The international gathering of tiger conservationists in Kathmandu this week will be in a sombre mood. The number of wild tigers is at an all time low. The decibel of the debate over the relationship between economic development and environmental quality is at an all-time high. Are conservation and commerce compatible? Can we harness the consumer demand for tiger parts help stave off the possible extinction of tigers in the wild? Can villagers living near forest benefit from the wildlife in their vicinity? I try to answer some of these question in this article, "Conservation for commerce", published in the Hindustan Times, on 18 April 2007.
The international gathering of tiger conservationists in Kathmandu this week will be in a sombre mood. The number of wild tigers is at an all time low — between 2,000 and 3,000 — probably half of what was believed a few years ago.
The decibel of the debate over the relationship between economic development and environmental quality is at an all-time high. Are conservation and commerce compatible? Is the consumer demand for tiger parts necessarily a prescription for the possible extinction of tigers in the wild? The meet is an opportunity to undertake a serious re-evaluation of existing tiger conservation strategies. Interestingly, for the first time, an official Chinese delegation is participating in the deliberations, triggering further speculation.
Through the last three decades of tiger conservation, commerce and conservation have been pitted against each other. The principal focus of the present conservation strategy has been to prohibit all forms of consumption, hunting of tigers, and trading in tiger parts. Policing has been made the cornerstone of tiger conservation polices.
So we have the paradox of high-value wildlife resources placed outside the discipline of market forces, and some of the poorest people in the world living in close proximity to such resources, without any incentive to conserve and manage sustainably.
But when there is a demand from consumers in the market, such a policy prescription is an open invitation to criminals and smugglers to profit from the poaching of tigers. Thus, poaching has continued to pose a major threat to wild tigers. In addition, about 75 per cent of the alleged tiger parts seized in China and sent to wildlife forensic labs for testing, are being found to be fake. Clearly, when trade is outlawed, only outlaws trade.
But tigers are a renewable resource. They breed very easily in captivity. In fact, China has, over the past decade or so, almost perfected the art of managing and breeding a large number of tigers in captivity, currently estimated at 5,000 animals. Bringing some of these tigers into the market to meet the demand for tiger parts, by legalising its trade, could make poaching economically unattractive.
There are many examples of species thriving under the discipline of commerce. Even as the tiger conservation policy prohibited commerce in the 1970s, crocodile farming was taking root. Today, India continues with its policy of keeping crocodiles outside the scope of commerce. But crocodiles have become very successful commercial animals elsewhere. Two million crocodiles are estimated to be harvested each year in Australia, South Africa and the US. Yet, there is hardly any evidence of crocodiles being poached in India or elsewhere because of market demand.
The reason is simple. If an international brand name wants a large volume of crocodile skins, at a competitive price, it has no reason to seek a poacher when it can procure these from a legal farmer.
Further, it is estimated that in the US the annual economic activity from a range of environmental activities, including nature treks and bird watching to fishing and hunting, generates revenue of over $ 100 billion. Big cats like tigers, lions and leopards can help transform the lives of some of the poorest sections of the population in poor countries.
Most rich Western countries have been able to restore and improve their environmental quality with economic development. China seems poised to reap the environmental dividend soon.
Pressure on the natural habitats of impoverished people poses, by far, the biggest threat to biodiversity and tigers — much more than poaching does. China’s economic growth in recent decades is credited to have moved a couple of hundred million rural folks away from the country side. In some of the remote rural regions, villages are depopulating at a very fast rate. This has helped lower the pressure on natural resources of land, forest and water bodies.
China has identified a couple of such areas, original habitat of the south China tiger (SCT), for a bold experiment in ‘re-wilding’ and re-introduction of one of the most endangered sub-species of tigers.
Clearly, the declining human pressure on forest and wildlife — a result of increasing alternative economic opportunities — coupled with breeding facilities to meet the demand for tiger parts will dramatically alter the future of tigers in the wild, securing the future of these majestic animals. Tiger conservation provides an opportunity to bring a new dimension of cooperation between China and India.
India has had a lot of trouble handling large cats in captivity. Last year, about half a dozen big cats died in the Delhi zoo. In 2000, a dozen mysteriously died at Nandankanan zoo over a span of a week. In China, breeders have managed to handle hundreds of animals in close proximity without any major calamity.
India has a lot of expertise in terms of people who have the experience of managing forests and tiger habitats. These people provided a ready pool of talent to help China restore and rebuild some of its tiger habitats. Finally, wildlife conservation, rather than becoming a drain on the national exchequer, could become a major contributor to the national economy.
The choice before the delegates in Kathmandu this week could not have been starker. Should they harness the power of commerce for the cause of conservation? Or should they continue to condemn commerce? The tiger is at a crossroads, but its future depends on the choice we make between these two scripts.
Wednesday, April 18, 2007
Sunday, April 15, 2007
Economics of populism
Populism may be an inherent part of democracy, but one must be wary of opportunism. I review the book, 'Can India grow without Bharat?' by Shankar Acharya, one of India's leading economic policy maker. This was published in the Financial Express, on 15 April 2007, under the title "The Economics of populism".
Can India grow without Bharat, asks Shankar Acharya in the title of his new book. Whether you are a politician or an economist, the answer to that question is almost always a no. So what is it the economist wants to bring out in this book?
Acharya had served as the chief economist advisor to the government of India for seven long years between 1993 and 2000. Unusually, he served four prime ministers in four different political formations during this period getting a ringside view of politics of economic decisions. Here he brings together 33 short essays, written between late 2003 and 2006. These essays cover a range of issues from macro economic policies, budgetary and taxation policies, infrastructure issues, foreign trade, and foreign policy issues. He presents a sense of cautious optimism at India’s economic future. He recognises the potential and possibilities, but also stresses that India will not rise automatically, unless a range of policy changes are effected. And he is not sure that the political processes have the capacity to do it.
No doubt India has moved a long way in the past 15 to 30 years. One of the chapters, ‘India’s tax reformers’, reminds us of the extent of these changes. He briefly traces the history of tax reforms from the 1970s, and credits the personalities that were involved in those decisions. In the 1970s, customs duty were often above 200% on many products, excise duty ranged from 2 and 100% spread over 24 slabs. Cascading taxes were the norm. On the other hand, personal income tax had 11 slabs, ranging from 11 to 85%, and with a surcharge of 15%, the top marginal rate was effectively 97.5%. Needless to say that tax administration was very complex and distinctly arbitrary.
From the Wanchoo committee report on direct taxes in 1971, to the Kelkar report a few years ago, from VP Singh to Manmohan Singh, Chidambaram and Yashwant Sinha, the general direction of tax reforms have been sustained. But Acharya credits Singh as the father of modern tax reforms, for “he and his team took a holistic view of tax reforms, both direct and indirect.”
Another interesting essay is ‘Why did India reform?’ Going beyond the 1991 balance of payment crisis, Acharya points out that while the 1991 elections were not fought on the grounds of political ideology or market versus the state, “most elements of the reform agenda had been around in influential sections of India’s technocracy for some years”. Contrary to left-wing criticism, reforms were indeed home grown. Secondly, the clear mandate by Narsimha Rao to Manmohan Singh enabled the latter to coordinate closely with the PMO, RBI and the commerce ministry. Dr Singh’s previous experience at various senior government positions helped him clear a lot of the minefields. The author characterises the reforms process as a “medium bang”, in the spectrum between the ‘big bang’ and ‘gradualism’. The results started to become visible as early as 1993, and thus the momentum for reforms were sustained. Finally, he stresses Singh’s role for seizing the opportunity, saying “he was the right man in the right place at the right time.”
Since most of the essays in this volume deal with the issues facing the present UPA government, it is natural that the readers may like to read Acharya’s assessment of the present political dispensation. In a mid term review of the UPA, the author gives the government just 38 out of 100, over 10 parameters. Predictably, the author assesses the performance of exchange rate and external payment at a high of 8 out of 10, while employment, public sector reforms, agriculture and human resource development all awarded a low of 2 out of 10. Not much for a government that repeatedly declares its concern for the common man at the top of its agenda. One of the critical essays deals with one of the corner stone of UPA policy — National Rural Employment Guarantee scheme. Writing in November 2004, Acharya is categorical. This law would “certainly destroy India’s public finances and much else besides.” As UPA took over the reign of power in the summer of 2004, Acharya acknowledged that the economic team of Dr Singh, P Chidambaram and Montek Singh Ahluwalia is the strongest at the cabinet level. Still, he castigated the Common Minimum Programme for falling under Gresham’s law — “bad money drives out good money”.
By the end of 2005, Acharya is apprehensive of the resurgent populism, where long term economic and social health is sacrificed for short-term political gains. The author traces a brief history of political populism in India, from the days of Indira Gandhi and slogan of ‘garibi hatao’. In all these years, Acharya says, populism while present, took a back seat only during the 1991-1996 regime of Rao and Singh, and 1998-2004 of the NDA rule.
Needless to point out that at the end of both these era of relatively low level of populism, both these regimes were humbled at the next electoral battle. But the electoral outcomes for populist regimes have been even more pathetic! “The only effective remedy against the obvious political temptations of populism, lies with the country’s leadership and their motivation, courage and ability to protect long-term national interests, from short term political opportunism.”
From an author who believes that economic incentive and institutions matter, his assessment of the political process is not very satisfactory. This book provides a lucid explanation of a lot of economic issues. Although such compilation have their own limitations, this reviewer expected some insight in to the politics of economic reforms, and some thoughts on the incentives that make political actors behave in a particularly “populist” way.
Can political sensibilities match the needs of economic sensitivities? From his vantage position, one hopes that Acharya will pen another volume exploring whether economic reforms can ever capture popular imagination, or whether populism can usher in an era of sustainable reforms. Such an insight may prove to be much more long lasting in its impact, contributing to securing national well being, than the political dust raised by many specific policy debates.
Can India grow without Bharat, asks Shankar Acharya in the title of his new book. Whether you are a politician or an economist, the answer to that question is almost always a no. So what is it the economist wants to bring out in this book?
Acharya had served as the chief economist advisor to the government of India for seven long years between 1993 and 2000. Unusually, he served four prime ministers in four different political formations during this period getting a ringside view of politics of economic decisions. Here he brings together 33 short essays, written between late 2003 and 2006. These essays cover a range of issues from macro economic policies, budgetary and taxation policies, infrastructure issues, foreign trade, and foreign policy issues. He presents a sense of cautious optimism at India’s economic future. He recognises the potential and possibilities, but also stresses that India will not rise automatically, unless a range of policy changes are effected. And he is not sure that the political processes have the capacity to do it.
No doubt India has moved a long way in the past 15 to 30 years. One of the chapters, ‘India’s tax reformers’, reminds us of the extent of these changes. He briefly traces the history of tax reforms from the 1970s, and credits the personalities that were involved in those decisions. In the 1970s, customs duty were often above 200% on many products, excise duty ranged from 2 and 100% spread over 24 slabs. Cascading taxes were the norm. On the other hand, personal income tax had 11 slabs, ranging from 11 to 85%, and with a surcharge of 15%, the top marginal rate was effectively 97.5%. Needless to say that tax administration was very complex and distinctly arbitrary.
From the Wanchoo committee report on direct taxes in 1971, to the Kelkar report a few years ago, from VP Singh to Manmohan Singh, Chidambaram and Yashwant Sinha, the general direction of tax reforms have been sustained. But Acharya credits Singh as the father of modern tax reforms, for “he and his team took a holistic view of tax reforms, both direct and indirect.”
Another interesting essay is ‘Why did India reform?’ Going beyond the 1991 balance of payment crisis, Acharya points out that while the 1991 elections were not fought on the grounds of political ideology or market versus the state, “most elements of the reform agenda had been around in influential sections of India’s technocracy for some years”. Contrary to left-wing criticism, reforms were indeed home grown. Secondly, the clear mandate by Narsimha Rao to Manmohan Singh enabled the latter to coordinate closely with the PMO, RBI and the commerce ministry. Dr Singh’s previous experience at various senior government positions helped him clear a lot of the minefields. The author characterises the reforms process as a “medium bang”, in the spectrum between the ‘big bang’ and ‘gradualism’. The results started to become visible as early as 1993, and thus the momentum for reforms were sustained. Finally, he stresses Singh’s role for seizing the opportunity, saying “he was the right man in the right place at the right time.”
Since most of the essays in this volume deal with the issues facing the present UPA government, it is natural that the readers may like to read Acharya’s assessment of the present political dispensation. In a mid term review of the UPA, the author gives the government just 38 out of 100, over 10 parameters. Predictably, the author assesses the performance of exchange rate and external payment at a high of 8 out of 10, while employment, public sector reforms, agriculture and human resource development all awarded a low of 2 out of 10. Not much for a government that repeatedly declares its concern for the common man at the top of its agenda. One of the critical essays deals with one of the corner stone of UPA policy — National Rural Employment Guarantee scheme. Writing in November 2004, Acharya is categorical. This law would “certainly destroy India’s public finances and much else besides.” As UPA took over the reign of power in the summer of 2004, Acharya acknowledged that the economic team of Dr Singh, P Chidambaram and Montek Singh Ahluwalia is the strongest at the cabinet level. Still, he castigated the Common Minimum Programme for falling under Gresham’s law — “bad money drives out good money”.
By the end of 2005, Acharya is apprehensive of the resurgent populism, where long term economic and social health is sacrificed for short-term political gains. The author traces a brief history of political populism in India, from the days of Indira Gandhi and slogan of ‘garibi hatao’. In all these years, Acharya says, populism while present, took a back seat only during the 1991-1996 regime of Rao and Singh, and 1998-2004 of the NDA rule.
Needless to point out that at the end of both these era of relatively low level of populism, both these regimes were humbled at the next electoral battle. But the electoral outcomes for populist regimes have been even more pathetic! “The only effective remedy against the obvious political temptations of populism, lies with the country’s leadership and their motivation, courage and ability to protect long-term national interests, from short term political opportunism.”
From an author who believes that economic incentive and institutions matter, his assessment of the political process is not very satisfactory. This book provides a lucid explanation of a lot of economic issues. Although such compilation have their own limitations, this reviewer expected some insight in to the politics of economic reforms, and some thoughts on the incentives that make political actors behave in a particularly “populist” way.
Can political sensibilities match the needs of economic sensitivities? From his vantage position, one hopes that Acharya will pen another volume exploring whether economic reforms can ever capture popular imagination, or whether populism can usher in an era of sustainable reforms. Such an insight may prove to be much more long lasting in its impact, contributing to securing national well being, than the political dust raised by many specific policy debates.
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