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Interviews | Pranab Bardhan, professor of graduate school in the department of economics at the University of California (Berkeley), interviewed by Devadeep Purohit (The Telegraph)
Pranab Bardhan, professor of graduate school in the department of economics at the University of California (Berkeley), interviewed by Devadeep Purohit (The Telegraph)

Pranab Bardhan, professor of graduate school in the department of economics at the University of California (Berkeley), interviewed by Devadeep Purohit (The Telegraph)

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published Published on Jan 24, 2018   modified Modified on Jan 24, 2018
-The Telegraph

The Left in Bengal had often criticised him whenever he red-flagged excessive local tyranny, and spoke about the industrial decline in Bengal. The incumbent ruling party may make tall claims about changes in Bengal since the Trinamul government came to power but he has been candid enough to suggest that he hasn't seen much change either in industrial expansion or in investment in infrastructure.

Former Prime Minister Manmohan Singh has been his personal friend for over four decades but that didn't stop him from highlighting the failures of the successive UPA regimes under his peer.

This winter, Pranab Bardhan, professor of graduate school in the department of economics at the University of California, Berkeley, shared with The Telegraph his assessment of the performance of the BJP-led NDA government.

"I am primarily an economist and therefore will focus more on economic polices. But I have a strong opinion on other aspects, non-economic or socio-political aspects, of this regime," Bardhan said at the beginning of an interview. Excerpts follow:

PROMISES UNFULFILLED

Job creation

This government came to power in 2014 by promising job creation. This, Modi described, was a departure from the UPA government's dole-driven regime. This was a winning slogan. We were also promised that the Gujarat model of development would be carried out in the rest of India. A promise was made to create 100 million new jobs by 2022, which appealed to the aspirational youth, particularly of north India. (As there has been a youth bulge in the demographics of the north Indian population, a large number of young people were fascinated by this promise).

That the Gujarat model of high growth was not a particular exemplar in job creation did not deter the appeal. The Gujarat model, in spite of its high manufacturing growth, was particularly in sectors like petroleum refineries and petrochemicals, which are highly capital-intensive. They don't create that many jobs. The Gujarat model is neither an exemplar in job creation nor in social welfare. Yet it was used to appeal to the aspiration for jobs among the young people.

It is by now clear to many people that the pace of job creation has not been shining. In fact, some of the data - like the annual data produced by the labour bureau surveys - show that there may have been even some absolute decline in jobs. But this is not new. Even for the last 40 years, job growth in India has been by and large rather sluggish.

At the moment, some data suggest that we have a total number of workers exceeding 50 million who are either unemployed or underemployed. This doesn't count the hundreds of millions of women, who are outside the labour force. (In surveys, the surveyors ask question about employment to only those who are part of the labour force).

Combating corruption

Another big hoax is the regime's supposedly spectacular fight against corruption. After insignificant progress in getting the black money stashed in foreign accounts or from repeated announcements for tax amnesty, there was a sudden "bold" launching of demonetisation in November 2016. This has turned out to be one of the grandest hoaxes ever in Indian political history.

The announced objective was to vaporise the corrupt cash hoarded by the rich. But then other objectives were also mentioned - to eliminate counterfeit money, to prevent terror funding. And when these things were not working, they talked about the need to digitise the economy. So, goalposts were changed over time.

Looking back now, we can say that most of the money has come back. This means that black money hoarded in the form of cash was tiny. Or, even if it was not tiny, it has been deftly returned through the backdoor with the complicity of corrupt bank officials.

Usually, most rich people do not keep their black money in cash. They use other means like real estate, gold, foreign account etc. I don't know what gave the government the idea that most black money was stashed in cash.

To this day, the hardship that it caused has not been properly measured. We, the urban middle class, all remember the long queues in front of the ATMs and our irritation with day-to-day changes in the regulations. But to me, what was done was a cruel joke on the Indian poor, particularly those in the informal sector. I think demonetisation was a hastily-thought-out programme by some ignorant but arrogant people in Delhi and foisted on an unprepared and somewhat confused bank bureaucracy.

We have now data - not for whole of India though - on the extent of losses in jobs and wages. Take the textile hubs -like Panipat in north India and Tiruppur in south India. Now, there is evidence of huge losses in trading as well as jobs. We also have evidence of small companies losing out and the informal sector failing to pay wages and workers going back to their villages.

But the political magic of this hoax was that a majority of poor people believed that it was for punishing the corrupt rich. The poor did not realise that the rich did not suffer that much. Some people said that the real estate sector was hurt, but that's not correct. As the 2017 Economic Survey pointed out, real estate was down even before demonetisation was announced.

Some people said that tax returns increased because of demonetisation. But the same Economic Survey pointed out that the average income level of the new tax payers was Rs 2.7 lakh, slightly above the tax threshold. So, the new people brought under the tax net are not the superrich who have been evading tax all these years. They are more likely to be relatively small people who have come under the tax net because of pressure from the banks to link accounts with the Aadhaar card and the PAN card and the Goods and Services Tax (GST) bringing some people in. So, it is not that fat cats were disgorging their illicit hoards due to demonetisation.

PR COUPS

Clean governance

The PR campaign that this regime is much cleaner is largely exaggerated. Let us ignore the gigantic Vyapam scam in the BJP regime in Madhya Pradesh in which 40 mysterious deaths of the witnesses and the accused had been reported. At least the scams in the UPA regime - take the 2G case - did not kill that many people. Then there is the cricket-related scams in Rajasthan and Delhi. Let's ignore that as well.

About the mineral and other natural resource related scams that were important under the UPA regime, I think today it is correct to say that the auctions of natural resources like minerals and coal are much cleaner. But they started to be cleaner towards the end of the UPA regime under the Supreme Court order. So, there is nothing new here. In any case, the international mining boom being over, there is now less money to be made in the mining sector.

Then, I should point out that attempts are reportedly being made to obstruct any action to be taken on the findings of the Directorate of Revenue Intelligence on the cases of large over-invoicing of power equipment and coal imports by some big corporate houses. Many stories about continuing corruption in government procurement, building and real estate deals and land grabs abound, but the CBI and the ED do not seem to be particularly keen to pursue these if they involve ruling party politicians.

As the intimidated NGOs and media largely keep quiet, you do not hear about these instances. At the level of everyday corruption, a recent survey - by the Centre for Media Studies - reports in 2017 that 43 per cent of households feel that the level of corruption has increased in the preceding year. This is petty corruption, something that households face in their day-to-day life.

Then, there is the elephant in the room - the matter of large election funding. Evidence suggests that the total donations to the ruling party are several times the donations to all the other parties combined.

All political parties are exempt from the RTI. But under what grounds? The political parties say they are not public entities. Now, if they are not public entities, they are private entities. Then, they must be NGOs or something like that. The NGOs are under the Foreign Contribution Regulation Act, and under that Act many NGOs are harassed these days.

Quietly in one of Arun Jaitley's Finance Bills, a clause had been added that made all political parties exempt from FCRA and it's retroactive to 2010. That means all the money that came for the 2014 elections cannot be investigated.

In the last budget, Jaitley introduced election bonds. This is really amazing. Under the new scheme of election bonds, corporate donations, practically without limits or without disclosure, can be made now. And the finance minister tells us, this will increase transparency. Exactly the opposite is the case.

The Lokpal Act - if anybody remembers that anymore - came to our statute books on January 1, 2014. Now it's January 2018. The BJP made a lot of hue and cry and pressed the UPA to pass the Lokpal Act. In the last four years, they did not find any time to either appoint a Lokpal or implement the Act. This follows a pattern. When Modi was the chief minister of Gujarat, in his more than 12 years he did not get the time to appoint a Lokayukta.

Yet, the rhetoric of slaying of the demon of corruption continues in full force and many people swallow it. At the same time, the PM refuses to face public questions in media - I understand that he has not faced a single press conference - or questions in Parliament. He has decided that one-way tweets and Maan Ki Baat radio talks are enough for the gullible.

Reformist approach

Similarly, PR coup wise, GST was introduced with much fanfare at a midnight session of Parliament and has been hailed as one of the biggest economic reforms in Indian history.

We are not supposed to remember that for quite some time, one of the main opponents of the original form of GST was a certain CM of Gujarat and now it is one of his major reforms. The PM has called it a 'good and simple tax'. It is interesting to remember that the version he had opposed as the CM was much better and simpler. Now because of the complexity of negotiations, it is no longer as good or as simple. This is part of the Indian political irony.

I am in favour of GST in general, but there are too many rates and too many exemptions - petroleum products and alcoholic beverages are outside its purview. I think it's a step in the right direction. The way it is implemented has been too hasty and clumsy, causing a great deal of hardship particularly to small business.

The government's approach to Aadhaar is another example of PR. The UPA regime was the architect of it and the BJP had strenuously opposed Aadhaar when it was in the Opposition. But the way it was introduced in the Lok Sabha - as a money bill - there could not be much discussion. There were serious things to be discussed like threat to privacy and data security. It is ominous that this was so hurriedly enacted and by a government that is quite trigger-happy with its powers of surveillance.

Even though in general one may be in favour of Aadhaar, one is hesitant about the way the whole thing has been implemented.

Different party

The last PR that I am going to talk about is the ruling party's success in creating an impression that it is a pan-Indian party rising above the narrow sectarian interests of caste, community and language that fragment Indian society. It also says it is above vote bank politics, unlike the Congress and the regional parties.

In reality, Amit Shah is busy forging very complex caste groupings and alliances. For example, in the Uttar Pradesh election, he very deftly crafted an alliance of non-Yadav and non-Jatav castes. The vote bank BJP nurses is the vote bank of Hindu supremacists. Language-wise, its linguistic practice, even in official transactions now, is of Hindi dominance.

The so-called nationalistic ideology that it propounds is not pan-Indian at all. It is highly exclusionary and based on a narrow sectarian concept of Hindi-Hindu-Hindustan. It pre-emptively brands any dissent from this narrowness as anti-national.

In fact, one may go to the other extreme and say that, in some respects, the Sangh parivar is more 'anti-national', as everyday they are violating, both in spirit and words, the ideal of civic nationalism based on the values embedded in our Constitution. I would go even one step further and say that they do not understand the Hindu philosophy as it has developed over thousands of years. Their Hindutva is, in some sense, deeply antithetical to classical Hindu philosophy of tolerance for diversity. And multiple paths to salvation. So, in that deep sense, it is also 'anti-Hindu'.

STEPS BACKWARD

Freeing up forest land

In the name of easing business procedures, the requirement of a number of environmental clearances has been relaxed, and at times secretively. There have also been attempts to dilute the forest rights act for the Adivasis that bypassed the mandatory concept of Adivasi Gram Sabhas in starting commercial operations on traditional forest lands.

Health woes

There has been a retreat from the commitments by the UPA regime - and also the current regime in the early days - on universal health coverage. Now, the announced National Health Policy of 2017 opens the doors for privatisation through its plans for "strategic purchasing" of secondary and tertiary healthcare services, which is likely to hurt the availability and affordability of the services for the poor. In any case, India has one of the lowest percentages of GDP spent on health among the developing countries. Even though there have been promises made to increase it, so far we are nowhere there, and dismally so.

Cost of vigilantism

The cow vigilantism and lynchings by the thugs belonging to or encouraged by the ruling party affiliates have had an economic effect, as it is playing havoc with livestock trade and transport. This has serious consequences for India's large livestock economy, and also for India's largest agricultural export - buffalo meat. Many people don't know that Gujarat is one of its major exporters.

Politics of hate

In general, the increased incidents of hate crimes and social violence and the atmosphere of fear and intimidation for the minorities and the dissenters have caused serious damage to our social and political fabric. This, to me, is much more serious than any harm their bad policies may be causing to the economy.

The so-called Gujarat model of economic growth has so far not worked in large parts of the country, but the Gujarat model of hate and intolerance is very much in evidence everywhere. This is fostered by the Sangh parivar and its associates, aided and abetted by a conniving police and bureaucracy and encouraged by the selective silence of the Prime Minister.

It is selective silence interspersed with some 'wink-wink' platitudes. He will talk about Dalits and Muslims and things like ' sabka saath' and all that, but his party members know how to interpret his selective silence. In election rallies, in times of desperation, he is not averse to spewing some form of communal poison, as he did in Uttar Pradesh and Gujarat.

The government has failed to provide basic security for minorities and the minimum rule of law in this respect. The whole world now knows this and I am going to quote some global rankings. The government and the Prime Minister seem to be preoccupied with the World Bank's ease of doing business index. They do not seem to be aware that there are a lot of problems with this World Bank ranking, in which in any case India now ranks 100 instead of 130. Still quite bad.

But one should give equal importance to some of the other rankings I am going to quote:

1. PEW Research Centre brings out world ranking of 198 countries on religious tolerance. India is fourth from the bottom. That means India is one of the most intolerant countries in the whole world.

2. According to the World Press Freedom Index, brought out by media watchdog Reporters without Borders, India ranks 136 out of 180 countries.

3. The World Justice Project has a Rule of Law index and in it, India ranks 66 out of 113 countries, which is worse than Ghana, Jamaica, Senegal or Tunisia.

Danger for democracy

In a sense, the current regime is presiding over a substantial deterioration in the quality of Indian democracy. This government is regularly imposing forms of obscurantism and intolerance on cultural institutions. They are packing the administrative bodies of educational institutions with bigots and charlatans. I should also add that the previous government also packed some of these bodies but there were fewer bigots and charlatans. And everybody knows that they are distorting history textbooks which schoolchildren read. This will be part of this regime's long-term social damage.

Finally, the erosion of fundamental institutions of the country, which began in the earlier regimes has continued on an accelerated pace. That means abuse of police, bureaucracy, public investigating agencies and tax machinery for narrow and short-sighted purposes of political leaders. There is regular trampling of basic human rights of individuals in the name of sectarian communities taking offence or in the name of public order or national unity. This violates the letter and the spirit of our Constitution.

Meanwhile, the macroeconomic impasse with a mountain of bank loans and deceleration of private investments continues.

On the whole, the current regime's performance on the economy has been mediocre at best, but in socio-political matters, it has been far worse.

HOW MODI STACKS UP

Pranab Bardhan rates 14 talking points on governance

GST: Started by the UPA. Pursued energetically by the NDA

Aadhaar: Started by UPA. Pursued energetically by the NDA

Fuel subsidy reduction: Started by the UPA. Pursued energetically by the NDA

Make in India: NDA’s big slogan is a continuation of the UPA’s National Manufacturing Policy of 2011. So far, Make in India has delivered very little

Skill India: Not delivered. The much-hyped but unattainable target of training at least 300 million by 2022 has been
abandoned

Swachh Bharat: An energetic continuation of the UPA regime’s Nirmal Bharat campaign of building toilets, without considering why many of these are not used. (This partly has to do with Hindu taboos of cleaning and emptying of pit latrines.)

Pradhan Mantri Gram Sadak Yojana: Continuation of an earlier programme. Has worked reasonably well. In general, construction of highways and, in particular, rural roads have been quite successful

Administrative reforms: Both Manmohan Singh and Narendra Modi had promised administrative reforms quite early in their tenure, but neither has delivered. On the contrary, Modi has centralised administration, which leads to bottlenecks, because all major decisions are taken in the PMO

Jan Dhan: Continuation of an earlier programme. No doubt, the Modi government’s Jan Dhan programme is much more energetic. But many of these accounts are dormant or are duplicates

Bankruptcy code: This is a welcome step, but any significant change will depend on the judicial process

Crop insurance programme: The coverage has improved. So far, the use of technology in assessing crop damage and timely disbursement of claims have been too tardy

UDAY: The Ujwal DISCOM Assurance Yojana for takeover of the debts of  power distribution companies is a step in the right direction but it is not a permanent solution. This is kind of a bailout. But we need to have a rationalisation of electricity tariff policy so that further bailouts will not be needed

Foreign investments: Much of the foreign investment is in the form of acquisitions and takeovers of existing ventures and buying of distressed assets of existing companies. These are not Greenfield investments. Some of it, in reality, may not even be foreign but a form of recycling of Indian money through foreign tax havens

Taming inflation: On paper, this claim is correct. It is hardly  to the credit of the government as international prices declined. But it also had the misfortune because the first two years were drought years
 
 
The Telegraph, 22 January, 2018, please click here to read more
 
 
Image Courtesy: The Telegraph/ Pradip Sanyal

The Telegraph, 22 January, 2018, https://www.telegraphindia.com/india/gujarat-model-of-hate-is-evident-everywhere-economist-202946


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