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Dinesh Narayanan
Dinesh Narayanan
Based in Delhi, I write on policy, politics and economy.

An Economic Times story this morning on India Inc not joining a United Nations effort to stamp out corruption says a lot about our corporates and their value systems as citizens of a developing nation. Indian businessmen are quick to play the victim whenever government agencies go after them. Just see the way Sahara has been acting after Sebi began asking questions about its debenture issues. Remember how corporates rallied together when the Radia tapes became public.

On issues of public importance such as corruption or human rights abuses, they shy away from doing anything concrete except making token gestures and speeches. When Anna Hazare began his movement against corruption two years ago, many corporates came forward to fund him. Around the same time, a number of people, including 22 Nobel laureates, were campaigning for Dr Binayak Sen’s release but not a single corporate was part of the movement.

Does this mean that Indian corporates are insensitive or they are concerned only about their profits? Perhaps not. But often their actions and statements make you suspect otherwise. For example, former CII President and Godrej group chairman Adi Godrej’s statement on why no Indian company is part of the UN initiative to curb corruption shows at least a lack of earnestness.

“The United Nations is generally perceived as a diplomats’ group, not one for businessmen. So if the UN Global Compact wants us to join their international working group against corruption, they should approach us through industry bodies like the CII,” Godrej was quoted as saying. He could not have been more bureaucratic in his answer than that. If Indian companies are really serious about tackling issues, I would imagine them to jump at every available opportunity.

At the Delhi Economic Conclave organised by the finance ministry, CII and NIPFP last winter, Princeton game theoretician Avinash Dixit proposed a radical effort by corporates to stop corruption. Professor Dixit was proposing a solution on the supply side where politicians demand and companies pay bribes. He felt businesses were best placed to check this.

Dixit’s solution was the business community get together and keep a watch on their own. If anyone was found to have paid a bribe to bag a contract or some other favour, he or she would be ostracised as penalty. The rest of the community will refuse to do business with him. It would be very difficult for a company to operate in isolation, Dixit had reasoned. It is somewhat akin to community members bringing on peer pressure to prevent default in micro-finance projects.

In theory the proposal sounded excellent but naive if you know Indian business. Predictably, there were sniggers in the audience comprising mostly businessmen. Scepticism arises not because Indian businessmen mistrust each other but they trust each other too much and are comfortable as a community that abides by established practice. Anyway, the cost of bribes is ultimately borne by the consumer.

That is why it is not surprising that there is no company from India to pitch in for an international effort against corruption.

One fallout of the Sebi-Sahara battle could be a change in the Companies Law. The corporate affairs ministry is discussing how to modify laws to plug loopholes in the current legal regime that governs share and debenture sales.

A top official in the ministry says that it is thinking of removing ambiguity in laws governing private placement of securities. Sale of securities to more than 50 people is currently considered as a public issue and, therefore, open to close regulatory scrutiny. If only 49 entities subscribe to a share or debt issue, it is deemed private.

The relevant clause in Section 67 of the Companies Act says, “…provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for shares or debentures is made to fifty persons or more…”

“The clause is open to interpretation,” the official told me on condition of anonymity because he is not authorized to speak to the media. “Does it specify the time period in which the securities are issued? Is it possible to have multiple, simultaneous offers to 49 entities each? These questions are unanswered and there is some room for different interpretations,” the official said.

Internally the ministry is debating how to close this loophole. The official said one way could be to close it when framing rules under the new Companies Act. He, however, did not specify how the amended wording could be. The Act was passed by the Lok Sabha in December but has to be cleared by the Rajya Sabha.

Meanwhile, Sahara is fighting a public battle to keep its chief out of jail. At one point of time (in 2010) in the clash Sahara had claimed that the Corporate Affairs Ministry had sided with it saying that it had exclusive jurisdiction to investigate the company on this issue. The winds changed in Sebi’s favour when the minister changed. Now the courts are also behind the regulator.

In full page advertisements taken out in leading dailies on Sunday and Monday, controversial chief managing worker of Sahara India Pariwar, Subrata Roy Sahara has openly challenged the Sebi chairman or any of the regulator’s senior officials to face-off with him on live national television. The latest campaign began after Sebi asked the Supreme Court to order the arrest of Roy and a few directors in his company.

Roy wants to debate with Sebi how, with malafide intentions, it is trying to destroy Sahara’s reputation, clean image and goodwill. Though he has questioned Sebi’s intention in going after Sahara, Roy has given a clean chit to the courts and has thoughtfully not demanded that anyone from the judiciary join issue with him on live television.

When Sahara was first questioned by Sebi in 2010, it had argued that it does not have jurisdiction over the debenture sale because it was a private placement. The regulator had then cited Section 67 of the Act to establish jurisdiction.

Sahara takes out advertisements whenever it feels that it has been wronged. In its long fight with Sebi, which started in 2010 when the markets regulator asked for some information regarding two of its companies that filed for selling shares to the public, it has gone to the public many times. Funnily, Sebi found that when it raises money, it does quietly from millions of investors without needing to issue advertisements.

Ever since it began investigating Sahara, it has circled around just one issue — the ownership of the money that Sahara collected and the identity of the investors. While Sahara says that its army of workers knows where exactly each of them lives, it is not surprised the postman cannot find them because they are too poor and often live by the edge of national highways in temporary hovels. Nice try, but Sebi is not believing and it is now back in Supreme Court.

 

“Ask not what your country can do for you – ask what you can do for your country” -- John F Kennedy at his inauguration as US President in 1961.

Reuters

Being the finance minister of India is an unenviable job. Making the annual budget is even more difficult when everyone wants him to dole out more but are tightfisted when it comes to giving away.

The most telling statistic finance minister P Chidambaram mentioned in his speech was that only 42,800 people in a country of 1.2 billion admitted that they earned more than Rs 1 crore a year. That is an unbelievably small number and perhaps indicates the extent of tax evasion that goes on.

A recent study by the National Institute of Public Finance and Policy reportedly estimated unlawful wealth in India at 10 per cent of GDP or over Rs 10 lakh crore.

It was only fair then that Chidambaram said, “When I need to raise resources, who can I go to except those who are relatively well placed in society.’’ So saying, he imposed a 10 per cent surcharge on the super-rich for a year. Though quite justified considering the widening inequality in the country, it also tacitly acknowledges the government’s inability to go after evaders and relies on squeezing the honest ones even more.

The finance minister revealed another number. Of the 17 lakh registered assesses under service tax, only seven lakh filed tax returns.  Saying that he cannot go after each one of them, he announced an amnesty for those who would truthfully declare and pay what was due in the past five years.

That said, Chidambaram’s lacklustre budget betrays an eagerness to please as many constituents as possible – women, different castes, tribals, other minorities, farmers. He has also not held back in setting aside money for populist development schemes such as rural job guarantee, roads, healthcare and food security.  But even that he has done cleverly. The percentage increases he has talked about are on revised estimates, which are significantly lower than what were budgeted last year. The NREG scheme, for instance, gets an allocation of Rs 33,000 crore, which is almost the same amount actually spent this year. The budget last year had estimated an expense of a little over Rs 40000 crore.

Thankfully, he plans to reduce the number of central schemes to 70 from the current 173 and also review them every two years.  It will hopefully reduce wasteful spending and improve delivery of the programmes.

What Chidambaram has failed to do, while he had the chance, is to improve the investment climate. There are not many incentives to boost economic activity, except a 15 per cent deduction for those who buy plant and machinery worth more than Rs 100 crore. It would have had a better impact on the broader economy if the incentive was given to small and medium size companies to import machinery.

In fact, higher corporate tax even if only for a year is likely to dampen investment. Besides, a bigger government borrowing programme at Rs 6.29 lakh crore as compared to Rs 5.58 lakh crore would crowd out private borrowers from the market. Remember the liquidity squeeze of 2012? That could repeat in 2013 as well, complicating monetary management for the RBI.

It may turn out to be good for retail investors, though, as banks would have to offer higher interest rates to mobilize deposits even as demand for credit increases.

Most people, including industrialists, have called the budget realistic. They have also welcomed the finance minister’s focus on the current account deficit which has been putting pressure on the rupee. Chidambaram has also vowed to contain fiscal deficit at 4.8% next year.

So what was this budget about? It seems it was about getting by for another year when elections will be due. If the government survives, there is always scope to tinker at the economy next year. If it doesn’t, well, you can always sit in opposition and scream how bad the government is at managing the economy.

After Mamata Banerjee pulled the rug from under the UPA government last September, Prime Minister Manmohan Singh had addressed the nation. Midway through his litany of woes, Singh, like many middle class fathers tell their whiny kids, had said: “Money does not grow on trees.”

Railway minister Pawan Kumar Bansal knows it only too well. He  presented today the Indian Railways (IR) budget for 2013-14, an uninspiring financial plan that wonders where the cash needed to modernise the world’s second largest railway system under a single management will come from. IR plans to spend Rs 5.19 lakh crore in the next five years, with Rs 1.94 lakh crore coming from the Union Budget, Rs 1.05 lakh crore from internal accruals, market borrowing of Rs 1.2 lakh crore and Rs 1 lakh crore from private investors through partnerships.

Indian Rail Budget Highlights

“The internal resource target, which is 1.6 times that of the 11th Plan, also appears a tall order as we could allocate only Rs 10,000 crore in the first year of the 12th Plan,” Bansal said. “The onerous task of raising the balance amount of Rs 95,000 crore in the next four years calls for a paradigm shift in our approach to tariff and non-tariff segments of earnings.” Yet Bansal did not touch passenger tariffs and did not present ideas on improving non-tariff segments of earnings such as exploiting IR’s land bank. Bansal later called the budget ‘realistic’.

“My main problem with the budget is that it does not tell me how things will be done, how targets will be achieved. Railways require Rs 1 lakh crore from PPP but there is no magic wand that you have which will give you this amount in the next three years of the Plan period,” says Akhileshwar Sahay, strategic advisor, Delhi Metro Rail Corporation.

The skepticism stems from past experience. For instance, IR had planned a locomotives factory at Madhepura in Bihar several years ago. Most international locomotive makers such as GE, Siemens and Alstom have been waiting for IR to float a tender for it. So far nothing has moved.

“The two committees headed by [Sam] Pitroda and [Anil] Kakodkar had recommended some far reaching reforms. But I do not see any pathway for those reforms in this budget. I do not see how DFC (dedicated freight corridor) would be completed by 2016-17,” says Sahay.

When he raised passenger fares on January 21, Bansal had said that internal resource generation had been seriously impacted resulting in scaling down of IR’s annual plan size. Fund balances turned negative in 2011-12, adversely affecting essential replacement and renewal of assets, operation and maintenance activities and critical safety and passenger amenity works, he had said.

The passenger fare hike in January was practically annulled by the subsequent rise in diesel prices. The minister has proposed a sort of fuel surcharge on freight from April 1 onwards, which will be an adjustment against fuel price fluctuations. The proposal, originally mooted in last year’s budget, was partly responsible for the then railways minister Dinesh Trivedi losing his job. Airlines bill passengers for a similar adjustment to protect themselves against fuel price rises.

The minister also raised fees charged for some services such as reservation and cancellation and Tatkal bookings. He has promised to improve passenger amenities at several railway stations and make the online reservation system faster.

It is clear that the 2014 elections is playing on the government’s mind and it is also worried about its finances. Opinion is divided on whether the budget was good or bad.

Rajaji Meshram, senior manager (infrastructure) at PwC, says the story is consistent. “I do not think you can say that this budget is any less reformist than the last one because actually the fares were raised in January 2013.” Meshram says Bansal pointing out that an annual increase of 5% to 6% in fares over 10 years can provide about Rs 1 lakh crore could mean that a few months down the line tariffs could be raised again.

The question is whether the government will have the gumption to raise tariffs as elections close in.

Meshram says new freight trains will improve the topline. “What he has stuck to is the doubling target, ie, an additional line on routes where you are sure of traffic. So doubling is a smart thing to do. And you have to prioritise.” Yet, the IR plans to set up six more water bottling plants. Surely, it is easier to source water from private suppliers than spending money on own plants.

“Why is there no long term plan to hive off the non-core activities of the railways? Why should railways continue in the business of hospitals, manufacturing , education etc?” asks Sahay.

Some of the minister’s moves seem clever. For instance, he says 40% of consequential accidents and 60% of fatalities occur at railway level crossings. It would cost Rs 37000 crore to remove the nearly 32000 level crossings in the country. He says that a lot of that money can come only from the Central Road Fund.

DMRC’s Sahay says there are many things that can improve IR which do not require money. For instance, setting up of an independent safety authority which was committed has not been done. “Even after announcement, the independent tariff authority is still no where on the horizon,” he points out.

While in ordinary circumstances, the railway budget may have been described as good, the track record and financial difficulties of the current government does not inspire confidence, especially since it does not offer a clear, viable financial plan. Since the prime minister’s September speech, the government has announced several reforms but most of them remain on paper or are half done. Bansal’s budget also may end up like them. As Sahay says, the “how” is missing.

John Flannery said that If the civil nuclear liability law stays the way it is, they won’t pursue the business Photo courtesy: B. Mathur / Reuters

One big multinational is almost certain to be out of the race for nuclear energy business in India. On Wednesday I had met John Flannery, outgoing President and Chief Executive Officer of GE in India for a chat before he left for his new assignment: finding targets for the company to buy. Flannery said GE will rather give up business than play within India’s civil nuclear liability rules.

“If the [civil nuclear] liability law stays the way it is, we won’t pursue the business.”

Flannery knows other companies, French and Russian, are nosing ahead in the race but points out that they are backed by the government.  He is very clear about his own: “We are a private enterprise and we just can’t take that kind of risk profiles.”

Last week, on his maiden visit to India as French President, Fracois Hollande had said that his country was okay with Indian laws. “Regarding civil nuclear liability, we obviously respect Indian law. It is the sovereign decision of a country that has witnessed catastrophes like the Bhopal gas tragedy,” Holande had told an interviewer from the Times of India February 14.

France’s Areva wants to supply nuclear reactors and fuel to India’s Nuclear Power Corporation which is planning to add about 37500 MW generation capacity. The contracts could be worth billions of dollars. Many of the units that the corporation plans to build such as at Jaitapur in Maharashtra are large ones with a capacity of 1000 MW and above. Areva also has an advantage here because it is also building similar sized reactors at home.

The world has been thinking deeply since March 11, 2011, whether nuclear plants are worth the risk. On that day, a massive Tsunami triggered by an earthquake in the Pacific Ocean swamped a nuclear power station run by the Tokyo Electric Power Co at Fukushima on the Japanese coast. Three reactor cores melted in as many days, contaminating the atmosphere with radioactivity. About 100000 people were evacuated from the surrounding areas.

Immediately after the Fukushima accident, Germany had also announced that it would shut down its 17 nuclear plants by 2022. Japan too pledged to phase out all its nuclear plants by 2040. Since then, however, there has been a change of heart and the new Liberal Democratic Party government in Tokyo is talking about withdrawing that pledge.

India is one of the few countries that has continued to expand its nuclear power programme despite widespread public protests. However, it depends on foreign companies for reactor technology and fuel. Every major player in the nuclear industry such as GE, Westinghouse, Areva, and Rosatom has lined up for a piece of the business.

America has been protesting India’s tough Civil Liability for Nuclear Damage Act passed in 2010. It has repeatedly said that the law diverges from international convention.

“India’s nuclear liability law is not in line with the international nuclear liability principles reflected in the Convention on Supplementary Compensation for Nuclear Damage,” Principal Deputy Assistant Secretary of State for South and Central Asian Affairs Geoffrey Pyatt said in December.

The Indian law limits the operator’s liability to Rs 1,500 crore  but in case of an accident, victims could find shelter in the law of Torts that can potentially lead to unlimited damages to be claimed from equipment suppliers. This is turning away private corporations like GE who are unwilling to take the risk of unlimited liability.

“There are a number of different countries on a common regulatory regime if you will. And we do business in those countries,” GE’s Flannery said. “India’s liability legislation is not congruent with that. And we are not comfortable on that basis doing that business in India.”

While the US has been putting pressure on India to open up its nuclear power market and ease laws, it has been guarded at home. A CBS poll after the Fukushima accident showed public support for nuclear power dip to 43 per cent from 57 per cent in 2008. President Barack Obama has said that the US needs all energy options available to it, but some critics say his administration has been obstructing growth of nuclear power. Last year the US department of energy said that it would part-fund small, modular nuclear power units.

Meanwhile, the US is also investing in developing promising new energy technologies. The Advanced Research Projects Agency-Energy backs high-potential, high-impact energy technologies that are too early for private-sector investment.

 

Congress unlikely to risk reforms in election year

Ever since P. Chidambaram came back to the finance ministry, he has heroically tried to postpone economic disaster, mostly with assurances and promises. Photo Courtesy: Issei Kato / Reuters

Yet another Parliamentary session is about to begin and the sky above Edwin Lutyens’ masterpiece is already dark.

Many reforms that have been announced are yet to materialize. Some, such as the direct cash transfer scheme, have been put on the back-burner. A senior Congress leader says nothing will happen until elections are over. “The party leadership is scared it may backfire,” he says.

These days hardly any business gets done in Parliament. The new normal is much hullabaloo followed by adjournments. The session beginning Thursday promises to be yet another.

There are a number of issues over which the knives will be out — an audio tape that allegedly reveals how the CBI’s case in the 2G spectrum allocation scam was compromised by it own prosecutor, a high-profile defence deal to buy helicopters gone bad, and questions over the alleged capers of the Rajya Sabha deputy chair PJ Kurien. Delhi grapevine has it that Kurien will resign. Most of all, the BJP will bay for home minister Sushil Kumar Shinde’s blood for his remarks on “Hindu terror’‘.

There are a number of legislations such as the Food Security Bill, Lokpal Bill and perhaps even the Judicial Accountability Bill that are supposed to be tabled.

The highlight of the session will be the national budget. P Chidambaram returns to present it, after four years of Pranab Mukherjee’s tepid show. The session will see the last full national budget of the United Progressive Alliance government-Mark II. Ever since he came back to the finance ministry, Chidambaram has heroically tried to postpone economic disaster, mostly with assurances and promises. But the economy has continued to slip as the country’s trade balance widens, industrial production slows, consumer price inflation stays high and investments remain a trickle.

The finance minister’s main worry is soaring expenses and disintegrating public finances but the UPA’s concern is the elections scheduled for 2014. A budget fulfilling both these demands is humanly impossible. The UPA’s image is in tatters and the government itself is surviving on the tenuous support of the Samajwadi Party led by that great opportunist Mulayam Singh Yadav and Bahujan Samaj Party led by the mercurial Mayawati.

It is clear that no one wants an election before time. A senior Congress leader half joked that even if his party were to want, its allies will never allow.  Although Mulayam Singh has repeatedly told his cadres to be prepared for polls in 2013 itself those who know him say that is more to prevent complacency in the party rank and file. An internal assessment by the party is said to have shown a sharp decline in the SP’s popularity in favour of BSP, especially among Brahmins and Muslims, crucial swing factors in Uttar Pradesh that sends 80 legislators to the Lower House. The SP is making its moves, though.

The SP government wants 17 most backward castes to be included in the list of scheduled castes which will help them get a slew of benefits. Last week it sent the proposal to the Centre, making space for an issue to haggle over and lure away Mayawati’s backward caste supporters. It is an old proposal that Mulayam had tabled in 2005 but withdrawn by Mayawati when she succeeded him.

The principal opposition in Parliament, the Bharatiya Janata Party is a divided house. It does not have a clear strategy. Most senior leaders in the party fancy their chances to be prime minister should the party win. They present a picture of solidarity in public but snipe at each other in private. Narendra Modi is the only person with a clear and ruthless strategy. His juggernaut is gathering pace and the BJP may be forced to toe his line. That means Modi, to whom winning is now second nature, will face off with Rahul Gandhi, for whom losing is becoming a habit.

At this time, Chidambaram is expected to deliver a budget that is tough as well as populist. Investors are keenly watching whether he will present a road-map for fiscal consolidation and voters are expecting more doles. It is important for the government’s credibility; with the voters and investors. That is a tough ask, especially when options are limited.

The minister does not have enough money at his disposal to splurge on populist projects. He has promised investors, Indian and foreign, that his prime concern is fiscal discipline. One key element of that is checking leakages and inefficiencies in government funded schemes. A reform that may have helped — direct cash transfer of government subsidies  — is off the table, according to a senior Congress leader.

Though the UPA announced pilots with much fanfare, the Congress leadership is believed to have chickened out. The leader says the party is scared to implement it widely because it is a double-edged sword. “If it works well it will bring the votes. But it can also backfire badly.”

To be safe, party leaders have agreed to keep direct cash transfer in the chiller until the elections are over. It will be periodically taken out to keep the topic warm but nothing concrete will happen.

Instead, the Congress is counting on ant-incumbency to help return to power. Except four majors, the states are ruled by the BJP and regional parties. Congress is in power in 10 more states, albeit small ones. The senior leader says if the Congress gets its seat allocation right, it has the advantage in states ruled by others. The party believes it has to just sit tight and people will do the rest, irrespective of the scams and scandals.

 

With the election of Rajnath Singh as the Bharatiya Janata Party’s president on Wednesday and Rahul Gandhi’s elevation as the Congress vice-president just before, the two national parties have taken up positions for the General elections of 2014.

While Gandhi’s appointment was expected and appears to have rallied Congressmen, Rajnath’s election was a surprise and has perhaps deepened divisions within the party. Until the income tax department raided firms linked to Nitin Gadkari on Tuesday, a second term for him as BJP chief was more or less settled. But the raids forced him to step down and Rajnath found himself in the sweet spot.
That Gadkari had the RSS’s backing was without doubt. A senior leader told me that the RSS never proposed anyone’s name to the party. The last time the RSS discussed BJP’s leadership issue, it had only insisted that whoever becomes the president should be a `young’ person who understands the demands of the country’s youth. Gadkari is six years younger than Singh, who is 61.

The RSS has been very conscious of the growing constituency of the young and the need to politically affiliate them to its ideology. It has for some time now stopped insisting on khaki shorts and white shirt uniforms, at the shakhas. Volunteers are allowed to wear sports shorts or cut-offs. Similarly, it also holds virtual shakhas. Though the Sangh is looking at its long-term future, the BJP does not seem to be as savvy as its mentor.

Singh’s rise shows that the party is focusing on the short term or the 2014 national elections. Knowing fully well that Uttar Pradesh holds the key to power in Delhi, the party two days ago welcomed UP leader Kalyan Singh back to its fold. Sources in the BJP say that veteran leaders LK Advani and Murli Manohar Joshi were instrumental in getting him back even though Rajnath Singh and even Joshi have been hostile to Kalyan Singh in the past. The backward leader had left BJP in 2009 and formed Jankranti Party (Rashtrawadi) in 2010. His party merged with the BJP two days ago. Interestingly known Kalyan Singh baiters such as Rajnath Singh and Kalraj Mishra, were present at the merger rally.

Events of the past two days suggest that the old guard led by LK Advani is still the most influential. Though names of other leaders such as Goa chief Minister Manohar Parrikar and former party president Venkaiah Naidu were doing the rounds to replace Gadkari, Rajnath Singh emerged as the consensus candidate. One of the reasons why the party is reluctant to bring regional leaders such as Parrikar to the national level is it believes they can be more effective in their respective states in the elections. States like Madhya Pradesh, Chattisgarh, Gujarat and Goa are run by relatively young leaders who are capable of winning crucial seats to the Lok Sabha. Just these four states have 68 seats and BJP can count on its regional chieftains to deliver a sizeable chunk of that. It also will win seats with allies in states like Punjab and Bihar.

The numbers will start looking very attractive if it manages to win a majority of seats in Uttar Pradesh. Considering the Samajwadi Party’s poor rule in the state so far and the Congress in disarray, a four corner contest in that state could bring the party dividends. The fourth, Mayawati’s Bahujan Samaj Party, with its committed cadre and wide base will likely be the party to beat.

With the leadership issue settled in both the national parties, the marathon is now expected to begin.

Rahul Gandhi

Rahul Gandhi was anointed party vice-president at the the All India Congress Committee (AICC) meeting in Jaipur on January 20, 2013. As the scion of a dynasty stretching back to India's independence from Britain in 1947, the party wants him to be prime minister if it wins the elections. Image Courtesy: Reuters

As a conversation opener this morning when I met a senior bureaucrat, I said, “power is poison’’ is the Congress party’s new maxim. I was, of course, hinting at Rahul Gandhi’s speech on Sunday after becoming the Congress Party’s vice-president. “So he must now be Rahul `Neelkanth’ Gandhi,’’ the bureaucrat replied wryly, referring to a name of Lord Shiva who drank poison to save the world. Mythology says Shiva’s wife Parvati, grabbed his neck so the poison stuck in his throat turning the neck blue.

As far as the Congress is concerned, Rahul Gandhi is the reluctant messiah who has finally accepted the poisoned chalice for the sake of the party. The Congress believes the young man of 42 would be a magnet for the increasingly restive youth and middle class of the country that has off late begun demanding decisive action, whether it is death for rapists or war against Pakistan.

The Congress Chintan Shivir (brainstorming camp) in Jaipur began with party president Sonia Gandhi’s reality-check speech and ended over the weekend with the party anointing the Gandhi scion as the second in command amid scenes of expected sycophancy and family drama. It is now clear that Rahul Gandhi will lead the party’s quest for a third straight term at the Centre; perhaps even as its prime ministerial candidate.

In one of his better articulated speeches in the eight years he has been active in Congress politics, Gandhi said, “I will not play the role of a lawyer, I will play the role of a judge now.’’
He also pronounced his judgment on what was wrong. “Power is grossly centralized in our country. We only empower people at the top of a system. We don’t believe in empowering people all the way to bottom… Until we start to respect and empower people, we cannot change anything in this country… all are closed systems, designed for mediocrity, mediocrity dominates,’’ he lamented.

Yet, mediocrity and lack of imagination is clearly reflected in the Jaipur Declaration released at the end of the session. Consider this.
“The Indian National Congress unequivocally re-commits itself to representing India’s ‘middle-ground’, speaking for the vast majority of the people of India, and fighting against fringe elements that foster divisive and destructive ideologies. The Congress is the Party that is committed to science, modern technology, inclusive innovation and job creating growth for the youth of India. The Indian National Congress commits to strengthening its support base – identifying its natural supporters, retaining the support of those sections that are with the Congress, and winning over those sections that have drifted away.”

The declaration promises to fulfill past promises and makes some new ones as well.
Congress Party’s biggest problem, apart from the lack of leadership and dis-empowering system identified by Gandhi, is an absolute lack of ideas, social, economic or political. It is unwilling to give credit where it is due and continues to play big brother with its coalition partners. It refuses to accept ideas from the ground, even from states ruled by its own, deferring to advise doled out by who Gandhi calls “…a handful of people behind closed doors who are not fully accountable to them (the people)’’.

Rahul Gandhi’s speech may have moved Congress workers and leaders to tears, but the Jaipur Declaration does not inspire confidence that much would change. It’s just old wine in an old bottle. Arguably, Rahul Gandhi now is the most powerful politician in the country. He must make sure he does not choke on it, as mother advised.

Delhi Rape Protests

Delhi has only one cop for 223 people, though it does not have a single women's police station. At 5285, it has the third largest number of women cops in the country. Image Courtesy: Reuters

The thousands of people gathered at Vijay Chowk to protest the government’s inability to prevent violent crimes against women in the Capital were cleared by police this morning. For the past few days, especially Saturday, the crowd relentlessly pressured the government to act. Finally, home minister Sushil Kumar Shinde made a statement Saturday evening that the government will increase policing and consider stronger punishment in the `rarest of rare’ cases.

An overwhelming number of outraged people want rapists to be hanged. Many think death penalty would act as an effective deterrent. That is unlikely. There is no effective method other than good policing, community involvement and a zero-tolerance policy to prevent crime. Former New York Mayor Rudi Giuliani and police chief Bill Bratton showed that going after petty criminals can actually help prevent bigger crimes from happening. Both of them were criticised that they were not focussed on big crime. Steven D Levitt and Stephen J Dubner present the case study in their bestselling 2005 non-fiction Freakonomics.

The strategy is based on the “broken windows” theory first published in The Atlantic magazine in 1982. The authors, George L Kelling and James Q Wilson, wrote:

We suggest that “untended” behaviour also leads to the breakdown of community controls. A stable neighbourhood of families who care for their homes, mind each other’s children, and confidently frown on unwanted intruders can change, in a few years or even a few months, to an inhospitable and frightening jungle. A piece of property is abandoned, weeds grow up, a window is smashed. Adults stop scolding rowdy children; the children, emboldened, become more rowdy. Families move out, unattached adults move in. Teenagers gather in front of the corner store. The merchant asks them to move; they refuse. Fights occur. Litter accumulates. People start drinking in front of the grocery; in time, an inebriate slumps to the sidewalk and is allowed to sleep it off. Pedestrians are approached by panhandlers.

At this point it is not inevitable that serious crime will flourish or violent attacks on strangers will occur. But many residents will think that crime, especially violent crime, is on the rise, and they will modify their behavior accordingly. They will use the streets less often, and when on the streets will stay apart from their fellows, moving with averted eyes, silent lips, and hurried steps. “Don’t get involved.” For some residents, this growing atomisation will matter little, because the neighbourhood is not their “home” but “the place where they live.” Their interests are elsewhere; they are cosmopolitans. But it will matter greatly to other people, whose lives derive meaning and satisfaction from local attachments rather than worldly involvement; for them, the neighbourhood will cease to exist except for a few reliable friends whom they arrange to meet.

Today, many pockets of Delhi, and indeed of other metros, are heading towards the scenario. The police forces in India are severely stretched. While the sanctioned strength is one policeperson for 576 people, the actual ratio is one for 761 people.  There are 442 women police stations in the country, 196 of them in Tamil Nadu.

Though it is better off, Delhi still has only one cop for 223 people, according to data from the Bureau of Police Research and Development. Though it does not have a single women’s police station, at 5285, it has the third largest number of women cops in the country. Given the limited resources, the police should use them strategically and look at ways of maximising effectiveness. One single step by the Delhi police that does not require any change of law or more force has the potential to reduce crime against women by at least half. That is, cracking down on drunk driving and public drinking, both punishable crimes under current law. Often, even people who normally would not commit a crime, cross the line in Dutch Courage. Jeanette Norris shows in this study published by VAW Net (National online resource Centre on Violence against Women) there is a clear link  between alcohol and sexual crimes.

Open spaces near liquor vends in the city turn to open-air bars by evening. Drivers of public transport vehicles — buses, taxis and autos — are often drunk. Private vehicles become cozy bars — car-o-bar in Delhi slang — by nightfall. If the city police adopts a zero-tolerance policy towards just this one menace, crimes of opportunity, which will be at least half the number of rapes and molestation on the streets, will not occur.

Narendra Modi won, decisively, again. It was never in doubt that Modi’s’ BJP would return to power in Gujarat, especially after the principal opposition, the Congress Party, showed that it was woefully short of ideas and strategy. The only debate was whether the BJP  would improve upon its tally of 117 in 2007 or not. It has ended with a total of 115, two short of the previous score. Surprisingly, despite its lack of strategy, the Congress improved its vote share by about a percentage point and converted that to 61 seats.

Gujarat BJP treasurer Surendra Patel said the results were as he expected. “I had expected this result, give or take five seats,” Patel told Forbes India. It was, however, not the result Narendra Modi wanted and targeted. The undisputed leader of Gujarat and potential contender for party nomination as the prime ministerial candidate in the next general elections was targeting to break Madhavsinh Solanki’s record of 149 seats with a vote share of 55.5 per cent in 1985. Five years before that Solanki had led the Congress to win 141 seats with a vote share of 51 per cent. BJP’s vote share also dropped by about a percentage point.

The results show incremental votes benefited the opposition more than the BJP. Even though the number of registered voters did not increase significantly, that of those who purposefully trekked to the polling booths did. Gujarat’s voting percentage went up from 59 per cent to nearly 70 per cent. As was seen in the UP elections earlier this year, women turned out in large numbers; their turnout increasing from 57 per cent to 68.9 per cent.

Had Modi been able to win another 20 seats, the stalwarts of BJP would have found it hard to ignore his claim to lead the party into the next general elections, now scheduled for 2014, and perhaps become Prime Minister if it were to win. However, that agenda remains paved with obstacles.

Without doubt, it took every bit of Modi’s brilliance as a strategist and charisma to effectively neutralise Keshubhai Patel’s rebellion and the swell of anti-incumbency. However, even that could not save many of his ministerial colleagues such as health minister Jay Narayan Vyas, agriculture minister Dilip Sanghani and finance minister Praful Patel lost. Modi’s trusted lieutenants, revenue minister Anandiben Patel and industries minister Saurabh Patel won only because they moved to safe seats.

Many leaders cutting across parties also sank. State BJP president RC Faldu, state Congress chief Arjun Modhwadia, leader of Opposition in the legislature, Saktisinh Gohil, and Gujarat Parivartan Party’s Gordhan Zadaphia all lost.

A Sangh Parivar leader said that it showed that the personalist politics of Modi is unsustainable in the long run. He said Modi had a legitimate claim to nomination as BJP’s prime minister candidate. But that would need a change in his style of politics, he said pointing out that Modi had already started doing it. “The visit to Nagpur (to the RSS headquarters before the elections) was unusual. It meant that he understands the ground reality much better than anyone else.”

There will be those in the BJP who would see the Gujarat victory also in the context of the Congress botching up its strategy. Its candidate selection was poor and close to the polls it even let go of an influential Patel leader Narhari Amin, whom Modi lost no time in welcoming to the BJP. Party leaders have so far avoided answering the question of who would lead it in the 2014 elections.

The Sangh Parivar leader said Keshubhai has certainly made a dent in the unity of the Parivar in Gujarat. Many RSS and VHP leaders have shifted loyalties, overtly and covertly, to his side.

For Modi it will be a dilemma. He knows that within the Parivar, he would need to be conciliatory to win friends. However, the essence of his leadership is concentrated power that brooks no opposition or debate. As we had argued in a previous article, his is a personalist government focussed on keeping the spearhead sharp. Narendra Modi’s Gujarat model of development is difficult to replicate on a national stage where a large number of interests converge. Balancing that will be tough for the Modi who was on display until now. But immediately after his victory he gave indications that he may be willing to change. Modi visited Keshubhai Patel at his residence and touched his feet before exchanging sweets.

 
 
Dinesh Narayanan
A senior editor at Forbes India, Dinesh Narayanan sits in Delhi and writes on policy, politics and economy.
 
 
 
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April 18, 2014 17:16 pm by Should we trust the political instincts of businessmen? | சவுக்கு
[...] shown scant interest in issues beyond profits as my former colleague Dinesh Narayan pointed out here and [...]
June 05, 2013 21:39 pm by dinesh narayan
The biggest issue is politician - entrepreneur nexus in the process of generation of GDP for the nation. The complete thrust is to distribute the entire GDP among entrepreneurs and politicians and their kith and kin , by way of creating fraudalent corporate structures . Part of GDP goes to the po...
April 18, 2013 16:06 pm by Rajib
Tell one thing Mr RAM When our Minister loot crores money from different sector, what it doing the SEBI people that time. It is not our money ? Where is the rules that time?
April 18, 2013 16:02 pm by Rajib
Mr Rag . I accept ur all word , But tell me one thing our Minister cheating Crores money from India. . Why sebi not monitoring those thing. Almost 2000 people working in Sahara and PACL and maintain there family. If we want save people from cheating sebi need to aware them such type of investment.
April 14, 2013 17:55 pm by Vijay Dandapani
"United Nations effort to stamp out corruption". There is no need to read the rest of the article. Expecting the UN to stamp out corruption is like putting Hitler in charge of a commission to stamp out genocide. There is no bigger cesspool of corruption than Turtle Bay.