http://business-standard.com/india/news/mihir-s-sharma-out-of-textbook-thinking/459403/
Good one from Mihir Sharma on RBI's monetary policy stance...
Friday, December 23, 2011
Monday, December 19, 2011
Food Security Act - an idea whose time is long overdue?
The cabinet has reportedly cleared the Food Security Bill for introduction in the winter session of Parliament. With this, another round of spirited, but often vitupirative debates has started. For a country that has the largest proportion of malnourished children, the tenor of the opposition is startling, and in case sympotomatic, a scary reflection of middle class sensitivities of the day.
Let us look at some of the objections to the Act.
1. It is too expensive, and we cant afford it.
This is the oft-repeated argument, that the Bill is fiscally ruinous and there is no way it can be afforded. And what is the estimated cost to the fisc? Well, depending on who is doing the maths, it ranges from 30,000 crores to 1 lac crores. Lets take the upper boundary. And as a perspective, compare this against the subsidy on oil (estimated to be touching 60000 crores this year), or indeed, taxes foregone on account of exemptions (mind you, distortionary exemptions, not tax rate rationalisaitons) add up to 6-7 times that number.
Are sops to the middle class of India and vested corporate interests (which is what most exemptions are for) more critical than ensuring a healthier new generation?
2. PDS is too inefficient, and cant be trusted to deliver
An old chestnut, but continuing as a red herring! PDS has been historically inefficient, but has made rapid progress in recent years. Driven by states like Tamil Nadu and Chattisgarh, and bolstered by measures like RTI and innovations in technology, PDS wastages have been reduced drastically. Not just in the exemplar states mentioned above, but almost across the board. The Centre's showpiece UID project is a prime variable to be used to increasae efficiencies even further! The Food Security Bill should be used as an opportunity to carry out more innovations in delivery, not throw up hands in depair!
3. Cash transfers and food stamps are more "efficient" options
Somewhat similar to arguments made in support of "fortified biscuits" in lieu of hot meals in the mid day meal programme for school kids. Cash transfers are a great idea, but not for solving the issue of access. Food security addresses issues of both affordibility AND access.
4. It will be beyond India's means in terms of availability terms
The biggest non sequitor that is peddled about. The total requirement, and in these programmes (just as in NREGA), actuals always come out lower than estimates as larger sections of the populace migrate to superior foods (and superior jobs). The estimated foodgrain procurement for the Food Security bill is 60 million tons, that is exactly the ballpark number being procured today. Without even accouting for a natural growth in procurements that has been over the trend growth in agriculture itself.
At a basic level, it is fundamentally about what sort of country do we want to build. Will we as a society agree to a stunted growth of our new generation? Or will we do all that we can (and some more, if required) to reverse that trend. At the cost, if necessary, of a few less exemptions on real estate projects masquerading as SEZs.
Let us look at some of the objections to the Act.
1. It is too expensive, and we cant afford it.
This is the oft-repeated argument, that the Bill is fiscally ruinous and there is no way it can be afforded. And what is the estimated cost to the fisc? Well, depending on who is doing the maths, it ranges from 30,000 crores to 1 lac crores. Lets take the upper boundary. And as a perspective, compare this against the subsidy on oil (estimated to be touching 60000 crores this year), or indeed, taxes foregone on account of exemptions (mind you, distortionary exemptions, not tax rate rationalisaitons) add up to 6-7 times that number.
Are sops to the middle class of India and vested corporate interests (which is what most exemptions are for) more critical than ensuring a healthier new generation?
2. PDS is too inefficient, and cant be trusted to deliver
An old chestnut, but continuing as a red herring! PDS has been historically inefficient, but has made rapid progress in recent years. Driven by states like Tamil Nadu and Chattisgarh, and bolstered by measures like RTI and innovations in technology, PDS wastages have been reduced drastically. Not just in the exemplar states mentioned above, but almost across the board. The Centre's showpiece UID project is a prime variable to be used to increasae efficiencies even further! The Food Security Bill should be used as an opportunity to carry out more innovations in delivery, not throw up hands in depair!
3. Cash transfers and food stamps are more "efficient" options
Somewhat similar to arguments made in support of "fortified biscuits" in lieu of hot meals in the mid day meal programme for school kids. Cash transfers are a great idea, but not for solving the issue of access. Food security addresses issues of both affordibility AND access.
4. It will be beyond India's means in terms of availability terms
The biggest non sequitor that is peddled about. The total requirement, and in these programmes (just as in NREGA), actuals always come out lower than estimates as larger sections of the populace migrate to superior foods (and superior jobs). The estimated foodgrain procurement for the Food Security bill is 60 million tons, that is exactly the ballpark number being procured today. Without even accouting for a natural growth in procurements that has been over the trend growth in agriculture itself.
At a basic level, it is fundamentally about what sort of country do we want to build. Will we as a society agree to a stunted growth of our new generation? Or will we do all that we can (and some more, if required) to reverse that trend. At the cost, if necessary, of a few less exemptions on real estate projects masquerading as SEZs.
Tuesday, October 25, 2011
Tuesday, October 11, 2011
Tuesday, October 4, 2011
Indo-Afghan dalliance - new game in town?
The strategic partnership between India and Afghanistan signed today is interesting. At some level, it has the potential to be the new game changer in the centuries old Great Game in Central Asia.
What is new? Well, simply, it is a formal articulation of India's intent of "training, equipping and capacity-building" of Afghan security forces. While the phraseology is sufficiently open-ended ("security forces" can mean the civilian police as well as the army, "capacity building" can stop at usual officer training slots in Indian academies), presumably to preempt any paroxysms of fresh hurt from Pakistan, the intent is clear. India is willing to step up the game on Afghanistan.
There is a feeling, not always unjustified that India's strategy of engagement in Afghanistan has been carried out under the protective umbrella of US/ISAF presence. Barring a few hundred ITBP policemen for proximate security of workers building the Zaranj-Delaram project, India has been loath to put any overt military content to the relationship. In a large measure, it is understandable. Afghanistan's long land border with Pakistan is a reality that is not lost on anyone, and India has been very congnisant of the same. But creative policy-making does not necessarily have to remain hostage to geography.
In many ways, India has been building the blocks. The Chabahar port in Iran, the Zaranj highway are all elements of a potential grand bargain of increasing India's military presence in Afghanistan. With the US likely to be gone by 2014, there will be less sensitivities around using an Iranian route to sustain military presence.
An Indian-run training operation, executed cheaper than the current American effort to train Afghan light infantry, coupled with an aid programme that equips the forces for CI operations - will go a longer way than maintaining a US-style presence.
The agreement yesterday might well be the start of something really good.
What is new? Well, simply, it is a formal articulation of India's intent of "training, equipping and capacity-building" of Afghan security forces. While the phraseology is sufficiently open-ended ("security forces" can mean the civilian police as well as the army, "capacity building" can stop at usual officer training slots in Indian academies), presumably to preempt any paroxysms of fresh hurt from Pakistan, the intent is clear. India is willing to step up the game on Afghanistan.
There is a feeling, not always unjustified that India's strategy of engagement in Afghanistan has been carried out under the protective umbrella of US/ISAF presence. Barring a few hundred ITBP policemen for proximate security of workers building the Zaranj-Delaram project, India has been loath to put any overt military content to the relationship. In a large measure, it is understandable. Afghanistan's long land border with Pakistan is a reality that is not lost on anyone, and India has been very congnisant of the same. But creative policy-making does not necessarily have to remain hostage to geography.
In many ways, India has been building the blocks. The Chabahar port in Iran, the Zaranj highway are all elements of a potential grand bargain of increasing India's military presence in Afghanistan. With the US likely to be gone by 2014, there will be less sensitivities around using an Iranian route to sustain military presence.
An Indian-run training operation, executed cheaper than the current American effort to train Afghan light infantry, coupled with an aid programme that equips the forces for CI operations - will go a longer way than maintaining a US-style presence.
The agreement yesterday might well be the start of something really good.
Friday, September 30, 2011
Pakistan - vindication of India's strategic posture
For long, India's strategic posture towards Pakistan has been described variously as pusilanimous, unimaginative, "soft" - generally, effete. As the Pakistani nation state comes to a pass that uncannily represents MJ Akbar's delightful descriotion of "jelly state", that strategy needs to be evaluated in a newer, better light.
In short, what has been India's own strategic objectives vis a vis Pak? Maintenance of status quo on geography, maintenance of relative "peace" (in terms of no overt hostilities) and minimising cross border terror emanating from there. Measured against each of these objectives, India's stance has paid off big time.
1. Not only has there been absolutely no change in the ground scenario on the geogrophical issue of Kashmir, the level of world support for the "cause" is at its lowest in history. Not even an intifada style uprising last year, or the foolish Ekta Yatra related shenanigans this year could change this reality. The matter has simply vanished from the global political radar, and Pakistan too has been left to make only sporadic belaboured noises.
2. India's military postures, by design or by default (likely to be a combination of both) since Op Parakram has meant that Indo-Pak flashpoint hasnt hobbled investor interest in India. There are lots of other issues with the development paradigm today, but hostilities with Pakistan isnt one. That is a far cry from the '90s, when possibility of Indo-Pak war was a real and present "risk variable" in investor decision making matrices.
3. Cross border terrorism. Using data compiled by the South Asia Terrorism Portal, casualties in India due to cross border terror attacks (in Kashmir and jihadi attacks in other parts of India) show a secular decline in the latter half of the last decade. This is including the data from the black swan Mumbai attacks in 2008. We have fresh challenges on home grown terror (especially of the Maoist kind), but a combination of border management and diplomacy (of the normal and coercive types) has meant that the capacities of the Pakistani state to indulge in cross border attacks on India have been dented. Or at least, diverted elsewhere.
As the US is finding out now, Pakistan is a strange challenge from a strategic perspective. Its an abnormal state born out of abnormal conditions, and therefore defy normal policy responses.
India has been only too aware of this. And our policy responses therefore have been trying to address the same issue. A chronically unstable Pakistan, at war with itself and therefore unable to carry out its own strategic agenda with vigour - that is the ideal state for India. Willy nilly, that is exactly what India has ended up achieving.
In short, what has been India's own strategic objectives vis a vis Pak? Maintenance of status quo on geography, maintenance of relative "peace" (in terms of no overt hostilities) and minimising cross border terror emanating from there. Measured against each of these objectives, India's stance has paid off big time.
1. Not only has there been absolutely no change in the ground scenario on the geogrophical issue of Kashmir, the level of world support for the "cause" is at its lowest in history. Not even an intifada style uprising last year, or the foolish Ekta Yatra related shenanigans this year could change this reality. The matter has simply vanished from the global political radar, and Pakistan too has been left to make only sporadic belaboured noises.
2. India's military postures, by design or by default (likely to be a combination of both) since Op Parakram has meant that Indo-Pak flashpoint hasnt hobbled investor interest in India. There are lots of other issues with the development paradigm today, but hostilities with Pakistan isnt one. That is a far cry from the '90s, when possibility of Indo-Pak war was a real and present "risk variable" in investor decision making matrices.
3. Cross border terrorism. Using data compiled by the South Asia Terrorism Portal, casualties in India due to cross border terror attacks (in Kashmir and jihadi attacks in other parts of India) show a secular decline in the latter half of the last decade. This is including the data from the black swan Mumbai attacks in 2008. We have fresh challenges on home grown terror (especially of the Maoist kind), but a combination of border management and diplomacy (of the normal and coercive types) has meant that the capacities of the Pakistani state to indulge in cross border attacks on India have been dented. Or at least, diverted elsewhere.
As the US is finding out now, Pakistan is a strange challenge from a strategic perspective. Its an abnormal state born out of abnormal conditions, and therefore defy normal policy responses.
India has been only too aware of this. And our policy responses therefore have been trying to address the same issue. A chronically unstable Pakistan, at war with itself and therefore unable to carry out its own strategic agenda with vigour - that is the ideal state for India. Willy nilly, that is exactly what India has ended up achieving.
Friday, September 16, 2011
Mamata's Bangladesh caper
In the long run, of the many blots on the policy record of UPAII, the one that might end of leaving the deepest scars would be Manmohan Singh's botched Bangladesh visit. What could have been the take-off of a "New Deal" in India's relationship with its near abroad has been left stranded in the runway. More depressingly, the plane awaits clearance from an ATC (aka, Mamata Bannerjee) whose sense of the larger political balance would put BCCI to shame!
The template of India's new deal with Bangladesh had three broad elements:
1. A comprehensive border settlement agreement that dileneates the border and formalises it, finally.
2. A regional transit agreement giving India access to its North East via Bangladesh.
3. A new template of sharing of river waters.
While the promise of the first was kept good, the second became a casualty to Mamata's capers on the third.
The Sheikh Hasina government in Bangladesh has invested a great deal in the new deal with India. Not just in clamping down on the myriad North EAstern rebel groups operating out of Bangladesh, but also in terms of shifting the entire narrative of the relationship from a typical South Asian "India nasty big brother" syndrome to one of shared economic destinies, taking advantage of India's booming economy. In some ways reflecting the reality of new aspirations that is sweeping many parts of the muslim world, the Hasina government has made economic progress as the key cornerstone of the policy direction, and relationship with India is but a natural corollary.
In such a scenario, Mamata Bannerjee's spanner in the works acts as a huge setback to both Hasina as well as India's cause. It rekindles the old fears of arrogant indifference of India to the radical constituencies in Bangladesh. And prevents the big idea of regional cooperative structures to move ahead for India. Land transit through Bangladesh and access to Chittagong port for trade onwards with East Asia can change the economic destiny of India's North East. Strategically, it affords India a huge insurance against the narrow "chicken's neck" access through Siliguri today.
But for now, the template is stranded on the runway. For many years, India's Sri Lanka policy was hostage to Tamil Nadu regional politics. As a result, China and even Pakistan managed to get significant toe-holds in Sri Lanka, helping it materially in the fight against LTTE. One only wishes that India's Bangladesh policy does not fall at the altar of another mecurial regional heavyweight.
Maybe the PM needs to do more than using Shiv Menon as emissary. Pranab Mukherjee with some Dhakai sarees probably stand a better chance!
The template of India's new deal with Bangladesh had three broad elements:
1. A comprehensive border settlement agreement that dileneates the border and formalises it, finally.
2. A regional transit agreement giving India access to its North East via Bangladesh.
3. A new template of sharing of river waters.
While the promise of the first was kept good, the second became a casualty to Mamata's capers on the third.
The Sheikh Hasina government in Bangladesh has invested a great deal in the new deal with India. Not just in clamping down on the myriad North EAstern rebel groups operating out of Bangladesh, but also in terms of shifting the entire narrative of the relationship from a typical South Asian "India nasty big brother" syndrome to one of shared economic destinies, taking advantage of India's booming economy. In some ways reflecting the reality of new aspirations that is sweeping many parts of the muslim world, the Hasina government has made economic progress as the key cornerstone of the policy direction, and relationship with India is but a natural corollary.
In such a scenario, Mamata Bannerjee's spanner in the works acts as a huge setback to both Hasina as well as India's cause. It rekindles the old fears of arrogant indifference of India to the radical constituencies in Bangladesh. And prevents the big idea of regional cooperative structures to move ahead for India. Land transit through Bangladesh and access to Chittagong port for trade onwards with East Asia can change the economic destiny of India's North East. Strategically, it affords India a huge insurance against the narrow "chicken's neck" access through Siliguri today.
But for now, the template is stranded on the runway. For many years, India's Sri Lanka policy was hostage to Tamil Nadu regional politics. As a result, China and even Pakistan managed to get significant toe-holds in Sri Lanka, helping it materially in the fight against LTTE. One only wishes that India's Bangladesh policy does not fall at the altar of another mecurial regional heavyweight.
Maybe the PM needs to do more than using Shiv Menon as emissary. Pranab Mukherjee with some Dhakai sarees probably stand a better chance!
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