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Sunday, October 05
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When you teach people for two generations not to respect the property of others, you are bound to have a tragedy. Singur is 50 km northwest of Kol
kata where Ratan Tata made the surprising decision to set up a factory for the world’s cheapest car, the Nano. Bengal’s image may have improved but it still has a poor work culture. But its chief minister Buddhadeb Bhattacharjee is a charming man. He sees himself as the Deng of India, and he persuaded Tatas, with an attractive plot of 1000 acres.
Although the state offered farmers a higher price than the market, some refused to sell their land. When they protested, the ruling CPM let the police loose and acquired their land forcibly. Mamata Banerjee, an opposition leader, sensing an opportunity for votes, arrived on the scene and insisted on the return of 300 acres. By now the factory was almost ready; Tatas claimed they needed the land to house component suppliers to keep costs down. Mamata’s agitation soon went out of control. Fearing for their staff’s safety, Tatas decided on Friday to leave Singur.
Here is a tragedy in which everyone lost! CPM’s culture of violence has been exposed. Buddhadeb’s hopes for an industrial renaissance of Bengal are dashed. Tatas and their vendors face massive relocation costs which have jeopardised Nano’s magical price. Mamata will now only be remembered for destroying Bengal’s future. For the people of Singur, the dream of a better life is over. And India’s image is unhappily tarnished.
So, who does one blame? Clearly, the state violated the farmers’ right to property when it forcibly acquired their land. We used to think that property rights concerned only the rich - especially when the targets were zamindars and big business, whose banks and insurance companies were nationalised without due compensation in 50s and 60s.
The judiciary, however, kept warning successive governments that the right to property was fundamental. But our socialists were impatient, and one sad day in 1978, the Janata government removed ‘property’ from the list of fundamental rights in our Constitution. Today, thanks to Mamata, we have realised that even a poor farmer has a right to his land.
Just as I have a right to my life, I also have the right to the shirt on my back or my home, so that I may live in peace. I can only give up this right when i voluntarily sell my property. If someone forcibly takes it away, the state has a duty to get it back. In societies where property rights are secure and legally enforced, citizens feel safe. They have the incentive to buy, sell, engage in business, and everyone’s life improves. There are times, however, when the state has to acquire private land forcibly for a public purpose such as a road.
But acquiring property from farmers for the sake of industry does not qualify as ‘public purpose’. To our democracy’s credit, our government has now realised its mistake. A new land acquisition bill is up for Parliament’s approval in the next session. In the future, industry will have to negotiate with farmers, and only if there is a deadlock and only if 70% of the farmers have agreed to sell, will the state step in.
The lesson from this Bengali tragedy is, give the poor a clean title to their property - their huts and plots - so that they may take a loan against it. Also, put land records on the Internet so that corrupt revenue officials will not exploit the poor.
Karnataka has done it - it has computerised two crore land records of 67 lakh farmers. This is one way out of poverty. The Bengalis are our Irish, who as Yeats said, have an abiding sense of tragedy. Their tragic sense lies in striving to be rational but recognising life’s underlying irrationality. One cannot avoid tragedy, but strengthening institutions like property rights may help to minimise it.
-Gurcharan Das
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I am not usually a pessimist. But i predict that India will suffer a lot of pain in the next 18 months, as the economy slows down along with the c
urrent global slowdown.
The US, Europe and Japan are sinking into recession together. Forget claims that India has decoupled from the US and can keep growing fast regardless. India and most developing countries are indeed much less dependent on the US economy than in the past. So, Indian growth will be dented rather than smashed. GDP growth will slide from 9 % last year to 7% this financial year, and to maybe 6% next year.
Now, 7% is a miracle growth rate by historical standards. You might think that declining from super-miraculous to merely miraculous growth cannot be particularly painful. You would be dead wrong. The direction of change matters more than the absolute level. Rising from 5% to 7% is blissful, but falling from 9% to 7% is painful. And a subsequent tumble to 6% will be more painful still.
To appreciate why the direction of change matters so much, recall the 1990s. India went bust in 1991, reformed by globalising, and reaped the reward of fast growth. GDP growth averaged 7.5% in the three-year period 1994-97. India’s growing integration with the world economy enabled it to share in the global economic boom of those years. Foreign institutional investors flooded into all emerging markets, including India, sending stock market prices spiralling.
Indian optimists thought that miraculous growth was here to stay. But along came the Asian financial crisis in 1997, and the Indian economy slumped along with the global economy. Indian GDP growth averaged just 5.5% in the next five years.
Now, 5.5 % may not sound too bad, just a modest deceleration from the 7.5% of the preceding boom. Indeed, India’s 5.5% at the time was one of the fastest growth rates in the world. Yet, the change in direction, from acceleration to deceleration, caused enormous pain.
Industrial growth crashed in 1997-98, and barely limped forward for years. Many industries had borrowed massively during the mid-1990s boom to invest in world-class new plants, for which there was suddenly no demand. Huge projects were abandoned unfinished, with companies defaulting on mega loans. These financial defaults brought the lending institutions also to the verge of bankruptcy, from which they were saved mainly by creative accounting and a friendly RBI. Medium and small companies crashed along with their larger brethren. Employment went into a tailspin. Stock markets crashed and companies stopped repaying fixed deposits, so household investors suffered trauma.
The budgets of the central and state governments assumed steady growth of revenue year after year. But the 1997 slowdown hit tax collections. Meanwhile, a bumper Pay Commission award hugely inflated the wage bills of central and state governments. So, governments, corporations, employees and household investors were all sucked downward into a whirlpool of distress. The only saving grace was the IT boom, sparked by the global Y2K scare. But that turned out to be a bubble, and it burst in 2001.
Difficult though these years were, they did not witness economic collapse. India did not revert to the old Hindu rate of growth of 3.5%, witnessed in the three decades after independence. GDP growth in 1997-2002 averaged a solid 5.5%. But the direction of change was downward, not upward, and that was enough to cause widespread distress.
I fear we are about to see a repetition of that process. As in the 1990s, a booming world economy first lifted Indian growth (and stock markets) to new heights for several years, giving rise to the illusion of permanency. As in the 1990s, the subsequent global slump is going to cause an Indian slump too. As in the 1990s, the fiscal problems of the government are going to be exacerbated by a Pay Commission award.
However, we are much better prepared for this downturn than we were in the 1990s. Our foreign exchange reserves are almost $300 billion, cushioning our balance of payments. Corporations have not gone on a borrowing spree paying 20% interest, as they did in the 1990s - they have large cash reserves, modest debt-equity ratios, and interest rates are much lower today. The banking system is in relatively good shape. The latest Pay Commission award this time is less onerous than the 1997 one. Our savings rate has crossed 30%, and can keep financing a healthy rate of investment. Infrastructural sectors like telecom, power, roads, and ports will be only minimally affected by a recession.
Nevertheless, pain will be widespread and sometimes deep. Income and job opportunities will slacken, sometimes dramatically. Many companies will suffer shrinkage or bankruptcy, especially small ones. Boom sectors like transport, restaurants, trade, real estate and exports will go into reverse gear. Credit will tighten, for consumers as well as companies. Corporate profits will slump. The revenues of central and state governments will fall, curbing their ability to alleviate distress. The stock markets will fall further, and the Sensex may fall below 10,000. Tighten your seat belts: we are running into rough weather.
-Swaminathan S Anklesaria Aiyar
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Friday, October 03
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Do we get bad leaders in spite of having good people?
If our people are great, why do we have leaders who fail?
Where are the people if the leaders are not doing what we think they should be doing?
A people so intensely under attack by the terrorists can’t claim to be brave by sitting silently and petitioning state clerks. Those who fear get what they fear.
While China, having superbly completed the Olympics, sent a man for a space walk and Sarah Palin "delighted" our PM in the US with a handshake, India seems to be descending dangerously into communal polarisation, reinforced and powered by a secular lobby. In the process, the morale of the police and other security forces is being affected for they are facing the brunt from terrorists as well as the secularists in the government and the media who are running them down, doubting their intentions and integrity.
Suddenly yardsticks for our judgment have changed. Opinions, morphed as judgments, are passed not on merit or weighing its consequences for the society, but by the yardstick of the colour events wear. The Nanavati Commission's report is to be discarded even before its pages are browsed because the Narendra Modi government instituted it and it shows Hindus as victims. The Bannerjee report is to be trusted because the secular Lalu Yadav instituted it and shows Hindus as aggressors. Strange logic.
Who speaks for the Indian?
Inspector M.C.Sharma's funeral is not to be attended because he shot at Muslims. When the men in khaki arrested the Kanchi Shankaracharya, not a single secular channel or newspaper cast any doubt on the police reports and statements. But when the men in khaki arrested a few from Jamia Milia, doubts were raised immediately and investigative journalism flowered.
Anything written about patriotism, even a good word about Inspector Sharma, is sought to be embarrassed under a general head – Hindu media. I read this term being used first time in the aftermath of the Jamia controversy. Anything that Muslims show as a sign of solidarity with the rest of the India and condemnation of terrorism is either blacked out or shown apologetically.
Last week, 21st September to be exact, a few hundred young professional Muslim youth from Okhla and Jamia Nagar organized a silent procession at India Gate in New Delhi. They were condemning terrorism, asking for the harshest punishment for terrorists who use Islam for their crimes, and they wanted to be recognized as patriots. I didn't see the coverage it deserved. Why?
Who is speaking for the Indians who were killed in the Delhi blasts? Why did they have to be turned lifeless in a sudden stroke?
Suddenly a blast occurs and their life is changed. You are going to see a movie, and next moment found dead. Someone bringing his daughter home from school – suddenly both are dead in a blast. Gone to market for shopping – minutes later a phone call at home says 'Please come to claim the dead body'. Terrorism has changed our lives, our behaviour, our language and relations. Yet we feel hesitant to speak out.
What happens to those who were dependent on the terror-struck victim nobody knows. They are not news. Can't we speak about Simran – whose father and grandfather were killed in the previous blast – and about Santosh, the sweet little kid who got killed in Mehrauli blast on Saturday?
"Son, what's your religion?" – should that be our first query and decide what is said next?
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