Posted by: John Elliott | December 8, 2013

India state elections demand political change without the Congress

India is tired of the Congress Party and its dominant Nehru-Gandhi dynasty and will demand sweeping changes in the general election that is due to be held in just over four months’ time. It may not however just want a switch between the established Congress and the Bharatiya Janata (BJP) parties, but could demand something new in politics that will tackle the country’s endemic corruption, crony capitalism and inefficient government.

Arvind K IMG_0559That is the conclusion that can be drawn from election results today for four state assemblies. A completely new anti-corruption party, the Aam Aadmi (common man), won an astonishing 28 of the 70 seats in Delhi, which will make it the official opposition. Congress was decimated after 15 years’ rule,  winning just eight seats compared with 43 in the last election in 2008 – a humiliating result that was far worse than had been expected.

Congress also suffered a resounding defeat by the BJP in Rajasthan, down from 96 seats to 21 after five years in government. The BJP held on to power against Congress in Madhya Pradesh and Chhattisgarh. Vote counting in a fifth state, Mizoram in north-east India, is taking place tomorrow and could provide Congress with a victory.

The Aam Admi Party’s victory is significant because it demonstrates a desire for change and a break with the corruption and mismanagement of recent years. Its social activist-turned politician leader, Arvind Kejriwal (above), talks about a new sort of politics, and the party’s election symbol is appropriately a broom. Focussing on local as well as state-level issues, the party produced individual manifestos for each of Delhi’s 30 assembly constituencies as well as one for the state as a whole.

In recent months, Narendra Modi, the controversial chief minister of Gujarat and the Hindu-nationalist BJP’s prime ministerial candidate, has been campaigning rumbustiously around the country promising to provide the new style of efficient and clean government that India needs at a time of high inflation and relatively low economic growth and high inflation.

Rahul Sonia IMG_0558That campaigning pitch is now being challenged by Kejriwal’s party, which is offering a far more radical fresh start and style than Modi. How far it can extend beyond Delhi, where its anti-corruption campaign has been focussed, is open to question. It says it has active organisations in 22 of India’s 28 states, but it will be stretched to do well in many of them.

It will also face competition that does not exist in Delhi from established regional parties based on caste and other factors. In Delhi, it will have to show that it can transform itself from an anti-corruption movement into a working political party and play a meaningful role as the assembly’s main opposition, once a new government has been installed (this is delayed because the BJP, which led in the polls with 32 seats does not have a clear majority).

The results mean that Congress and the Nehru-Gandhis are facing a massive defeat – indeed rejection – in the general election. National polls do not necessarily reflect local results, but the scale of today’s defeats does seem to indicate what will happen next year when seen against the background of the national mood of despair about the current Congress-led United Progressive Alliance coalition.

This is a disastrous setback for Rahul Gandhi, heir to the party’s leadership who, once again, has failed to move voters despite extensive campaigning. He has had earlier personal leadership failures in Uttar Pradesh and Bihar state polls. He is a reluctant politician, who gives mixed messages. On the one hand he talks about reforming his party so that new leaders emerge from the grassroots, while at the same time, along with his mother Sonia and sister Priyanka, behaving as though he and they have a dynastic right to rule. It is that right that is now being rejected.

Delhi constituency voting list where Kejriwal (with his broom election symbol) defeated Dikshit (with the hand)

Delhi constituency voting list – Kejriwal (with his broom election symbol) defeated Dikshit (with the hand)

Rahul’s grass-roots ideas could  provide a credible answer to the Aam Admi, but he has not so far been able to achieve change in a party that is riven with crony patronage-oriented organisation and relationships. Speaking after Congress’s defeat this evening (seen above with Sonia), he told reporters in Delhi that political parties were “not giving adequate voice to the man in the street… and it is our job to do that”. He said that he would put all his efforts to ‘transforming the organisation of the Congress Party” and would now push those changes “aggressively”. Political analysts believe that, though he will do what he can before next year’s polls, his target is to make changes by the following general election.

Who will win next year cannot yet be forecast. It could be a BJP-led coalition led by Modi, though that will depend on the BJP winning sufficient seats in India’s northern states to persuade regional parties to join a coalition led by him. Or it could be a muddled coalition supported but not led by either the BJP or possibly the Congress. That is the best that the Gandhis’ party can hope for, but it would not be good for the country which needs strong economic and developmental leadership.

Although the BJP won in the four states, it did not have the resounding victory it had hoped for because of the Aam Aadmi’ s emergence in Delhi and a close-run contest with Congress in Chhattisgarh. There will now be arguments about how much Modi contributed to the successes, or whether they were due to strong chief ministerial candidates in Rajasthan, Madhya Pradesh and Chhattisgarh.

Sheila Dikshit, 71, who has been the chief minister of Delhi for the past 15 years, suffered the day’s biggest defeat because she lost her own central-Delhi assembly seat to Kejriwal, as well as losing the assembly to the BJP. She has generally tried to evade responsibility for Delhi’s significant problems in the past five years, deflecting criticism of the appalling and corrupt preparations for the Commonwealth Games in 2010 and continuing inadequate water and electricity supplies. She also blamed the police during a rape case a year ago that aroused international as well as national outrage. She is identified with the Gandhi family.

The state elections were pitched in the media as a contest between Rahul Gandhi and Modi, but Arvind Kejriwal, the outsider, has emerged as the winner with Rahul as the loser. Rahul is 43 and Kejriwal is 45 – if both have the staying power, one to transform his party and the other to build a new one, they could maybe begin the political change that India needs. Both have a huge task and could be overwhelmed by the entrenched political establishment but they have time on their side which Modi, aged 63, does not.

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Posted in Delhi, India, India corruption, India general election, India politicians, India states, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , , , ,

Posted by: John Elliott | October 14, 2013

Odisha’s cyclone shows India can handle disasters but longer-term action is needed

When a massive cyclone hit the eastern Indian state of Odisha (Orissa) at the end of October 1999, at least four district officials abandoned their posts in panic or rushed to their homes, and the chief secretary flew on a private visit to the US a few days later. Some 10,000 people were killed as a result of inefficient administration and a lack of preparation, together with inaccurate weather forecasts and a chief minister who was reportedly told by his astrologers that the cyclone would not be serious. That was typical of the lack of responsibility and preparedness, plus trust in the stars and a belief that everything will work out ok, which accounts for many of India’s dreadful disasters.

Villagers returning home - PTI photo

Villagers returning home – PTI photo

As a result of lessons learned in 1999, Odisha successfully protected human life from a serious cyclone that crossed the Bay of Bengal and hit the coast on Saturday night at more than 200kms an hour.

Some 950,000 people were evacuated from the area in the previous few days, and fewer than 25 people are believed to have been killed, even though fishing villages, homes, ports, and farming areas were devastated.

National and state level disaster management and other services worked well, and the country’s meteorological department accurately predicted Cyclone Phailin’s strength and focus area, dismissing criticisms from American experts who alleged that the storm could have been as serious as New Orleans’ Hurricane Katrina in 2005.

Odisha is generally known for being sleepy and ineffectual, but it has shown what can be achieved when someone takes charge with determination to succeed and forces officials and state politicians to carry out their duties. This runs counter to India’s record of badly handled natural disasters – seen most recently in the Himalayan state of Uttarakhand where environmental degradation and an indifferent state government led in June to more than 6,000 deaths after devastating floods. In another disaster yesterday, more than 120 pilgrims were killed during a stampede in Madhya Pradesh at a river where 50 people were killed during the same religious festivities in 2006.

Odisha’s evacuation plans were drawn up in time and infrastructure that was missing in 1999 such as cyclone shelters, satellite telephones and trained rescue staff had been prepared. This was backed up by effective national disaster management arrangements and modern weather forecasting and monitoring technology.

Naveen Patnaik Oct 13 '13Naveen Patnaik, Odisha’s chief minister (right) who presided over the activity, was elected a few months after the 1999 disaster by a state that wanted change. He had been a dilettante international socialite and author (mixing abroad with people such as Mick Jagger and Jacqueline Onassis, who had been his editor at Doubleday, his publishers) until he fell unexpectedly into politics a few years earlier. That  followed the death of his father, who had also been chief minister.

He now lives a semi-reclusive lifestyle in Odisha, relying on a few close advisers and cronies, and has managed to retain a “clean” image despite the state’s widespread corrupt and illegal mining.

Not enough has been done however to protect the coasts of Odisha and the neighbouring state of Andhra Pradesh that was also hit by Phailin – and there is now a risk of widespread floods. A report on the Wall Street Journal’s blog site suggests that they have failed effectively to implement a Rs14.9bn (about $240m) five-year cyclone disaster management programme that was set up in 2009 after a massive tsunami killed more than 15,000 people on India’s east coast in 2004. Recent government reports (see the project’s website) suggest that the programme is far behind schedule, especially in Andhra Pradesh where the government has been wracked by political crises over deep-rooted corruption and plans to split the state in two.

Patnaik now needs to ensure that his state-level politicians and officials continue to work effectively and honestly on relief, rehabilitation and stronger coastal defences. If he succeeds, he could be re-elected for a record-breaking fourth term in state assembly elections due next year. This will test his ability as a political manager because the usual reaction in India after such a success is to relax and let life takes its course. Moving nearly a million people in a few days was a massive task, but maintaining focus, and ensuring continuity of efficient and clean government, will be much more difficult over the longer term.

before the storm - AP photo

before the storm – AP photo

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Posted in India, India politicians, Odisha (Orissa) | Tags: ,

Posted by: John Elliott | October 3, 2013

Rahul Gandhi stops a ‘small compromise’ on Lalu Yadav, but does he have the stamina to be a leader?

The past week will be seen as a milestone in Indian history. Lalu Prasad Yadav, one of the most famously corrupt and once-powerful regional politicians, is losing his Lok Sabha parliamentary seat after today being sentenced to jail for massive embezzlement. This followed an astonishing public outburst last Friday by Rahul Gandhi, heir apparent to the leadership of the Congress Party and the prime minister’s post, who opposed a government move to protect the regional power broker.

Rahul Gandhi watched byAjay Maken, a Congress gen secy, last Friday

Rahul Gandhi denouncing the ordnance, watched by Ajay Maken, a Congress Party general  secretary

Three questions arise from these two events. The first is the extent to which Gandhi was defying not just prime minister Manmohan Singh but also his mother, Sonia Gandhi, the Congress leader, and Ahmed Patel, her closest adviser and political manager, when he burst into a party press conference on Friday and denounced a government ordnance that would have protected Yadav as “complete nonsense”. The ordnance should, he said, “be torn up and thrown out“. Today he added: “My mother told me that the words that I used were strong. In hindsight, I feel maybe my words were wrong…but the sentiment I felt was not wrong”.

The second is whether Rahul is capable of following up his highly commendable though equally controversial act of political guerrilla warfare with more sustainable moves to clean up the country’s politics and governance – or are his drive and behaviour too erratic and unpredictable for him to be capable of continuity? Often in the past he has dived into situations and controversies but then not followed them up, disappearing from public view for days and weeks. Currently he is campaigning around the country for coming elections.

Lalu YadavThe third is whether Yadav’s (left) sentencing today is just a one-off, or will legal action against politicians with high-level connections in notable cases such as 2G telecoms and the Commonwealth Games now be pursued so that they too go to jail without protection from the top of the government and Congress Party.  Another Congress politician, Rasheed Masood, was on Tuesday sentenced to four years in jail, and will lose his Rajya Sabha seat, after being convicted of fraudulently nominating undeserving candidates to medical colleges while he was health minister in a 1990 government.

The most significant remark made by Rahul last Friday was that “if we want to fight corruption in this country, whether it’s us, the Congress Party, or the BJP, we cannot continue making these small compromises because, when we make these small compromises, we compromise everything”.  This meant that he considered his mother and her advisers, and the cabinet, had gone too far with such compromises when they decided to protect Yadav by introducing the ordinance quickly before a verdict on his corruption case was announced on Monday.

Criminalisation of politics

For decades, politics and the maintenance of political power has provided an excuse and a cover for the gradual criminalisation of politicsto such an extent 30% of the members of parliament elected in 2009 had criminal charges pending against them, half of them for serious offences such as rape, murder, kidnapping and corruption. The roles of democracy, governance and institutions, which were lauded 20 to 30 years ago as India’s special strengths, have been progressively undermined and replaced by arbitrary powers wielded, often corruptly, by individuals, be they ministers, bureaucrats, policemen, or regional politicians.

Rahul Gandhi seems to understand this and wants to make changes, unlike his mother and Manmohan Singh who have presided over a highly corrupt ruling party and government and have made “small compromises” such as keeping corrupt politicians in the cabinet so that their parties would continue to support the coalition government.

What is not clear is how far Rahul had or had not tried to make his opposition known while the bill and the ordinance were being considered, nor whether he was ignored by his mother and her advisers. Also not clear is what it was last Friday afternoon that propelled him into the undignified action of using his authority as vice president of the Congress Party to invade a party press conference and condemn a cabinet decision – while the prime minister was in Washington, about to meet President Obama. Also curious is the fact that President Mukherjee was receiving complaints about the ordinance and was, it is assumed, wondering whether to block it at just the time that Rahul spoke out.

Fodder scam

Yadav and 45 others including senior bureaucrats and politicians were convicted this week of embezzling Rs9.5bn (now approx $150m or £94m) that should have been spent on buying cattle fodder when he was the state of Bihar’s chief minister in the mid-1990s at the head of the Rashtriya Janata Dal party. Yadav only promoted his own Yadav backward caste, and he mis-ruled the state for 15 years with his wife Rabri Devi (she took over the chief minister’s post when he went briefly to prison early in the case). The court – located in Ranchi, capital of the state of Jharkhand that used to be part of Bihar – today also ordered Yadav to pay a fine of Rs2.5m.

The case has dragged on through the courts for years, but became politically sensitive when the supreme court ruled in July that members of parliament convicted of crimes would no longer be able to retain their seats while they appealed – a process that can take many years in India’s clogged and manipulated judicial system.

Sonia Gandhi has been fond of Yadav, 65, since he supported her in her early days in politics, and he has been part of her Congress-led coalition, serving as railways ministers in the 2004-09 government. She and the party now wanted to help Yadav because it might need his party’s support in forming a coalition after next year’s general election. So the government acted, within the constitution, when it tabled a bill in parliament that would have overturned the supreme court judgement. But this aroused widespread public opposition – and Rahul’s ire – when the cabinet decided on September 24 to implement the change immediately with an ordinance while parliament was in recess.

If Rahul is up to it, the events of the past week could transform his lacklustre political career which has been based till now solely on his dynasty inheritance. Now he has used dynastic authority for the first time to do what he and a large mass of public opinion thought was right on a major issue. The question now is whether he can and will build on that success.

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Posted in India, India corruption, India general election, India politicians, Manmohan Singh, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , ,

Posted by: John Elliott | September 14, 2013

Narendra Modi steps into national political vacuum

modi1_jpg_1583447gIf Narendra Modi, the controversial Bharatiya Janata Party chief minister of Gujarat becomes India’s next prime minister, it will be because Sonia and Rahul Gandhi, together with their prime minister, Manmohan Singh, have left such a leadership vacuum at the end of nine years of increasingly ineffectual government that India is willing to take a gamble on a feared politician.

It will also be because the BJP’s national leaders have failed so dismally in the nine years to form any sort of coherent political opposition, and instead have led a gaggle of chronic disruption in parliament, that is was easy for Modi to step in.

Modi, who will be 63 next week, was anointed yesterday (right) by the BJP as its prime ministerial candidate in almost presidential style after he had spent months travelling around the country advertising his leadership qualities at public meetings.

He is India’s first new national leader to emerge since the 1980s, and he would almost be a shoe-in for the post of prime minister if it were not for the baggage that he carries of Gujarat’s Godhra riots in 2002, when more than 2,000 people are believed to have been killed, with 12,000 Muslims losing their homes. He has support in urban India, especially from the corporate sector, and he now has to widen the BJP’s electoral base across the country, and rebuild it in the crucial state of Uttar Pradesh. Then, if the BJP does well in the polls, he will have to prove amenable enough to attract other parties into a coalition. Neither task will be easy.

This means that neither of India’s two leading prime ministerial candidates for next year’s general election is ideal. Both of them, in very different ways, arouse either strong opposition or despair and, of course, the next prime minister might come from another party.

The other leading candidate is Rahul Gandhi, who the Congress Party does not seem to dare officially to name formally, probably in case he does not shape up during the coming months, or because he or Sonia Gandhi could nominate someone else, as happened in 2004. Leading Congress ministers are however talking about him as the prime ministerial candidate, and say they would be willing to serve under him – providing Congress gets enough seats to be able to lead a coalition government and virtually dictate who should be prime minister.

rahul-gandhi-287x300Neither Modi nor Gandhi is ideal because Modi is a divisive Hindu nationalist who, on his past record, could create fear and social unrest, though he has earned his new position by providing himself a capable politician and administrator.

Gandhi has no administrative experience, shies away from his public role, and rarely if ever speaks in parliament. He would not be in the running for any significant political post if he were not the son, grandson, and great-grand son of previous prime ministers Rajiv Gandhi, Indira Gandhi and Jawaharlal Nehru, and if he had not been chosen as her heir apparent by Sonia Gandhi, the current Congress leader and Rajiv’s widow.

I first wrote about after Modi’s national leadership qualities in July 2002, for a column in the Business Standard  after the Gujarat riots. I had been away in the UK and felt on my return that, while condemning the appalling massacre and Modi’s reported role, India had a new potential national leader. “Unlike most politicians, the Gujarat chief minister was arguing passionately for what he believed in, not for some short-term personal gain far removed from policy, but out of conviction,” I wrote. He was a strong public speaker and was standing his ground and presenting his case with rare confidence, force and élan. Whether one liked it or not, he had a commanding presence and looked like a logical heir to the BJP leadership.

Friends and contacts told me that I was wrong, and asked how a man who had presided in the state as chief minister during such ghastly bloody carnage could ever win popular respect and a wide following. Weren’t Gujarat’s people tiring of the violence, and wasn’t he in fact already finished, just waiting to be edged out of his job? The BJP, I was told, could not survive as a national party of government if he became one of its top leaders because it would be shunned by coalition partners. Yet, since then, he has led the BJP to re-election three times in successive five-yearly state assembly polls. I have written in similar terms on this blog three or four times in recent years and, each time, am met with incredulity that Modi could even become the BJP prime ministerial candidate.

Modi and mother - RediffHe comes from a poor low caste (Other Backward Caste or OBC), which could be an electoral asset if he can moderate his style. As a boy, he worked on a tea stall at a railway terminus in Gujarat till he became a political activist in the Rashtriya Swayamsevak Sangh (RSS) or National Association of Volunteers, the BJP’s hard-line parent organisation that was behind his anointing yesterday. That is a dramatically different social background from the patrician Gandhi dynasty. (Modi, right, with his mother)

In his campaign, Modi will attack the rampant corruption and bad governance of the Congress government, and stress the need for development and economic growth, as well as projecting the BJP’s basic Hindu nationalist line. Gandhi and the Congress will argue that the current government has worked well for the poor and implemented liberal polices such as the right to information, a rural employment guarantee scheme, a national food security programme, and land acquisition reforms. It will also stress its role in uniting India’s diverse communities and cultures.

It looks now as if lack of faith in Rahul Gandhi will drive voters to support the BJP, and that fear of Modi will drive others to vote for Congress. Both men could change those perceptions in the coming five months. Modi could soften his image and appear less divisive and more accommodating to the needs of the poor and religious minorities. Gandhi could toughen up and behave like a political leader with coherent policies who is earning his position and not assuming it as a right. On balance, I reckon Modi is more likely to change his image than Gandhi is to grow into his role.

See also earlier posts:

https://ridingtheelephant.wordpress.com/2013/01/17/businessmens-praise-for-narendra-modi-boosts-his-prime-ministerial-ambitions/

https://ridingtheelephant.wordpress.com/2012/12/21/narendra-modi-challenges-the-gandhis-idea-of-india/

https://ridingtheelephant.wordpress.com/2011/09/15/could-narendra-modi-be-the-leader-india-needs/

https://ridingtheelephant.wordpress.com/2008/12/05/mumbai-votes-for-narendra-modi-as-national-leader/

https://ridingtheelephant.wordpress.com/2008/11/03/has-india-got-an-obama-like-unifying-politician/

https://ridingtheelephant.wordpress.com/2008/12/03/will-the-current-crisis-lead-to-narendra-modi-as-pm/

https://ridingtheelephant.wordpress.com/2007/12/27/a-hindu-nationalist-win-in-gujarat/ 

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Posted in Gujarat, India, India corruption, India general election, India politicians, Manmohan Singh, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , , ,

Posted by: John Elliott | August 28, 2013

Sonia Gandhi’s $20bn bid for Political Security

Politicians in India usually give bangles, saris, electrical goods and even lap tops away at election time in order to woo voters. Sonia Gandhi has raised the bar this week with a $20bn-plus total food handout that has taken several percentage points off the value of the rupee and the stock market, and demolished successful efforts last Friday by Palaniappan Chidambaram, the finance minister, to halt the slide in the country’s economy.

Sonia Gandhi in Parliament

She did this on Monday night (above) by pushing through the Lok Sabha a Food Security Bill that is primarily aimed at giving her dynasty and the Congress Party political security by persuading India’s poor that Congress is their best bet for a better life.

Increasing food for the needy is of course something a government should be doing, but her eyes are on the general election due next April or May.  Ignoring opposition, it is believed, from key economic ministers and advisers, she hopes that bags of grain and rice will wipe away memories of slowing growth, rising prices, endemic corruption, somnolent government, and all the other economic problems that have beset the coalition that she heads.

This has driven India’s currency to record lows in the past two days – Rs69 against the dollar and Rs107 on the pound sterling. That compares with Rs63.3 and Rs98.5 that Chidambaram’s measures and statements achieved last Friday. He was trying to stabilise the rupee at a time when the currencies of developing economies were sliding. The rupee has been hit the hardest hit (black line in chart below), losing 20% of its value this year.

OB-YR738_rupee0_EA_20130828032912“Madam Gandhi must have been quite a force to reckon with,” historians will say, when hearing about such a sacrifice for the poor, and its impact on India’s uncomfortably high current account deficit, at a time of tumbling currencies!

Cynics would say that it would be brave for a dynasty that is set on perpetuating its rule to do anything else but to perpetuate the conditions that enable it to present itself as the guardian of the poor and under-privileged.

Is it instinctive for an elite to maintain conditions as they are, modulating progress so that the apple cart on which it is perched does not topple over? I am not suggesting that Sonia Gandhi consciously plots policies that would keep the poor poor, but that is the logic of what she has done in recent years, advised by her aid-oriented National Advisory Council that designed this bill, instead of pushing reforms and subsidy cuts that would spur economic growth (now down to near 5% from 9%).

And whether it is conscious or instinctive, as I wrote on this blog last year, Rahul Gandhi has been heard saying that the way to keep Congress in power is to channel subsidies and funds to the poor, irrespective of how wasteful that could be, while discouraging growth-oriented economic reforms that might do short-term harm to Congress’s pro-poor image.

food queuesThe Bill guarantees 5 kg of rice, wheat and cereals per month at fixed low prices to some 70% of the 1.2bn population.  Government estimates suggest that this will cost a total of Rs 1,24,723 crore per year (around $20bn and £12bn) in food aid, but other estimates go as higher.  Surjit Bhalla, a economics commentator, puts the figure at’ Rs 3,14,000 crore or around 3% of GDP.

Much of this hefty government budget for food allocation and subsidies is wasted or siphoned off by corrupt officials as the money travels down to villages. The government admitted in parliament this week that 20% to 30% of food is lost with leakages from the public distribution system.

The Food Bill is of course an easy high profile measure to introduce, emulating the way that politicians lay foundations stones without worrying about whether projects are actually built and well maintained. The much harder task would be to tackle what really ails the poor, which is malnutrition and the supply of clean-safe drinking water, improved sanitation, and piped sewerage or other hygienic systems to avoid outbreak of water-borne diseases.

Food schemes can be administered efficiently, as has been shown in the state of Chhattisgarh where the management of the public distribution system’s ration shops was shifted from private licensees to community-based organizations such as gram panchayats (village councils,) female self-help groups and co-operative societies.

“We organize a Chawal Utsav (Rice Festival) at each ration shop during the first week of every month, which helps to ensure that all food items are adequately stocked in each shop by the last day of the previous month,” Raman Singh, chief minister, told the Wall Street Journal. Food is delivered direct to the shops to help curtail leakages and the system is computerised. That policy was adopted in Chhattisgarh as part of a broad approach to economic change and was not a stand-alone policy like Sonia Gandhi’s, which has no chance of being widely administered so effectively.

Sonia publicly launched the Food Bill last week (as part of the Congress Party platform for coming assembly elections in the state of Delhi) on the birth anniversary of her husband, Rajiv Gandhi, even though he focussed in the 1980s as prime minister on more constructive economic growth policies. So this measure, while it demonstrates Sonia Gandhi’s political strength, is not really a credit to his memory. I wonder if he would approve!

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Posted in India, India economic reforms, India economy, India general election, India poor, India poverty, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , , , , , , ,

Posted by: John Elliott | July 7, 2013

Elephant book on the way

Sorry there haven’t been any new posts recently – it’s because I’m completing a book that I’ve been writing on India, broadly derived from these Riding the Elephant posts. I hope to complete it in a few weeks, after which I’ll be back here regularly again.

cheers

John

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Posted by: John Elliott | May 21, 2013

China turns friendly with India – but why?

When China’s former premier, Wen Jiabao, visited  India in December 2010, he was full of talk about the two country’s joint aspirations, their friendship, their co-operation, and about how their two-way trade would almost double to $100bn a year by 2015. In a speech in Delhi, he said their civilizations had “once added radiance and beauty to each other and deeply influenced the process of human civilization,” – and then suddenly his tone and even his demeanour changed, and he put India firmly in its place as an unequal neighbour, taking China’s usual rigid line on the two countries’ decades-long dispute over its mountainous 3,500 kms (2,170 mile) border. “It will not be easy to completely resolve this question. It requires patience and will take a fairly long period of time,” he declared.

China’s new premier, Li Keqiang, has been in India since Sunday, perhaps significantly visiting Delhi and Mumbai at the beginning of his first trip abroad since taking up his new post in March. Unlike his predecessor, he has been consistent in his friendly and practical remarks about sowing “the seeds of friendship”, and saying that China was “committed to building friendly relations with India”. There was no sudden Wen Jaibao-style change of tack, which sounded in 2010 as if China’s powerful People’s Liberation Army (PLA) had drafted part of his speech.

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In a joint media conference with Manmohan Singh yesterday, and at a businessmen’s meeting this morning, Li’s body language has been strikingly fulsome and consistent.

He talked in practical terms about how the two prime ministers had had “multiple in-depth and candid discussions” and that a “strategic consensus” had “deepened our strategic trust”. He repeated China’s usual line that the border issue was ”a question left over by history”, but added that the two sides had “agreed to push forward with negotiations”, which contrasted sharply with the line taken by Wen Jaibao and most Chinese leaders in recent years.

That change of mood is the most notable point to emerge from the visit, especially coming at the start of the China’s new leadership’s ten-year term in office. Li’s smiling sophisticated friendliness however contrasted sharply with a small but major confrontation triggered by China on the countries’ mountainous border a month ago, which prompts questions about China’s motives.

Does it really want to solve disagreements over the countries’ 2,000-plus mile disputed border, known as the Line of Actual Control (LAC), which has been undefined since India humiliatingly lost a war there in 1962? It has been resisting moves to clarify the border in recent years, despite past agreements that it should do so, and India, which habitually shrinks from diplomatic confrontation, has not pushed hard enough.

Or – and this seems more likely – does China have other targets? It probably wants to coax India into a border defence co-operation agreement, which is now being negotiated. This could stop India’s current construction of infrastructure and defensive installations to match China’s presence on the other side of the border. India ignored China’s construction work for years, and has only recently woken up to the need for roads and a substantial military presence, so it would be self-defeating for it to sign an agreement at this stage, especially before the border line is defined.

Teasing America

China is also probably teasing the US, which has been cosying up to India since 2005. Li today quoted a Chinese proverb that “a distant relative may not be as useful as a near neighbour,” clearly trying (no doubt fruitlessly) to wean India away from the US. The Beijing-based People’s Daily, a government mouthpiece, said this morning that the US “should not be jealous” of a strategic partnership between China and India because the two countries did not want to be America’s “enemy” – they just hoped for its co-operation.

China could also have decided that it sent the wrong signals with the recent border row, and that it should not fall out with its biggest neighbour at the same time as it is aggressively confronting Japan and the Philippines over possession of  islands in the East and South China Seas.

Li’s approach is specially confusing because it comes soon after 30 PLA troops pitched tents, in mid-April, 19 kms inside what India regards as its territory on the 16,000ft-high Depsang Plain in the Ladakh sector of the LAC. A procedure agreed in 2005 for solving such a confrontation was not operated by China so, after some apparently nervous indecision and delay, India moved troops and tents into a face-off and strengthened its previously soft diplomatic stance. After three weeks, both sides removed their troops, but the terms of the truce were not revealed.

This confrontation was totally unexpected in Delhi and was especially odd coming soon after China’s new president, Xi Jinping, had (on March 19) put forward five  proposals for improving ties with India and said that  “peace and tranquility” should be maintained on the border in order to help solve the border issue, a task that “won’t be easy”.

Dodging issues

Manmohan Singh is reported to have warned Li on Sunday evening that peace on the border was essential for relations to grow. He said at the media conference that he and Li had taken “stock of lessons learnt from the recent incident” – tactfully dubbing what had been a major incursion as merely an “incident”. Li apparently dodged the question when he was asked why and how the incursion had happened and, instead of pressing this, India agreed that two top “special representatives” should “consider further measures that may be needed to maintain peace and tranquillity along the border, and seek “early agreement on a framework for a fair, reasonable and mutually acceptable” boundary settlement. “Why embarrass him!”, Salman Khurshid, India’s foreign minister, said later. It was better to find out why the existing proceedure had not worked.

A long joint statement was issued with over 30 items ranging from the border and economic co-operation to media exchanges, easier visas and handling Afghanistan and, notably, recognition by China of India’s wish for a bigger role in the United Nations ‘ Security Council.

What this all means will begin to emerge when the special representatives meet in a few weeks’ time. Barring mishaps, India’s defence minister will then visit Beijing , followed later in the year by Manmohan Singh, whose declining reputation as prime minister has been boosted by Li’s visit and the possibility of improved relations.

To show it wants progress, China needs to hand over draft maps of its border proposals which it has resisted doing so far – presumably because, the longer the border is undefined, the easier it is for it to grab patches of territory. It also needs to soften the stridency of a claim to the whole of India’s north-eastern state of Arunachal Pradesh, which India will never voluntarily concede. For its part, India needs to find the courage to push for progress.

In summary, Li Keqiang’s visit has generated splendid bonhomie and talk of good intentions – India helped by blocking roads and surrounding the Chinese Embassy with heavy barbed wire defences to stop Tibetan protestors upsetting the mood. Issues of substance on problems over the border, and over China possibly blocking India’s river waters with new up-stream dams, have however been  dodged by talking about mechanisms rather than substance. That fits with India’s traditionally low key approach to foreign diplomacy, which plays into China’s hands. It now remains to be seen whether India will push for real movement, not just mechanisms, and whether China is willing to respond.

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Posted in India, India entrepreneurs, India environment, India industrial policy, India industry, India media, India savings, Mahatma Gandhi, Olive Ridley turtles, Pakistan politics, Shiv Sena

Posted by: John Elliott | May 6, 2013

Congress’s latest $2m corruption scandal is a very old scam

Pawan Bansal was forced by the government to resign on the evening of May 10 after a week of CBI inquiries and arrests, plus a stream of media reports on alleged links involving him, his family, the businessmen, and other dealings. On May 12, he repeated his statement of  a week earlier that “I have nothing to do with all this”

The latest corruption scandal to embroil India’s coalition government is scarcely a surprise. The nephew of Pawan Kumar Bansal, the railways minister (below), was to be paid Rs10 crore (about $2m) to fix a top railways board appointment. Such appointments have been fixed for decades, often financed with money from companies that would benefit, as was allegedly planned in this case.

I remember talking to people about this nearly 20 years ago after I heard about a public sector corporation chairman’s job that was available in return for a payment of Rs 2 crore – then about $450,000. A private sector company was offering to make the payment, and the candidate knew it would expect to be given every contract or other service that it demanded while he was the chairman. The fact that the company itself was delivering the payment would, of course, increase its hold over him.

Pawan BansalMany public servants have to pay bribes to get their jobs. They range sometimes all the way from top ministry bureaucrats to public sector corporations’ board directors and on to income tax officials and traffic police – and that is partly why corruption has become so endemic in  India.

The top people need to cover their costs by making money on policy decisions and contracts they handle, as well as by helping their sponsor. Tax officials take bribes from defaulters and police charge a few hundred rupees to drivers at traffic junctions instead of formally booking them.

The more lucrative the job, the higher the price, and that is why in the current case companies were willing to pay $2m for their candidate to become the Railway Board’s Member (Electrical) because of the large-scale signalling and other contracts that the railways urgently needs to award to improve safety – the board’s annual budget for the current year is Rs.63,363 crore ($11.6bn).

The accusation is that Vijay Singla, Bansal’s sister’s son, arranged to receive bribes of Rs2 crore from Mahesh Kumar, a senior and successful railways engineer, to fix his appointment as the electricals’ board member. The money was to be paid through a contractor, Sandeep Goel, having been raised from a group of businessmen dealing with railways equipment who were promised business by Kumar. Half of the amount was to be paid before the appointment, and the rest after it was confirmed. However Kumar was appointed last week to the far less lucrative job of board member (staff), and was advised to wait by Singla till the electricals job possibly came free in a month or two.

Phone tapping

After investigations and phone-tapping for three months, the CBI raided those involved last Friday and recovered Rs 90 lakh ($180,000), which was allegedly the first instalment for the board job. Singla and eight others have been arrested including the businessmen. CBI officials are reportedly working on the assumption that it was inconceivable for Kumar to have agreed to pay as much as Rs2 crore if he was not confident about Singla’s ability to leverage his family ties and get him the job.

Such bribe-based arrangements have operated for top jobs when various governments have been in power, so the Bharatiya Janata Party opposition is on weak ground when it tries, as it is now doing, to make the railways scam sound like a massive new Congress-led government scandal.

It is also on somewhat weak ground on another current scandal over the Central Bureau of Investigation (CBI) being called in by a government minister over a case concerning coal industry corruption. Governments of all hues have controlled the conduct of many CBI for years, using it to torment and expose political opponents and save supporters from legal prosecution, though in this case the minister involved seems to have over-played his hand by calling a meeting instead of consulting informally.

The railways scandal was a shock when it broke last Friday because Bansal was regarded as a competent and apparently clean politician. Earlier the parliamentary affairs minister and before that a minister of state for water resources and finance, he has been trying to sort out serious safety and equipment problems since he was appointed railways minister last October.

Family businesses

Yet there is a report this morning that a rival BJP politician has named companies started by Bansal’s wife and other relatives since he first became a minister in 2006, plus links to railway catering companies and contracts. Reports  are also circulating about massive long-term extortion and corruption in both the railways ministry, and in the Railways Board which runs the system.

The minister tried to claim at first that he had no recent contacts with his nephew, who in any case could not influence his decisions. Media reports however suggest that Singla was involved in Bansal’s political work in the city of Chandigarh, his political constituency, as well as business deals going back some years to when Bansal was at the finance ministry.   Sons, daughters, nephews and wives and uncles frequently do run politicians’ business interests. That is part of the reason for the surge in recent years of political dynasties that broaden and protect the base of politicians’ riches and powers of patronage.

Relatives also frequently use their proximity to a politician to further their own separate business interests, cashing in on perceptions of their apparent proximity to power, with or without the politician’s knowledge. For example, it is not clear how much the Gandhi dynasty knew or was linked to controversial real estate deals that were revealed last October involving Robert Vadra, son-in-law of Sonia Gandhi who heads the governing coalition.

The basis of the railway minister’s defence is that he did not know about his nephew’s activities and that he would not have benefited financially, and therefore that the payments would not have influenced his decisions on board appointments. For now, the government has decided not to ask for his resignation.

Corruption is so widespread in India that public figures are perceived to be guilty until they prove their innocence – and the circumstantial evidence so far is stacked against Bansal, irrespective of whether he is innocent or not.

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Posted in India, India corruption, India railways, Nehru-Gandhi dynasty | Tags: , , , , , , , ,

Posted by: John Elliott | April 10, 2013

How we launched Thatcher’s ‘Privatisation’ word in the FT in 1979

Originated as Reprivatisierung in Nazi Germany

One of Margaret Thatcher’s most significant legacies is privatisation – not only for introducing the policy itself, but also for adding the word into the world’s every-day vocabulary. Her death this week seems a good moment to recount how we launched the word on July 28 1979 in The Financial Times.

The day before, I telephoned Nigel Lawson, who had just become Financial Secretary at the Treasury, for a background briefing on de-nationalisation, as it was then called. During the conversation, he used the word privatisation, which I had never heard before.

I was covering the industrial policy side of nationalised industries for the FT, and an economics correspondent, Anatole Kaletski (Kaletsky) , was writing on the finances. We launched the word in the first paragraph of an FT leader page feature, saying:

“A new word has been circulating in Whitehall in recent weeks. It goes to the heart of the Government’s policy for reforming the ownership and bureaucracy of state owned industries, but few Ministers would admit to using it. The word is ‘privatisation’ which, to those close to the centre of Tory thinking, means the Government’s well known interest in selling public sector assets to private individuals, financial institutions, and anyone else (apart from foreign  interests in some sensitive cases) who might want to buy them”.

No-one seemed to have heard of the word, and the FT features editor did not agree with my request to put our scoop in the headline, saying something like “no-one will know what it means”. Instead, with vintage FT cautious precision, the headline said, “Long and short term aims of denationalisation”.

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People of course rapidly came to “know what it means”, and the word became internationally used, putting a positive and private sector spin on the more negative heavy-sounding de-nationalisation. Thatcher also intended it to mark the end of Britain’s see-saw policies, with Conservative and Labour governments alternately nationalising and de-nationalising industries.

Sadly, the briefing was non-attributable, so the article does not include any quotations from Lawson – though I did write, leaving a small trail, that he was at the “centre of the ‘privatisation’ exercise”. I also mentioned that Sir Keith Joseph, the Industry Secretary (Minister) and a strong right-wing influence on Thatcher, was concerned about how to protect consumers when public utility monopolies such as electricity and gas supply were sold off. He had briefed me on that earlier – the answer was to allow the creation of rival companies, as happened most notably in telecommunications.

Years later, living in India where the wrongs and rights of privatisation are hotly debated, I’ve wondered whether that was the first use of the word and where it actually came from. The origin, I have just discovered, is Nazi Germany in the 1930s. Udaya Narayana Singh, a linguist and professor at Santiniketan in West Bengal, discovered for me that “English Etymological Dictionaries show the coinage ‘privatization’ to have come into operation from 1959”.

So I googled privatization, with a ‘z’ instead of an ‘s’, and added 1959, which led to links suggesting that the word started in Germany between 1959 and 1965 when Volkswagen and other government companies were sold.

Nazi goodwill

Some sources have also claimed, wrongly, that Peter Drucker, a management theorist,  introduced the word in a 1969 book, but my search revealed that it actually first appeared in Nazi Germany in the 1930s as Reprivatisierung, which meant returning nationalised assets to the private sector.

“In return for business assistance, the Nazis hastened to give evidence of their good will by restoring to private capitalism a number of monopolies held or controlled by the state”, said an analysis in 1941, which also suggested the policy was aimed at strengthening the wealth and loyalty of capitalists, and strengthening what would become a “war economy”.

The word was brought into Britain’s Conservative policy-making by David (now Lord) Howell, who became a minister in the Thatcher government. He first used it in a Conservative Party policy pamphlet, A New Style of Government, in 1970 where he saw privatisation “not just as being about free market and competition but about social change generating public ownership”.

FT privat table July '79 IMG_8308_1_1

Along with a broad sweep of public opinion in the UK, he is now unhappy that, after raising more than £50 billion by selling off businesses such as British Railways, Airways, Aerospace, Gas, Steel, and Telecom, it went too far with what he has described to me as a “weird frenzied” breaking up of services such as water electricity and airports,. These businesses passed into the hands of large corporations, including some based abroad. That was never the intention says Howell, who regrets that the broader social change aims were lost. 

Thatcher’s war economy was different from Germany’s in the 1930s, and was aimed at destroying the power of trade unions and revitalising Britain’s leftward-leaning economy.  In her memoirs, she describes privatisation as “fundamental to improving Britain’s economic performance”.

Like most of Thatcher’s policies, privatisation went too far and continued for too long, becoming a mantra – internationally as well as in Britain – rather than a reasoned policy. A senior Treasury official explained to me in the 1990s how it was essential for him to have a continuing list of potential sales so as to maintain the political momentum. If that momentum was lost, it could be very difficult to restart, he said.

Consequently, despite the obvious successes like airways, aerospace and telecom (with new private companies overtaking what is now BT), there have been some disasters in the UK – notably railways, which were renationalised after serious crashes and mis-management, hospitals (under the Blair Labour government), and security (the G4S company had to be baled out by the British army at last year’s Olympics). The policy is still running – the government intends to privatise the Royal Mail, which has defied reformers since 1979.

Indian divestment

It has also developed into a world-wide craze for PPP – public-private partnership – which often blurs and confuses the conflicting priorities of providing adequate public services and making private sector profits. The private sector cannot be trusted to deliver public services in terms of quantity and quality – as has been seen in Britain with railways and hospitals, and in India with airports (where privatisation is often corrupted by land scams, though there have been successes) and highways (where companies shirk PPP responsibilities).

India has debated how far to go along the Thatcher path for over 20 years. More progress has been made on divestment (selling minority stakes) than on privatising control. Manmohan Singh, prime minister since 2004, has never been a fan, and does not favour selling off profitable businesses. That reflects both India’s old socialist approach, and (I suspect and hope) a healthy scepticism about how far parts of the Indian private sector can be trusted with the country’s family jewels.

This is all a long way from my phone call to Nigel Lawson in July 1979, and even further from Germany in the 1930s. It is a tribute to Thatcher’s leadership that what she started 34 years ago has become a continuing international trend. What happened in Britain however also reflects her inability – or lack of interest – in seeing the downsides of the reforms that she so passionately believed in. As she herself said, “the lady is not for turning”.

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Posted in British politics, India, India economic reforms, India industrial policy, Manmohan Singh, UK economy | Tags: , , , , , , , , , , , , , , , , ,

Posted by: John Elliott | April 4, 2013

Rahul Gandhi dreams– with a beehive of buzzing thoughts

Rahul Gandhi, heir to the leadership of the Congress Party and maybe to the job of Indian prime minister, has dreams. Today he tried to spell them out for the first time to a large conference of businessmen, who knew he was breaking away from his usual political meetings and were indulgent and even captivated as he occupied the stage for about 70 minutes.

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He had two main messages in a slightly disjointed speech and then two long rambling answers as he walked around the stage at the Confederation of Indian Industry annual conference.

One was that India’s future lay in taking politics down to the pradhans (village headmen) to give “a billion people the power to solve the problems” and facilitate development.

The other was that India was a “beehive” of voices and energy that excelled at managing complexities. “You are of the masters of complexities. Dealing with your business, your interactions with India and abroad gives you the power to conquer the world,” he said.

The instant view from an audience that had enjoyed Gandhi’s adlibbing was that he had done well, and some thought they saw leadership qualities. But as people chatted later, criticisms began to emerge about the lack of enough discussion of individual issues. He had set out his vision of a new India with devolved political power, better motivated people, and better roads, ports and education, but he now needed to talk about how these things will be achieved.

Gandhi is starting from a very low base in his current bid to win public acceptability. He has stayed largely invisible and silent for most of the nine years that he has been a member of parliament, and has created endless confusion about whether he wants to be prime minister or even a politician. That low base made it easy for today’s audience to be impressed by his freewheeling style and by what he said, which was sincere though sometimes naïve, laced with a few stories, some rather odd. This would all be fine if he was just starting out, say in his late 20s. But he is now 43, and vice president of the Congress, so should have gone further – for example having an answer to a question he was asked about water shortages and contamination. He should also have discussed how local empowerment could be achieved – by him, or whoever.

His two themes enabled him to dispel any idea that, as a dynastic heir, he could suddenly wipe away India’s problems – and also that Narendra Modi, the Bharatiya Janata Party’s Gujarat chief minister and Congress’s main adversary for the next general election, could not do so either.

“Give me all the power you want – give one individual all the power you want, give him everything, he cannot solve the problems of a billion people,” he said. Knowing that Modi has strong (and financial) backing from businessmen, Gandhi told his CII audience, “If you think there is a guy who will come on a horse charging through and set everything right, this is not going to happen”. Focussing again on Modi, who is a divisive politician, but without naming him, Gandhi added that it took a long time to reverse seeds of disharmony. “Anger, hatred and prejudice do not contribute to growth”.

Gandhi has travelled extensively across the country, including visits to poor rural and urban areas, and he has correctly identified the dynamism and ambitions that are waiting to be released. “Millions of Indians are brimming with energy”, he said. Talking about ambitious poor people he had met on a train to Mumbai looking for work, he added, “We are now sitting on an unprecedented tide of transformation. This tremendous movement of people and ideas are going to define this country in the 21st century”.

Mixing his metaphors to explain problems caused by the exclusion of marginalised groups such as the poor he said that “A rising tide doesn’t raise people who don’t have a boat. We have to build the boat for them. We have to give them the basic infrastructure to rise with the tide.”

He also had a swipe at China, suggesting it was a simple straightforward country compared with India’s beehive. “China is referred to as the ‘dragon’ and India as an ‘elephant’. But we are not an elephant, we are a ‘beehive’,” he said. The problem was that, unlike a “beehive which gives every member a voice”, India was “clogged” and the voices of most people were not heard – which brought him back to his empowerment theme.

This was all fine, but India has no shortage of such dreams and even policies. The problem is implementation of what everyone knows needs to be done and, on that, Gandhi had nothing to say apart from devolution to a billion-plus people via village headmen.

So he needs to go further next time – hopefully soon. Then perhaps people will stop saying Rajiv Gandhi (his father) when they mean Rahul, a mistake that happened twice today, once by the conference manager before he entered the hall, and once by the CII’s new president,  Kris Gopalakrishnan of Infosys, in the vote of thanks.

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Posted in dynasty, India, India general election, India politicians, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , ,

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