimed otherwise.  Innumerable flatterers and other self-interested parties have made out differently, creating what they have found to be a politically useful fiction; he has yet to deny them.

 

Siddhartha Shankar Ray and I met last in July 2009, when I gave him a copy of this 2005 volume I had created, which pleased him much. 

 

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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 she did not seem 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 people to a meeting here so you can meet them and tell them that directly”. 

 

It never transpired.  In our last phone 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, my only friend among politicians other than the late Rajiv Gandhi himself.

 

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In March February 2010, my father and I called upon the new Bengal Governor, MK Narayanan and gave him a copy of the Thatcher volume for the Raj Bhavan Library; I told him the story about my encounter with Rajiv Gandhi thanks to Siddhartha Shankar Ray and its result;  Narayanan within a few days made a visit to Ray’s hospital-bed, and when he emerged after several hours he made a statement, which in substance he repeated again when Ray died in November 2010:

 

“There are few people in post-Independence India who could equal his magnificent contribution to India’s growth and progress”.

 

To what facts did MK Narayanan, a former Intelligence Bureau chief, mean to refer with this extravagant praise of Ray?  Was Narayanan referring to Ray’s politics for Indira Gandhi?  To Ray’s Chief Ministership of Bengal?  To Ray’s Governorship of Punjab?  You will have to ask him but I doubt that was what he meant:  I surmise Narayanan’s eulogy could only have resulted after he confirmed with Ray on his hospital-bed the story I had told him, and that he was referring to the economic and political results that followed for the country once Ray had introduced me in September 1990 to Rajiv Gandhi. But I say again, you will have to ask MK Narayanan himself what he and Ray talked about in hospital and what was the factual basis of Narayanan’s precise words of praise. To what facts exactly was MK Narayanan, former intelligence chief, meaning to refer when he stated Siddhartha Shankar Ray had made a “magnificent contribution to India’s growth and progress”?

 

 

3.   Jagdish Bhagwati & Manmohan Singh?  That just don’t fly!

 

Now returning to the apparent desire of Professor Panagariya, the Jagdish Bhagwati Professor of Indian Political Economy at Columbia, to attribute to Jagdish Bhagwati momentous change for the better in India as of 1991, even if Panagariya had not the scientific curiosity to look into our 1992 book titled Foundations of India’s Political Economy: Towards an Agenda for the 1990s or into Milton Friedman’s own 1998 memoirs, we may have expected him to at least turn to his co-author and Columbia colleague, Jagdish Bhagwati himself, and ask, “Master, have you heard of this fellow Subroto Roy by any chance?”

 

Jagdish would have had to say yes, since not only had he received a copy of the proofs of my 1984 IEA work Pricing, Planning and Politics: A Study of Economic Distortions in India, he was kind enough to write in a letter dated 15 May 1984 that I had

 

“done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems!” 

 

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Also Jagdish may or may not have remembered our only meeting, when he and I had had a long conversation on the sofas in the foyer of the IMF in Washington when I was a consultant there in 1993 and he had come to meet someone; he was surprisingly knowledgeable about my personal 1990 matter in the Supreme Court of India which astonished me until he told me his brother the Supreme Court judge had mentioned the case to him!

 

Now my 1984 work was amply scientific and scholarly in fully crediting a large number of works in the necessary bibliography, including Bhagwati’s important work with his co-authors.  Specifically, Footnote 1 listed the literature saying:

 

“The early studies notably include: B. R. Shenoy, `A note of dissent’, Papers relating to the formulation of the Second Five-Year Plan, Government of India Planning Commission, Delhi, 1955; Indian Planning and Economic Development, Asia Publishing, Bombay, 1963, especially pp. 17-53; P. T. Bauer, Indian Economic Policy and Development, George Allen & Unwin, London, 1961; M. Friedman, unpublished memorandum to the Government of India, November 1955 (referred to in Bauer, op. cit., p. 59 ff.); and, some years later, Sudha Shenoy, India : Progress or Poverty?, Research Monograph 27, Institute of Economic Affairs, London, 1971. Some of the most relevant contemporary studies are: B. Balassa, `Reforming the system of incentives in World Development, 3 (1975), pp. 365-82; `Export incentives and export performance in developing countries: a comparative analysis’, Weltwirtschaftliches Archiv, 114 (1978), pp. 24-61; The process of industrial development and alternative development strategies, Essays in International Finance No. 141, Princeton University, 1980; J. N. Bhagwati & P. Desai, India: Planning for Industrialisation, OECD, Paris : Oxford University Press, 1970; `Socialism and Indian Economic Policy’, World Development, 3 (1975), pp. 213-21; J. N. Bhagwati & T. N. Srinivasan, Foreign-trade Regimes and Economic Development: India, National Bureau of Economic Research, New York, 1975; Anne O. Krueger, `Indian planning experience’, in T. Morgan et al. (eds.), Readings in Economic Development, Wadsworth, California, 1963, pp. 403-20; `The political economy of the rent-seeking society, American Economic Review, 64 (June 1974); The Benefits and Costs of Import-Substitution in India: a Microeconomic Study, University of Minnesota Press, Minneapolis, 1975; Growth, distortions and patterns of trade among many countries, Studies in International Finance, Princeton University, 1977; Uma Lele, Food grain marketing in India : private performance and public policy, Cornell University Press, Ithaca, 1971; T. W. Schultz (ed.), Distortions in agricultural incentives, Indiana University Press, Bloomington, 1978; V. Sukhatme, “The utilization of high-yielding rice and wheat varieties in India: an economic assessment”, University of Chicago PhD thesis, 1977….”

 

There were two specific references to Bhagwati’s work with Srinivasan:

 

“Jagdish Bhagwati and T. N. Srinivasan put it as follows : `The allocation of foreign exchange among alternative claimants and users in a direct control system . . .would presumably be with reference to a well-defined set of principles and criteria based on a system of priorities. In point of fact, however, there seem to have been few such criteria, if any, followed in practice.’”

 

and

 

“But as Bhagwati and Srinivasan report, `. . . the sheer weight of numbers made any meaningful listing of priorities extremely difficult. The problem was Orwellian: all industries had priority and how was each sponsoring authority to argue that some industries had more priority than others? It is not surprising, therefore, that the agencies involved in determining allocations by industry fell back on vague notions of “fairness”, implying pro rata allocations with reference to capacity installed or employment, or shares defined by past import allocations or similar rules of thumb’”

 

and one to Bhagwati and Desai:

 

“The best descriptions of Indian industrial policy are still to be found in Bhagwati and Desai (1970)…”

 

Professors Bhagwati and Panagriya have not apparently referred to anything beyond these joint works of Bhagwati’s dated 1970 with Padma Desai and 1975 with TN Srinivasan.  They have not claimed Bhagwati did anything by way of either publication or political activity in relation to India’s economic policy between May 1984, when he read my soon-to-be-published-work and found I had

 

done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems”,

 

and September 1990 when I gave Rajiv the University of Hawaii perestroika-for-India project results developed since 1986, which came to politically spark the 1991 reform in the Congress’s highest echelons from months before Rajiv’s assassination.   

 

There may have been no such claim made by Bhagwati and Panagariya because there may be no such evidence.  Between 1984 and 1990,  Professor Bhagwati’s research interests were away from Indian economic policy while his work on India through 1970 and 1975 had been fully and reasonably accounted for as of 1984 by myself.

 

What is left remaining is Bhagwati’s statement :

 

“When finance minister Manmohan Singh was in New York in 1992, he had a lunch for many big CEOs whom he was trying to seduce to come to India. He also invited me and my wife, Padma Desai, to the lunch. As we came in, the FM introduced us to the invitees and said: ‘These friends of mine wrote almost a quarter century ago [India: Planning for Industrialisation was published in 1970 by Oxford] recommending all the reforms we are now undertaking. If we had accepted the advice then, we would not be having this lunch as you would already be in India’

 

Now this light self-deprecating reference by Manmohan at an investors’ lunch in New York “for many big CEOs” was an evident attempt at political humour written by his speech-writer.   It was clearly, on its face, not serious history.   If we test it as serious history, it falls flat so we may only hope Manmohan Singh, unlike Jagdish Bhagwati, has not himself come to believe his own reported joke as anything more than that.  

 

The Bhagwati-Desai volume being referred to was developed from 1966-1970.  India saw critical economic and political events  in 1969, in 1970, in 1971, in 1972, in 1975, in 1977, etc.

 

Those were precisely years during which Manmohan Singh himself moved from being an academic to becoming a Government of India official, working first for MG Kaul, ICS, and then in 1971 coming to the attention of  PN Haksar, Indira Gandhi’s most powerful bureaucrat between 1967 and 1974: Haksar himself was Manmohan Singh’s acknowledged mentor in the Government, as Manmohan told Mark Tully in an interview.  

 

After Manmohan visited our Paris home in 1973 to talk to me about economics, my father — who had been himself sent to the Paris Embassy by Haksar in preparation for Indira Gandhi’s visit in November 1971 before the Bangladesh war —

 

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had told me Manmohan was very highly regarded in government circles with economics degrees from both Cambridge and Oxford, and my father had added, to my surprise, what was probably a Haksarian governmental view that Manmohan was expected to be India’s Prime Minister some day.  That was 1973.

 

PN Haksar had been the archetypal Nehruvian Delhi intellectual of a certain era, being both a fierce nationalist and a fierce pro-USSR leftist from long before Independence.  I met him once on 23 March 1991, on the lawns of 10 Jan Path at the launch of General V Krishna Rao’s book on Indian defence which Rajiv was releasing, and Haksar gave a speech to introduce Rajiv (as if Rajiv needed introduction on the lawns of his own residence);  Haksar was in poor health but he seemed completely delighted to be back in favour with Rajiv,  after years of having been treated badly by Indira and her younger son.  

 

 Had Manmohan Singh in the early 1970s gone to Haksar — the architect of the nationalisation of India’s banking going on right then — and said “Sir, this OECD study by my friend Bhagwati and his wife says we should be liberalising foreign trade and domestic industry”, Haksar would have been astonished and sent him packing.  

 

There was a war on, plus a massive problem of 10 million refugees, a new country to support called Bangladesh, a railway strike, a bad crop, repressed inflation, shortages, and heaven knows what more, besides Nixon having backed Yahya Khan, Tikka Khan et al. 

 

 

nixon-note

Then after Bangladesh and the railway strike etc, came the rise of the politically odious younger son of Indira Gandhi and his friends (at least one of whom is today Sonia Gandhi’s gatekeeper) followed by the internal political Emergency, the grave foreign-fueled problem of Sikh separatism and its control, the assassination of Indira Gandhi by her own Sikh bodyguards, and the Rajiv Gandhi years as Prime Minister. 

 

Certainly it was Rajiv’s arrival in office and Benazir’s initial return to Pakistan, along with the rise of Michael Gorbachev in the changing USSR, that inspired me in far away Hawaii in 1986 to design with Ted James the perestroika-projects for India and Pakistan which led to our two volumes, and which, thanks to Siddhartha Shankar Ray, came to reach Rajiv Gandhi in Opposition in September 1990 as he sat somewhat forlornly at 10 Jan Path after losing office. “There is a tide in the affairs of men, Which taken at the flood, leads on to fortune….

 

My friend and collaborator Ted James died of cancer in Manila in May 2010; earlier that year he came to say publicly

 

“Seldom are significant reforms imposed successfully by international bureaucracies. Most often they are the result of indigenous actors motivated by domestic imperatives. I believe this was the case in India in 1991. It may have been fortuitous that Dr. Roy gained an audience with a receptive Rajiv Gandhi in 1990 but it was not luck that he was prepared with a well-thought out program; this arose from years of careful thought and debate on the matter.”

 

Changing the direction of a ship of state is very hard, knowing in which direction it should change and to what degree is even harder; it has rarely been something that can be done without random shocks arising let aside the power of vested interests. Had Rajiv Gandhi lived to form a new Government, I have little doubt I would have led the reform that I had chalked out for him and that he had approved of;  Sonia Gandhi would have remained the housewife, mother and grandmother that she had preferred to be and not been made into the Queen of India by the Congress Party; Manmohan Singh had left India in 1987 for the Nyerere project and it had been rumoured at the time that had been slightly to do with him protesting, to the extent that he ever has protested anything, the anti-Sikh pogrom that some of Rajiv’s friends had apparently unleashed after Indira’s killing; he returned in November 1990, joined Chandrashekhar in December 1990, left Chandrashekhar in March 1991 when elections were announced and was biding his time as head of the UGC; had Rajiv Gandhi lived, Manmohan Singh would have had a governor’s career path, becoming the governor of one state after another; he would not have been brought into the economic reform process which he had had nothing to do with originating; and finally Pranab Mukherjee, who left the Congress Party and formed his own when Rajiv took over, would have been likely rehabilitated slowly but would not have come to control the working of the party as he did. I said in my Lok Sabha TV interview on 5 9 December 2012 that there have been many microeconomic improvements arising from technological progress in the last 22 years but the macroeconomic and monetary situation is grim, because at root the fiscal situation remains incoherent and confused. I do not see anyone in Manmohan Singh’s entourage among all his many acolytes and flatterers and apologists who is able to get to these root problems.  We shall address these issues in Part II.

 

What Manmohan Singh said in self-deprecating humour at an investors’ lunch in New York in 1992 is hardly serious history as Jagdish Bhagwati has seemed to wish it to be.  Besides, it would have been unlike Manmohan,  being the devoted student of Joan Robinson and Nicholas Kaldor as he told Mark Tully,  to have taken such a liberalising initiative at all.  Furthermore, the 1969 American Economic Review published asurvey of Indian economic policy authored by his Delhi University colleagues Jagdish Bhagwati and Sukhamoy Chakravarty which made little mention of his work, and it would have been unreasonable to expect him to have been won over greatly by theirs. Perhaps there is a generous review from the 1970s by Manmohan Singh of the Bhagwati-Desai volume hidden somewhere but if so we should be told where it is.  A list of Manmohan Singh’s publications as an economist do not seem easily available anywhere.  

 

Lastly and perhaps most decisively, the 1970 Bhagwati-Desai volume, excellent study that it was, was hardly the first of its genre by way of liberal criticism of modern Indian economic policy!   Bhagwati declared in his 2010 speech to the Lok Sabha

 

“This policy framework had been questioned, and its total overhaul advocated, by me and Padma Desai in writings through the late 1960s…”

 

But why has Bhagwati been forever silent about the equally if not more forceful and fundamental criticism of “the policy framework”, and advocacy of its “total overhaul”, by scholars in the 1950s, a decade and more earlier than him, when he and Manmohan and Amartya were still students?  Specifically, by BR Shenoy, Milton Friedman, and Peter Bauer?   The relevant bibliography from the mid 1950s is given in Footnote 1 of my 1984 work. 

 

 


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baueronshenoy

Peter Tamas Bauer (1915-2002) played a vital role in all this as had he himself not brought the Friedman 1955 document to my attention I would not have known of it.

 

 

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As undergraduates at the LSE, we had been petrified of him and I never spoke to him while there, having believed the propaganda that floated around about him; then while a Research Student at Cambridge, I happened to be a speaker with him at a conference at Oxford; he made me sit next to him at a meal and told me for the first time about Milton Friedman’s 1955 memorandum to the Government of India which had been suppressed.  I am privileged to say Peter from then on became a friend, and wrote, at my request, what became I am sure the kiss of death for me at the World Bank of 1982:

 

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Later he may have been responsible for the London Times writing its lead editorial of 29 May 1984 on my work.

 

Now Milton had sent me in 1984, besides the original of his November 1955 memorandum to the Government of India, a confidential 1956 document also which seemed to have been written for US Government consumption.  I did not publish this in Hawaii in 1989 as I was having difficulty enough publishing the 1955 memorandum.  I gave it to be published on the Internet some years ago, and after Milton’s passing, I had it published in The Statesman  on the same day as my obituary of him. 

 

It makes fascinating reading, especially about Mahalanobis and Shenoy, of how what Bhagwati wishes to call “the policy framework” that, he claims, he and Desai called for a “total overhaul” of, came to be what it was in the decade earlier when he and Amartya and Manmohan were still students. 

 

Friedman’s 1956 document said

 

“I met PC Mahalanobis in 1946 and again at a meeting of the International Statistical Institute in September 1947, and I know him well by reputation. He was absent during most of my stay in New Delhi, but I met him at a meeting of the Indian Planning Commission, of which he is one of the strongest and most able members.   Mahalanobis began as a mathematician and is a very able one. Able mathematicians are usually recognized for their ability at a relatively early age. Realizing their own ability as they do and working in a field of absolutes, tends, in my opinion, to make them dangerous when they apply themselves to economic planning. They produce specific and detailed plans in which they have confidence, without perhaps realizing that economic planning is not the absolute science that mathematics is. This general characteristic of mathematicians is true of Mahalanobis but in spite of the tendency he is willing to discuss a problem and listen to a different point of view. Once his decision is reached, however, he has great confidence in it. Mahalanobis was unquestionably extremely influential in drafting the Indian five-year plan. There were four key steps in the plan. The first was the so-called “Plan Frame” drafted by Mahalanobis himself. The second was a tentative plan based on the “Plan Frame”. The third step was a report by a committee of economists on the first two steps, and the fourth was a minority report by BR Shenoy on the economists’ report. The economists had no intention of drafting a definitive proposal but merely meant to comment on certain aspects of the first two steps. Shenoy’s minority report, however, had the effect of making the economists’ report official. The scheme of the Five Year Plan attributed to Mahalanobis faces two problems; one, that India needs heavy industry for economic development; and two, that development of heavy industry uses up large amounts of capital while providing only small employment.  Based on these facts, Mahalanobis proposed to concentrate on heavy industry development on the one hand and to subsidize the hand production cottage industries on the other. The latter course would discriminate against the smaller manufacturers. In my opinion, the plan wastes both capital and labour and the Indians get only the worst of both efforts. If left to their own devices under a free enterprise system I believe the Indians would gravitate naturally towards the production of such items as bicycles, sewing machines, and radios. This trend is already apparent without any subsidy. The Indian cottage industry is already cloaked in the same popular sort of mist as is rural life in the US. There is an idea in both places that this life is typical and the backbone of their respective countries. Politically, the Indian cottage industry problem is akin to the American farm problem. Mohandas Gandhi was a proponent of strengthening the cottage industry as a weapon against the British. This reason is now gone but the emotions engendered by Gandhi remain. Any move to strengthen the cottage industry has great political appeal and thus, Mahalanobis’ plan and its pseudo-scientific support for the industry also has great political appeal.  I found many supporters for the heavy industry phase of the Plan but almost no one (among the technical Civil Servants) who really believes in the cottage industry aspects, aside from their political appeal. In its initial form, the plan was very large and ambitious with optimistic estimates. My impression is that there is a substantial trend away from this approach, however, and an attempt to cut down. The development of heavy industry has slowed except for steel and iron. I believe that the proposed development of a synthetic petroleum plant has been dropped and probably wisely so. In addition, I believe that the proposed five year plan may be extended to six years. Other than his work on the plan, I am uncertain of Mahalanobis’ influence. The gossip is that he has Nehru’s ear and potentially he could be very influential, simply because of his intellectual ability and powers of persuasion. The question that occurs to me is how much difference Mahalanobis’ plan makes. The plan does not seem the important thing to me. I believe that the new drive and enthusiasm of the Indian nation will surmount any plan, good or bad. Then too, I feel a wide diversity in what is said and what is done. I believe that much of Nehru’s socialistic talk is simply that, just talk. Nehru has been trying to undermine the Socialist Party by this means and apparently the Congress Party’s adoption of a socialistic idea for industry has been successful in this respect.  One gets the impression, depending on whom one talks with, either that the Government runs business, or that two or three large businesses run the government. All that appears publicly indicates that the first is true, but a case can also be made for the latter interpretation. Favour and harassment are counterparts in the Indian economic scheme. There is no significant impairment of the willingness of Indian capitalists to invest in their industries, except in the specific industries where nationalization has been announced, but they are not always willing to invest and take the risks inherent in the free enterprise system. They want the Government to support their investment and when it refuses they back out and cry “Socialism”..”

 

I look forward to seeing a fundamental classical liberal critique from India’s distinguished American friends at Columbia University, Professors Jagdish Bhagwati and Padma Desai and Arvind Panagariya, if and when such a critique arises,  of the  “policy framework” in India as that evolved from the mid 1950s to become what exists across India in 2013 today.  Specifically:  Where is the criticism from Bhagwati of Mahalanobis and friends?  And where is Bhagwati’s defence of Shenoy, leave aside of Milton Friedman or Peter Bauer?   They seem not to exist. The most we get is a footnote again without the civility of any references, in the otherwise cogent 1975 Desai-Bhagwati paper “Socialism and Indian Economic Policy” alleging 

 

” Of these three types of impact of the Soviet example, the Plan-formulation approach was to be enthusiastically received by most commentators and, indeed, to lead to demands on the part of aid agencies for similar efforts by other developing countries. However, the shift to heavy industry was seen as a definite mistake by economic opinion of the Chicago school variety, reflecting their basic unfamiliarity with the structural models of growth and development planning of the Feldman-Mahalanobis variety-an ignorance which probably still persists. The detailed regulation was not quite noticed at the time, except by conservative commentators whose position however was extreme and precluded governmental planning of industrial investments on any scale.”

 

Desai and Bhagwati naturally found no apparent desire to locate any possible scientific truth or reasonableness among

 

“conservative commentators”

 

nor among the unnamed and undescribed

 

“economic opinion of the Chicago school variety”.   

 

Could Desai and Bhagwati have done anything different after all, even when talking about India to an American audience, without being at risk of losing their East Coast Limousine Liberal credentials?  Bhagwati used to routinely declare his “socialist” credentials, and even the other day on Indian TV emphatically declared he was not a “conservative” and scornfully dismissed “Thatcher and Reagan” for their “trickle down economics”…

 

Jagdish Bhagwati has evidently wanted to have his cake and eat it too…

 


 

4.    Amartya Sen’s Half-Baked Communism: “To each according to his need”? 

 

If I have been candid or harsh in my assessments of Jagdish Bhagwati and Manmohan Singh as they relate to my personal experience with the change of direction in Indian economic policy originating in 1990-1991, I am afraid I must be equally so with Bhagwati’s current opponent in debate, Amartya Sen. Certainly I have found the current spat between Bhagwati and Sen over India’s political economy to be dismal, unscholarly, unscientific and misleading (or off-base) except for it having allowed a burst of domestic policy-discussion in circumstances when India needs it especially much.  

 

None of this criticism is personal but based on objective experience and the record.  My criticism of Professor Bhagwati and Dr Manmohan Singh does not diminish in the slightest my high personal regard for both of them.

 

Similarly, Amartya Sen and I go back, momentarily, to Hindustan Park in 1964 when there was a faint connection as family friends from World War II  (as Naren Deb and Manindranath Roy were friends and neighbours, and we still have the signed copy of a book gifted by the former to the latter), and then he later knew me cursorily when I was an undergraduate at LSE and he was already a famous professor, and I greatly enjoyed his excellent lectures at the LSE on his fine book On Economic Inequality, and a few years later he wrote in tangential support of me at Cambridge for which he was thanked in the preface to my 1989 Philosophy of Economics — even though that book of mine also contained in its Chapter 10 the decisive criticism of his main contribution until that time to what used to be called “social choice theory”. Amartya Sen had also written some splendid handwritten letters, a few pages of which remain with me, which puzzled me at the time due to his expressing his aversion to what is normally called ‘price theory’, namely the Marshallian and/or Walrasian theory of value. 

 

Professor Sen and I met briefly in 1978, and then again in 2006 when I was asked to talk to him in our philosophical conversation which came to be published nicely.  In 2006 I told him of my experience with Rajiv Gandhi in initiating what became the 1991 reform on the basis of my giving Rajiv the results of the Hawaii project,  and Amartya was kind enough to say that he knew I had been arguing all this “very early on”, referring presumably to the 1984 London Times editorial which he would have seen in his Oxford days before coming to Harvard.

 

This personal regard on my part or personal affection on his part aside, I have been appalled to find Professor Sen not taking moral and intellectual responsibility for and instead disclaiming paternity of the whole so-called “Food Security” policy which Sonia Gandhi has been prevailed upon over the years by him and his acolytes and friends and admirers to adopt, and she in her ignorance of all political economy and governance has now wished to impose upon the Congress Party and India as a whole:

 

“Questioner: You are being called the creator of the Food Security Bill.

Amartya Sen: Yes, I don’t know why. That is indeed a paternity suit I’m currently fighting. People are accusing me of being the father”.

 

Amartya Sen has repeatedly over the years gone on Indian prime-time television and declared things like

 

If you don’t agree there’s hunger in the world, there’s something morally wrong with you”

 

besides over the decades publishing titles like Poverty and Famines: An Essay on Entitlement and Deprivation, Hunger and Public Action, The Political Economy of Hunger etc and ceaselessly using his immense power with the media, with book publishing houses, with US academic departments and the world development economics business,  to promote his own and his acolytes’ opinions around the world, no matter how ill-considered or incoherent these may be.   A passage from his latest book with Jean Drèze reportedly reads

 

“If development is about the expansion of freedom, it has to embrace the removal of poverty as well as paying attention to ecology as integral parts of a unified concern, aimed ultimately at the security and advancement of human freedom. Indeed, important components of human freedoms — and crucial ingredients of our quality of life — are thoroughly dependent on the integrity of the environment, involving the air we breathe, the water we drink, and the epidemiological surroundings in which we live….”

 

Had such a passage reached me in an undergraduate essay, I would have considered it incoherent waffle, and I am afraid I cannot see why merely because it is authored  by an eminence at Harvard and his co-author, the evaluation should be any different.   I am reminded of my encounter in 1976 with Joan Robinson, the great tutor in 1950s Cambridge of Amartya and Manmohan:  “Joan Robinson cornered me once and took me into the office she shared with EAG… She came at me for an hour or so wishing to supervise me, I kept declining politely… saying I was with Frank Hahn and wished to work on money… “What does Frankie know about India?” she said… I said I did not know but he did know about monetary theory and that was what I needed for India;  I also said I did not think much about the Indian Marxists she had supervised… and mentioned a prominent name… she said about him, “Yes most of what he does can go straight into the dustbin”…”  The Indian Marxist whom I had referred to in this conversation with Joan was not Amartya but someone else much younger, yet her candid “can go straight into the dustbin” still applies to all incoherent waffle, whomsoever may produce it.

 

Indeed, Amartya Sen, if anyone, really should get down to writing his memoirs, and candidly so in order to explain his own thinking and deeds over the decades to himself and to the world in order that needless confusions do not arise.  

 

Else it becomes impossible to explain how someone who was said to be proud to have been a Communist student on the run from the police in West Bengal, who was Joan Robinson’s star pupil at a time she was extolling Maoist China and who has seemingly nurtured a deep lifelong fascination and affection for Communist China despite all its misdeeds, who was feted by the Communist regime of West Bengal after winning the Bank of Sweden Prize (on the same day that same regime had tossed into jail one unfortunate young Mr Khemkha merely for having been rude to its leaders on the Internet), and who seemed to share some of those winnings on social causes like primary education at the behest of the Communist regime’s ministers, etc, how someone with that noble comradely leftist personal history as an economist allows a flattering interviewer with a Harvard connection to describe him in Business Standard of 25 July 2013  as having been all along really a

 

“neoclassical economist”

 

who also happens to be

 

“the greatest living scholar of the original philosopher of the free market, Adam Smith”

 

Amartya Sen a neoclassical economist and a great scholar of Adam Smith?  It is hilarious to suppose so. The question arises, Does Sen, having published about Adam Smith recently in a few newspapers and leftist periodicals, agree with such a description by his flattering admirer from Harvard at Business Standard?  “Neoclassical” economics originated with men like Jevons, Menger, Walras, Pareto, Marshall, Wicksell, and was marked by the theory of value being explained by a demand-side too, and not, like classical economics, merely by the cost of production alone on the supply side.  Indeed a striking thing about the list below published by the Scandinavian Journal of Economics of Amartya’s books following his 1998 Bank of Sweden Prize

 

1467-9442.00152_p1is how consistently these works display his avoidance of all neoclassical economics, and the absence of all of what is normally called ‘price theory’, namely the Marshallian and/or Walrasian theory of value.   No “neoclassical economics” anywhere here  for sure!  

 

It would be fair enough if Professor Sen says he is hardly responsible for an admirer’s ignorant misdescription of his work — except the question still arises why he has himself also evidently misdescribed his own work!  For example, in his 13 July 2013 letter to The Economist in response to the criticism of Jagdish Bhagwati and Arvind Panagariya, he says he had always been keenly interested in

 

“the importance of economic growth as a means— not an end”

 

and that this

 

“has been one of the themes even in my earliest writings (including “Choice of Techniques” in 1960 and “Growth Economics” in 1970)”.

 

This is a very peculiar opinion indeed to have been expressed by Professor Sen about his own work because the 1970 volume Growth Economics listed above among his books hardly can be said at all to be one of his own “earliest writings” as he now describes it to have been!

 

What had happened back then was that Sen, as someone considered a brilliant or promising young Indian economist at the time, had been asked by the editors of the famous Penguin Modern Economics Readings series to edit the specific issue  devoted to growth-theory — a compendium of classic already-published essays including those of Roy Harrod, Evsey Domar, Robert Solow and many others, to which young Amartya was given a chance to write an editorial Introduction.   Every economist familiar with that literature knows too that the growth-theory contained in that volume and others was considered highly abstract and notoriously divorced from actual historical processes of economic growth in different countries.  Everyone also knew that the individual editors in that famous Penguin Modern Economics Series were of relative unimportance as they did not commission new papers but merely collected classics already published and wrote an introduction.

 

This is significant presently because neither Professor Sen nor Professor Bhagwati may be objectively considered on the evidence of his life’s work as an economist to have been a major scholar of economic growth, either in theory or in historical practice.  As of December 1989,  Amartya Sen himself described his own interests to the American Economic Association as

 

“social choice theory, welfare economics, economic development”

 

and Jagdish Bhagwati described his interests as

 

“theory of international trade and policy, economic development”. 

 

Neither Sen nor Bhagwati mentioned growth economics or economic history or even general economic theory, microeconomics, macroeconomics, monetary economics, public finance, etc.  Furthermore, Sen saying in his letter to The Economist  that he has been always interested in economic growth seems to be baseless in light of the list of his books above, other than the Penguin compendium already discussed.

 

Incidentally in the same American Economic Association volume of 1989, Padma Desai had described her interests as

 

“Soviet economy and comparative economic systems”; 

 

Arvind Panagariya had described his interests as

 

“economies of scale and trade; smuggling; parallel markets in planned economies”;

 

and one Suby Roy described his interests as

 

“foundations of monetary economics”.

 

Reflecting on Amartya Sen’s works over the 40 year period that I have known them

 

[and again, my personal copies of his books and those of Bhagwati and Desai, were all in my professorial office at IIT Kharagpur when I was attacked by a corrupt gang there in 2003; and IIT have been under a High Court order to return them but have not done so],

 

I wonder in fact if it might be fairly said that Sen has been on his own subjective journey over the decades around the world seeking to reinvent economics and political economy from scratch, and inventing his own terminology like “capabilities”, “functionings” and yes “entitlements” etc. to help him do so, while trying to assiduously avoid mention of canonical works of  modern world economics like Marshall’s Principles, Hicks’s Value and Capital, Debreu’s Theory of Value, or Arrow and Hahn’s General Competitive Analysis, all defining the central neoclassical tradition of the modern theory of value.  

 

But no contemporary science, economics and political economy included, is open to be re-invented from scratch, and what Amartya Sen has ended up doing instead is seeming to be continually trying to reinvent the wheel, possibly without having had the self-knowledge to realise this.  Wittgenstein once made a paradoxical statement that one may know another’s mind better than one knows one’s own…  

Here is a current example.  Professor Sen says

 

“First, unlike the process of development in Japan, China, Korea and other countries, which pursued what Jean Drèze and I have called “Asian economic development” in our book, India has not had enough focus on public spending on school education and basic healthcare, which these other countries have had….”

 

Does Sen really believes believe he and Drèze  have now in 2013 discovered and christened an economic phenomenon named “Asian economic development”?  Everyone, from Japan and Bangkok and Manila, to Hawaii and Stanford to the World Bank’s East Asia department, including  especially my Hawaii colleague Ted James, and many many others including especially Gerald M Meier at Stanford, were was publishing about all that every month — in the mid 1980s!  In fact, our project on India and Pakistan arose in the 1980s from precisely such a Hawaiian wave!  Everyone knows all that from back then or even earlier when the Japanese were talking about the “flying geese” model.  (And, incidentally,  Communist China did not at the time belong in the list.)  Where was Amartya Sen in the mid 1980s when all that was happening?  Jean Drèze was still a student perhaps. Is Professor Sen seeking to reinvent the wheel again with “Asian Economic Development” being claimed to be invented in 2013 by him and Drèze now? Oh please!  That just won’t fly either!

 

A second example may be taken from the year before Professor Sen was awarded the Bank of Sweden Prize when he gave a lecture on “human capital” theory which was published as a survey titled “Human Capital and Human Capability” in World Development 1997 Vol. 25, No. 12, 

 

Can you see any reference in this 1997 survey to TW Schultz’s 1960 American Economic Association Presidential Address or to Schultz’s classic 1964 book Transforming Traditional Agriculture or to his 1979 Bank of Sweden Prize address?  I could not.   If one did not know better, one might have thought from Professor Sen’s 1997 survey that there was nothing done worth talking about on the subject of “human capital” from the time of Adam Smith and David Hume until Amartya Sen finally came to the subject himself. 

 

Thirdly,  one is told by Sen’s admirer and collaborator, Professor James Foster of George Washington University, that what  Sen means by his notion of

 

“effective freedom”

 

is that this is something

 

“enhanced when a marginally nourished family now has the capability to be sufficiently nourished due to public action”…

 

Are Amartya and his acolytes claiming he has invented or reinvented welfare economics ab initio?   That before Amartya Sen, we did not know the importance of the able-bodied members of a community assisting those who are not able-bodied? 

 

Where have they been? Amartya needed merely to have read Marshall’s Principles evenslightly to find Marshall himself, the master of Maynard Keynes and all of Cambridge and modern world economics, declaring without any equivocation at the very start 

 

“….the study of the causes of poverty is the study of the causes of the degradation of a large part of mankind…”

 

But Marshall was interested in study, serious study, of poverty and its causes and amelioration, which is not something as easy or trivial as pontification on modern television.  My 1984 article “Considerations on Utility, Benevolence and Taxation” which also became a chapter of my 1989 Philosophy of Economics surveyed some of Marshall’s opinion.

 

“From each according to his ability, to each according to his need” was a utopian slogan around 1875 from Karl Marx, which generations of passionate undergraduates have found impressive. Amartya Sen deserves to tell us squarely about his engagement with Marx or Marxist thought from his earliest days until now.  His commitment in recent decades to democracy and the open and free society is clear;  but has he also at the same time all along been committed to a kind of half-baked communist utopia as represented by Marx’s 1875 slogan? 

 

“To each according to his need” sounds to be the underlying premise that is seeing practical manifestation in the Sonia Congress’s imposition of a so-called “right to food”; “from each according to his ability” is its flip side in the so-called “rural employment guarantee”.  Leave aside the limitless resource-allocation and incentive and public finance problems created by such naive ideas being made into government policy, there is a grave and fundamental issue that Amartya and other leftists have been too blinkered to see:

 

Do they suppose the organised business classes have been weakly cooperative and will just allow such massive redistribution to occur without getting the Indian political system to pay them off as well?   And how do the organised business classes get paid off?  By their getting to take the land of the inhabitants of rural India.   And land in an environment of a debauching of money and other paper assets is as good as gold.

 

So the peasants will lose their land to the government’s businessman friends on the one hand while purportedly getting “guaranteed” employment and food from the government’s bureaucrats on the other!  A landless, asset-less slave population, free to join the industrial proletariat! Is that what Amartya wants to see in India?  It may become what results within a few decades from his and his acolytes’ words and deeds. 

 

Rajiv Gandhi once gave me his private phone numbers at 10 Jan Path.  I used them back in January 1991 during the Gulf war.  But I cannot do so now as Rajiv is gone.  Amartya can.  Let him phone Sonia and prevail upon her to put the brakes on the wild food and employment schemes he and his friends have persuaded her about until he reads and reflects upon what I said in January 2007 in “On Land-Grabbing” and in my July 2007 open letter to him, reproduced below:

 

“At a business meet on 12 January 2005, Dr Manmohan Singh showered fulsome praise on Buddhadeb Bhattacharjee as “dynamic”, “the Nation’s Best Chief Minister”, whose “wit and wisdom”, “qualities of head and heart”, “courage of conviction and passionate commitment to the cause of the working people of India” he admired, saying “with Buddhadeb Babu at the helm of affairs it appears Bengal is once again forging ahead… If today there is a meeting of minds between Delhi and Kolkata, it is because the ideas that I and Buddhadebji represent have captured the minds of the people of India. This is the idea of growth with equity and social justice, the idea that economic liberalization and modernization have to be mindful of the needs of the poor and the marginalized.”…. Dr Singh returned to the “needs of the poor and the marginalized” at another business meet on 8 January 2007 promising to “unveil a new Rehabilitation Policy in three months to increase the pace of industrialisation” which would be “more progressive, humane and conducive to the long-term welfare of all stakeholders”, while his businessman host pointedly stated about Singur “land for industry must be made available to move the Indian manufacturing sector ahead”. The “meeting of minds between Delhi and Kolkata” seems to be that agriculture allegedly has become a relatively backward slow-growing sector deserving to yield in the purported larger national interest to industry and services: what the PM means by “long-term welfare of all stakeholders” is the same as the new CPI-M party-line that the sons of farmers should not remain farmers (but become automobile technicians or IT workers or restaurant waiters instead).   It is a political viewpoint coinciding with interests of organised capital and industrial labour in India today, as represented by business lobbies like CII, FICCI and Assocham on one hand, and unions like CITU and INTUC on the other. Business Standard succinctly (and ominously) advocated this point of view in its lead editorial of 9 January as follows: “it has to be recognised that the world over capitalism has progressed only with the landed becoming landless and getting absorbed in the industrial/service sector labour force ~ indeed it is obvious that if people don’t get off the land, their incomes will rise only slowly”.  Land is the first and ultimate means of production, and the attack of the powerful on land-holdings or land-rights of the unorganised or powerless has been a worldwide phenomenon ~ across both capitalism and communism.  In the mid-19th Century, white North America decimated hundreds of thousands of natives in the most gargantuan land-grab of history. Defeated, Chief Red Cloud of the Sioux spoke in 1868 for the Apache, Navajo, Comanche, Cheyenne, Iroquois and hundreds of other tribes: “They made us many promises, more than I can remember, but they never kept any except one: they promised to take our land, and they took it.”  Half a century later, while the collapse of grain prices contributed to the Great Depression and pauperisation of thousands of small farmers in capitalist America in the same lands that had been taken from the native tribes, Stalin’s Russia embarked on the most infamous state-sponsored land-grab in modern history: “The mass collectivisation of Soviet agriculture (was) probably the most warlike operation ever conducted by a state against its own citizens…. Hundreds of thousands and finally millions of peasants… were deported… desperate revolts in the villages were bloodily suppressed by the army and police, and the country sank into chaos, starvation and misery… The object of destroying the peasants’ independence…was to create a population of slaves, the benefit of whose labour would accrue to industry. The immediate effect was to reduce Soviet agriculture to a state of decline from which it has not yet recovered… The destruction of the Soviet peasantry, who formed three quarters of the population, was not only an economic but a moral disaster for the entire country. Tens of millions were driven into semi-servitude, and millions more were employed as executants…” (Kolakowski, Main Currents of Marxism).   Why did Stalin destroy the peasants? Lenin’s wishful “alliance between the proletariat and the peasantry” in reality could lead only to the peasants being pauperised into proletarians. At least five million peasants died and (Stalin told Churchill at Yalta) another ten million in the resultant famine of 1932-1933. “Certainly it involved a struggle ~ but chiefly one between urban Communists and villagers… it enabled the regime to obtain much of the capital desired for industrialization from the defeated village… it was the decisive step in the building of Soviet totalitarianism, for it imposed on the majority of the people a subjection which only force could maintain” (Treadgold, 20th Century Russia).  Mr Bhattacharjee’s CPI-M is fond of extolling Chinese communism, and the current New Delhi establishment have made Beijing and Shanghai holiday destinations of choice. Dr Singh’s Government has been eager to create hundreds of “Special Economic Zones” run by organised capital and unionised labour, and economically privileged by the State. In fact, the Singur and Nandigram experiences of police sealing off villages where protests occur are modelled on creation of “Special Economic Zones” in China in recent years.  For example, Chinese police on 6 December 2005 cracked down on farmers and fishermen in the seaside village of Dongzhou, 125 miles North East of Hong Kong. Thousands of Dongzhou villagers clashed with troops and armed police protesting confiscation of their lands and corruption among officials. The police immediately sealed off the village and arrested protesters. China’s Public Security Ministry admitted the number of riots over land had risen sharply, reaching more than seventy thousand across China in 2004; police usually suppressed peasant riots without resort to firing but in Dongzhou, police firing killed 20 protesters. Such is the reality of the “emergence” of China, a totalitarian police-state since the Communist takeover in 1949, from its period of mad tyranny until Mao’s death in 1976, followed by its ideological confusion ever since.  Modern India’s political economy today remains in the tight grip of metropolitan “Big Business” and “Big Labour”. Ordinary anonymous individual citizens ~ whether housewife, consumer, student, peasant, non-union worker or small businessman ~ have no real voice or representation in Indian politics. We have no normal conservative, liberal or social democratic party in this country, as found in West European democracies where the era of land-grabbing has long-ceased. If our polity had been normal, it would have known that economic development does not require business or government to pauperise the peasantry but instead to define and secure individual property rights and the Rule of Law, and establish proper conditions for the market economy. The Congress and BJP in Delhi and CPI-M in Kolkata would not have been able to distract attention from their macroeconomic misdeeds over the decades ~ indicated, for example, by increasing interest-expenditure paid annually on Government debt as a fraction of tax revenues… This macroeconomic rot originated with the Indira Gandhi-PN Haksar capriciousness and mismanagement, which coincided with the start of Dr Singh’s career as India’s best known economic bureaucrat….”

 

“Professor Amartya Sen, Harvard University,  Dear Professor Sen,  Everyone will be delighted that someone of your worldwide stature has joined the debate on Singur and Nandigram; The Telegraph deserves congratulations for having made it possible on July 23.  I was sorry to find though that you may have missed the wood for the trees and also some of the trees themselves. Perhaps you have relied on Government statements for the facts. But the Government party in West Bengal represents official Indian communism and has been in power for 30 years at a stretch. It may be unwise to take at face-value what they say about their own deeds on this very grave issue! Power corrupts and absolute power corrupts absolutely, and there are many candid communists who privately recognise this dismal truth about themselves. To say this is not to be praising those whom you call the “Opposition” ~ after all, Bengal’s politics has seen emasculation of the Congress as an opposition because the Congress and communists are allies in Delhi. It is the Government party that must reform itself from within sua sponte for the good of everyone in the State.  The comparisons and mentions of history you have made seem to me surprising. Bengal’s economy now or in the past has little or nothing similar to the economy of Northern England or the whole of England or Britain itself, and certainly Indian agriculture has little to do with agriculture in the new lands of Australia or North America. British economic history was marked by rapid technological innovations in manufacturing and rapid development of social and political institutions in context of being a major naval, maritime and mercantile power for centuries. Britain’s geography and history hardly ever permitted it to be an agricultural country of any importance whereas Bengal, to the contrary, has been among the most agriculturally fertile and hence densely populated regions of the world for millennia.  Om Prakash’s brilliant pioneering book The Dutch East India Company and the Economy of Bengal 1630-1720 (Princeton 1985) records all this clearly. He reports the French traveller François Bernier saying in the 1660s “Bengal abounds with every necessary of life”, and a century before him the Italian traveller Verthema saying Bengal “abounds more in grain, flesh of every kind, in great quantity of sugar, also of ginger, and of great abundance of cotton, than any country in the world”. Om Prakash says “The premier industry in the region was the textile industry comprising manufacture from cotton, silk and mixed yarns”. Bengal’s major exports were foodstuffs, textiles, raw silk, opium, sugar and saltpetre; imports notably included metals (as Montesquieu had said would always be the case).  Bengal did, as you say, have industries at the time the Europeans came but you have failed to mention these were mostly “agro-based” and, if anything, a clear indicator of our agricultural fecundity and comparative advantage. If “deindustrialization” occurred in 19th Century India, that had nothing to do with the “deindustrialization” in West Bengal from the 1960s onwards due to the influence of official communism.  You remind us Fa Hiaen left from Tamralipta which is modern day Tamluk, though he went not to China but to Ceylon. You suggest that because he did so Tamluk effectively “was greater Calcutta”. I cannot see how this can be said of the 5th Century AD when no notion of Calcutta existed. Besides, modern Tamluk at 22º18’N, 87º56’E is more than 50 miles inland from the ancient port due to land-making that has occurred at the mouth of the Hooghly. I am afraid the relevance of the mention of Fa Hiaen to today’s Singur and Nandigram has thus escaped me.  You say “In countries like Australia, the US or Canada where agriculture has prospered, only a very tiny population is involved in agriculture. Most people move out to industry. Industry has to be convenient, has to be absorbing”. Last January, a national daily published a similar view: “For India to become a developed country, the area under agriculture has to shrink, urban and industrial land development has to take place, and about 100 million workers have to move out from agriculture into industry and services. This is the only way forward for bringing prosperity to the rural population”.   Rice is indeed grown in Arkansas or Texas as it is in Bengal but there is a world of difference between the technological and geographical situation here and that in the vast, sparsely populated New World areas with mechanized farming! Like shoe-making or a hundred other crafts, agriculture can be capital-intensive or labour-intensive ~ ours is relatively labour-intensive, theirs is relatively capital-intensive. Our economy is relatively labour-abundant and capital-scarce; their economies are relatively labour-scarce and capital-abundant (and also land-abundant). Indeed, if anything, the apt comparison is with China, and you doubtless know of the horror stories and civil war conditions erupting across China in recent years as the Communist Party and their businessman friends forcibly take over the land of peasants and agricultural workers, e.g. in Dongzhou. All plans of long-distance social engineering to “move out” 40 per cent of India’s population (at 4 persons per “worker”) from the rural hinterlands must also face FA Hayek’s fundamental question in The Road to Serfdom: “Who plans whom, who directs whom, who assigns to other people their station in life, and who is to have his due allotted by others?”  Your late Harvard colleague, Robert Nozick, opened his brilliant 1974 book Anarchy, State and Utopia saying: “Individuals have rights, and there are things no person or group may do to them (without violating their rights)”. You have rightly deplored the violence seen at Singur and Nandigram. But you will agree it is a gross error to equate violence perpetrated by the Government which is supposed to be protecting all people regardless of political affiliation, and the self-defence of poor unorganised peasants seeking to protect their meagre lands and livelihoods from state-sponsored pogroms. Kitchen utensils, pitchforks or rural implements and flintlock guns can hardly match the organised firepower controlled by a modern Government.   Fortunately, India is not China and the press, media and civil institutions are not totally in the hands of the ruling party alone. In China, no amount of hue and cry among the peasants could save them from the power of organised big business and the Communist Party. In India, a handful of brave women have managed to single-handedly organise mass movements of protest which the press and media have then broadcast that has shocked the whole nation to its senses.  You rightly say the land pricing process has been faulty. Irrelevant historical prices have been averaged when the sum of discounted expected future values in an inflationary economy should have been used. Matters are even worse. “The fear of famine can itself cause famine. The people of Bengal are afraid of a famine. It was repeatedly charged that the famine (of 1943) was man-made.” That is what T. W. Schultz said in 1946 in the India Famine Emergency Committee led by Pearl Buck, concerned that the 1943 Bengal famine should not be repeated following dislocations after World War II. Of course since that time our agriculture has undergone a Green Revolution, at least in wheat if not in rice, and a White Revolution in milk and many other agricultural products. But catastrophic collapses in agricultural incentives may still occur as functioning farmland comes to be taken by government and industry from India’s peasantry using force, fraud or even means nominally sanctioned by law. If new famines come to be provoked because farmers’ incentives collapse, let future historians know where responsibility lay.  West Bengal’s real economic problems have to do with its dismal macroeconomic and fiscal position which is what Government economists should be addressing candidly. As for land, the Government’s first task remains improving grossly inadequate systems of land-description and definition, as well as the implementation and recording of property rights.  With my most respectful personal regards, I remain, Yours ever, Suby”

 

How does India, as a state, treat its weakest and most vulnerable citizens? Not very well at all.  It is often only because families and society have not collapsed completely, as they have elsewhere, that the weakest survive.  Can we solve in the 21st Century, in a practical manner appropriate to our times, the problem Buddha raised before he became the Buddha some twenty six centuries ago?  Says Eliot,

 

“The legend represents him as carefully secluded from all disquieting sights and as learning the existence of old age, sickness and death only by chance encounters which left a profound impression”

 

It is to this list we add “the poor” too, especially if we want to include a slightly later and equally great reformer some miles west of the Terai in the Levant.  I said some years ago “As we as infants and children need to be helped to find courage to face the start of life, we when very elderly can need to be helped to find courage to face life’s end”.   Old age carries with it the fear of death, fear of the end of life and what that means, which raises the meaning of life itself, or at least of the individual life, because we can hardly grasp what the end of life is if we haven’t what it is supposed to be the end of in the first place. What the very elderly need, as do the dying and terminally ill, is to find courage within themselves to comprehend all this with as much equanimity as possible. Companionship and camaraderie — or perhaps let us call it love — go towards that courage coming to be found; something similar goes for the sick, whether a sick child missing school or the elderly infirm, courage that they are not alone and that they can and will recover and not have to face death quite yet, that life will indeed resume.  

 

As for the poor, I said in 2009 about the bizarre Indian scheme of “interrogating, measuring, photographing and fingerprinting them against their will” that “the poor have their privacy and their dignity. They are going to refuse to waste their valuable time at the margins of survival volunteering for such gimmickry.”

 

“What New Delhi’s governing class fails to see is that the masses of India’s poor are not themselves a mass waiting for New Delhi’s handouts: they are individuals, free, rational, thinking individuals who know their own lives and resources and capacities and opportunities, and how to go about living their lives best. What they need is security, absence of state or other tyranny, roads, fresh water, electricity, functioning schools for their children, market opportunities for work, etc, not handouts from a monarch or aristocrats or businessmen….” Or, to put it differently in Kant’s terms, the poor need to be treated as ends in themselves, and not as the means towards the ends of others…

 

 

Part II India’s Right Road Forward Now: Some Thoughtful Analysis for Grown Ups

 

5.   Transcending a Left-Right/Congress-BJP Divide in Indian Politics

6.   Budgeting Military & Foreign Policy

 

7.    Solving the Kashmir Problem & Relations with Pakistan

 

8.  Dealing with Communist China

 

9.   Towards Coherence in Public Accounting, Public Finance & Public Decision-Making

 

10.   India’s Money: Towards Currency Integrity at Home & Abroad

Posted in Academic research, Amartya Sen, Arvind Panagariya, Asia and the West, Bengal's Public Finances, Bhagwati-Sen spat, BJP, Britain in India, Cambridge Univ Economics, Cambridge University, Columbia University, Congress Party, Congress Party History, Credit markets, Economic inequality, Economic Policy, Economic quackery, Economic Theory, Economic Theory of Growth, Economic Theory of Interest, Economic Theory of Value, Economics of Public Finance, Financial Repression, Governance, Government accounting, Government of India, India's Big Business, India's Cabinet Government, India's Government economists, India's 1991 Economic Reform, India's balance of payments, India's Budget, India's bureaucracy, India's Capital Markets, India's constitutional politics, India's corruption, India's currency history, India's Economic History, India's Economy, India's Exports, India's Foreign Exchange Reserves, India's Government Budget Constraint, India's Industry, India's inflation, India's Macroeconomics, India's Monetary & Fiscal Policy, India's Polity, India's Public Finance, India's Reserve Bank, India's State Finances, Institute of Economic Affairs, Jagdish Bhagwati, Jean Drèze, LK Advani, Manmohan Singh, Margaret Thatcher's Revolution, Mihir Kumar Roy (MKRoy), Milton Friedman, Money and banking, Padma Desai, Paper money and deposits, Political Economy, Public Choice/Public Finance, Public property waste fraud, Rajiv Gandhi, Rajiv Gandhi's assassination, Reverse-Euro Model for India, Sen-Bhagwati spat, Siddhartha Shankar Ray, Sonia Gandhi, Subroto Roy, Sukhamoy Chakravarty, The Times (London), University of Hawaii, William E (Ted) James (1951-2010). Leave a Comment »

Cambridge Economics & the Disputation in India’s Economic Policy (2013)

19 May 2013

“Manmohan and Sonia have violated Rajiv Gandhi’s intended reforms; the Communists have been appeased or bought; the BJP is incompetent”

is what I said in Sep 2007 in an op-ed in The Statesman. I have to say it again, adding Amartya Sen too for his backing of the so-called “Food Security Bill”…

[Sonia was livid in a speech after I said in 2007 “Manmohan and Sonia have violated Rajiv Gandhi’s intended reforms” … Her stooges wanted me arrested! One said “lined up and shot”… Then she said she only meant to refer to Haryana politics! … https://twitter.com/subyroy/status/1064737873746976768  ]

 

But taking Sonia and Rajiv out of it all, we are left with a battle from within Cambridge economics, viz,

Sen and Singh (disciples of Joan Robinson, Kaldor, Dobb et al in the 1950s)

vs

myself … in my PhD thesis of 1981 under Frank Hahn...

PhD

 15 July 2013

I am afraid I cannot remember a cogent coherent book authored by Amartya Sen since his 1972 *On Economic Inequality*, which had nice surveys of the Gini coefficient and related concepts…

My 2006 conversation with him about his book *Identity and Violence* is here.  (see too Is “Cambridge Philosophy” dead, in Cambridge? Can it be resurrected, there? Case Study: Renford Bambrough (& Subroto Roy) preceded by decades Cheryl Misak’s thesis on Wittgenstein being linked with Peirce via Ramsey…”

I now see he and a co-author seem to have produced yet one more piece of extended undergraduate waffle…E.g. “If development is about the expansion of freedom, it has to embrace the removal of poverty as well as paying attention to ecology as integral parts of a unified concern, aimed ultimately at the security and advancement of human freedom. Indeed, important components of human freedoms — and crucial ingredients of our quality of life — are thoroughly dependent on the integrity of the environment, involving the air we breathe, the water we drink, and the epidemiological surroundings in which we live….”

See also https://independentindian.com/2013/08/23/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-encounter-with-rajiv-gandhi-just-as-siddhartha-shan/

15 July 2013

Where is Amartya’s reply to this?

scan0001

And where is Manmohan’s reply to this?

ppp19842

And where is Manmohan’s reply to this?

602593_10151152229307285_27628359_n

And Manmohan was given a copy of this

indvol

by me at a luncheon at the Indian Embassy Residence in Washington in September 1993 when the Ambassador, the late Barrister SS Ray, told him in the presence of all his senior aides including Montek Ahluwalia and C. Rangarajan, that I had authored the 1991 reform for the then-dead Rajiv Gandhi… on my laptop…

So, to cut to the chase, I have not and do not accept that either Amartya Sen or Manmohan Singh have been leaders of economic thought about India at least (US and British economists can judge for themselves the impact of the former on their own economics). The Sonia Congress has misled itself on the basis of their advocacy and the pity is the BJP, Communists et al in India seem to be even worse…

See also https://independentindian.com/2013/08/23/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-encounter-with-rajiv-gandhi-just-as-siddhartha-shan/

Twenty Years Ago in New Delhi March 18-23 1991: Excerpt from “Rajiv Gandhi & the Origins of India’s 1991 Economic Reform”

Twenty Years Ago in New Delhi March 18-23 1991: Excerpt from https://independentindian.com/thoughts-words-deeds-my-work-1973-2010/rajiv-gandhi-and-the-origins-of-indias-1991-economic-reform/

“I returned to Delhi on Monday, March 18, 1991 as new elections had been announced.  Rasgotra said I should be in touch with Krishna Rao, and the next day March 19 Krishna Rao met me for several hours. I told him what I thought were the roots and results of the Gulf war. He in turn generously told me what had happened while I had been away. He said the group had met Rajiv in December with the proposal that Rajiv better organize his time by having an “office manager” of larger political stature than George. The name of a UP Congressman of integrity had been put forward, but nothing had come of it. Rajiv had been advised to keep Chandrashekhar in power through the autumn of 1991, as Chandrashekhar was doing Rajiv’s work for him of sidelining V. P. Singh. The idea was to cooperate with Chandrashekhar until he could be pushed up to the Presidency when that fell vacant. Rajiv had been advised not to work in a Chandrashekhar cabinet, though in my opinion, had we been like the Scandinavians, it was not impossible for a former prime minister to enter another cabinet on the right terms in the national interest of providing stable government, which was imperative at the time. Things seem to have slipped out of control when Chandrashekhar resigned. At that point, Rajiv called the group together and instructed them to write a draft of the manifesto for the impending elections. I had advised readiness back in September but the lack of organization had prevented much tangible progress at the time. Our group was to now report to a political manifesto-committee of three senior party leaders who would report to Rajiv. They were Narasimha Rao, Pranab Mukherjee and Madhavsingh Solanki. Krishna Rao liased with Narasimha Rao, Krishnamurty with Mukherjee, Pitroda with Solanki. While Rajiv would obviously lead a new Congress Government, Mukherjee was the presumptive Finance Minister, while Narasimha Rao and Solanki would have major portfolios though Narasimha Rao was expected to retire before too long.

Krishna Rao said I should be in touch with Krishnamurty who was preparing the economic chapters of the draft of the manifesto. Krishnamurty told me he had brought in A. M. Khusro to the group, and there would be a 5 p.m. meeting at Khusro’s office at the Aga Khan Foundation. I arrived early and was delighted to meet Khusro, and he seemed pleased to meet me. Khusro seemed excited by my view that India and Pakistan were spending excessively on defence against each other, which resonated with his own ideas, and he remarked the fiscal disarray in India and Pakistan could start to be set right by mutually agreed cuts in military spending. (Khusro was eventually to accompany Prime Minister Vajpayee to Lahore in 1999).

Krishnamurty had prepared a draft dated March 18 of several pages of the economic aspects of the manifesto. After our discussions, Krishnamurty was hospitable enough to open the draft to improvement. That evening, the 19th, I worked through the night and the next morning to get by noon copies of a revised version with all the members of the group. At 4 p.m. on the 20th there was a meeting at Andhra Bhavan of the whole group except Pitroda, which went on until the night. The next day the 21st , Krishnamurty, Khusro and I met again at Andhra Bhavan for a few hours on the economic aspects of the draft. Then in mid-afternoon I went to Rasgotra’s home to work with him and Krishna Rao. They wanted me to produce the economic draft which they could then integrate as they wished into the material they were dictating to a typist. I offered instead to absorb their material directly on to my laptop computer where the economic draft was. Rasgotra was reluctant to let go control, and eventually I gave in and said I would get them a hard copy of the economic draft, which they then planned to re-draft via a stenographer on a typewriter. At this, Rasgotra gave in and agreed to my solution. So the work began and the three of us continued until late.

That night Krishna Rao dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. Krishna Rao asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.

This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the V. P. Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization.

The next day, Friday March 22, I worked from dawn to get the penultimate draft to Krishna Rao before noon as planned the night before. Rasgotra arrived shortly, and the three of us worked until evening to finish the job. I left for an hour to print out copies for a meeting of the entire group, where the draft we were going to submit would come to be decided. When I got back I found Rasgotra had launched an extended and quite unexpected attack on what had been written on economic policy. Would someone like Manmohan Singh, Rasgotra wanted to know, agree with all this talk we were putting in about liberalization and industrial efficiency? I replied I did not know what Manmohan Singh’s response would be but I knew he had been in Africa heading something called the South-South Commission for Julius Nyrere of Tanzania. I said what was needed was a clear forceful statement designed to restore India’s credit-worthiness, and the confidence of international markets. I said that the sort of thing we should aim for was to make clear, e.g. to the IMF’s man in Delhi when that person read the manifesto, that the Congress Party at least knew its economics and was planning to make bold new steps in the direction of progress. I had argued the night before with Rasgotra that on foreign policy we should “go bilateral” with good strong ties with individual countries, and drop all the multilateral hogwash. But I did not wish to enter into a fight on foreign policy which he was writing, so long as the economic policy was left the way we said. Krishnamurty, Khusro and Pitroda came to my defence saying the draft we had done greatly improved on the March 18 draft. For a bare half hour or so with all of us present, the draft was agreed upon. Later that night at Andhra Bhavan, I gave Krishna Rao the final copy of the draft manifesto which he was going to give Narasimha Rao the next day, and sent a copy to Krishnamurty who was liaising with Pranab Mukherjee. Pitroda got a copy on a floppy disc the next day for Solanki.

In its constructive aspects, the March 22 1991 draft of the Congress manifesto went as follows with regard to economic policy: “CHAPTER V AGENDA FOR ECONOMIC ACTION 1. Control of Inflation …. The Congress believes the inflation and price-rise of essential commodities… is a grave macroeconomic problem facing the country today. It has hit worst the poorest and weakest sections of our people and those with fixed incomes like pensioners. The Congress will give highest priority to maintaining the prices of essential commodities, increasing their production and supply using all appropriate economic instruments. 2. Macroeconomic Policy Framework To control inflation of the general price-level, the Congress will provide a predictable long-term policy framework. The average Indian household and business will not have their lives and plans disrupted by sudden changes in economic policy. Coherent monetary policy measures will be defined as called for by the Report of Experts of the Reserve Bank of India in 1985. The Long-Term Fiscal Policy introduced by the Congress Government of 1984-1989 will be revived. Medium and long-term export-import policies will be defined. The basis for a strong India must be a strong economy. The Congress believes a high rate of real growth is essential for securing a strong national defence, social justice and equity, and a civilized standard of living for all. As the party of self-reliance, Congress believes resources for growth must be generated from within our own economy. This means all wasteful and unproductive Government spending has to be cut, and resources transferred from areas of low priority to areas of high national priority. Subsidies have to be rationalized and reduced, and productivity of investments already made has to be improved. The widening gap between revenue receipts and revenue expenditure must be corrected through fiscal discipline, and the growing national debt brought under control as a matter of high priority. These policies in a consistent framework will create the environment for the freeing of the rupee in due course, making it a hard currency of the world of which our nation can be proud. Public resources are not unlimited. These have to be allocated to high priority areas like essential public services, poverty-reduction, strategic sectors, and protection of the interests of the weaker sections of society. Government has to leave to the initiative and enterprise of the people what can be best done by themselves. Government can now progressively vacate some areas of activity to the private, cooperative and non-government sectors. Black money in the parallel economy has become the plague of our economic and political system. This endangers the social and moral fabric of our nation. Artificial price controls, excessive licensing, capacity restrictions, outmoded laws on rent control and urban ceiling, and many other outdated rules and regulations have contributed to pushing many honest citizens into dishonest practices. The Congress will tackle the problem of black money at its roots by attacking all outmoded and retrograde controls, and simplifying procedures in all economic spheres. At the same time, the tax-base of the economy must be increased via simplification and rationalization of tax-rates and coverage, user-fees for public goods, and reduction of taxes wherever possible to improve incentives and stimulate growth. 3. Panchayati Raj India’s farmers and khet mazdoors are the backbone of our economy. Economic development is meaningless until their villages provide them a wholesome rural life. The Congress will revitalize Panchayat Raj institutions to decentralize decision-making, so development can truly benefit local people most effectively. 4. Rural Development Basic economic infrastructure like roads, communications, fresh drinking water, and primary health and education for our children must reach all our villages. The Congress believes such a policy will also relieve pressures from migration on our towns and cities…… Through the Green Revolution which the Congress pioneered over 25 years, our farmers have prospered. Now our larger farmers must volunteer to contribute more to the national endeavour, and hence to greater equity and overall economic development. Equity demands land revenue should be mildly graduated so that small farmers holding less than one acre pay less land revenue per acre…. 9. Education and Health The long-run prosperity of our nation depends on the general state of education, health and well-being of our people. Small families give themselves more choice and control over their own lives. Improving female literacy, promoting the welfare of nursing mothers and reducing infant mortality will have a direct bearing on reducing the birth-rate and improving the health and quality of all our people. Primary and secondary education has high social returns and is the best way in the long-run for achievement of real equality. Efforts will be made to reduce the cost of education for the needy through concessional supply of books and other study materials, scholarships and assistance for transportation and residential facilities. The Congress Party pledges to dedicate itself to promoting education, especially in rural areas and especially for girls and the weaker sections of society. The next Congress Government will prepare and launch a 10-year programme for introduction of free and compulsory primary education for all children of school age. It will continue to emphasize vocational bias in education, integrating it closely with employment opportunities…. 11. Industrial Efficiency Our industrial base in the private and public sectors are the core of our economy. What we have achieved until today has been creditable, and we are self-reliant in many areas. Now the time has come for industry to provide more efficiency and better service and product-quality for the Indian consumer. The public sector has helped the Indian economy since Independence and many national goals have been achieved. Now it has become imperative that the management of public sector units is made effective, and their productivity increased. Major steps must be taken for greater accountability and market-orientation. Failure to do this will make our country lose more and more in the international economy. Budgetary support will be given only for public sector units in the core and infrastructure sectors. Emphasis will be on improving performance and productivity of existing investments, not on creating added organizations or over manning. Units not in the core sector will be privatised gradually. Even in core sectors like Telecommunications, Power, Steel and Coal, incremental needs can be taken care of by the private sector. The Government-Enterprise interface must be properly defined in a White Paper. The Congress believes privatisation must distribute the profits equitably among the people of India. In order to make our public enterprises truly public, it is essential that the shares of many such enterprises are widely held by the members of the general public and workers. Congress pledges to allot a proportion of such shares to the rural Panchayats and Nagarpalikas. This will enhance their asset-base and yield income for their development activities, as well as improve income-distribution. 12. Investment and Trade Indian industry, Government and professional managers are now experienced enough to deal with foreign companies on an equal footing, and channel direct foreign investment in desired directions. Foreign companies often bring access to advanced technological know-how, without which the nation cannot advance. The Congress Government will formulate a pragmatic policy channelling foreign investment into areas important to the national interest. Every effort must be made also to encourage Indians who are outside India to invest in the industry, trade and real estate of their homeland. Because of the protected and inflationary domestic market, Indian industry has become complacent and the incentive for industrial exports has been weakened. When all production is comfortably absorbed at home, Indian industry makes the effort to venture into exports only as a last resort. This must change. A Congress Government will liberalize and deregulate industry to make it competitive and export-oriented, keeping in mind always the interests of the Indian consumer in commercial policy. Export-oriented and predictable commercial policies will be encouraged. Existing procedural constraints and bottlenecks will be removed. Quotas and tariffs will be rationalized. Thrust areas for export-development will be identified and monitored. Efforts will be made to develop a South Asian Community. Trade and economic cooperation among South Asian countries must be increased and simplified.”

This March 22 1991 draft of the Congress’s intended economic policies got circulated and discussed, and from it rumours and opinions appeared that Congress was planning to launch a major economic reform in India. Economic Times said the manifesto “is especially notable for its economic agenda” and Business Standard said “if party manifestos decide election battles” Congress must be “considered home and dry”. A senior IMF official told me three years later the manifesto had indeed seemed a radical and bold move in the direction of progress, which had been exactly our intended effect.

When I met Manmohan Singh at the residence of S. S. Ray in September 1993 in Washington, Ray told him and his senior aides the Congress manifesto had been written on my computer. Manmohan Singh smiled and said that when Arjun Singh and other senior members of the Congress had challenged him in the cabinet, he had pointed to the manifesto. Yet, oddly enough, while the March 22 draft got discussed and circulated, and the Indian economic reform since July 1991 corresponded in fundamental ways to its contents as reproduced above, the actual published Congress manifesto in April 1991 was as tepid and rhetorical as usual, as if some party hack had before publication put in the usual nonsense about e.g. bringing down inflation via price-controls. Certainly the published manifesto was wholly undistinguished in its economic aspects, and had nothing in it to correspond to the bold change of attitude towards economic policy that actually came to be signalled by the 1991 Government.

On March 23, our group was to meet Rajiv at noon. There was to be an event in the inner lawns of Rajiv’s residence in the morning, where he would launch Krishna Rao’s book on India’s security. Krishna Rao had expressly asked me to come but I had to wait outside the building patiently, not knowing if it was a mistake or if it was deliberate. This was politics after all, and I had ruffled feathers during my short time there. While I waited, Rajiv was speaking to a farmers’ rally being held at grounds adjoining his residence, and there appeared to be thousands of country folk who had gathered to hear him. When it was over, Rajiv, smiling nervously and looking extremely uncomfortable, was hoisted atop people’s shoulders and carried back to the residence by his audience. As I watched, my spine ran cold at the thought that any killer could have assassinated him with ease in that boisterous crowd, right there in the middle of Delhi outside his own residence. It was as if plans for his security had been drawn up without any strategic thinking underlying them.

Krishna Rao arrived and graciously took me inside for his book launch. The event was attended by the Congress’s top brass, including Narasimha Rao whom I met for the first time, as well as foreign military attaches and officers of the Indian armed forces. The attaché of one great power went about shaking hands and handing out his business card to everyone. I stood aside and watched. Delhi felt to me that day like a sieve, as if little could be done without knowledge of the embassies. One side wanted to sell arms, aircraft or ships, while the other wanted trips abroad or jobs or green cards or whatever for their children. And I thought Islamabad would be worse — could India and Pakistan make peace in this fetid ether?

Proceedings began when Rajiv arrived. This elite audience mobbed him just as the farmers had mobbed him earlier. He saw me and beamed a smile in recognition, and I smiled back but made no attempt to draw near him in the crush. He gave a short very apt speech on the role the United Nations might have in the new post-Gulf War world. Then he launched the book, and left for an investiture at Rashtrapati Bhavan.

We waited for our meeting with him, which finally happened in the afternoon. Rajiv was plainly at the point of exhaustion and still hard-pressed for time. He seemed pleased to see me and apologized for not talking in the morning. Regarding the March 22 draft, he said he had not read it but that he would be doing so. He said he expected the central focus of the manifesto to be on economic reform, and an economic point of view in foreign policy, and in addition an emphasis on justice and the law courts. I remembered our September 18 conversation and had tried to put in justice and the courts into our draft but had been over-ruled by others. I now said the social returns of investment in the judiciary were high but was drowned out again. Rajiv was clearly agitated that day by the BJP and blurted out he did not really feel he understood what on earth they were on about. He said about his own family, “We’re not religious or anything like that, we don’t pray every day.” I felt again what I had felt before, that here was a tragic hero of India who had not really wished to be more than a happy family man until he reluctantly was made into a national leader against his will. We were with him for an hour or so. As we were leaving, he said quickly at the end of the meeting he wished to see me on my own and would be arranging a meeting. One of our group was staying back to ask him a favour. Just before we left, I managed to say to him what I felt was imperative: “The Iraq situation isn’t as it seems, it’s a lot deeper than it’s been made out to be.” He looked at me with a serious look and said “Yes I know, I know.” It was decided Pitroda would be in touch with each of us in the next 24 hours. During this time Narasimha Rao’s manifesto committee would read the draft and any questions they had would be sent to us. We were supposed to be on call for 24 hours. The call never came. Given the near total lack of system and organization I had seen over the months, I was not surprised. Krishna Rao and I waited another 48 hours, and then each of us left Delhi. Before going I dropped by to see Krishnamurty, and we talked at length. He talked especially about the lack of the idea of teamwork in India. Krishnamurty said he had read everything I had written for the group and learned a lot. I said that managing the economic reform would be a critical job and the difference between success and failure was thin.

I got the afternoon train to Calcutta and before long left for America to bring my son home for his summer holidays with me. In Singapore, the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi. Eleven years later, on 25 May 2002, press reports said “P. V. Narasimha Rao and Manmohan Singh lost their place in Congress history as architects of economic reforms as the Congress High command sponsored an amendment to a resolution that had laid credit at the duo’s door. The motion was moved by…. Digvijay Singh asserting that the reforms were a brainchild of the late Rajiv Gandhi and that the Rao-Singh combine had simply nudged the process forward.” Rajiv’s years in Government, like those of Indira Gandhi, were in fact marked by profligacy and the resource cost of poor macroeconomic policy since bank-nationalisation may be as high as Rs. 125 trillion measured in 1994 rupees. Certainly though it was Rajiv Gandhi as Leader of the Opposition in his last months who was the principal architect of the economic reform that came to begin after his passing.”

 rajiv_gandhi Rajiv Gandhi 20 August 1944- 21 May 1991

Rajiv-Gandhi-and-the-origins-of-indias-1991-economic-reform/
. See also https://independentindian.com/2013/08/23/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-encounter-with-rajiv-gandhi-just-as-siddhartha-shan/also

https://independentindian.com/2011/05/21/twenty-years-ago-today-march-23-1991-an-excerpt/

Two Different Models for India’s Political Economy: Mine & Dr Manmohan Singh’s (Updated 2013)

see

https://independentindian.com/2013/05/19/cambridge-economics-the-disputation-in-indias-economic-policy/

https://independentindian.com/2013/08/23/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-encounter-with-rajiv-gandhi-just-as-siddhartha-shan/

https://independentindian.com/2009/06/12/mistaken-macroeconomics-an-open-letter-to-prime-minister-dr-manmohan-singh/

From Facebook

February 24 2011

Subroto Roy does not know if he just heard Manmohan Singh say “inflation will soon come down” — excuse me Dr Singh, but how was it you and all your acolytes uniformly said back in July 2010 that inflation would be down to 6% by Dec 2010? 6%?! 16% more likely! I said. Until he explains his previous error, we may suppose he will repeat it.

January 11 2011:

Subroto Roy can stop the Indian inflation and bring integrity to the currency over time, and Manmohan Singh and his advisers cannot (because they have the wrong economic models/theories/data etc and refuse to change), but then they would have to make me a Minister and I keep getting reminded of what Groucho Marx said about clubs that would have him.

Subroto Roy does not think Dr Manmohan Singh or his acolytes and advisers, or his Finance Minister and his acolytes and advisers, understand Indian inflation. If you do not understand something, you are not likely to change it.

March 6 2010:

Subroto Roy  says the central difference between the Subroto Roy Model for India as described in 1990-1991 to Rajiv Gandhi in his last months, and the Manmohan Singh Model for India that has developed since Rajiv’s assassination, is that by my model, India’s money and public finances would have acquired integrity enough for the Indian Rupee to have become a hard currency of the world economy by now, allowing all one billion Indians access to foreign exchange and precious metals freely, whereas by the model of Dr Singh and his countless supporters, India’s money and public finance remain subject to government misuse and abuse, and access to foreign exchange remains available principally to politicians, bureaucrats, big business and its influential lobbyists, the military, as well as perhaps ten or twenty million nomenclatura in the metropolitan cities.

April 8 2010:

Subroto Roy notes a different way of stating his cardinal difference with the economics of Dr Manmohan Singh’s Govt: in their economics, foreign exchange is “made available” by the GoI for “business and personal uses”. That is different from my economics of aiming for all one billion Indians to have a money that has some integrity, i.e., a rupee that becomes a hard currency of the world economy. (Ditto incidentally with the PRC.)

 

Updates:

From Facebook:

Subroto Roy  reads in *Newsweek* today  (Aug 19) Manmohan Singh “engineered the transition from stagnant socialism to a spectacular takeoff”.  This contradicts my experience with Rajiv Gandhi at 10 Janpath in 1990-91. Dr Singh had not returned to India from his years with Julius Nyerere in his final assignment before retiring from the bureaucracy when Rajiv and I first met on 18 September 1990.

“After (Rajiv Gandhi’s) assassination, the comprador business press credited Narasimha Rao and Manmohan Singh with having originated the 1991 economic reform.  In May 2002, however, the Congress Party itself passed a resolution proposed by Digvijay Singh explicitly stating Rajiv and not either of them was to be so credited… There is no evidence Dr Singh or his acolytes were committed to any economic liberalism prior to 1991 and scant evidence they have originated liberal economic ideas for India afterwards. Precisely because they represented the decrepit old intellectual order of statist ”Ma-Bap Sarkari” policy-making, they were not asked in the mid-1980s to be part of a “perestroika-for-India” project done at a foreign university ~ the results of which were received…by Rajiv Gandhi in hand at 10 Janpath on 18 September 1990 and specifically sparked the change in the direction of his economic thinking…”

Subroto Roy notes that current Indian public policy discussion has thus far failed to realise that the rise in money prices of real goods and services is the same as the fall in the real value of money.

Subroto Roy  is interested to hear Mr Jaitley say in Parliament today the credibility of Government economists is at stake. Of course it is. There has been far too much greed and mendacity all around, besides sheer ignorance. (When I taught for a year or so at the Delhi School of Economics as a 22 year old Visiting Assistant Professor in 1977-78, I was told Mr Jaitley was in the law school and a student leader of note. I though was more interested in teaching the usefulness of Roy Radner’s “information structures” in a course on “advanced economic theory”.)

 

 

 

 

July 31 2010

Subroto Roy reads in today’s pink business newspaper the GoI’s debt level at Rs 38 trillion & three large states (WB, MH, UP) is at Rs 6 trillion, add another 18 for all other large states together, another 5 for all small states & 3 for errors and omissions, making my One Minute Estimate of India’s Public Debt Stock Rs 70 trillion (70 lakh crores). Interest payments at, say, 9%, keep the banking system afloat, extracting oxygen from the public finances like a cyanide capsule.

July 28 2010

Subroto Roy observes Parliament to be discussing Indian inflation but expects a solution will not be found until the problem has been comprehended.

July 27 2010:

Subroto Roy continues to weep at New Delhi’s continual debauching of the rupee.

July 25 2010:

Subroto Roy  has no idea why Dr Manmohan Singh has himself (along with all his acolytes and flatterers in the Government and media and big business), gone about predicting Indian inflation will fall to 6% by December. 16% may be a more likely figure given a public debt at Rs 40 trillion perhaps plus money supply growth above 20%! (Of course, the higher the figure the Government admits, the more it has to pay in dearness allowance to those poor unionized unfortunates known as Government employees, so perhaps the official misunderestimation (sic) of Indian inflation is a strategy of public finance!)

July 12 2010:

Subroto Roy is amused to read Dr Manmohan Singh’s Chief Acolyte say in today’s pink business newspaper how important accounting is in project-appraisal — does the sinner repent after almost single-handedly helping to ruin project-appraisal  & government accounting & macroeconomic planning over decades?  I  rather doubt it.   For myself, I am amused to see chastity now being suddenly preached from within you-know-where.

July 4 2010:

Subroto Roy does not think the Rs 90 billion (mostly in foreign exchange) spent by the Manmohan Singh Government on New Delhi’s “Indira Gandhi International Airport Terminal 3” is conducive to the welfare of the common man (“aam admi”) who travels, if at all, mostly within India and by rail.

Subroto Roy hears Dr Manmohan Singh say yesterday “Global economic recession did not have much impact on us as it had on other countries”. Of course it didn’t. I had said India was hardly affected but for a collapse of exports & some fall in foreign investment. Why did he & his acolytes then waste vast public resources claiming they were rescuing India using a purported Keynesian fiscal “stimulus” (aka corporate/lobbyist pork)?

May 26 2010:

Subroto Roy  would like to know how & when Dr Manmohan Singh will assess he has finished the task/assignment he thinks has been assigned to him & finally retire from his post-retirement career: when his Chief Acolyte declares on TV that 10% real GDP growth has been reached? (Excuse me, but is that per capita? And about those inequalities….?)

Well done! The Sonia-Manmohan Congress takes a *third* Rajivist step!

From Facebook October 15  2010

Subroto Roy thinks the Sonia-Manmohan Govt throwing auditors with their rule-books ex post facto at the Games’ organisers is a good if miniscule first step (though it is, in my estimation, the third Rajivist step in total, see infra…). May we please have the same done asap to military contracts (especially for Russian fighter jets, used aircraft carriers etc), Boeing & Airbus contracts, railway contracts, power sector contracts including nuclear business contracts, IIT and IIM building contracts, in fact *all* government sector building contracts, in fact *all* government sector contracts……

 

From Facebook March 28 2010

Subroto Roy is pleased that according to this morning’s news reports of a “national convention” on “Law, Justice & the Common Man”, the Sonia-Manmohan Congress took a small second step yesterday on the same road that Rajiv Gandhi and I had chalked out in 1990-1991.  Better late than never!

Will the Telangana flare-up awaken New Delhi from its dream-world and into India’s political reality?

Subroto Roy thinks the flare-up of the Telangana issue has one and only one positive consequence: it brings home to New Delhi’s ruling elite that there are real political questions in India, and not everything can be left to spin-doctors and lobbyists to handle.

Question for the Sonia-Manmohan Govt: is a little polo in Washington expected to benefit India’s “aam admi”?

From Facebook:

Subroto Roy must ask Dr Manmohan Singh’s Government how it sees India’s “aam admi” coming to benefit by the United States Polo Team welcoming India in 2010 in the world championship polo matches on the DC National Mall, as has been very kindly reported by Mr and Mrs Tareq Salahi following the “Sensational Night honoring India”.

Finally, a dozen years late, the Sonia-Manmohan Congress takes a small Rajivist step: Yes Prime Minister, our Judiciary is indeed a premier public good (or example of “infrastructure” to use that dreadful bureaucratic term)

I was very harsh and did not beat about the bush in my Sep 23-24 2007 article  in The Statesman “Against Quackery” when I said in its subtitle

“Manmohan and Sonia have violated Rajiv Gandhi’s intended reforms”.

I said inter alia

“WASTE, fraud and abuse are inevitable in the use and allocation of public property and resources in India as elsewhere, but Government is supposed to fight and resist such tendencies. The Sonia-Manmohan Government have done the opposite, aiding and abetting a wasteful anti-economics ~ i.e., an economic quackery. Vajpayee-Advani and other Governments, including Narasimha-Manmohan in 1991-1996, were just as complicit in the perverse policy-making. So have been State Governments of all regional parties like the CPI-M in West Bengal, DMK/ AIADMK in Tamil Nadu, Congress/NCP/ BJP/Sena in Maharashtra, TDP /Congress in Andhra Pradesh, SP/BJP/BSP in Uttar Pradesh etc. Our dismal politics merely has the pot calling the kettle black while national self-delusion and superstition reign in the absence of reason. The general pattern is one of well-informed, moneyed, mostly city-based special interest groups (especially including organised capital and organised labour) dominating government agendas at the cost of ill-informed, diffused anonymous individual citizens ~ peasants, small businessmen, non-unionized workers, old people, housewives, medical students etc….Rajiv Gandhi had a sense of noblesse oblige out of remembrance of his father and maternal grandfather. After his assassination, the comprador business press credited Narasimha Rao and Manmohan Singh with having originated the 1991 economic reform. In May 2002, however, the Congress Party itself passed a resolution proposed by Digvijay Singh explicitly stating Rajiv and not either of them was to be so credited. The resolution was intended to flatter Sonia Gandhi but there was truth in it too. Rajiv, a pilot who knew no political economy, was a quick learner with intelligence to know a good idea when he saw one and enough grace to acknowledge it. …Rajiv was entirely convinced when the suggestion was made to him in September 1990 that an enormous infusion of public resources was needed into the judicial system for promotion and improvement of the Rule of Law in the country, a pre-requisite almost for a new market orientation. Capitalism without the Rule of Law can quickly degenerate into an illiberal hell of cronyism and anarchy which is what has tended to happen since 1991. The resources put since Independence to the proper working of our judiciary from the Supreme Court and High Courts downwards have been abysmal, while the state of prisons, borstals, mental asylums and other institutions of involuntary detention is nothing short of pathetic. Only police forces, like the military, paramilitary and bureaucracies, have bloated in size….Neither Sonia-Manmohan nor the BJP or Communists have thought promotion of the Rule of Law in India to be worth much serious thought ~ certainly less important than attending bogus international conclaves and summits to sign expensive deals for arms, aircraft, reactors etc. Yet Rajiv Gandhi, at a 10 Janpath meeting on 23 March 1991 when he received the liberalisation proposals he had authorized, explicitly avowed the importance of greater resources towards the Judiciary. Dr Singh and his acolytes were not in that loop, indeed they precisely represented the bureaucratic ancien regime intended to be changed, and hence have seemed quite uncomprehending of the roots of the intended reforms ever since 1991.”

Days after the article appeared there were press reports Dr Singh was murmuring about quitting, and then came a fierce speech in Hindi from the Congress President saying “enemies” would receive their dues or whatever – only to be retracted a few days later saying that no more had been meant than a local critique of the BJP in Haryana politics!  (Phew! I said to myself in relief…)

Today I am very happy to learn that Dr Manmohan Singh spoke on Sunday of the importance of the Rule of Law and an effective and efficient judiciary. The new Law Minister in the second Sonia-Manmohan Government has been eagerly saying the same.

All this is constructive and positive, late as it is since Sonia Gandhi and Manmohan Singh both became heavy-duty Congress Party politicians for the first time a dozen years ago.

I was privileged to advise a previous Congress President in his last months from September 1990 as has been told elsewhere. And six years before that I had  said:

“….….The most serious examples of the malfunctioning of civil government in India are probably the failure to take feasible public precautions against the monsoons and the disarray of the judicial system. …The Statesman lamented in July 1980:`The simplest matter takes an inordinate amount of time, remedies seldom being available to those without means or influence. Of the more than 16,000 cases pending in the Supreme Court, about 5,000 were introduced more than five years ago; while nearly 16,000 of the backlog of more than 600,000 cases in our high courts have been hanging fire for over a decade. Allahabad is the worst offender but there are about 75,000 uncleared cases in the Calcutta High Court in addition to well over a million in West Bengal’s lower courts.” Such a state of affairs has been caused not only by lazy and corrupt policemen, court clerks and lawyers, but also by the paucity of judges and magistrates. . . . a vast volume of laws provokes endless litigation as much because of poor drafting which leads to disputes over interpretation as because they appear to violate particular rights and privileges…. When governments determinedly do what they need not or should not do, it may be expected that they will fail to do what civil government positively should be doing.” A few months ago was the 25th anniversary of this statement… ! 🙂

Yes Prime Minister, having an effective and efficient judiciary is indeed a premier public good and one that has failed to be provided to India’s people from Nehru’s time and through Indira’s. I managed to persuade Rajiv about it completely. Might I next be so bold as to draw attention as well to the paragraphs of the 2007 article that followed?

“Similarly, Rajiv comprehended when it was said to him that the primary fiscal problem faced by India is the vast and uncontrolled public debt, interest payments on which suck dry all public budgets leaving no room for provision of public goods.  Government accounts: Government has been routinely “rolling over” its domestic debt in the asset-portfolios of the nationalised banks while displaying and highlighting only its new additional borrowing in a year as the “Fiscal Deficit”. More than two dozen States have been doing the same and their liabilities ultimately accrue to the Union too. The stock of public debt in India is Rs 30 trillion (Rs 30 lakh crore) at least, and portends a hyperinflation in the future. There has been no serious recognition of this since it is political and bureaucratic actions that have been causing the problem. Proper recognition would entail systematically cleaning up the budgets and accounts of every single governmental entity in the country: the Union, every State, every district and municipality, every publicly funded entity or organisation, and at the same time improving public decision-making capacity so that once budgets and accounts recover from grave sickness over decades, functioning institutions exist for their proper future management. All this would also stop corruption in its tracks, and release resources for valuable public goods and services like the Judiciary, School Education and Basic Health. Institutions for improved political and administrative decision-making are needed throughout the country if public preferences with respect to raising and allocating common resources are to be elicited and then translated into actual delivery of public goods and services. Our dysfunctional legislatures will have to do at least a little of what they are supposed to. When public budgets and accounts are healthy and we have functioning public goods and services, macroeconomic conditions would have been created for the paper-rupee to once more become a money as good as gold ~ a convertible world currency for all of India’s people, not merely the metropolitan special interest groups that have been controlling our governments and their agendas.”

Subroto Roy

Kolkata


Parliament is supposed to control the Government, not be bullied or intimidated by it: Will Rahul Gandhi be able to lead the Backbenches in the 15th Lok Sabha?

Any Lok Sabha MP who neither sits with the Opposition nor is a sworn-in member of the Government is a Backbench MP of the Government party or its coalition.

Shrimati Sonia Gandhi is the most prominent of such Backbench MPs in the 15th Lok Sabha, just as she was of the 14th Lok Sabha, and has chosen to be in a most peculiar position from the point of view of parliamentary law. As the leader of the largest parliamentary party, she could have been not merely a member of the Government but its Prime Minister. She has in fact had a decisive role in determining the composition of the Manmohan Government as well as its policies. She in fact sits on the Frontbenches in the Lok Sabha along with the Manmohan Government. But she is not a member of the Government and is, formally speaking, a Backbench MP who is choosing to sit in the Frontbenches.

(Dr Manmohan Singh himself, not being a member of the Lok Sabha, may, formally speaking, sit or speak from among the Frontbenches of his own Government only by invitation of the Lok Sabha Speaker as a courtesy – such would have been the cardinal reason why Alec Douglas-Home resigned from being Lord Home and instead stood for a House of Commons seat when he was appointed British Prime Minister.)

Sonia Gandhi’s son, Mr Rahul Gandhi, is also a Backbench MP. From all accounts, including that of Dr Singh himself, he could have been a member of Dr Singh’s Government but has specifically chosen not to be. He has appeared to have had some much lesser role than Sonia Gandhi in determining the composition of the Government and its policies but he is not a member of it. He is, formally speaking, a Backbench MP, indeed the most prominent to actually sit in the Backbenches, as he had done in the 14th Lok Sabha, which, it is to be hoped, he does in the 15th Lok Sabha too.

Now Rahul Gandhi, Sonia Gandhi and their 541 other fellow 15th Lok Sabha MPs were declared winners by May 16 2009 having won the Indian people’s vote.

(Incidentally, I predicted the outcome here two hours before polls closed on May 13 – how I did so is simply by having done the necessary work of determining that some 103 million people had voted for Congress in 2004 against some 86 million for the BJP; in my assessment Congress had done more than enough by way of political rhetoric and political reality to maintain if not extend that difference in 2009, i.e., the BJP had not done nearly enough to even begin to get enough of a net drift in its favour. I expect when the data are out it shall be seen that the margin of the raw vote between them has been much enlarged from 2004.)

As I have pointed out here over the last fortnight, there was no legal or logical reason why the  whole 15th Lok Sabha could not have been sworn in latest by May 18 2009.

Instead, Dr Manmohan Singh on May 18 held a purported “Cabinet” meeting of the defunct 14th Lok Sabha – an institution that had been automatically dissolved when Elections had been first announced! The Government then went about forming itself over two weeks despite the 15th Lok Sabha, on whose confidence it depended for its political legitimacy, not having been allowed to meet. Everyone – the Congress Party’s Supreme Court advocates, the Lok Sabha Secretariat, the Election Commission, Rashtrapati Bhavan too –  seems to have gotten it awfully wrong by placing the cart before the horse.

In our system it is Parliament that is sovereign, not the Executive Government. In fact the Executive is accountable to Parliament, specifically the Lok Sabha, and is supposed to be guided by it as well as hold its confidence at all times.

What has happened instead this time is that Government ministers have been busy taking oaths and entering their offices and making policy-decisons days before they have taken their oaths and their seats as Lok Sabha MPs!  The Government has thus started off by diminishing Parliament’s sovereignty and this should not be allowed to happen again.

(Of course why it took place is because of the peculiarity of the victory relative to our experience in recent decades – nobody could remember parliamentary traditions from Nehru’s time in the 1950s.  Even so, someone, e.g. the former Speaker, should have known and insisted upon explaining the relevant aspect of parliamentary law and hence avoided this breach.)

A central question now is whether a Government which has such a large majority, and which is led by someone in and has numerous ministers from the Rajya Sabha, is going to be adequately controlled and feel itself accountable to the Lok Sabha.

Neither of the Lok Sabha’s most prominent Backbenchers, Sonia Gandhi and Rahul Gandhi, have thus far distinguished themselves as Parliamentarians on the floor of the Lok Sabha. In the 14th Lok Sabha, Sonia Gandhi, sitting in the Frontbenches, exercised the  enormous control that she did over the Government not on the floor of the House itself but  from outside it.

It would be best of all if she chose in the 15th Lok Sabha to actually physically sit in the Congress’s Backbenches because that would ensure best that the Government Party’s ministers in the Frontbenches will keep having to seek to be accountable to the  Backbenches!

But this seems unlikely to happen in view of the fact she herself seems to have personally influenced the choice of a Speaker for the 15th Lok Sabha and it may be instead expected that she continues to sit on the Frontbenches with the Government without being a member of it.

That leaves Rahul Gandhi. If he too comes to be persuaded by the sycophants to sit on the Frontbenches with the Government, that will not be a healthy sign.

On the other hand, if he continues to sit on the Backbenches, he may be able to have a salubrious influence on the 15th Lok Sabha fulfilling its responsibility of seeking to seriously control and hold accountable the Executive Government,  and not be bullied or intimidated by it. His paternal grandfather, Feroze Gandhi, after all, may have been India’s most eminent and effective Backbench MP yet.

Subroto Roy, Kolkata

How to Design a Better Cabinet for the Government of India

Cabinet Government has become far too unwieldy and impractical in India, and the new Cabinet chosen by Sonia Gandhi and Manmohan Singh over almost a fortnight  — of some 79 Ministers, almost certainly the largest number in the world — may be destined to be so as well.   If there is going to be “fiscal prudence” as the PM and Finance Minister have declared, it really needs to start at the top with the Union Government itself.  Remember we also have more than two dozen State Governments plus Union Territories and  myriad local governments too.

Here then is an example of a better-designed Cabinet for the Government of India with Cabinet Ministers in bold-face, others not so:

Prime Minister

–         Parliamentary Affairs

–         Intra-Government Liaison

Defence War/Forces  (Raksha, Yudh/Fauj)

–    Army

–    Navy & Coast Guard

–    Air Force & Strategic Forces

–    Ordnance

Finance

–         Money & Banking

–         Accountant General

–         Planning

Home Affairs

–         Law & Justice

–         Internal Security

–     Disaster Management & Civil Defence

–         Archaeology, Art & Culture

Foreign

–         Commerce & Tourism

–         Overseas Indians

–         International Organisations

Transport

–         Railways

–         Roads & Highways

–         Shipping & Waterways

–         Civil Aviation

–         Urban Development

Agriculture & Food

–         Rural Development

–         Water, Flood Control & Irrigation

–         Environment

–         Forestry & Tribal Affairs

Industry

–    Competition and Monopoly-Control

–      Steel

–      Textiles

–      Power

–      Petroleum and Energy

–      Chemicals & Fertilizers

–       Coal and Mines

–      Communications and IT

Education

–    Schools

–     Higher Education

–     Vocational Education

–      Sports

–      Science and Technology

Labour & Employment

Health and Human Services

–        Housing

–         Women and Child Development

–         Social Security

There are just eleven Cabinet Ministers (in bold-face above) including the PM, so, along with the Cabinet Secretary, they could sit with ease around a normal table which should help the process of deliberation.

This document has arisen out of one during my work as an adviser to Rajiv Gandhi  in his last months in 1990-1991 though the latter never reached him; I had intended to talk to him about its contents but it was not to be.

It may be profitably read alongside my “Distribution of Government Expenditure in India”, which is part of my ongoing research and was released in the public interest last year.

Subroto Roy, Kolkata

Why does India not have a Parliament ten days after the 15th Lok Sabha was elected? Nehru and Rajiv would both have been appalled

There are at least three Supreme Court lawyers, all highly voluble, among the higher echelons of Congress Party politicians; it is surprising that not one of them has been able to get the top Party leadership of Sonia Gandhi and Manmohan Singh to see the apparent breach of normal constitutional law in Parliament not having met more than 10 days after it was elected.

A Government has been formed, Ministers have entered their offices and have been holding press-conferences and taking executive decisions,  wannabe-Ministers continue to be wrangling night-and-day for the plums of office — BUT THERE IS NO PARLIAMENT!

Today is the death-anniversary of Jawaharlal Nehru and last week was the death anniversary of  Rajiv Gandhi.

Nehru, whatever his faults and infirmities, was an outstanding parliamentarian and a believer in the Westminster model in particular.  He was intimately familiar with its  unpoken customs and unwritten laws.   He would have been completely appalled by the situation today where luminaries of the party that goes by the  same name as the one he had led are paying obeisance to his memory 45 years after his death but have failed to see the absurdity in having a Government in office with no new Parliament ten days after a month-long General Election was over!  (Incidentally, had he not left explicit instructions against any hero-worship  taking place of himself too?)

Rajiv knew his grandfather and had acquired a sense of noblesse oblige from him.  He too would have been appalled that the procedural business of government  had been simply  procrastinated over like this.

It surprises me that Dr Manmohan Singh, having been a post-graduate of Cambridge, having earned a doctorate from Oxford, and more recently having been awarded honorary doctorates from both Ancient Universities, should seem so unaware of the elements of the Westminster model of  constitutional jurisprudence which guides our polity too.

It is too late now and the mistakes have been made.   I hope his  new Government will  come to realise at some point and then keep in mind that our Executive receives political legitimacy from Parliament, not vice versa.   An Executive can hardly be legitimately in office until the  Parliament that is supposed to elect it has been sworn in.

As for our putative Opposition in the Parliament-yet-to-meet, it seems to have drawn a blank too, and eo ipso revealed its own constitutional backwardness and lethargy.

Subroto Roy

How tightly will organised Big Business be able to control economic policies this time?

The power of organised Big Business over New Delhi’s economic policies (whether Congress-led or BJP-led) was signalled by the presence in the audience at Rashtrapati Bhavan last week of several prominent lobbyists when Dr Manmohan Singh and his senior-most Cabinet colleagues were being sworn-in by the President of India. Why were such witnesses needed at such an auspicious national occasion?

Organised Big Business (both private sector and public sector) along with organised Big Labour (whose interests are represented most ably by New Delhi’s official communist parties like the CPI-M and CPI), are astutely aware of how best to advance their own economic interests; this usually gets assisted nicely enough through clever use of our comprador English-language TV, newspaper and magazine media. Shortly after the election results, lobbyists were all over commercial TV proposing things like FDI in insurance and airports etc– as if that was the meaning of the Sonia-Rahul mandate or were issues of high national priority. A typical piece of such “pretend-economics” appears in today’s business-press from a formerly Leftist Indian bureaucrat: “With its decisive victory, the new Manmohan Singh government should at last be able to implement the required second generation reforms. Their lineaments (sic) are well known and with the removal of the Left’s veto, many of those stalled in the legislature as well as those which were forestalled can now be implemented. These should be able to put India back on a 9-10 per cent per annum growth rate…”

Today’s business-press also reports that the new Government is planning to create a fresh “Disinvestment Ministry” and Dr Singh’s chief economic policy aide is “a frontrunner among the names short-listed to head the new ministry” with Cabinet rank.

Now if any enterprising doctoral student was to investigate the question, I think the evidence would show that I, and I alone – not even BR Shenoy or AD Shroff or Jagdish Bhagwati — may have been the first among Indian economists to have argued in favour of the privatisation of India’s public sector. I did so precisely 25 years ago in Pricing, Planning and Politics: A Study of Economic Distortions in India, which was so unusual for its time that it attracted the lead editorial of The Times of London on the day it was published May 29 1984, and had its due impact on Indian economic policy then and since, as has been described elsewhere here.  In 1990-1991 while with Rajiv Gandhi, I had floated an idea of literally giving away shares of the public sector to the public that owned it (as several other countries had been doing at that time), specifically perhaps giving them to the poorest panchayats in aid of their development.  In 2004-2005, upon returning to Britain after many years, I helped create the book Margaret Thatcher’s Revolution: How it Happened and What it Meant, and Margaret Thatcher if anyone was a paragon of privatisation.

That being said, I have to say I think a new Indian policy of creating a Ministry to privatise India’s public sector is probably a very BAD idea indeed in present circumstances — mainly because it will be driven by the interests of the organised Big Business lobbies that have so profoundly and subtly been able to control the New Delhi Government’s behaviour in recent decades.

Such lobbyist control is exercised often without the Government even realising or comprehending its parameters. For example, ask yourself: Is there any record anywhere of Dr Manmohan Singh, in his long career as a Government economist and then as a Rajya Sabha MP, having ever proposed before 2004-2005 that nuclear reactors were something vitally important to India’s future? And why do you suppose the most prominent Indian business lobby spent a million dollars and registered itself as an official lobbyist in Washington DC to promote the nuclear deal among American legislators? Because Big Business was feeling generous and altruistic towards the “energy security” of the ordinary people of India? Hardly.  Indian Big Business calculates and acts in its own interests, as is only to be expected under economic assumptions; those interests are frequently camouflaged by their lobbyist and media friends into seeming to be economic policy for the country as a whole.

Now our Government every year produces paper rupees and bank deposits in  practically unlimited amounts to pay for its practically unlimited deficit financing, and it has behaved thus over decades. Why we do not hear about this at all is because the most prominent Government economists themselves remain clueless — sometimes by choice, mostly by sheer ignorance — about the nature of the macroeconomic process that they are or have been part of.  (See my  “India’s Macroeconomics”, “The Dream Team: A Critique” etc elsewhere here). As for the Opposition’s economists, the less said about the CPI-M’s economists the better while the BJP, poor thing, has absolutely no economists at all!

Briefly speaking, Indian Big Business has acquired an acute sense of this long-term nominal/paper expansion of India’s economy, and as a result acts towards converting wherever possible its own hoards of paper rupees and rupee-denominated assets into more valuable portfolios for itself of real or durable assets, most conspicuously including hard-currency denominated assets, farm-land and urban real-estate, and, now, the physical assets of the Indian public sector. Such a path of trying to transform local domestic paper assets – produced unlimitedly by Government monetary and fiscal policy and naturally destined to depreciate — into real durable assets, is a privately rational course of action to follow in an inflationary economy.  It is not rocket-science  to realise the long-term path of the Indian rupee is downwards in comparison to the hard-currencies of the world – just compare our money supply growth and inflation rates with those of the rest of the world.

The Statesman of November 15 2006 had a lead editorial titled Government’s land-fraud: Cheating peasants in a hyperinflation-prone economy. It said:

“There is something fundamentally dishonourable about the way the Centre, the state of West Bengal and other state governments are treating the issue of expropriating peasants, farm-workers, petty shop-keepers etc of their small plots of land in the interests of promoters, industrialists and other businessmen. Singur may be but one example of a phenomenon being seen all over the country: Hyderabad, Karnataka, Kerala, Haryana, everywhere. So-called “Special Economic Zones” will merely exacerbate the problem many times over. India and its governments do not belong only to business and industrial lobbies, and what is good for private industrialists may or may not be good for India’s people as a whole. Economic development does not necessarily come to be defined by a few factories or high-rise housing complexes being built here or there on land that has been taken over by the Government, paying paper-money compensation to existing stakeholders, and then resold to promoters or industrialists backed by powerful political interest-groups on a promise that a few thousand new jobs will be created. One fundamental problem has to do with inadequate systems of land-description and definition, implementation and recording of property rights. An equally fundamental problem has to do with fair valuation of land owned by peasants etc. in terms of an inconvertible paper-money. Every serious economist knows that “land” is defined as that specific factor of production and real asset whose supply is fixed and does not increase in response to its price. Every serious economist also knows that paper-money is that nominal asset whose price can be made to catastrophically decline by a massive increase in its supply, i.e. by Government printing more of the paper it holds a monopoly to print. For Government to compensate people with paper-money it prints itself by valuing their land on the basis of an average of the price of the last few years, is for Government to cheat them of the fair present-value of the land. That present-value of land must be calculated in the way the present-value of any asset comes to be calculated, namely, by summing the likely discounted cash-flows of future values. And those future values should account for the likelihood of a massive future inflation causing decline in the value of paper-money in view of the fact we in India have a domestic public debt of some Rs. 30 trillion (Rs. 30 lakh crore) and counting, and money supply growth rates averaging 16-17% per annum. In fact, a responsible Government would, given the inconvertible nature of the rupee, have used foreign exchange or gold as the unit of account in calculating future-values of the land. India’s peasants are probably being cheated by their Government of real assets whose value is expected to rise, receiving nominal paper assets in compensation whose value is expected to fall.”

Mamata Banerjee started her famous protest fast-unto-death in Kolkata not long afterwards, riveting the nation’s attention in the winter of 2006-2007.

What goes for the government buying land on behalf of its businessman friends also goes, mutatis mutandis, for the public sector’s real assets being bought up by the private sector using domestic paper money in a potentially hyperinflationary economy.  If Dr Singh’s new Government wishes to see real public sector assets being sold, let the Government seek to value these assets not in inconvertible rupees which the Government itself has been producing in unlimited quantities but rather in forex or gold-units instead!

Today’s headline says “Short of cash, govt. plans to revive disinvestment ministry”. Big Business’s powerful lobbies will suggest  that real public assets must be sold  (to whom? to organised Big Business of course!) in order to solve the grave fiscal problems in an inflationary economy caused precisely by those grave  fiscal problems! What I said in 2002 at IndiaSeminar may still be found to apply: I said the BJP’s privatisation ideas “deserve to be condemned…because they have made themselves believe that the proceeds of selling the public sector should merely go into patching up the bleeding haemorrhage which is India’s fiscal and monetary situation… (w)hile…Congress were largely responsible for that haemorrhage to have occurred in the first place.”

If the new Government would like to know how to proceed more wisely, they need to read and grasp, in the book edited by myself and Professor John Clarke in 2004-2005, the chapter by Professor Patrick Minford on Margaret Thatcher’s fiscal and monetary policy (macroeconomics) before they read the chapter by Professor Martin Ricketts on Margaret Thatcher’s privatisation (microeconomics).  India’s fiscal and monetary or macroeconomic problems are far worse today than Britain’s were when Thatcher came in.

During the recent Election Campaign, I contrasted Dr Singh’s flattering praise in 2005 of the CPI-M’s Buddhadeb Bhattacharjee with Sonia Gandhi’s pro-Mamata line in 2009 saying the CPI-M had taken land away from the poor.  This may soon signal a new fault-line in the new Cabinet too on economic policy with respect to not only land but also public sector privatisation – with Dr Singh’s pro-Big Business acolytes on one side and Mamata Banerjee’s stance in favour of small-scale unorganised business and labour on the other.  Party heavyweights like Dr Singh himself and Sharad Pawar and Pranab Mukherjee will weigh in one side or the other with Sonia being asked in due course to referee.

I personally am delighted to see the New Rahul Gandhi deciding not to be in Government and to instead reflect further on the “common man” and “common woman” about whom I had described his father talking to me on September 18 1990 at his home. Certainly the “aam admi” is not someone to be found among India’s organised Big Business or organised Big Labour nor their paid lobbyists in the big cities.

Subroto Roy

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Parliament’s sovereignty has been diminished by the Executive: A record for future generations to know (2009)

Sad to say, Parliament’s sovereignty has been diminished, indeed usurped, by the new Executive Government.

Here is a brief record for future generations to know.

India’s people completed their voting in the 15th General Elections on Wednesday May 13 2009.

The results of how they had spoken, what was their will, were known and declared by Saturday May 16 2009.

There was no legal or logical reason why the 543 members of the 15th Lok Sabha could not have been sworn in as new MPs by the close-of-business on Monday May 18 at the latest.

On Tuesday May 19 the 15th Lok Sabha could have and should have met to elect itself a pro tem or even a permanent Speaker.

The Speaker would have divided the new House into its Government Party and its Opposition.

There would have been a vote of confidence on the floor of the House, which in the circumstances would have been in favour of the Government Party.

Observing this to have taken place, the Hon’ble President of India as the Head of State would have sent for the leader of the Government Party and invited her to form the new Government.

In this particular case, the leader of the largest political party, namely Sonia Gandhi, would have been accompanied perhaps by the Leader of the Lok Sabha, Pranab Mukherjee, as well as her personal nominee for the position of PM, namely, Manmohan Singh.

Sonia Gandhi would have respectfully declined the invitation of the President to be the new Prime Minister, and she would have also explained that she wanted Manmohan Singh to have the position instead.

The President would have said “Very well, Dr Singh, can you please form the Government?”

He would have said, “Yes Madame President it shall be a privilege and an honour to do so”.

The President would have added, “Thank you, and I notice you are not a member of the Lok Sabha at the moment but I am sure you are taking steps towards becoming one.”

End of visit.

Manmohan Singh would have been sworn in as PM and would have gone about adding Ministers at a measured pace.   Later, he would have resigned his Rajya Sabha seat and sought election to the Lok Sabha on the parliamentary precedent set by Alec Douglas-Home.

What has happened instead?

On May 18 2009, instead of 543 members of the 15th Lok Sabha taking their oaths as required by parliamentary law and custom, Dr Singh held a purported “Cabinet”  meeting of the 14th Lok Sabha — a long-since dead institution!

Some of the persons attending this  meeting as purported “Cabinet ministers” had even lost their seats in the elections decided a few days earlier and so had absolutely zero democratically legitimate status left. All these persons then submitted their purported resignations which Dr Singh carried to the President, stating his Government had resigned. The President then appointed him a caretaker PM and he, along with Sonia Gandhi, then went about “staking claim” to form the next Government — turning up at the President’s again with “letters of support” signed by some 322 persons  who were MP-elects but were yet to become MPs formally by not having been sworn in.

The President appeared satisfied the party Sonia Gandhi and Manmohan Singh belonged to would command a majority in prospect in the Lok Sabha and invited him to be PM.   Some major public wrangling then took place with at least one of his allies about cabinet berths — and that is the situation as of the present moment except that Dr Singh and several others have been sworn in as the Council of Ministers even though the  new 15th Lok Sabha of 543 members has still not convened!  It has been all rather sloppy and hardly uplifting.

Parliament is supposed to be sovereign in India.

Not the Executive Government or the largest political party or its leader.

The sovereignty of Parliament required Sonia Gandhi and Dr Singh to have realised

first, that the 14th Lok Sabha stood automatically dissolved when elections were announced;

secondly, that the 15th Lok Sabha could have and should have been sworn in by Monday May 18;

thirdly, that there should have been a vote of confidence in the Lok Sabha immediately which would have gone in favour of the Government Party;

fourthly, that only then should the Executive Government have been sought to be formed;

and of course fifthly, that if that Executive Government was to be led by someone who happened to be a member of the Rajya Sabha and not the Lok Sabha, parliamenary law and custom required him to follow the Douglas-Home precedent of resigning from the former and seeking election to the latter at the earliest opportunity.

Let future generations know that as of today, May 25, the 543 persons whom the people of India voted to constitute the 15th Lok Sabha still remain in limbo without having been sworn in though we already have an Executive Government appointed!

The sovereignty of Parliament, specifically that of the Lok Sabha, has come to be diminished, indeed usurped, by the Executive.   It is the Executive that receives its political legitimacy from Parliament, not vice versa.  Nehru and his generation knew all this intimately well and would have been appalled at where we in the present have been taking it.

Subroto Roy

May we have reviews & reforms of protocols & practices to be followed at Rashtrapati Bhavan and elsewhere? (2009)

The Hon’ble President of India has invited you to join the Council of Ministers and has invited you to Rashtrapati Bhavan to be sworn in by an oath she shall administer. You are awaiting your name to be called. Your name is called and what do you do? You stand up and do a namaste to the PM and then walk a bit to do another namaste to Sonia Gandhi sitting in the audience opposite the President, and then you move towards the microphone ignoring or turning your back on the President herself and then you suddenly remember where you are and realize it is the President who has invited you and shall be administering your oath so you turn around and do a small namaste to her smiling apologetically for having made her an afterthought, and then you go about taking your oath, and then you perhaps do another namaste or two to the President more deeply because you want to make up for having forgotten her last time and finally you feel so happy and pleased with yourself you do another big namaste to Sonia Gandhi in the audience and finally get back to your seat! Phew!

Such was how several of Dr Singh’s new and senior-most cabinet members behaved yesterday at their swearing-in. Dr Singh himself walked straight to the President and did a very gracious bow to her before taking his oath, though on the way back he may have started the ball rolling by doing an exceptionally glad namaste to Sonia Gandhi sitting in the audience. AK Antony was the first and the most senior on the list who most blatantly ignored the President herself initially and turned his back on her momentarily before correcting himself, though he did not fail to do an initial namaste to Shrimati Gandhi. By contrast, Sharad Pawar may have got the whole thing right by walking straight to the President and doing a proper namaste, followed by his oath fluently spoken in Hindi followed by a small acknowledgment of the audience as a whole before returning to his seat.

But in half a dozen cases it all seemed a little sloppy, and even though the President seemed game and sportsmanlike about it, a discourtesy was noticeable to her high office as Head of State which needs to be apologized for and corrected. After all, these were the senior-most ministers, what might lesser ministers do next week?

In fact, a strong case might exist for a rational review nationwide of all such practices and protocols in Delhi and the State capitals, some of which have become so ossified from ancient times that they look bizarre today. Why do we have to have such an elaborate ceremony at all for a mere swearing in, which gets repeated too in each of the states with the Governors and State Governments? Yes perhaps the Head of State did administer the oath to the PM back in 1947 but it is not really necessary for the Head of State to do so now – it could be, for example, the Chief Justice of India who does so, at least to the Prime Minister. The Prime Minister could then himself/herself administer the oath to everyone else in his/her Cabinet, while someone, even the Cabinet Secretary perhaps, could administer the oath to everyone else. The oath itself is what is important, not so much the status of the person administering it. There need not be any such elaborate ceremony at all in Rashtrapati Bhavan that risks the dignity of the President like this and spends everyone’s time.

(And did anyone else notice the private sector lobbyists and public sector fixers seated in the audience? Precisely what were they doing there? Is this just another New Delhi social occasion for people to put on a show of showing their presence?)

For that matter, why was the National Anthem apparently played twice not by any live or noticeable orchestra or band but as a rather grainy recording? It is all a bit depressing when it should have been uplifting. Imagine instead some splendid soprano or tenor leading the singing of the Anthem in that splendid Hall accompanied by a first-class band.

I have long thought we need a National Commission to review all such matters and much more.

It would need to start with the 15th August Red Fort speech by the PM. 15th August was a date chosen by Mountbatten and its auspiciousness was diminished by all the bloodshed that flowed with it. It has become quite unseemly in recent decades to hear our PMs read out party-slogans or government propaganda statements from behind a bullet-proof barrier there. If I was a perceptive school-child being compelled to wait for hours in front of the Red Fort on a hot and muggy August morning to hear such dreary stuff, I might be justifiably upset, and of course many schoolchildren faint every year from exhaustion at being forced to do such things across the country. My own recommendation would be that August 15 be renamed Martyrs’ Day and be a solemn holiday marked only by a long five-minute nationwide silence, say at noon, in memory of all those who have died for India to be what it is today.

Then there is 26 January, going all the way to the “Beating of the Retreat”. Why on earth do we feel a need in this modern age to have such a display in the capital city once a year? Marching bands and parades and floats and fireworks can be great fun for all citizens but they can be and should be spread year-round all across the country’s many cities and towns, and the occasion need not be made a pompous one only in Delhi once a year (with some pale imitations in the State capitals). Republic Day can be a happy holiday for everyone in January when the weather is splendid around the country, with fireworks and fun for everyone, not merely New Delhi’s already delusional Ruling Class.

Then there is the oh-so-common ceremony all over the country from Parliament downwards of standing before the portrait or statue of someone long dead and throwing flowers at it along with a namaste (or in the case of communists, a clenched-fist Black Panther salute). Have we so lost our secular ethos that we do not realize that, for example, a Muslim or Jewish believer might find throwing flowers and doing namaste to a portrait something awkward to do? Both Ariel Sharon and Pervez Musharraf seemed to feel awkward when we took them to the Mahatma Gandhi memorial and said right, now, this is what we expect you to do, throw flowers and walk around it in this manner… it is not enough for you as a visiting dignitary to merely place a bouquet… ! We need to chill out a bit about all this ritualism.

And so it goes. To their considerable credit, neither Nehru nor Indira or Rajiv stood on ceremony much, and the same seems to apply to Sonia Gandhi and her children. The time may be opportune for all such matters to be reviewed calmly and soberly by a National Commission– in the meantime, the PM needs to send a small apology to the President for any unintended discourtesy from his Council of Ministers that may have occurred yesterday or at least a promise that it will not get repeated.

Subroto Roy, Kolkata

Postscript: Then there is the matter of Presidents, Prime Ministers, Governors, Chief Ministers et al taking salutes from the uniformed armed forces  or the paramilitary — if you are not yourself a commissioned officer or have never been one, do not respond to a salute from uniformed men and women by saluting or trying to salute them back yourself.  What is required is instead to perhaps stand to attention when they salute you, and perhaps bow your head slightly to acknowledge their salute.   Salutes are exchanged only within the uniformed services.  We instead have civilian leaders seeming to greatly enjoying trying to return salutes themselves….

Why has the Sonia Congress done something that the Congress under Nehru-Indira-Rajiv would not have done, namely, exaggerate the power of the Rajya Sabha and diminish the power of the Lok Sabha?

We in India did not invent the idea of Parliament, the British did.  Even the British did not invent the idea of a “Premier Ministre”, the French did that, though the British came to develop its meaning most.  Because these are not our own inventions, when something unusual happens in contemporary India to political entities and offices known as “Parliament”, “Prime Minister” etc, contrast and comparison is inevitable with standards and practices that have prevailed around the world in other parliamentary democracies.

Indeed we in India did not even fully invent the idea of our own Parliament though the national struggle led by the original Indian National Congress caused it to come to be invented.  The Lok Sabha is the outcome of a long and distinguished constitutional and political history from the Morley-Minto reforms a century ago to the Montagu-Chelmsford reforms and Government of India Act of 1919 to the Government of India Act of 1935 and the first general elections of British India in 1937 (when Jawaharlal Nehru briefly became PM for the first time) and in due course the 1946 Constituent Assembly.   Out of all this emerged the 1950 Constitution of India, drafted by that brilliant jurist BR Ambedkar as well as other sober intelligent well-educated and dedicated men and women of his time, and thence arose our first Lok Sabha following the 1951 General Elections.

About the Lok Sabha’s duties, I said in my March 30 2006 article “Logic of Democracy” in The Statesman

“What are Lok Sabha Members and State MLAs legitimately required to be doing in caring for their constituents? First of all, as a body as a whole, they need to elect the Government, i.e. the Executive Branch, and to hold it accountable in Parliament or Assembly. For example, the Comptroller and Auditor General submits his reports directly to the House, and it is the duty of individual legislators to put these to good use in controlling the Government’s waste, fraud or abuse of public resources.   Secondly, MPs and MLAs are obviously supposed to literally represent their individual constituencies in the House, i.e. to bring the Government and the House’s attention to specific problems or contingencies affecting their constituents as a whole, and call for the help, funds and sympathy of the whole community on their behalf.  Thirdly, MPs and MLAs are supposed to respond to pleas and petitions of individual constituents, who may need the influence associated with the dignity of their office to get things rightly done. For example, an impoverished orphan lad once needed surgery to remove a brain tumour; a family helping him was promised the free services of a top brain surgeon if a hospital bed and operating theatre could be arranged. It was only by turning to the local MLA that the family were able to get such arrangements made, and the lad had his tumour taken out at a public hospital. MPs and MLAs are supposed to vote for and create public goods and services, and to use their moral suasion to see that existing public services actually do get to reach the public.”

What about the Rajya Sabha?  I said in the same article:

“Rajya Sabha Members are a different species altogether. Most if not all State Legislative Councils have been abolished, and sadly the present nature of the Rajya Sabha causes similar doubts to arise about its utility. The very idea of a Rajya Sabha was first mooted in embryo form in an 1888 book A History of the Native States of India, Vol I. Gwalior, whose author also advocated popular constitutions for the “Indian India” of the “Native States” since “where there are no popular constitutions, the personal character of the ruler becomes a most important factor in the government… evils are inherent in every government where autocracy is not tempered by a free constitution.”  When Victoria was declared India’s “Empress” in 1877, a “Council of the Empire” was mooted but had remained a non-starter even until the 1887 Jubilee. An “Imperial Council” was now designed of the so-called “Native Princes”, which came to evolve into the “Chamber of Princes” which became the “Council of the States” and the Rajya Sabha.  It was patterned mostly on the British and not the American upper house except in being not liable to dissolution, and compelling periodic retirement of a third of members. The American upper house is an equal if not the senior partner of the lower house. Our Rajya Sabha follows the British upper house in being a chamber which is duty-bound to oversee any exuberance in the Lok Sabha but which must ultimately yield to it if there is any dispute.  Parliament in India’s democracy effectively means the Lok Sabha — where every member has contested and won a direct vote in his/her constituency. The British upper house used to have an aristocratic hereditary component which Tony Blair’s New Labour Government has now removed, so it has now been becoming more like what the Rajya Sabha was supposed to have been like.”

The Canadian upper house is similar to ours in intent: a place for “sober second thought” intended to curb the “democratic excesses” of the lower house.   In the Canadian, British, Australian, Irish and our own cases, the Prime Minister, as the chief executive of the lower house has immense indirect power over the upper house, whether in appointing members or even, in the Australian case, dissolving the entire upper house if he/she wishes.

Now yesterday apparently Shrimati Sonia Gandhi, as the duly elected leader of the largest political party in the 15th Lok Sabha, accompanied by Dr Manmohan Singh, as her party’s choice for the position of Prime Minister, went to see the President of India where the Hon’ble President apparently appointed Dr Singh to be the Prime Minister of India – meaning the Prime Minister of the 15th Lok Sabha, except that Dr Singh is not a member of the Lok Sabha and apparently has had no intent of becoming one.

In 2004 Shrimati Gandhi had declined to accept an invitation to become PM and instead effectively recommended Dr Singh to be PM despite his not being a member of the Lok Sabha nor intending to be so.   This exploited a constitutional loophole to the extent that the drafters of our 1950 Constitution happened not to have explicitly stated that the PM must be from the Lok Sabha.  But the reason the founders of our democratic polity such as BR Ambedkar and Jawaharlal Nehru did not specify that the PM must be from the Lok Sabha was quite simply that it was a matter of complete obviousness to them and to their entire generation that this must be so — it would have been  appalling to them and something beyond their wildest imagination that a later generation, namely our own, would exploit such a loophole and allow a PM to be appointed who is not a member of the Lok Sabha and intends not to be so.

Ambedkar, Nehru and all others of their time knew fully well that the history and intended purpose of the Lok Sabha was completely different from the history and intended purpose of the Rajya Sabha.  They knew too fully well that Lord Curzon had been explicitly denied the leadership of Britain’s Tory Party in 1922 because that would have made him a potential PM  when he was not prepared to be a member of the House of Commons.  That specific precedent culminated a centuries’-old  democratic trend of  political power flowing from monarchs to lords to commoners, and has governed all parliamentary democracies  worldwide ever since — until Dr Singh’s appointment in 2004.

When such an anomalous situation once arose in Britain, Lord Home resigned his membership of the House of Lords to contest a House of Commons seat as Sir Alec Douglas Home so that he could be PM in a manner consistent with parliamentary law.

Dr Singh instead for five years remained PM of India while not being a member of the Lok Sabha.  Even if reasons and exigencies of State could have been cited for such an anomalous situation during his first term, there was really no such reason for him not to contest the 2009 General Election if he wished to be the Congress Party’s prime ministerial candidate a second time.  Numerous Rajya Sabha members alongside him have contested Lok Sabha seats this time, and several have won.

As of today, Dr Singh is due to be sworn in tomorrow as Prime Minister for a second term while still having no declared intention of resigning from the Rajya Sabha and contesting a Lok Sabha seat instead.   What the present-day Congress has done is elect him the leader of the “Congress Parliamentary Party” and claim that it is in such a capacity that he received the invitation to be Prime Minister of India.   But surely if the question had been asked to the Congress Party under Nehru or Indira or Rajiv: “Can you foresee a circumstance ever in which the PM of India is not a member of the Lok Sabha?” their answer in each case would have been a categorical and resounding  “no”.

So the question does arise why the Congress under Sonia Gandhi has with deliberation allowed such an anomalous situation to develop.  Its effect is to completely distort the trends of relative political power between the Lok Sabha and Rajya Sabha.  On the one hand, the Lok Sabha’s power is deliberately made to diminish as the chief executive of the Government of India shall not be from the Lok Sabha but from “the other place” despite the Lok Sabha having greater political legitimacy by having been directly elected by India’s people.   This sets a precedent that  might  get repeated in India  in the future but which contradicts the worldwide trend in parliamentary democracies over decades and centuries in precisely the opposite direction –  of power flowing in the direction of the people not away from them.   On the other hand, the fact this anomalous idea has been pioneered by the elected leader of the largest political party in the Lok Sabha while her PM is in the Rajya Sabha causes a member of the lower house to have unexpected control over the upper house when the latter is supposed to be something of an independent check on the former!

It all really seems an unnecessary muddle and a jumbling up of normal constitutional law and parliamentary procedure.  The Sonia-Manmohan Government at the outset of its second term should hardly want to be seen by history as having set a poor precedent using brute force.  The situation can be corrected with the utmost ease by following the Alec Douglas Home example, with Dr Singh being given a relatively safe seat to contest as soon as possible, if necessary by some newly elected Congress MP resigning and allowing a bye-election to be called.

Subroto Roy

What’s all this business about political parties “staking a claim” to Government? Can there not be more dignified behaviour towards the President of India?

Press reports today say “With a comfortable majority in the Lok Sabha, UPA Chairperson Sonia Gandhi and Prime Minister Manmohan Singh will meet President Pratibha Patil to stake claim (sic) to form the new government. This was decided unanimously at a meeting of the leaders of the United Progressive Alliance in which Gandhi was re-elected its Chairperson.” (emphasis added)

“Stake claim”?

“To stake a claim” is  to show that you believe something is yours or to declare that something belongs to you.

Is that what Jawaharlal Nehru did with Dr Rajendra Prasad or Dr Radhakrishnan?  He went and said something like “Now look here Mr President, I would like to stake my claim to be Prime Minister of India now that this here General Election is over and I won”?

Is anyone else at present submitting any competing “claims” to the President?  Of course not.   Is the President unaware of the fact the General Elections are now over, or that she has a solemn duty to perform of inviting the leader of the largest political party in the new Lok Sabha to Rashtrapati Bhavan for an important chat?  Why does it have to be said that someone has to “stake a claim” to be asked to form the Government when the field is open and there is no sign of any other “claimant”?   Besides there has been the rush of political parties shooting off letters to the President declaring their support of Shrimati Gandhi and Dr Singh when they “stake claim” to the Government.  What does the President of India do with such letter-carriers when they turn up at her doorstep uninvited?  Offer each of them a cup of tea and a smile?

It is all hardly sober or uplifting — in fact, it is all rather undignified.

Perhaps a President of India might someday murmur something to the politicians like “Really, why do we need such talk about “staking claims”; I was going to invite you anyway.”

Starting with Procedural Error: Why has the “Cabinet” of the 14th Lok Sabha been meeting today AFTER the results of the Elections to the 15th Lok Sabha have been declared?!

The 14th Lok Sabha stood automatically dissolved when General Elections to the 15th Lok Sabha were first announced.  A fortiori so did its Council of Ministers and its “Cabinet”.

Yet this morning Dr Manmohan Singh has held a purported “Cabinet Meeting” of the 14th Lok Sabha where its “members” (some of whom lost their seats!)  purportedly submitted their “resignations” which he will then convey to the President with a request that the 14th Lok Sabha be dissolved!

Nyet!

The 14th Lok Sabha was dissolved and came to end eo ipso with the calling of the General Elections and any Council of Ministers and Cabinet that continued in existence was necessarily of a caretaker nature.

The 15th Lok Sabha has been elected as soon as the Election Commission has certified its final results.    There can be no legitimate “Cabinet” of the 14th Lok Sabha subsisting alongside the 15th Lok Sabha even for one logical moment.

It is surprising we must begin perhaps with such a simple procedural error.  It suggests there may be more to come.  We must be sorry to see the steady corrosion of parliamentary law and custom.

Subroto Roy

Postscript:   In the interregnum between the dissolution of the 14th  Lok Sabha when General Elections are announced and the  actual  declaration of the results of the 15th, which has in fact taken a month or more, there is no  functioning legislative branch of Government — though I would not disagree that if a national emergency like a war occurred during that period, the President in her wisdom would have a right to recall the 14th Lok Sabha if necessary as a kind of “caretaker” body for the duration of the emergency.

Inviting a new Prime Minister of India to form a Government: Procedure Right and Wrong (updated 2019 since 2009)

2019

Better Procedure:

 

 

So please follow my timetable for : Th 23/5 Results declared Fri 24/5 EC certifies results Sat Sun 25 26/5 Members sworn in Mon 27/5 Speaker pro tem divides House; Prez invites new to form a Gov’t Tue 28/5 Cabinet appointed

Better Procedure for .. Respected 16LS no longer exists as soon as results are certified by … Let 543 members of new be sworn in immediately one by one; let them elect a Speaker pro tem.

Let the Speaker pro tem divide the House between a putative Government & Opposition… Let then invite the leader of the former side to visit him for a chat… better then before please

Gen Chohan: Utopia not possible Prof. We can only dream IMO.

It’s the correct parliamentary logic tho.. Not hard to do… informs of winning candidates; LS informs 543 new members of to turn up pronto and be sworn in; elect a Speaker pro tem, divide the House; invites

Worse Procedure: 

Halla gulla … lists… parades of signatories… you know… Dilliwalla histrionics… 

 

 

2009:

Better Procedure

The Hon’ble President of India invites the leader of the single largest political party in the 15th Lok Sabha to visit Rashtrapati Bhavan.

The leader does so, bringing with her, her own nominee for the Prime Ministership of India as she herself wishes to decline the invitation to be PM.

The President meets the leader alone and extends the invitation.

The invitation is respectfully declined with the recommendation that the Hon’ble President may perhaps consider instead the name of the person nominated by the leader.

The President agrees and extends the invitation to the latter in the presence of the leader.  The latter accepts with thanks.

The President observes that since the PM-elect in this case happens not to be  a member of the Lok Sabha, she hopes that he shall soon become one.

The meeting ends.

Worse Procedure

The leader of the single largest political party in the 15th Lok Sabha publicly announces her nominee for the position of Prime Minister.

The Hon’ble President of India comes to learn of this from the newspapers or television and extends an invitation to the latter.

The latter visits Rashtrapati Bhavan, receives and accepts the President’s invitation to form a Government.

Of related interest:

Parliament’s sovereignty has been diminished by the Executive

Memo to the Hon’ble President of India: It is Sonia Gandhi, not Manmohan Singh, who should be invited to our equivalent of the “Kissing Hands” Ceremony

Starting with Procedural Error: Why has the “Cabinet” of the 14th Lok Sabha been meeting today AFTER the results of the Elections to the 15th Lok Sabha have been declared?!

Memo to the Hon’ble President of India (May 16, 2009)

H.E. The Hon’ble Shrimati Pratibha Patil

President of India

Your Excellency,

As India is fortunately a Republic and not a Monarchy, we do not have  a “Kissing Hands Ceremony”  where “the monarch invites the incoming prime minister to form a government and swear allegiance to the throne”.

While we do not have such a ceremony literally, we do have its republican equivalent in the well-established constitutional custom of the President of India after a General Election inviting one person to be Prime Minister and to form the new  Government.

It soon shall be your solemn duty to invite such a new Prime Minister of India to form the Government.

Given the results of the 15th General Elections to the Lok Sabha, that invitation may be extended only to the Leader of the winning coalition in the Lok Sabha, who is Shrimati Sonia Gandhi.

The outgoing Prime Minister, Dr Manmohan Singh, not having contested the Lok Sabha election, may not by  you be invited to be Prime Minister at this stage.

What happened in 2004 was that Shrimati Sonia Gandhi declined to accept such an invitation and instead effectively appointed Dr Singh to be PM despite his not being a member of the Lok Sabha nor intending to be so.

This exploited a constitutional loophole to the extent that our Constitution did not explicitly state that the PM must be from the Lok Sabha.

What may have been passable as the hurried exploitation of a loophole in 2004 is surely not acceptable in 2009.

Why the founders of our democratic polity such as BR  Ambedkar and Jawaharlal Nehru did not specify that the PM must be from the Lok Sabha was quite simply that it was a matter of complete obviousness to them and to their entire generation that this must be so — it would have been  appalling to them and something beyond their wildest imagination that a later generation, namely our own, would exploit this loophole and allow a PM to be appointed who is not a member of the Lok Sabha and intends not to be so.

Ambedkar, Nehru and all others of their time knew fully well that Lord Curzon had been explicitly denied the leadership of Britain’s Tory Party in 1922 because that would have made him a potential PM  when he was not prepared to be a member of the House of Commons.

That specific precedent (culminating a centuries-old  democratic trend of  political power flowing from monarchs to lords to commoners) has governed all parliamentary democracies  worldwide ever since  — until Dr Singh’s appointment in 2004.

In fact,  when such an anomalous situation once arose in Britain, Lord Home resigned his membership of the House of Lords to contest a House of Commons seat as Sir Alec Douglas Home  so that he could be PM in a manner consistent with parliamentary law.

I believe you are fully within constitutional law and precedent to invite Shrimati Sonia Gandhi to form the new Government of India after the 15th General Elections to the Lok Sabha.  If she declines and instead requests again the use of the loophole to appoint Dr Singh as PM,  I believe that parliamentary law and precedent requires him to resign from the Rajya Sabha and instead contest a seat in the Lok Sabha.

Respectfully submitted

Subroto Roy, PhD (Cantab.), BScEcon (London)

Citizen and Voter

Postscript: Please see also here “Inviting a new Prime Minister of India to form a Government: Procedure Right and Wrong”.

My 2009 prediction of the Sonia Congress election win

It is now coming up to be 3 pm Indian Standard Time on May 13, the last day of India’s 2009 General Elections, and there are two hours left for the polls to close.   I am happy to predict a big victory for the Congress Party, and Sonia Gandhi and her son Rahul will deserve congratulations for it.

How the victory takes shape is, I think, by their having won the median voter on both the economic and the secular-communal axes of Indian politics.  (See my 2008 published graph on the Median Voter Model in Indian politics, available elsewhere here).

I have met Sonia Gandhi once, in December 1991 at her home, where I gave her a tape of her husband’s conversations with me during the first Gulf War in 1991.   Her son and I met momentarily in her husband’s office in 1990-1991 but I do not recall any conversation.   I have had nothing to do with her Government.   Dr Manmohan Singh and I have met twice, once in Paris in the autumn of 1973 and once in Washington in September 1993; on the latter occasion, I was introduced to him and his key aides by Siddhartha Shankar Ray as the person on whose laptop the Congress manifesto of 1991 had been composed for Rajiv, something described elsewhere here.   (I also gave him then a copy of the published book that emerged from the University of  Hawaii perestroika-for-India project, Foundations of India’s Political Economy: Towards an Agenda for the 1990s, edited by myself and WE James.)  On the former occasion,  Dr Singh had kindly acceded to my father’s request to visit our then-home to advise me on economics before I started as a freshman undergraduate at the London School of Economics.

In May 2004 I was interviewed by BBC television in England and I praised the UPA in prospect — in comparison  to the horrors of the Vajpayee-Advani regime (including my personal experience of it, when their Education Minister had sent an astrology-believing acolyte to supposedly run a scientific/technical institute).

Since 2005, especially in the columns of The Statesman, I have dispensed rational criticism of the UPA Government as harshly as I have criticised the BJP/RSS and the Communists.  Principally, I believe they have got  some (perhaps most) much of their  economics (quite badly) wrong as well as their jurisprudence and foreign policy; they have also been willingly under the influence of the powerful organised lobbies and interest groups that populate our capital cities.

Even so, I think there is a large electoral victory in prospect for the Congress, and I send them my early congratulations.  They have done enough by way of political rhetoric and political reality to maintain or enhance their vote-share; their oppositions on either side have both failed badly. The BJP may make some marginal gains especially in Bihar but they have generally done enough to lose the day.  The CPM too will lose popularity especially in Bengal, and will never progress until they fire their JNU economists which they are never going to do.

So, Sonia-Rahul, well done!

But please try to improve your economics.

And, also, you simply must get Dr Manmohan Singh a seat in the Lok Sabha if he is to be PM — Ambedkar and Nehru and all their generation did not specify that India’s PM must be from the Lok Sabha because it was something totally OBVIOUS.

Subroto Roy

Postscript: Someone at a website has referred to my prediction above and remarked: “Perhaps the good doc is aware of the money in play”. The answer is no, I have absolutely no special information about any “money in play” on any side. My prediction is based on a layman’s observation of the campaign, as well as more specialised analysis of past voting data from the EC. In an earlier post, I pointed out the BJP had gotten some 17 million fewer votes than the Congress in 2004, and I asked if they had done enough to get enough of a net change in their favour. The answer I think is that they have not done so. To the contrary, I think there will be a quite large net change in favour of Congress thanks to a better-run and better-led campaign. Of course it is just a prediction that may be found to be incorrect.
SR

A Dozen Grown-Up Questions for Indian Politicians Dreaming of Becoming/Deciding India’s PM After the 2009 General Elections

The 2009 General Election campaign is supposed to elect a Parliament and a Head of Government for the Republic of India, not a Head Boy/Head Girl at an urban middle-class high school or the karta of a joint family. Unfortunately, our comprador national-level media seem to be docile  and juvenile enough in face of power and privilege to want to ask only touchy-feely koochi-woochi pretty baby questions of the “candidates” for PM (several of whom are not even running as candidates for the Lok Sabha but still seem to want to be PM).   Rival candidates themselves seem to want to hurl invective and innuendo at one another, as if all this was merely some public squabble between Delhi middle-class families.

So here are a set of grown-up adult questions instead:

1. Pakistan is politically and strategically our most important neighbour. Can you assure the country that a government headed by you will have a coherent policy on both war and peace with Pakistan? How would you achieve it?

2. Do you agree with the Reagan-Gorbachev opinion that “a nuclear war cannot be won and must never be fought”? If so, what would your Government do about it?

3. If there are Indian citizens in Jammu & Kashmir presently governed by Article 370 who wish to renounce Indian nationality and remain stateless or become Pakistani/Afghan/Iranian citizens instead, would you consider letting them do so and giving them Indian “green cards” for peaceful permanent residence in J&K and India as a whole?

4. Do you know where Chumbi Valley is? If so, would your Government consider reviving the decades-old idea with China to mutually exchange permanent leases to Aksai Chin and Chumbi Valley respectively?

5. Nuclear power presently accounts as a source of about 4% of total Indian electricity; do you agree that even if nuclear power capacity alone increased by 100% over the next ten years and all other sources of electricity remained constant, nuclear power would still account for less than 8% of the total?

6. The public debt of the country  may now amount to something like Rs 30 lakh crore (Rs 30 trillion); do you find that worrisome? If so, why so? If not, why not?

7. The Government of India may be paying something like Rs 3 lakh crore (Rs 3 trillion) annually on interest payments on its debt;  do you agree that tends to suck dry every public budget even before it can try to do something worthwhile?

8.  If our money supply growth is near 22% per annum, and the rate of growth of real income is near 7% per annum, would you agree the decline in the value of money (i.e., the rate of inflation) could be as high as 15% per annum?

9. Do you agree that giving poor people direct income subsidies is a far better way to help them than by distorting market prices for everybody? If not, why not?

10. How would you seek to improve the working of  (and reduce the corruption in) the following public institutions: (1) the Army and paramilitary; (2) the Judiciary and Police; (3) Universities and technical institutes?

11. There has never been a Prime Minister in any parliamentary democracy in the world throughout the 20th Century who was also not an elected member of the Lower House; do you agree BR Ambedkar and Jawaharlal Nehru intended that for the Republic of India as well and thought it  something so obvious as  not necessary to specify in the 1950 Constitution?  What will your Government do to improve the working of the Presidency, the Lok Sabha, Rajya Sabha and State Assemblies?

12. What, personally, is your vision for India after a five-year period of a Government led by you?

Subroto Roy,

Citizen & Voter

Posted in 15th Lok Sabha, Academic research, Afghanistan, Air warfare, Aksai Chin, BR Ambedkar, China's expansionism, China-India Relations, Chumbi Valley, India's 2009 General Election, India's Army, India's Banking, India's Budget, India's bureaucracy, India's Constitution, India's constitutional politics, India's Democracy, India's Diplomacy, India's Economy, India's education, India's Election Commission, India's Electorate, India's Foreign Policy, India's Government Budget Constraint, India's Government Expenditure, India's higher education, India's History, India's inflation, India's Judiciary, India's Lok Sabha, India's Macroeconomics, India's Monetary & Fiscal Policy, India's nomenclatura, India's Personality Cults, India's political lobbyists, India's political parties, India's Politics, India's Polity, India's pork-barrel politics, India's poverty, India's Presidency, India's private TV channels, India's Public Finance, India's Rajya Sabha, India's Reserve Bank, India's Rule of Law, India's State Finances, India's Supreme Court, India's Union-State relations, India-China relations, India-Pakistan cooperation against terrorism, India-Pakistan naval cooperation, India-Pakistan peace process, India-Tibet Border, India-United States business, India-US Nuclear Deal, International diplomacy, Iran, Jammu & Kashmir, Jammu & Kashmir in international law, Jawaharlal Nehru, Just war, Laddakh, Land and political economy, LK Advani, Manmohan Singh, Pakistan's murder of Indian POWs, Pakistan's terrorist masterminds, Pakistan's terrorist training institutes, Pakistan, Balochistan, Afghanistan, Iran, Pakistani expansionism, Press and Media, Sonia Gandhi, Stonewalling in politics, Voting, War. Leave a Comment »

Politics can be so entertaining :) Manmohan versus Sonia on the poor old CPI(M)!

My January 14 2007 article “On Land-Grabbing” started by saying:

“AT a business meet on 12 January 2005, Dr Manmohan Singh showered fulsome praise on Buddhadeb Bhattacharjee as “dynamic”, “the Nation’s Best Chief Minister”, whose “wit and wisdom”, “qualities of head and heart”, “courage of conviction and passionate commitment to the cause of the working people of India” he admired, saying “with Buddhadeb Babu at the helm of affairs it appears Bengal is once again forging ahead… If today there is a meeting of minds between Delhi and Kolkata, it is because the ideas that I and Buddhadebji represent have captured the minds of the people of India. This is the idea of growth with equity and social justice, the idea that economic liberalization and modernization have to be mindful of the needs of the poor and the marginalized.”  With such support of a Congress Prime Minister (as well as proximity to Pranab Mukherjee), Mr Bhattacharjee could hardly have feared the local Congress and Trinamul would pose any threat in the 2006 Assembly Elections despite having more potential voters between them than the CPI-M.  Dr Singh returned to the “needs of the poor and the marginalized” at another business meet on 8 January 2007 promising to “unveil a new Rehabilitation Policy in three months to increase the pace of industrialisation” which would be “more progressive, humane and conducive to the long-term welfare of all stakeholders”, while his businessman host pointedly stated about Singur “land for industry must be made available to move the Indian manufacturing sector ahead”.   The “meeting of minds between Delhi and Kolkata” seems to be that agriculture allegedly has become a relatively backward slow-growing sector deserving to yield in the purported larger national interest to industry and services: what the PM means by “long-term welfare of all stakeholders” is the same as the new CPI-M party-line that the sons of farmers should not remain farmers (but become automobile technicians or IT workers or restaurant waiters instead).  It is a political viewpoint coinciding with interests of organised capital and industrial labour in India today, as represented by business lobbies like CII, FICCI and Assocham on one hand, and unions like CITU and INTUC on the other. Business Standard succinctly (and ominously) advocated this point of view in its lead editorial of 9 January as follows: “it has to be recognised that the world over capitalism has progressed only with the landed becoming landless and getting absorbed in the industrial/service sector labour force ~ indeed it is obvious that if people don’t get off the land, their incomes will rise only slowly”. “

I went on to say

“Land is the first and ultimate means of production, and the attack of the powerful on land-holdings or land-rights of the unorganised or powerless has been a worldwide phenomenon ~ across both capitalism and communism.”

It is interesting and amusing to see today’s newspapers report that the person who appointed Dr Manmohan Singh to be India’s PM, namely Sonia Gandhi,  has taken a  180-degree turn on this subject while sitting beside Mamata Banerjee yesterday.

She apparently said:  “I am happy so be sharing the  dais with Mamata Banerjee once again….in Nandigram and Singur the State Government had unleashed dictatorship in the garb of democracy… . In the name of development (the CPI(M)) created terror in Nandigram and Singur.  In the name of development, they snatched the land from the poor people there.”

Now what is the poor old CPI(M) to think after all this! Politics can be so  entertaining.  😀

Subroto Roy

India is not a monarchy! We urgently need to universalize the French concept of “citoyen”! (2009)

Each of the two sons of Feroze and Indira Gandhi died tragically  in his prime, years ago, and it is unbecoming to see their family successors squabble today. Everyone may need to be constantly reminded that this handful of persons are in fact ordinary citizens in our democratic polity, deserving India’s attention principally in such a capacity.

What did, indeed, Feroze Gandhi, Jawaharlal Nehru, Sanjay Gandhi, Indira Gandhi and Rajiv Gandhi “live and die for”?  It was not any one identifiable thing or any set of common things, that seems certain.

Feroze Gandhi from all accounts stood for integrity in Indian politics and journalism; it is not impossible his premature death was related to  his wife’s negligence because she had returned to her father’s side instead.  Jawaharlal Nehru did not do well as a father to promote his daughter so blatantly as his assistant either before 1947

nehruindira70yearsago1

or after.

nehruindira56

Nehru did not achieve political power until well into middle age; his catastrophic misjudgment of communist ideology and intentions, especially Chinese communist ideology and intentions, contributed to an Indian defeat at war, and led soon thereafter to his health collapsing and his death. He and Indira somewhat nonchalantly made a visit to Ceylon even as the Chinese attack was commencing; a high point of my own childhood was saying namaste on October 13 1962 at Colombo airport when they arrived.

nehru

Feroze and Indira’s younger son evidently came to die in a self-inflicted aeronautical mishap of some sort.  What did Sanjay Gandhi “live for”?  The book Foundations of India’s Political Economy: Towards an Agenda for the 1990s created twenty years ago in America

indvol

has a chapter titled “The State of Governance” by the political scientist James Manor which says:

“After 1973 or so, personal loyalty tended increasingly to become the main criterion for advancement in the Congress Party. People who appeared to be loyal often replaced skilled political managers who seemed too independent.  Many of these new arrivals did not worry, as an earlier generation of Congress officials  had done, that excessive private profiteering might earn the wrath of party leaders.  In 1975, Sanjay Gandhi suddenly became the second most powerful figure in Indian politics.  He saw that the parties of the left and right had strong organizations that could put large numbers of militants into the streets for demonstrations while Congress had no such capacity.  In the belief that Congress should also have this kind of muscle, he began recruiting elements from urban centres including the criminal underworld.  The problem of corruption was exacerbated by demands that State-level Congress leaders place large sums of money at the disposal not of the national party but of the persons who presided over it.  Congress chief ministers realized that a fulsome response to these demands went a long way toward insulating them from interference from New Delhi, and a monumental system of fund-raising sprang up.  When so many people were being drawn into semi-institutionalized malfeasance, which seemed to be condoned by higher authorities, it was inevitable many would skim off portions of the funds raised for personal benefit.  Corruption soared. The problem was compounded by the tendency for people to be dismissed from public and party offices abruptly, leading many Congress politicians to fear that their time in power might be quite short.”

I do not have reason to disagree with this  opinion  contained in the book  that I and WE James created  at the University of Hawaii twenty years ago.   If anything, Sanjay’s political model may have spread  itself across  other Indian  political parties in one way or another.

What does strike me as odd in light of current  political controversy is that  several  of Sanjay’s friends and colleagues  are now part-and-parcel of the   Sonia Congress – one must ask, were they such fair-weather  friends that they never  lent a hand or a shoulder to his young widow and her infant son especially against the cruelties Sanjay’s mother bestowed upon them?  Did they offer help or guidance to Sanjay’s son, have they tried to guide him away from becoming the bigoted young politician he seems to wish to be today?

Indira’s major faults included playing favourites among her bahus and her grandchildren with as much gusto as any mother-in-law portrayed on the tackiest TV-serial today.

What were her good deeds?  There was one, and it was an enormously large one, of paramount significance for the country and our subcontinent as a whole: her statesmanship before, during and to some extent after the war that created Bangladesh.  My father has preserved a classic photograph over the years of Indira’s finest period as an international stateswoman, when she visited Paris and other foreign capitals including Washington in the autumn of 1971.

scan0024

She tried to prevent the Yahya Khan/Tikka Khan  genocide in Bangladesh when many  Bangladeshis came to be sacrificed at the altar of the Nixon-Kissinger visits to Mao and Zhou.  She made a major diplomatic effort in world capitals to avert war with West Pakistan over its atrocities in East Pakistan. But war could not be averted, and within a few weeks, in December 1971, Bangladesh was born.

“Indira Gandhi’s one and paramount good deed as India’s leader and indeed as a world leader of her time was to have fought a war that was so rare in international law for having been unambiguously just. And she fought it flawlessly. The cause had been thrust upon her by an evil enemy’s behaviour against his own people, an enemy supported by the world’s strongest military power with pretensions to global leadership. Victims of the enemy’s wickedness were scores of millions of utterly defenceless, penniless human beings. Indira Gandhi did everything right. She practised patient but firm diplomacy on the world’s stage to avert war if it was at all possible to do. She chose her military generals well and took their professional judgment seriously as to when to go to war and how to win it. Finally, in victory she was magnanimous to the enemy that had been defeated. Children’s history-books in India should remember her as the stateswoman who freed a fraternal nation from tyranny, at great expense to our own people. As a war-leader, Indira Gandhi displayed extraordinary bravery, courage and good sense.” (From my review article of Inder Malhotra’s Indira Gandhi, first published in The Statesman May 7 2006.)

“She had indeed fought that rarest of things in international law: the just war. Supported by the world’s strongest military, an evil enemy had made victims of his own people. Indira tried patiently on the international stage to avert war, but also chose her military generals well and took their professional judgment seriously as to when to fight if it was inevitable and how to win. Finally she was magnanimous (to a fault) towards the enemy ~ who was not some stranger to us but our own estranged brother and cousin.  It seemed to be her and independent India’s finest hour. A fevered nation was thus ready to forgive and forget her catastrophic misdeeds until that time….” (From  “Unhealthy Delhi” first published in The Statesman June 11 2007).

What did Indira die for?  I have said it was “blowback” from domestic and/or international politics, similar to what happened to Rajiv Gandhi and Benazir Bhutto in later years.

“Indira Gandhi died in “blowback” from the unrest she and her younger son and others in their party had opportunistically fomented among Sikh fundamentalists and sectarians since the late 1970s.  Rajiv Gandhi died in “blowback” from an erroneous imperialistic foreign policy that he, as Prime Minister, had been induced to make by jingoistic Indian diplomats, a move that got India’s military needlessly involved in the then-nascent Sri Lankan civil war.  Benazir Bhutto similarly may be seen to have died in “blowback” from her own political activity as prime minister and opposition leader since the late 1980s, including her own encouragement of Muslim fundamentalist forces.  Certainly in all three cases, as in all assassinations, there were lapses of security too and imprudent political judgments made that contributed to the tragic outcomes.” From “An Indian Reply to President Zardari”.

And then there was Rajiv.  He did not know me except in his last eight months. It has now emerged that Dr Manmohan Singh’s first bypass operation was in 1990-1991, coinciding precisely with the time I gave Rajiv the results of the perestroika-for-India project that I had led at the University of Hawaii since 1986, an encounter that sparked the 1991 economic reform as has been told elsewhere. Dr Singh was simply not in that loop, nor has he himself ever claimed to have been in it — regardless of what innumerable flatterers, sycophants and other straightforwardly mendacious characters in Delhi’s high power circles have been making out over the years since.  Facts are rather stubborn things.

As a 35-year old newcomer to Delhi and a complete layman on security issues, I did what little I knew  how to try to reduce the vulnerability that I felt  Rajiv  faced from unknown lists of assassins.

“That night KR dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. KR asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.  This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the V. P. Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization…..  the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi. Eleven years later, on 25 May 2002, press reports said “P. V. Narasimha Rao and Manmohan Singh lost their place in Congress history as architects of economic reforms as the Congress High command sponsored an amendment to a resolution that had laid credit at the duo’s door. The motion was moved by…. Digvijay Singh asserting that the reforms were a brainchild of the late Rajiv Gandhi and that the Rao-Singh combine had simply nudged the process forward.” Rajiv’s years in Government, like those of Indira Gandhi, were in fact marked by profligacy and the resource cost of poor macroeconomic policy since bank-nationalisation may be as high as Rs. 125 trillion measured in 1994 rupees. Certainly though it was Rajiv Gandhi as Leader of the Opposition in his last months who was the principal architect of the economic reform that came to begin after his passing.”

(I have had to say that I do not think the policies pursued by Dr Singh thus far have been consistent with the direction I believe Rajiv,  in a second term as PM, would have wished to take. See, for example, “India’s Macroeconomics”, “Fallacious Finance”, “Against Quackery”, “Mistaken Macroeconomics”, and other articles listed and linked at “Memo to Dr Kaushik Basu”.  See also https://independentindian.com/2006/05/21/the-politics-of-dr-singh/ https://independentindian.com/2008/04/25/assessing-manmohan-the-doctor-of-deficit-finance-should-realise-the-currency-is-at-stake/  https://independentindian.com/2013/08/23/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-encounter-with-rajiv-gandhi-just-as-siddhartha-shan/)

The treatment of Indira or Rajiv or Sanjay or their family successors as royalty of any kind whatsoever in India was, is, and remains absurd, reflecting stunted growth of Indian democracy.  I remember well the obsequiousness I witnessed on the part of old men in the presence of Rajiv Gandhi.

Tribal and mansabdari political cultures still dominate Northern and Western regions of the Indian subcontinent (descending from the Sikhs, Muslims, Rajputs, Mahrattas etc).

Nehru in his younger days was an exemplary democrat, and he had an outstanding democratically-minded young friend in Sheikh Mohammad Abdullah.

abdullahnehru1947

But Nehru and Abdullah as Westernized political liberals were exceptions  in the autocratic/monarchical political cultures of north India (and Pakistan) which continue today and stunt the growth of any democratic mindset.

What we may urgently need is some French  Liberté, égalité, fraternité ! to create a simple ordinary citoyen universally in the country and the subcontinent as a whole!  May we please import a Marquis de Lafayette?

Bengal and parts of Dravidian India have long lost fondness for monarchy and autocracy —  Western political liberalism began to reach  Kolkata  almost two centuries ago after all (see e.g. Tapan Raychaudhuri’s  fine study Europe Reconsidered). Both Nepal and Pakistan have been undergoing radical transformation towards democracy in recent  months, as Bengali Pakistanis had done 40 years earlier under Sheikh Mujib.  I said last year and say again that there may be a dangerous  intellectual vacuum around the throne of Delhi.

Subroto Roy

Transparency & history: India’s archives must be opened to world standards

Transparency & history: India’s archives must be opened to world standards
by Claude Arpi & Subroto Roy
First published in Business Standard New Delhi December 31, 2008, 0:26 IST

The Government of India continues to hide India’s history from India’s people using specious excuses. An example is the Henderson-Brook report on the 1962 war, a single copy of which is said to exist locked away in the Defence Ministry. An anti-Indian author like Neville Maxwell is among the few ever given access to it; he has reiterated his factually incorrect theory (accepted by Henry Kissinger and Zhou Enlai and the US and Chinese establishments since) that the 1962 war was due to Nehru’s aggressive policy and China had no choice but launch a “pre-emptive attack”.

In Parliament not long ago, Defence Minister A K Antony said: “Considering the sensitivity of information contained in the report and its security implications, the report has not been recommended to be declassified in the National Security interest.” This is nonsense. Nothing from as far back as 1962 can possibly affect anything significant to India’s security today. In any case the Defence Ministry’s official history of the 1962 war, though officially unpublished, is openly available.

Even the 2005 Right to Information Act goes against transparency of research into India’s history. Article 8 (1) (a) says, “there shall be no obligation to give any citizen,— (a) information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence.” This can cover all files of the MEA, Defence and Home; there seems to be no right to academic freedom for India’s people to research their own history.

China itself is more open with its archives. Since 2004, the Foreign Ministry in Beijing has begun a systematic process declassifying more than 40,000 items from its diplomatic records for the period 1949-1960. The Cold War International History Project at the Woodrow Wilson International Center in Washington DC has recently published Inside China’s Cold War; the Project Director admits this has been possible due to China’s “archival thaw”.

In the USA, official documents are made available after 30 years or when a reasonable demand is made under the Freedom of Information Act. Numerous groups exist whose only work is to make sure the law is followed. The recently released Foreign Relations of the United States, Volume XVIII, China (1973-1976) published by the American foreign ministry reveals several interesting aspects of the India-USA-China relationship. Last year the National Archives and Records Administration (NARA) posted some 320,000 declassified cables on-line. The text of once-secret diplomatic cables indexed is today retrievable from the NARA Website. It also includes withdrawal cards for documents still classified, so these can be requested under the Freedom of Information Act. Out of 119,356 documents for 1973 and 200,508 for 1974, some 7,484 were related to India. Indians scholars today have to rely on US documents for their own history!

In an open society, the ordinary citizen has reasonably easy access to any and all information relating to the public or social interest— whether the information is directly available to the citizen himself/herself, or is indirectly available to his/her elected representatives like MPs and MLAs. Different citizens will respond to the same factual information in different ways, and conflict and debate about the common good will result. But that would be part of the democratic process. In an open society, both good news and bad news is out there in the pubic domain— to be assessed, debated, rejoiced over, or wept about. Citizens are mature enough to cope with both— the experience causes a process of social maturation in formulating the common good as well as responses to problems or crises the community may face. People improve their civic capacities, becoming better-informed and more discerning voters and decision-makers, and so becoming better citizens.

The opposite of an open society is a closed society— in which a ruling political party or self-styled elite or ‘nomenclatura’ keep publicly important information to themselves, and do not allow the ordinary citizen easy or reasonably free access to it. The reason may be merely that they are intent on accumulating assets for themselves in the dark as quickly as possible while in office, or that they are afraid of public anger and want to save their own skins from demands for accountability. Or it may be they have the impression that the public is better off kept in the dark— that only the elite ‘nomenclatura’ is in a position to use the information to serve the national interest. Bad news comes to be suppressed and so good news gets exaggerated in significance. News of economic disasters, military defeats or domestic uprisings gets suppressed. News of victories or achievements or heroics gets exaggerated. If there are no real victories, achievements or heroics, fake ones have to be invented by government hacks— though the suppressed bad news tends to silently whisper all the way through the public consciousness in any case.

Such is the way of government propaganda everywhere. Closed society totalitarianism permitted the general masses to remain docile and unthinking while the ‘nomenclatura’ make the decisions. Dostoevsky’s Grand Inquisitor said that is all that can be expected of the masses. Open society transparency was instead defined by Pericles for the Athenians: “Here each individual is interested not only in his own affairs but in the affairs of the state as well; even those who are mostly occupied with their own business are extremely well-informed on general politics— this is a peculiarity of ours: we do not say that a man who takes no interest in politics is a man who minds his own business; we say that he has no business here at all.”

The study of the subcontinent’s history using archival material is crucial to disentangle difficult problems like the Jammu & Kashmir issue or the border problem with China. Yet today nobody can access independent India’s primary sources locked in South Block and North Block in New Delhi. Most bizarrely, Jawaharlal Nehru’s papers are under control of his descendants like Priyanka Vadra and Sonia Gandhi, who claim copyright. Someone may need to tell them there is a universal principle that there can be no copyright on the public life-work of historical figures like presidents and prime ministers.

Leadership vacuum

First published in The Statesman, Editorial Page Special Article, June 7 2008, http://www.thestatesman.net

Leadership vacuum

Time & Tide Wait For No One In Politics: India Trails Pakistan & Nepal!

Subroto Roy

The Karnataka legislative elections, as well as to lesser extent the Bengal panchayat polls, have revealed the vacuum that exists across the leadership of India’s national-level politics today.

To start with the BJP: had India been a normal democratic country on the Western pattern, Mr Arun Jaitley would have rocketed to the top of his party’s leadership by now. Besides being articulate in both Hindi and English and in his fifties (the age-group of most leaders in democratic countries), Mr Jaitley’s political acumen and organisational skills have been acknowledged even by his Congress adversaries after the Karnataka result. He himself has been frank and expansive about his formula for winning in Karnataka, which was simply to focus on real issues, especially state-specific ones, as well as to project a single credible leader. Had the BJP been a normal political party in a normal country, Mr Jaitley would have been given the task of leading it to victory in the next General Election and, assuming he won a Lok Sabha seat, to become its prime ministerial candidate.

Dadagiri

Instead, the BJP chooses to remain backward, backward, backward in the majority of its thought-processes and behaviour-patterns ~ from its kneejerk anti-Muslim psychology via its hyperinflationary macroeconomics and protectionist trade to its embrace of astrology and bovine exclusiveness. The idea of uniting behind someone relatively modern-minded in his politics like Mr Jaitley would be simply unacceptable not merely to people in the party within his own age-cohort (including the present party president) but even more so to those in age-cohorts decades older (including the party’s present prime ministerial candidate).

The opposition of the first group would arise from, in a word, jealousy. The opposition of the second group would arise from, in a word, dadagiri, i.e. the gerontocratic idea that merely because one is older, one is owed respect, authority and the plums of office in precedence over someone who is younger. Jealousy is a universal emotion not something specific to Indian politics, but dadagiri and the lack of meritocracy in our political culture is one reason India remains an abnormal polity in the modern democratic world.

LK Advani, driven by his unfulfilled personal ambition, will likely lead the BJP in the next election and do so with Mr Jaitley’s explicit support; Mr Advani may lead it into defeat or even to a victory in which he, given his age, is not as successful a PM as a Jaitley might have been. Yet our sclerotic political culture is such that neither Mr Advani nor Mr Rajnath Singh will simply stand aside now and hand over the reins to a newer, more competent and progressive leadership.

The same idea of dadagiri pervades what passes for the official “Left” in India as exemplified by the CPI-M. Mr Jyoti Basu has in a recent letter to Harkishen Singh Surjeet reminisced of their times together, and in doing so remarked that he remained the Chief Minister of West Bengal for as many years as he did because the Party had instructed him to do so, and when he handed over power to Buddhadeb Bhattacharjee, he did so with the Party’s agreement.

Those who believe in India’s parliamentary democracy might have thought that what our system requires is for a Chief Minister to hold the confidence of the legislative assembly from the bottom up but clearly that is not so because what a CM or PM seems to need are Party instructions from the top down. When Mr Bhattacharjee was anointed the new CM, the present author had remarked to the then Editor of The Statesman that the transition seemed to take place even without a formal vote of confidence in the Assembly. Does anyone in fact recall the last confidence vote debated and passed in the West Bengal Assembly? Democratic legislatures the world over routinely begin their new sessions with a debate and vote of no confidence being brought by the Opposition against the Government-of-the-day.

Does that happen with us, purportedly the world’s largest democracy? Let aside State legislatures, even our Parliament sees only the rare vote of confidence, and LK Advani specifically as Leader of the Opposition seems to have introduced none. Oppositions that do not wish to properly oppose are of course complicit in a government’s misdeeds.

It is the dadagiri culture shared by the official Communists that has caused the generational handover of power from Mr Basu and Mr Surjeet to the JNU coterie of the Karats and Mr Sitaram Yechuri. The “Left” like the “Right” and everyone else in Indian politics, can only handle cherubic “known” faces at the top ~ genuine grassroots activists like Binayak Sen or Medha Patkar must languish in jail or starve on hunger-strike in seeking to represent the politically and economically powerless in India while the entrenched dadas of Indian politics continue with their dissimulation.

Puppet-masters

In case of the Congress, it is an even deeper aspect of the Indian joint family system than dadagiri that has dominated its political culture, namely, the question who is the karta of the family and, if the karta is or seems too young or naïve or inexperienced, who will act as Regent on the karta’s behalf? Indira Gandhi was successfully guided in international politics for several years by a coterie led by PN Haksar. Rajiv Gandhi was attempted to be guided by several different competing coteries of senior party dadas ~ one of whom first brought up the name of Manmohan Singh in Indian politics on 22 March 1991 in a challenge addressed to the present author on liberalisation plans that Rajiv had authorised.

It is almost true to say that Sonia Gandhi and Rahul Gandhi have been in recent years played by puppet-masters of whose personal interests and intrigues they remain clueless. As has been said before by this author, the most salubrious thing Sonia Gandhi could have done for the Congress Party was to remain steadfast in her decision to stay out of Indian politics, and to have organised a fair, tough intra-party contest among its putative senior leaders based on differences of political and economic ideology.

Instead there is now paralysis in decision-making induced by Sonia Gandhi and Manmohan Singh each mistakenly relying upon the other’s purported economic wisdom and political acumen. This confusion came to be most clearly illustrated in the choice of Head of State last year though that was something politically costless ~ the failures of which Karnataka is the current example may lead the Congress to lose what it, like other Indian parties, loves most of all, namely political power in Lutyens’ Delhi.

Indians should make no mistake: our good neighbours in Pakistan and Nepal (Muslim in Pakistan, Hindu and Buddhist and communist in Nepal) have been through healthy cathartic political experiences in recent months and years of a kind we have not. There continues to remain a dangerous intellectual vacuum around the throne of Delhi.

“All India wept”: On the death of Rajiv Gandhi May 21 1991

“All India wept” is a sentence from my “Rajiv Gandhi and the Origins of India’s 1991 Economic Reform”, one of the most viewed articles that is published at this site, and excerpted from below. I was in Singapore on my way to the USA to bring my young son back for his summer holidays with me. I heard it first on the radio at night while asleep in a hotel but the horror of what was reported did not register in my semi-conscious brain. It was only the next morning that I read the newspaper headlines at the airport and came to recall what had been said. I phoned my father and found him, at age 75, weeping.

Today, watching all the New Delhi dignitaries parade along Rajiv’s memorial, I wonder if he would have approved: almost certainly not. He would have wanted them to be at their jobs instead of wasting time like this; as for the young family he left behind, he has of course never left them.

Subroto Roy

from Rajiv Gandhi and the Origins of India’s 1991 Economic Reform (1995, 2001, 2005, 2007):

“Krishnamurty had prepared a draft dated March 18 of several pages of the economic aspects of the manifesto. After our discussions, Krishnamurty was hospitable enough to open the draft to improvement. That evening, the 19th, I worked through the night and the next morning to get by noon copies of a revised version with all the members of the group. At 4 p.m. on the 20th there was a meeting at Andhra Bhavan of the whole group except Pitroda, which went on until the night. The next day the 21st , Krishnamurty, Khusro and I met again at Andhra Bhavan for a few hours on the economic aspects of the draft. Then in mid-afternoon I went to Rasgotra’s home to work with him and Krishna Rao. They wanted me to produce the economic draft which they could then integrate as they wished into the material they were dictating to a typist. I offered instead to absorb their material directly on to my laptop computer where the economic draft was. Rasgotra was reluctant to let go control, and eventually I gave in and said I would get them a hard copy of the economic draft, which they then planned to re-draft via a stenographer on a typewriter. At this, Rasgotra gave in and agreed to my solution. So the work began and the three of us continued until late.

That night Krishna Rao dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. Krishna Rao asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.

This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the V. P. Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization….

On March 23, our group was to meet Rajiv at noon. There was to be an event in the inner lawns of Rajiv’s residence in the morning, where he would launch Krishna Rao’s book on India’s security. Krishna Rao had expressly asked me to come but I had to wait outside the building patiently, not knowing if it was a mistake or if it was deliberate. This was politics after all, and I had ruffled feathers during my short time there. While I waited, Rajiv was speaking to a farmers’ rally being held at grounds adjoining his residence, and there appeared to be thousands of country folk who had gathered to hear him. When it was over, Rajiv, smiling nervously and looking extremely uncomfortable, was hoisted atop people’s shoulders and carried back to the residence by his audience. As I watched, my spine ran cold at the thought that any killer could have assassinated him with ease in that boisterous crowd, right there in the middle of Delhi outside his own residence. It was as if plans for his security had been drawn up without any strategic thinking underlying them.

Krishna Rao arrived and graciously took me inside for his book launch. The event was attended by the Congress’s top brass, including Narasimha Rao whom I met for the first time, as well as foreign military attaches and officers of the Indian armed forces. The attaché of one great power went about shaking hands and handing out his business card to everyone. I stood aside and watched. Delhi felt to me that day like a sieve, as if little could be done without knowledge of the embassies. One side wanted to sell arms, aircraft or ships, while the other wanted trips abroad or jobs or green cards or whatever for their children. And I thought Islamabad would be worse — could India and Pakistan make peace in this fetid ether?

Proceedings began when Rajiv arrived. This elite audience mobbed him just as the farmers had mobbed him earlier. He saw me and beamed a smile in recognition, and I smiled back but made no attempt to draw near him in the crush. He gave a short very apt speech on the role the United Nations might have in the new post-Gulf War world. Then he launched the book, and left for an investiture at Rashtrapati Bhavan. We waited for our meeting with him, which finally happened in the afternoon. Rajiv was plainly at the point of exhaustion and still hard-pressed for time. He seemed pleased to see me and apologized for not talking in the morning. Regarding the March 22 draft, he said he had not read it but that he would be doing so. He said he expected the central focus of the manifesto to be on economic reform, and an economic point of view in foreign policy, and in addition an emphasis on justice and the law courts. I remembered our September 18 conversation and had tried to put in justice and the courts into our draft but had been over-ruled by others. I now said the social returns of investment in the judiciary were high but was drowned out again. Rajiv was clearly agitated that day by the BJP and blurted out he did not really feel he understood what on earth they were on about. He said about his own family, “We’re not religious or anything like that, we don’t pray every day.” I felt again what I had felt before, that here was a tragic hero of India who had not really wished to be more than a happy family man until he reluctantly was made into a national leader against his will. We were with him for an hour or so. As we were leaving, he said quickly at the end of the meeting he wished to see me on my own and would be arranging a meeting. One of our group was staying back to ask him a favour. Just before we left, I managed to say to him what I felt was imperative: “The Iraq situation isn’t as it seems, it’s a lot deeper than it’s been made out to be.” He looked at me with a serious look and said “Yes I know, I know.” It was decided Pitroda would be in touch with each of us in the next 24 hours. During this time Narasimha Rao’s manifesto committee would read the draft and any questions they had would be sent to us. We were supposed to be on call for 24 hours. The call never came. Given the near total lack of system and organization I had seen over the months, I was not surprised. Krishna Rao and I waited another 48 hours, and then each of us left Delhi. Before going I dropped by to see Krishnamurty, and we talked at length. He talked especially about the lack of the idea of teamwork in India. Krishnamurty said he had read everything I had written for the group and learned a lot. I said that managing the economic reform would be a critical job and the difference between success and failure was thin.

I got the afternoon train to Calcutta and before long left for America to bring my son home for his summer holidays with me. In Singapore, the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi. Eleven years later, on 25 May 2002, press reports said “P. V. Narasimha Rao and Manmohan Singh lost their place in Congress history as architects of economic reforms as the Congress High command sponsored an amendment to a resolution that had laid credit at the duo’s door. The motion was moved by…. Digvijay Singh asserting that the reforms were a brainchild of the late Rajiv Gandhi and that the Rao-Singh combine had simply nudged the process forward.” Rajiv’s years in Government, like those of Indira Gandhi, were in fact marked by profligacy and the resource cost of poor macroeconomic policy since bank-nationalisation may be as high as Rs. 125 trillion measured in 1994 rupees. Certainly though it was Rajiv Gandhi as Leader of the Opposition in his last months who was the principal architect of the economic reform that came to begin after his passing.”

Assessing Manmohan: The Doctor of Deficit Finance should realise the currency is at stake

Assessing Manmohan:

The Doctor of Deficit Finance should realise the currency is at stake

by Subroto Roy

First published in The Statesman, Editorial Page Special Article, April 25 2008,

The best thing that may be said of the Manmohan Singh premiership is that when it began in May 2004, it seemed, for a short while, refreshing in comparison to the dysfunctional arrogance and brutality displayed by its predecessor. By the last months of the Vajpayee-Advani Government, there were party appointees who had ended all pretence of purportedly Hindu values and were raking it in shamelessly. The Golden Rule of Democracy is “Throw the rascals out”, which is what Indian democracy upheld as it has done time and again. By 2009, India’s electorate will have the chance to decide whether the incumbent government deserves the same fate.

Lok Sabha

Manmohan Singh was seriously discussed as the Congress’s putative nominee for PM as early as 2001. The idea brewing at the time with the party’s next generation of wannabe leaders (in their 50s and 60s, where Manmohan was near 70) was that they needed to maintain good relations with the Great White Queen and wait out one term of an inevitable Singh premiership before having a shot at the top job themselves.

What is surprising is Dr Singh appeared never to feel it necessary to educate himself privately on how to retool himself for the necessary transformation from being the archetypal bureaucrat he had been in his working career to becoming the national statesman he wished to be after retirement. It is doubtful, for example, if he ever stood in front of a mirror and practised an extempore political speech in Hindi in preparation for the highest executive post in the country, let aside writing a clear-headed, original vision or mission statement of substance as to where he wished to lead it. As Narasimha Rao’s Finance Minister, he could meekly take orders from his PM; it seemed he wished to continue in the same mode even when PM himself.

Jawaharlal Nehru is supposed to have been a hero of Dr Singh’s ~ but Nehru was a thorough parliamentarian, among the finest anywhere, and someone who always respected the Lok Sabha immensely. Dr Singh, after he lost to VK Malhotra for the South Delhi seat in 1999, made not the slightest effort to enter the Lok Sabha again, even when the Akalis indicated they might not oppose him in a Punjab contest. When asked specifically at a large press conference about not entering the Lok Sabha, Dr Singh murmured words to the effect he had better uses of his time ~ a display, if anything, of the misplaced arrogance of many New Delhi academics and intellectuals. Dr Singh may be the first PM in any parliamentary democracy never to have won a seat in the lower house nor felt a need to do so.

Dr Singh’s bureaucratic expertise assisted him well in the first national crisis that came his way, which was the Tsunami of 26 December 2004. There appeared to be an air of efficiency about the Government’s response and he seemed in his element as commander of bureaucratic forces while working with Pranab Mukherjee in enlisting the military. George W. Bush (not a great geographer or historian) was apparently impressed to see on a map that India had naval forces deployed as far as the Andamans.

By 2005 though, Dr Singh’s bureaucratic mindset had its negative impact. Montek Ahluwalia had been his Finance Secretary when he was Finance Minister. Mr Ahluwalia’s spouse had been a main supporter of Dr Singh’s unsuccessful Lok Sabha attempt. During the Vajpayee Government, Mr Ahluwalia remained a Planning Commission Member for several years before moving to Washington. With Dr Singh as PM, Mr Ahluwalia returned from the USA in mid 2004 to become Deputy Chair at the Planning Commission. Simultaneously with his return, the idea that the American nuclear industry would like to sell “six to eight lightwater reactors” to India arose.

That is as much as is presently known in public. Dr Singh and Mr Ahluwalia may in the national interest want to frankly and precisely explain to the Indian people the full story of the sudden origins of this idea. Certainly, none of the lessons of the Dabhol fiasco a decade earlier seemed to have been learnt, and the Maharasthtra Government (and hence the Government of India) ended up paying some $300 million to General Electric and Bechtel Corporation for Dabhol before any nuclear talks with the USA could begin. Nor had any serious cost-benefit analysis been done or discussion taken place comparing nuclear energy with coal, hydro and other sources in the Indian case.

Indian foreign policy became frozen in its focus on nuclear negotiations with the USA, swirling around Dr Singh’s fife-and-drum welcome at the White House and President Bush’s return visit to India. At the same time arose the issue of Paul Volcker’s UN committee mentioning the name of India’s foreign minister. As The Statesman put it, regardless of the latter’s involvement, “the damage to India’s diplomatic reputation in the world” was done and it was inevitable a new foreign minister would be necessary. After dilly-dallying and much 10 Janpath to-and-fro, Dr Singh followed Nehru’s mistake of becoming his own foreign minister. The idea was that this would be temporary but it became almost a year.

Instead of transforming himself towards Indian political statesmanship, Dr Singh advanced other retired bureaucrats’ ambitions on similar career-paths. Foreign policy went out of the MEA’s control and seemingly into the control of the new “National Security Adviser”. Dr Singh, sometimes with MK Narayanan beside him, travelled a large number of countries from Brazil to Finland and Uzbekistan to South Africa and Japan. Dr Singh also found time and willingness to accept honorary degrees from British and Russian universities during these short months.

While Dr Singh seemed thus preoccupied, two of India’s main neighbours underwent massive democratic revolutions (leave aside magnificent Bhutan). Nepal’s people practically stormed their Bastille while Dr Singh and Mr Narayanan visited Germany to discuss BMWs. Pakistan’s democratic forces could hardly believe the cold indifference shown to them by a New Delhi merely following Bush’s support for Pervez Musharraf. While Pakistan and Nepal, and to lesser extent Bangladesh, saw movements towards better governance, Sri Lanka descended towards civil war ~ India’s PM remained obsessed with the magic wand that the nuclear deal was supposed to be.

Inflation

Then suddenly the magic vanished ~ Dr Singh seemed to finally come to a silent private recognition that the economics of the nuclear deal simply did not add up if it meant India importing “six to eight lightwater reactors” on a turnkey basis from the USA or anywhere else. Dr Singh seemed to come out of his self-imposed trance and return a little better to reality. By the time he visited China, although he was as deferential to Hu Jintao in his body language as he had been to Bush and Musharraf and even accepted an indoor guard of honour, he also seemed willing to stand up for India. The Arunachal visit was a reality-check.

Now there is inflation ~ and one year left in the UPA’s term. What the country needs is tough sensible macroeconomics and clean public finance. A pandering profligate budget in February was not a healthy sign. Instructing Mr Ahluwalia to close down the Planning Commission and make it a minor R&D wing of the Finance Ministry would be instead a good step. Instructing the RBI to clean up its bureaucratic wastefulness and prepare itself for institutional independence from the Finance Ministry would be even better. Getting proper financial control over every Union and State government entity spending public money and resources would be most important of all. Such major institutional changes in the policy-making process are what an economist might expect of an economist prime minister who wishes to lead India in the 21st Century. India’s currency is at stake.

(See also:  “The Politics of Dr Singh”, May 2006; “Mistaken Macroeconomics”, June 2009, etc.)

Anarchy in Bengal

Anarchy in Bengal

Intra-Left bandh marks the final unravelling of “Brand Buddha”

First published in The Sunday Statesman, 10 February 2008, Editorial Page Special Article   http://www.thestatesman.net

by

SUBROTO ROY

Once upon a time, not very long ago, there was something called “Brand Buddha”. The basic idea was that the CPI-M had quietly reformed itself, passing the baton from old unreconstructed communists like Jyoti Basu and Harkishan Surjeet to a new generation of pragmatists and modernists represented by Prakash Karat’s JNU coterie at the national level and the smartly dressed bhadralok persona of Buddhadeb Bhattacharjee in Kolkata itself.

Big businessmen and their foreign collaborators were no longer the “comprador bourgeoisie” but rather were allies to whom government subsidies and concessions, especially land, would be and should be granted. The “investment climate” and “work culture” under a CPI-M government would be among the best in India. High employment levels would be the hoped-for result, especially employment for those associated positively with the CPI-M and its friends. The usual set of academics, journalists, film and TV actors, dancers, sportsmen, singers, NRIs etc who were directly or indirectly recipients of the largesse of the West Bengal Government helped to contribute to the idea that a viable political brand had been identified and it represented the unique way forward for the State. “You are either with us or against us” has always been the brief philosophy of communist and fascist parties around the world ~ joining up with Brand Buddha meant you were part of the bandwagon of progress, if you did not join up you would be left behind. (No one thought Brand Buddha could be or would come to be actively opposed.)

At the national level, the old Indira Gandhi-Communist alliance was restored by way of a new one led by Sonia Gandhi. Jyoti Basu had frankly described Sonia as “a housewife” but now that the housewife was running the country and needed the Communists’ help in doing so, the opportunity was not to be missed to extract whatever price was possible. The main broker between 10 Janpath and West Bengal’s Communists was Pranab Mukherjee who was most familiar with the old Indira-style of opportunistic Indian politics, and who was given the mandate of appeasing the Communists with whatever they needed while also being the pointman to make a phone call to his friend Buddhadeb to see to it, e.g., that the CPI-M like everyone else enjoyed the American and Indian air force show at Kalaikunda.

The “enemy” (for, after all, every unholy alliance must have an identifiable enemy) was the wicked old BJP. Everyone from Sonia Gandhi via Pranab Mukherjee to Jyoti Basu would voice the fear that if they did not join hands in socialist secularist unity, the BJP Boogeyman was destined to return to power. And of course the BJP did nothing and had little positive in its record to dissipate those fears. It was indeed filled with old men and it had indeed behaved wickedly while in power. From negligence in the Graham Staines murder in Orissa to the pogrom in Gujarat, there was little to suggest the BJP’s leadership had any clear ideas or principles about right and wrong governance. In office from 1998-2004, its macroeconomic record was woeful, mainly because it knew no better than maintain the same economic bureaucrats as its predecessors, and allow its finance and other economic ministers to be wholly manipulated by big business lobbies. Now when those bureaucrats and big business lobbies created, endorsed and marketed Brand Buddha itself, the BJP found it had been successfully finessed and could hardly speak a word in opposition. If the BJP thinks it can win in 2009 by its discredited leaders merely recycling anti-Muslim or anti-Christian formulae as before, it may be in for a surprise and a disappointment.

Brand Buddha reached its pinnacle when Sonia Gandhi’s Prime Minister endorsed it personally at a big business meeting in Kolkata on 12 January 2005. But the contradiction involved in Sonia Gandhi then giving merely a perfunctory speech on behalf of the West Bengal Congress in the 2006 election campaign could not be covered up and did not escape the notice of her local partymen.

Brand Buddha started to unravel when Mamata Banerjee realized that all the CPI-M really had was a brand being marketed, not something based on any new and fresh political and economic reality. Mamata has never accepted Sonia’s right to lead the Congress which is what had led to the Trinamul breaking away ~ at the same time, even when she was allied to the BJP, no one could accuse her of being anti-Muslim or anything but secular in her political identity. Her three-week long fast over Singur blocked Metro Channel and riveted the country’s political attention while TV broadcasts of the police-behaviour at Singur acted as a signal to the people of Nandigram to prepare for the same or worse.

The fact the Nandigram peasants who feared losing their land were mostly Muslim caused the central Sonia-Pranab-Buddhadeb myth to explode that only they stood to protect Muslims from the BJP. Once that myth had exploded, the fact the emperor was naked came to be seen by all. There never had been a viable political or economic product behind the brand that was being so heavily advertised and endorsed. If Buddhadeb and his party had been genuinely confident of possessing a constructive new economic policy for West Bengal, they should have transparently and honestly discussed it in detail and gone to the people to ask for a mandate on it before the 2006 elections.

Or when the issue boiled over and Mamata went on her fast at the end of 2006, Buddhadeb could have dissolved the Assembly and gone for fresh elections asking for a specific mandate from Bengal’s voters. Instead, the Chief Minister or his senior ministers not once found the need or courage to address all of West Bengal’s people on television even though the State came to be rocked by violence, mayhem and tragedy – hardly a climate for investment and new employment.

2007 saw the CPI-M and its New Delhi Congress friends being revealed to be bunglers, who could not cope with things as small as Rizwanur’s love-marriage or Taslima’s writings except with heavy-handed repression. The CPI-M’s own unions had crippled their own Government and the State before with bandhs, but not until the Cooch Behar firings has the anarchy become complete. The Forward Bloc protesters were, after all, merely asking for implementation of Sonia Gandhi’s favourite scheme of rural employment guarantees! Anarchy is the absence of government and when a government is so divided that its members cannot decide if they are the government or the opposition, it has to be said there is an absence of government.

Recovery requires candour which in turn requires honesty and introspection, all of which may be qualities too difficult to find. What Brand Buddha could have and should have been about is this: the CPI-M cutting waste, fraud and abuse of publicly owned resources from all the organs, departments and projects of the West Bengal Government that they have controlled for decades, and drastically improving the productivity of all those receiving State government wages or contracts. Real governance does not require any phony advertising because success advertises itself.

Sonia’s Lying Courtier with Postscript 25 Nov 2007, & Addendum 30 June 2014

30th June 2014

“Sonia’s Lying Courtier” (see below) has now lied again! In a ghost-written 2014 book published by a prominent publisher in Delhi!

He has so skilfully lied about himself the ghost writer was probably left in the dark too about the truth.

**The largest concealment has to do with his Soviet connection: he is fluent in Russian, lived as a privileged guest of the state there, and before returning to the Indian public sector was awarded in the early 1970s a Soviet degree, supposedly an earned doctorate in Soviet style management!**

How do I know? He told me so personally! His Soviet degree is what allowed himself to pass off as a “Dr” in Delhi power-circles for decades, as did many others who were planted in that era. He has also lied about himself and Rajiv Gandhi in 1990-1991, and hence he has lied about me indirectly.

In 2007 I was gentle in my exposure of his mendacity because of his advanced age. Now it is more and more clear to me that exposing this directly may be the one way for Sonia and her son to realise how they, and hence the Congress party, were themselves influenced without knowing it for years…

25 November 2007

Two Sundays ago in an English-language Indian newspaper, an elderly man in his 80s, advertised as being “the Gandhi family’s favourite technocrat” published some deliberate falsehoods about events in Delhi 17 years ago surrounding Rajiv Gandhi’s last months. I wrote at once to the man, let me call him Mr C, asking him to correct the falsehoods since, after all, it was possible he had stated them inadvertently or thoughtlessly or through faulty memory. He did not do so. I then wrote to a friend of his, a Congress Party MP from his State, who should be expected to know the truth, and I suggested to him that he intercede with his friend to make the corrections, since I did not wish, if at all possible, to be compelled to call an elderly man a liar in public.

 

That did not happen either and hence I am, with sadness and regret, compelled to call Mr C a liar.

 

The newspaper article reported that Mr C’s “relationship with Rajiv (Gandhi) would become closer when (Rajiv) was out of power” and that Mr C “was part of a group that brainstormed with Rajiv every day on a different subject”. Mr C has reportedly said Rajiv’s “learning period came after he left his job” as PM, and “the others (in the group)” were Mr A, Mr B, Mr D, Mr E “and Manmohan Singh” (italics added).

 

In reality, Mr C was a retired pro-USSR bureaucrat aged in his late 60s in September 1990 when Rajiv Gandhi was Leader of the Opposition and Congress President. Manmohan Singh was an about-to-retire bureaucrat who in September 1990 was not physically present in India, having been working for Julius Nyerere of Tanzania for several years.

 

On 18 September 1990, upon recommendation of Siddhartha Shankar Ray, Rajiv Gandhi met me at 10 Janpath, where I handed him a copy of the unpublished results of an academic “perestroika-for-India” project I had led at the University of Hawaii since 1986. The story of that encounter has been told first on July 31-August 2 1991 in The Statesman, then in the October 2001 issue of Freedom First, then in January 6-8 2006, September 23-24 2007 in The Statesman, and most recently in The Statesman Festival Volume 2007. The last of these speaks most fully yet of my warnings against Rajiv’s vulnerability to assassination; this document in unpublished form was sent by me to Rajiv’s friend, Mr Suman Dubey in July 2005, who forwarded it with my permission to the family of Rajiv Gandhi.

 

It was at the 18 September 1990 meeting that I suggested to Rajiv that he should plan to have a modern election manifesto written. The next day, 19 September, I was asked by Rajiv’s assistant V George to stay in Delhi for a few days as Mr Gandhi wished me to meet some people. I was not told whom I was to meet but that there would be a meeting on Monday, 24th September. On Saturday, the Monday meeting was postponed to Tuesday 25th September because one of the persons had not been able to get a flight into Delhi. I pressed to know what was going on, and was told I would meet Mr A, Mr B, Mr C and Mr D. It turned out later Mr A was the person who could not fly in from Hyderabad.

 

The group (excluding Mr B who failed to turn up because his servant had failed to give him the right message) met Rajiv at 10 Janpath in the afternoon of 25th September. We were asked by Rajiv to draft technical aspects of a modern manifesto for an election that was to be expected in April 1991. The documents I had given Rajiv a week earlier were distributed to the group. The full story of what transpired has been told in my previous publications.

 

Mr C was ingratiating towards me after that first meeting with Rajiv and insisted on giving me a ride in his car which he told me was the very first Maruti ever manufactured. He flattered me needlessly by saying that my PhD (in economics from Cambridge University) was real whereas his own doctoral degree had been from a dubious management institute of the USSR. (Handling out such doctoral degrees was apparently a standard Soviet way of gaining influence.) Mr C has not stated in public how his claim to the title of “Dr” arises.

 

Following that 25 September 1990 meeting, Mr C did absolutely nothing for several months towards the purpose Rajiv had set us, stating he was very busy with private business in his home-state where he flew to immediately. Mr D went abroad and was later hit by severe illness. Mr B, Mr A and I met for luncheon at New Delhi’s Andhra Bhavan where the former explained how he had missed the initial meeting. Then Mr B said he was very busy with his house-construction, and Mr A said he was very busy with finishing a book for his publishers on Indian defence, and both begged off, like Mr C and Mr D, from any of the work that Rajiv had explicitly set our group. My work and meeting with Rajiv in October 1990 has been reported previously.

 

Mr C has not merely suppressed my name from the group in what he has published in the newspaper article two Sundays ago, he has stated he met Rajiv as part of such a group “every day on a different subject”, another falsehood. The next meeting of the group with Rajiv was in fact only in December 1990, when the Chandrashekhar Government was discussed. I was called by telephone in the USA by Rajiv’s assistant V George but I was unable to attend, and was briefed later about it by Mr A.

 

When new elections were finally announced in March 1991, Mr C brought in Mr E into the group in my absence (so he told me), perhaps in the hope I would remain absent. But I returned to Delhi and between March 18 1991 and March 22 1991, our group, including Mr E (who did have a genuine PhD), produced an agreed-upon document. That document was handed over by us together in a group to Rajiv Gandhi at 10 Janpath the next day, and also went to the official political manifesto committee of Narasimha Rao, Pranab Mukherjee and M. Solanki.

 

Our group, as appointed by Rajiv on 25 September 1990, came to an end with the submission of the desired document to Rajiv on 23 March 1991.

 

As for Manmohan Singh, contrary to Mr C’s falsehood, Manmohan Singh has himself truthfully said he was with the Nyerere project until November 1990, then joined Chandrashekhar’s PMO in December 1990 which he left in March 1991, that he had no meeting with Rajiv Gandhi prior to Rajiv’s assassination but rather did not in fact enter Indian politics at all until invited by Narasimha Rao several weeks later to be Finance Minister. In other words, Manmohan Singh himself is on record stating facts that demonstrate Mr C’s falsehood.

 

The economic policy sections of the document submitted to Rajiv on 23 March 1991 had been drafted largely by myself with support of Mr E and Mr D and Mr C as well. It was done over the objections of Mr B, who had challenged me by asking what Manmohan Singh would think of it. I had replied I had no idea what Manmohan Singh would think of it, saying I knew he had been out of the country on the Nyerere project for some years.

 

Mr C has deliberately excluded my name from the group and deliberately added Manmohan Singh’s instead. What explains this attempted falsification of facts – reminiscent of totalitarian practices in communist countries? Manmohan Singh was not involved by his own admission, and as Finance Minister told me so directly when he and I were introduced in Washington DC in September 1993 by Siddhartha Shankar Ray, then Indian Ambassador to the USA.

 

A possible explanation for Mr C’s mendacity is as follows: I have been recently publishing the fact that I repeatedly pleaded warnings that I (even as a layman on security issues) perceived Rajiv Gandhi to have been insecure and vulnerable to assassination. Mr C, Mr B and Mr A were among the main recipients of my warnings and my advice as to what we as a group, appointed by Rajiv, should have done towards protecting Rajiv better. They did nothing — though each of them was a senior man then aged in his late 60s at the time and fully familiar with Delhi’s workings while I was a 35 year old newcomer. After Rajiv was assassinated, I was disgusted with what I had seen of the Congress Party and Delhi, and did not return except to meet Rajiv’s widow once in December 1991 to give her a copy of a tape in which her late husband’s voice was recorded in conversations with me during the Gulf War.

 

Mr C has inveigled himself into Sonia Gandhi’s coterie – while Manmohan Singh went from being mentioned in our group by Mr B to becoming Narasimha Rao’s Finance Minister and Sonia Gandhi’s Prime Minister. If Rajiv had not been assassinated, Sonia Gandhi would have been merely a happy grandmother today and not India’s purported ruler. India would also have likely not have been the macroeconomic and political mess that the mendacious people around Sonia Gandhi like Mr C have now led it towards.

 

POSTSCRIPT: The Congress MP was kind enough to write in shortly afterwards; he confirmed he “recognize(d) that Rajivji did indeed consult you in 1990-1991 about the future direction of economic policy.”   A truth is told and, furthermore, the set of genuine Rajivists in the present Congress Party is identified as non-null.

 

See also

https://independentindian.com/2014/07/03/much-as-i-might-love-russiaengland-france-america-i-despise-their-spies-local-agents-affecting-poor-indias-policies-memo-to-pm-modi-mr-jaitley-mr-doval-the-new-govt-of-india-bew/

https://independentindian.com/thoughts-words-deeds-my-work-1973-2010/rajiv-gandhi-and-the-origins-of-indias-1991-economic-reform/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-e/

Against Quackery

Against Quackery

 

 

First published in two parts in The Sunday Statesman, September 23 2007, The Statesman September 24 2007

 

by

Subroto Roy

 

 

Manmohan and Sonia have violated Rajiv Gandhi’s intended reforms; the Communists have been appeased or bought; the BJP is incompetent

 

 

WASTE, fraud and abuse are inevitable in the use and allocation of public property and resources in India as elsewhere, but Government is supposed to fight and resist such tendencies. The Sonia-Manmohan Government have done the opposite, aiding and abetting a wasteful anti-economics ~ i.e., an economic quackery. Vajpayee-Advani and other Governments, including Narasimha-Manmohan in 1991-1996, were just as complicit in the perverse policy-making. So have been State Governments of all regional parties like the CPI-M in West Bengal, DMK/ AIADMK in Tamil Nadu, Congress/NCP/ BJP/Sena in Maharashtra, TDP /Congress in Andhra Pradesh, SP/BJP/BSP in Uttar Pradesh etc. Our dismal politics merely has the pot calling the kettle black while national self-delusion and superstition reign in the absence of reason.

 

 

The general pattern is one of well-informed, moneyed, mostly city-based special interest groups (especially including organised capital and organised labour) dominating government agendas at the cost of ill-informed, diffused anonymous individual citizens ~ peasants, small businessmen, non-unionized workers, old people, housewives, medical students etc. The extremely expensive “nuclear deal” with the USA is merely one example of such interest group politics.

 

 

Nuclear power is and shall always remain of tiny significance as a source of India’s electricity (compared to e.g. coal and hydro); hence the deal has practically nothing to do with the purported (and mendacious) aim of improving the country’s “energy security” in the long run. It has mostly to do with big business lobbies and senior bureaucrats and politicians making a grab, as they always have done, for India’s public purse, especially access to foreign currency assets. Some $300 million of India’s public money had to be paid to GE and Bechtel Corporation before any nuclear talks could begin in 2004-2005 ~ the reason was the Dabhol fiasco of the 1990s, a sheer waste for India’s ordinary people. Who was responsible for that loss? Pawar-Mahajan-Munde-Thackeray certainly but also India’s Finance Minister at the time, Manmohan Singh, and his top Finance Ministry bureaucrat, Montek Ahluwalia ~ who should never have let the fiasco get off the ground but instead actively promoted and approved it.

 

 

Cost-benefit analysis prior to any public project is textbook operating procedure for economists, and any half-competent economist would have accounted for the scenario of possible currency-depreciation which made Dabhol instantly unviable. Dr Singh and Mr Ahluwalia failed that test badly and it cost India dearly. The purchase of foreign nuclear reactors on a turnkey basis upon their recommendation now reflects similar financial dangers for the country on a vastly larger scale over decades.

 

 

Our Government seems to function most expeditiously in purchasing foreign arms, aircraft etc ~ not in improving the courts, prisons, police, public utilities, public debt. When the purchase of 43 Airbus aircraft surfaced, accusations of impropriety were made by Boeing ~ until the local Airbus representative said on TV that Boeing need not complain because they were going to be rewarded too and soon 68 aircraft were ordered from Boeing!

 

 

India imports all passenger and most military aircraft, besides spare parts and high-octane jet fuel. Domestic aviation generates near zero forex revenues and incurs large forex costs ~ a debit in India’s balance of payments. Domestic airline passengers act as importers subsidised by our meagre exporters of textiles, leather, handicrafts, tea, etc. What a managerially-minded PM and Aviation Minister needed to do before yielding to temptations of buying new aircraft was to get tough with the pampered managements and unions of the nationalized airlines and stand up on behalf of ordinary citizens and taxpayers, who, after all, are mostly rail or road-travellers not jet-setters.

 

 

The same pattern of negligent policy-behaviour led Finance Minister P. Chidambaram in an unprecedented step to mention in his 2007 Union Budget Speech the private American companies Blackstone and GE ~ endorsing the Ahluwalia/Deepak Parekh idea that India’s forex reserves may be made available to be lent out to favoured private businesses for purported “infrastructure” development. We may now see chunks of India’s foreign exchange reserves being “borrowed” and never returned ~ a monumental scam in front of the CBI’s noses.

 

 

The Reserve Bank’s highest echelons may have become complicit in all this, permitting and encouraging a large capital flight to take place among the few million Indians who read the English newspapers and have family-members abroad. Resident Indians have been officially permitted to open bank accounts of US $100,000 abroad, as well as transfer gifts of $50,000 per annum to their adult children already exported abroad ~ converting their largely untaxed paper rupees at an artificially favourable exchange-rate.

 

 

In particular, Mr Ratan Tata (under a misapprehension he may do whatever Lakshmi Mittal does) has been allowed to convert Indian rupees into some US$13,000,000,000 to make a cash purchase of a European steel company. The same has been allowed of the Birlas, Wipro, Dr Reddy’s and numerous other Indian corporations in the organised sector ~ three hundred million dollars here, five hundred million dollars there, etc. Western businessmen now know all they have to do is flatter the egos of Indian boxwallahs enough and they might have found a buyer for their otherwise bankrupt or sick local enterprise. Many newcomers to New York City have been sold the Brooklyn Bridge before. “There’s a sucker born every minute” is the classic saying of American capitalism.

 

 

The Sonia-Manmohan Government, instead of hobnobbing with business chambers, needed to get Indian corporations to improve their accounting, audit and governance, and reduce managerial pilfering and embezzlement, which is possible only if Government first set an example.

 

 

Why have Indian foreign currency reserves zoomed up in recent years? Not mainly because we are exporting more textiles, tea, software engineers, call centre services or new products to the world, but because Indian corporations have been allowed to borrow abroad, converting their hoards of paper rupees into foreign debt. Forex reserves are a residual in a country’s international balance of payments and are not like tax-resources available to be spent by Government; India’s reserves largely constitute foreign liabilities of Indian residents. This may bear endless repetition as the PM and his key acolytes seem impervious to normal postgraduate-level economics textbooks.

 

 

Other official fallacies include thinking India’s savings rate is near 32 per cent and that clever bureaucratic use of it can cause high growth. In fact, real growth arises not because of what politicians and bureaucrats do but because of spontaneous technological progress, improved productivity and learning-by-doing of the general population ~ mostly despite not because of an exploitative parasitic State. What has been mismeasured as high savings is actually expansion of bank-deposits in a fractional reserve banking system caused by runaway government deficit-spending.

 

 

Another fallacy has been that agriculture retards growth, leading to nationwide politically-backed attempts at land-grabbing by wily city industrialists and real estate developers. In a hyperinflation-prone economy with wild deficit-spending and runaway money-printing, cheating poor unorganised peasants of their land, when that land is an asset that is due to appreciate in value, has seemed like child’s play.

 

 

What of the Opposition? The BJP/RSS have no economists who are not quacks though opportunists were happy to say what pleased them to hear when they were in power; they also have much implicit support among organised business lobbies and the anti-Muslim senior bureaucracy. The official Communists have been appeased or bought, sometimes so cheaply as with a few airline tickets here and there. The nonsensical “Rural Employment Guarantee” is descending into the wasteland of corruption it was always going to be. The “Domestic Violence Act” as expected has started to destroy India’s families the way Western families have been destroyed. The Arjun-DMK OBC quota corrodes higher education further from its already dismal state. All these were schemes that Congress and Communist cabals created or wholeheartedly backed, and which the BJP were too scared or ignorant to resist.

 

 

And then came Singur and Nandigram ~ where the sheer greed driving the alliance between the Sonia-Manmohan-Pranab Congress and the CPI-M mask that is Buddhadeb, came to be exposed by a handful of brave women like Mamata and Medha.

 

 

A Fiscal U-Turn is Needed For India to Go in The Right Economic Direction

 

Rajiv Gandhi had a sense of noblesse oblige out of remembrance of his father and maternal grandfather. After his assassination, the comprador business press credited Narasimha Rao and Manmohan Singh with having originated the 1991 economic reform. In May 2002, however, the Congress Party itself passed a resolution proposed by Digvijay Singh explicitly stating Rajiv and not either of them was to be so credited. The resolution was intended to flatter Sonia Gandhi but there was truth in it too. Rajiv, a pilot who knew no political economy, was a quick learner with intelligence to know a good idea when he saw one and enough grace to acknowledge it.

 

 

Rule of Law

 

The first time Dr Manmohan Singh’s name arose in contemporary post-Indira politics was on 22 March 1991 when M K Rasgotra challenged the present author to answer how Dr Singh would respond to proposals being drafted for a planned economic liberalisation that had been authorised by Rajiv, as Congress President and Opposition Leader, since September 1990. It was replied that Dr Singh’s response was unknown and he had been heading the “South-South Commission” for Tanzania’s Julius Nyerere, while what needed to be done urgently was make a clear forceful statement to restore India’s credit-worthiness and the confidence of international markets, showing that the Congress at least knew its economics and was planning to take bold new steps in the direction of progress.

 

 

There is no evidence Dr Singh or his acolytes were committed to any economic liberalism prior to 1991 as that term is understood worldwide, and scant evidence they have originated liberal economic ideas for India afterwards. Precisely because they represented the decrepit old intellectual order of statist ”Ma-Bap Sarkari” policy-making, they were not asked in the mid-1980s to be part of a “perestroika-for-India” project done at a foreign university ~ the results of which were received, thanks to Siddhartha Shankar Ray, by Rajiv Gandhi in hand at 10 Janpath on 18 September 1990 and specifically sparked the change in the direction of his economic thinking.

 

 

India is a large, populous country with hundreds of millions of materially poor citizens, a weak tax-base, a vast internal and external public debt (i.e. debt owed by the Government to domestic and foreign creditors), massive annual fiscal deficits, an inconvertible currency, and runaway printing of paper-money. It is unsurprising Pakistan’s economy is similar, since it is born of the same land and people. Certainly there have been real political problems between India and Pakistan since the chaotic demobilisation and disintegration of the old British Indian Army caused the subcontinent to plunge into war-like or “cold peace” conditions for six decades beginning with a bloody Partition and civil war in J&K. High military expenditures have been necessitated due to mutual and foreign tensions, but this cannot be a permanent state if India and Pakistan wish for genuine mass economic well-being.

 

 

Even with the continuing mutual antagonism, there is vast scope for a critical review of Indian military expenditures towards greatly improving the “teeth-to-tail” ratio of its fighting forces. The abuse of public property and privilege by senior echelons of the armed forces (some of whom have been keen most of all to export their children preferably to America) is also no great secret.

 

 

On the domestic front, Rajiv was entirely convinced when the suggestion was made to him in September 1990 that an enormous infusion of public resources was needed into the judicial system for promotion and improvement of the Rule of Law in the country, a pre-requisite almost for a new market orientation. Capitalism without the Rule of Law can quickly degenerate into an illiberal hell of cronyism and anarchy which is what has tended to happen since 1991.

 

 

The Madhava Menon Committee on criminal justice policy in July proposed a Hong Kong model of “a single high-tech integrated Criminal Justice complex in every district headquarters which may be a multi-storied structure, devoting the ground floor for the police station including a video-installed interrogation room; the first floor for the police-lockups/sub-jail and the Magistrate’s Court; the second floor for the prosecutor’s office, witness rooms, crime laboratories and legal aid services; the third floor for the Sessions Court and the fourth for the administrative offices etc…. (Government of India) should take steps to evolve such an efficient model… and not only recommend it to the States but subsidize its construction…” The question arises: Why is this being proposed for the first time in 2007 after sixty years of Independence? Why was it not something designed and implemented starting in the 1950s?

 

 

The resources put since Independence to the proper working of our judiciary from the Supreme Court and High Courts downwards have been abysmal, while the state of prisons, borstals, mental asylums and other institutions of involuntary detention is nothing short of pathetic. Only police forces, like the military, paramilitary and bureaucracies, have bloated in size.

 

 

Neither Sonia-Manmohan nor the BJP or Communists have thought promotion of the Rule of Law in India to be worth much serious thought ~ certainly less important than attending bogus international conclaves and summits to sign expensive deals for arms, aircraft, reactors etc. Yet Rajiv Gandhi, at a 10 Janpath meeting on 23 March 1991 when he received the liberalisation proposals he had authorized, explicitly avowed the importance of greater resources towards the Judiciary. Dr Singh and his acolytes were not in that loop, indeed they precisely represented the bureaucratic ancien regime intended to be changed, and hence have seemed quite uncomprehending of the roots of the intended reforms ever since 1991.

 

 

Similarly, Rajiv comprehended when it was said to him that the primary fiscal problem faced by India is the vast and uncontrolled public debt, interest payments on which suck dry all public budgets leaving no room for provision of public goods.

 

 

 

Government accounts


Government has been routinely “rolling over” its domestic debt in the asset-portfolios of the nationalised banks while displaying and highlighting only its new additional borrowing in a year as the “Fiscal Deficit”. More than two dozen States have been doing the same and their liabilities ultimately accrue to the Union too. The stock of public debt in India is Rs 30 trillion (Rs 30 lakh crore) at least, and portends a hyperinflation in the future.

 

 

There has been no serious recognition of this since it is political and bureaucratic actions that have been causing the problem. Proper recognition would entail systematically cleaning up the budgets and accounts of every single governmental entity in the country: the Union, every State, every district and municipality, every publicly funded entity or organisation, and at the same time improving public decision-making capacity so that once budgets and accounts recover from grave sickness over decades, functioning institutions exist for their proper future management. All this would also stop corruption in its tracks, and release resources for valuable public goods and services like the Judiciary, School Education and Basic Health. Institutions for improved political and administrative decision-making are needed throughout the country if public preferences with respect to raising and allocating common resources are to be elicited and then translated into actual delivery of public goods and services. Our dysfunctional legislatures will have to do at least a little of what they are supposed to. When public budgets and accounts are healthy and we have functioning public goods and services, macroeconomic conditions would have been created for the paper-rupee to once more become a money as good as gold ~ a convertible world currency for all of India’s people, not merely the metropolitan special interest groups that have been controlling our governments and their agendas.

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Political Paralysis

POLITICAL PARALYSIS

India has yet to develop normal conservative, liberal and socialist parties. The Nice-Housing-Effect and a little game-theory may explain the current stagnation

By SUBROTO ROY

First published in The Sunday Statesman, Editorial Page Special Article, June 24 2007, http://www.thestatesman.net

THE theatrics surrounding the choice of presidential candidates refer to the highest and most dignified office of the land. Otherwise, India’s public would have been justified to think we were watching an absurd farce. Even so, lessons may be learnt about the nature of our polity, especially our purported Government and its purported Opposition.

Consider first how the name of the Congress’s candidate apparently arose. “Why don’t you think of Pratibha Patil?” was the rhetorical suggestion apparently made by Manmohan Singh to Sonia Gandhi at a joint meeting of the UPA and Left where no other person could be agreed upon. What could have been the emotional state of the Prime Minister of India in addressing such a question to its specific addressee? It had to be the same unconscious perplexity and mental contradiction he has experienced throughout the UPA Government, saying to himself: “I am the Prime Minister but I am not the Prime Minister, I am the Head of India’s Government but I am not the Head of India’s Government”.

Instead of leading the country as he was chosen to do in the belief he possessed some superior wisdom and capability for the job, Dr Singh has constantly deferred to and followed the person who chose him to lead. The Head of Government in our system recommends an appropriate Head of State. If Dr Singh truly felt himself India’s leader, not merely someone permitted for some time to enjoy the office and perquisites of India’s Prime Minister and being nominally referred to as such, he could have said: “I think we should consider Pratibha Patil, what say all of you?”

Such words would have displayed too much assertiveness in the presence of Sonia Gandhi, too much leadership from someone flatteringly described as mild and gentle but unflatteringly described as obsequious in the face of power. It is the same excess of deference displayed when he allows himself to be bullied or insulted by the DMK or receive the open contempt of his own Cabinet ministers. Dr Singh has just returned from the so-called “G-8 summit” where he was an invitee. In a group photo standing above and behind the American President, Dr Singh was seen gently touching George Bush on the shoulder as if Bush was a rich younger brother who needed a lift in spirits. Afterwards Dr Singh reportedly said the summit was useless ~ from his long bureaucratic experience he should have known that long beforehand, and declined to waste India’s time there. But then Europe is nice this time of year when Delhi is so hot. China is next on his itinerary, and he will surely not want to miss the Great Wall despite China’s continuing insults.

What the Pratibha episode reveals about Sonia Gandhi is her continuing bewilderment and confusion about the parameters of her life since her husband’s assassination sixteen years ago. There is a very simple candid explanation why, after her years in mourning, she entered politics following the Sitaram Kesri period: she and her children could not financially sustain a lifestyle to which they had become accustomed at 10 Janpath except as part of India’s politics via the Congress Party. Running the Rajiv Gandhi Foundation was not enough, and Rahul Gandhi’s income in a normal private sector career would have been unexceptional. Hence the lure of power has remained strong and cannot be walked away from even if walking away would be the right thing to do for sake of the political health of the Congress Party ~ which would finally have to grow up, find some political principles, and develop some normal processes of internal competition.

When Pratibha Patil’s name was mentioned for the first time in this manner, the rational course of action for the UPA Chair would have been to say, wait, if we are now thinking about a woman definitely, may we please have two or three such names to consider for a few days? But it was Dr Singh mentioning the name, and his supposed wisdom is what Sonia Gandhi believes, in her bewilderment, she should defer to, so she agreed at once in a parallel state of mental confusion as his: “I am India’s Leader but I am not India’s Leader”. Hence Pratibha Patil becomes the nominee. A little “game-theory” may help to explain the outcome (see table).

The paralysis and/or sclerosis of the Congress’s thinking processes is matched by the BJP and Communists. If Sonia Gandhi could bring herself to walk away from Indian politics, a genuine leadership contest in the Congress would have to occur for the first time in decades. Similarly, if Atal Behari Vajpayee and Lal Krishna Advani could bring themselves to honestly walk away from BJP politics, there would have to be a genuine leadership contest and some new principles emerging in their party. There is an excellent and very simple political reason for Vajpayee and Advani to go, which is not that they are too old (which they are) but that they led their party to electoral defeat. Had they walked away in May 2004, there might have been by now some viable conservative political philosophy in India and some recognisable new alternative leadership for 2009. Instead there is none and the BJP has not only failed very badly at being a responsible Opposition, it will go into the 2009 General Election looking exceptionally decrepit and incompetent.

Indeed, Vajpayee and Advani may not have walked away for the same reason as Sonia Gandhi, namely, the “10 Janpath Effect” or what may be generalised to the “Nice-New Delhi-Government-Housing-Effect”. Besides, like our ageing cricketers, cinema stars, playback singers and tons of ageing bureaucrats and corporate executives, where would they go, what would they do, how would they live, what do they know how to do if they were not doing what they have been doing for so long? Golf and grandchildren is the usual American formula.

In case of the Communists, it is not electoral but ideological defeat, indeed ideological annihilation, that their leaders have led them into. When was the last time we heard our Communist leaders extolling Marx, Engels, Lenin, Stalin, Mao, Zhou or even Fidel Castro? Not for a long time. The bankruptcy of official communism is obvious even to them, at least in their candid moments in front of the mirror every morning. Even for the CPI and CPI(M) to merge into a genuine modern socialist party is too creative and productive an outcome to be handled since top and middle management retrenchments would be inevitable. Also, the Cannot-Leave-Nice-Housing-Effect applies here too, and so the most we find by way of communist transformation is a perverse alliance with organised big business in trying to cheat very poor and unorganised peasants of their land in an economy where runaway paper money printing threatens a hyperinflation.

Nobody in power wants to address the rotten state of our public finances, since all of them have contributed to causing the stench. Our Finance Minister finds time to attend posh parties and publish books while presiding over an RBI-supported capital flight of India’s super-rich: “ultrahigh networth individuals are looking forward to buy overseas equities and real estate” Business Standard (25 April 2007) blithely said. The Finance Minister should have been instead burning the midnight candle getting public budgets and government accounting cleaned and healthy nationwide.

We in India have had more than enough time and democratic experience to have developed by now a set of normal conservative, liberal democrat, social democrat and socialist parties. That we have nothing of the kind speaks to the rot in the political culture we are witnessing in our capital and other major cities. Politically, we may be in for an especially ugly, unpleasant and incoherent few years starting with the presidential election currently underway.

Unhealthy Delhi

Unhealthy Delhi

When will normal political philosophy replace personality cults?

by Subroto Roy

First published in The Statesman, Editorial Page Special Article, June 11 2007,

A decade after Solzhenitsyn’s classic 1962 memoir One day in the life of Ivan Denisovitch, an ambitious young Delhi photographer published a hagiography called A life in the day of Indira Gandhi. Indira was shown gambolling with her little grandchildren, guiding her dutiful daughter-in-law, weeping for her father, greeting her loyal subjects from around India, reprimanding her ingratiating sycophants, imperiously silent during political meetings, smiling and scolding alternately at press conferences, and of course standing in victory at Shimla beside the defeated Bhutto. “Indira is India” the sycophantic slogan went, and the cult of her personality was one of showing her as omniscient and omnipotent in all earthly matters of Indian politics.

She had indeed fought that rarest of things in international law: the just war. Supported by the world’s strongest military, an evil enemy had made victims of his own people. Indira tried patiently on the international stage to avert war, but also chose her military generals well and took their professional judgement seriously as to when to fight if it was inevitable and how to win. Finally she was magnanimous (to a fault) towards the enemy ~ who was not some stranger to us but our own estranged brother and cousin.

It seemed to be her and independent India’s finest hour. A fevered nation was thus ready to forgive and forget her catastrophic misdeeds until that time, like bank-nationalization and the start of endless deficit-finance and unlimited money-printing, a possible cause of monetary collapse today four decades later under Manmohan Singh whose career as an economic bureaucrat began at that time.

Hitler, Stalin, Mao

Modern personality cults usually have had some basis in national heroism. In Indira’s case it was the 1971 war. Hitler, Stalin and Mao were seen or portrayed as war heroes too. Because there has been leadership in time of war or national crisis, nervous anxious masses extend their hopes and delusions to believe such a leader has answers to everything. The propaganda machinery available as part of modern state apparatus then takes over, and when it is met on behalf of the citizenry with no more than a compliant docile ingratiating mass media, the public image comes to be formed of a parental god-like figure who will protect and guide the community to its destiny.

Beneath this public image, the cunning play of self-interest by anonymous underlings in the allocation of public resources continues unabated, and so it is possible some truth attaches to the idea that an individual leader is not as responsible for evil misdeeds or depredations done by “the party” in his/her name.

In the Indian case, hero-worship and ancestor-worship are part of the culture of all our major religions. Hence we have parades of parliamentarians garlanding or throwing flowers and paying obeisance at this or that statue or oil-painting or photograph regularly ~ though as a people we have yet to produce rigorous intellectual biographies of any major figures of our own modern history, comparable to, say, Judith Brown’s work on Gandhi or Ayesha Jalal’s on Jinnah.

Indira continued to dominate our political culture until her assassination more than a decade later, but there was hardly a shred of political or economic good in what she left the country. Her elder son (leaving aside his blunders in Sri Lanka, J&K etc.) did have the sense to initiate fundamental change in his party’s economic thinking when he found a chance to do so in the months before his own assassination.

Rajiv was the son of Feroze Gandhi too and a happy family man; he seemed not to have psychological need for as much of the kind of personality cult his mother clearly loved to indulge in. It is not clear if his widow is today trying to follow his example or his mother’s ~ certainly, the party that goes by the name of Indian National Congress would like to relive for a second time the worst of the Indira personality cult around Sonia Gandhi. And Rahul Gandhi, instead of seeking to develop or display any talent as befits a young man, has shown disconcerting signs of longing for the days of his grandmother’s personality cult to return. He may have been more effective pursuing a normal career in the private sector.

The Congress’s perpetual tendency towards personality cults has extended by imitation to other political parties in New Delhi and the States. Atal Behari Vajpayee at his peak as PM did not find it at all uncomfortable to be portrayed by his sycophants as a wise, heroic and loving father-figure of the nation ~ an image shattered when, immediately after perfunctorily commiserating the Godhra and post-Godhra horrors, he was pictured fashionably on a Singapore golf-cart sporting designer sunglasses.

India’s organised communists make a great show of collective decision-making since they most intimately followed the details of Kruschev’s denunciation of Stalin’s personality cult. It has not stopped them routinely genuflecting to China’s communists. There also has been a communist tendency to deny individual merit and creativity at junior levels and instead appropriate all good things for the party bosses. New brilliant faces will never arise in the Left and we may be condemned to see the usual characters in perpetuity. If personality cults around Jyoti Basu or Buddhadeb Bhattacharya have failed to thrive it has not been through lack of trying on part of the publicly paid communist intelligentsia and their docile artists, but rather because of resistance from Bengal’s newspapers and a few clear-headed journalists and well known opposition politicians.

Tamil Nadu has seen grotesque rivalry between Karunanidhi and Jayalalitha as to whose personality cult can alternately outdo the other, supplanting all normal political economy or attempts at discovery of the public interest. In Andhra Pradesh, Maharashtra, J&K, Bihar and Uttar Pradesh (but not Gujarat or Rajasthan lately), two-party democratic politics has succeeded in limiting tendencies for personality cults to develop. The North Eastern States have had inadequate coverage by modern media, which, fortuitously, along with tribal traditions, may have restrained personality cults from developing.

Facts explode cults

Facts are the most reliable means by which to explode personality cults. It is not a coincidence that facts are also the source by which to develop modern political philosophies, whether conservative, classical liberal/ libertarian, or socialist. Facts have to be discovered, ferreted out, analysed, studied and reflected upon by those civil institutions that are supposed to be doing so, namely university social science, economics and related departments, as well as responsible newspapers, radio and other mass media. Julian Benda once titled a book The Treason of the Intellectuals. India will begin to have a normal political philosophy when the treason of its modern intellectual classes begins to be corrected.

It is not a treason in which the state has been betrayed to an enemy. Rather it is one in which the very purposes of public conversation, such as the discovery of the public interest, have been betrayed in the interests of immediate private gain. This may help to explain why there is so little coherent public discussion in India today, and certainly almost nothing on television, or in the business papers or what passes for academia.

Swindling India

SWINDLING INDIA

by

Subroto Roy

First published in slightly abbreviated form as “A scam in the making” in The Sunday Statesman April 1 2007, Front page comment

A gigantic financial scheme is in the making. Will it come to be seen in future years as having been in fact a scam – indeed India’s scam of the 21st Century for which India’s unknowing masses will be made to pay for many generations? The scheme is mind-boggling in size as well as its sheer audacity. Bofors, Quattrochi etc amount to peanuts in comparison.

No less a personage than the Finance Minister of India, P Chidambaram, has openly praised the potential of this financial scheme. And he has done so in no less an open and transparent place than his latest Budget Speech to Parliament last February.

It is a scheme openly advocated and currently being developed by our Prime Minister Dr Manmohan Singh’s closest acolytes, Planning Commission head Mr Montek Singh Ahluwalia and HDFC head Mr Deepak Parekh, in collaboration with Reserve Bank Governor Dr YV Reddy and the Finance Ministry’s top bureaucrats. The PM himself has come close to endorsing it explicitly. And this PM is not an elected member of the Lok Sabha but holds office and acts as the executive agent of the UPA Chairperson and Lok Sabha Member from Rae Bareilly, Sonia Gandhi.

I hasten to add nobody in the BJP has objected to this financial scheme — in fact had the BJP been in power today instead of Congress, they would have been likely even more agreeable to the scheme given their close proximity to business lobbies and organized capital. As for the Communists, none of their JNU economics professors is technically competent enough to comprehend or recognize what is going on.

The scheme involves private companies “borrowing” India’s foreign exchange reserves from the Reserve Bank of India, allegedly for purpose of “infrastructure” creation — in collaboration with the American bank Citigroup, the American financial business, Blackstone Group, and possibly the American giant, GE Capital too. Mr Chidambaram took the unprecedented step of naming Mr Deepak Parekh as well as Citigroup and Blackstone in the text of his Budget Speech.

To begin to comprehend the nature of this scheme, we need to recall an earlier case.

Foreign exchange reserves of countries typically include foreign currency holdings as well as gold stocks. One of the biggest Wall Street scams of the 1980s-1990s involved private companies borrowing not countries’ foreign currency reserves but their gold reserves.

In that scam, it was not the Reserve Bank of India that was cheated but the Central Banks of Poland, Malaysia, Portugal and Yugoslavia. The New York financial company involved was a subsidiary of the Drexel Burnham Lambert Group. The Drexel parent went bankrupt on February 13 1990 and its subsidiary followed on May 9 1990.

A report on June 4 1990 by Leah J. Nathans (now Leah Nathans Spiro) in New York’s highly respected Business Week magazine said: “Central banks, those pillars of monetary virtue, lost $219 million ($21.9 crore) to an obscure commodities subsidiary called Drexel Burnham Lambert Trading Corporation”. The sum was small by American standards but it was “a big, big number” for the countries involved at the time.

What had these national central banks done? They had been lured into becoming greedy. They had been sitting on stocks of gold as part of their national reserves which they felt “just collect dust”. So they yielded to the temptation offered by the Drexel subsidiary of leasing the gold to private parties.

In Ms. Nathans’ words, “By leasing gold, a central bank earns a modest interest rate, ranging from less than 0.5% to 2.5%. Typically, the central bank consigns the gold to a dealer – say, for 90 days. The dealer can then lend the gold to a customer, at a higher interest rate. It may be a speculator, who hopes to repay the borrowed gold when the price falls, or a gold mine that wants to repay the broker with gold produced later.”

But the Drexel parent and subsidiary went bankrupt through bad financial decisions. Drexel’s Michael Milken went to jail. The Central Banks of Poland, Malaysia, Portugal and Yugoslavia were left empty-handed – and had to sue as creditors in New York’s courts trying desperately to get back the gold they had been lured into parting with. It would be unwise to take bets on how much of their gold they ever got back.

All the present PM’s men — Messrs Chidambaram, Ahluwalia, Parekh, Reddy et al in collaboration with one or two American financial companies – now have a scheme that will use not the RBI’s gold but its foreign currency reserves.

Mr Ahluwalia and Mr Parekh have made the outlandish claim that “India needs US$320 billion” (US 32,000 crore) by way of “investment for physical infrastructure” during the so-called “Eleventh Five-Year Plan”. (How many so-called “Five Year Plans” is India going to have incidentally? We had our “First Plan” when Manmohan Singh was a student at Punjab University. Stalin, who invented the “Five Year Plan”, died during that time, and even his old USSR has ceased to exist, let alone its “Five Year Plans”.)

That vast amount of “investment for physical infrastructure” is what Mr Ahluwalia says he knows India needs for his purported “9% growth rate” to be achieved. Where are the macroeconomic models and time-series data sets from him or his friends to back such assertions? There are none. None of the PM’s men, no one in the Finance Ministry or RBI or Planning Commission, nor any of their JNU economics professor friends or anyone else in Delhi, Mumbai, Kolkata etc have any such models or data with which to back such assertions. Nor do the World Bank etc. It is all sheer humbug – all a lie. It is part of the mendacity and self-delusion that our capital city has been floating upon.

In any event, the RBI reportedly has “opposed the idea of deploying forex reserves for infrastructure development on the grounds that it will create monetary expansion”. But Mr Chidambaram’s Finance Ministry owns the RBI, and the Ministry has said “the RBI’s concerns had been taken care of, as the investments would be deployed only through a structured mechanism”. (Business Standard 23 March 2007, p. 3)

What is a “structured mechanism”? Mr Chidambaram, mentioning Citigroup and Blackstone Group specifically, said in his Budget Speech that Mr Deepak Parekh has “suggested the establishment of two wholly-owned overseas subsidiaries of India Infrastructure Finance Company Ltd with the following objectives: (i) to borrow funds from the RBI and lend to Indian companies implementing infrastructure projects in India, or to co-finance their External Commercial Borrowings for such projects, solely for capital expenditure outside India; and (ii) to borrow funds from the RBI, invest such funds in highly rated collateral securities, and provide ‘credit wrap’ insurance to infrastructure projects in India for raising resources in international markets. The loans by RBI to these two subsidiary companies will be guaranteed by the Government of India and the RBI will be assured of a return higher than the average rate of return on its incremental investment.”

You do not understand? Well, no one is supposed to. The most exquisite thievery occurs after all not in darkness but in broad daylight with everyone watching but no one able to see or comprehend anything. So let us return to elementary first principles.

What are foreign exchange reserves and why do countries hold them? It is quite simply answered. Consider the USA and Canada, each with its own dollar. Canadians want to purchase American goods and services, give gifts and make loans to American residents, and make investments in the USA. Americans want to do the same in Canada. Each has to use the domestic money of the other when it does so. If an American wishes to lend money to a Canadian or to purchase something from him, he receives Canadian dollar notes from the Canadian Government to make his Canadian transactions, handing over his American dollar notes instead. The American dollar notes he hands over become part of Canada’s foreign exchange reserves, held by its Central Bank. Roughly speaking, a country’s foreign exchange reserves are the residual foreign currency assets its central bank holds after all these transactions are carried out on both sides of the border.

In the US-Canada case, neither Government prevents its citizens from exchanging domestic money for foreign money. In India, our rupee has been inconvertible since about 1940. The average Indian cannot freely exchange his/her rupee-denominated assets for foreign exchange denominated ones even if he/she wished to. There has been some import-liberalisation in recent years but only someone with the political access of Mr Tata or Mr Birla can purchase foreign assets and foreign companies using their Indian money – because the rupee is inconvertible, any bad financial decisions they make in using their foreign assets will be implicitly paid for by the Indian public.

Now a country’s central bank, such as our Reserve Bank, is the custodian of its foreign exchange reserves. India’s reserves are supposed to have reached $195.96 Billion ($19,596 Crore) as of March 16 2007. Keep in mind we do not know why they have risen: they can rise merely because foreigners (including NRIs) have lent us more of their money, not because foreigners have bought more of our goods and services. In fact Business Standard yesterday 31 March 2007 said on its front page “external commercial borrowing” was “a major source of accretion” of India’s reserves.

Also keep in mind that the Reserve Bank has the duty to manage these foreign-denominated assets against which it has already issued Indian rupees. It might receive a small conservative income from the cash-management aspect of this but it may not risk them or place them in any jeopardy!

Yet the whole idea behind the Chidambaram-Ahluwalia-Parekh-Reddy scheme under discussion by the Sonia-Manmohan Government is that the RBI will “lend” some of the billions of Americans dollars in its custody to overseas subsidiaries of Indian companies – say, for example, to the Tatas who have now bought foreign “capital assets” of some US$ 12 Billion ($1200 Crore) from Corus without having anything near that kind of foreign income.

Such favoured Indian companies might then use these “borrowed” funds as collateral for other borrowings. In exchange, they will go about undertaking purported “infrastructure” projects in India. So much for the “structured mechanisms” being touted by Messrs Chidambaram, Ahluwalia, Parekh et al.

Before India’s public understands it, the schemers will shout (as they have done with the SEZ Act) that Parliament has passed it. The BJP will applaud with envy. The Communists might uncomprehendingly complain a little, and then be bought off with a sop or two that they do understand, like a little pro-China rhetoric or being let off lightly on Nandigram.

Now international institutions like the International Monetary Fund and the Bank of International Settlements officially exist to advise central banks to stay along the straight and narrow and to avoid all such mischief. Here is what the IMF explicitly warned about such schemes in its Guidelines for Foreign Exchange Reserve Management dated September 20 2001:

Liquidity risk. The pledging of reserves as collateral with foreign financial institutions as support for loans to either domestic entities, or foreign subsidiaries of the reserve management entity, has rendered reserves illiquid until the loans have been repaid. Liquidity risks have also arisen from the direct lending of reserves to such institutions when shocks to the domestic economy led to the borrowers’ inability to repay their liabilities, and impairment of the liquidity of the reserve assets.
Credit risk. Losses have arisen from the investment of reserves in high-yielding assets that were made without due regard to the credit risk associated with the issuer of the asset. Lending of reserves to domestic banks, and overseas subsidiaries of reserve management entities, has also exposed reserve management entities to credit risk.”

Dostoevsky believed man could have evil intent. Socrates was more generous and said man does not do wrong knowingly. It is not impossible our Indian schemers have innocent intent and do not even realize how close they are to becoming scamsters, or are already in the grip of scamsters. But at least we are now forewarned: India faces a clear risk of being swindled of its foreign exchange reserves. Prevention is better than cure.

Uttar Pradesh Polity and Finance

Uttar Pradesh Polity & Finance


A Responsible New Govt May Want To Declare A Financial Emergency

First published in

The Statesman Editorial Page, March 24 2007

by

Subroto Roy

 

 

Uttar Pradesh goes to the polls beginning April 7. Nothing may succeed better in focusing the minds of its citizens and political candidates than some hard macroeconomic realities. Discussing UP’s public finances may be the first step to bringing cool rationality to the cauldron of its politics ~ consisting as it does of seemingly deep and irreconcilable divisions of religion, caste and personality.

 

UP shared initials of the old British “United Provinces of Agra and Oudh”, and in 1947 was mostly the same territory. It deserves better than to be known merely as our “Northern State”: UP has been India’s fulcrum, deeply affecting our history, culture and politics. There could have been today not merely a new Uttarakhand but also perhaps Agra, Bareilly (Rohilkhand), Jhansi (Bundelkhand), Meerut, Avadh (Ayodhya, Oudh), Kanauj, Varanasi etc.

 

 

History and politics

 

Each has had its history. Oudh was seen by the British before Dalhousie as a northern buffer for their Bengal possessions. Bareilly was “an important centre of disaffection” of Muslim soldiers against the British in 1857 and also where Hindus after Aurangzeb’s death in 1707 had “thrown off the imperial yoke” refusing to pay tribute to Delhi. The very idea of “Pakistan” was mostly a UP-invention. Long before Iqbal and Jinnah, Sayyid Ahmad Barelvi (1786-1831) initiated a mass migration of Muslims and created a theocratic principality in the NWFP (Tariqah-i-Muhammadiyah) which collapsed due to conflict between his Pashtun and North Indian followers. Pervez Musharraf’s family were frankly nostalgic during their India-visit, and indeed Pakistan’s Mohajirs long for fertile UP more than the arid country they in fact possess ~ even more than for J&K on which Pakistanis since Liaquat (UP’s most prominent Muslim legislator between 1926-1940) became fixated instead.

 

 

In the 1980s and 1990s, the “Ram Janambhoomi/Babri Masjid” dispute may have been mostly a gigantic, inchoate, incoherent national exercise in defining our identity: “Who are we?” or perhaps “Who are we not?” as modern Indians, questions that remain unanswered. Certainly, in 1908 the Imperial Gazetteer of India Vol XIX pp 279-280 reported: “After Babar had gained a footing in Hindustan by his victory at Panipat in 1526, and had advanced to Agra, the defeated Afghan house of Lodhi still occupied the Central Doab, Oudh, and the eastern districts of the present United Provinces. In 1527, Babar, on his return from Central India, defeated his opponents in Southern Oudh near Kanauj, and passed on through the Province as far as Ajodhya where he built a mosque in 1528, on the site renowned as the birthplace of Rama. The Afghans remained in opposition after the death of Babar in 1530, but were defeated near Lucknow in the following year.”

 

 

History books and doctoral theses should have been perhaps where all such old facts deserved to remain in a modern self-confident, self-aware India.

 

 

Today’s UP at more than 166 million people exceeds in population France and Germany combined. One in every six or seven Indians is from UP. The State has become notorious for its chaotic politics, its “history-sheeters”, its corruption, crimes, badlands, astrology and other superstition. Its popular power gets divided between Mulayam, Mayawati and the BJP: each the self-appointed spokesman of Muslims, “Bahujans” and Hindu upper castes respectively. Congress, once India’s grand old secular national party, has been side-lined in UP politics.

 

 

Yet UP’s pivotal role remains such that the healthiest development for Indian democracy today may be for the Lok Sabha Member from Rae Bareilly to close down 10 Janpath as a residence and office for herself, and live instead as an exemplary parliamentarian among the common people of her constituency, setting the example too for her son to do the same in Amethi. Their permanent departure from New Delhi, becoming prominent UP politicians instead, would be the desperately needed “tough love” required by the Congress Party ~ which finally, after many decades, would be compelled to grow up and elect a leadership for itself based on some real political principles and not mere sycophancy.

 

 

Focussing on UP’s Public Finances is the first constructive step towards a rational political economy arising in the interests of its many citizens. As with other States of our Union, it is not impossible to understand what is going on with UP’s finances, though it does take some serious effort. The State receives tax revenues, income from State operations (like bus fares etc), and grants transferred from the Union. Of these revenues, more than 70% arise from taxation. Of those taxes, about 45% is collected by the Union on behalf of the State according to the Finance Commission’s formulae; 55% is collected by the State itself, and about 50% of what the State collects is Sales Tax. On the expenditure side, some 43% has been going to repay the State’s debts plus interest owed on that debt. The remainder gets distributed as summarily shown in the table.

 

 

Audit and restructuring

As with the Union of India, as well as with other States like West Bengal, the wide difference between income and expenditure implies the Government must then issue new public debt, which typically has been a larger and larger sum every year, greater than the maturing debt being amortised or extinguished. The grave consequences of this will be obvious to any householder, and makes it imperative that calm, sober thought and objective analysis occur about UP’s financial condition and budget constraint. E.g., what is revealed at a higher level of detail is that in 2003-2004, Rs. 5.43 Bn (Rs 543 crores) were spent to collect Rs. 1.18 Bn (Rs. 118 crores) of land revenue! UP has also spent extraordinarily vast public resources (and World Bank loans) on electricity ~ yet its power supply remains dismal.

 

 

These kinds of facts may be enough for any responsible new Government of UP (perhaps even a “Unity Government”) to declare a financial emergency under Article 360 of the Constitution, followed by ordering the most stringent of audits of all government departments and projects using public resources as well as recognition of public assets, followed in turn by a restructuring of the public budget over a few years with the aim of cutting all waste, fraud and abuse, and directing public resources instead to areas of highest social usefulness.

The author is Contributing Editor, The Statesman

UP Government Finance 2003-2004
EXPENDITURE ACTIVITIES : Rs Billion (Hundred Crore)
government & local government
judiciary
police (including vigilance etc)
prisons
bureaucracy
collecting land revenue & taxes
government employee pensions
schools, colleges, universities, institutes
health, nutrition & family welfare
water supply & sanitation
roads, bridges, transport etc.
electricity
irrigation, flood cntrl., environ, ecology
agricultural subsidies, rural development
industrial subsidies
capital city development
social security, SC, ST, OBC, lab.welfare
tourism
arts, archaeology, libraries, museums
miscellaneous
debt amortization & debt servicing
total expenditure

30.33
3.17
25.81
1.13
11.63
8.41
29.00
62.79
18.97
6.04
16.13
200.22
29.98
16.07
8.19
1.08
18.36
0.20
0.37
0.53
373.60

3.52%
0.37%
2.99%
0.13%
1.35%
0.98%
3.36%
7.28%
2.20%
0.70%
1.87%
23.23%
3.48%
1.86%
0.95%
0.13%
2.13%
0.02%
0.04%
0.06%
43.34%

tax revenue
operational income
grants from Union
loans recovered
total income
268.74
22.82
24.82
124.98
Govt. Borrowing Requirement:
(total expenditure minus total income) 420.67
financd by:
new public debt issued
use of Trust Funds etc.

385.41
35.26
420.67

From the author’s research based on latest available data published by the C&AG of India

Bengal’s Finances

BENGAL’S FINANCES

First published in The Sunday Statesman February 25 2007, Editorial Page  Special Article, www.thestatesman.net

There is urgent need for calm, sober thought, not self-delusion. Foreign trade, world politics are not what State Governments are constitutionally permitted to do.

By SUBROTO ROY

Mr Buddhadeb Bhattacharjee is fond of saying his hoped for industrialization plans will lead to jobs for “thousands” of unemployed young men and women emerging from West Bengal’s many schools, colleges and universities.

Now ever since JM Keynes’s time, economists have understood the phenomenon of unemployment quite well. Some unemployment is voluntary: where someone declines to accept a job at the prevailing wage or chooses leisure instead, e.g. withdraws from the labour-force in order to go to college or care for children or family or be involved in search for a better job. Some unemployment is seasonal, as in agriculture ~ where there often is “overfull” employment at harvest-time. Some unemployment may be frictional or structural, depending on dynamic unpredictable industrial or technological changes. In none of these cases is any large role defined for government investment using public resources, though there can be smaller roles like providing job-information, advice and training.

Keynes himself was concerned with systematic “involuntary” unemployment, where masses of people are willing but unable to find work at the going wage because there has been a general collapse of the market economy, as arguably happened in the 1930s in the Western countries. There has been no such situation in independent India.

And it is important to remember our labour markets are mostly unrestricted by State boundaries: unlike totalitarian China, we do not have internal passports in the country, and Indians are mostly free to work anywhere they wish to. Talk from CPI-M, Congress, BJP or other politicians of alleged Keynesian “multiplier” effects arising from government expenditure is mostly talk. And as for Sonia Gandhi’s “National Rural Employment Guarantee”, to the extent it was argued for at all by Amartya Sen’s disciples like Jean Drèze, the argument was not on Keynesian grounds but of a purportedly more equitable distribution of government expenditure.

What then is the Bhattacharjee Government supposed to be doing?

Chandrababu Naidu started a trend among Chief Ministers flying off to exotic foreign vistas, addressing international conferences and signing memoranda with foreign businessmen. But world politics, international relations and foreign trade are not what Indian State Governments are permitted by our Constitution to be engaged in doing. Nelson Mandela is a great man of history but Jyoti Basu’s Government had no constitutional right or business to gift him five million American dollars of West Bengal public money after he was released from jail in South Africa in 1990 by De Klerk.

Our Constitution is crystal clear that the legitimate agenda of India’s State Governments is something very mundane and wholly unglamorous: State Governments are supposed to be managing Courts of Law; the Police, Civil Order, Prisons; Water, Sanitation, Health; State Debt Service; Intra-State Infrastructure & Communications; Local Government; Liquor & Other Public Sector Industry; Trade, Local Banking & Finance; Land, Agriculture, Animal Husbandry; Libraries, Museums, Monuments; State Civil Service & Administration. In addition, “concurrent” with the Union Government are Criminal, Civil & Family Law, Contracts & Torts; Forests & Environmental Protection; Unemployment & Refugee Relief; Electricity; Education. It is relative to that explicit agenda that State Government performances around the country must be evaluated.

The finances of the West Bengal Government and those of every other State of the Union appear in a condition of Byzantine confusion. Even so, it is not impossible for any citizen to understand them with a little serious effort. The State receives tax revenues, income from State operations (like bus fares, lottery tickets etc), and grants transferred from the Union. Of the State’s total revenues, more than 80% arise from taxation. Of those taxes, about 30% is collected by the Union on behalf of the State in accordance with the Finance Commission’s formulae; 70% is collected by the State itself, and about 60% of whhat the State collects is Sales Tax. On the expenditure side, more than 60% goes in repaying the State’s debts as well as interest owed on that debt. The remainder gets distributed as summarily shown in the table. (What would be revealed at a higher level of detail is that e.g. Rs. 2.63 Bn is spent in collecting Rs. 9.93 Bn of land revenue!) The wide difference between the State’s income from all sources and its expenditures implies the State must then issue new public debt. That typically has been a larger and larger sum every year, greater than the amount of maturing debt being amortised or extinguished. The potentially grave consequence of this will be obvious to any householder, and makes it imperative that calm, sober thought and objective analysis occur about the State’s financial condition and budget constraint. There is no room for self-delusion, especially on the part of the Bhattacharjee Government. We are still paying interest on the money we borrowed to make Nelson Mandela a gift seventeen years ago.

Govt. of W. Bengal’s Finances 2003-2004
Rs Billion (Hundred Crore)
EXPENDITURE ACTIVITIES:
government & local government 8.68 1.68%
judiciary 1.27 0.25%
police (including home guard etc.) 13.47 2.61%
prisons 0.62 0.12%
bureaucracy 5.69 1.10%
collecting land revenue & taxes 4.32 0.84%
government employee pensions 26.11 5.05%
schools, colleges, universities, institutes 45.06 8.72%
health, nutrition & family welfare 14.70 2.84%
water supply & sanitation 3.53 0.68%
roads, bridges, transport, etc. 8.29 1.60%
electricity (mostly loans to power sector) 31.18 6.03%
irrigation, flood control, environment, ecology 10.78 2.09%
agricultural subsidies, rural development, etc. 7.97 1.54%
industrial subsidies 2.56 0.50%
capital city development 7.29 1.41%
social security, SC, ST, OBC, labour welfare 9.87 1.91%
tourism 0.09 0.02%
arts, archaeology, libraries, museums 0.16 0.03%
miscellaneous 0.52 0.10%
debt amortization & debt servicing 314.77 60.89%
total expenditure 516.92

tax revenue 141.10
operational income 6.06
grants from Union 18.93
loans recovered 0.91
total income 167.00
INCOME SOURCES:

GOVT. BORROWING REQUIREMENT
(total expenditure
minus total income ) 349.93

financed by:
new public debt issued 339.48
use of Trust Funds etc 10.45
349.93
From the author’s research and based on latest available data published by the Comptroller & Auditor General of India

On a Liberal Party for India

NON-EXISTENT LIBERALS

By SUBROTO ROY

First published in The Sunday Statesman October 22 2006, Editorial Page Special Article


Communists, socialists and fascists exist in the Left, Congress and BJP-RSS ~ but there is a conservative/”classical liberal” party missing in Indian democracy today

We in India have sorely needed for many years a serious “classical liberal” or “conservative” political party. Major democratic countries used to have such parties which paid lip-service at least to “classical liberal” principles. But the 2003 attack on Iraq caused Bush/McCain-Republicans to merge with Hilary-Democrats, and Blair-Labour with Tory neocons, all united in a cause of collective mendacity, self-delusion and jingoism over the so-called “war on terror”. The “classical liberal” or “libertarian” elements among the Republicans and Tories find themselves isolated today, just as do pacifist communitarian elements among the Democrats and Labour. There are no obvious international models that a new Indian Liberal Party could look at ~ any models that exist would be very hard to find, perhaps in New Zealand or somewhere in Canada or North Eastern Europe like Estonia. There have been notable individual Indian Liberals though whom it may be still possible to look to for some insight: Gokhale, Sapru, Rajagopalachari and Masani among politicians, Shenoy among economists, as well as many jurists in years and decades gone by.

What domestic political principles would a “classical liberal” or conservative party believe in and want to implement in India today? First of all, the “Rule of Law” and an “Efficient Judiciary”. Secondly, “Family Values” and “Freedom of Religious Belief”. Thirdly, “Limited Government” and a “Responsible Citizenry”. Fourthly, “Sound Money” and “Free Competitive Markets”. Fifthly, “Compassion” and a “Safety Net”. Sixthly, “Education and Health for All”. Seventhly, “Science, not Superstition”. There may be many more items but this in itself would be quite a full agenda for a new Liberal Party to define for India’s electorate of more than a half billion voters, and then win enough of a Parliamentary majority to govern with at the Union-level, besides our more than two dozen States.

The practical policies entailed by these sorts of political slogans would involve first and foremost cleaning up the budgets and accounts of every single governmental entity in the country, namely, the Union, every State, every district and municipality, every publicly funded entity or organisation. Secondly, improving public decision-making capacity so that once budgets and accounts recover from having been gravely sick for decades, there are functioning institutions for their proper future management. Thirdly, resolving J&K in the most lawful and just manner as well as military problems with Pakistan in as practical and efficacious a way as possible today. This is necessary if military budgets are ever going to be drawn down to peacetime levels from levels they have been at ever since the Second World War. How to resolve J&K justly and lawfully has been described in these pages before (The Statesman, “Solving Kashmir” 1-3 December 2005, “Law, Justice and J&K”, 2-3 July 2006).

Cleaning up public budgets and accounts would pari passu stop corruption in its tracks, as well as release resources for valuable public goods and services. A beginning may be made by, for example, tripling the resources every year for three years that are allocated to the Judiciary, School Education and Basic Health, subject to tight systems of performance-audit. Institutions for improved political and administrative decision-making are necessary throughout the country if public preferences with respect to raising and allocating common resources are to be elicited and then translated into actual delivery of public goods and services.

This means inter alia that our often dysfunctional Parliament and State Legislatures have to be inspired by political statesmen (if any such may be found to be encouraged or engendered) to do at least a little of what they have been supposed to be doing. If the Legislative Branch and the Executive it elects are to lead this country, performance-audit will have to begin with them.

The result of healthy public budgets and accounts, and an economy with functioning public goods and services, would be a macroeconomic condition for the paper-rupee to once more become a money that is as good as gold, namely, a convertible world currency again after having suffered sixty years of abuse via endless deficit finance at the hands of first the British and then numerous Governments of free India that have followed.

It may be noticed the domestic aspects of such an agenda oppose almost everything the present Sonia-Manmohan Congress and Jyoti Basu “Left” stand for — whose “politically correct” thoughts and deeds have ruined India’s money and public budgets, bloated India’s Government especially the bureaucracy and the military, starved the Judiciary and damaged the Rule of Law, and gone about overturning Family Values. While there has been endless talk from them about being “pro-poor”, the actual results of their politicization of India’s economy are available to be seen with the naked eye everywhere.

One hundred years from now if our souls returned to visit the areas known today as India, Pakistan, Bangladesh etc, we may well find 500+ million inhabitants still below the same poverty-line despite all the gaseous prime ministerial or governmental rhetoric today and projections about alleged growth-rates.

If the Congress and “Left” must oppose any real “classical liberal” or conservative agenda, we may ask if the BJP-RSS could be conceivably for it. The answer is clearly not. The BJP-RSS may pontificate much about being patriotic to the motherland and about past real or imagined glories of Indian culture and religion, but that hardly ever has translated concretely into anything besides anti-Muslim or anti-Christian rhetoric, or breeding superstitions like astrology even at supposedly top technological institutes in the country. (Why all astrology is humbug, and a pre-Copernican Western import at that, is because all horoscopes assume the Sun rotates around the Earth in a geocentric solar system; the modern West’s scientific outlook arose only after astrology had declined there thanks to Copernicus and Galileo establishing the solar system as heliocentric.)

As for a “classical liberal” economic agenda, the BJP in Government transpired to be as bad if not worse than their adversaries in fiscal and monetary profligacy, except they flattered and were flattered by the organised capital of the big business lobbies whereas their adversaries flatter and are flattered by the organised power of the big labour unions (covering a tiny privileged class among India’s massive workforce). Neither has had the slightest interest in the anonymous powerless individual Indian citizen or household. The BJP in Opposition, instead of seeking to train and educate a new modern principled conservative leadership, appear to wish to regress even further back towards their very own brand of coarse fascism. “Family Values” are why Indian school-children have become the envy of the world in their keen discipline and anxiety to learn – yet even there the BJP had nothing to say on Sonia Gandhi’s pet bill on women’s property rights, whose inevitable result will be further conflict between daughters and daughters-in-law of normal Indian families.

At the root of the malaise of our political parties may be the fact we have never had any kind of grassroots “orange” revolution. There has been also an underlying national anxiety of disintegration and disorder from which the idea of a “strong Centre” follows, which has effectively meant a Delhi bloated with power and swimming in self-delusion. The BJP and Left are prisoners of their geriatric leaderships and rather unpleasant ideologies and interest-groups, while the Congress has failed to invent or adopt any ideology besides sycophancy. Let it be remembered Sonia Gandhi had been genuinely disdainful of the idea of leading that party at Rajiv’s death; today she has allowed herself to become its necessary glue. The most salubrious thing she could do for the party (and hence for India) is to do a Michael Howard: namely, preside over a genuine leadership contest between a half-dozen ambitious people, and then withdraw with her family permanently from India’s politics, focusing instead on the legacy of her late husband. Without that happening, the Congress cannot be made a healthy political entity, and hence the other parties have no role-model to imitate. Meanwhile, a liberal political party, which necessarily would be non-geriatric and non-sycophantic, is still missing in India.

New Foreign Policy? (8-9 Oct 2006)

NEW FOREIGN POLICY? “Kiss Up, Kick Down”?

Seven phases of Indian foreign policy may be identifiable since Nehru; the current phase seems to involve subservience to the strong, jingoism otherwise

 

by Subroto Roy

 

First published in The Sunday Statesman 8 Oct 2006, The Statesman 9 Oct 2006 Editorial Page Special Article

 

 

The outlines of a new tri-partisan Indian foreign policy may be becoming discernible. That it is “new” or that it commands near unanimity among the Congress, BJP and “Left” and their respective friends in the Indian media and political classes, does not make it sound or robust in any way. In fact, its basis in the history, geography and economics of India is wholly inadequate, and it is also entirely divorced from any clearly enunciated new Indian political ethics for the modern world.

 

 

The new policy, which may be fairly dubbed the Jaswant-Manmohan policy after the BJP and Congress politicians who have been its putative authors and leading practitioners, is as likely as not to lead to an India that is no longer a free decision-maker in any meaningful way in world affairs by 2047, one hundred years after Independence. Our great grandchildren may well be taught that for some decades in Indian history a sovereign unitary republic actually existed which then came to be effectively lost.

 

 

Indeed the new policy may amount to being less a coherent new doctrine of India’s role in international relations than a mere change in attitude on the part of politicians, bureaucrats and their intelligentsia friends: from seeming universally arrogant in the world to becoming pliant and subservient towards those world powers perceived (accurately or inaccurately) as strong, combined with a vainglorious jingoism towards all others. It is an application to international diplomacy and politics of the classic bureaucratic principle of “kiss up, kick down” in an organisation, and may reflect the fact the two main institutions the Mughals and British used to run their empires were the bureaucracy and military ~ both of which have grown and continued to run New Delhi (and Islamabad) afterwards, co-opting whatever domestic political development that has arisen. There is plenty of wishful waffling too about India becoming a “great power” or being a “swing state in the global balance of power”, and about how well the economy is supposedly doing ~ as if what Government spokesmen say about the economy is to be believed at face-value. Indian Leftists and their fellow-travellers ~ as great lovers themselves of bureaucracy, collectivist groupthink and propaganda on the USSR or PRC pattern, and fearful or envious of all individual criticism, creativity and achievement – have taken to the same principle like fish to water.

 

 

The first phase of Indian foreign policy was Nehruvian in that it began with Nehru’s Fabian misperception of Stalin’s USSR, and ended with the military debacle he led the country into at the hands of Zhou’s “human wave” armies in the mountains of Ladakh and NEFA.

 

 

A second phase was Kashmir-centric, overlapping with the first insofar as it may be traced to Karan Singh’s iniquitous dismissal of Sheikh Abdullah’s first Government, but really beginning after Nehru’s death with the Ayub-Abdullah summit, and being marked by Ayub’s 1965 attack in J&K ~ Shastri’s riposte reaching the Ichogil Canal signalled that no longer would war over J&K be confined to J&K.

 

 

A third phase was forced on India by the Pakistani civil war that led to Bangladesh’s creation, and was marked by the Indira/ Haksar alliance with Brezhnev’s USSR, as well as by Pokhran-I.

 

 

A fourth phase of Indian foreign policy may be identified in the late 1970s and 1980s, marked by rebellion of the fundamentalist Sikhs whom Indira and Sanjay Gandhi had provoked, which led in due course to her assassination. The turmoil that followed in Punjab and North India was financed by anti-Indian Sikhs from Vancouver,California and Britain, with gleeful help from the Pakistanis, and Indian diplomats had their hands full in trying to counter that phenomenon. It was during this phase of domestic Indian turmoil that New Delhi wholly missed the seismic changes occurring in the USSR, East Europe and international relations generally, and completely failed to predict its consequences for India.

 

 

The phase came to end when the Narasimha Rao Government (upon advice of a well-known communist cabal in the IFS and JNU) instantly showered praise on the anti-Yeltsin coup in August 1991. When Yeltsin returned to power, the new anti-communist Russians took their revenge on New Delhi, exacting hard dollars for the soft rouble-trade of friendlier times.

 

 

A fifth phase may be seen in retrospect as one of relative success.The main plank of Indian foreign policy in the late 1980s and early 1990s was to get Pakistan designated a “terrorist state” in American eyes, as well as to warn of the dangers of a Pakistani nuclear bomb. It had been prompted by the end of American involvement in the Afghan war, which caused the ISI to shift the jihadis to J&K, and the Indian policy was destined not to succeed. No matter how hard Kanwal Sibal tried in 1992-1993 as Minister-Political in the Washington Embassy to tell the Americans that their Pakistani friends were dangerous, he was destined to fail as the MEA had entirely failed to realise how far ahead the Pakistanis were in their lobbying power in Washington ~ the Pakistani super-elite has been entrenched among the K-Street lobbyists and in expensive real-estate along the Potomac River for more than two generations. Yet after the 9/11 attacks several years later, the Indians were able to look back at that fifth phase and say to the Americans, “We told you so”.

 

 

In the late 1990s came a short-lived sixth phase of Pokhran-II and the Lahore bus-trip, which may be credited as Vajpayee successes, and also contained the Kargil War and Kandahar hijacking, which were more dubious. This overlapped with the last and currently continuing seventh phase of Indian foreign policy with Jaswant Singh breaking the ice with the Americans when they had recovered from the fact the CIA’s failures included not foreseeing Pokhran-II; it coincided too with Osama bin Laden’s declarations of jihad against the USA. The Americans enlisting themselves on the side of the Northern Alliance to defeat the Taliban after 9/11 was beneficial from an Indian standpoint since Afghanistan had been effectively lost to secular Indian influence for two decades, and the Taliban had shown themselves no friends of India during the Kandahar hijacking.

 

 

But the BJP’s anti-Muslim thought processes quickly took over, as did its proximity to organised business lobbies. When Iraq was attacked and occupied in 2003, there was hardly a whimper from the BJP leadership, and instead their businessmen friends started to fly to Amman hopeful of “reconstruction” contracts. The Sonia/ Manmohan Congress/Leftist combine has effectively continued and expanded that trend, though now the business lobbies have been much more muted and subtle, especially in their backroom dealings and payoffs with respect to the nuclear deal. There is also an occasional burst of anti-Americanism from leftists though it is hard of course to beg for American foreign investment in Marxist-run areas while also being sincere in quaint street demos or agitprop.

 

 

Running through the new foreign policy is a fiction that it is driven by a new economic motivation to improve development and mass well-being in India. The bizarre idea of creating hundreds of so-called “Special Economic Zones” (reminiscent of 17th and 18th Century colonial fortifications) illustrates this. India’s ordinary anonymous masses ~ certainly the 850 million people entirely outside the organised sector ~ have little or nothing to do with any of this. Benefits will accrue only to the ten million Indian nomenclatura controlling or having access to the gaping exit holes to the outside world in the new semi-closed economy with its endless deficit finance paid for by unlimited printing of an inconvertible domestic currency.

 

 

It is as fallacious to think private investment from foreign or domestic businessmen will support public “infrastructure” creation as it is to think foreign exchange reserves are like tax revenues in being available for Government expenditure on “infrastructure”. Such fallacies are intellectual products of either those who know no economics at all or those who have forgotten whatever little they might have been once mistaught in their youth. What serious economics does say is that Government should generally have nothing to do with any kind of private business, and instead should focus on properly providing public goods and services, encourage competition in all avenues of economic activity and prevent or regulate monopoly, and see to it all firms pay taxes they are due to pay.

 

 

That is it. It is as bad for Government to be pampering organised foreign or domestic business or organised labour with innumerable subsidies, as has been happening in India for decades, as it is to make enterprise difficult with red tape and hurdles. Businessmen are grown ups and should be allowed to freely risk their capital and make their profits or their losses without public intervention.

 

 

An economics-based policy would have single-mindedly sought to improve the financial condition of every governmental entity in the country, with the aim of improving the provision of public goods and services to all 1,000 million Indians. If and when budgets of all governmental entities become sound, foreign creditors would automatically line up before them with loans to sell, and ambitious development goals can be accomplished. As long as public budgets (and public accounts) remain in an outrageous shambles, nothing can be in fact achieved and only propaganda, corruption and paper-money creation results instead. Whatever economic growth does occur is due to new enterprise and normal technological progress, and is mostly despite and not because of New Delhi’s bureaucrats (see “The Dream Team: A Critique”, The Statesman 6-8 January 2006).

 

 

The first aspect of the new Indian foreign policy has been for Government to become wholly ingratiating towards any and all “First World” members visiting India who may deign to consider any kind of collaboration whatsoever. The long line of foreign businessmen and heads of government having photo-ops with the Indian PM began with Vajpayee and has continued with Manmohan, especially when there is a large weapons’ or commercial aircraft or other purchase to be signed. The flip-side has been ministerial and especially Prime Ministerial trips abroad ~ from Vajpayee’s to a Singapore golf-cart immediately after commiserating Gujarat, to Manmohan receiving foreign honorary doctorates while still holding public office.

 

 

Subservience to foreign business interests in the name of economic policy extends very easily to Indian naval, military or diplomatic assets being used to provide policing or support services for the great powers as and when they may ask for it. Hence, Indian naval forces may be asked by the Americans to help fight pirates in the Indian Ocean, or escort this vessel or that, or India may be asked to provide refuelling or base facilities, or India may be requested to vote against Iran, Venezuela or whomever here or there. But there would be absolutely no question of India’s role in international politics being anything greater than that of a subaltern or comprador whose response must be an instant “Ji, Huzoor”. The official backing of the Tharoor candidacy was as futile and ridiculous as the quest for UN veto-power or the willingness to attend G-8 summits as an observer.

 

 

While subservience towards the First World’s business and military interests is the “kiss up” aspect of the new foreign policy, an aggressive jingoism towards others is the “kick down” aspect. One influential voice among the media friends of the new foreign policy states it as follows: “The search for `equity oil’ has been the single most important new element of Indian economic diplomacy in recent years… Equity oil raises India’s stakes in the stability of regimes or even individuals who preside over these resources… the big question is how far would India go in defence of `regime stability’ elsewhere? And if it’s assets fall into hostile hands, would India be prepared to consider promoting `regime change’?” Just as surely as a pacifist Fabian socialist Nehru misperceived Stalin’s USSR, New Delhi’s new capitalistic jingoists have misperceived the Cheney-Rumsfeld grab for “equity oil” and have even defined Bush-Blair adventurism as being “the side of the angels”. How they must love to want to project Indian military force ~ paratroopers in the Maldives perhaps, though they need to recall what happened with the LTTE too!

 

 

Multiple Jallianwalla Bagh massacres may have been occurring in front of us in Iraq, Afghanistan and Balochistan, and there may soon be an attack on Iran too. New Delhi’s new “kiss up, kick down” attitude has rendered India’s once-dignified and sober voice silent, our eyes closed or our face turned away.

 

 

The obvious alternative to bureaucratic “kiss up, kick down” would be “kick up, kiss down” loved by all individualists and anti-bureaucrats. In other words, it would be for India to take each case and circumstance in international politics on its merits; be seen to stand up seriously to the powerful in world politics wherever and whenever necessary; seek to protect those who may be vulnerable to international or other brutality in world affairs, while getting on properly with the mundane business of ordinary government and commerce at all other times. That mundane business may call for a gradual withdrawal of India from all or most of the fancy, corrupt international bureaucracies in New York, Washington, Geneva etc, focussing calmly but determinedly instead on improved administration and governance at home. Such was what Rajiv Gandhi was advised in January 1991 (see “Memos to Rajiv,” The Statesman 31 July-2 August 1991; Freedom First October 2001), when for one futile moment he even formed a peaceful bridge between the Americans and Saddam during the first Gulf War. The New Delhi establishment may be too intoxicated with power and insecure intellectually to be able to reflect on such sober alternatives.

Indian Money and Credit

Indian Money & Credit
by
Subroto Roy
First published in The Sunday Statesman, August 6 2006, Editorial Page Special Article

One rural household may lend another rural household 10 kg or 100 kg of grain or seed for a short time. When it does, it expects to receive back a little more than the amount lent ~ even if that little amount is in services or in plain goodwill among friends or neighbours. That extra amount is “real interest”, and the percentage of its value relative to the whole is the “real rate of interest”. So if 10 kg of grain are lent for two weeks and 11 kg are returned, an implicit real rate of interest of 10 per cent has been paid over that short period. The future is always less valuable than the present in the sense that 10 kg of grain today is worth something more than the prospect of the same 10 kg of grain tomorrow.

But loans may be made in terms of money rather than real units of grain, thus the change in the value of money over the period of the loan becomes relevant. If a loan of Rs 100,000 is made by a bank to a borrower for one year at a simple interest rate of 13 per cent per annum, and the value of money then declines at 8 per cent over the year, the debtor is paying real interest of just about 13 per cent-8 per cent = 5 per cent. The Yale economist Irving Fisher described how this monetary rate of interest equals the real rate of interest plus the rate of monetary inflation, while the great Swedish economist Knut Wicksell predicted inflation if the monetary rate fell below the real rate, and vice versa.

And there is another consideration too. A new cycle-rickshaw costs about Rs 5,000. A rickshaw driver who does not own his own machine has to pay the owner of the rickshaw a fixed rental of about Rs 15 per day. Now a government policy may want to see more cycle-rickshaw drivers owning their own machines, and allocate bank-credit accordingly. But some fraction of the drivers are alcoholics and hence are bad credit-risks, while others are industrious, have strong family lives and are good credit-risks. If a creditor is unable to distinguish between who is an alcoholic and who is not, credit terms will tend towards subsidising the alcoholic and taxing the industrious.

On the other hand, a creditor who knows each debtor individually will also know their credit-risks, and price individual loans to them accordingly. India’s credit markets, both rural and urban, have been segmented always into “formal” and “informal”, and remain so despite (or perhaps because of) much government intervention in recent decades.

Banks and the Reserve Bank of India operate in formal financial markets, but the informal credit market is where the real action is. For example, a mosaic-machine used in the construction business costs Rs 15,000 brand new and gets to be rented out at the rate of Rs 150 per day.

Someone with access to formal sector bank loans at say 13 per cent per annum, might borrow the Rs 15,000, buy a machine, rent it out, break-even within a few months and make a whopping profit afterwards. Everyone would thus hunger after subsidised formal sector bank loans, and these would be rationed quickly and then come to be allocated to people known to bank officials (like their own friends and relatives).

Rates of return on capital, i.e. real profits, are and always have been massively high in India, and that is what is to be expected because capital, both machinery and finance, is relatively scarce as a factor of production. Rates of return on labour, i.e. real wages, are on the other hand relatively low in India thanks to our vast population. For these reasons we have had for three centuries foreigners coming to India to invest their capital in enterprise and make a profit, while Indians have emigrated all over the world from Fiji to Britain to America in search of higher wages.

Now all of this is very elementary reasoning well known to serious monetary economists, yet it seems to have always escaped India’s monetary and fiscal decision-makers. For example, just the other day, the Finance Minister said in Parliament that all rural banks had been instructed to lend farmers credit at a 7 per cent (monetary) rate of interest, and failure to do so would lead to  punishment. By the rickshaw example (in fact many cycle-rickshaw drivers are also marginal farmers), the FM did not wish to, and of course cannot in practice, distinguish between good and bad credit-risks among the recipients of such loans. If the value of money is declining by, say, 8 per cent per annum, a 7 per cent monetary rate is equivalent to a minus 1 per cent real rate. i.e., the FM would have done some Humpty Dumpty economics and caused the future prospect of holding Rs 1,000 tomorrow to be more and not less valuable than the certainty of holding Rs 1,000 today. It is inevitable there will be credit-rationing when credit is so massively subsidised, so the typical borrowing farmer will get some little fraction of his credit-needs at the official government price of 7 per cent per annum and then have to get the bulk of his credit-needs fulfilled in the informal market ~ at a price perhaps of 1 per cent-5 per cent PER DAY! The FM promising in his Budget to subsidise farm credit sounds nice on TV but may be wholly futile as a way of stopping farmers’ suicides.

The same kind of Humpty Dumpty monetary economics has been religiously pursued by the Reserve Bank of India for decades upon directions from its owner and master, the Finance Ministry ~ which in turn has always meekly followed the dictates of India’s unreasonable politicians of all parties. Formal sector interest rates in India have been for decades so artificially lowered that even if we use official figures measuring inflation, this leads to real interest rates being lower in capital-scarce India than in the capital-rich West! (See graphs).  Negative or near-zero real interest rates in India’s formal financial sector coexisting with massively high profit rates in informal credit markets point to continuous processes of low risk profits being made by arbitrage between the two. That is why the organised private and public sectors seem so pleased with official credit policies ~ while every borrower in the informal credit markets always has suicide not far from his/her mind.

Other than Dr Rangarajan who once mentioned it, we have never had an RBI Governor who has wished to see the Reserve Bank of India constitutionally independent of the Government of the day, and hence dedicated to restoring the integrity of India’s money. Playing with the repo rate or other short term monetary rates is fun and makes the RBI think it is doing something as important as the US or UK central banks. Certainly the upward trend in such short term rates over the last few months is better than the nonsensical flip-flops previously. But it is small potatoes compared to the really giant variables which are all fiscal and not monetary in India. For example, Sonia Gandhi (as advised by another naturalized Indian, Jean Drèze, disciple of the Non-Resident Amartya Sen) insisted on a massive “Rural Employment Guarantee”; Manmohan Singh and Pranab Mukherjee have insisted on massive foreign weapons’ purchases and government wage increases; Praful Patel on massive foreign aircraft purchases; Arjun Sengupta on Scandinavian welfare benefits; Montek Ahluwalia on nuclear reactor purchases (so South Delhi will be able at least to run its ACs in 20 years’ time). All this adds endlessly to the stock of government paper being held as bank-assets, while the currency remains inconvertible (See e.g. The Statesman 30 October 2005, 6-8 January, 23 April 2006).The RSS/BJP and JNU/Left have been equally bereft of serious thought.

Tell any suicidal farmer that the Government of India has been borrowing larger and larger amounts every year just to pay interest on previously incurred debts; it may make him realise there are famous and powerful people who are even more unwise than himself and amount to effective suicide-prevention therapy. But do not tell him that they unlike himself have been playing with public money ~ or you may have the opposite effect.

The Politics of Dr Singh

Preface April 25 2009:  This article of mine has become a victim of bowdlerization on the Internet by someone who seems to support Dr Singh’s political adversaries.  I should say, therefore, as I have said before that  there is nothing personal in my critical assessment of Dr Singh’s economics and politics.  To the contrary, he has been in decades past a friend or at least a colleague of my father’s, and in the autumn of 1973 visited our then-home in Paris at the request of my father to advise me, then aged 18, before I embarked on my undergraduate studies at the London School of Economics.   My assessments in recent years like “The Politics of Dr Singh” or “Assessing Manmohan” etc need to be seen along with my “Assessing Vajpayee: Hindutva True and False”, “The Hypocrisy of the CPI-M”, “Against Quackery”, “Our Dismal Politics”, “Political Paralysis” etc.   (Also “Mistaken Macroeconomics”, June 2009). Nothing personal is intended in any of these; the purpose at hand has been to contribute to a full and vigorous discussion of the public interest in India.

 

 

Postscript 2 Sep 2013: See especially Did Jagdish Bhagwati “originate”, “pioneer”, “intellectually father” India’s 1991 economic reform?  Did Manmohan Singh? Or did I, through my encounter with Rajiv Gandhi, just as Siddhartha Shankar Ray told Manmohan & his aides in Sep 1993 in Washington?  Judge the evidence for yourself.  And why has Amartya Sen misdescribed his work? India’s right path forward today remains what I said in my 3 Dec 2012 Delhi lecture!

also from 2014: https://independentindian.com/2014/08/07/haksar-manmohan-and-sonia/

 

 

 

 

THE POLITICS OF DR SINGH

by

Subroto Roy

 

First published in The Sunday Statesman Editorial Page Special Article, May 21 2006

 

 

 

Manmohan Singh matriculated during Partition, and earned bachelor’s and master’s degrees in economics from Punjab University in 1952 and 1954. He then went to Cambridge to read for the BA over two years. The pro-communist Joan Robinson and Nicholas Kaldor were dominant influences in Cambridge economics at the time. Mark Tully reports Dr Singh saying in 2005 he fell under their influence. “At university I first became conscious of the creative role of politics in shaping human affairs, and I owe that mostly to my teachers Joan Robinson and Nicholas Kaldor. Joan Robinson was a brilliant teacher, but she also sought to awaken the inner conscience of her students in a manner that very few others were able to achieve. She questioned me a great deal and made me think the unthinkable. She propounded the left wing interpretation of Keynes, maintaining that the state has to play more of a role if you really want to combine development with social equity. Kaldor influenced me even more; I found him pragmatic, scintillating, stimulating. Joan Robinson was a great admirer of what was going on in China, but Kaldor used the Keynesian analysis to demonstrate that capitalism could be made to work.”

 

 

Now, in fact, what was going on in China at that time was the notorious catastrophe caused by Mao Zedong known initially as the “Little Leap Forward” (with a Stalin-like collectivization of agriculture) and then as the “Great Leap Forward”. Mao later apologised to China’s people for his ignorance of microeconomic principles, admitting he “had not realised coal and steel do not move of their own accord but have to be transported”. If what Robinson was extolling to young Indians at Cambridge like Amartya Sen and Manmohan Singh in the mid 1950s was Mao’s China, it was manifest error.

 

 

As for Kaldor, the Canadian economist Harry Johnson independently reported that “being a man who rolls with the times fairly fast”, Kaldor “decided early on that capitalism actually was working. So for him the problem was, given that it works, it cannot possibly work because the theory of it is right. It must work for some quite unsuspected reason which only people as intelligent as himself can see.” Like Robinson, Kaldor made a handful of fine contributions to economic theory. But in policy-making he exemplified the worst leftist intellectual vanity and “technocratic” arrogance.

 

 

Returning to India, Manmohan Singh was required to spend three years at Chandigarh. In 1960, he left for Nuffield College to work for an Oxford DPhil on the subject of Indian exports. He returned to Chandigarh as required by government rules for another three years, and in 1966 left again until 1969, this time as a bureaucrat at the new UNCTAD in New York run by Raul Prebisch. A book deriving from his doctoral thesis was published by Clarendon Press in 1964.

 

 

In 1969, Dr Singh returned to India becoming Professor of International Trade at the Delhi School of Economics. A technical survey of mainstream Indian economic thinking done by his colleagues Jagdish Bhagwati and Sukhamoy Chakravarty published in the American Economic Review of 1969, made footnote references to his book in context of planning and protectionism, but not in the main discussion of Indian exports which at the time had to do with exchange-rate overvaluation.

 

 

After Indira Gandhi’s March 1971 election victory, Dr Singh came to the attention of Parameshwar Narain Haksar, who launched his career in bureaucracy after inviting him to write a political paper “What to do with the victory”. Haksar had been an Allahabad lawyer married into the Sapru family. In London as a student he was a protégé of R. Palme Dutt and Krishna Menon, and openly pro-USSR. He was close to the Nehrus, and Jawaharlal placed him in the new Foreign Service. He was four years older than Indira and later knew her husband Feroze Gandhi who died in 1960. By May 1967 Haksar was Indira’s adviser, and became “probably the most influential and powerful person in the Government” until 1974, when there was a conflict with her younger son. But Haksar’s influence continued well into the 1990s. His deeds include nationalization of India’s banks, the Congress split and creation of the Congress(I), and politicisation of the bureaucracy including the intelligence services. High quality independent civil servants became politically committed pro-USSR bureaucrats instead. Professionalism ended and the “courtier culture” and “durbar” politics began.

 

 

Haksar and T. N. Kaul were key figures negotiating the August 1971 “Treaty of Peace, Friendship and Cooperation” with the USSR, which was to run 25 years except the USSR collapsed before then. Indira had hosted Richard Nixon two years previously, and the Nixon-Kissinger attempt to get close to Zhou En Lai’s China using Pakistan’s Z. A. Bhutto and Yahya Khan (coinciding with Pakistan’s civil war) were undoubtedly factors contributing to India’s Soviet alliance.

 

 

As Haksar’s protégé, Dr Singh’s rise in the economic bureaucracy was meteoric. By 1972 he was Chief Economic Adviser and by 1976 Secretary in the Finance Ministry. The newly published history of the Reserve Bank shows him conveying the Ministry’s dictates to the RBI. In 1980-1982 he was at the Planning Commission, and in 1982-1985 he was Reserve Bank Governor (when Pranab Mukherjee was Finance Minister), followed by becoming Planning Commission head, until taking his final post before retirement heading the “South-South Commission” invented by Julius Nyerere of Tanzania, from August 1987 until November 1990 in Geneva.

 

 

Dr Singh joined Chandrashekhar’s Government on 10 December 1990, when Rajiv Gandhi was Leader of the Opposition yet supporting Chandrashekhar “from the outside”, and left when new elections were announced in March 1991. The first time his name arose in context of contemporary post-Indira Congress Party politics was on 22 March 1991 when M K Rasgotra challenged the present author to answer how Manmohan Singh would respond to proposals being drafted for a planned economic liberalisation of India by the Congress Party authorised by Rajiv since September 1990 (viz., “Memos to Rajiv” The Statesman 31 July-2 August 1991 republished here as “Three Memoranda to Rajiv Gandhi”; “The Dream Team: A Critique” The Statesman 6-8 January 2006 also republished here; see also “Rajiv Gandhi and the Origins of India’s 1991 Economic Reform” published elsewhere here, and in abbreviated form in Freedom First, October 2001).

 

 

Rajiv was assassinated on 21 May 1991, resulting in Narasimha Rao (who had been ill and due to retire) becoming PM in June 1991. Dr Singh told Tully: “On the day (Rao) was formulating his cabinet, he sent his Principal Secretary to me saying, `The PM would like you to become the Minister of Finance’. I didn’t take it seriously. He eventually tracked me down the next morning, rather angry, and demanded that I get dressed up and come to Rashtrapati Bhavan for the swearing in. So that’s how I started in politics”. In the same conversation, however, Dr Singh also said he learnt of “the creative role of politics” from Robinson, and hence he must have realised he actually became politically committed when he began to be mentored by Haksar — Indira Gandhi’s most powerful pro-communist bureaucrat. Before 1991, Dr Singh may be fairly described as a statist anti-liberal who travelled comfortably along with the tides of the pro-USSR New Delhi political and academic establishment, following every rule in the bureaucratic book and being obedient in face of arbitrary exercise of political and economic power. There is no evidence whatsoever of him having been a liberal economist before 1991, nor indeed of having originated any liberal economic idea afterwards. The Congress Party itself in May 2002 passed a resolution saying the ideas of India’s liberalisation had originated with neither him nor Narasimha Rao.

 

 

Indeed, the 1970s and 1980s saw onset of the worst macroeconomic policies with ruination and politicisation of India’s banking system, origins of the Rs 30 trillion (Rs 30 lakh crore) public debt we have today, and the start of exponential money supply growth and inflation. Along with Pranab Mukherjee, Dr Singh, as the exemplary Haksarian bureaucrat, must accept responsibility for having presided over much of that. If they are to do anything positive for India now, it has to be first of all to undo such grave macroeconomic damage. This would inevitably mean unravelling the post-Indira New Delhi structure of power and privilege by halting deficit finance and corruption, and enforcing clean accounting and audit methods in all government organisations and institutions. Even the BJP’s Vajpayee and Advani lacked courage and understanding to begin to know how to do this, allowing themselves to be nicely co-opted by the system instead. Rajiv might have done things in a second term; but his widow and her coalition government led by Dr Singh, who exemplified India’s political economy of the 1970s and 1980s, appear clueless as to the macroeconomic facts, and more likely to enhance rather than reverse unhealthy fiscal and monetary trends.

Revisionist Flattery of Indira Gandhi

Inder Malhotra’s Indira Gandhi : A Review Article
by Subroto Roy
First published in The Statesman May 7 2006

Indira Priyadarshini Nehru was fortunate to have been a handsome woman born to an eminent and indulgent father and grandfather. Despite her lack of higher education or significant worldly wisdom or experience, she acquired enough of an aura of being born to rule that she became Congress Party President in 1959 at age 41, and India’s most dramatic Prime Minister from 1966-1977 and again from 1980-1984 when she was assassinated. She was lucky too that the Zoroastrian man she married did not have one of the many long and colourful surnames Indian Zoroastrians can have, but coincidentally shared the same surname as modern India’s founder. Hence arose the iconic name and personage known as Indira Gandhi.

“The evil that men do lives after them, the good is often interred with their bones”, said Shakespeare. Indira Gandhi’s one and paramount good deed as India’s leader and indeed as a world leader of her time was to have fought a war that was so rare in international law for having been unambiguously just. And she fought it flawlessly. The cause had been thrust upon her by an evil enemy’s behaviour against his own people, an enemy supported by the world’s strongest military power with pretensions to global leadership. Victims of the enemy’s wickedness were scores of millions of utterly defenceless, penniless human beings. Indira Gandhi did everything right. She practised patient but firm diplomacy on the world’s stage to avert war if it was at all possible to do. She chose her military generals well and took their professional judgement seriously as to when to go to war and how to win it. Finally, in victory she was magnanimous to the enemy that had been defeated. Children’s history-books in India should remember her as the stateswoman who freed a fraternal nation from tyranny, at great expense to our own people. As a war-leader, Indira Gandhi displayed extraordinary bravery, courage and good sense.

Unfortunately, this was the only arena in which these virtues of hers came to be expressed. India’s serious history-books, beyond those written for or read by children, need to record that her sheer ignorance of the fundamentals of domestic statecraft as well as her caprice, arrogance and hubris caused permanent harm to India’s polity in innumerable dimensions from which we have yet long to recover. On advice first of her childhood acquaintance, the proto-communist P. N. Haksar, and later of her ruffian unprincipled younger son Sanjay, she single-handedly destroyed India’s nascent parliamentary traditions, federalism, the Rule of Law, and its most important political party; the integrity of the civil services, judiciary, police, intelligence services and other public institutions; as well as monetary and fiscal prudence Beside this, she and her younger son Sanjay contributed to destroying communal harmony and political stability in the Punjab, while she and later her older son Rajiv contributed to do the same in Kashmir. She exulted in the personality cult, courtier culture and durbar politics of her father and grandfather.

Many pertinent questions about the personal and political life of Indira Gandhi have remained to be answered by any serious modern biographer. Her relationships with her husband and his rival for her time and affections, her father, remain in darkness, as does, after their deaths, her relationship between 1967- 1974 with Haksar, her key adviser. Her capacity and her failures as a mother to two very different sons also remain unclear. Her own lack of education was transmitted to them and neither succeeded at what he studied to be, though at least Rajiv became a gentleman. Her father had been an indifferent husband to Kamala and she an indifferent wife to Feroze — the most important thing her sons may have done with their lives was to have married women she did not choose for them, and then to have become well-loved spouses themselves. As mother-in-law, her petulant bullying of the young Sikh widow of Sanjay, mother of an infant child at the time, remains to be contrasted with her apparent warmth and generosity towards her Italian-born elder daughter-in-law. All such questions would be ones of feminine gossip or TV-soap operas in case of any ordinary woman but assume political significance for Indians because of the inordinate impact she, her father, her sons and their widows have had on India’s modern history. Why all of India’s national-level politics have acquired a gossipy joint-family tone about them is because she projected onto them no high and universally known political principles whatsoever, but merely her own personal experiences and desire for popularity.

The book at hand provides almost no new fact or insight on any relevant extant personal or political question about Indira Gandhi at all. The one exception has to do with a brief discussion of her relationship with Lal Bahadur Shastri which reveals her naked ambition most clearly, though the author is too ingratiating to wish to draw such a conclusion himself. He meekly deflects blame for her faults onto exogenous random shocks like monsoon failures, the rise in petroleum prices or other uncontrollable international events, or the ill-will of others. The most fawning apologists and cultists are quoted with approval: Sanjay was merely “inept”, the Emergency was brought on by its victims and not such a bad thing really, the Shah Commission resembled “a Chinese people’s court”, Maneka was a “rebellious chit of a girl”, etc. Two decades later, we must expect the greatest detachment and calm objectivity in any serious treatment of this complex stateswoman’s life. What we have instead received — at a time when Rajiv’s widow is in power in Delhi and Haksar’s protégé is her PM, while The Mitrokhin Archives II are published — is a clear attempt at revisionist flattery, complete with Indira’s face smiling at us at the start of every chapter and old propaganda photos from the PIB. This is deeply unfortunate coming from the National Book Trust. Indeed, neither she nor her father deserve further inquiry and reflection today more than do their respective spouses, Feroze Gandhi and Kamala Nehru, both of whom died prematurely.

Logic of Democracy

LOGIC OF DEMOCRACY

by

SUBROTO ROY

First published in The Statesman,

Editorial Page Special Article, March 30 2006

Parliament may unanimously vote for a bill on the “Office of Profit” issue but this will have to be consistent with the spirit and letter of the Constitution and with natural law if it is not to be struck down by the Supreme Court. It is thus important to get the logic right.

India is a representative and not a direct democracy. We the people constitute the Electorate who send our representatives periodically to legislative institutions at national, state and local levels. These representatives, namely, Lok Sabha and Legislative Assembly Members and municipal councilors, have a paid job to do on behalf of all their constituents, not merely those who voted for them. They are supposed to represent everyone including those who voted against them or did not vote at all.

In view of this, if the question is asked: “Was India’s interest served by Sonia Gandhi peremptorily resigning as the Lok Sabha Member from Rae Bareli and then immediately declaring she will fight a fresh election from there?”, the answer must be of course that it was not. Mrs Gandhi had been elected after an expensive process of voting and she had a duty to continue to represent all of Rae Bareli’s people (not just her party-supporters) for the duration of the 14th Lok Sabha. Instead she has given the impression that Rae Bareili is her personal fiefdom from where she must prove again how popular she is as its Maharani.

What needed to be done instead was to abolish the so-called “National Advisory Council” which, like the “Planning Commission” is yet another expensive extra-constitutional body populated by delusional self-styled New Delhi worthies. The NAC has been functioning as Mrs Gandhi’s personal Planning Commission, and she lacked the courage to scrap it altogether — just as Manmohan Singh lacks the courage to tell Montek Ahluwalia to close down the Planning Commission (and make it a minor R&D wing of the Ministry of Finance).

Lok Sabha’s duties

What are Lok Sabha Members and State MLAs legitimately required to be doing in caring for their constituents? First of all, as a body as a whole, they need to elect the Government, i.e. the Executive Branch, and to hold it accountable in Parliament or Assembly. For example, the Comptroller and Auditor General submits his reports directly to the House, and it is the duty of individual legislators to put these to good use in controlling the Government’s waste, fraud or abuse of public resources.

Secondly, MPs and MLAs are obviously supposed to literally represent their individual constituencies in the House, i.e. to bring the Government and the House’s attention to specific problems or contingencies affecting their constituents as a whole, and call for the help, funds and sympathy of the whole community on their behalf.

Thirdly, MPs and MLAs are supposed to respond to pleas and petitions of individual constituents, who may need the influence associated with the dignity of their office to get things rightly done. For example, an impoverished orphan lad once needed surgery to remove a brain tumour; a family helping him was promised the free services of a top brain surgeon if a hospital bed and operating theatre could be arranged. It was only by turning to the local MLA that the family were able to get such arrangements made, and the lad had his tumour taken out at a public hospital. MPs and MLAs are supposed to vote for and create public goods and services, and to use their moral suasion to see that existing public services actually do get to reach the public.

Rajya Sabha different species

Rajya Sabha Members are a different species altogether. Most if not all State Legislative Councils have been abolished, and sadly the present nature of the Rajya Sabha causes similar doubts to arise about its utility. The very idea of a Rajya Sabha was first mooted in embryo form in an 1888 book A History of the Native States of India, Vol I. Gwalior, whose author also advocated popular constitutions for the “Indian India” of the “Native States” since “where there are no popular constitutions, the personal character of the ruler becomes a most important factor in the government… evils are inherent in every government where autocracy is not tempered by a free constitution”.

When Victoria was declared India’s “Empress” in 1877, a “Council of the Empire” was mooted but had remained a non-starter even until the 1887 Jubilee. An “Imperial Council” was now designed of the so-called “Native Princes”, which came to evolve into the “Chamber of Princes” which became the “Council of the States” and the Rajya Sabha.

It was patterned mostly on the British and not the American upper house except in being not liable to dissolution, and compelling periodic retirement of a third of members. The American upper house is an equal if not the senior partner of the lower house. Our Rajya Sabha follows the British upper house in being a chamber which is duty-bound to oversee any exuberance in the Lok Sabha but which must ultimately yield to it if there is any dispute.

Parliament in India’s democracy effectively means the Lok Sabha — where every member has contested and won a direct vote in his/her constituency. The British upper house used to have an aristocratic hereditary component which Tony Blair’s New Labour Government has now removed, so it has now been becoming more like what the Rajya Sabha was supposed to have been like.

The corruption of our body-politic originated with the politicisation of the bureaucracy thirty five years ago by Indira Gandhi and PN Haksar. The Rajya Sabha came to be ruined with the “courtier culture” and “durbar politics” that resulted. This bad model which the Congress Party created and followed was imitated by the Congress’s political opponents too. Our Rajya Sabha has now tended to become a place for party worthies who have lost normal elections, superannuated cinematic personalities, perpetual bureaucrats still seeking office, and similar others. The healthiest course of action for Indian democracy may be to close it down completely for a few years, then recreate it ab initio based on its original purposes and intent (but this may not be constitutionally possible to do).

Holding Executive accountable

It is a forgotten platitude that in a representative democracy what elected legislators are supposed to be doing is represent the interests of the Electorate. Along with the Judiciary, the Legislative Branch is supposed to control the Executive Government, which is the natural oppressor of the Electorate. That is why the Legislature must be independent of the Executive — which is the precise intent behind Article 102 (a) of the Constitution of India: “A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament… if he holds any office of profit under the Government of India or the Government of any State…”

In other words, if you are a Lok Sabha MP or State MLA who is supposed to be a part of the august House which has elected the Executive Government and by whom that Government is supposed to be held accountable, then it is a clear conflict of interest if you are yourself in the pay of that Government. As a legislator, you are either in the Executive or you are not. If you are in the Executive, you are liable to be held accountable by the House. If you are not in the Executive, you are duty-bound as an ordinary Member of the House to hold the Executive accountable. The logic is ultimately as clear and simple as that.

It is inevitable that the delineation of the appropriate boundaries between Legislature and Executive will have to be pronounced upon by the Judiciary. The “Office of Profit” issue has opened an opportunity for a Constitution Bench of the Supreme Court to speak on the rights and duties of the Legislative and Executive Branches of Government. And no Constitution Bench has ever spoken unwisely.