Good data Good governance -...

3 Pragati- The Indian National Interest Review!

September 2013 www.nationalinterest.in

The Indian National Interest Review

Pragati

Good data Good governance

Bicameralism in the statesA different kind of a rapeModernisation of paramilitary forces in IndiaCentral banking in crisisIndia’s defence spending

PERSPECTIVE4 THE PERPETUAL DISCONNECTThe modernisation of paramilitary forces in India has suffered due to the disconnect between the ground operatives and the policy-makers.Bibhu Prasad Routray

10 FIRM GOVERNMENTThe relevance of Professor Coase’s The Nature of the Firm to the Indian governance system.Ravikiran Rao

13 THE MIDLIFE CRISIS OF GOVERNANCEIt is not about one party or one leader. Our governance is too centralised, too top heavy, and too obese.Raj Cherubal

17 A DIFFERENT KIND OF A RAPE Our ideas of rape and sexual violence have to be wide enough to see all rape victims as individuals, who have been subjected to a vicious crime that violates their individual liberty and changes their sense of security.Priya Ravichandran

20 CENTRAL BANKING IN CRISISThe political economy risk to the RBI’s institutional credibility.Gulzar Natarajan

23 KASHMIR’S CONCERTED EFFORTSeparatists have turned Zubin Mehta’s concert into a political battle.Saurabh Chandra

26 AN EARLIER DATE FOR INDO-EUROPEANS IN NORTHWEST INDIA Archaeological evidence suggests that Indo-European speakers may have been present in Northwest India two millennia earlier than previously thought. Jayakrishnan Nair

IN DEPTH30 BICAMERALISM IN THE STATES: THE NEED FOR A DIVERSE LEGISLATUREThe Upper House should be of a diverse composition with knowledgeable and wise persons, and not a safe haven for unelectable politicians.Salil Bijur

35 VIRTUAL MEDIA, REAL CHANGE? Reflections on organisational hijacking of social media.Sushobhan Mukherjee

38 FIXING THE WHOLEThe problems of juvenile policing can only be fixed by reforming the complete policing system. Sarah Farooqui

41 WINDS OF CHANGEGujarat’s Wind Power Policy is a good example of commercially viable and internationally compatible energy policy management.Mukul Asher and TS Gopi Rethinaraj

44 IT IS THE FISCAL POLICY, STUPID Fiscal deficits, fiscal dominance and the resultant financial repression are the two principal factors behind India’s current economic malaise.V Anantha Nageswaran

INFOGRAPHIC49 UNDERSTANDING INDIA’S DEFENCE SPENDINGPavan Srinath

BOOKS54 ANTIFRAGILE POLICY PRESCRIPTIONS Nassim Nicholas Taleb’s Antifragile.Karthik Shashidhar

HIGHLIGHT

7 Good data, good governanceData is concrete knowledge, and without it, decision makers can only rely on guessing.Varsha Joshi


CONTRIBUTORSBibhu Prasad Routray

Bibhu Prasad Routray served as a Deputy Director in the National Security Council Secretariat, New Delhi

Varsha JoshiVarsha Joshi is an IAS officer, with the office of the Registrar General & Census Commissioner India

Ravikiran S RaoRavikiran S Rao blogs at The Examined Life

Raj CherubalRaj Cherubal is the Director (Projects) at Chennai City Connect

Priya RavichandranPriya Ravichandran is Programme Manager for the GCPP programme at the Takshashila Institution

Gulzar NatarajanGulzar Natarajan is a civil servant

Saurabh ChandraSaurabh Chandra is a Bangalore based technology entrepreneur with an interest in public policy

Jayakrishnan NairJayakrishnan Nair blogs at Varnam

Salil BijurSalil Bijur is a civil servant from the Indian Revenue Service based in Bangalore

Sushobhan MukherjeeSushobhan Mukherjee (@sushobhan) creates growth strategies for brands and ideas

Sarah FarooquiSarah Farooqui is the Assistant Editor of Pragati and a researcher at Public Affairs Centre, Bangalore

Mukul AsherMukul Asher is Professorial Fellow, Lee Kuan Yew School of Public Policy, and Councillor, Takhshashila Institution

TS Gopi Rethinaraj TS Gopi Rethiniraj is a faculty member at the Lee Kuan Yew School of Public Policy, Singapore.

V Anantha NageswaranV Anantha Nageswaran is the Fellow for Geo-economics at the Takshashila Institution

Pavan SrinathPavan Srinath is the Policy Research Manager at the Takshashila Institution

Karthik ShashidharKarthik Shashidhar is the Resident Quant at the Takshashila Institutuion

Published by the Takshashila Institution, an independent think tank on India’s strategic affairs.

Some rights reserved. This work is licensed under the Creative Commons Attribution 2.5 India License.

Advisory PanelMukul G Asher

Sameer Jain Amey V Laud

V Anantha Nageswaran Ram Narayanan

Sameer Wagle

EditorsNitin Pai

Sushant K Singh

Assistant EditorSarah Farooqui

Acknowledgementsgdiazfor

[email protected]

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Pragati The Indian National Interest Review

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PERSPECTIVE Conflictology

BIBHU PRASAD ROUTRAYBibhu Prasad Routray, a Singapore based security analyst, served as a Deputy Director in the National Security Council Secretariat, New Delhi.

The perpetual disconnectThe modernisation of paramilitary forces in India has suffered due to the disconnect between the ground operatives and the policy-makers.

It is apt to start with an allegory. A school management body decides to rent out the school building as a function hall during the non-‐‑operational hours. It generates a lot of demand and the building becomes a popular venue for organising events. After a few months, while deciding to use available funds to renovate the school building, the management is confronted with a policy predicament whether to upgrade the school’s facilities to suit the needs of its students or that of the clients who use it for their events. In a way, this is

one of the dilemmas that confronts the chieftains of the Central Armed Police Force (CAPF), formerly known as the Central Paramilitary Force (CPMF) institutions, as they aDempt to modernise their forces.

In the first week of September, Border Security Forces (BSF) personnel teamed up with the Haryana police to enforce law and order in the Pataudi area, after 16 vehicles were torched. In June, Indo Tibetan Border Police (ITBP) personnel deployed in ChhaDisgarh’s Rajnandgaon

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district killed a Maoist commander in an encounter. In April, 20 odd personnel belonging to the Central Reserve Police Force (CRPF) started providing security to the chairman of Reliance Industries Limited, Mukesh Ambani. The drastic temperance in the original terms of reference of the CAPF institutions is a reality. In fact, the operational incongruity in deploying the essentially border guarding forces in internal security situations and to maintain law and order, and specially designated counter-‐‑insurgent forces to provide personal security, is no longer a subject of policy discussion. In the face of the country’s growing internal security and law and order duties, such deployments beyond the CAPFs’ conventional area of expertise are expected to register a continuous growth.

Each of the CAPF institutions today, thus, is adorned with a split personality: with a primary duty, conforming to their original terms of references, and with an array of obligatory secondary duties, which are no less demanding than the former. BSF baDalions are in charge of the Indo-‐‑Pak and Indo-‐‑Bangladesh border, the ITBP still guards the Indo-‐‑China border, the Sashastra Seema Bal(SSB) is the force along the Indo-‐‑Nepal border etc. All these forces along with the Central Industrial Security Force (CISF) are also baDling the Maoists, providing VIP security, controlling riots, responding to relief operations during natural disasters, carrying out election-‐‑related duties, and providing securities to critical infrastructures. On many occasions, the CAPFs have even excelled in their secondary duties. The admirable role played by the BSF in counter-‐‑Maoist operations in Odisha or the accomplishments of the ITBP during the

June 2013 floods in UDarkhand and in protecting the Indian embassy and consulates in Afghanistan, are some of the pointers towards this trend.

However, whereas the Ministry of Home Affairs (MHA), the ministry in charge of the CAPFs, appears to have seDled these operational contradictions, mostly citing shortage of forces, questions regarding how to modernise these forces with such contrasting assignments are yet to figure in the policy-‐‑making circles.

The scheme for modernisation of the CAPFs, implemented since 2002, aims at increasing the strike capacities of the forces by providing them with weapons, equipments and communication systems; upgrading their skills by providing them with training; and keeping them operationally fit. The achievements under the scheme during the past decade, however, remain, at best, modest. According to a 2010 evaluation paper by the Bureau of Police Research and Development (BPRD), the stringent norms imposed by the MHA continue to inhibit timely procurement of arms, ammunition and other equipments for the forces.


Successive assessments by the BPRD and the CAG provide several narratives of a regime of neglect, myopia and lack of drive within the CAPF institutions.

In addition, implementation of individual schemes of the CAPF institutions, while succeeding in augmenting the numerical strength of their personnel by adding new baDalions, continues to be driven or affected by the commitment or the lack of it of the leadership. The fact that the CAPF chiefs, more often than not, do not grow within the institutions and are often paradropped by the political leadership from other departments/ states do not help addressing the needs of the forces.

Three following examples of the disconnect between the leadership and the forces on the ground would suffice. Till 2011, canteens of the CRPF used economical, yet unhealthy dalda and vanaspati ghee for preparing food for the personnel on static duty. The age-‐‑old practice was discontinued and healthy cooking oil was introduced after reports of 140 soldiers of the force dying of cardiac diseases in 2010 hit the media headlines. Similarly, till 2013, complains regarding the heavy leather boots by its personnel deployed in Jammu & Kashmir (J&K) and the Maoist affected states were ignored by the CRPF leadership. It took a decision by the Home Secretary to reverse the practice. Even as BSF personnel clamoured for beDer weapons and equipments, the authorities diverted a part of the modernisation funds to build an officer’s mess and a swimming pool in the force’s headquarters in New Delhi. Successive assessments by the BPRD and the CAG provide several narratives of a regime of neglect, myopia and lack of drive within the CAPF institutions. This partially explains why as many as 36618 CRPF, BSF and ITBP personnel have left their jobs between 2009 and 2012.

Thus, while the plan to augment the conventional strike capacity of the forces and keeping them operationally fit has suffered, looking after the specific needs of the CAPFs, operating outside their known areas of expertise, does not even figure in the modernisation schemes. In 2009, for example, the BSF unveiled a five year modernisation project worth Rupees 6,016 crore. The proposed plan involved recruitment of 30,000 personnel, procurement of new aircrafts, construction of 509 border posts along the Indo-‐‑Pak and Indo-‐‑Bangladesh border, nine new sectors and three frontier headquarters. The plan does not even mention the measures to address the needs of the 11 baDalions of the BSF personnel who operate in the Maoist areas or the countless personnel who manage the law and order duties across the country. Similarly, the ITBP’s 2012 plan talks about augmenting its strength by 12 baDalions by 2015, but is silent on the needs of its 6000 forces baDling the Maoists or its personnel performing a range of additional duties elsewhere.

While professionalising the modernisation process by inducting experts and implementing the recommendations of the projects run by the BPRD is naturally prescribed as solutions to the problems, such steps do not tinker with the top-‐‑heavy model in the conception and implementation procedures. The solution to woes probably lies in democratising the process, by establishing permanent and functional structures within each of the CAPF institutions to receive and internalise the needs from the ground. Given that whether countering insurgency or implementing the law and order is a small commander’s effort, not heeding to the calls from the ground is indefensible.


PERSPECTIVE

VARSHA JOSHIVarsha Joshi is an IAS officer, currently with the office of the Registrar General and Census Commissioner India. The views are personal.

Good data, good governanceData is concrete knowledge, and without it, decision makers can only rely on guessing.

Data is ‘in’. The media provides clear percentages and cool visualisations for every kind of statistic, from cricket to elections. Census and survey reports are much discussed by the common public. Open data is in great demand by researchers, marketing professionals, civil society, and administrators alike. And Big Data is the new buzzword in the software and computing industry.

This is a wonderful development; data is concrete knowledge, and without it,

decision makers can only rely on guessing. This applies the most in the case of governance and public policy, where the stakes are the highest.

The Government of India has come a long way in collecting data and making it publicly available. First came the RTI Act, which established the basic principle that public data should be in the public domain by default. The National Data Sharing and Accessibility Policy gave shape to this principle. Now,


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there is the remarkable Open Data Portal, data.gov.in, where to date there are nearly 4000 data sets from over 50 departments of the Government of India.

There are three broad methods of data collection used by the Government. The first, and simplest, is compiling records of past events. Secondly, there are regular sample surveys such as the NSSO, NFHS, DLHS, AHS, SRS, etc., and the decadal Census of India. The third method is the real-‐‑time monitoring of schemes through field reporting.

While using past records for decision-‐‑making, one has to be sure that the data fields used continue to be of current relevance. For example, in a price index, are the items included actually what people are spending the most on? This is exactly what was discovered in the 68th round of the NSSO household expenditure survey in 2011-‐‑12; expenditure on cereals and pulses was falling and that on eggs and diary products was increasing. As a result, the composition of the Wholesale Price Index is under modification.

Just as surveys work as reality checks for simple data collection, the Census of India works as a reality check for surveys. All survey sample frames are based on the Census enumeration

frame, i.e. the geographical net of enumeration blocks, each having roughly the same population of about 500. This frame gets renewed every decade with the fresh Census. Also, projections and assumptions used since the last Census can now be replaced with the actual facts, creating a new set of baseline data. For example, the population of NCT Delhi had been projected at 18.7 million for 2011 on the basis of 2001 data. The actual figure from Census 2011 came out to be 16.7 million. This happened because several unanticipated factors arose in the intervening decade, such as the ban on industrial units in residential areas and large-‐‑scale slum removal.

When really large data sets are collected, which can only be interpreted with the use of high computing power, they are known as Big Data. The Census of India is, in a sense, Big Data, since it covers many aspects of information abut a very large population. It can come up with complete surprises, revealing hitherto unknown facts, often needing urgent policy intervention. One way in which this comes about is because a paDern is too subtle to show up in ordinary experience. For example, the 1991 Census brought out the falling child sex ratio, which had not been expected to be so critical. It led to the Prenatal Diagnostic Techniques (PNDT) Act being enacted in 1994. Another way in which the Census comes up with surprises is because it counts very rare events too, which would not be detected in smaller samples. This happened in the 2011 Census, in which the presence of a small but definite number of manual scavengers across the country was detected, controverting the claims of public agencies that the practice stood wiped out. As a result, a targeted plan


The Census, and other surveys, can only be accurate as long as the public perceives them to be neutral and not directly tied to any Government scheme.

http://data.gov.in/

http://data.gov.in/

for abolishing this practice and rehabilitating the scavengers is now under way.

The multifaceted data sets from the Census also help in detecting possible linkages between different aspects of data. For example, it has been well established by research across several Censuses that there is a strong correlation between high female literacy and low fertility rates. This has important implications for cross-‐‑departmental policy interventions, and points to the necessity of close association between academicians and policy makers so that insight can be turned into successful change on the ground.

The Census, and other surveys, can only be accurate as long as the public perceives them to be neutral and not directly tied to any Government scheme. Otherwise, the responses would be coloured by the anticipation of future benefits. In general, the Census, with its legal backing, confidentiality, and multilateral style of working, involving the Central and State Governments, as well as academia and civil society, is a byword for reliability. However, if there arises a competition among different groups for increasing their numbers, the exercise gets vitiated. This is what happened in the 2001 Census in Nagaland, where the numbers got inflated to such an extent that the results were ultimately rejected; consequently, the universally accepted 2011 Census in Nagaland had a negative growth rate! This had far reaching effects for

Nagaland throughout the decade, due to misallocation of resources leading to wastages, the delimitation of constituencies being set aside by the court, and much public unrest.

The third aspect of data collection—real time monitoring of field activities—has a crucial role to play in ensuring not only that the schemes themselves function well, but also that policy making is at all times in touch with reality. A plethora of technological solutions are being utilised for this purpose. The e-‐‑Mamta MCH monitoring system under the NRHM is a good example. SMS based reporting and grievance redressal is being used in health schemes in Andhra Pradesh, policing in Kerala, and mid day meals in UDar Pradesh. Such applications are only limited by the imagination of the scheme administrators. Further, when such data is placed in the public domain, it goes a long way to ensure transparency and accountability.

Thus, an interactive combination of all three methods of data collection—records, surveys, and real time monitoring—is necessary for successful policymaking and implementation. Also, data needs to be studied by not only the concerned department but also by other government agencies, researchers, and civil society, since all of them can contribute in different ways to extract the information hidden in the data. Their findings must be taken into account as well. Only then can correct decisions, which are likely to work out well in the long term, be made.


PERSPECTIVESavyasachi

RAVIKIRAN RAORavikiran S Rao blogs at The Examined Life.

Firm GovernmentThe relevance of Professor Coase’s The Nature of the Firm to the Indian governance system.

Ronald H Coase, who died recently at the age of 102 had an extraordinarily productive life. He wrote his last book, How China became Capitalist, in 2012, when he was a hundred years old. His first significant work was The Nature of the Firm, published in 1937, when he was 27.

In that paper, Mr Coase dealt with the question of why firms exist in spite of the clear advantages that markets offer over central planning. Most of us have tipped waiters at restaurants, and justified the transaction on grounds that it gave the waiters an incentive to provide beDer service. Having come to that conclusion, we rarely proceed to ask why the rest of the restaurant is still organised as a centrally planned entity,

with the proprietor making decisions in a command and control fashion.

We may envisage the Market Restaurant, that contrasts with the Command and Control Restaurant, as follows: In this restaurant, the employees—the waiters, chefs and other staff, instead of being appointed to their jobs, have to buy their positions. They will then have to recoup their costs by freely transacting in the restaurant business. The waiters make their revenues by selling food and service to customers at the price they set. They have to negotiate table-‐‑cleaning services from the cleaning staff and to buy the food from the chefs, who in turn have to buy the ingredients from the purchasing


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staff. Everyone has to pay rent for the space they occupy.

Such a restaurant would of course thrive with the dynamism that anything that relies on the market mechanism would be expected to depict. The perceptive reader may point out that the Market Restaurant is not as fanciful as it seems—an approximation of it would be found at food courts of malls, for instance. But the question that The Nature of the Firm raised was why proprietorships exist at all. What value do the decisions of the proprietor provide that the price mechanism would be unable to?

The answer was that above a certain scale, transaction costs involved in continual negotiations would make the Market Restaurant unviable. While this restaurant would do a great job of responding to market demands, it would face significant difficulties in following any kind of strategy that shapes market demand. A restaurant aiming to provide a fine dine ambience to rich patrons would be stymied by a few waiters who insist on serving the economy segment, or a restaurant with a long term strategy of developing a clientele interested in Far Eastern cuisine could very soon find their strategy unworkable because its waiters insist on serving the cuisine that its patrons want right now.

While the Market Restaurant seems like a theoretical construct, one can find examples of the difficulties in effecting strategic transformation due to entrenched fiefdoms everywhere. It is a well known, if unfortunate fact, that parts of the Indian press and television, especially regional language media, have structures resembling the Market Restaurant. Journalists are paid only a

token salary, and they are expected to make their money by selling coverage to the subjects of the news, or worse still, by blackmailing them. Imagine the resistance that an editor or proprietor of a newspaper would face if he tried to move his journalists to a fixed salary, and tried to transform his business into one of providing honest and unbiased news to readers.

While the task would be humongous, it has been done. An example of what must have been surely a complex and lengthy transformation is that of the armed forces. While in most modern democracies, the image of the armed forces is that of a disciplined force that responds without question to orders from civilian authority, this has been true only since recent times in historical terms. Medieval armies were raised and would operate in ways that would remind us of the corrupt underbelly of the Indian media industry—they were paid a piDance in salary, if at all, and were expected to make their fortune through rapine and plunder. The British Army continued the practice of sale of military commissions right up to the 19th century. It must have been an enormously difficult to convert such armies into a professional army that was paid a fixed salary, but it would have been worth the transformation in terms of the ability to actually set and execute a strategy, rather than hope that the


The Indian government works very much like the Market Restaurant, at every level of government.

business interests of your soldiers lead to a beneficial end.

That brings us to the great governance challenge facing India today. The Indian government works very much like the Market Restaurant, at every level of government. In most modern democracies, the exchange between the government and the governed can be thought of as an exchange of votes for legislation and policies. Among the more corrupt democracies, laws and policies are sold for money. But in India, the exchange happens more at the retail level – the analogy would be with customers of the restaurant buying meals from the waiters directly. It is well known that many ‘lucrative’ government posts in India are bought by those appointed to the position, and the investment is recouped by the incumbents selling their services to the general public. In coalition governments, coalition partners are effectively sold ministries, popularly dubbed “ATM ministries” for their ability to spin money for them, in return

for support to the ruling party.

As Professor Coase would have predicted, the system is creaking under the burden of transaction costs. It also makes the business of predicting elections a joke—most predictions assume that voting is a wholesale business where votes are exchanged for policy, while in reality, it is a retail transaction, where they are exchanged for favours in policy implementation. It makes policy advocacy complicated, because any serious policy analysis will need to understand how the implementation will be sold in the bazaar.

Most importantly, it makes change very difficult. In transforming any organisation, one runs into entrenched interests that resist change, but when you have people who have paid for a job and are recouping their investment, they will feel entitled to treat them as fiefdoms, and the resistance will be all the more fierce. Yet, this is the task that is facing any serious reformer who intends to improve India’s governance.


PERSPECTIVEUrban Blues

RAJ CHERUBALRaj Cherubal is the Director (Projects) at Chennai City Connect.

The midlife crisis of governanceIt is not about one party or one leader. Our governance is too centralised, too top heavy, and too obese.

Humans and nations are similar in that both need periodic introspection, find meaning in their existence, refocus on what they can do and let go of what they cannot. For nations and humans, obesity can be a health hazard, robbing them of their agility, turning every chore, even essential ones, into a groaning and tedious task.

Our union government today resembles an obese middle-‐‑aged man. Gone are the days of dynamism and enthusiasm. Performing even the bare essential tasks of a union government – conducting

foreign and defence policy – seems painful and lethargic.

In a world obsessed with party politics – not to be confused with politics of governance, societies and existence – the glib solution would be to replace one head of government with another, purportedly more dynamic. Or to replace one political grouping with another one, more hungry for power. This is a tragic misunderstanding of the nature and scope of the problem.

Watch any government in India, central or state, after elections. Earlier there was


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ample time for the public to have its governance dreams betrayed. But today, the picture is different. Dynamic and promising leaders when in Opposition take reigns of the governance and within a maDer of days, descend into mis-‐‑governance and scandals.

Government is often seen as a well-‐‑oiled machine that can be driven only by dynamic leaders. When this doesn’t materialise, even with dynamism at the top, the public gets perplexed and questions are raised about the competence and honesty of the ministers and bureaucrats. Collective disappointment hits the fan and solidifies into the refrain, “elections and governments come and go, but nothing will change.” Cynicism seeps into the national bone.

This ennui seDling upon us needs to be analysed objectively, past the din of periodic elections and partisan pronouncements. Human institution can only do so much at any given time. Even governments teeming with energetic and purposeful individuals can only handle a set of issues at a time and govern effectively. And we should

remember, no government is that perfect.

The obese Indian government is burdened by the excess weight of countless ministries and agencies. It groans while struggling to complete mundane tasks of governance. Even under the most favourable of conditions, decision making is difficult. But what happens when ministries are outdated, exist only to please coalition partners, take up responsibilities in already deregulated areas or areas devolved to the states and the markets?

Ironically, in democratic India, intra party politics is dictatorial. Every decision is referred upstairs for political clearance since initiative and dynamism of underlings are seen as a challenge to authority. Hence all files float upwards and, due to paucity of time and aDention at the top, decisions rarely float downwards.

Further, coalition governments are sum of quasi-‐‑dictatorial groupings. So not only does each ministry decision go up and down the constituent party’s hierarchy, they then travel the maze of bureaucracies and collective politics. How can decisions, even in critical ministries, be quick?

How many decisions can a Prime Minister and his Cabinet take – especially when they usurp the functions of the market where millions of actors interact and decide? Will they decide on the nature and size of the PPP projects eluding the Railways? Will they go file by file and decide which airlines should merge with which other airlines or not? Will they decide on the exact percentage of dilution of stocks of some government owned coal company? Will they have time to decide on the exact amount of food to be delivered in each


How can one expect the bloated, obese institution of union government, constantly distracted by demands from obsolete underlings, to have energy and passion left for responsibilities that are its own?

village, town and city of this vast and varied nation? Or will they save their energies to resolve border issues, water sharing disputes with neighbours, diffuse impending wars with neighbours orin faraway lands? Will they save their wits to reform our armed forces and make them modern and agile? Will they proactively deal and defuse internal security threats, nurture peace and security in historic trouble spots of which there are plenty? This list is hopelessly endless and the Cabinet is just a collection of mere men and women with no magical or superhuman powers.

These by themselves are impossible tasks for even the most competent of men and women. How can one expect the bloated, obese institution of union government, constantly distracted by demands from obsolete underlings, to have energy and passion left for responsibilities that are its own? In a world with only 24 hours in a day, this is humanly impossible.

Consider the Food Processing Ministry. Regardless of what its website proclaims as its objective, what is its purpose in a modern, global food market with millions of small, medium and giant entities involved in processing food? It can be brushed off as just another unavoidable nuisance in Indian life unless it starts believing its own rhetoric, starts legislating and becomes a hindrance to millions already surging ahead processing food.

Then there are ministries whose very existence is harming national progress, economy and environment. In developed countries, cities have Mayors and Councils with powers to make decisions—even bad decisions. Over a period of time, city governments learn

to govern – not always neat as they learn from trial and error. Yet they learn to provide basic infrastructure and services that the denizens of cities expect.

In twenty-‐‑first century India, cities have minimal powers and responsibilities, and instead, we have central Ministry of Urban Development (MOUD) and their state counterparts. We have centralised schemes like JNNURM as means to fund urban infrastructure and services in select cities – ignoring thousands of other towns and cities – and elicit reforms.

City administrators queue up in MOUD with begging bowls for JNNURM funds for construction of storm water drains, buying buses, laying roads, and other mundane projects which should be responsibilities of any city government anyway. Modern nations empower their cities with taxation powers to raise funds to finance these amenities. Yet Indian cities – civilisational descendants of Mohenjo-‐‑daro, famous for its infrastructural marvels – are expected to be subservient to and grateful for the largess of central and state ministries. While global cities surged ahead with strong local governments, we add to our central obesity, and rob our cities of powers and accountability. The resulting pathetic state of urban development and consequences are there for all to see.

The damage caused by other mammoth ministries like Railways, Agriculture and Human Resource Development, by their very existence and size, is incalculable and unpardonable. Their very existence makes them massive hammers looking for nail-‐‑problems to solve. India is an astonishingly diverse nation. Instead of developing an education system that celebrates this diversity and decentralises powers to


communities and consumers, Ministry for Human Resource Development, egged on by ivory tower activists, perpetrates one of the biggest centralising power grab in history and passes the Right to Education Act. The list of obsolete ministries and their burdensome deeds is also endless.

India, past its youth and entering midlife, needs to do some soul searching

about governance, if we are to rise above our collective frustrations and outrage. Our governance is too centralised, too top heavy, and too obese. Irrespective of which grouping forms the Union government, we must resolve to shed its excess fat, devolve and decentralise its responsibilities, and refocus it towards what it should and only it can do.


PERSPECTIVE Brewhouse

PRIYA RAVICHANDRANPriya Ravichandran is Programme Manager for the GCPP programme at the Takshashila Institution.

What if it had been a different kind of a rape?Our ideas of rape and sexual violence have to be wide enough to see all rape victims as individuals, who have been subjected to a vicious crime that violates their individual liberty and changes their sense of security.

Both times, there were men, many men. In both situations, the women were doing perfectly respectable things, had taken the precaution of not being alone and were appropriately dressed. Both the girls were hard working, ambitious and from middle class backgrounds. They were in decent areas of a sprawling metro city and had not

brought aDention onto themselves. Both the women now share a history of rape and consequently, of initiating mass movements against the crime. They have triggered protests, demands for respect, new laws for death penalty or castration for the rapists, and for the judiciary to act fast and decisively.

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Both the Delhi and the Mumbai rape cases are straightforward for our judicial systems. Uncomfortable questions on the woman’s consent, her activities, profession, clothes, family, upbringing and sexual history don’t have to be raised. It is easy for the police and for our justice systems to fast track them without any disreputable judgments being passed on the women. Death penalty or castration becomes a promising possibility considering that the accused men are criminals, declared to likely descend into a lifetime of alcohol, drugs and other questionable habits. It has also been easy in some measures to protest, to demand beDer laws, reforms, and education. We have persisted in spite of a small degree of pushback from sections of society, and apathy and resignation from many others. Our protests have also mourned the loss of safety for women and loss of morals as a society. We have questioned our patriarchal systems, and the many reasons why men would want to violently rape these women.

An increasing number of activists, journalists and policy makers have called for new laws and beDer implementation of older laws. They have called for police reforms to deal with the growing cases of sexual harassment and violence. We have also recognised the importance of educating all citizens, irrespective of their age group on gender equality and to have an awareness towards sexist remarks. Greater awareness by the public has also led to condemnation and a call for removing ministers who have been charged with molestation, rape and sexual violence.

But what if the situation were different? What if the woman in this situation had

been someone intoxicated and stumbling out of a bar? What if the woman had been wearing something considered ‘inappropriate’ or ‘indecent’? What if, like the Steubenville Rape case in Ohio, the girl would be intoxicated and unconscious while being gang raped? What if the woman had been raped by her father, brother, uncle, or by an eager fiancée? What if the woman had been raped by her husband? What if the victim had been a man being taught a lesson in masculinity? What if the rape victim was a homosexual? Or a transgendered man or a woman?

What if it had been a different kind of rape? Would our values, morals and non-‐‑ judgmental way of looking at rape still apply? Would we still call in the same voice and pitch for justice for these victims too? Can we say that we can treat every raped individual as a victim of a heinous crime without colouring the victim or the society itself with shades of our prejudices and narratives? Can we push for justice no maDer who the victim is or where and how the rape took place?


Our ideas of rape and sexual violence have to be wide enough to see all rape victims as individuals, subjected to a vicious crime that violates their individual liberty and changes their sense of security.

http://en.wikipedia.org/wiki/Steubenville_High_School_rape_case




For all the clamour about beDer justice, gender equality and education, there is an even greater need to stop and examine our own conceit and biases. Cases like the one in Delhi and Mumbai have made it easier for us to focus all our passion and moral outrage on our laws and demand greater justice. We have made it easier on ourselves to outrage only when cases like these come up and when our marches and sit ins are not challenged, derided or dismissed because the victim did not fit the profile of the Delhi girl or the Mumbai girl. As a response to this outrage, we risk skewed laws and reforms that will miss the fact that there are rape victims who don’t fit the profile of these two women and rapists who don’t fit the profile of these criminals.

Rape and sexual violence that do not fit into a standard paDern are the ones that will challenge us and our idea of a liberated society. It is easy for us to silence the very small portion of critics who complain about westernised liberal women working in all kinds of environment and going out with boys in the night as “asking for it” when a rape of this sort happens. But the girls were doing things that the larger society deems appropriate. What is acceptable for the society ends up geDing unequivocal support too. The challenge however will be in pushing for justice when a different kind of rape takes place and in geDing people to acknowledge that what should maDer in a rape is that the victim gets justice.

We need to stand up to a society that declares a differently dressed woman, an effeminate man, a transgender

person or a woman who does not have full control of her faculties, as someone who is “asking for it”. Any sexual abuse, violence or harassment is a crime against an individual. At no point should it be seen as a judgment on our society, family or an assault on honour. If we don’t see it thus, we risk succumbing to the pressure from a society that fails to challenge unconventional crimes and fails to accept lifestyles that it looks down upon. We also end up making the victim guilty twice over: of “asking for it”, and for trying to get justice for an act that the victim could have prevented.

Our ideas of rape and sexual violence have to be wide enough to see all rape victims as individuals, subjected to a vicious crime that violates their individual liberty and changes their sense of security. The crime and our response to the crime—not the status of the victim—should be a weather vane for the depths that our society has plunged into. The Supreme Court has recently taken a very bold step by refusing to compromise on judgment in rape cases even if the victim forgives the accused. This is a much required stance that will prevent the victim from being coerced into a situation of taking on the responsibility of the crime. It is one small step. Until we push for further recognition within our society and in our laws to recognise all rape as an unpardonable violation of individual liberty and dignity irrespective of the situation, and irrespective of our personal biases and prejudices, we are and will remain our own worst enemies.


http://www.thehindu.com/news/national/no-compromise-in-rape-cases-even-if-victim-forgives-accused-sc/article5064363.ece

http://www.thehindu.com/news/national/no-compromise-in-rape-cases-even-if-victim-forgives-accused-sc/article5064363.ece

PERSPECTIVEGovernance Agenda

GULZAR NATARAJANGulzar Natarajan is a civil servant. The views are personal.

Central banking in crisisThe political economy risk to the RBI’s institutional credibility.

The appointments of central bank governors have become almost as high-‐‑profile and important as that of finance ministers. In recent weeks, UK, India, and shortly the US, would have nominated new central bank governors. Many expectations have been raised about their ability to pull their respective economies out of their current economic weakness. But this apparent success may carry certain under-‐‑appreciated risks.

The original mandates of central banks have been to maintain price stability and in some cases promote sustainable

growth. In India, apart from being the banking sector regulator, the Reserve Bank of India (RBI) is vested with the mandate of “securing monetary stability”. Accordingly, the primary task of the central bank has been the stabilisation of inflation, through policy instruments that influence the interest rate.

The global financial crisis and the Great Recession that followed have dramatically changed their mandates. It has pitchforked central banks to the epicentre of national economic policy making. In fact, they have become the


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single most important actor, eclipsing even governments. Their actions have generated much discussion and have influenced the markets more than any action of the government.

Governments should take the blame for this turn of events. Fiscal constraints, political paralysis and sheer ineptitude have all contributed to governments, in many developed and developing countries, becoming marginal players, sometimes even going missing in action as their economies tanked. They have preferred to watch and goad central banks into aggressively pushing their operational boundaries in the misplaced belief that it entailed limited costs and it could be a substitute for their own inaction.

Accordingly, central banks have pursued policies which have blurred the lines between monetary, credit, and fiscal policies. Truth to tell, in most cases, they have done a creditable job with their expanded mandates. The RBI too has not bucked the trend. Its actions have assumed prominence because of being forced into leading the fight initially against a persistent high inflation and now a falling rupee.

The Indian economy today faces adverse headwinds in many fronts – unsustainable fiscal and current account deficits, persistent high inflation, supply constraints, and declining growth. All these feed a self-‐‑fulfilling downward spiral of negative sentiments. Multiple policy distortions and failures, which have less to do with the RBI’s actions, are the major cause for the current crisis.

Critical structural reforms and policy shifts, with medium to long time horizons, are necessary to overcome these problems. Apart from helping the government minimise damage from the

immediate crisis, the RBI can only facilitate the required reforms by working to provide monetary stability. The government has to bite the bullet with reforms.

But such has been the dominant role of the RBI, as well as the government’s self-‐‑imposed marginalisation, that we have come to expect more from Mint Street. It merely reflects a cognitively biased over-‐‑estimation of the Central Bank’s capabilities and powers as well as a similar overlooking of the government’s responsibilities. Most unfortunately, such perceptions end up blaming the RBI for the government’s failures, especially when things do not improve quickly, as they are likely to given the magnitude of our problems.

Consider two recent instances of criticism of the central bank. First, in order to tame persistent high inflation, RBI continuously tightened monetary policy since early 2010, even in the face of a rapidly slowing economy. Second, more recently in July, in order to support the rupee the RBI tightened further by steeply raising the rates on other policy instruments.

On both occasions, the RBI was only trying to manage a crisis that arose from multiple policy failures and whose inevitable result was growth contraction. However, given the


Critical structural reforms and policy shifts, with medium to long time horizons, are necessary to overcome these problems.

perception of its dominant role in addressing broader macroeconomic problems, it was accused of constraining growth. Ironically, even the government thought so. In both cases, irrespective of the party in power, it would have been tempting for a finance minister to mount pressure on the RBI to reverse the course. Supporters, including a large section of the opinion makers and corporate India, would have acquiesced with such actions.

This also highlights the importance of the political economy in monetary policy decisions. In an ideal world, it can be reasoned that a central bank should stay the course with its policy actions. But in a real world, central bank agents have to pay heed to their government principals. In fact, it is well known that central banks do not take interest rate decisions based on a highly technical and formulaic objective function. Their objective function is more heuristically determined by both economic and political considerations. It is therefore not surprising that Chairman Bernanke did not embrace the full prescriptions of Professor Bernanke. Nor did Dr Subba Rao go the full distance with tightening on the face of a persistent inflation.

If the RBI remains too insulated from the political economy, then it is only a

maDer of time before politicians assume control. The recent example of Japan, where the Bank of Japan refused to deviate from a very rigid inflation targeting regime even in the face of a long deflationary recession, is a case in point. It finally led to the new Prime Minister Shinzo Abe virtually taking over and dictating the central bank’s agenda.

All this may be more relevant to countries like India where the institutional credibility of the central bank is fledgling. In a country where governments have constantly chipped away the credibility of all important public institutions, it may be too much to expect the RBI to escape the trend, especially if its operational domain expands and its actions become divorced from important political economy considerations.

The institutional credibility of the RBI lies in the perception of its competence and independence. This can be achieved only if the government steps up to assume its central role and the RBI restrains from over-‐‑expanding its operational domain either on its own or in response to government pressure. Opinion makers can help this by a beDer appreciation of some of the aforementioned dynamics that govern monetary policy making.


PERSPECTIVE

SAURABH CHANDRASaurabh Chandra is a Bangalore based technology entrepreneur with an interest in public policy.

Kashmir’s concerted effortSeparatists have turned Zubin Mehta’s concert into a political battle.

Zubin Mehta is going to receive this year’s Tagore Award for Cultural Harmony. It is a fiDing award for the truly international man of music, who imbibes Tagore’s ideal of being a citizen of the world. The world-‐‑renowned music director holds an Indian passport, is a permanent resident in the United States of America, maintains houses in multiple countries and has directed orchestras across the globe. His wish to perform in Kashmir, expressed last year while receiving an award at the German embassy in India, was taken seriously by the German ambassador and has

resulted in the planned Ehsaas-‐‑e-‐‑Kashmir (Feeling of Kashmir) concert. That Mehta’s global musician credentials are not enthusing the Kashmiri separatists would be an understatement.

Zubin Mehta may have made an innocent wish to perform in Kashmir but the planned concert has now become a political statement due to the antics of the separatists. Initially, the mood was to ignore and downplay the significance of the concert. The first major objection was raised by SAS Geelani who said that an international event should not happen in Srinagar as


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Kashmir is a disputed territory. After this statement, as if on cue, the separatists have increased the intensity of the statements opposing the concert. Mirwaiz Farooq called it an aDempt to project a conflict-‐‑ridden region as normal. Some people have called it a way for Germany and the European Union to curry favour with India for market access. Extremist organisations like Dukhtaran-‐‑e-‐‑Millat have gone so far as to cite Mehta’s position as a Director for Life with the Israeli Philharmonic to suggest a “Jewish Conspiracy” behind this concert. Many people think Mehta himself is a Jew (he is a Parsi). All this becomes excellent fodder for the Islamists in Kashmir.

In contrast, those working in the tourism industry of the region are supportive of the concert, given the positive impact it will have on their business. All the ambassadors of the EU countries are aDending and the event is to be telecast live, for free, across the world. The artist community of Kashmir is also supportive and is actively involved in helping with the arrangements for the concert. A group of Kashmiri musicians slated to play in the

UK on 7 September, the same date of as the Ehsaas-‐‑e-‐‑Kashmir concert, have asked that if they do not welcome musicians into Kashmir, how could they expect to be welcomed into Europe?

The separatist movement in Kashmir is no longer bloody like the nineties. There is a broad realisation that outgunning the Indian Army is not a sustainable strategy. The movement has shifted to mass protests in urban centres, which often turn violent with stone throwing by the mob or firings by the police for crowd control. This changed tactics makes events like this music concert ideal for the separatists to press their point by giving them symbolism beyond the usual. Some time back, the all-‐‑girl rock band Pragaash had to shut down after just one performance since it was not compatible with the separatist’s Islamist vision. A few years ago, the Pakistani rock band Junoon was able to perform in Kashmir without any problems. The separatists demonstrate to the rest of the Kashmiris their preferences through such acts and also convey to the outsiders that they have the coercive power to influence the social life in the Valley.

Yanni’s concert at the Acropolis in the 1990s made a new benchmark for how popular western classical music can become in modern times. The album of the live show at the Acropolis became Yanni’s defining legacy. This concert in Shalimar Bagh (part of the Mughal Gardens) next to Dal Lake has the same potential to capture the audience’s mind. In the scenic venue, Zubin Mehta conducting the Bavarian State Orchestra could create magic that could turn it into his defining concert. The worldwide telecast of Yanni’s concert reintroduced the world to the Acropolis. Similarly,


Srinagar’s famous landmarks would be associated with music, beauty and world class performances instead of terrorism and violence that has negatively impacted the tourism industry in the state.

this concert can also place the Shalimar Bagh and the Dal Lake on the world map. Srinagar’s famous landmarks would be associated with music, beauty and world class performances instead of terrorism and violence that has negatively impacted the tourism industry in the state.

By choosing to convert this concert into a political baDle, the separatists have raised the stakes for themselves. They don’t have much to gain if they succeed but will face ridicule and irrelevance if the event is held peacefully. From the ranks of separatists, these Kashmiri groups havenow joined the company of the regional chauvinist groups that exist in every state across India, who oppose

any ‘western’ event and take pride in being a nuisance to the society.

Socially, politically, economically and culturally, the Ehsaas-‐‑e-‐‑Kashmir concert is a positive for the valley. By opposing it, the separatists get to demonstrate that they can dictate the social life in the region. They can then hope to reinforce their self-‐‑styled credentials as the real representatives of Kashmiris, with whom India should hold talks. Even if the concert was not political to begin with, there is no doubt that it has become one now. This should only increase the resolve of the state government to ensure that it carries the day. At the banks of the Dal on the seventh of September.


PERSPECTIVE

JAYAKRISHNAN NAIRJayakrishnan Nair blogs at Varnam.

An earlier date for Indo-Europeans in Northwest IndiaArchaeological evidence suggests that Indo-European speakers may have been present in Northwest India two millennia earlier than previously thought.

Between 4500 BCE and 2500 BCE, in the steppes north of Black and Caspian seas, in what is Southern Ukraine and Russia, there lived a group of people who spoke a language, called Proto-‐‑Indo-‐‑European (PIE). This language was the ancestor of later languages such as English, Sanskrit, Latin, Old Saxon, and Lithuanian among others. Once they domesticated the horse and acquired the

wheel, PIE speakers traveled long distances with their tents and supplies, spreading the Indo-‐‑European language around the world. One of PIE’s descendants, Proto-‐‑Indo-‐‑Iranian developed between 2500 BCE and 2000 BCE implying that Vedic, which descended from Indo-‐‑Iranian, could only have a date later than 2000 BCE. Following this period, Indo-‐‑European


heartbreakingal

speakers either conquered or migrated into the Harappan region and imposed Vedic culture, Sanskrit language and caste system transforming Northwest India.

So far archaeologists have not found any intrusive material culture dating to this period. If Indo-‐‑European speakers arrived in large numbers and culturally and linguistically transformed the region, such evidence is absent on the ground. A late migration also fails to explain how Vedic people knew about the mighty Saraswati whose flow had reduced by then. Still many historians are wedded to an invasion/migration model derived from linguistics, an area of research done predominantly outside India.

Earlier migration of farmers

Now a 2012 paper by Peter Bellwood, Professor of Archaeology at the School of Archaeology andAnthropology of the Australian National University suggests that Indo-‐‑European speakers may have been present in Northwest India much earlier, maybe even two millennia earlier. This theory is based on new archaeological discoveries in the Gangetic basin working alongside another Indo-‐‑European dispersal theory. According to the West Anatolian model, that has been in existence for a while, Indo-‐‑European originated in Anatolia and not near the steppes near the Black Sea. The spread of the language happened due to population growth and the gradual spread of farming techniques and not due to carts, horses and wheels. Based on paleoethnobotanical dates, a date of 7000 BCE has been proposed for the spread of farming into Europe from Anatolia.

Around 6300 BCE, the catastrophic drowning of agricultural lowlands near the Black Sea may have triggered the migration of the farmers to other regions around the world. From Anatolia, the language spread through Armenia, Northern Iran, and Southern Turkmenistan and entered Pakistan by 4000 BCE. This implies that regions like Mehrgarh, the Neolithic antecedent which lead to the Harappan culture, could have been Indo-‐‑European speaking. According to Bellwood, the urban Harappan civilisation had a large number of Indo-‐‑European speakers alongside the speakers of other languages which may have included Dravidian. Thus the composers of Rig Veda were not the first Indo-‐‑European speakers in the region; their ancestors were present in the region at least two millennia before the current consensus.

Another piece of data, on which this earlier date is based, comes from extensive archaeology conducted in Haryana, Rajasthan and Gujarat. Just between Saraswati and Yamuna, around 350 sites were discovered and poDery in some of those sites date as far back 3700 BCE. Usually the Gangetic plains enters Indian history following the decline of the Indus-‐‑Saraswati civilisation, but new evidence indicates movement of farming techniques from Middle East to the Gangetic basin and from Gangetic basin to the Indus region. A version of rice, legumes, millets and humped caDle were domesticated in India, but there was an external flow of wheat, barley, sheep and goats from the Middle East. Also between 3500 and 2000 BCE there is an increase in seDlements from the middle gangetic plains towards lower gangetic plains indicating population movement.


http://en.wikipedia.org/wiki/Archaeology

http://en.wikipedia.org/wiki/Archaeology

http://en.wikipedia.org/wiki/Anthropology

http://en.wikipedia.org/wiki/Anthropology

http://en.wikipedia.org/wiki/Australian_National_University




The suggestion that Indo-‐‑European speakers lived in the Harappan cities is not one of those theories, which does not have much academic support. In a 2010 paper, Professor Jonathan Mark Kenoyer, who has been excavating at Harappa for three decades wrote that even though the Indus script has not been deciphered, he thinks more than one language was spoken in the seDlements. The language families that co-‐‑existed include Dravidian, Austro-‐‑Asiatic, Sino-‐‑Tibetan and Indo-‐‑Aryan. Paul Heggarty, a linguist at the Max Planck Institute for Evolutionary Anthropology, in a 2013 paper writes that Indo-‐‑European speakers may have reached Mehrgarh much earlier than 4000 BCE. The model that these studies present is not of a civilisation dominated by one language as imagined by Dravidian politicians and textbook historians, but an Indus-‐‑Saraswati region which was cosmopolitan.

New possibilities

All these have serious implications to Indian history.

First, the theory suggests the possibility of the development of Vedic in the Indus region. There are many versions of the theory that describes the origins and spread of the Indo-‐‑European language family. Most historians have been using the short chronology tied to the decline of the Indus-‐‑Saraswati civilisation and subsequent arrival of large Indo-‐‑European speaking population. Bellwood and Heggarty revive the longer chronology in which Indo-‐‑European speakers arrived early, much early than the Early Phase of the Harappan civilisation. As some farming techniques spread from the Indus region to the Gangetic plains, proto-‐‑Vedic too must have spread. This version allows

for the possibility that Indo-‐‑Iranian branch and its children crystallized locally on the banks of Indus and not in the steppes of Central Asia. It also explains why the authors of the most ancient Indian text, the Rig Veda, had great awareness of the geography of Northwest India.

Second, many historians have argued that after the collapse of the Indus cities, a new civilisation emerged in the Ganges Valley and there was no continuity of material culture; according to them most of the second millennium BCE was a long dark age. In his book, The Lost River, Michel Danino contradicts this by listing many such continuities from the Harappan period to the present. These include symbols like the swastika, the paDerns used in kolams, motifs like the pipal tree and seals like the pashupati seal which display a figure seated in yogic posture. Other elements like fire altars used by Vedic brahmins even now made John Marshall to comment in 1931 that the Indus religion was so characteristically Indian as hardly to be distinguished from still living Hinduism. The new evidence of agricultural relationship between people who lived around the sapta-‐‑sindhu region and the Gangetic region confirms that the Ganges Valley urbanism was related to its Harappan antecedents.

Third, this theory discards the ‘elite dominance’ version of the migration


Thus the composers of Rig Veda were not the first Indo-‐‑European speakers in the region;

theory. As per the short chronology, the Indo-‐‑European speaking people with their horses and chariots arrived in the Harappan region and influenced the residents to change their language or imposed their language. Even though the Indo-‐‑Europeans were few in number, people switched the language due to some utility of aDaching themselves with the elites. The long chronology supports demic diffusion, a gradual spread which comes without the invasion and massive migration components. It is now clear that the decline of the Harappan civilisation was not caused by the invading or migrating Bronze-‐‑Age riders from the Eurasian steppes, but rather due to vagaries of nature: tectonic movements blocked the course of lower Indus river which must have caused floods that submerged Mohenjo-‐‑daro while either tectonic movements or weakened monsoons affected Saraswati and forced the residents to migrate east and south. (See: What caused the decline of Harappa?)

Finally, after two centuries of Indo-‐‑European studies there is no consensus on the homeland, on the path of dispersal or the time frame of Proto-‐‑Indo-‐‑European. A debate which is going on this year is if Basque, the ancestral language spoken by people living in the region spanning northeastern Spain and southwestern France, is an Indo-‐‑European language or not. According to Paul Heggarty, linguistic data does not convincingly support the claim that Proto-‐‑Indo-‐‑European speakers domesticated the horse. Even if they were domesticated, there is less evidence of the saddle or the stirrup that are required for riding, and hence a Mongolian style invasion from the steppes could be an anachronism. Further, the words that were

reconstructed for wheeled vehicles refer to just movement and time and it is one interpretation that refers them as carts. Also, even now there is no agreed sequence of Indo-‐‑European branching, which could mean that there was no such straightforward branching, but rather a diffusion of people in waves. Hence the chronology of Indian history based purely on linguistics should be taken with a pinch of salt.

References:

Peter Bellwood. “How and Why Did Agriculture Spread.” In Biodiversity in Agriculture: Domestication, Evolution, and Sustainability. Cambridge University Press, 2012.

Heggarty, Paul. “Europe and Western Asia: Indo-‐‑European Linguistic History.” In The Encyclopedia of Global Human Migration. Blackwell Publishing Ltd, 2013. hDp://onlinelibrary.wiley.com/doi/10.1002/9781444351071.wbeghm819/abstract.

Bryant, Edwin. The Quest for the Origins of Vedic Culture: The Indo-‐‑Aryan Migration Debate. Oxford University Press, USA, 2004.

Jonathan Mark Kenoyer. “Indus Civilization.” In Encyclopedia of Archaeology. Academic Press, 2007.

Danino, Michel. Lost River: On The Trail of the Sarasvati. Penguin Books India, 2010.

Danino, Michel. Indian Culture and India’s Future. New Delhi: D.K. Printworld, 2011.

Anthony, David W. The Horse, the Wheel, and Language: How Bronze-‐‑Age Riders from the Eurasian Steppes Shaped the Modern World. Reprint. Princeton University Press, 2010.


http://pragati.nationalinterest.in/2013/02/what-caused-the-decline-of-harappa/

http://pragati.nationalinterest.in/2013/02/what-caused-the-decline-of-harappa/

http://en.wikipedia.org/wiki/Spain

http://en.wikipedia.org/wiki/Spain

http://en.wikipedia.org/wiki/France




http://onlinelibrary.wiley.com/doi/10.1002/9781444351071.wbeghm819/abstract






IN DEPTH

SALIL BIJURSalil Bijur is a civil servant from the Indian Revenue Service based in Bangalore. The views are personal.

Bicameralism in the states: the need for a diverse legislatureThe Upper House should be of a diverse composition with knowledgeable and wise persons, and not a safe haven for unelectable politicians.

In 1986, the Madras Court disqualified A B Shanthi’s nomination to the Tamil Nadu Legislative Council on grounds of insolvency. The then Chief Minister M G Ramachandran took it as a personal affront. A B Shanthi, also known as Venniradai Nirmala, was a film actress known for her debut along with J Jayalalitha in Vennira Aadai in 1965 and had been nominated to the upper house of the Tamil Nadu legislature by the governor on MGR’s advice.

A miffed MGR’s government passed a resolution in the Assembly to abolish the Legislative Council. The Parliament in the same year enacted the Tamil Nadu Legislative Council (Abolition) Bill and made the Tamil Nadu state legislature a unicameral one. The Parliament has the power to create or abolish legislative councils if the state assembly passes a resolution saying so.

While the abolition of the Tamil Nadu council is thought of as a personal whim

of MGR, the real reason was political. The opposition party in the assembly, the DMK had done well in the elections in the local bodies and was likely to get a majority in the upper house. MGR anticipating problems from the upper house decided to abolish it altogether. The issue of Tamil Nadu’s Legislative Council is still unresolved, with the DMK having tried to unsuccessfully revive the Legislative Council a few times, as latest as 2010.

The upper house in state legislatures is the essence of bicameralism. And states, as shown by Tamil Nadu, do not like bicameralism. They are seen as unnecessary and wasteful expenditures acting as hurdles in legislation or even obstructing them, if the opposition of the assembly has a majority in the council. In fact, Andhra Pradesh which abolished the council in 1985 had a similar political issue as the Telugu Desam government aDempted to prevent a Congress majority in the


council. The AP council however was later revived in 2006. Before these two states, West Bengal and Punjab, both of which had bicameral legislatures before partition, had abolished their legislative councils the late 1960s.

A bicameral legislature balances the over zealousness of lawmakers by delaying hasty legislations. We have seen in the recent past how important laws and budgets which require careful drafting and sufficient time and thought have been rushed through legislatures with barely any discussion, both at the Union and the state level. These incidents can be prevented by a more thoughtful deliberative house whose composition is different from the lower house.

The second issue in bicameralism is of providing varied representation and bringing in knowledgeable persons, experts in their fields, in the process of law-‐‑making. The members of the Rajya Sabha represent the states, but the social, educational and economic profile of the members is not too different from the members of Lok Sabha. The profile of all members has drastically changed from the Constituent Assembly which had a plethora of lawyers to only 76 members of the 15th Lok Sabha

describing themselves as lawyers or advocates whereas an overwhelming 246 members being agriculturists or farmers. The Rajya Sabha and the legislative councils do have some nominated members from the fields of art, literature, science and social service but they are in a minority.

Adult suffrage, according to Dr S Radhakrishnan, is the most powerful instrument devised by man for breaking down social and economic injustice. However bicameralism looks beyond adult franchise for a more successful democracy. The Constituent Assembly had thoughtful debates on this issue when it came to the provincial legislatures and did consider the Irish model of functional representation which has vocational electorate panels such as administration, agriculture, culture & education, industry & commerce and labour. It also considered suggestions on giving representation to persons from the field of medicine, engineering, religion and philosophy, voluntary social service and agricultural labour. However, somewhere in the deliberations this idea seems to have been diluted and the final draft of the constitution gave the legislative councils a composition of members indirectly by the lower house, members elected by panchayat and municipal bodies, members nominated by the governor and members elected from the ‘teachers constituency’ and the ‘graduates constituency’. Elections for these seats are conducted using the preferential voting system unlike the first-‐‑past-‐‑the-‐‑post system used for the legislative assembly.

Dr P S Deshmukh, a member of the Constituent Assembly, during a discussion on the composition of the


The members of the Rajya Sabha represent the states, but the social, educational and economic profile of the members is not too different from the members of Lok Sabha.


Christian Haugen

Legislative Council made rather prophetic remarks when he pointed out that the composition of the upper house will not be radically different from that of the lower house and doubted if teachers and graduates would be chosen among the best elements of society. Deshmukh was right. Today, the profile of a majority of the members of the legislative council is therefore not too different from that of the assembly.

Also, the ‘educational’ constituencies are somewhat misleading. The Teachers Constituency, for example, is an electorate consisting of teachers belonging to the state. But the law does not require a candidate to be a teacher. Similarly, the Graduates Constituency is an electorate consisting of graduates residing in the state. And just like the teachers constituency, there is no requirement that a candidate from the graduates constituency should necessarily be a graduate. There is also no condition that the voters should have graduated from a university from that state. As expected, a glance at the list of members from teachers and graduates constituencies in each of the states reveals that they are members of the political parties of the state.

But there is a difference between these two electorates. Teachers are organised in unions but graduates are not. Elections to the teachers constituencies are keenly contested by leaders of teacher associations usually with politically affiliations. Despite increased education, there is poor awareness about the graduate constituency. In 2012, the Bangalore graduates constituency had 90,000 out of over 20 lakh graduates registered, which was less than 5 percent of eligible voters.In the Mumbai Graduates constituency

only 91,650 voters were registered which is extremely low for a city with a population of over 18 million.

The educational profile of legislators has also improved with the percentage of graduate Lok Sabha members at 79 percent and members without secondary education at 3 percent. But although the electorate has also expanded, it has not resulted in a corresponding rise in turnout. Only 35 percent of the 90,000 registered voters came out to vote. It is doubtful therefore if the legislators from the graduates constituency truly represent all graduates of the state.

It is hence necessary to consider a relook at the composition of the legislative councils for beDer representation for the otherwise unrepresented. The upper house which is often called as a ‘house of elders’. The minimum age is also higher for the Rajya Sabha and the legislative councils. But in a country where more than 65 percent of the population are below the age of 35, we see that 86 percent of the MPs in Lok Sabha are over the age of 40. Considering that is a need for beDer representation for the majority population, the upper houses could do well by lowering the age barrier and infusing younger blood in the legislatures. The graduate constituency could be modified to a students constituency where university senates can send their representatives to the legislative councils, as they did in pre-‐‑independence provincial legislatures. This scheme is present in the upper house of the Parliament of Ireland which has separate electorates for universities.

Similarly, we could also consider looking at the legislatures of Hong Kong and Macau which have functional


http://articles.timesofindia.indiatimes.com/2012-04-13/bangalore/31337221_1_constituency-elections-graduates-candidate






http://www.thehindu.com/todays-paper/tp-national/tp-karnataka/55-pc-turnout-in-council-polls/article3513533.ece




constituencies for business, labour, professionals, education, culture, sports, architecture, teaching, medical, and social welfare. Pre-‐‑independence councils did have special electorates for the chambers of commerce and in an emerging economy it may be necessary to give a voice to the trade and industry community. There is a chance though, of these functional constituencies falling prey to political partisanship like the teachers and graduates constituencies have. However, proper drafting can

prevent this.

The debate on bicameralism is an old one, with staunch supporters on either side. But it is the decision of a state whether they require two houses of legislatures or not. If a state does choose to have an upper house, it should be of a diverse composition with knowledgeable and wise persons, and not failed or unelectable politicians and leaders trying to make a backdoor entry into public life.


IN DEPTHConcept Circle

SUSHOBHAN MUKHERJEESushobhan Mukherjee (@sushobhan) creates growth strategies for brands and ideas.

Virtual media, real change?Reflections on organisational hijacking of social media.

The story of movements and uprisings tends to be centred around individuals. Be it a western educated, western garbed lawyer being thrown out of a train, be it a man with shopping bags staring down a column of tanks, a technology guru returning home to lead his country’s social media driven revolution—the idea of the trigger being an individual is powerful. It has the emotive power of David against Goliath. If David has his slingshot, today’s revolutionaries have social media.

In a networked society, every individual is a node and every node is connected to

the other. A vast neural network paired with the motive power of muscles, these individuals can precipitate spontaneous uprisings, challenge fallible institutions, bring authoritarians to their knees and make it the cover of Time magazine. So goes the rest of the story.

This story has been played over and over again in media, finding its way into popular belief and discourse. It is perhaps useful to examine this story at a time that the Arab Spring has been overturned by military action. Are individuals truly the organising forces which lead to change? Or, are


StockM

onkeys.com

individuals being co-‐‑opted by organisations to further their agenda? Both these questions are pertinent in an India where social media seems to inspire everything, from television debates to dinner table conversation, where daily baDles between acolytes of the two leading aspirants for power end up in allegations of trolling and abuse.

I have wriDen about how the Chinese state censors and controls the social media landscape, creating quasi-‐‑freedom to vent online but restrict aDempts to organise. Andrew Keller, a researcher at the Ohio State University, has examined how social media affects political participation in authoritarian states, studying China in particular. He raises the question of TwiDer & The Arab Spring and asks whether TwiDer helped cause these uprisings or whether it simply channeled pre-‐‑existing passions. “Do social media and online interaction help derail dictators or do they provide authoritarian leaders with still more transmission belts for their

propaganda? In short, do the effects of social media strengthen or weaken the ideological power of an authoritarian system?”

Keller describes the two currently prevalent and ideologically opposite theories on the impact of social media and indeed all-‐‑online activity. “The (Google Doctrine) theory that online interactions can decrease group identification, produce new ideas outside the party line, and lead to democratization, and the idea (Enclaves of Extremism) that the internet can be a breeding ground for misinformation that reinforces pre-‐‑existing ideas and group identification.” His conclusions, based on his study of China, place the state of play as somewhere in between these theories, with misinformation and tendencies to radicalisation. Given governmental and party suzerainty on the web, Chinese social media discourse tends to reinforce loyalty to the state!

Israel’s social media savvy military, the IDF, is now recruiting college kids to act on its behalf on social media. An article states that “The Israel Defense Forces, no strangers to social media, are trying to coax university students to go on sites like Facebook and TwiDer to post positive, pro-‐‑government messages, reports the Associated Press. In exchange for their services, the government is willing to hand out scholarships to the students, with a total budget of $778,000 allocated for the project.” The Israeli Prime Minister’s Office goes on to say in a wriDen statement that this is a groundbreaking project aimed at strengthening Israeli national diplomacy and adapting it to changes in information consumption. What could be problematic with this? Brands and businesses recruit community managers


This would suggest that change in India will likely not be tweeted, but will be brought about the way it has always been—on-‐‑ground mobilisation and through political processes that leverage real life, not the virtual.

http://pragati.nationalinterest.in/2013/05/crouching-people-snooping-dragon/

http://pragati.nationalinterest.in/2013/05/crouching-people-snooping-dragon/

http://www.dailydot.com/politics/israel-defense-forces-idf-social-media/

http://www.dailydot.com/politics/israel-defense-forces-idf-social-media/

http://dailydot.com/communities/facebook

http://dailydot.com/communities/facebook

http://dailydot.com/communities/twitter

http://dailydot.com/communities/twitter

http://www.startribune.com/entertainment/tv/219552661.html

http://www.startribune.com/entertainment/tv/219552661.html

for social media all the time for commercial purposes, don’t they? Well, not quite the same. “These students can decide for themselves whether or not to disclose that they’re working for the government.”

This non-‐‑declaration of agency has worrying consequences. How does one distinguish between what is official and what is personal? “Rather than just pro-‐‑Israel messages, some people fear that the tweets and Facebook posts could veer into anti-‐‑Palestine rants. One of the officials rumored to be heading the project is diplomacy official Danny Seaman, who has posted anti-‐‑Muslim messages on his personal Facebook page, according to the Associated Press”. Clearly, even the “only popular democracy in the Middle East” Israel, is harnessing the power of social media to make it less spontaneous and more directed.

What about our own chaotic democracy and its outpouring on social media? In one corner, we have those who support #Feku and in the other we have those who support #Pappu. A casual analysis of the trends seems to indicate paDerns of coordinated messaging and action by both camps. I would argue that India’s social media landscape is witnessing ideological power being strengthened. Rather than a thousand flowers blooming, it seems to be one or two large trees, which dominate the jungle.

India’s problems are myriad, our economic situation is lurching from bad to worse and the despondency is growing deeper. Are these conditions ripe for a movement like Occupy? For our own Spring, or Autumn, depending on when the elections are announced for? Are the youth, the 60 percent of the nation, ready to seize the moment?

Not so fast. A recent study of digital youth cultures in Gujarat reveals the limited impact of the Net in their lives. “Youth in this study treat new media and technologies as one limited component of otherwise rich lives and social experiences. While new technologies promote individualistic mobility, Indian youth of small towns and rural places still live in collective social structures that shape their orientations. New media are at the periphery of their lives, as these youth have strong interpersonal connections that are rooted in geographic proximity and active school experiences”.

This would suggest that change in India will likely not be tweeted, but will be brought about the way it has always been—on-‐‑ground mobilisation and through political processes that leverage real life, not the virtual. It is hormonally rewarding to indulge in a fiery baDle of hash-‐‑tags, but to expect armchair activism to unleash change and propel progress anytime soon is still the stuff of fantasy. Indian social media is now being hijacked by parties and their informally co-‐‑opted volunteers. It is a hardening of previously held beliefs rather than fundamental change that we have to expect.

To reflect on the state of the original home of the Revolution, Russia. Evgeny Morozov cautions, “Russian young people spend countless hours online downloading videos and having a very nice digital entertainment lifestyle, which does not necessarily turn them into the next Che Guevara.”

The Internet is turning out to be the opiate of the masses. Chennai Express, anyone? Or is it Madras Café this week?


http://news.cnet.com/8301-1023_3-57598577-93/israel-to-hire-pro-government-tweeters-and-facebookers/








http://nms.sagepub.com/content/early/2013/08/02/1461444813496611.abstract?rss=1

http://nms.sagepub.com/content/early/2013/08/02/1461444813496611.abstract?rss=1

http://www.motherjones.com/media/2011/01/evgeny-morozov-twitter-tunisia

http://www.motherjones.com/media/2011/01/evgeny-morozov-twitter-tunisia

IN DEPTHBrewhouse

SARAH FAROOQUISarah Farooqui is the Assistant Editor of Pragati- The Indian National Interest Review and a researcher at Public Affairs Centre, Bangalore.

Fixing the wholeThe problems of juvenile policing can only be fixed by reforming the complete policing system.

When a breach in security occurs anywhere in the country, we reflexively blame the police. Either they are inefficient, incompetent or absent. Media coverage of cases of terror, sexual assault, child abuse and crime ensures that the shortcomings of the police get dissected in great detail. The case for radical reforms to the structure and function of police has also been made multiple times now. Beyond the structural shortcomings, the shortfalls within the system are glaring. From a shortage in the number of police personnel (India has only 138 police

personnel for every 1,00,000 population), lack of proper equipment and training, poor working conditions, archaic technology and a slow judicial system—there are subliminal layers to each of the problems. Despite the 2006 Supreme Court directives on police reforms, no state government has implemented any of the recommendations.

Over the last few years, the increase in the number of cases pertaining to children—crimes commiDed on children and crimes commiDed by children—has


Leon

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amchenko

v

http://ncrb.gov.in/CD-CII2012/cii-2012/Chapter%2017.pdf




http://www.humanrightsinitiative.org/index.php?option=com_content&view=article&catid=54%3Aprogrammes&id=199%3Asupreme-court-directives-on-police-reform&Itemid=98




highlighted the role of the police in dealing with them. But the police does not work as a collective whole on children’s cases. Instead it has a unit called the Special Juvenile Police Unit (SJPU) that is mandated to handle all the cases of children. The SJPU was first introduced in the Juvenile Justice Act 2000. It stemmed from the idea of child friendly police envisioned in the UN Beijing rules, 1985. This unit exists in every zone of a city. But it is not an independent unit, rather an additional internal wing created within the existing setup. It consists of three members—a senior Child Welfare Officer, an assistant Child Welfare Officer and a social worker, who work together on all the cases of children. The functions of the SJPU range from providing legal protection against cruelty, abuse and exploitation of children, taking cognisance of adult perpetrators of crimes against children, registering and monitoring information regarding missing children, carrying out investigations, working with NGOs and monitoring activities to prevent crimes against children.

Given the dismal state of child protection in the country, it is evident that the SJPU fails in accomplishing most of its mandated tasks. The senior Child Welfare Officer is someone high up on the hierarchy of the police, an Assistant Commissioner of Police. He can rarely give the SJPU the time and energy it requires. The cases related to children are considered ‘soft’ and not as thrilling as the cases of adult crime. Many in the SJPU are ignorant about their role and unaware of the functions of the SJPU. Many do not take the training seriously and often remain absent. Some do not even now the details of Juvenile Justice Act nor are

they aware of the details of the primary policy related to children, the Integrated Child Protection Scheme (ICPS). The investigations are often shoddy because of a lack of personnel and even if a case is resolved, there is rarely a follow up.

The police is often the first interaction any child or young adult has with the state. The need to ensure its sensitisation is thus critical. But how does one expect overworked policemen to clinically carry out these additional duties? Can we expect the passion and empathy needed for this particular role, when there are many other areas of pressing concerns? Essentially, the problems faced by the police as a whole only magnify for the SJPU. The SJPU is additional to the existing responsibilities of an official with no extra salary or incentive. Hence, there is a general apathy towards them. The social worker in the SJPU often handles cases for an entire zone and is physically unable to multi-‐‑task. The other members of the SJPU are neither experts in handling child related cases nor are they trained in child psychology. Regular transfers ensure that the portfolio has no long-‐‑term officer and there is an additional


Such radical changes within the SJPU will however not happen anytime soon. In any case, you can’t fix this problem without fixing the problems bedevelling the whole police.

http://www.un.org/documents/ga/res/40/a40r033.htm




http://dpjju.com/index.php?option=com_content&view=article&id=289&Itemid=247




cost and time in training each new Child Welfare Officer (CWO). Moreover, other issues such as terror, law and order, traffic and crime become the priority of the CWO. The cases related to children consequently face shoddy investigation, with most being handed over to NGOs and social workers. Juvenile justice faces shortfalls, as the empirical approach of professional investigation gets lost. Additionally, the SJPU has no executive powers and is supposed to assist the police with regard to cases related to children, while being responsible for the handling of such cases.

2012 saw an increase of 15.3 percent in crimes against children compared to the previous year. In ten years (2001-‐‑2011) crimes commiDed by children have escalated by 65 percent. At a time when there is increased awareness of cases related to children, a strong and professional SJPU is a necessity. An ideal solution would be to create a separate SJPU, divorced from other functions of the police, with some officials designated only to this unit with others overseeing it. Having a special budget for the SJPU would go a long way in establishing it within the police. Such radical changes within the SJPU will however not happen anytime soon. In any case, you can’t fix this problem without fixing the problems bedevelling the whole police. Positive changes for a robust child protection system are not divorced from changes in

the entire system. While hysteria regarding crimes against children and crimes by children is necessary to generate awareness, the real changes can come only with structural changes to the entire system of policing.

India strives to guarantee economic security for her citizens, from food, education, and employment to healthcare. The need to augment the expenditure on literal security then becomes even more necessary. The implementation of police reforms should be the highest priority because it affects every aspect of citizen welfare. Alongside, there should be an increase in the numbers of police in each state and exclusive officers working on separate designations. The budget for the police and each of its units should be augmented in proportion to the urban realities. The living and working conditions of the personnel should be improved. Investment will have to be made in creating a robust system of investigation along with a separate SJPU. These, among other reforms, will go a long way in creating a system of efficient and organised policing. They may not be the final solution, but they will definitely be a start to the process of reform. Their impact will eventually percolate into the system making the whole policing efficient. Then only will the units such as the SJPU be able to perform the task expected of them in today’s India.




http://ncrb.nic.in/CD-CII2011/Statistics2011.pdf




IN DEPTH PubEcon

MUKUL ASHER and TS GOPI RETHINARAJMukul Asher is Professorial Fellow, Lee Kuan Yew School of Public Policy, National University of Singapore and Councillor, Takhshashila Institution. TS Gopi Rethinaraj is a faculty member at the Lee Kuan Yew School of Public Policy, National University of Singapore, and specialises in energy policy issues.

Winds of changeGujarat’s Wind Power Policy is a good example of commercially viable and internationally compatible energy policy management.

As energy security objective becomes more prominent, renewable energy policies focusing on sources such as solar and wind power, have been receiving increasing aDention of the policymakers and investors. Thus, in 2012, 43 percent of new energy capacity in the United States of America was for wind power alone.

India holds significant potential for renewable energy generation from wind, solar, biomass, small hydro, and cogeneration bagasse from sugar mills. Official estimates of renewable electricity generation potential, barring large hydro, solar thermal, and solar

photovoltaic applications are around 90,000 MW of which wind power’s share alone is about 55 percent.

The installed wind power capacity, however, is only around 19,000 MW, which is about one eighth of the total power generation capacity. More than 95 percent of India’s wind energy development is concentrated in just five states: Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, and Gujarat. While Gujarat’s share in installed wind power capacity is around one sixth of the country’s total, Tamil Nadu will continue to remain the leading state in


ep.Sos.de

http://www.nytimes.com/2013/08/15/business/energy-environment/intermittent-nature-of-green-power-is-challenge-for-utilities.html

http://www.nytimes.com/2013/08/15/business/energy-environment/intermittent-nature-of-green-power-is-challenge-for-utilities.html

http://mospi.nic.in/mospi_new/upload/Energy_Statistics_2013.pdf

http://mospi.nic.in/mospi_new/upload/Energy_Statistics_2013.pdf

http://www.livemint.com/Industry/HzQ1NGtt9kX7MqsJcJPcmO/India-seeks-to-revive-interest-in-wind-sector.html




the medium term with a share exceeding two fifths of the total.

Gujarat, however, has a much greater potential to add wind power generation capacity because of the state’s long coastline and huge tracts of land which is only marginally useful for agriculture, and where population density is low. Wind power potential critically depends on prevailing wind speeds because the power generation from a wind turbine is proportional to the cubic power of wind speed. Gujarat’s uniform wind power potential across the state is a major advantage in terms of flexibility for site selection. In particular, the coastline north of the Gulf of Kutch has the highest potential in the state and therefore represents an aDractive location for wind power installations.

Although India’s annual manufacturing capacity for producing wind turbines is 9500 MW, only 3000 MW of capacity, less than a third, is actually planned to be utilised annually during the 2012-‐‑2017 period. The Global Wind Energy Council has aDributed the modest level of utilisation of both India’s wind manufacturing capacity as well as its resource potential to “… lack of an appropriate regulatory framework to facilitate purchase of renewable energy from outside the host state, inadequate grid connectivity, high wheeling and open access charges in some states, and delays in acquiring land and obtaining statutory clearances.”

For enhancing the share of renewable energy and for beDer commercial viability, initiatives are needed to utilise this additional manufacturing capacity.

Gujarat’s new Wind Power Policy (WPP) launched in 2013 is designed to help achieve the state government’s larger goal to expand and support energy

generation from renewable sources. This is to sustain Gujarat’s domestic and international competitiveness, provide productive livelihoods, and help reduce the energy import bill of the country.

Gujarat’s 2013 WPP has several positive features. These include producers investing in Wind Turbines Generators (WTGs) eligible for incentives for 25 year period, sufficiently long to make investment aDractive. It also has commercially viable provisions for sale of power generated for smart metering, and access to Clean Development Mechanism (CDM) benefits.

The Union government’s Ministry of New and Renewable Energy (MNRO) is considering reintroducing incentives such as accelerated depreciation, which could reduce income tax liabilities and strengthen cash flows, and generation based incentives (GBIs). These may further enhance the commercial viability of wind power and manufactuing of WTGs. This is relevant as the estimates are that capital expenditure of INR 42-‐‑45 million is needed per MW of power


A string of policy measures, both in the form of inducements and forced self-‐‑discipline, have been introduced to encourage efficiency and make renewable energy generation financially viable without government support in the long run.

http://www.gwec.net/wp-content/uploads/2012/11/India-Wind-Energy-Outlook-2012.pdf




generated through coal-‐‑based or gas-‐‑based projects; while wind based projects require INR 60 million per MW.

Since coastline from Maharashtra to Kerala appears less aDractive for wind power, Gujarat has the opportunity to advance national interest by establishing a renewable energy corridor to trade any surplus wind power generation with neighbouring states. Because of the intermiDent nature of wind power generation, investment in generation should also be complemented by comparable transmission and distribution infrastructure upgrades that allow smart metering and flexibility for consumers to use different sources of electricity. In India’s federal polity, union government also has the responsibility to ensure that its regulatory and incentive regimes provide necessary flexibility to the states, ensuring commercial viability and efficient allocation of power. As an example, making it difficult for interstate sale of wind power even in border areas is counterproductive.

Gujarat’s new Wind Energy Policy permits utilities to sell electricity generated from wind turbines to the state electricity board as well as private companies having license for electricity

distribution. By way of supporting its renewable energy policy, the state has also exempted generating utilities from paying mandatory electricity duty. A string of policy measures, both in the form of inducements and forced self-‐‑discipline, have been introduced to encourage efficiency and make renewable energy generation financially viable without government support in the long run. Besides adding a credible renewable energy portfolio, the initiatives also have the potential for new businesses and job creation in the sector. To avoid the problems of displacement of people, the state is mainly focusing on the vast tracts of barren land for wind energy projects.

To conclude, Gujarat’s Wind Power Policy (WPP) is a good example of the competent, commercially viable, and internationally compatible energy policy management, while being consistent with India’s national objective of enhancing reliance on renewable sources of energy. The 2013 WPP will also help Gujarat in maintaining domestic and international competitiveness, and further its reputation as a well-‐‑governed and state with high broad-‐‑based economic growth in the Indian Union.


IN DEPTH Bleeding Heart

ANANTHA NAGESWARANV Anantha Nageswaran is the Fellow for Geo-economics at the Takshashila Institution.

It is the fiscal policy, stupidFiscal deficits, fiscal dominance and the resultant financial repression are the two principal factors behind India’s current economic malaise.

In the last week of August, the Government of India announced that the growth rate of the Indian economy in real terms slowed to 4.4 percent (y/y) in the second quarter (April – June) of 2013. Measured as other countries do, the growth rate was actually 2.5 percent (Figure 1). Without prolific government spending that India is burdened with, the growth rate would have been 1.4 percent. The blame game had to begin.

In an interesting Op-‐‑Ed, Dr Surjit Bhalla blamed high real interest rates in India

for the growth slowdown. According to him, real rates in India were too high, if one looked at the GDP deflator. Yes, the Gross Domestic Product (GDP) Deflator (the index of prices that is used to convert nominal into real values at some constant prices) was only 5.8 percent at the end of Q2. However, the annual increase in the consumer price index (CPI) is around 9.8 percent. The difference is due to the weight of food. In the former, it is around 20 percent . In the laDer, it is 50 percent. But, core CPI


Niklas Morberg

http://http/www.indianexpress.com/news/its-the-interest-rate-stupid/1162438/0

http://http/www.indianexpress.com/news/its-the-interest-rate-stupid/1162438/0

inflation, excluding food and energy is 8.2 percent. India’s wholesale price inflation is 5.8 percent. Non-‐‑food manufacturing inflation per the Wholesale Price Index (WPI) is around 2.4 percent. So, the menu is varied and we can pick the inflation rate we like, to make the argument we wish to make.

Before we get to the issue of whether real rates are too high and hence choking India’s gross fixed capital formation, we must quote the most colourful paragraph of his piece that we wholeheartedly agree with:

UPA 2 regime has been responsible for possibly the worst fiscal policy that India has endured, and I would hazard a guess that outside of Venezuela, possibly the worst fiscal policy of any modern economy. And the nightmare just does not end. We have just witnessed the passage of two more populist bills, bills of a kind that would

have severely embarrassed, had he been alive, the last of the great populists, Hugo Chavez of Venezuela.

Then, he goes on to question monetary policy too. Dr Subbarao, the outgoing RBI Governor has been criticised for having tightened monetary policy too

late in 2009 10. He has accepted the criticism. But, Mr Bhalla criticises him for having tightened too much!

If one looked at the real rate of interest (Prime Lending Rate – GDP deflator), it had shot up only in the last quarter. Otherwise, it was low too and hovered around its long-‐‑term average of 6.25 percent. I have used data from 1997Q2 until 2013Q2. Post-‐‑crisis, for at least for two full years, the real rate remained well below its long-‐‑term average (2009 Q3 to 2011 Q3). However, real gross fixed capital formation (GFCF) had peaked in 2010Q1 and had dropped to


Figure 1: India’s real GDP growth slows to 2.5 percent in the second quarter of 2013.

4.2 percent (y/y) in 2011Q3, well before real prime lending rate began climbing above its long-‐‑term average.

Interestingly, if one looked at contemporaneous correlation or correlation lagged up to four quarters, real GFCF and real prime lending rate are not correlated at all, except for contemporaneous correlation at -‐‑0.49. The nominal prime lending rate and real GFCF show far beDer correlation, even up to 4-‐‑quarter lags. The same holds true for nominal prime lending rate and nominal GFCF. The correlation has the expected negative sign.

No surprises there. We agree that interest rates maDer for economic growth through capital formation. The question is whether monetary policy was the culprit for high nominal and real rates of interest. That is where I differ completely with Dr Bhalla.

The correlation between the prime lending rate and the policy rate (repo rate) is rather low. It is about 27 percent at best. Using monthly data, I calculate the correlation up to six month lag. That is, the repo rate is lagged up to six months to see the delayed impact, if any, on the prime lending rate. There was none. If anything, the correlation drops. The data I had goes from the year 2000 (March) to the year 2013 (August). (I did not run any regression since a reduced form model is not the best way to calculate the impacts from lending rate to capital formation and from policy rate to lending rate because one has to control for other factors that impact both).

One should hazard a guess that the rise in the prime lending rate and its persistence at a high level despite the policy rate having come down by 125

basis points in the last one year suggests that the problem lies somewhere else.

Let us recall Dr Subbarao’s last speech: Yes, growth has moderated, but to aDribute all of that moderation to tight monetary policy would be inaccurate, unfair, and importantly, misleading as a policy lesson. India’s economic activity slowed owing to a host of supply side constraints and governance issues, clearly beyond the purview of the Reserve Bank. If the Reserve Bank’s repo rate was the only factor inhibiting growth, growth should have responded to our rate cuts of 125 bps between April 2012 and May 2013, CRR cut of 200 bps and open market operations (OMOs) of INR1.5 trillion last year.

The real culprit is the big spender – the Government of India. It has denied the corporate sector resources to invest, created tightness in liquidity and, not to be left out, place a lot of other obstacles on investment activity through its hyper-‐‑activism on the environmental front, on the tax front and through retrospective cancellation of licenses. Basically, the government did not view business as a partner for economic growth but as an adversary.

Savour this information: The size of the government’s net market borrowing programme (dated securities) increased nearly 9.7 times in eight years to INR4.9 trillion in 2012-‐‑13. In addition, the government resorted to an additional funding of INR1.16 trillion through 364-‐‑ day treasury bills. (Source: Chapter 3 of the RBI Report on Currency and Finance 2009-‐‑2012)

I ended up reading this chapter thanks to a crisp blog post by Gavyn Davies in the Financial Timesbased on this chapter. The title of his post says that India needs


http://blogs.ft.com/gavyndavies/2013/09/01/india-needs-to-end-fiscal-dominance-over-the-central-bank/

http://blogs.ft.com/gavyndavies/2013/09/01/india-needs-to-end-fiscal-dominance-over-the-central-bank/

to end fiscal dominance over the central bank. That sums up everything.

What is fiscal dominance (of monetary policy)?

Loosely, it is the influence or distortion that a large fiscal deficit of the government exerts on the conduct of the monetary policy by the Central Bank. Just to make it clear, fiscal policy refers to taxation and spending policies of the elected (or otherwise) government. Monetary policy deals with issues relating to interest rates and money supply that are in the domain of the Central Bank of the country.

According to the Chapter 3 cited above, Fiscal dominance of monetary policy goes beyond the monetisation issue. It occurs in several forms. Large fiscal deficits have inflationary consequences even when they are not financed by the Central Bank. For instance, suppressed inflation remains a significant drag on inflation management even after the government has taken some steps to deregulate administered prices in the energy sector. At the first stage, suppressed inflation feeds into inflation as the subsidies necessitated by the price rigidity widen the fiscal deficit. At the second stage, as subsidies become unsustainable, they sooner or later necessitate large discrete price adjustment that feeds into inflation expectations. At the current juncture, if prices are adjusted in one go to remove

total under-‐‑recovery of the oil marketing companies and prices of coal and electricity are adjusted upwards by a moderate 10 per cent each, the direct impact would increase wholesale price index (WPI) by 4 percent. This suggests the persistence of fiscal dominance of monetary policy.

In terms of the Fiscal Theory of Price Level (FTPL), fiscal dominance occurs in a weak or a strong form. In the weak form, fiscal dominance occurs when money growth rises to accommodate fiscal deficit and so exerts upward pressure on inflation. In the strong form, even if the level of money supply does not change in response to the fiscal gap, the laDer independently raises the level of inflation because of its impact through aggregate demand. The weak form suggests that a central bank cannot target inflation because it cannot control money supply under the fiscal dominance. The strong form implies that inflation is not necessarily a monetary phenomenon and fiscal policy instead drives inflation.

A substantial portion of government debt has ended up in the books of the RBI, eventually, even if it is no longer buying them in the primary market. That is the most direct form of fiscal dominance. What would be the benchmark interest rate on government borrowings if RBI had not conducted Open Market Operations to the extent it did, buying government debt in the market or if the Statutory Liquidity Ratio was not at 25 percent but a lot lower? How would lower policy rates have helped? If anything, it would have dented credibility of the Central Bank to lower rates when fiscal policy has remained reckless. No economist should commit the folly of recommending a


The question is whether monetary policy was the culprit for high nominal and real rates of interest.

loose monetary policy to go along with reckless fiscal policy. Remember that the core CPI inflation rate is still 8.2 percent.

Given, as Dr Bhalla has wriDen, that India has the worst fiscal policy outside of Venezuela, what is the fair compensation on Indian government debt? Should it have been 7 percent that prevailed until recently? Had the government debt been priced fairly in a proper market, where would other lending rates have been? Private market interest rates would have been much higher, with or without the central bank tightening monetary policy. Fiscal populism and fiscal cronyism of the last nine years lie at the root of India’s present economic (and other) woes.

In fact, in a show of restrained candour, the aforementioned chapter has this to say on the fiscal roadmap unveiled last summer/autumn: The road map does not sufficiently address the issue of quality of fiscal consolidation. There has been over-‐‑dependence on non-‐‑durable resources of revenue, inadequate pruning of subsidies and undesirable reduction in capital spending as part of this fiscal consolidation strategy.

Whether or not RBI monetary policy is effective against structural drivers of food inflation, what would have been the incentive for Indian savers to keep money in Indian banks had the rates been lowered? Already, they are voting with their feet buying gold since the real value of their savings is being eroded daily. By cuDing interest rates as Dr Bhalla advocates, if RBI had rendered the real return on such savings more negative (remember even if the GDP deflator is around 5.8 percent, the consumer price inflation rate is now 9.8 percent and that is the inflation rate

households face), what would have happened to bank savings deposits? Would they not have rushed for the exit and into gold?

The tight liquidity faced by the market thanks to the colossal increase in government borrowings in the last eight years would have become even tighter, forcing the RBI to conduct more OMOs and provide more liquidity and generate more inflation in the process. One cannot imagine a surer method than this to lose the confidence of the domestic population and foreign investors.

If there is a counter-‐‑argument that lower rates would have set in motion a virtuous circle of higher capital formation, higher growth, higher stock market returns and hence resulting in diminished need to seek gold, all that one has to do is an honest reality check of such a scenario emerging under this government.

Let me quote what Mr Ratan Tata said few days ago: “The government has issued policy which vested interests, quite often in private sector have changed, delayed or manipulated that policy. So, for one reason or the other, the government has swayed with those forces,” Tata said.

Yes, India could have enjoyed lower inflation, lower interest rates and higher economic growth but the blame for preventing India from experiencing these has to be on a government that increased its borrowing at an annual rate of 33 percent for eight years. Fiscal deficits, fiscal dominance and the resultant financial repression are the two principal factors behind India’s current economic malaise.


http://articles.economictimes.indiatimes.com/2013-08-28/news/41538662_1_tata-group-chairman-ratan-tata-1991-reforms

http://articles.economictimes.indiatimes.com/2013-08-28/news/41538662_1_tata-group-chairman-ratan-tata-1991-reforms

INFOGRAPHICPAVAN SRINATHPavan Srinath is the Policy Research Manager at the Takshashila Institution.


BOOKS

KARTHIK SHASHIDHARKarthik Shashidhar is the Resident Quant at the Takshashila Institution.

Antifragile policy prescriptionsNassim Nicholas Taleb’s Antifragile.

An intriguing point that Nassim Nicholas Taleb made in his earlier book, The Black Swan was that countries like Italy, India or Japan are more likely to be politically stable in the long run compared to seemingly stable regimes such as Saudi Arabia or China. He aDributed it to the constant low-‐‑level political uncertainty seen in the former set of countries, which makes them ‘robust’ in handling bigger shocks. Countries in the laDer set however are fooled by an apparent lack of uncertainty and are likely to implode when faced with larger uncertainties.

While The Black Swan was published in 2007, we have seen this story being played out over the last three years as part of the Arab Spring. One after another, authoritarian regimes in the Middle East and North Africa continue to display varying degrees of ineptitude in handling new-‐‑found political uncertainty. While Tunisia looks like it has made a transition to a democracy, ‘mess’ and ‘chaos’ are understatements to describe the situation in Egypt and Syria.

Meanwhile, Taleb has moved on. He is not interested in mere ‘robustness’ any more. His latest book Antifragile is about systems that grow stronger with uncertainty, systems he terms ‘antifragile’. He was forced to invent the word since there was no existing word in English that described this phenomenon.

In Antifragile, Taleb classifies all systems into three categories – fragile, robust and anti-‐‑fragile. Fragile systems are those which get negatively affected by volatility while robust systems are inert to volatility. The most interesting category is that of antifragile systems which are actually helped by volatility.

National governments, as described earlier, are good examples of antifragile institutions. The lack of mild shocks from time to time can lull the government into complacency and lead to chaos when a large shock arrives. Periodic small perturbations, however, lead to institutional knowledge on how to deal with uncertainty, and even when faced with massive disruption, such as the assassination of a Prime Minister or


the unearthing of a major scandal, the system continues to thrive.

An interesting concept Taleb talks about is that antifragility is not self-‐‑similar, that is, individual components of an antifragile systems need not be antifragile. For example, consider a group of restaurants in a town. Each restaurant is exposed to the vagaries of market forces, and is hence fragile to disruption. This very property of the restaurants, however, makes the entire system of restaurants antifragile. When a bad restaurant fails, the average quality of the remaining restaurants goes up. More importantly, in a system such as this, surviving restaurants learn from the mistakes of those that have failed.

On similar lines, Taleb talks about nations of city-‐‑states being more antifragile than nation states, taking the examples of ancient Greece and modern Swiyerland to illustrate his point. When city-‐‑states make bad policies, they will go down, but the scale of damage is limited. Other city-‐‑states learn from the errors of the failed city-‐‑state and make sure they don’t repeat the errors. That way, the nation on the whole prospers beDer than in a centralised system.

One obvious policy outcome from this is that of greater decentralisation and federalism. With a centralised system, there is liDle room for experimentation of policy ideas. If you try something and it goes bad, the entire country suffers, and we know that certain decisions are hard to roll back. If, in contrast, we have a high degree of decentralisation, then certain parts of the country can try out certain ideas, and the damage (if any) will be limited to those parts.

In her recent piece in Pragati, Hemal Shah argued that one way to usher

labour reforms is by making labour a state subject. It is an antifragile prescription. Currently there is no way for us to test if liberalisation of labour laws is desirable, and if yes, to what extent. If labour were a state subject, different states could try out their own versions in liberalising the law. Soon there will be a natural experiment which will throw up a version that is superior to the others, and the rest of the country can then emulate that. And if you think that a state is too large a unit for such experimentation, the answer is greater federalism.

Another significant policy implication of Antifragility is that large corporations are bad for the system. Forget the profit motive, forget monopoly power. Large corporations are bad simply because they are fragile. When an industry is dominated by a handful of operators, the collapse of any one of them is going to lead to horrible consequences for the entire industry. Imagine there is a single company that supplies turbines to India’s upcoming power projects. For whatever reason (let’s say an accounting scandal), if that company collapses, it will jeopardise the entire electricity


An interesting concept Taleb talks about is that antifragility is not self-‐‑similar, that is, individual components of an antifragile systems need not be antifragile.

http://pragati.nationalinterest.in/2013/08/labour-restrictions-breaking-six-decades-of-deadlock/).

http://pragati.nationalinterest.in/2013/08/labour-restrictions-breaking-six-decades-of-deadlock/).

capacity expansion programme. But if there are ten suppliers of turbines, one of them going bust would strengthen the rest of the industry, without much disruption to its customers.

Imagine, for example, if the international investment banking system had a hundred banks, rather than less than ten major banks. With a hundred banks, the amount that each bank owed the other would be small compared to the overall size of the banks, and thus the failure of one bank would not put too much risk to the rest of the ecosystem. As it happened, the US government had to bail out a number of banks, which led to further fragility in the system. Armed with the knowledge that the larger they are, the more likely they are to be bailed out, nothing prevents banks from growing even larger, owing each other even larger amounts and puDing the entire system at risk.

This applies to countries as well. The theory of comparative advantage, when applied in a textbook fashion, can also lead to fragility. Let us assume, that Scotland has a world monopoly over the supply of Scotch Whiskey. Now if for some reason, all its distilleries are destroyed, the entire scotch supply would abruptly cease. Even if in the short run Scotland were significantly superior to other nations in Scotch manufacture, it would be helpful to retain other sources (however

inefficient) as they help mitigate risk. Unfortunately supply of goods such as petroleum is dictated by natural factors and such diversification is not possible. Hence we witness a sharp rise in prices of petroleum every time there is uncertainty in the Middle East.

Then there is the issue of entrepreneurship, which plays a major role in economic development. Taleb blames the saturation of the Japanese economy on the country’s risk-‐‑averse culture, where failure is not accepted and failed entrepreneurs are socially ostracised. Taleb argues that to encourage risk-‐‑taking, we need to foster a culture where it is okay to take risk and fail and to provide a safety net for such failed entrepreneurs. In India, business is traditionally done by people belonging to business families, who have family wealth backing them in case of a failure.

However, if we have to broaden the base of people who want to take risk and start businesses, we will need to create systems that lead to broader safety nets. Taleb holds up Silicon Valley as an example of an antifragile economic ecosystem that has thrived.

The book is long and often repetetive. Taleb’s writing style is not simple and he can come across as being pompous. However, once you get started, it rewards you with nuggets of important policy prescriptions—only a few of which have been included here.


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