The anti-defection law is suppressing dissent and has only raised the price of switching loyalties. We need to dispassionately understand the real cost of driving political negotiations underground, I write in this article "A law endangering democracy", published in the Mint, on 21 August 2008.
Many were outraged at the display of cash in Parliament, during the trust vote, last month. But far worse was that the Prime Minister could not make his concluding statement, and that even if he had, it would have made no impact. Our anti-defection law has made parliamentary debates pointless, as in the process of substantive debate, if members of Parliament, or MPs, change their mind and defy their party whip, they face disqualification. With debates being defunct, inducements in cash or kind become the necessary tools to sway legislators.
In a parliamentary democracy, numbers are important, but democracy is much more than just a numbers game. Democracy is not just about today’s majority, but also about protecting the smallest minority opinion, so that it has the freedom to become the majority opinion of tomorrow by engaging in informed debate and peacefully persuading people.
Some of the participants’ performance during the trust vote in Parliament was quite commendable. There was candour and compassion, precision and passion, angst and wit in some speeches. Sadly, the debate was a mere formality. The anti-defection law makes a mockery of parliamentary democracy by marginalizing debate, because legislators cannot afford to dissent without risking disqualification from the House, if they differed from the stated party line. Under this law, parties can expel the legislator who defies the party whip, and on complaint from the party, the Speaker has the power to disqualify the legislator from the House itself.
With parliamentary debate turned into a mere numbers game, closed-door negotiations and not- so-hidden inducements take precedence. Disruptions, rather than substantive debate, become the only form of opposition possible. If we are disgusted by this degeneration of political practices, we must allow our politicians to publicly and legitimately debate political ideology, negotiate electoral prospect, and be persuaded by ideas, even cash or kind, if necessary. And we must respect the voters’ wisdom to hold their representative to account at the next election.
Under the Tenth Schedule, any legislator who “votes or abstains from voting in such House contrary to any direction issued by the political party to which he belongs”, can be penalized with disqualification. There have been quite a few instances of disqualification from Parliament, under this law — in 1991, eight Janata Dal MPs for siding with the Chandra Shekhar government; in 1993, four MPs from a faction of the Janata Dal for backing the Narasimha Rao government; and, more recently, three Bahujan Samaj Party MPs for defecting to the Samajwadi Party.
This law was created to try and stop MPs from switching loyalties, and stabilize the polity by purging the “Aya Rams and Gaya Rams”. For the first time, stress on political discipline through party whips was established. But this has come at the cost of the idea of Westminster-style parliamentary democracy. Party affiliation is only incidental in our first-past-the-post electoral system, as elected representatives are obligated to represent all in their constituency — those who voted for their and those who may not have.
Today, the single biggest factor contributing to the desecration of Parliament is the anti-defection law. First, it has not prevented switching of loyalties; only the price may have increased. Second, it violates one of the basic features of our Constitution — democracy. Parliamentary debate itself has, thereby, become largely redundant. Third, it violates the basic element of representative democracy by empowering the party, and undermining the relationship between elected representatives and their constituents.
Ironically, the bigger political parties, which believed this law will help them keep their flock together, have become the biggest victims of blackmail and worse at the hands of the tiny parties and independents. Since merging with a bigger party makes exit so much tougher for individual members, the smaller entities have discovered the advantages of driving hard political bargains by retaining their independent identities.
At the founding of the Republic, B.R. Ambedkar warned: “Constitutional morality is not a natural sentiment... We must realise that our people have yet to learn it. Democracy in India is only a top dressing on an Indian soil, which is essentially undemocratic.” The sentiment may have reflected the then political reality, and a lot of credit for nurturing India on the road to a stable democratic future lay with the founding fathers, Jawaharlal Nehru, Sardar Patel, Ambedkar, Maulana Azad, C. Rajagopalachari and other political giants. The table has turned, 60 years on. The people have adopted democracy. But the political leadership seems hard- pressed to keep pace with their democratic aspirations. And its lack of appreciation of the true meaning of debate and dissent in democracy is at the root of much of our political ills.
We need to dispassionately understand the real political cost of the anti-defection law, and the price of driving political negotiations underground. Politics is the most noble of occupations which nurtures free and open societies. By bringing politics to the open, respecting dissent and revitalizing debate, we will help restore the majesty of democracy.
Thursday, August 21, 2008
Sunday, July 27, 2008
Serial blasts fail to shake the people's resolve
The serial bomb blasts have failed to shake the popular resolve not to be provoked. Tragically, the political consensus necessary to fight the perpetrators of terrors have failed to crystallise so far. It is clear from these attacks that the intention of the terrorists were to provoke a wider flare up among different sections of society. By refusing to get provoked the common man on the street have risen to this challenge, therefore, defeating the very purpose of these cowardly attacks on innocent people. I wrote this article in the aftermath of the serial bomb blasts that rocked Jaipur and Ahmedabad on 25th and 26th July 2008, and this was after the blasts in Jaipur in May.
Serial bombs fail to shake popular resolve, yet political consensus to fight terror elude
In the 16 serial blasts that rocked Ahmedabad city on Saturday, 49 lives have been lost so far. On Friday, nine explosions in Bangalore in the afternoon had killed two, and injured quite a few. With these two latest series of bombs in public places, we have had 11 serial bomb attacks in different Indian cities, beginning with one in Delhi in October 2005.
While the tragedy of these attacks have failed to shake the popular resolve not to be provoked, the political consensus necessary to fight the perpetrators of terrors have failed to crystalise so far.
While the deaths and destruction from each of these tragedies have varied, there is a common thread. From the nature of these blasts, it is clear that the effort has been not just to cause death and destruction, but primarily to cause panic, and provoke a wider flare up among different sections of society, particularly the Hindus and Muslims. But the common man on the street seems to have risen to this challenge in a spectacular manner. There has not been any general breakdown of law and order, and no reports of riots or retaliatory attacks on any community have broken out in the aftermath of these serial blasts.
The frustrations of the perpetrators could be best seen in their attempt to place their explosives in or around Mosques (Malegaon, Hyderabad, Ajmer) and in temples or around Hindu festivals (Ajmer, Delhi and Jaipur), in the desperate hope of provoking a wider reaction. The cowards behind these heinous attackers have failed miserably in their basic objectives of causing chaos and social breakdown, so far.
Unfortunately, the intelligence agencies have failed to get any information about these attacks, and the police investigation have failed in virtually each of these instances, to identify and apprehend the perpetrators, and prosecute them in courts of law.
The question, therefore is, will the political leadership and investigative agencies will rise to this challenge, rather than shirking their basic responsibility to protect life, liberty and property or engaging in political rhetoric or perpetuating the blame game, and meet the expectations of the public who have so far done everything in their capacity to demonstrate their capacity to absorb the shock of these blasts, and resolve not to fall for the provocation.
Chronology of serial blasts in India
PTI on NDTV, 26 July 2008
Serial bombs fail to shake popular resolve, yet political consensus to fight terror elude
In the 16 serial blasts that rocked Ahmedabad city on Saturday, 49 lives have been lost so far. On Friday, nine explosions in Bangalore in the afternoon had killed two, and injured quite a few. With these two latest series of bombs in public places, we have had 11 serial bomb attacks in different Indian cities, beginning with one in Delhi in October 2005.
While the tragedy of these attacks have failed to shake the popular resolve not to be provoked, the political consensus necessary to fight the perpetrators of terrors have failed to crystalise so far.
While the deaths and destruction from each of these tragedies have varied, there is a common thread. From the nature of these blasts, it is clear that the effort has been not just to cause death and destruction, but primarily to cause panic, and provoke a wider flare up among different sections of society, particularly the Hindus and Muslims. But the common man on the street seems to have risen to this challenge in a spectacular manner. There has not been any general breakdown of law and order, and no reports of riots or retaliatory attacks on any community have broken out in the aftermath of these serial blasts.
The frustrations of the perpetrators could be best seen in their attempt to place their explosives in or around Mosques (Malegaon, Hyderabad, Ajmer) and in temples or around Hindu festivals (Ajmer, Delhi and Jaipur), in the desperate hope of provoking a wider reaction. The cowards behind these heinous attackers have failed miserably in their basic objectives of causing chaos and social breakdown, so far.
Unfortunately, the intelligence agencies have failed to get any information about these attacks, and the police investigation have failed in virtually each of these instances, to identify and apprehend the perpetrators, and prosecute them in courts of law.
The question, therefore is, will the political leadership and investigative agencies will rise to this challenge, rather than shirking their basic responsibility to protect life, liberty and property or engaging in political rhetoric or perpetuating the blame game, and meet the expectations of the public who have so far done everything in their capacity to demonstrate their capacity to absorb the shock of these blasts, and resolve not to fall for the provocation.
Chronology of serial blasts in India
PTI on NDTV, 26 July 2008
- 26 July 2008: Serial blasts in Ahmedabad killing at least 49 people and injuring more than 100.
- 25 July 2008: Nine explosions in Bangalore create terror killing two people and injuring twelve.
- 13 May 2008: Eight serial blasts rock Jaipur in a span of 12 minutes leaving 65 dead and over 150 injured.
- 11 October 2007: 2 killed in a blast inside Ajmer Sharif shrine during Ramadan.
- 25 August 2007: 42 dead, 60 hurt in Hyderabad 'terror' strike.
- 18 May 2007: A bomb at Mecca mosque in Hyderabad kills 11 people.
- 19 February 2007: Two bombs explode aboard a train, near Panipat, bound from India to Pakistan, burning to death at least 66 passengers, most of them Pakistanis.
- 7 September 2006: 30 dead and 100 hurt in twin blasts at a mosque in Malegaon.
- 11 July 2006: Seven bombs on Mumbai's trains kill over 200 and injure 700 others.
- 7 March 2006: Three bombings at a train station and two temples in Varanasi kill 20 people.
- 29 October 2005: Three bombs placed in busy New Delhi markets a day before Diwali kill 62 people and injure hundreds.
- January 2008: Terrorist attack on CRPF camp in Rampur kills 8.
- August 2003: Two taxis packed with explosives blow up outside a Mumbai tourist attraction and a busy market, killing 52 and wounding more than 100.
- September 24, 2002: Militants with guns and explosives attack the Akshardham Hindu temple in the western state of Gujarat, 31 killed, More than 80 injured.
- May 14: Militants attack an army camp near Kashmir's winter capital, Jammu, killing more than 30, including wives and children of soldiers.
- December 13, 2001: More than a dozen people, including five gunmen, killed in an attack on parliament in New Delhi.
- October 1, 2001: Militants storm the Jammu and Kashmir state assembly complex, killing about 35 people.
- March 1993: Mumbai serial bombings kill 257 people and injure more than 1,100.
Tuesday, July 22, 2008
Market reform in politics
One reason why politicians have fallen in public esteem is because they are not seen to be operating in an open market, I argue in this article, "Market reform in politics", published in the Mint, on 22 July 2008.
The run-up to the trust vote has been as exciting as a Twenty20 (T20) game of cricket. Fortune is fluctuating every hour. It is a cliff-hanger!
But rather than enjoy the political game, commentators are lamenting that high principles of parliamentary democracy have degenerated to lowly bazaar bargaining.
It’s time our politicians took a leaf out of the T20 experience and created a legitimate market for politics.
Indian Premier League’s success was not in the T20 format. Beginning with the private ownership of teams to auctioning of the players, branding and marketing, cricket was commercialized as never before. It produced quality entertainment for the paying public and unearthed new talent.
In contrast to cricket, parliamentary discourse is handicapped by accusations of horse trading as if hard-nosed political bargaining is somehow unparliamentary.
One reason why politicians have fallen in public esteem is because they are not seen to be operating in an open market. This is in contrast to a regular scene of a street market, where the rich and poor rub shoulders, bargain over a product and go their separate ways without rancour.
If only politicians could operate in an open and competitive market-like environment, Parliament would be able to redeem itself.
If we are disgusted by closed-door political dealings and rumours of cash for votes, then we must allow our politicians to publicly and legitimately bargain over political ideology, negotiate electoral prospects, and be allowed to be persuaded by cash or kind if necessary.
When politicians are free to debate matters of ideology and strike bargains over public policy, the quality of parliamentary debate will enrich the country. But for this to happen, we have to scrap the most undemocratic element of our Constitution, the anti-defection law, which has stifled debate and endangered democracy itself.
In the marketplace, offers of cash or kind are tools for influencing potential customers. So, if a politician believes that ideology or policy is not adequate to further his political interest and, by extension, of his constituents, he should legitimately open himself to political auction.
Transparent and public bidding will remove insinuations of cash stuffed in suitcases. Since politics is an important way of organizing and sustaining free society, the amount raised by political auctions or contributions should be tax-free and without limit — the condition being that it be open to public audit.
If an MP were to auction his vote for Rs100 crore, his voters would legitimately ask for a share of the windfall. If unsatisfied, the voters could remove the leader at the next ballot. A political leader who can’t get elected is unlikely to command a high price. Then it will dawn on all that while money is necessary, it is not a sufficient condition for getting elected. Party, policies, performance, too, are required.
These two reforms in politics — marketization and transparency— will drastically reduce corruption and improve the quality of political discourse and unleash new talent.
Given the range of discretionary power in the hands of the government over a large number of economic issues, it’s possible that despite these political reforms, there could still be some element of undercover dealing in exchanging favours.
Having reduced the scope of political corruption, we will greatly enhance the capacity of law enforcement agencies to vigorously pursue the remaining instances of corruption. With increased competition and prospect of change of governments, the fear of getting exposed by rivals will act as a deterrent.
The true strength of a democracy lies in its people. With increased transparency, information about political leaders will freely flow. Empowered with information, citizens will be able to hold their elected representatives accountable. With economic reforms, we have begun to enjoy the benefits as consumers. With market reforms in politics, we the people will finally begin our reign as sovereign.
The run-up to the trust vote has been as exciting as a Twenty20 (T20) game of cricket. Fortune is fluctuating every hour. It is a cliff-hanger!
But rather than enjoy the political game, commentators are lamenting that high principles of parliamentary democracy have degenerated to lowly bazaar bargaining.
It’s time our politicians took a leaf out of the T20 experience and created a legitimate market for politics.
Indian Premier League’s success was not in the T20 format. Beginning with the private ownership of teams to auctioning of the players, branding and marketing, cricket was commercialized as never before. It produced quality entertainment for the paying public and unearthed new talent.
In contrast to cricket, parliamentary discourse is handicapped by accusations of horse trading as if hard-nosed political bargaining is somehow unparliamentary.
One reason why politicians have fallen in public esteem is because they are not seen to be operating in an open market. This is in contrast to a regular scene of a street market, where the rich and poor rub shoulders, bargain over a product and go their separate ways without rancour.
If only politicians could operate in an open and competitive market-like environment, Parliament would be able to redeem itself.
If we are disgusted by closed-door political dealings and rumours of cash for votes, then we must allow our politicians to publicly and legitimately bargain over political ideology, negotiate electoral prospects, and be allowed to be persuaded by cash or kind if necessary.
When politicians are free to debate matters of ideology and strike bargains over public policy, the quality of parliamentary debate will enrich the country. But for this to happen, we have to scrap the most undemocratic element of our Constitution, the anti-defection law, which has stifled debate and endangered democracy itself.
In the marketplace, offers of cash or kind are tools for influencing potential customers. So, if a politician believes that ideology or policy is not adequate to further his political interest and, by extension, of his constituents, he should legitimately open himself to political auction.
Transparent and public bidding will remove insinuations of cash stuffed in suitcases. Since politics is an important way of organizing and sustaining free society, the amount raised by political auctions or contributions should be tax-free and without limit — the condition being that it be open to public audit.
If an MP were to auction his vote for Rs100 crore, his voters would legitimately ask for a share of the windfall. If unsatisfied, the voters could remove the leader at the next ballot. A political leader who can’t get elected is unlikely to command a high price. Then it will dawn on all that while money is necessary, it is not a sufficient condition for getting elected. Party, policies, performance, too, are required.
These two reforms in politics — marketization and transparency— will drastically reduce corruption and improve the quality of political discourse and unleash new talent.
Given the range of discretionary power in the hands of the government over a large number of economic issues, it’s possible that despite these political reforms, there could still be some element of undercover dealing in exchanging favours.
Having reduced the scope of political corruption, we will greatly enhance the capacity of law enforcement agencies to vigorously pursue the remaining instances of corruption. With increased competition and prospect of change of governments, the fear of getting exposed by rivals will act as a deterrent.
The true strength of a democracy lies in its people. With increased transparency, information about political leaders will freely flow. Empowered with information, citizens will be able to hold their elected representatives accountable. With economic reforms, we have begun to enjoy the benefits as consumers. With market reforms in politics, we the people will finally begin our reign as sovereign.
Thursday, July 17, 2008
Economic climate casts a shadow on climate change
The politicos at the G8 summit in Japan, seem to have drawn their lessons from the Kyoto Protocol, two decades earlier, when they burned their fingers by accepting short-term goals of emission cuts by 2012. The hard reality is that the political leaders can no longer afford to sacrifice the poor today, at the altar of climate change, for the sake of the rich tomorrow. India can legitimately play a leadership role and change the climate of discussion on climate change, I write in "Economic climate at G8 overshadowed talk of climate change", published in the Mint, on 17 July 2008.
“It is the economy, stupid!” The economic and political concerns dampened the desire of world leaders at the Group of Eight (G-8) summit in Japan to ride the hot air balloon of climate change. That’s no surprise. In any contest between a present crisis and future threat, the present always wins. The G-8 leaders are hardcore politicians and recognize that in hard times, politicians must not get carried away by the future. This explains why they agreed to a future goal: 50% reduction in carbon emission by 2050, without any signposts towards that goal for the present.
The politicos seem to have drawn their lessons from the Kyoto Protocol, two decades earlier, when they burned their fingers by accepting short-term goals of emission cuts by 2012. Those targets will, of course, elude most signatories. And so, the leaders at this G-8 meet expressed a desire to reduce emissions by 2050, when few can be held accountable.
Clearly, it suited all not to push the agenda too far. With the economic slowdown, funding for new investments in alternative energy and desire for technology transfer will inevitably get squeezed. Consequently, there is little inducement for major emerging economies to even consider climate goals. This prospect was not lost among the climate change community. As the G-8 leaders were gathering in Japan, the Intergovernmental Panel on Climate Change (IPCC) made a pitch to the European Union to take the lead role. A group of senior corporate executives publicly appealed for funds to facilitate the development of energy- and emission-related technologies. It was clear that, in hard times, everyone could do with some spare funds!
The National Action Plan for Climate Change (NAPCC) that Prime Minister Manmohan Singh released a week before he left for the G-8 summit seems to have accepted this political reality. And so, India found itself in a comfortable situation at the side meetings at G-8; none of the core points of NAPCC was questioned.
With oil prices at record highs, it is natural that NAPCC will be seen more in the context of energy security, not just climate change. Virtually all the eight missions of NAPCC are policies identified much earlier, but progress has been mixed. NAPCC talks of benchmarking certain energy-intensive sectors. But some of the sectors that have seen dramatic improvement in energy efficiency are those that experienced greater global competition. So the lesson is that, rather than setting industry-specific benchmarks, deepening the reforms process can greatly help in improving industrial competitiveness and efficiency.
Perhaps, it is this relationship between economy, energy efficiency and emissions which made Singh assert that India is unlikely to cross the per capita energy consumption and emission levels of richer, industrialized countries. Increased commerce and competition will motivate Indian companies to leapfrog to higher levels of efficiency with increased access to global technologies.
However, it has dawned on policymakers that there is a real and rising threat of using climate change arguments to restrict commerce. With economic slowdown, the political climate could easily turn protectionist in the richer countries. Thus, it is even more important for India to identify and argue for the economic and environmental benefits of liberalization and free trade.
A key element of India’s position is that the developmental aspirations of its people cannot be sacrificed for emission targets. India’s per capita emission, at 1.2 tonne, is far lower than the world average of 3 tonnes-plus, and a fraction of that in rich countries. Besides, the “historical responsibility” for the anthropogenic greenhouse gases (GHGs) in the atmosphere lay squarely with the developed world. NAPCC also questions the role of man-made GHGs — it observes changes in climatic behaviour in India, such as a 0.4 degree Centigrade increase in surface temperature over the past century or about 1mm per year sea-level rise in northern Indian Ocean or wider variation in rainfall patterns. Yet, it affirms that no firm link between documented changes and warming due to anthropogenic climate change has yet been established.
This vital question needs to be read along with the last of NAPCC missions, which talks of the strategic knowledge sharing platform to identify challenges of, and response to, climate change and funding for focused research. This can help open the debate to more critical scientific scrutiny and generate more creative policy responses.
IPCC’s repeated assertion that there is a scientific consensus behind its reports and policy prescriptions reflects its own unscientific foundation. Science progresses by continuously questioning existing orthodoxy. The earth’s climate may or may not be changing, but the global economic slowdown and the rise of India among the emerging economies have opened a window of opportunity to change the climate of discourse, by grounding it to real-world concerns.
Ultimately, the hard reality is that the political leaders can no longer afford to sacrifice the poor today for the sake of the rich tomorrow. India can legitimately play a leadership role and change the climate of discussion on climate change.
“It is the economy, stupid!” The economic and political concerns dampened the desire of world leaders at the Group of Eight (G-8) summit in Japan to ride the hot air balloon of climate change. That’s no surprise. In any contest between a present crisis and future threat, the present always wins. The G-8 leaders are hardcore politicians and recognize that in hard times, politicians must not get carried away by the future. This explains why they agreed to a future goal: 50% reduction in carbon emission by 2050, without any signposts towards that goal for the present.
The politicos seem to have drawn their lessons from the Kyoto Protocol, two decades earlier, when they burned their fingers by accepting short-term goals of emission cuts by 2012. Those targets will, of course, elude most signatories. And so, the leaders at this G-8 meet expressed a desire to reduce emissions by 2050, when few can be held accountable.
Clearly, it suited all not to push the agenda too far. With the economic slowdown, funding for new investments in alternative energy and desire for technology transfer will inevitably get squeezed. Consequently, there is little inducement for major emerging economies to even consider climate goals. This prospect was not lost among the climate change community. As the G-8 leaders were gathering in Japan, the Intergovernmental Panel on Climate Change (IPCC) made a pitch to the European Union to take the lead role. A group of senior corporate executives publicly appealed for funds to facilitate the development of energy- and emission-related technologies. It was clear that, in hard times, everyone could do with some spare funds!
The National Action Plan for Climate Change (NAPCC) that Prime Minister Manmohan Singh released a week before he left for the G-8 summit seems to have accepted this political reality. And so, India found itself in a comfortable situation at the side meetings at G-8; none of the core points of NAPCC was questioned.
With oil prices at record highs, it is natural that NAPCC will be seen more in the context of energy security, not just climate change. Virtually all the eight missions of NAPCC are policies identified much earlier, but progress has been mixed. NAPCC talks of benchmarking certain energy-intensive sectors. But some of the sectors that have seen dramatic improvement in energy efficiency are those that experienced greater global competition. So the lesson is that, rather than setting industry-specific benchmarks, deepening the reforms process can greatly help in improving industrial competitiveness and efficiency.
Perhaps, it is this relationship between economy, energy efficiency and emissions which made Singh assert that India is unlikely to cross the per capita energy consumption and emission levels of richer, industrialized countries. Increased commerce and competition will motivate Indian companies to leapfrog to higher levels of efficiency with increased access to global technologies.
However, it has dawned on policymakers that there is a real and rising threat of using climate change arguments to restrict commerce. With economic slowdown, the political climate could easily turn protectionist in the richer countries. Thus, it is even more important for India to identify and argue for the economic and environmental benefits of liberalization and free trade.
A key element of India’s position is that the developmental aspirations of its people cannot be sacrificed for emission targets. India’s per capita emission, at 1.2 tonne, is far lower than the world average of 3 tonnes-plus, and a fraction of that in rich countries. Besides, the “historical responsibility” for the anthropogenic greenhouse gases (GHGs) in the atmosphere lay squarely with the developed world. NAPCC also questions the role of man-made GHGs — it observes changes in climatic behaviour in India, such as a 0.4 degree Centigrade increase in surface temperature over the past century or about 1mm per year sea-level rise in northern Indian Ocean or wider variation in rainfall patterns. Yet, it affirms that no firm link between documented changes and warming due to anthropogenic climate change has yet been established.
This vital question needs to be read along with the last of NAPCC missions, which talks of the strategic knowledge sharing platform to identify challenges of, and response to, climate change and funding for focused research. This can help open the debate to more critical scientific scrutiny and generate more creative policy responses.
IPCC’s repeated assertion that there is a scientific consensus behind its reports and policy prescriptions reflects its own unscientific foundation. Science progresses by continuously questioning existing orthodoxy. The earth’s climate may or may not be changing, but the global economic slowdown and the rise of India among the emerging economies have opened a window of opportunity to change the climate of discourse, by grounding it to real-world concerns.
Ultimately, the hard reality is that the political leaders can no longer afford to sacrifice the poor today for the sake of the rich tomorrow. India can legitimately play a leadership role and change the climate of discussion on climate change.
Monday, April 21, 2008
Patents are not the problem
Patents are often blamed for most of the problems afflicting the health care system. In this article published in the Montreal Gazette, on 21 April 2008, I point out that "Patents are not the problem". By focusing on patents rather than the wider ills that seriously affect healthcare service to the poor, we will not help improve the lot of the ordinary patients.
Thailand's health minister recently announced that the nation's state-run drug manufacturer, the Government Pharmaceutical Organization, would continue to violate the patents on four key cancer drugs. Health activists around the world applauded the move, apparently believing that intellectual property rights are an obstacle to bringing medicine to the world's poorest and sickest citizens.
But drug patents and drug prices aren't the main obstacle to Third World patients seeking treatment. The truth is that even if medicine were completely free, most developing nations lack the infrastructure to deliver it effectively. As Kevin De Cock, HIV/AIDS director at the World Health Organization, explained to Reuters last year, "You have health infrastructure that is dilapidated, and supply chains that don't exist."
For instance, cold storage is essential to preserving the effectiveness of many drugs. It's estimated that about 50,000 people die annually in India from snake bites, primarily because the anti-venom serum cannot be stored in most rural clinics because of a lack of refrigeration, thanks to an extremely unreliable supply of electricity.
Diagnostic facilities are also often ignored. It was recently estimated that of the 22 million pathological tests carried out across India each day, only 1 million may be done at accredited laboratories. In addition, there is very little information about the validity and reliability of many of these tests.
Regularly, drugs are not administered safely in hospitals. In India, the government admitted recently that nearly 70 per cent of the injections patients get might be unsafe. Often, patients stay away from hospitals - even when sick - out of fear that they might get infected with diseases like AIDS. Indeed, a 10-year-old boy from a poor family in eastern India was infected with AIDS at one of Delhi's premiere hospitals.
This is one reason why the Indian government failed miserably in its efforts to increase access to medicines even after abolishing product patents in 1972. Thirty years later, when the debate began as to whether India would be better served by re-establishing patent rights, less than 10 per cent of the nation's estimated 3.5 million AIDS patients were receiving any treatment whatsoever.
Then there is the issue of greed - not so much of the patent-holders, but that of many governments in poor countries.
Kenya, one of the world's most vocal proponents of the patent-is-the-problem-for-patients notion, levies a 38-per-cent tax on imported medicines - enormous markup that needlessly makes drugs too expensive for many sick Kenyans. Morocco and Tanzania tax medicines at a similar rate. Brazil, also a habitual offender of intellectual property, imposes a 28-per-cent tax. Peru's tax is 29 per cent.
In Thailand, the former government turned down an offer from the Global Fund (an international philanthropy) that would have provided resources to purchase generic medications certified by the World Health Organization - preferring instead to produce the drugs domestically.
The reality is that regardless of whether a nation respects drug patents, someone somewhere must pay the high research and development costs of the pharmaceutical industry. Otherwise, drugs cannot be developed.
Right now, American patients pay for most research costs through high drug prices. It's estimated that it costs $800 million to develop a new drug today. Many drug makers already sell many medications at much lower prices to poor countries. If the use of compulsory licences increases, they'll have little choice but to reduce humanitarian drug sales or increase prices in poor nations - as they would have to find a way to recoup that lost revenue.
The health activists who are urging a number of governments that are systematically confiscating patents from international drug companies might have good intentions. But if governments continue to expropriate patents, they will essentially kill the goose that lays the golden eggs - and along with it, the hopes of hundreds of millions of the world's sick who await tomorrow's cures.
By focusing on patents rather than the wider ills that seriously affect healthcare service to the poor, we will not help improve the lot of the ordinary patients.
Thailand's health minister recently announced that the nation's state-run drug manufacturer, the Government Pharmaceutical Organization, would continue to violate the patents on four key cancer drugs. Health activists around the world applauded the move, apparently believing that intellectual property rights are an obstacle to bringing medicine to the world's poorest and sickest citizens.
But drug patents and drug prices aren't the main obstacle to Third World patients seeking treatment. The truth is that even if medicine were completely free, most developing nations lack the infrastructure to deliver it effectively. As Kevin De Cock, HIV/AIDS director at the World Health Organization, explained to Reuters last year, "You have health infrastructure that is dilapidated, and supply chains that don't exist."
For instance, cold storage is essential to preserving the effectiveness of many drugs. It's estimated that about 50,000 people die annually in India from snake bites, primarily because the anti-venom serum cannot be stored in most rural clinics because of a lack of refrigeration, thanks to an extremely unreliable supply of electricity.
Diagnostic facilities are also often ignored. It was recently estimated that of the 22 million pathological tests carried out across India each day, only 1 million may be done at accredited laboratories. In addition, there is very little information about the validity and reliability of many of these tests.
Regularly, drugs are not administered safely in hospitals. In India, the government admitted recently that nearly 70 per cent of the injections patients get might be unsafe. Often, patients stay away from hospitals - even when sick - out of fear that they might get infected with diseases like AIDS. Indeed, a 10-year-old boy from a poor family in eastern India was infected with AIDS at one of Delhi's premiere hospitals.
This is one reason why the Indian government failed miserably in its efforts to increase access to medicines even after abolishing product patents in 1972. Thirty years later, when the debate began as to whether India would be better served by re-establishing patent rights, less than 10 per cent of the nation's estimated 3.5 million AIDS patients were receiving any treatment whatsoever.
Then there is the issue of greed - not so much of the patent-holders, but that of many governments in poor countries.
Kenya, one of the world's most vocal proponents of the patent-is-the-problem-for-patients notion, levies a 38-per-cent tax on imported medicines - enormous markup that needlessly makes drugs too expensive for many sick Kenyans. Morocco and Tanzania tax medicines at a similar rate. Brazil, also a habitual offender of intellectual property, imposes a 28-per-cent tax. Peru's tax is 29 per cent.
In Thailand, the former government turned down an offer from the Global Fund (an international philanthropy) that would have provided resources to purchase generic medications certified by the World Health Organization - preferring instead to produce the drugs domestically.
The reality is that regardless of whether a nation respects drug patents, someone somewhere must pay the high research and development costs of the pharmaceutical industry. Otherwise, drugs cannot be developed.
Right now, American patients pay for most research costs through high drug prices. It's estimated that it costs $800 million to develop a new drug today. Many drug makers already sell many medications at much lower prices to poor countries. If the use of compulsory licences increases, they'll have little choice but to reduce humanitarian drug sales or increase prices in poor nations - as they would have to find a way to recoup that lost revenue.
The health activists who are urging a number of governments that are systematically confiscating patents from international drug companies might have good intentions. But if governments continue to expropriate patents, they will essentially kill the goose that lays the golden eggs - and along with it, the hopes of hundreds of millions of the world's sick who await tomorrow's cures.
By focusing on patents rather than the wider ills that seriously affect healthcare service to the poor, we will not help improve the lot of the ordinary patients.
Tuesday, February 5, 2008
Should India remain a socialist republic?
In the constituent assembly in 1948, Dr B R Ambedkar, the chairman of the drafting committee, had clearly reasoned why no political ideology, socialism or anything else, should be included in the Constitution, binding the future generations. But in 1976, under her emergency rule, Prime Minister Indira Gandhi introduced the 42 amendment which among many other things, also introduced "socialism" in to the preamble. Now, 0ver fifteen years since India began to liberalise and reform our economic system, and began a slow journey moving away from the socialist policies that had strangulated the economy, "Should India remain a socialist republic?" I ask this question in view of a recent PIL that raised the same question in the Supreme Court, on 5 February 2008.
Last month, the Supreme Court issued notice to the Government of India and the Election Commission in response to a petition questioning the constitutionality of India being a socialist state. The judges wanted to hear about the practical and legal implications of having a socialist intent in the preamble which has led to the changes in the Representation of People Act, making it mandatory for all registered political parties in India to affirm to socialist ideals.
In 1976, the preamble to the Constitution was amended to make India a "sovereign, secular, socialist, democratic republic". Thirty years later, a new generation of Indians, want to undo that historic mistake.
Dr. B. R. Ambedkar specifically explained the reason for the non-inclusion of the word "socialism", when it was sought to be inserted into the preamble by another member. He stated in the Assembly on 15th November, 1948:
The purpose of the amendment to include "socialist", was stated in the Statement of the Objective -
1. Inclusion of "socialist" in the Preamble is against the original intent of the founding fathers
2. By including socialism, democracy, which has been accepted as one of the "basic features" of the constitution is being violated.
3. Democracy gives the people the freedom to choose the nature of social organisation of the state under which they want to live, and change that order if they deem necessary. So it unconstitutional to tie the future generations to only a particular type of social organisation - socialism.
4. If the objective of the 42nd amendment is to be accepted, then either the Indian state, which over the past two decades, has been trying to withdraw from many economic activities, is no longer following that socialist objective; or that times have changed, and that objective is no longer desired by the people, and has become obsolete.
5. All most all the major countries of the world, which had incorporated "socialism" as the only political ideology of the state, had turned in to one party, dictatorship. This could not be the goal of the world's largest and most vibrant multiparty democracy.
This is no longer an issue of political semantic. If the preamble was a mere statement of intent, without any particular legal force, one could perhaps ignore this aspect. Many people have legitimately different perspective on different aspects of the Indian constitution, yet the basic structure of the constitution is acceptable to most. But the socialist intent of the preamble has been extended as a law in to the Representation of Peoples Act, 1951, through an amendment in 1988 by the Congress government under Rajiv Gandhi, which enjoyed unprecedented majority in Parliament. The bill was passed without a single dissenting vote.
Section 29A of the RPA, requires that any political association that seeks to register itself with the Election Commission of India, needs to file an affidavit affirming to socialism. This in effect means that only political parties with socialist ideology can undertake legitimate political action, and campaigns in India . On the other hand, independents and non-registered political parties can promote any ideology, and if elected, can join the ranks of the legislators.
This provision in the election law could easily be found to violate of the freedom of association, as well as freedom of thought and expression, some of the fundamental rights guaranteed under our constitution. Clearly, this affirmation to socialism goes much beyond the "reasonable restriction" doctrine that circumscribes the fundamental rights.
An historic opportunity has come our way to focus the spotlight on the political ideologies and principles, one of the legitimate purposes of democratic governance. Even more importantly, this is an opportunity to appreciate our constitutional structure that provides legitimate space to all ideologies to compete for the attention of the people, without legally restricting that space to any one preferred political theory.
A time comes for every generation when they have to face test of history. Sixty years after India gained its Independence from British colonial rule, We the People, have to decide, whether we want to be in the dustbin of history by continuing to align ourselves with a failed political ideology, or be shown to be hypocrite declaring a principle, and then rejecting it in practice. Or, do We the People have the freedom to chart our own destiny in the democratic miracle that is India. Today, We the People need to judge our past, so that we can come out with our heads high, when the future generations sit on judgement over us. On the sixtieth anniversary of our Independence, this would be the most appropriate reaffirmation of our faith in constitutional democracy.
Last month, the Supreme Court issued notice to the Government of India and the Election Commission in response to a petition questioning the constitutionality of India being a socialist state. The judges wanted to hear about the practical and legal implications of having a socialist intent in the preamble which has led to the changes in the Representation of People Act, making it mandatory for all registered political parties in India to affirm to socialist ideals.
In 1976, the preamble to the Constitution was amended to make India a "sovereign, secular, socialist, democratic republic". Thirty years later, a new generation of Indians, want to undo that historic mistake.
Dr. B. R. Ambedkar specifically explained the reason for the non-inclusion of the word "socialism", when it was sought to be inserted into the preamble by another member. He stated in the Assembly on 15th November, 1948:
"What should be the policy of the State, how the Society should be organized in its social and economic side are matters which must be decided by the people themselves according to time and circumstances. It cannot be laid down in the Constitution itself, because that is destroying democracy altogether. If you state in the Constitution that the social organization of the State shall take a particular form, you are, in my judgment, taking away the liberty of the people to decide what should be the social organization in which they wish to live. It is perfectly possible today, for the majority people to hold that the socialist organization of society is better than the capitalist organization of society. But it would be perfectly possible for thinking people to devise some other form of social organization which might be better than the socialist organization of today or of tomorrow. I do not see therefore why the Constitution should tie down the people to live in a particular form and not leave it to the people themselves to decide it for themselves."In 1950, when the people of India adopted the Constitution, the Preamble read:
[Source: Constituent Assembly Debates, Vol. VIII, pp.401-402]
"We, the people of India , having solemnly resolved to constitute India into a Sovereign, Democratic Republic and to secure to all its citizens:
Justice - social, economic and political;A quarter Century later, the Congress government under Prime Minister of Mrs Indira Gandhi, during the dark days of emergency rule, passed the 42nd Amendment to the Indian Constitution in 1976. Among many other things, the Preamble to the Constitution was amended to include - secular, socialist, - to state India to be a "sovereign, secular, socialist democratic republic".
Liberty of thought, expression, belief, faith and worship;
Equality of status and of opportunity before law."
The purpose of the amendment to include "socialist", was stated in the Statement of the Objective -
Addition of the word 'socialist' indicates incorporation of the philosophy of socialism in the Constitution and may enable the courts to lean more and more in favour of nationalization and State ownership of industry.Thirty years later, a PIL is seeking to question the constitutionality of amending the Preamble. There are major legal grounds for such a question.
1. Inclusion of "socialist" in the Preamble is against the original intent of the founding fathers
2. By including socialism, democracy, which has been accepted as one of the "basic features" of the constitution is being violated.
3. Democracy gives the people the freedom to choose the nature of social organisation of the state under which they want to live, and change that order if they deem necessary. So it unconstitutional to tie the future generations to only a particular type of social organisation - socialism.
4. If the objective of the 42nd amendment is to be accepted, then either the Indian state, which over the past two decades, has been trying to withdraw from many economic activities, is no longer following that socialist objective; or that times have changed, and that objective is no longer desired by the people, and has become obsolete.
5. All most all the major countries of the world, which had incorporated "socialism" as the only political ideology of the state, had turned in to one party, dictatorship. This could not be the goal of the world's largest and most vibrant multiparty democracy.
This is no longer an issue of political semantic. If the preamble was a mere statement of intent, without any particular legal force, one could perhaps ignore this aspect. Many people have legitimately different perspective on different aspects of the Indian constitution, yet the basic structure of the constitution is acceptable to most. But the socialist intent of the preamble has been extended as a law in to the Representation of Peoples Act, 1951, through an amendment in 1988 by the Congress government under Rajiv Gandhi, which enjoyed unprecedented majority in Parliament. The bill was passed without a single dissenting vote.
Section 29A of the RPA, requires that any political association that seeks to register itself with the Election Commission of India, needs to file an affidavit affirming to socialism. This in effect means that only political parties with socialist ideology can undertake legitimate political action, and campaigns in India . On the other hand, independents and non-registered political parties can promote any ideology, and if elected, can join the ranks of the legislators.
This provision in the election law could easily be found to violate of the freedom of association, as well as freedom of thought and expression, some of the fundamental rights guaranteed under our constitution. Clearly, this affirmation to socialism goes much beyond the "reasonable restriction" doctrine that circumscribes the fundamental rights.
An historic opportunity has come our way to focus the spotlight on the political ideologies and principles, one of the legitimate purposes of democratic governance. Even more importantly, this is an opportunity to appreciate our constitutional structure that provides legitimate space to all ideologies to compete for the attention of the people, without legally restricting that space to any one preferred political theory.
A time comes for every generation when they have to face test of history. Sixty years after India gained its Independence from British colonial rule, We the People, have to decide, whether we want to be in the dustbin of history by continuing to align ourselves with a failed political ideology, or be shown to be hypocrite declaring a principle, and then rejecting it in practice. Or, do We the People have the freedom to chart our own destiny in the democratic miracle that is India. Today, We the People need to judge our past, so that we can come out with our heads high, when the future generations sit on judgement over us. On the sixtieth anniversary of our Independence, this would be the most appropriate reaffirmation of our faith in constitutional democracy.
Free India's land market
It is legal to invoke eminent domain to acquire private land for industrial projects, even though the investors could afford to buy the land. But why can't a farmer buy a thousand acres. In this article "Free India's land market", published in the Mint, on 4 February 2008, I look at the problems affecting land market.
Small as it is, the Tata Nano has sent the world automobile sector into a big spin. The Nano reflects the potential of the new industrial revolution, which has so far passed India by. However, for the manufacturing to take firm root, the land needs to be prepared.
The Nano has been developed in four years. But Tata Motors may not have been able to buy the necessary land from landowners during the same period.
Which leads us to the question: Why is it legitimate to acquire land for industrial use, but prohibit farmers from consolidating and expanding their landholding to improve agriculture? Why shouldn’t a farmer be able to legitimately acquire a thousand acres?
Indian industry can raise capital from the global market on the basis of a prospectus, which promises performance in the future. But Indian farmers can’t raise adequate capital on the basis of the land asset which they already possess.
The most significant fallout of the Nano is the realization that low-cost manufacturing is not the exclusive domain of China. The Nano’s real contribution will be to demonstrate the competitiveness and technological viability of manufacturing in India. The industrial revolution may yet come to India, riding the Nano; a century late, perhaps, but better late than never.
But one swallow does not make a summer. One Tata Motors factory in Singur will not be able to spur the much-delayed industrial revolution.
Much more economic reform is necessary if India is to experience the much-needed industrial revolution. But the Nano gives us a glimpse of the possibilities.
Let’s take the Singur connection. The debate should not be for or against industrialization. The real debate ought to be on the glaring discrimination between agricultural land, and non-agricultural usage of that same land. Apparently, 40-50% of agricultural landowners are believed to be willing to sell their assets, at least partly, and move their economic activities beyond agriculture. It is imperative to facilitate this shift from agriculture to industry, and then to services.
No country in the world has been able to develop by keeping the bulk of its population dependent on land. With almost 60% of the population dependent on agriculture, which today contributes less than 20% of India’s GDP, it is no surprise that agriculture has become synonymous with poverty. The only way to pave the way for development is to increase agriculture productivity and at the same time absorb millions of people in non-agricultural activities.
However, it is critical that the value of the land of farmers, often their only asset, is maximized, and it is made simple to capitalize. The problem facing the poor is not their poverty, but inability to capitalize their assets. Typically, agricultural land hardly fetches Rs2-3 lakh per acre. Agriculture income, even if the land is cropped twice a year, can hardly be more than Rs30,000 per acre, at current productivity levels.
Restrictions such as zoning, land ceiling and land use laws, along with unclear titles and poor land records, grossly undervalue land prices. On top of that, there are transaction costs such as registration fees, property tax, etc. The result is a greatly distorted land market. At one end, there are landowners, millions of small and marginal farmers, who can’t even know the market value of their land. At the other end, there are the land mafia and speculators, who make a killing because of the large gap between restrained supply and inflated demand.
The Tata Motors project in Singur illustrates this quite vividly. This Rs1,500 crore project needed about 1,000 acres of land. For a typical industrial project of this kind, land rarely contributes 10% of the project cost. This means, Tata Motors could have purchased the land for around Rs150 crore. Or in a functioning land market, could have leased or rented the land at a much lower capital cost. This would translate to a price of around Rs15 lakh per acre in the Singur area. Tata Motors, with a production of about 250,000 cars per year, could have a turnover of Rs2,500 crore. One doesn’t have to be a financial wizard to know that if the Nano finds acceptance among buyers, this project would be an eminently viable one.
Rather than opposing land acquisition by the state, farmers may freely agree to sell their land if the offer is attractive enough. But they should be equally free not to sell, and instead give the land on lease or rent, and earn an assured return. The industry could also offer shares or bonds in lieu of land. Or even provide alternative land if the farmer decides to continue with his vocation. In an open land market, with protected property rights and security of contract, there would be a wide range of choices to meet almost every requirement. Only then would agriculture and industry become truly equal partners in the process of economic development, rather than being pitted against each other.
If the government no longer tries to act as a broker in industrial mergers and acquisitions, there is no reason for it to become a land broker either. But for this to happen, we need to radically liberalize the land market. If we are beginning to enjoy the fruits of industrial liberalization, and the Nano is a product of that reform, the potential benefit of unlocking the economic value of land is beyond our imagination.
The success of the Nano, coupled with the bitter debate over land in Singur, should help us appreciate the urgent need for liberalizing the land market, and pave the way for truly “inclusive growth”. Farmers as well as industrial enterprises deserve this. The Nano is a small car, but if it helps expose the self-imposed brakes that have held back our economic development, it could drive us towards a new industrial dawn.
Small as it is, the Tata Nano has sent the world automobile sector into a big spin. The Nano reflects the potential of the new industrial revolution, which has so far passed India by. However, for the manufacturing to take firm root, the land needs to be prepared.
The Nano has been developed in four years. But Tata Motors may not have been able to buy the necessary land from landowners during the same period.
Which leads us to the question: Why is it legitimate to acquire land for industrial use, but prohibit farmers from consolidating and expanding their landholding to improve agriculture? Why shouldn’t a farmer be able to legitimately acquire a thousand acres?
Indian industry can raise capital from the global market on the basis of a prospectus, which promises performance in the future. But Indian farmers can’t raise adequate capital on the basis of the land asset which they already possess.
The most significant fallout of the Nano is the realization that low-cost manufacturing is not the exclusive domain of China. The Nano’s real contribution will be to demonstrate the competitiveness and technological viability of manufacturing in India. The industrial revolution may yet come to India, riding the Nano; a century late, perhaps, but better late than never.
But one swallow does not make a summer. One Tata Motors factory in Singur will not be able to spur the much-delayed industrial revolution.
Much more economic reform is necessary if India is to experience the much-needed industrial revolution. But the Nano gives us a glimpse of the possibilities.
Let’s take the Singur connection. The debate should not be for or against industrialization. The real debate ought to be on the glaring discrimination between agricultural land, and non-agricultural usage of that same land. Apparently, 40-50% of agricultural landowners are believed to be willing to sell their assets, at least partly, and move their economic activities beyond agriculture. It is imperative to facilitate this shift from agriculture to industry, and then to services.
No country in the world has been able to develop by keeping the bulk of its population dependent on land. With almost 60% of the population dependent on agriculture, which today contributes less than 20% of India’s GDP, it is no surprise that agriculture has become synonymous with poverty. The only way to pave the way for development is to increase agriculture productivity and at the same time absorb millions of people in non-agricultural activities.
However, it is critical that the value of the land of farmers, often their only asset, is maximized, and it is made simple to capitalize. The problem facing the poor is not their poverty, but inability to capitalize their assets. Typically, agricultural land hardly fetches Rs2-3 lakh per acre. Agriculture income, even if the land is cropped twice a year, can hardly be more than Rs30,000 per acre, at current productivity levels.
Restrictions such as zoning, land ceiling and land use laws, along with unclear titles and poor land records, grossly undervalue land prices. On top of that, there are transaction costs such as registration fees, property tax, etc. The result is a greatly distorted land market. At one end, there are landowners, millions of small and marginal farmers, who can’t even know the market value of their land. At the other end, there are the land mafia and speculators, who make a killing because of the large gap between restrained supply and inflated demand.
The Tata Motors project in Singur illustrates this quite vividly. This Rs1,500 crore project needed about 1,000 acres of land. For a typical industrial project of this kind, land rarely contributes 10% of the project cost. This means, Tata Motors could have purchased the land for around Rs150 crore. Or in a functioning land market, could have leased or rented the land at a much lower capital cost. This would translate to a price of around Rs15 lakh per acre in the Singur area. Tata Motors, with a production of about 250,000 cars per year, could have a turnover of Rs2,500 crore. One doesn’t have to be a financial wizard to know that if the Nano finds acceptance among buyers, this project would be an eminently viable one.
Rather than opposing land acquisition by the state, farmers may freely agree to sell their land if the offer is attractive enough. But they should be equally free not to sell, and instead give the land on lease or rent, and earn an assured return. The industry could also offer shares or bonds in lieu of land. Or even provide alternative land if the farmer decides to continue with his vocation. In an open land market, with protected property rights and security of contract, there would be a wide range of choices to meet almost every requirement. Only then would agriculture and industry become truly equal partners in the process of economic development, rather than being pitted against each other.
If the government no longer tries to act as a broker in industrial mergers and acquisitions, there is no reason for it to become a land broker either. But for this to happen, we need to radically liberalize the land market. If we are beginning to enjoy the fruits of industrial liberalization, and the Nano is a product of that reform, the potential benefit of unlocking the economic value of land is beyond our imagination.
The success of the Nano, coupled with the bitter debate over land in Singur, should help us appreciate the urgent need for liberalizing the land market, and pave the way for truly “inclusive growth”. Farmers as well as industrial enterprises deserve this. The Nano is a small car, but if it helps expose the self-imposed brakes that have held back our economic development, it could drive us towards a new industrial dawn.
Friday, January 18, 2008
Time to oust socialism from the constitution
Countries where socialism was the only political ideology of the state inevitably degenerated into dictatorship. At stake is the democratic and political process, which includes campaigning and convincing the people of any particular political ideology, I write in the Mint on 17 January 2008, that "‘Our’ socialist agenda: the time to oust it has come".
The world has come to admire India’s democratic institutions. However, many may be unaware that in this, the largest democracy, all political parties have to profess the same political ideology—socialism. The Supreme Court has now asked the government and the Election Commission to explain this apparent paradox. Under the Representation of the People Act, all political parties in India have to pledge allegiance not only to the Constitution and integrity of India, but also to socialism.
The socialist intent of the Preamble has been extended by law to the Representation of the People Act, 1951, (RP Act) through an amendment in 1988. Section 29 A (5) of the Act now states that the application for registration “shall be accompanied by a copy of the memorandum or rules and regulations of the association…shall bear…allegiance to the Constitution of India…to the principles of socialism, secularism and democracy, …uphold the sovereignty, unity and integrity of India.”
Rajiv Gandhi’s government introduced this amendment when the ruling Congress party enjoyed three-fourths majority in Parliament. The amendment was carried without any dissenting vote.
But at the root of this change, was the infamous 42nd Amendment to the Constitution, enacted by the Congress government under then prime minister Indira Gandhi during the days of national emergency, in 1976. The Bill had proposed nearly 60 amendments—one of these amended the Preamble to the Constitution to term India a “sovereign, secular, socialist democratic republic.”
When the Janata Party formed government after the Congress lost the 1977 election, it sought to undo a lot of the draconian provisions of the 42nd Amendment, but retained the section that pertained to socialism and secularism in the Preamble. While Indira Gandhi wanted to lean towards socialist policies and diluted protection of property rights in order to pursue a more active intervention in the private sector, Morarji Desai’s government actually deleted the right to property as a fundamental right from the Constitution in 1978. Clearly, there was an almost unanimous opinion in Indian politics that socialism was the preferred path for the country.
However, B.R. Ambedkar, the man who helped draft the Constitution, specifically gave his reason for the non-inclusion of the word “socialism” when it was sought to be inserted into the Preamble by another member during the deliberations. Ambedkar did not want the Constitution to tie down future generations. He said in the Assembly on 15 November, 1948 : “(H)ow the society should be organized in its social and economic side are matters which must be decided by the people themselves according to time and circumstances. It cannot be laid down in the Constitution itself, because that is destroying democracy altogether… It is perfectly possible today, for the majority people to hold that the socialist organization of society is better than the capitalist... But it would be perfectly possible for thinking people to devise some other form...which might be better than the socialist organization of today or of tomorrow.”
In 1950, when the Constitution was adopted, the Preamble read: “We, the people of India, having solemnly resolved to constitute India into a sovereign, democratic republic and to secure to all its citizens…”
Six decades after Ambedkar’s caution, three decades after the amendment which added socialism in the Preamble and two decades after the change in the election law that made it mandatory for all political organizations in the country to affirm to the cause of socialism, there is now an opportunity to seriously reconsider this whole issue. The Supreme Court recently issued a notice to the government, in response to a public interest petition questioning the validity of the affirmation of socialism. The court wanted to know the practical and legal implications of having a socialist intent in the Preamble, as reflected in the RP Act.
The Swatantra Party in Maharashtra has been trying to challenge this provision in the high court for more than a decade, with little success. If all political parties are to have the same ideology, we would hardly need multiple parties. If we don’t have parties, there would be no need for contested elections. If we don’t have free and fair elections, we won’t have representative democracy. If we don’t have democracy…does this path sound familiar?
What is at stake is not whether one believes in the tenets of socialism or secularism. At stake is the democratic and political process, which includes campaigning and convincing the people of any particular political ideology; and the freedom of the people to choose from the competing policies.
Democracy is not just about majority rule, it is also about the freedom enjoyed by those who hold a minority opinion today to win over their fellow citizens. Without that freedom, democracy cannot have any substance. It is no coincidence that countries which had incorporated socialism as the only political ideology of the state inevitably degenerated into one-party dictatorship. This can’t be the goal of the most vibrant multiparty democracy in the world—India.
The world has come to admire India’s democratic institutions. However, many may be unaware that in this, the largest democracy, all political parties have to profess the same political ideology—socialism. The Supreme Court has now asked the government and the Election Commission to explain this apparent paradox. Under the Representation of the People Act, all political parties in India have to pledge allegiance not only to the Constitution and integrity of India, but also to socialism.
The socialist intent of the Preamble has been extended by law to the Representation of the People Act, 1951, (RP Act) through an amendment in 1988. Section 29 A (5) of the Act now states that the application for registration “shall be accompanied by a copy of the memorandum or rules and regulations of the association…shall bear…allegiance to the Constitution of India…to the principles of socialism, secularism and democracy, …uphold the sovereignty, unity and integrity of India.”
Rajiv Gandhi’s government introduced this amendment when the ruling Congress party enjoyed three-fourths majority in Parliament. The amendment was carried without any dissenting vote.
But at the root of this change, was the infamous 42nd Amendment to the Constitution, enacted by the Congress government under then prime minister Indira Gandhi during the days of national emergency, in 1976. The Bill had proposed nearly 60 amendments—one of these amended the Preamble to the Constitution to term India a “sovereign, secular, socialist democratic republic.”
When the Janata Party formed government after the Congress lost the 1977 election, it sought to undo a lot of the draconian provisions of the 42nd Amendment, but retained the section that pertained to socialism and secularism in the Preamble. While Indira Gandhi wanted to lean towards socialist policies and diluted protection of property rights in order to pursue a more active intervention in the private sector, Morarji Desai’s government actually deleted the right to property as a fundamental right from the Constitution in 1978. Clearly, there was an almost unanimous opinion in Indian politics that socialism was the preferred path for the country.
However, B.R. Ambedkar, the man who helped draft the Constitution, specifically gave his reason for the non-inclusion of the word “socialism” when it was sought to be inserted into the Preamble by another member during the deliberations. Ambedkar did not want the Constitution to tie down future generations. He said in the Assembly on 15 November, 1948 : “(H)ow the society should be organized in its social and economic side are matters which must be decided by the people themselves according to time and circumstances. It cannot be laid down in the Constitution itself, because that is destroying democracy altogether… It is perfectly possible today, for the majority people to hold that the socialist organization of society is better than the capitalist... But it would be perfectly possible for thinking people to devise some other form...which might be better than the socialist organization of today or of tomorrow.”
In 1950, when the Constitution was adopted, the Preamble read: “We, the people of India, having solemnly resolved to constitute India into a sovereign, democratic republic and to secure to all its citizens…”
Six decades after Ambedkar’s caution, three decades after the amendment which added socialism in the Preamble and two decades after the change in the election law that made it mandatory for all political organizations in the country to affirm to the cause of socialism, there is now an opportunity to seriously reconsider this whole issue. The Supreme Court recently issued a notice to the government, in response to a public interest petition questioning the validity of the affirmation of socialism. The court wanted to know the practical and legal implications of having a socialist intent in the Preamble, as reflected in the RP Act.
The Swatantra Party in Maharashtra has been trying to challenge this provision in the high court for more than a decade, with little success. If all political parties are to have the same ideology, we would hardly need multiple parties. If we don’t have parties, there would be no need for contested elections. If we don’t have free and fair elections, we won’t have representative democracy. If we don’t have democracy…does this path sound familiar?
What is at stake is not whether one believes in the tenets of socialism or secularism. At stake is the democratic and political process, which includes campaigning and convincing the people of any particular political ideology; and the freedom of the people to choose from the competing policies.
Democracy is not just about majority rule, it is also about the freedom enjoyed by those who hold a minority opinion today to win over their fellow citizens. Without that freedom, democracy cannot have any substance. It is no coincidence that countries which had incorporated socialism as the only political ideology of the state inevitably degenerated into one-party dictatorship. This can’t be the goal of the most vibrant multiparty democracy in the world—India.
Thursday, January 17, 2008
Should India continue to be socialist?
Should we continue to hold that socialism as one of the cherished Constitutional goals of the Indian Republic? In this article, I discuss how "socialism" was discussed at the time of the making of our constitution, and why it was rejected. And then, I look at how it crept in to the constitution during the Emergency Days in 1976, and ask, what is its relevance of this anachronism today? A version of this article appeared in the Ananda Bazar Patrika (Bengali) on 17 January 2008, under the title "Should we be tied to socialism?"
Last month, the Supreme Court issued notice to the Government of India and the Election Commission in response to a petition questioning the constitutionality of India being a socialist state. The judges wanted to hear about the practical and legal implications of having a socialist intent in the preamble which has led to the changes in the Representation of People Act, making it mandatory for all registered political parties in India to affirm to socialist ideals.
In 1976, the preamble to the Constitution was amended to make India a "sovereign, secular, socialist, democratic republic". Thirty years later, a new generation of Indians, want to undo that historic mistake.
Dr. B. R. Ambedkar specifically explained the reason for the non-inclusion of the word "socialism", when it was sought to be inserted into the preamble by another member. He stated in the Assembly on 15th November, 1948:
The purpose of the amendment to include "socialist", was stated in the Statement of the Objective -
Section 29A of the RPA, requires that any political association that seeks to register itself with the Election Commission of India, needs to file an affidavit affirming to socialism. This in effect means that only political parties with socialist ideology can undertake legitimate political action, and campaigns in India . On the other hand, independents and non-registered political parties can promote any ideology, and if elected, can join the ranks of the legislators.
This provision in the election law could easily be found to violate of the freedom of association, as well as freedom of thought and expression, some of the fundamental rights guaranteed under our constitution. Clearly, this affirmation to socialism goes much beyond the "reasonable restriction" doctrine that circumscribes the fundamental rights.
An historic opportunity has come our way to focus the spotlight on the political ideologies and principles, one of the legitimate purposes of democratic governance. Even more importantly, this is an opportunity to appreciate our constitutional structure that provides legitimate space to all ideologies to compete for the attention of the people, without legally restricting that space to any one preferred political theory.
A time comes for every generation when they have to face test of history. Sixty years after India gained its Independence from British colonial rule, We the People, have to decide, whether we want to be in the dustbin of history by continuing to align ourselves with a failed political ideology, or be shown to be hypocrite declaring a principle, and then rejecting it in practice. Or, do We the People have the freedom to chart our own destiny in the democratic miracle that is India. Today, We the People need to judge our past, so that we can come out with our heads high, when the future generations sit on judgement over us. On the sixtieth anniversary of our Independence, this would be the most appropriate reaffirmation of our faith in constitutional democracy.
Last month, the Supreme Court issued notice to the Government of India and the Election Commission in response to a petition questioning the constitutionality of India being a socialist state. The judges wanted to hear about the practical and legal implications of having a socialist intent in the preamble which has led to the changes in the Representation of People Act, making it mandatory for all registered political parties in India to affirm to socialist ideals.
In 1976, the preamble to the Constitution was amended to make India a "sovereign, secular, socialist, democratic republic". Thirty years later, a new generation of Indians, want to undo that historic mistake.
Dr. B. R. Ambedkar specifically explained the reason for the non-inclusion of the word "socialism", when it was sought to be inserted into the preamble by another member. He stated in the Assembly on 15th November, 1948:
"What should be the policy of the State, how the Society should be organized in its social and economic side are matters which must be decided by the people themselves according to time and circumstances. It cannot be laid down in the Constitution itself, because that is destroying democracy altogether. If you state in the Constitution that the social organization of the State shall take a particular form, you are, in my judgment, taking away the liberty of the people to decide what should be the social organization in which they wish to live. It is perfectly possible today, for the majority people to hold that the socialist organization of society is better than the capitalist organization of society. But it would be perfectly possible for thinking people to devise some other form of social organization which might be better than the socialist organization of today or of tomorrow. I do not see therefore why the Constitution should tie down the people to live in a particular form and not leave it to the people themselves to decide it for themselves."In 1950, when the people of India adopted the Constitution, the Preamble read:
[Source: Constituent Assembly Debates, Vol. VIII, pp.401-402]
"We, the people of India , having solemnly resolved to constitute India into a Sovereign, Democratic Republic and to secure to all its citizens:A quarter Century later, the Congress government under Prime Minister of Mrs Indira Gandhi, during the dark days of emergency rule, passed the 42nd Amendment to the Indian Constitution in 1976. Among many other things, the Preamble to the Constitution was amended to include - secular, socialist, - to state India to be a "sovereign, secular, socialist democratic republic".
o Justice - social, economic and political;
o Liberty of thought, expression, belief, faith and worship;
o Equality of status and of opportunity before law."
The purpose of the amendment to include "socialist", was stated in the Statement of the Objective -
Addition of the word 'socialist' indicates incorporation of the philosophy of socialism in the Constitution and may enable the courts to lean more and more in favour of nationalization and State ownership of industry.Thirty years later, a PIL is seeking to question the constitutionality of amending the Preamble. There are major legal grounds for such a question.
- Inclusion of "socialist" in the Preamble is against the original intent of the founding fathers
- By including socialism, democracy, which has been accepted as one of the "basic features" of the constitution is being violated.
- Democracy gives the people the freedom to choose the nature of social organisation of the state under which they want to live, and change that order if they deem necessary. So it unconstitutional to tie the future generations to only a particular type of social organisation - socialism.
- If the objective of the 42nd amendment is to be accepted, then either the Indian state, which over the past two decades, has been trying to withdraw from many economic activities, is no longer following that socialist objective; or that times have changed, and that objective is no longer desired by the people, and has become obsolete.
- All most all the major countries of the world, which had incorporated "socialism" as the only political ideology of the state, had turned in to one party, dictatorship. This could not be the goal of the world's largest and most vibrant multiparty democracy.
Section 29A of the RPA, requires that any political association that seeks to register itself with the Election Commission of India, needs to file an affidavit affirming to socialism. This in effect means that only political parties with socialist ideology can undertake legitimate political action, and campaigns in India . On the other hand, independents and non-registered political parties can promote any ideology, and if elected, can join the ranks of the legislators.
This provision in the election law could easily be found to violate of the freedom of association, as well as freedom of thought and expression, some of the fundamental rights guaranteed under our constitution. Clearly, this affirmation to socialism goes much beyond the "reasonable restriction" doctrine that circumscribes the fundamental rights.
An historic opportunity has come our way to focus the spotlight on the political ideologies and principles, one of the legitimate purposes of democratic governance. Even more importantly, this is an opportunity to appreciate our constitutional structure that provides legitimate space to all ideologies to compete for the attention of the people, without legally restricting that space to any one preferred political theory.
A time comes for every generation when they have to face test of history. Sixty years after India gained its Independence from British colonial rule, We the People, have to decide, whether we want to be in the dustbin of history by continuing to align ourselves with a failed political ideology, or be shown to be hypocrite declaring a principle, and then rejecting it in practice. Or, do We the People have the freedom to chart our own destiny in the democratic miracle that is India. Today, We the People need to judge our past, so that we can come out with our heads high, when the future generations sit on judgement over us. On the sixtieth anniversary of our Independence, this would be the most appropriate reaffirmation of our faith in constitutional democracy.
Sunday, January 13, 2008
Tata Nano: A glimpse of the potential industrial revolution in India
The media frenzy around the unveiling of Tata Motors’ Nano, may drown two of the most significant aspects of this project, it provides a glimpse of the manufacturing revolution that has largely bypassed India, so far. In that context, tragic events in Singur a year ago could have been easily avoided. This article was published in Liberty Institute's website In Defence of Liberty, on 13 January 2008.
The media frenzy around the unveiling of Tata Motors’ Nano, may drown two of the most significant aspects of this project - firstly, it is a completely new product, which aims to make personal transportation accessible to those who could not afford a car earlier; secondly, and more importantly, it provides a glimpse of the manufacturing revolution that has largely bypassed India, so far.
While Tata Motors has a long history of making commercial vehicles, it launched its first passenger car only in 1998. In the last ten years, it has produced a million cars, but remains a relatively small player in the passenger car segment. That such a minor player on the global stage can so radically reengineer a product as to access new customers, while meeting international safety standards, makes it an unqualified managerial success. Doubtless, it has made significant technological leaps too, and there is some talk of possible patents as well.
Today, it is widely accepted that mobility and communication are critical to economic and social participation. Yet, in most poor countries, low-cost public transport is uncertain or non-existent, and many poor families have to risk life and limb by braving city traffic on two-wheeled scooters or motor-cycles.
Exactly a century ago, in 1908, the Ford Model T put “America on wheels”. The assembly line off which it rolled increased productivity so much that a worker could afford to buy the car with four months' worth of wages. At the same time it shaped American sociology, by showing how personal mobility greatly enhanced personal autonomy. It is a strange coincidence that the Nano is priced very similarly to the Model T - its price in 1920s would equate to $ 3000 in 2006 dollars. And the Tata Nano will cost about $ 2500. Of course the Nano is a huge technological advance, packing 33 hp to the Model T's 20, with a fuel efficiency of 20 km. to the liter, compared to the Model T's 5 to 9.
But the most significant fall-out of Nano may be the realization that low cost manufacturing is not the domain of China alone. Like Ford T, Tata Nano’s real contribution may be to demonstrate the competitiveness and technological viability of manufacturing in India. The industrial revolution may yet come to India, riding the Nano; a century late, perhaps, but better late than never.
Of course, much more economic reform is necessary if India is to experience the much needed industrial revolution. But Tata’s Nano gives us a glimpse of the possibilities.
Not surprisingly, there are many who have expressed concerns about the prospect of the masses accessing personal automobiles. The issues they raise range from the impact on oil prices and a concern for global warming, to traffic congestion. Most such commentators have not been known to eschew their personal automobiles, or other modern conveniences, but have no qualms in frowning upon the masses enjoying some of the same benefits. This desire to keep others off the life-boats of their standard of living is a common feature of many who claim to have social or environmental concern in their hearts. One fact worth reminding them of is that transportation is one of the biggest expenses faced by rural poor seeking health care.
The opposition to Nano is also an illustration of the head-in-the-sand mind-set, which pits rising demand for consumption against environmental conservation.
In fact, as more Indians are able to afford more cars, the scale of consumption will help improve the technology, improve efficiency and clean up the environment. It is not a coincidence, that Toyota's ascent up the world auto league has been accompanied by its pioneering efforts in new technologies and innovation. Though counter-intuitive, it is true of most areas of enterprise that only enhanced scales of consumption lead to improvement in efficiency - in this case, easily measured by tail-pipe emission. It is worth noting that while Toyota sold well over 9 million vehicles in 2007, Tata Motors took ten years to sell its millionth passenger car.
Also as more Indians learn to drive, the appreciation of basic road rules and etiquettes will improve, as drivers begin to realise that the purpose of the rules are not to hinder movement, but to facilitate it. Finally, with greater mobility, congestion may actually get diffused, as the range of personal mobility increases. Also, with more demand for mobility and motor-ability, more resources could be devoted to expanding the road network, and expanding the parking facilities.
Hardly any shopkeeper is disgruntled if he finds a large crowd of buyers at his shop. It becomes an incentive to try and expand his business, and cater to even larger clients. Unfortunately, roads and parking are services that are not looked upon as any normal businesses. And under public management, greater flow of traffic or demand for parking is seen as a headache for the authorities, rather than as an opportunity. It is ironic, but unfortunately true. Compare the parking facilities in Khan Market with those in Connaught Place, in the heart of Delhi. In the former, parking is free, maintained by the shop-owners to facilitate customers. In the latter, parking is seen as a milking cow by the parking contractors and the municipality, with least concern for the businesses and the customers.
To assess the on-road performance of Nano, we will have to wait for its commercial release. Our belief, though, is that–apart from enabling people to graduate from two-wheelers to the greater safety and comfort of a four-wheeled car–the Nano will also appeal to commercial transporters such as auto-rickshaw operators. That itself, could improve the quality of movement on Indian roads.
Needless to say, that opening of the car market to a new but large segment of the population itself will attract others to seek a share of the pie. And with greater competition, the whole society will benefit.
Despite the promise, it is worth keeping in mind that the Tata’s have had to rediscover the wheel, to an extent. If the duties on imported cars were not as high as it is, about 60% on new ones, and about 100% on second hand cars (down from 180% in 2001), a much higher performance vehicle could have been imported at much lower cost. Likewise, a third of the price of the cars on Indian roads is contributed by various kinds of taxes. In addition, the 100% taxes on fuel, adds significantly to the operational cost.
India has one of the lowest densities of vehicles, at barely 8 per 1000 people, compared to over 500 in the US. Various fiscal and regulatory barriers that have retarded mobility, have also weighed down the economy as a whole, as well as shrunk the space for personal autonomy. And by all accounts has not helped the environment either.
Given this not so conducive environment, the Tata Motors small car is a reflection of the huge leap Indian entrepreneurs are capable of. This only brings to greater relief the tragic development in Singur over the past year where the Nano is slated to be manufactured. There the farmers have been protesting 1000 acres of land acquired by the government for this project. There will inevitably be accusations of blood on the Nano. It was completely unnecessary, since cost of the land could not have been even 10% of the total investment for this project. Tata Motors could have easily bought the land, or should have highlighted the reasons why even with funds, they may not have been able to purchase appropriate land in the four years that took them to develop the Nano. Because land laws in the country would not have given them access to land, in much the same way that makes most Indians still unable to aspire for a personal mode of transport.
Farmers – small and marginal - and industrial enterprises, both deserve much better. The Nano is a small car, but if it helps to expose the self-imposed brakes that restrain us, it could prove a powerful engine to drive us towards a new industrial revolution in India.
The media frenzy around the unveiling of Tata Motors’ Nano, may drown two of the most significant aspects of this project - firstly, it is a completely new product, which aims to make personal transportation accessible to those who could not afford a car earlier; secondly, and more importantly, it provides a glimpse of the manufacturing revolution that has largely bypassed India, so far.
While Tata Motors has a long history of making commercial vehicles, it launched its first passenger car only in 1998. In the last ten years, it has produced a million cars, but remains a relatively small player in the passenger car segment. That such a minor player on the global stage can so radically reengineer a product as to access new customers, while meeting international safety standards, makes it an unqualified managerial success. Doubtless, it has made significant technological leaps too, and there is some talk of possible patents as well.
Today, it is widely accepted that mobility and communication are critical to economic and social participation. Yet, in most poor countries, low-cost public transport is uncertain or non-existent, and many poor families have to risk life and limb by braving city traffic on two-wheeled scooters or motor-cycles.
Exactly a century ago, in 1908, the Ford Model T put “America on wheels”. The assembly line off which it rolled increased productivity so much that a worker could afford to buy the car with four months' worth of wages. At the same time it shaped American sociology, by showing how personal mobility greatly enhanced personal autonomy. It is a strange coincidence that the Nano is priced very similarly to the Model T - its price in 1920s would equate to $ 3000 in 2006 dollars. And the Tata Nano will cost about $ 2500. Of course the Nano is a huge technological advance, packing 33 hp to the Model T's 20, with a fuel efficiency of 20 km. to the liter, compared to the Model T's 5 to 9.
But the most significant fall-out of Nano may be the realization that low cost manufacturing is not the domain of China alone. Like Ford T, Tata Nano’s real contribution may be to demonstrate the competitiveness and technological viability of manufacturing in India. The industrial revolution may yet come to India, riding the Nano; a century late, perhaps, but better late than never.
Of course, much more economic reform is necessary if India is to experience the much needed industrial revolution. But Tata’s Nano gives us a glimpse of the possibilities.
Not surprisingly, there are many who have expressed concerns about the prospect of the masses accessing personal automobiles. The issues they raise range from the impact on oil prices and a concern for global warming, to traffic congestion. Most such commentators have not been known to eschew their personal automobiles, or other modern conveniences, but have no qualms in frowning upon the masses enjoying some of the same benefits. This desire to keep others off the life-boats of their standard of living is a common feature of many who claim to have social or environmental concern in their hearts. One fact worth reminding them of is that transportation is one of the biggest expenses faced by rural poor seeking health care.
The opposition to Nano is also an illustration of the head-in-the-sand mind-set, which pits rising demand for consumption against environmental conservation.
In fact, as more Indians are able to afford more cars, the scale of consumption will help improve the technology, improve efficiency and clean up the environment. It is not a coincidence, that Toyota's ascent up the world auto league has been accompanied by its pioneering efforts in new technologies and innovation. Though counter-intuitive, it is true of most areas of enterprise that only enhanced scales of consumption lead to improvement in efficiency - in this case, easily measured by tail-pipe emission. It is worth noting that while Toyota sold well over 9 million vehicles in 2007, Tata Motors took ten years to sell its millionth passenger car.
Also as more Indians learn to drive, the appreciation of basic road rules and etiquettes will improve, as drivers begin to realise that the purpose of the rules are not to hinder movement, but to facilitate it. Finally, with greater mobility, congestion may actually get diffused, as the range of personal mobility increases. Also, with more demand for mobility and motor-ability, more resources could be devoted to expanding the road network, and expanding the parking facilities.
Hardly any shopkeeper is disgruntled if he finds a large crowd of buyers at his shop. It becomes an incentive to try and expand his business, and cater to even larger clients. Unfortunately, roads and parking are services that are not looked upon as any normal businesses. And under public management, greater flow of traffic or demand for parking is seen as a headache for the authorities, rather than as an opportunity. It is ironic, but unfortunately true. Compare the parking facilities in Khan Market with those in Connaught Place, in the heart of Delhi. In the former, parking is free, maintained by the shop-owners to facilitate customers. In the latter, parking is seen as a milking cow by the parking contractors and the municipality, with least concern for the businesses and the customers.
To assess the on-road performance of Nano, we will have to wait for its commercial release. Our belief, though, is that–apart from enabling people to graduate from two-wheelers to the greater safety and comfort of a four-wheeled car–the Nano will also appeal to commercial transporters such as auto-rickshaw operators. That itself, could improve the quality of movement on Indian roads.
Needless to say, that opening of the car market to a new but large segment of the population itself will attract others to seek a share of the pie. And with greater competition, the whole society will benefit.
Despite the promise, it is worth keeping in mind that the Tata’s have had to rediscover the wheel, to an extent. If the duties on imported cars were not as high as it is, about 60% on new ones, and about 100% on second hand cars (down from 180% in 2001), a much higher performance vehicle could have been imported at much lower cost. Likewise, a third of the price of the cars on Indian roads is contributed by various kinds of taxes. In addition, the 100% taxes on fuel, adds significantly to the operational cost.
India has one of the lowest densities of vehicles, at barely 8 per 1000 people, compared to over 500 in the US. Various fiscal and regulatory barriers that have retarded mobility, have also weighed down the economy as a whole, as well as shrunk the space for personal autonomy. And by all accounts has not helped the environment either.
Given this not so conducive environment, the Tata Motors small car is a reflection of the huge leap Indian entrepreneurs are capable of. This only brings to greater relief the tragic development in Singur over the past year where the Nano is slated to be manufactured. There the farmers have been protesting 1000 acres of land acquired by the government for this project. There will inevitably be accusations of blood on the Nano. It was completely unnecessary, since cost of the land could not have been even 10% of the total investment for this project. Tata Motors could have easily bought the land, or should have highlighted the reasons why even with funds, they may not have been able to purchase appropriate land in the four years that took them to develop the Nano. Because land laws in the country would not have given them access to land, in much the same way that makes most Indians still unable to aspire for a personal mode of transport.
Farmers – small and marginal - and industrial enterprises, both deserve much better. The Nano is a small car, but if it helps to expose the self-imposed brakes that restrain us, it could prove a powerful engine to drive us towards a new industrial revolution in India.
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