Sunday, July 27, 2014

India’s ties with Israel remain parde ke peechey

By Swapan Dasgupta


Opposition MPs were right to point out the apparent inconsistency in the government opposing a parliamentary resolution on the Gaza conflict and then voting against Israel at the UN Human Rights Commission last Thursday. If, as External Affairs Minister Sushma Swaraj maintained, India should maintain equidistance between two friends who have got embroiled in a conflict, it follows that neutrality should have been maintained in a multilateral forum as well.


Logically, India should have abstained from the UNHRC vote in Geneva. Yet, its representative joined other ‘non-aligned’ countries in censuring Israel for its allegedly disproportionate retaliation against the Hamas-controlled Gaza strip. Worse, India’s Permanent Representative in the UN used strong language in the Security Council attacking Israel.


Those diplomats, both retired and serving, who have maintained that India’s position in the UN (and, for that matter, at the BRICS summit) was consistent with its earlier stand on the issue cannot be faulted. If foreign policy is judged by adherence to continuity, India’s position was consistent. Despite the change of government, India has stuck to the principle that the ever-deepening ties with Israel must exist behind a purdah; in public and for ‘secular’ domestic consumption Delhi must be seen to be endorsing the Palestinian cause.


If the Narendra Modi government has indeed taken the view that the fundamentals of Indian foreign policy must remain unchanged and that the priorities determined by Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi must be preserved as a national treasure, there is nothing more to say. In that case, the only job of the Ministry of External Affairs is to safeguard the spirit of the Nehrus and Gandhis in a fast-changing world—a task better suited to theologians than diplomats.  


In the 19th century Lord Palmerston suggested there are no permanent friends and enemies, only permanent interests. In the India of 2014, there appears to be a section that believes friends and enemies are constant and that only the national interest is negotiable.


The position is untenable even if the principle of Congress-decides-BJP-upholds is accepted as the gospel. In recent times it was P.V. Narasimha Rao, a Congress Prime Minister, who took bold steps to extricate Indian diplomacy from an ossified Nehruvian vision. In 1992 India and Israel entered into full diplomatic relations, overruling the objections of those who felt that this would have devastating consequences for Indian interests in West Asia. Rao signalled to the world that India has its own national priorities that go beyond friendship with Yasser Arafat. If there were misgivings in the Arab world over India cosying up to Israel, they must have been communicated in invisible ink.


In the past two decades, the relationship between India and Israel has developed exponentially. It would not be an exaggeration to say that Israel occupies a special place in India’s strategic ecosystem. Much of the relationship is wilfully kept below the radar but it is based on discretion and absolute trust.


At an individual level some Indians may not like Tel Aviv’s over-robust response to Hamas’ provocation. Others may feel that Israel needs to walk the extra mile to make the two-state solution a meaningful reality. These concerns are reflected in the debates within Israel as well. However, it is important to demarcate doubts over Israel’s no-nonsense national security policy from the visceral anti-Semitism that is the hallmark of Hamas and its backers. The former explores routes to a durable peace while the latter proceeds from the assumption that the state of Israel is illegitimate.


It is sad that Indian diplomacy is unable to make this crucial separation because ‘secular’ politics has deemed that Palestine affects the entire ‘ummah’.


As the new government gains in self-confidence and prioritises national security and economic growth, its foreign policy has to be fit for purpose. The vacuous preachiness of the past must be replaced by a focussed perusal of national interests. Last week’s UN vote was an opportunity to signal a small shift. It was muffed for two reasons. First, because a conservative bureaucracy prefers continuity over breaking new ground; and second, because there was insufficient political application of mind.


The lessons are obvious: foreign policy demands a political direction. This has not been in evidence so far. 

Sunday Times of India, July 27, 2014


Indian policy needs a new strategic direction in Sri Lanka

By Swapan Dasgupta


Last week, I visited the beautiful home of local businessman Thirukumar Nadesan in a part of Colombo-7 that is so reminiscent of Kolkata’s Alipore of yore. There are three facets of Nadesan that strike me as significant. First, he is a Jaffna Tamil now living in Colombo; second, he is an extremely devout Hindu, with a fully functioning puja room and even a goshala in his back garden; and finally, his wife Nirupama, a MP for the ruling SLFP, is a niece of President Mahinda Rajapaksa.


Nadesan, who values his religious and cultural identity, has like many other Jaffna Tamils patronised the Ramanathaswamy temple in Rameshwaran, just across the Palk Strait. Each year Nadesan would make it a point to go on pilgrimage to Rameshwaran and then proceed to visit other temples in India. On January 10, 2012, while entering the temple for puja, he was set upon by a determined band of pro-LTTE activists who assaulted him and chased him out of the shrine. With no assurance of personal protection forthcoming from the state government, Nadesan hasn’t been able to re-visit the temple—although he has been to other temples in India.


As an Indian I find this assault on Nadesan’s rights as a practising Hindu outrageous. What is even more surprising is that none of our defenders of India’s ‘secular’ inheritance has deemed this to be an attack on religious freedom. There have, for example, been attacks on Buddhist pilgrims from Sri Lanka who use Chennai as a transit point for their journey to Bodh Gaya. And even Opposition leader Ranil Wickremsinghe faced mob fury when he visited Chennai three years ago.


Worst of all—and cricket-crazy Indians will understand this—for the past three years Sri Lankan cricketers have been targets of an unofficial ban against them playing any matches in Chennai.


To those engaged in formulating ‘nuanced’ policy towards the neighbourhood, these incidents may seem trivial and small details of some ‘misunderstandings’ vis-à-vis a small neighbour. But imagine a situation if an extremist body in Sri Lanka was to impose such a ban on Mahendra Singh Dhoni’s team or if a group of Hindus from India visiting the Sita shrine near Kandy was set upon by a clutch of Sinhala chauvinists. Wouldn’t the shrill TV channels be demanding strong Indian retaliation to avenge national dishonour, as they often do when Indian fishermen are arrested for straying into Lanka’s territorial waters?


It is healthy for foreign policy to be subjected to domestic scrutiny. However, when the interest takes the form of ill-informed rhetoric and mob action, it is time to put correctives in place. For too long, India’s policy towards Sri Lanka has been viewed exclusively through the prism of the Tamil question and the 30-year civil war that, mercifully, came to an end in May 2009. Indian diplomacy has scarcely been able to rise above debates over the 13th Amendment and the tensions that mark relations between the Northern Provincial Council and the central government in Colombo. There is an impression that India is the reserve army of Sri Lanka’s Tamil minority in the North and East, an impression that translates into conviction with the Tamil National Alliance.


The problem with this preoccupation with only one aspect of Sri Lanka’s national life is that many more important questions are left either unaddressed or de-prioritised.


Many Indians would, for example, be surprised to learn that nearly 70 per cent of the freight traffic handled by the bustling Colombo part is devoted to India’s imports and exports. India needs an efficient Colombo port just as Colombo port needs Indian custom. There is total inter-dependence. India will benefit from the further upgradation of facilities on the Colombo waterfront and Sri Lanka stands to benefit from India’s rapid economic growth.


Take another factoid. Tourism accounts for nearly 25 per cent of Sri Lanka’s GDP and contributes immeasurably to generating local employment. And, of the tourists, nearly 70 per cent are from India. Add to this the investment of Indian entrepreneurs (both big and small) in the infrastructure of tourism and we see another facet of the deep economic linkages that bind the two countries.


How much of this economic bonding was government-driven and how much was a function of market logic is difficult to ascertain. However, considering the fact that Sri Lanka cannot market its tea to India or that there are serious impediments to the island selling its world-famous pepper and cinnamon to India, there is an unavoidable conclusion. Sri Lanka and India have forged deep business links despite the babus. This is something for Prime Minister Narendra Modi to ponder over.


The one area where the government could have played a role, its intervention has been found wanting. Last year, the exhibition of Buddhist relics from Kapilavastu drew spectacular crowds in Sri Lanka. Much of these relics were sourced from the Indian Museum in Kolkata which seems to have neither the imagination nor the inclination to display much of what it possesses. The Madhya Pradesh government, on the other hand, has been more forthcoming in forging links with Sri Lanka for Buddhist studies. However, the efforts have been patchy and there is need for a show of political will to drive the Buddhist heritage project.


I have been travelling to Sri Lanka from 1987, a time when the island was crippled by war. During my initial visits, I was fortunate to meet many of the political old-timers. Almost all of them had deep personal links with India forged during the 1940s and 1950s. The new generation of the Sri Lankan elite don’t share those experiences because somewhere along the way the two countries went their separate ways.


It is time to re-forge those links not through politics but by blending heritage with trade and commerce. Indo-Sri Lanka relations are crying out for a strategic shift. 

Sunday Pioneer,July 27, 2014








Friday, July 25, 2014

For West, Rajapaksa is Sri Lanka’s Modi

By Swapan Dasgupta

It is a measure of Sri Lanka’s return to “normal” democratic politics that conspiracy theories are once again resonating in Colombo.

Compared to the situation just three years ago when “politics” continued to centre on the 30-year-long bloody civil war that mercifully came to an end in May 2009, the sub-text of political discussions today is the presidential election, due some time in early-2015.

It is not that the unending tensions between the Central government in Colombo and the Provincial Council in Jaffna have become so drearily routine that they cease to excite the public imagination. The Tamil National Alliance-controlled local administration in the Northern Province has reverted to the constitutional brinkmanship that marked Jaffna politics in the days before the Liberation Tigers of Tamil Eelam’s conquest of the province. The loquacious Tamil politicians now in charge of the provincial administration know that they owe their return to the centrestage to the total decimation of the Tigers by the Sri Lankan Army five years ago. Yet, such are the charms of posturing that it is obligatory for them to pretend that the three lost decades were just a footnote.

When I was in Sri Lanka exactly 13 months ago, the conspiracy theory centred on President Mahindra Rajapaksa’s “secret” plan to either avoid provincial council elections in the Northern Province altogether or rig the results in favour of the pro-government Tamil parties. At that time TNA leaders were quite vocal in insisting that the so-called hardliners in the Rajapaksa government would never allow democracy in the Tamil areas.

Predictably, the conspiracy theory turned out to be spurious. Elections were held in the Northern Province as per the President’s commitment; there was a high turnout of voters and no suggestion of electoral malpractice; and the TNA won a resounding victory.

Since then, there is an ongoing cold war between the TNA and the government in Colombo over Jaffna’s claim for unhindered powers over land and police — the 13th Amendment controversy. Colombo is adamant that it cannot afford to relax its guard and allow any possible revival of terrorism in the province. The TNA feels that this is tantamount to reneging on a sovereign commitment given by President J.R. Jayawardene to Indian Prime Minister Rajiv Gandhi and enshrined in the Indo-Sri Lanka Accord of 1987. It believes that India must use its muscle power to secure something akin to the “special status” of Article 370 for the Lankan Tamils. New Delhi, which is understandably wary of over-involvement in Sri Lanka after the Indian Peace Keeping Force experience of the late 1980s, isn’t too keen to meddle beyond a point and would rather that the matter be resolved within Sri Lanka. The TNA, however, loves to play the India card to replenish its bargaining clout with Colombo. The progress has been zero but the use of a foreign power to resolve domestic disputes has created complications for the larger relationship between New Delhi and Colombo. It has also created the conditions for China to cosy up to a country that is anxious for deepening economic engagements without strings attached.

The election of the Narendra Modi government has created a mood of anticipation in Colombo. First, there is satisfaction that a BJP government with a majority of its own will not have to accommodate every unreasonable demand from Tamil Nadu on the course of bilateral relations. There is an expectation that the unfortunate situation of India voting against Sri Lanka at the UN Human Rights Commission and Manmohan Singh’s boycott of Commonwealth Heads of Government Meeting in Colombo won’t be repeated.

Secondly, given Mr Modi’s own unfortunate experiences with the global human rights industry, it is expected that India will be more understanding of Sri Lanka’s position on the collateral damage of the civil war. The belief is that India will endorse Sri Lanka’s growing impatience with NGOs and multilateral bodies that use the cover of human rights and reconciliation to carry out a political agenda. Certainly, India will have reason to be concerned about the precedents being set by the UN office in Colombo. Last month, for example, the UN attempted to conduct “voter education” workshops in a country that had universal adult franchise even before India and where voter turnout has always been extremely high. My own interaction with UN staffers leave me in little doubt that the local outfit sees itself as a facilitator for a type of politics that in Lanka’s context is decisively anti-Rajapaksa.
Thirdly, the BJP has had a more rounded view of India’s civilisational links with Sri Lanka than some of those who saw the relationship through an exclusively Tamil prism. Since the time Syama Prasad Mookerjee took an active role in the Mahabodhi Society and the return of Bodh Gaya to Buddhist control, the Sangh fraternity has cherished both the Nallur Kandaswamy temple in Jaffna and the Buddha tooth shrine in Kandy. These ties have been supplemented in recent years by exchanges with the Madhya Pradesh government and Colombo’s support for the preservation of the “Ram setu” linking the two countries.

Maybe it is because of an expected shift away from big-brotherly condescension to a more civilisational-cum-economic relationship that the conspiracy theories are certain to multiply in Colombo. There are certain to be suggestions of a Rashtriya Swayamsevak Sangh link with the extremist Bodu Bala Sena that many people feel was responsible for the recent attacks on Muslims in Sri Lanka. More fanciful suggestion will hold that defence secretary Gotabaya Rajapaksa is behind a sinister plot to ensure a Hindu-Buddhist alliance in Colombo and the Central Provinces to counter an exaggerated Muslim cultural separatism.

There will be many more theories that will be lapped up by an impressionable media for whom President Rajapaksa is just another version of the dreaded Mr Modi in India. Like in India, the foreign media and NGOs in Sri Lanka believe that it is their responsibility to ensure natives vote according to the high moral standards set by the West.

Asian Age, July 25, 2014

Sunday, July 20, 2014

Gaza debate must show that Israel is not friendless in India

By Swapan Dasgupta


Those who imagine that the scheduled debate in Parliament on the hostilities in Gaza stemmed from a heartfelt desire of concerned MPs to avert a ‘humanitarian tragedy’ are either being wilfully naïve or plain disingenuous. Under the guise of tear-jerking speeches the debating chambers will echo a narrow, sectarian rhetoric aimed at a purely domestic audience.


It is time to stop skirting the real issue. The 2014 general election was a turning point in more than one way. Apart from the fact that an avowed non-Congress party secured a clear majority, the election verdict indicated the limits of ‘secular’ scare-mongering. The results clearly suggested that no group or community can exercise a permanent veto over which party and which leader has the right to run a government at the Centre. The victory of the BJP-led NDA exposed the popular impatience with a spurious secularism based on manipulating the fears and vulnerabilities of India’s Muslim citizens.


For both the so-called secular parties and the custodians of ghetto politics, the clear mandate for Narendra Modi and the BJP was a monumental setback. The orchestrated furore over India’s alleged insensitivity to what a senior Trinamool Congress MP bizarrely described as Israel’s “genocide” against the Palestinian people is the first serious attempt to get over the post-election demoralisation and reclaim lost ground. It is a calculated attempt to inform the Modi dispensation that while it may have a functioning majority, their veto is still intact.


For understandable reasons the Modi government may be anxious to minimise the confrontation with the opposition, particularly in the Rajya Sabha where it does not have a working majority. However, this is no reason for the government to be unmindful of the political-ideological challenge that has been thrown by parties that are unable to break out of the mould of sectarian politics.


What is interesting is that the challenge is brazen and with little attempt to conceal its real nature. The Israeli retaliation to the 1,200 or so rocket attacks on its citizens was not against some benign, if helpless, Palestinian dispensation. It was directed at an administration controlled by Hamas, an organisation that has consistently shunned all peace initiatives and is committed to the destruction of the state of Israel. Inspired by the Muslim Brotherhood of Egypt, the Hamas is a radical Islamist body that invokes revulsion in other parts of West Asia and is both feared and despised by the more legitimate Palestinian Authority operating from the West Bank. Hamas does not merely threaten the security of Israel, it has the potential to destabilise the neighbouring Arab states of the region. To convey any sense of sympathy with its political goals and war aims is reprehensible. Even by the dubious standards of the selective ‘morality’ of the Israel-haters, Hamas is beyond the pale. India must not be seen to have any truck with it.


If a parliamentary debate on the situation in West Asia is now a given, it is important that the government side enlarges its scope beyond the national boundaries of Israel and the embryonic Palestinian state.


First, the threat Hamas poses to the lives of Israeli citizens cannot be seen in isolation. From India’s perspective, it is also linked to the establishment of the ISIS-run Caliphate in parts of Iraq and Syria. To view the emergence of one mysterious Caliph al-Baghdadi as yet another manifestation of warlordism may well turn out to be correct, especially if the ISIS challenge is repelled by the legitimate government of Iraq. However, for the moment, the importance of the ISIS Caliphate is not on account of its bid to turn back the clock of history but on account of the hold the promise of a pan-Islamic empire has for many thousands of impressionable youth.


For the moment, going purely by the extremely conservative estimates of India’s intelligence community, there are 18 known Indian nationals who are helping ISIS go on a bloody rampage. However, there are fears that the numbers could be much higher. Certainly, if the 200 or so British Muslims of subcontinental origin who have joined al-Baghdadi’s jihad are factored in, there are strong grounds for anticipating a potential threat to internal security. Another wave of Islamist radicalism, targeting the ‘unbelievers’, seems to be on the cards. At this juncture, the last thing India needs is a onrush of romantic infatuation with Hamas terrorists with whom ISIS has an implicit commonality of interests.


The sponsors of the parliamentary debate will be anxious to limit their focus to painting Israel in the darkest of colours and demanding that relations with Jerusalem be downgraded. Since the target audience of a parliamentary debate is the whole country, it would be of immense value if Indian nationalists ensure that the contours of the larger threat emanating from an unstable region be clearly drawn.


Secondly, a debate must end the spurious suggestion that the national consensus is decisively ranged against Israel. It is not. Israel has far more friends in India than TV anchors and left-leaning foreign policy correspondents realise. This friendship is partly based on the admiration of a people that has struggled and achieved in the face of colossal adversities and deep prejudice. Equally, it is also centred on an increasingly deepening bilateral relationship whose full details are best understated. Israel is a friend of India and more mindful of our larger strategic interests than the entire OIC.


It is time that some of us flaunt our partiality for Israel. And this parliamentary debate may be as good an occasion as any to stand by real friends. 

Sunday Pioneer, July 20, 2014

Friday, July 18, 2014

BEYOND THE HISTORIANS - The ICHR’s project must be to depoliticize the liberal arts

By Swapan Dasgupta


Like most people I too had never heard of Professor Yellapragada Sudershan Rao, leave aside being familiar with his work, before he was appointed as the chairman of the Indian Council of Historical Research earlier this month.


This ignorance could be on two counts. First, even as a lapsed historian, the study of ancient Indian history has never been among my priorities. I blame the unimaginative ways of my teachers and my unfamiliarity with classical languages for my inability to get passionate over India’s supposed Golden Age. However, far more than my personal partiality for the modern India that emerged after the death of Aurangzeb, my unfamiliarity with the new ICHR chief had precious little to do with my formal detachment from academic institutions. It is among the quirks of national life that far too many of India’s historians have acquired their public reputations, not on account of path-breaking scholarship, but on the strength of their interventions in the political debates of the day. To the best of my knowledge, Rao hasn’t notched up any brownie points by appending his signature to the innumerable petitions that do the rounds of the academic and are faithfully reproduced in the columns of Economic and Political Weekly and reported in The Hindu. To the extent that the petition-writers never even thought it worthwhile to even approach for his endorsement for any perceived injustice, he can hardly be said to fit into the category of those Arun Shourie sneeringly described as India’s “eminent historians.”


In her spirited intervention on the ICHR appointment by a Human Resource Development minister who is apparently “unfamiliar with academia beyond the school level”, Professor Romila Thapar, arguably the diva of the community of Indian historians, has indicated another reason why Rao’s credentials are a matter of speculation. In an article in India Today, Thapar has argued that Rao “has published popular articles on the historicity of Indian epics but not in any peer-reviewed journal, and the latter is now a primary requisite for articles to be taken seriously at the academic level.”


The implication of Thapar’s assertion is quite interesting. She is, in effect, suggesting that the community of professional historians is akin to a private members’ club: to be acknowledged as a proper historian one must be acknowledged as such by those who have already secured recognition. In short, to be deemed a historian is to be part of a self-perpetuating cabal.


This reminds me so much of a conversation I once had with a tenured history professor who insisted that a book by Niall Ferguson—incidentally, a professor at Harvard and a Fellow of an Oxford college—could not be recommended to undergraduates because the writer wasn’t a “proper historian.” I presume the academic notable meant that just because Empire had stemmed from a TV series aimed at a popular audience, it lacked the necessary gravitas.


Don’t get me wrong. I am not for a moment that a historian must necessarily add media presence to academic accomplishments in order to be regarded as a historian. It isn’t obligatory for every historian to be another AJP Taylor whose TV and radio appearances, not to mention book reviews for the popular press, made him a celebrity. However, just as his popular touch became an issue among crusty Oxford dons and was a factor in his non-selection as Regius Professor (an appointment that, incidentally, is decided by the Prime Minister of Britain), Rao’s authorship of ‘popular’ articles on the epics doesn’t necessarily warrant condescending asides. Rao may or may not be an accomplished practitioner of the historians’ craft but I don’t think there is any pre-determined criterion for being acknowledged as a historian. Certainly, if the judgment of publishers is solicited, it would seem that the best books on history have invariably been written by individuals outside academia. 


In any case, the relative academic worth of an individual is extraneous to the present debate. The post of ICHR chairman is not akin to that of India’s chief historian or even a National Professor of History. The ICHR is a completely redundant government body set up by the then Education Minister S. Nurul Hasan in the high noon of Indira Gandhi’s socialism to guide historical research through government patronage. Its purpose was out and out political: to redefine the contours of historical research.


In theory at least a determined government can appoint its chosen hatchet-persons as chairman and members of the council and thereby determine what subjects of research will get official funding and what would be deemed ideologically tainted. In the past, Congress ministers have frequently outsourced the management of history to those who have championed both “scientific” and “secular” history. Some members of the academic Praetorian Guard have been card-carrying Marxists while others have been less dogmatic. But the consequences of their sustained control over the levers of academic funding have resulted in a large measure of ideological regimentation and, more important, the transformation of history into an abstruse, peer-regulated discipline. Equally, there has been a definite shift from rigorous empirical research to purposeless and self-indulgent theorising.


That the composition of the ICHR is politically determined is undeniable. In the past, Marxists and the so-called ‘secular’ historians ruled the roost and now the Bharatiya Janata Party is desirous of controlling the body. However, this does not necessarily imply that the new dispensation must be a mirror image of the past. The answer to Left thought control must not be a BJP version of the same. Nor must it mean that all official funding for historical will be diverted to attempts to establish either the authenticity of the Ramayana and Mahabharata or to prove that all scientific wisdom had their origins in the ancient texts of India.


To my mind, there are two clear priorities for the ICHR (but not the ICHR alone). First, the study of Indian history has to be freed from ideological regimentation. There are multiple ways of looking at the past and this pluralism has to be officially upheld. This implies that the control of the Left on history departments must be broken. Such an exercise cannot be undertaken by replacing one set of over-politicised academics with another. The political project of the ICHR and, indeed, the HRD Ministry as whole, must be to depoliticise the liberal arts.


Secondly, as repeated controversies have indicated, history is too serious a business to be left to “eminent historians”. For the past few decades, India’s awareness of its own past has shrunk on account of the growing insularity of its historians. Judging by the dense and jargon-infested prose, India’s historians are no longer communicating with the wider world but engaging in closed-door conversations. This has to change. Even at the cost of offending those who believe that understanding the past first necessitates grasping their social systems and modes of production, the endeavour of the ICHR must be to make history accessible to an audience that extends well beyond the historians themselves. That means a conscious attempt must be made to re-embrace narrative history, if only as a means of telling a story.


In an increasingly globalised world, the government must give a leg-up to all attempts to promote enlightened nationalism. A debunking of the nation’s heritage is the democratic right accorded to a political minority. But surely the taxpayers’ money need not be used for this intellectualised self-flagellation. After all, there are perfectly decent and richly-endowed universities with post-modernist and neo-Marxist agendas on the other side of the Atlantic.

The Telegraph, July 18, 2014

Thursday, July 17, 2014

Why the Finance Minister chose to be reconciled to a flawed inheritance

By Swapan Dasgupta


The wicked people will say that the only evidence of Finance Minister Arun Jaitley breaking from the past was that he avoided a poetic finale to his Budget speech. However, this aside highlights a very real perception problem that may dog the Narendra Modi government in the coming months unless there is corrective action.


The problem, ironically, has arisen because Jaitley chose to prioritise the principle of continuity over a political consideration. It was a near-open secret that P. Chidambaram’s Interim Budget estimate of the fiscal deficit being at 4.5 per cent of GDP was wishful thinking. It was based on the calculation that this was as much the financial community could digest without pressing the panic button. Confronted with a near-empty treasury and huge outstanding obligations, Jaitley was left with two choices: he could either come clean with the whole truth and risk both an adverse market reaction and the world’s faith in India’s official fiscal reporting, or he could take a deep breath and be reconciled to a flawed inheritance.


In the coming days, particularly if the government faces additional problems over drought and petroleum prices, the decision to uphold continuity in government will be questioned by those BJP supporters who preferred a bout of kitchen-sinking—bringing out all the bad news at one go.  However, the Modi-Jaitley duo concluded that popular reaction to full disclosure would have seriously affected the upbeat, we-can-do-it mood of the investor community and subjected the achche din promise to mockery. Additionally, they felt it was inopportune to get into a confrontation with the Congress at this early stage and risk charges of not upholding the ‘national interest’.


The consequence of this difficult political choice was that the Budget appeared as one that could have been presented by a reformist Congress minister.


This is a facile conclusion. There may be common ground but the “challenge” (some would call it gamble) Jaitley has accepted is based on at least four distinctive premises.


First, there is the belief that the bottled-up entrepreneurial energies will come into full play under a government that is unapologetically business-friendly. It is felt that business plans kept on hold for the past four years will now be operationalized. In short, nothing must derail the restoration of India’s faith in itself.


Secondly, there is a commitment to rationalise government spending and curb wasteful expenditure. Without being explicit, this Budget has prescribed severe belt tightening—a big change from the tax and splurge culture of the past.


Thirdly, the ambitious resource mobilisation targets of the Budget are also based on the resounding success of the disinvestment programme that presupposes buoyant capital markets with faith in the India story.


Finally, the speed at which the Modi government pursues a sharp reform agenda will also depend on the outcomes of the coming state elections. A set of positive results for the BJP will ensure better representation for the party in the Rajya Sabha and encourage Modi to press the accelerator. Adverse results won’t reverse the process but it will prompt the government to slow down in a battle against time.


Despite the fact that the political message wasn’t delivered with characteristic forthrightness, the Budget was a proclamation of intent. Yet, there are things that just don’t add up. Jaitley may have preserved the honour of his Finance Ministry by not rubbishing the entire past, but what sort of signal has it sent to the bureaucracy that will oversee the big changes Modi contemplates?


Continuity has its pitfalls and the most obvious one is that the Modi dispensation is in serious danger of being led by the nose by a bureaucracy that is most at ease with perpetuating the status quo through control. Certainly the main body of the Budget speech conveyed the unmistakable impression of having been penned by someone who was completely impervious to its political rationale and made the seamless transition from UPA to NDA.


Modi may believe that, as in Gujarat, he can motivate the same bureaucracy to do his bidding. Maybe he can but not before babudom grasps the reality of political change. At present, there is no indication of such a realisation. For the Indian bureaucracy the achche din has been never-ending. 

Sunday Times of India, July 13, 2014

Wednesday, July 16, 2014

Narendra Modi's politics of patience and the possible

By Swapan Dasgupta

In the eyes of the world, the BJP is labelled in two distinct (but not always mutually exclusive) ways. Left-liberals choose to describe it as ‘Hindu nationalist’, a categorisation that carries an implied note of disapproval. At the other ideological end, the preferred term is ‘conservative’, a description that locates the saffron party as a loose Indian equivalent of the Republicans in the United States, the British Conservatives and German Christian Democrats.

Neither of these umbrella terms can do full justice describing the specific beliefs, internal traditions, prejudices and even fads of India’s ruling party. However, for the sake of argument, if the BJP is located within the broad ‘conservative’ tradition, two streams are visible, in the realm of economic thinking at least.

The first, which was also apparent in the pre-Margaret Thatcher Conservative Party, blends a strong attachment to traditional social institutions and what may loosely be called ‘family values’ with pragmatic exercise of policy options. Although descriptions of the BJP are invariably prefixed with the term ‘Right-wing’, it is not an ideological party in terms of economic thinking. There is a loose commitment to small businesses and to deregulation but even these aren’t doctrinaire concerns. In the past, the BJP felt more comfortable with issues centred on bhavna (inner feelings) than with economic issues.

After Manmohan Singh changed the direction of the Indian economy in 1991, confusion prevailed in the BJP over how much of liberalisation to support and oppose. At that time, I recall LK Advani, arguably the BJP’s most clear-headed strategist, telling me “BJP will never fight an election on economic issues.”

The remark wasn’t very prescient because after five years in government and a decent record of economic management, the BJP fought the 2004 election on the ‘India Shining’ slogan. The defeat prompted a section of the party to demand a return to ‘core’ concerns. However, even this debate was derailed by the leadership question that took an inordinately long time to be conclusively resolved.

Narendra Modi’s anointment as the leader in September 2013 managed to bridge two important strands in BJP thinking. The Gujarat leader’s appeal to the committed BJP voter outside Gujarat was based on his reputation as a latter-day Shivaji but to the wider middle class that propelled the campaign, Modi’s selling point was his development record in Gujarat. The enthusiasm over the ‘Gujarat model’ was a modified return to ‘Shining India’ but with the traditional emotional issues also addressed. In the 2014 general election, the BJP promised India’s economic regeneration, not a Hindu State.

A caveat is, however, in order. The high growth rate achieved in Gujarat wasn’t a consequence of the chief minister’s doctrinaire approach. Modi isn’t a conviction politician in the same mould as, say, Thatcher. He was more concerned with addressing concrete problems of delivery and efficiency through the exercise of pragmatic policy options. These options in turn were determined by careful calculations of what would and what wouldn’t work in Gujarat. His approach mirrored the theme that Union finance minister Arun Jaitley echoed in last week’s Union budget: That “politics is the art of the possible.”

In the aftermath of the budget, there has been some criticism of Jaitley for not being sufficiently audacious. Some of these criticisms — particularly his decision to accept his predecessor’s estimate of the fiscal deficit — are not out of place. However, in the eyes of the BJP leadership the mandate was for better governance and a better quality of life but not necessarily for a paradigm shift in economic management. If, at the end of five years, there is a discernible shift in the Indian consensus, it will not be a premeditated change born out of doctrinaire beliefs.

There is, for example, a huge difference between what the “studio pundits” (a catchy term coined by Jaitley) understand by ‘reform’ and what the government regards as its priority. To the former, the full opening of all sectors, including defence production, retail, insurance and even legal services, is central to reform. Many of these, no doubt, could form a part of the government’s future agenda but they will be need-based and a result of pragmatic (as opposed to ideological) concerns. In any case, many of these big changes will first need to be sold politically.

The BJP, it would seem, is unwilling to repeat some of the political miscalculations of the Vajpayee government, notably on privatisation.

For the moment, the Modi government’s priorities are three-fold. First, it is committed to making the tax regime less oppressive and cumbersome. For business this means a rationalisation of rules and procedures and for the individual taxpayer it involves lowering taxation to leave more money for families. There is a belief that more all-round liquidity would lead to more demand and, consequently, more business. Jaitley’s principal concern has been to improve the ease of doing business in India.

The second concern is to improve the quality of the government’s delivery mechanism. This may explain why Modi has been loath to carry out anything that seems like a purge of the bureaucracy. He firmly believes, based on his Gujarat experience, that a motivated bureaucracy is capable of enhancing the state’s capacity to deliver.

The final concern is to conduct a thorough audit of public expenditure. The proposed Expenditure Management Commission is a first step but equally this is an area that (as many ministers have discovered) will meet with bureaucratic stonewalling.

For the past 50 days or so, Modi has concentrated all his energies on understanding the ailing patient that has been put in his charge. His approach will be to get his patient back to full health. The creation of a different, New India must necessarily await a second term in office.

Hindustan Times, July 15, 2014


Friday, July 11, 2014

Soporific speech, sensible Budget

By Swapan Dasgupta


If Finance Minister Arun Jaitley’s Budget speech was as crisp and focused as his post-Budget interview to Doordarshan, it is almost certain that Prime Minister Narendra Modi’s many supporters and well-wishers would have had an extra bounce in their steps. Unfortunately, Jaitley’s maiden exercise in reading from a prepared script left just too many viewers—apart from those deeply involved in finance and industry—completely underwhelmed. Apart from the fact that the entire exercise in the Lok Sabha took up more than two hours (with interruptions), the speech meandered its way through a dhobi list of proposals, some critically important to the future of the Indian economy and taxpayers and others that seemed remarkably trivial. Matters weren’t helped by the fact that Jaitley, a remarkably good lawyer, is better speaking extempore than reading from a prepared script.


In the 1960 debate during the US presidential election—the first time such an event was broadcast over the electronic media—there were two very distinct responses. Those who watched the debate on TV—and most American voters did—were quite emphatic that John Kennedy had outscored his rival Vice President Richard Nixon. At the same time, the minority who heard the debate on radio were equally emphatic that Nixon was the winner.


In a similar vein, Jaitley’s Budget proposals are calculated to look far more appealing when presented in a capsuled form that when heard live. On the floor of the Lok Sabha, Jaitley’s presentation lacked a sense of hierarchy and, apart from the first few paragraphs that outlined his larger political philosophy, the listener was left in some confusion as to what it all added up to. In the interview room, Jaitley explained the overall thrust of the Budget with such lucidity that the plethora of details fell very neatly into place. It almost seemed that Jaitley had dictated the initial paragraphs of his script and outsourced the rest to his Finance Ministry officials who put the unmistakable stamp of babudom on the speech. Indeed, had the Budget not unscrambled by the Minister, the immediate ridicule it attracted in the social media would have become conventional wisdom.


First impressions, unfortunately, tend to linger and Jaitley’s Budget speech conveyed the impression of both lacking focus and being dreadfully boring, even if the by-now mandatory poetic finale was lacking.


Jaitley should be grateful that a Budget speech, unlike many other ministerial interventions, has a lengthy shelf life. Therefore, despite this surprising—by the exacting standards set by Team Modi—failure in political communication, the end message is likely to endure. And this message was overall positive.


In attempting a balancing act between the over-optimism of achche din and the grim realities of a severely depleted state exchequer, Jaitley emphatically sided with the forces of fiscal prudence. Maybe there was a bit of needless bureaucratic conservatism in maintaining that the starting point of the fiscal deficit was 4.5 per cent of GDP—a figure that conventional wisdom deemed the financial community would be able to digest. But the road-map he set for bringing the deficit down to 4.1 per cent has appeared credible because the promise of fiscal consolidation was not accompanied by a rash of populist, but ultimately self-defeating, schemes. For a change, a government has drawn the right messages from the uncomfortable realities of an empty treasury, low growth, the unexpected rise in petroleum prices following the Caliphate problem in West Asia and the likely drought in central and western India. It has acted with exemplary responsibility.


The Finance Minister’s task was to accept the lack of elbow room and yet, within this limitation, to create the conditions that would get India back on a higher growth path. From all accounts, both industry and potential investors believe that he has taken many right steps in that direction. The significance of the complicated changes in excise rules and tax procedures were possibly understood only by Chartered Accountants and a few affected parties, but by detailing them with the exactness of a corporate lawyer, Jaitley appears to have revived a great deal of confidence in the Indian business environment. To secure a better ranking for India’s ease of business index will possibly take more sustained effort and lot of actual movement on the ground. However, Jaitley has taken the right steps in the right direction.


This restoration of business confidence is of more importance to India than the political class would acknowledge. Unless, investors start putting money back into India, growth will not return and there will be little hope of meeting the demanding revenue targets the Budget has set for the government. Worse, unless growth returns, Modi can say goodbye to all his ambitious schemes to create smart cities, create a diamond quadrilateral and give jobs to the impatient youth that voted for him in such large numbers.


The Modi government appears to have learnt a few important political lessons from the experience of the Atal Behari Vajpayee regime. The Vajpayee government was often insufficiently mindful of the concerns of the vast army of the lower middle class that constitute the electoral backbone of the BJP. It was their indifference to the lofty reforms process that contributed to the NDA’s unexpected defeat in 2004. This time, Jaitley’s Budget has addressed their expectations.


The cuts in personal taxes may not be dramatic and just about keeps pace with inflation. However, by accepting the principle that individuals must have more money to spend on their families, he has signaled the government’s responsiveness to their concerns. Widening the tax base is a principle favoured by economists. At a time of slow growth, the Budget has recognized that taxing people less is preferable to taxing more people. This is an important area of difference between the low tax principle favoured by the BJP and the over-zealous “tax terrorism” of the UPA.


This Budget has a huge amount of saleable items to India’s very different stakeholders. It is this message the BJP has to disseminate because the larger political message wasn’t very clear from Jaitley’s Budget speech. Next year, he must devote as much time to crafting his Budget speech as he does to actually formulating its details. A Budget is too important to be left to babus with no commitment to the politics of this government. 

Deccan Chronicle/ Asian Age, July 11, 2014

Saturday, July 5, 2014

KEEPING FAITH IN CHANGE - The new government must respond to the striking mandate for it

By Swapan Dasgupta

For many months to come, both media and academia are certain to focus their minds on the question: what does the mandate of 2014 imply? No doubt there are those who perceive every election as just another Indian tamasha and refuse to be drawn into assessing their larger implication. However, while such cynicism may be justified in view of how, say, the poriborton mandate in West Bengal was operationalised, there may also be a case for harbouring the belief that not all politicians and political formations are wilfully disingenuous and that they often try to live up to their poll commitments.

It would be fair to say that there were not too many stalwarts of the Bharatiya Janata Party that believed that the avowed objective of its Mission 272+ would not only be met but even exceeded. Proceeding on the understanding that its footfall was limited to approximately 300 Lok Sabha seats, the BJP’s principal objective was to manage a high strike rate of above 75 per cent in its catchment areas and coast to a majority on the strength of its regional alliances. By the final week of April it was sufficiently clear that the Congress was crumbling and that India would have a BJP-led government at the Centre but the sheer magnitude of the victory was insufficiently anticipated. Indeed, till the very last, a small section of both the BJP and the wider Establishment harboured the belief that the selection of the Prime Minister was negotiable.

The electorate’s clear endorsement of a Modi-led sarkar killed all possibilities of backroom deals and unprincipled horse-trading. India reposed its confidence in a leader who had crafted his reputation on a number of attributes: as a decisive leader with a reputation for personal integrity, as a champion of entrepreneur-led economic development and, to a lesser extent, as a symbol of ‘subaltern’ Hindu pride. In a campaign that centred more on leadership than on issues, Modi came out on top because his style and approach was so markedly different from that of both the incumbent and his chosen successor. India, it was sufficiently clear, voted to be governed differently. Doubtless, the policy details of this alternative approach were not spelt out in any meaningful form. However, the mere fact that the electorate had to first clear out cobwebs of demonology surrounding the leader from Gujarat suggests that the inclination of the electorate was for a radical rupture with the past.

As the Narendra Modi government prepares the finishing touches of its first Budget to be presented by Finance Minister Arun Jaitley on July 10, it is importance that it doesn’t lose sight of the central meaning of the mandate it received two months ago. The reminder is necessitated on two counts.

First, the environment of New Delhi often has a numbing effect on the radical impulses of even the most sincere and well-meaning of individuals. The tentacles of the Indian Establishment may not be as far-reaching as that of some Western democracies but what defines it in an otherwise turbulent region is its innate preference for conservative gradualism. Bold prescriptions that presume a generous measure of discontinuity are instinctively shunned and the raw enthusiasm of newcomers is invariably blunted, often with Yes Minister-style subterfuge. Modi, no doubt, has had a 13-year-long experience of using the bureaucracy far more effectively than the babus used him. However, the same can hardly be said of many other senior ministers whose approach to governance can be best summed up by Murli Manohar Joshi’s quip: “It’s our turn now.”

Secondly, thanks to the opaque nature of the Government of India, parties that come to power after a long spell in the opposition are often not aware of all the information that facilitates official decision-making. Consequently, new ministers are often confronted with an information overload on assuming office and more often than not made to feel that their earlier rejection of particular government policies were based on a blend of impulsiveness and a paucity of information. At a recent seminar involving the so-called “strategic community”, a member of the outgoing Congress Establishment assured an audience keen to learn about the thinking of India’s new government that an earlier adventurism had been replaced by more “considered” judgment after exhaustive briefing by those in the know. Regardless of whether this belief that the new decision-makers have been adequately socialised or not, the point remains that the main thrust of a well-entrenched Establishment is to ensure that change, if at all it is necessary, is very gradual.

It is to be hoped that in crafting the Budget, the Finance Minister is sufficiently mindful of the decisive pro-change mandate of the general election. There is, quite undeniably, a huge burden of shoddy inheritance that Jaitley has to bear. His scope for manoeuvrability is certain to be curtailed by the realities of the fiscal profligacy that has ensured the fiscal deficit is spiralling out of control. According to one newspaper report: “The Centre has reached almost 50 per cent of its fiscal deficit target for the full year in just two months of FY15 on the back of heavy non-plan spending on interest payments and oil subsidy combined with marginal revenue collections.” In real terms, this implies that many of the ambitious infrastructure upgradation plans that the Modi government regards as imperative to kick-start the larger economic recovery are likely to be delayed. It also implies that the section of the BJP that desires more, albeit better targeted, populism is likely to emerge from the Budget speech somewhat disappointed, a state of mind that will naturally be exploited by the Congress and other opposition parties.

For the Modi government, the inheritance problem and the likelihood of a deficient monsoon can be handled in either of two ways. It can, travel down the same path of the UPA Government and focus on more subsidies and doles to counter the short-term effects of inflation and rural deprivation. Alternatively, it can shift the focus of the Budget from fire-fighting to long-term moves to improve the environment for entrepreneurship and business in India. This involves bold steps to lessen bureaucratic hurdles, the rationalisation of taxes and adopting a philosophy that puts more money in the hands of individuals and families. No doubt, Jaitley will have to pay heed to the immediate crisis, particularly since there is the all-important Maharashtra Assembly election scheduled for later this year. However, as a veteran election organiser he would also realise that knee-jerk government schemes don’t necessarily lead to a positive electoral outcome. Had that been the case, the Congress which made Rajasthan the laboratory of all its welfare schemes would never have been defeated so conclusively in that state.

In the long run, the Modi government has to take some risks and be faithful to the set of convictions that won it the 2014 election. However, to travel along this course also involves having to relentlessly explain the logic behind each and every initiative to the voters. Reform and communications are totally inseparable, as both Margaret Thatcher and Ronald Reagan realised so many years ago.

For Modi, the Budget has to be a small but indispensable part of a larger story to reshape the assumptions governing India’s development route. The socialistic path involving a top-down, state-regulated approach has more or less become the common sense. The Modi government has to unshackle both the economy and the mindset governing it. Otherwise it will not be faithful to the decisive mandate it received from the Indian voter. 

The Telegraph, Friday, July 4, 2014
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