Bookmarking an important read on Maps

Mint opinion: India’s descent into stepwells of growth

Important long read by Kaushik Basu. How India started out as a promise and is now fast deteriorating into decline.

Debuted with Opinion in Moneycontrol today

I will be writing op-eds for moneycontrol, India’s number 1 financial news website, and today was my debut. Do read.

Moneycontrol Link: https://www.moneycontrol.com/news/opinion/time-for-a-policy-rethink-on-crime-and-poverty-eradication-5762451.html

TikTok, China and Swadeshi

India is facing an uphill task battling the Covid-19. New Delhi, its national capital, is flooded with cases and subsequent stories of misery and deaths due to the pandemic. Its financial capital Mumbai is buried neck deep in the crisis. The infectious disease has reached its southern state with a vengeance – there have been 338000 Corona virus cases in state capital Chennai so far. But on the WhatsApp groups I am in, the conversation has already shifted in recent months, in rhythm with the shift in narratives on television news. On June 15, India went to bed with 332424 Covid-19 cases and an overwhelming sense of fear and chaos at the burgeoning health crisis. Next morning, newspapers were awash with reports of a “violent face off” with China’s People’s Liberation Army in eastern Ladakh, in which more than 20 Indian soldiers were killed. In what was the first Indian casualties in a clash with the PLA since 1975, the barbaric killing of Indian soldiers enraged the nation. Today, Covid cases in India have touched 2.7 million but this isn’t the biggest news of the day. Overnight, the virus is not the biggest enemy in India; China is.

My neighbour, who has rented the flat and lived in Delhi for five years, is vacating the flat this week. His real estate business has dried up in Delhi and he is moving lock stock and barrel to his hometown where his family has stayed for most part of the lockdown. Next door, another neighbour who owns a garment factory and drives a Maserati, has just returned in weeks to reopen the factory after the lockdown was lifted in early June. In two months since mid-June, I am listening to the clamour of people on my floor – one of them is moving out and another has just returned. Their conversations are the stuff you mostly find in WhatsApp groups these days. The one shifting out of Delhi is leaving all behind all the electronic goods made in China that he ever purchased. That TCL television set was his favourite but he doesn’t care anymore. The cleaners could take them home but he has asked the floor cleanliness manager to make sure they are discarded. The neighbour who has returned to his flat in two months nods in agreement. He says he would discard the One Plus mobile handsets owned by his family. I gasp, aren’t they expensive?

“This is the least we could do after what China has done to our soldiers,” he says. The widely reported details of the deaths of Indian soldiers in eastern Ladakh’s Galwan Valley have angered Indians. Those who can afford a Maserati can discard a One Plus phone. Those who own Hero Honda Splendor are dismantling the Xiaomi sets. The battle against China, however ill-conceived, is out on the streets and everyone seems to be doing their bit with vehement vows to boycott Chinese products. Social distancing is no more the worry. Street congregations have been organised to burn Chinese products by political parties, trade bodies, government officers and individuals alike.

The protests on street have come to mirror the policy decisions taken in the week of the aftermath of the Ladakh attack — amidst clamour for boycott, three projects worth Rs 5000 crore signed with Chinese companies have been put on hold in the western state of Maharashtra, and many more stalling of projects could follow.

The Indian government took it to another level: it banned 59 Chinese apps including the very popular Tik Tok on the grounds that they pose a threat to the country’s “sovereignty and security” and more may be under the axe. TikTok has about 200 million registered users in the country with app downloads in excess of 660 million since its launch in India. Globally, the sentiment against China has reached a crescendo with the US banning TikTok and contemplating extending the ban to Alibaba.

In my upscale apartment, the anti-China slogans have pervaded Whatsapp groups. But the decades old reliance on Chinese products is mixing up loyalties. Like the hostilities along the border, the discarding of Chinese products is difficult to take to absolute
completion.

My cook has a Xiaomi handset and he lives away from his family in Bihar. His cheap smartphone enables video calls with his kids every day. Whenever there has been an
emergency or any urgent calls needed between them and him, or him and me, the
phone has proved to be immensely useful. We have all the urgency and urge to discard
everything that has anything to do with China even remotely, but the courage to
discard all of it at once hasn’t been in ample supply. For the first time, this
feeling or rather the weakness of action has no class divide – from opulent
classes to middle income to poor households, reliance on Chinese products has
grown too deep for us to discard overnight.

Yet, the rhetoric is loud and toxic, and it escalates, two of the biggest challenges confronting us fade into the background – the Covid-19 crisis and the worsening unemployment crisis in India. Every passing day, newspapers and television channels and digital media has other priorities, and every day, our collective conscience is tricked
into outrage we don’t need.

Emmanuel Farhi: Too young to say goodbye

I didn’t know Emmanuel Farhi except as someone invested in economics and the scholarship of economists. But his death has left me with several pressing thoughts. In an earlier post on this blog written immediately after his death, I had laid out the condolences and conspiracy theories around his death. Today, I am writing more to reflect on his death and why it’s sparked such sorrow and curiosity.

Emmanuel Farhi was just too young to die. To make it harder on people who were familiar with his work, he was brilliant. It is the coming together of both that makes his death so tragic.When you are barely 40 something, you are at once old enough to be respected for your ideas and young enough for the world to expect more from you. You are somewhere between accomplishment and greatness, shining bright enough for the world to almost picture you with your pioneering contributions in the future. At such a young age, his contributions carried a unique diversity of thought and depth of scholarship – from fiscal policy, public finance, exchange rates, to international macro and monetary systems, productivity and international trade. He transformed the theory of taxation, macroeconomics, and international finance.

In a column in Mint, economist Ajit Ranade wrote:

He challenged the notion of the “liquidity trap”, made famous by Keynes during the Great Depression. Keynes had said monetary policy would be ineffective in spurring investment during deep recessions. Farhi said that in the modern context, especially after the crisis of 2008-09, we have a “safety trap”. The world is facing a shortage of safe assets such as US Treasury bonds. And yields cannot go any lower, since zero is an effective lower bound. How do you deal with this? With the unorthodox monetary policy of creating new “safe assets”; i.e. central banks buying AAA-rated corporate bonds. The European Central Bank is already doing so. The second example is of the impossible trinity in macroeconomics, which says you cannot simultaneously control interest and exchange rates if your capital account is open. Farhi’s insight was that partial capital controls are a solution for open economies fighting an onslaught of inflows and battling volatility in exchange rates—a practical guide to countries like India. A third example is Farhi’s boldness in taking on an old debate called the “Cambridge capital controversy”. This was a critique by Joan Robinson of Robert Solow, Paul Samuelson (both Nobel winners) and others that you can’t describe an entire economy’s aggregate production function in terms of “capital stock”; buildings and machinery cannot be aggregated into one number. This debate fizzled out in the 1960s, but Farhi’s work has reopened it, examining it rigorously from the very foundations.

In the bright world of academia where brilliance is never in short supply, Farhi also symbolized the pinnacle of attainments one could achieve in his field – he was tenured at Harvard within five years of defending his PhD at MIT and his admirers called him a future Nobel winner. Being young and bright is a promise to not just people who want you to succeed, but to the field you contribute to. Bring all these together and you have the picture of a success story. Yet, Farhi was humble and generous and open to collaborations more than anyone of his intellectual stature would admit to. He published a significant number of his papers as a co-author.

Success, recognition and superlative achievement may not always translate into joy or happiness or attainment of whatever it is that holds one together, though. With strictly limited coverage of Farhi’s death, we don’t know what it is that he wanted or what it was that he could no longer bear. Perhaps, at such a young age, we are still figuring out life stuff, even though academically or professionally, it may be possible to excel and lead.

Here is a detailed interview with Emmanuel Farhi and another obit that I strongly recommend to understand his work.

Emmanuel Farhi

Prof. Emmanuel Farhi was too young to die. Just as SSR was too young to die too. Farhi was 41; SSR was 34. In both events, we lost bright stars. This post is on Farhi’s passing away which has shocked people who knew, loved and admired him.

Moving tributes poured in from people who knew Dr Farhi when he passed away on July 23rd, 2020. Just 41, Dr Farhi was a brilliant economist and as some of his colleagues described him, a future “Nobel winner”. Robert C. Waggoner Professor of Economics in the Economics Department at Harvard University, Farhi was a member of the Commission Economique de la Nation, the National Bureau for Economic Research, and the Center for Economic Policy Research.

The Econ Focus once profiled him thus:

A young Emmanuel Farhi knew that his father, who passed away when Emmanuel was 10 years old, was an economist. But the boy never fully knew during his father’s lifetime just what an economist was.
Three decades later, Farhi is one of the pre-eminent macroeconomists of his generation in both the United States and his native France. It was a roundabout journey: At age 16, he won first prize in the French national physics competition. Two years afterward, on the threshold of entering university, he attained the highest score in the nation on the entry exam for France’s elite engineering school, the École Polytechnique. But he turned it down for another coveted institution, the École Normale Supérieure in Paris, often called ENS. (Today, ENS is also the alma mater of numerous other notable French economists, including the University of California, Berkeley’s Emmanuel Saez, MIT’s Esther Duflo, Farhi’s Harvard colleague and frequent co-author Xavier Gabaix, and Thomas Piketty, author of the 2014 bestseller Capital in the Twenty-First Century.)
At ENS, he planned at first to be a mathematician, but became drawn to economics instead. In his spare time, he read MIT professor Paul Samuelson’s classic economics text.
“I think what drew me in particular was the ability to model economic phenomena,” he says. “And I thought that was a powerful way of deeply understanding these forces and how they were shaping the world.”

Here is the best piece I read on him – I downloaded the English translation and there was no way to link to the translated version so please download to read:

Another excellent piece on French economists and their phenomenal success in the US – again, download English translation below:

There was an eerie silence around the cause of his death until this professor at INSEAD tweeted, hinting at mental illness in academia:

While none of the op-eds on his brilliant career as an economist mentioned “suicide” as the cause of death, a debate on Twitter erupted urging the need for openness and compassionate discussion on the subject. Another blog said he “died by his own hand” adding it to the list of four academics in the US who committed suicide over the past year.

The Future of Capitalism blog stated and I quote:

David Warsh reports: “Emmanuel Farhi, 41, of Harvard University, died last week, apparently by his own hand. It was the fourth such death of a prominent economist in a year, following those of Martin Weitzman, also of Harvard; Alan Krueger, of Princeton University; and William Sandholm, of the University of Wisconsin at Madison.”
Suicide is always, or at least often, something of a mystery, but if I had some reporters to assign, I’d send one to go investigate these four deaths and come back with a story about something—academic economics, mental health, something. It is of interest beyond academia. The Centers for Disease Control and Prevention reported in April 2020 that in the U.S., “From 1999 through 2018, the suicide rate increased 35%, from 10.5 per 100,000 to 14.2. The rate increased on average approximately 1% per year from 1999 to 2006 and by 2% per year from 2006 through 2018.” Also, that “Suicide is a major contributor to premature mortality as it ranks as the second leading cause of death for ages 10–34 and the fourth leading cause for ages 35–54.”

Here is a range of theories around his death. Whatever that it was that led to his death, the speculation must stop. What needs to be grieved is the definitive loss that his going away brings to the field of Economics. May he rest in peace.

I leave you with this video of him speaking on The Microeconomic Foundations of Aggregate Production Functions (and my heart just breaks watching this:

Pandemic of Inequality Won’t Let Us Breathe

Illustration by Parag Dabke.

The world we live in is getting scarier as disturbing events unfold. Floyd’s gruesome killing has sparked fierce reactions globally and we are now left tracing its roots to the long-standing racial prejudices that have existed alongside decades of material prosperity. We know this could be traced to British colonialism in the Americas and the Caribbean and its role in setting up systems of apartheid in the Africas that continue even today, not just in the US but also UK and other parts of the world. This could be traced to the unequal societies and economic cultures that centuries of unbridled capitalism have created. This could be pinned on the collective failure of the governments to act in the interest of black and ethnic minorities and to work on dismantling the racial, class and caste biases that often creep into policing and administration of justice. There are a whole lot more other explanations, each one more searing than the other, which make one thing undoubtedly clear: George Floyd’s murder cannot be dismissed as a standalone American problem because it is not. In many ways, we have collectively felt the need to call out the multiple inequalities embedded in our societies, from caste prejudice and religious bigotry in the East further accentuated by the pandemic to racism and ethnic violence in the West.

All the rioting, police violence and protests over violation of civil rights have led us to a very dangerous place – democracies may fall, the continuing chaos could facilitate a consolidation of right-wing extremism, and whip up social unrest globally. The economic fragility is threatening to pull societies apart, and institutions and existing health infrastructure are already under strain. Some of the biggest democracies in the world have been dealing with political and social unrest for a while now, and Covid-19 has only worsened the crises. The global economy is heading into a recession; 195 million jobs are expected to be lost worldwide; domestic violence and child abuse are on the rise; alcoholism and depression have found new reasons to thrive; and US-China relations are almost on the brink of war threatening to unsettle the prevailing world order. This could very well be the beginning of the making of revolutions that could shift economic and social cultures globally.

To make matters worse, there are depressing precedents for health crises to become an excuse for curtailing civil liberties. Often, contagion has been used by authoritarian regimes to justify the control of people and suppression of human rights, as is the case with many countries today, and to dump science and facts in favour of dominant politics of the day. Around the world, governments have worked to put strict lockdown measures in place during the Covid-19 pandemic, and in some instances, this has come about within a day’s notice. Racial bias in policing is already at the centre of the ongoing protests in the US, with research already disputing the charge. All of these will worsen inequality; in the words of economist Arthur Okun, underlining this feels like watching the grass grow.

For long, we have been told and I have truly believed, getting everyone to become rich is just a matter of sincere efforts. Yet, time and again, especially after Thomas Piketty’s seminal work on inequality, we have realised that this is not necessarily true. From US President Barack Obama to Alan Krueger, Chairman of the Council of Economic Advisors in 2012, world leaders for quite some time have known that high income inequality is increasingly synonymous with the least equality of opportunity, and great wealth accumulation with least competition. Yet, economists have been divided in the decades since, often questioning the data and other assumptions made in the research on inequality. As a consequence, inequality hadn’t been treated as a severe economic and social challenge until Piketty and Saz made it fashionable. In the Global South where inequality has been spiralling out of control, this has had debilitating effects on poverty, hunger and unemployment with the exception of China. Covid-19 has once again brought inequality to the fore. In countries like India where politics always dominates the economics, inequality has the chance to be at the forefront of policymaking for the threat it poses to democracy.

As countries plunge into uncertainties of all hues, let us step back a little to think about the pandemics in history and how they affected global inequality.

Continue to read here.

Share from Mostlyeconomics: Three development paradigms of Indian economy

Vijay Kelkar Convocation Address at BHU: Three development paradigms of Indian economy

Vijay Kelkar Convocation Address at BHU: Three development paradigms of Indian economy
— Read on mostlyeconomics.wordpress.com/2020/01/30/vijay-kelkar-convocation-address-at-bhu-three-development-paradigms-of-indian-economy/

Reading Hindustan in Bihar

First published in Mint: https://www.livemint.com/Home-Page/Z1r7HfBhwKSstRvClBJ0cJ/Reading-8216Hindustan8217-in-Bihar.html

Bharti’s cellular theory of growth

First published in Mint: https://www.livemint.com/Home-Page/trjewrH7xTTOmOj9tHSPcN/Bharti8217s-cellular-theory-of-growth.html

Five Ways You Could Reduce Inequality in Daily Life

Start the new year by worrying less about things you can’t control and doing something about what you can. Inequality, for example.

Photo credit: wikimedia.commons.org

It’s a loaded term, alright, but let’s think like economists and see where exactly in our daily lives could we make a difference to mitigate inequality.

So here are my top 5 suggestions:

  • Pay your taxes honestly – While the government struggles with progressive taxation, you go ahead and do your bit. Pay your taxes honestly- no bungling rent receipts, or forged investment certificates anymore. Pay your taxes online and hey, when you eliminate corruption in private life, it goes a long way in eliminating corruption in public life.
  • Work on gender budgeting for the household: this is a much bandied about term but the govt still doesn’t get it right. This doesn’t mean you should be like that too. If you truly believe in gender equality, start paying your maids for their life saving work on par with your drivers. Allocate resources equally between genders for consumption, education, health and future savings. Always remember, gender inequality begins in households, and it’s well within you to tackle that.
  • Save for future big time – While you are young, who cares about ageing, right? Wrong! Demographic change is a reality and it will catch up with you sooner than later. Remember Japan? In India, social security net for its ageing population has shrunk. Add to this the effects of adjustment and without savings, you are in for a very cold and debilitating old age. Start saving big and do this till the time you are working. This is your safety net and your instrument to tackle inequality that may arise out of a combination of factors including economic shocks, ageing and changing labour market demographics, slowing growth and poor pension spending by govt.
  • Brighten your child’s prospects at intergenerational equality by security a child fund – If you have a child, this has to come right on top of your priorities. Start taking out a decent amount of your income for a child fund that grows as your child grows, to give you enough in the long run. Remember, a child’s education 10 years down the line would need a minimum of a crore INR, conventionally speaking. If you are aiming Ivy League, you wouldn’t want to just hedge your bets on scholarships. Work out a fund that pays out 5 crores. An equal amount for marriage ceremonies, contingencies, and helping the child settle down as he starts out in this big, bad world. We have seen how that works, so better safe than sorry.
  • Delay gratification, cut down on unnecessary spends, learn to grow your money – More savings that outflow means more money, simple. Yet, not so simple. When the value of money and your purchasing power has been deciding with inflation, you don’t need to just guard against excessive spending; you also need to grow what you have. But money doesn’t grow on trees! Start to get to know how to spot great shares you could buy, how SIPs work, how much of mutual funds is good for you, and how traditional more conventional ways of growing your money can still help you. Check out Monica Halan’s super advice on all do these in her book ‘Let’s Talk Money’. I have been holding off a review of the book for sometime; will do this soon. Keep watching this space.

So that’s it. Don’t wait for the govt or the capitalists to figure out inequality for you. You could do your bit. Why wait.

Millennials and Money

Four Reasons Why Millennials Don’t Have Any MoneyThe same forces… https://robertreich.org/post/190130389550

Same is true for India but the Indian media is busy sorting out its own credibility issues. Who has time to look at the real problems.

Should rich people pay more tax?

Second Richest Man Spouts Nonsense https://www.econlib.org/second-richest-man-spouts-nonsense/

In the job market, Caste role reversal

I am absolutely thrilled to share another story on caste. This one again has gone missing from Mint’s website. I found this story’s draft on my drive and googled with the first four lines. Guess what, this blog had shared the story with the Mint link that does not work anymore. Thanks to the blog, I now have a full version of my published article. This article talks about the reversal of caste in the labour market with globalization.

Here you go:

In job market, caste role reversal

http://www.livemint.com/2010/11/09180926/In-job-market-caste-role-reve.html?atype=tpPosted: Wed, Nov 10 2010. 1:00 AM IST

Rapid globalization has altered the historical structure that allotted
well-paying jobs to the upper castes

Pallavi Singh

Anil Kumar Mishra wears a sacred yellow thread around his torso,
effectively covered by his ash-blue uniform. While ushering in
visitors’ vehicles in the basement parking of V3S shopping mall in New
Delhi’s Nirman Vihar, he always hopes not to run into any acquaintance
from his village Shahabad in Bihar.

The yellow thread, he insists, can embarrassingly give him away.

Back home, this relic of religiosity is what shapes his identity—he is
the privileged Brahmin, the upper-caste Hindu whose primary role in
the Varna system is to worship the gods. In fact, this is what his
father Badrinarayan Mishra did all his life and survived on regular
doles from Hindu devotees during festivals.

Two of his younger brothers in Shahabad continue the family tradition,
but Anil says the vocation assigned to him by virtue of his caste
brought his family little money.

At 45, the college dropout is in a line of work which is considered a
lowly occupation for Maithil Brahmins—one of the highest ranking
Brahmins—in his village. He is a parking attendant, and by his own
admission, if he had enough education, he would be doing something
else. “Respect is very important in a job and everyone respects
priests. Position of a parking attendant is still better than that of
a security guard. No one gives him any respect, you know, and people
often address him lousily. I would never tolerate that. After all, I
am a Brahmin,” he says, adding that people seldom violate his
instructions in the parking lot, which is at least not disrespectful
for his upper-caste lineage.

For thousands of years, caste has remained a superior marker and an
important identity in India for upper-caste Hindus such as Anil, but
rapid globalization and economic reforms in its wake may now be
reversing the historical structure that allotted the well-paying jobs
only to the upper castes and forbade them from taking up menial jobs.
“In India, one doesn’t have a caste without any occupational identity.
But in a globalized world, much of the caste order has begun to
reverse itself primarily because of movement of low-caste Dalits from
farm to non-farm sectors such as industry, entry of multinational
firms with caste-neutral jobs and the subsequent race for money,
clearing the space for unemployed upper castes to step in,” says
Chandra Bhan Prasad, Dalit writer, activist and author of Dalit
Phobia: Why do they hate us? Prasad is currently researching the
emerging trend of this role reversal in collaboration with the
University of Pennsylvania in the US.

A recent study by Prasad, Devesh Kapur, Lant Pritchett and Shyam Babu,
excerpted last month in the Economic and Political Weekly and reported
by Mint, reflected two significant changes in economic activity of low
caste community in Uttar Pradesh: More and more Dalits are working as
sharecroppers on farm land rather than as labourers, and fewer among
them are handling animal corpses, traditionally an occupation limited
to the community.

Prasad argues that such changes, reflective of a higher social status
for Dalits, have diluted the upper caste arrogance of Hindus
significantly. “Upper-caste Hindus are going through a great amount of
distress. For centuries, they have owned land, but in the post-reform
period, they suddenly realize that owning a television set or a mobile
phone is a much bigger social status than their caste superiority.
They feel threatened when they can’t achieve them,” he adds.

The growing importance of money in a free-market era is also
undermining the importance of caste by allotting more value to
material possessions instead of social status, Prasad says. “This
money-making phase is very similar to the wave of materialism in the
US in 1960s when the growing importance of money resulted in more
democratic relations between the whites and blacks. Even the upper
caste Hindus such as Brahmins and Rajputs are willingly taking up jobs
that they vehemently detest,” argues Prasad.

Saroj Kumar Chaudhary, 18, perfectly understands the situation. He was
brought to Delhi from Madhubani in Bihar a year ago by a relative
after his father, a small-time farmer, began chiding him for his
constant demands for a mobile. A high-school dropout, Saroj landed a
scavenging job with the Centrestage Mall in Noida.

During the ten-hour shift at the mall, Chaudhary’s primary task is to
keep its toilets clean for which he is paid Rs.4,800 a month. However,
in the slums of Loni in Ghaziabad where he now lives, he is known as
an attendant in a television showroom, a lie he deliberately sells.
“Everyone knows I am a Bhumihar Brahmin and no one expects me to do
such a dirty job,” he says, admitting to his upper-caste identity
after repeated queries.

To Saroj’s rescue are the modern tools of scavenging—a steel wiper,
toilet cleaning solutions and tissue papers—and for the “new-age
look”, he also has a dark blue uniform with a cap similar to that of
his colleagues; even the work he does has what Chandra Bhan Prasad
calls a “caste-neutral name for a caste-loaded occupation”:
housekeeping. “Multinationals have been instruments of change in this
regard; they have made scavenging appear caste-neutral. Brooms have
vanished and these men in the toilets look like professionals,” Prasad
adds.

But it was neither the euphemistic name nor the modern tools for
scavenging that led Asha Devi to join the housekeeping staff at
Pacific Mall in Ghaziabad. Since migrating to Delhi from Etah district
in Uttar Pradesh seven years ago, Asha who is a Rajput, the warrior
caste, took up the housekeeping job a month ago, without telling her
husband, for the sheer shield of anonymity it offers. “I was working
as a maid in the bungalows of Noida before this. I would earn about
the same amount of money then too, but then, everyone around us would
know that I was washing utensils and sweeping floors in bungalows. My
husband wouldn’t like that either, so how could I tell him I am
cleaning toilets now?” she says.

Asha’s husband, who is an autorickshaw driver, picks her up after work
and she says she takes special care about what she wears after her
10-hour shift is over. “I take a bath and use a deodorant. Even
make-up. And, I almost every day remind my supervisor that he should
not tell my husband anything except that I dust off files in an
office,” she says.

Alak N. Sharma, director of Institute of Human Development in New
Delhi, says the upper-caste migration from villages to bigger cities
and metros is growing at an exponential rate, especially in states
such as Bihar where individual landholding has shrunk over the years.

“Upper-castes who have traditionally held land over the years are now
finding it difficult to feed themselves. Earnings from agriculture
aren’t enough anymore even as property partition in families keeps
reducing individual landholding. In fact, upper castes are migrating
more now than the lower castes are,” Sharma says.

Many Dalits and even upper-caste Brahmins, especially in rural areas,
don’t have a shot at a decent education—a must for the fastest-growing
areas of India’s economy such as software development, medicine and
engineering. India’s reservation policy, which reserves seats for the
scheduled castes, scheduled tribes and other backward classes in
institutions of higher education, haven’t benefited the community
much, argues its critics.

Yet, reservations helped OBCs such as Naresh Yadav, who runs an auto
agency in Haryana’s Faridabad, get college education and employment.
“After graduation, I worked in a call centre and saved money to start
this agency. Without education, would you expect me to come this far?”

Yadav’s small-scale Yadu Auto today employs six drivers, out of which
two are Kayasthas, the merchant caste several ranks higher than the
Yadavs in Hindu caste order.

For a number of migrants, moving outside the state for work also works
as a symbol of upward social mobility and freedom from the repressive
caste hierarchy in the state. Only 42% of migrants working in rural
areas of Bihar would appreciate having a job in their native state,
notes a recent study on migration from the state by the Delhi-based
Indian Institute of Public Administration. “Out-migration for
employment sake has now become a craze. So much so that now staying at
village is equated with laziness among fellow villagers,” says Girish
Kumar, co-author of the study.

Gore Lal Singh, a Rajput, owns five bighas of land (two hectares) in
his village in Allahabad district, dominated by members of his caste,
but he would continue with his job as a security guard at the Pacific
Mall in Ghaziabad than go back and till his land.

“I can’t afford hiring (agricultural) labour for my land and if I work
myself, it will be looked down upon. So, I had to come here… But there
are many here who do even worse, you see, many who work as servants,
many who sell newspapers, many who do work they wouldn’t go back home
and talk about,” he says.

Many, like him.

Dalit Capitalism

I covered Dalit capitalism for Mint in its early days when DICCI as a chamber of commerce for the Dalit community had just come up. My boss at Mint, who is an economist, always felt proud of my work, especially on Dalit capitalism. Today, I spoke to Milind Kamble, founder and chairman of DICCI, in a decade and learned of the advances made by the community. This also prompted me to search for my stories on Dalit capitalism on the Mint website but a majority of them are missing! I am told that Mint had a website revamp which might have interfered with the articles. However, I found my report on a blog.

Anyway, I found this one (unedited) on my drive today. This report is a minefield for researchers (so proud to have written this story):

The rise of Dalit Entrepreneurship

http://www.livemint.com/2010/12/26190827/The-rise-of-Dalit-entrepreneur.html?atype=tp
Posted: Mon, Dec 27 2010. 1:00 AM IST

The community has found an escape both from the demeaning tasks
assigned to them by the caste system and the stigma of being branded
as non-meritorious beneficiaries of reservations in India
Pallavi Singh, pallavi.s@livemint.com

Around 40 years ago, huddled among a group of hungry children in his
native village of Vadgaon Budruk in Maharashtra, Rajendra Gaikwad had
an epiphany about how there was discrimination in a simple seating
arrangement.

It was a mass lunch thrown by upper-caste Marathas and the
nine-year-old was seated along with his mother in a corner of the
temple where Dalits of the village ate. “We were segregated from the
upper-caste Hindus, which was very humiliating. Even as a child, I
felt insulted and would cry each time my parents would talk of
visiting the village. I didn’t return after that,” he says.

Gaikwad is today based in Pune and runs a pest-control firm with
operations in India and Singapore. He is also a member of a growing
band of Dalit entrepreneurs who have eagerly grabbed the opportunities
offered by a booming Indian economy to break the occupational shackles
imposed on their community for centuries.

Atin Kamble is a third-generation Dalit entrepreneur from Mumbai who
has none of Gaikwad’s bitter childhood tales to tell. After eight
years in the business of marketing edible goods in Mumbai shops
through his venture Arti Enterprises, 36-year-old Kamble is
ambitiously pitching for two power-generation projects in Arunanchal
Pradesh, which would need an investment of a minimum of Rs.15 crore
initially.

His grandfather began with a modest business of leather goods, a
vocation traditionally allocated to Dalits, in Mumbai’s crowded Dadar
area; his father expanded the family business but Kamble chose to
strike out on his own.

“I somehow found sitting in my grandfather’s leather business shop
infra dig. I mean, it’s a peon’s job, if you are ambitious. I wanted
to do something that would give our business the status of industry,”
he says. And adds: “Today I am dealing with distributors and local
shopkeepers in the food business. When my children take over, they
will be dealing with super stockists.”

As opposed to Kamble’s pedigree and Gaikwad’s fortunes, Dashrath
Singh, who uses a surname mostly used by upper-caste Rajputs in India,
is still struggling in the garments business he runs from a rundown
garage in the congested Om Nagar slum in Delhi. Yet, from where he
stands today, it isn’t just a matter of miles covered, but it’s a
significant leap from his native village of Vari in Uttar Pradesh’s
Bulandshahar district to Delhi.

Singh’s work over a decade has included a series of humble vocations,
among them a helper at a grocery shop, an autorickshaw driver, a
door-to-door salesman of clothes, and a conductor in private buses,
before the idea of entrepreneurship struck him. Three years into his
business, he sometimes “earns lakhs in a month and sometimes just a
paltry sum”. But he insists things couldn’t get better. “Whatever it
is, I am on my own. I seek no favours,” he explains.

Gaikwad, Kamble and Singh are three faces of an emerging Dalit
capitalism that allows them an escape both from the demeaning tasks
assigned to them by the caste system and the stigma of being branded
as non-meritorious beneficiaries of reservations in education and
employment.

D. Shyam Babu, a fellow of the Rajiv Gandhi Institute for Contemporary
Studies (RGICS) in New Delhi, says Dalit capitalism is still at a
nascent stage, but adds that it will help create a Dalit bourgeoisie.
“It has the seeds of transformation for Dalits—from the lower class to
the middle class and beyond,” says Babu, whose research on Dalits and
the new economic order has highlighted the social advance of the
community in the wake of globalization.

“I know Dalit entrepreneurs who manufacture copper wires and cables
for use by the Indian Railways and the Delhi Metro, which proves that
these businesses are competitive, quality-oriented and efficient. This
is what Dalits in business want to prove today: they are good as
everyone else,” says author and activist Chandra Bhan Prasad, who is
currently compiling a database of entrepreneurs in the community.

Though the rise of the market economy has helped break many old social
barriers, Dalit businessmen still have to deal with several hurdles on
their chosen road.

“Most Dalit entrepreneurs face problems varying from difficulty in
getting enough supplies on credit, lack of social networks, absence of
kin groups in the business, and control of traditionally dominant
business-caste groups. These, along with other social variables such
as lack of social capital, make the Dalit situation in India more
complicated and vulnerable to homogeneous categorization,” says
Surinder S. Jodhka, a professor at the Centre for the Study of Social
Systems at Jawaharlal Nehru University in New Delhi.

Jodhka’s paper, ‘Dalits in Business: Self-Employed Scheduled Castes in
Northwest India’, drew insight on the expansion of private capital in
India during the post-1991 period and highlighted the discrimination
faced by Dalit businesses. The marginal status of Dalits and their
continued discrimination in the urban labour market also find
recognition in the 11th Five Year Plan released in October 2008. The
paper notes that “in urban areas, too, there is prevalence of
discrimination by caste, particularly discrimination in employment,
which operates at least in part through traditional mechanisms; SCs
(scheduled castes) are disproportionately represented in poorly paid,
dead-end jobs. Further, there is a flawed preconceived notion that
they lack merit and are unsuitable for formal employment”.

A poor economic and social background thus makes the beginning
difficult—only to be eased by outside help, mostly from the community
or well-off upper-caste individuals. “Forty years ago, when I began, I
would go on a cycle in rain and sun to various places—from a poultry
farm to an army cantonment, to kill rats and do odd jobs. I slowly
learnt that businesses need hard work and professionalism,” Gaikwad
says. In almost an afterthought, he adds: “A gentlemen called Mr.
Deshpande helped me get a loan from a bank by agreeing to be a
guarantor. The fact that he was an upper-caste man did help in making
my application appear serious.”

S. Galab, a professor at the Centre for Economic and Social Studies in
Hyderabad, who carried out research on the role and effectiveness of
self-help groups run by Dalit women in Andhra Pradesh, says most Dalit
enterprises suffer because of social isolation and the lack of
cooperation, and get over the initial hiccups only with help from
upper-caste individuals, since Dalits haven’t had a strong footing in
the social and economic sphere for centuries. “However, the upper
caste help also, kind of, co-opts the Dalits into the overall existing
structures, which is why they find it difficult to think about giving
back to their community later,” he cautions.

Various economic fora have also emerged over the years to help Dalits
overcome initial hurdles in setting up businesses. At the Pune-based
Dalit Indian Chamber of Commerce and Industry, formed three years ago,
its chairman Milind Kamble not just works on a database of Dalit
businessmen, but also helps them find linkages in industry.

And yet, argues author and activist Prasad, the emerging
entrepreneurship will need government help to thrive. “The government
ought to constitute a body, say, the ‘National Scheduled Caste and
Scheduled Tribes Supplier Development Council’, which should identify
Dalit/tribal entrepreneurs who are already supplying goods and
services to the government through middlemen, and connecting them
directly to procurement departments,” he says, citing examples from
the US, where a national body connects minority entrepreneurs with
large American firms.

To those who say that such a practice goes against the spirit of a
free market, Prasad argues that the Indian bourgeoisie itself would
not have thrived without state support and protection till 1991.
“Dalit businesses particularly need help since most of these are
small-scale operations,” he adds.

Explaining that economic standing is the only way Dalits can redefine
themselves, RGICS’ Babu likens the trend to the wave of Black
Capitalism in the US in the 1970s and 1980s. “There are strong
similarities. Like the black capitalists of America, most of the Dalit
entrepreneurs are first-generation entrepreneurs, people who were
never into businesses but mostly relying on agricultural labour. To
get into serious business from agriculture is a paradigm shift. And,
in both cases, here as in the United States, even though there have
been state interventions to promote entrepreneurship, individual
motivation and community help have come first,” Babu says.

Photo credit: https://bit.ly/2Ms0aiJ

 

The Kashmir Conundrum

Apologies for being away for almost a week. I have missed you, hope you have too.

I had no realization of what significant events my brief interlude from blogging would bring. But while I have been away, Jammu and Kashmir as a state of India don’t exist the way it used to. It’s now a Union Territory with a Legislature. The state was also bifurcated to create an independent UT of Ladakh with no legislature. This also meant article 370 of the Indian Consitution, which conferred special status to the state of J&K, was modified. Before this, this special status allowed J&K to have its own constitution, its own flag and its own laws independent of the same in the union of India. Now, people from all over India can buy land in Kashmir, set up businesses and invest; Indian government’s welfare schemes, rules, and regulations will now be applicable in the state.

Before the bill to this effect was passed in Parliament, Indian Army troops moved into J&K, clamped down on the Internet and detained local politicians and separatists. There have been apprehensions of violence and unrest over the development. As we speak, this continues with an eerie silence from the international community with the exception of Pakistan and China. What’s evident is that most countries in the world seem to be viewing this exercise by the Indian government as an internal matter of India, recognizing its sovereignty in dealing with its internal affairs. Pakistan, however, thinks otherwise and has already reached out to the UN and a host of other countries to offer their support in condemning India.

A Contested Past

Unlike the differing viewpoints on Kashmir, there are thankfully no conflicting opinions on how J&K acceded to India. I particularly liked this academic EPW piece on the history of the troubled state. The main points in the piece can be summarised as below:

  • At the time of independence of India, Hari Singh, the then king of J&K was ambiguous about acceding to India or Pakistan. He brokered a deal with the British govt to stay independent. This state was not to be, as an attack by Pakistani pastuns compelled Hari Singh to reach out to India for help. India, in turn, sought J&K accession to India.
  • At the time of accession, India adopted the policy that in case of dispute over J&K’s status, the matter should be settled in accordance with the wishes of people. However, India also considered the accession a purely temporary and provisional arrangement, as stated in the Government of India’s White Paper on J&K in 1948.
  • J&K was conferred the special status via Article 370; you could read all about the provision in detail here. Briefly, this article limited the Union government’s legislative power over Kashmir to just three subjects- foreign affairs, defense, and communications. This in effect ensured J&K’s autonomy.
  • Further, to strengthen this arrangement, certain riders were put in place: the central government couldn’t make any changes in the article without issuing a presidential order, with approval of the state legislature, and only after the changes were incorporated in the state constitution.

Why The Scrapping of 370 Was Welcomed:

  • Home Minister Amit Shah, in his speech in Lok Sabha, said article 370 had for years separated J&K from India, with the provision misused by separatists and sympathizers of separatists in the state. Shah’s argument was in line with the BJP’s historic stand on article 370, which has also been on their poll manifesto for years.
  • Another argument highlighted the lack of development in the state because of the special status of J&K. Shah said because of the article, many of the central government’s schemes and benefits didn’t reach the people of Kashmir.Manish Sabharwal wrote in The Indian Express:

Historians warn against “presentism” and Kashmir’s history is too long and complex to belong to any party, community, individual or religion. But it would be foolish to deny that Kashmir’s last few maharajas were distracted and disinterested in development. Monarchies or hereditary leadership are ineffective because they think of citizens or voters as a necessary evil that must be tolerated, possibly patronised, but certainly ignored. Naya Kashmir — a memorandum that Sheikh Abdullah submitted to Maharaja Hari Singh in 1944 — outlined a plan to convert J&K from an absolute monarchy to a constitutional democracy, called for universal franchise, freedom of expression and press, ability of women to work in all trades and professions, and a detailed economic plan. Much of what he sought is enshrined in our Constitution but his vision of social justice, economic progress and poverty reduction — which he couldn’t achieve in his lifetime — is highly relevant for Kashmir today….

India and J&K are tremendously and permanently intertwined. When one does well, the other does well. And when we both do well, we are unstoppable.

  • An overwhelming number of Kashmiri pundits rejoiced the scrapping of 370, arguing that with the provision gone, they would return to their homes in J&K from where they had to flee at the peak of separatist violence in the state.
  • Article 370 was acted as a shield for terrorists in J&K, who brainwashed Kashmiri youth against India and took undue advantage of their economic situation arising out of the poor development in the state.

Why The Scrapping of 370 Was Condemned:

  • Scrapping of 370 hits at the autonomy of J&K, many argued.
  • With the special status gone, outsiders can buy and in J&K. Many viewed this as a vicious attempt to engineer a demographic transition in the Muslim-dominate d state.
  • The move attacked the “Idea of India” and diluted Kashimiriyat. Economist Haseeb Drabu, in this piece for Mint, argued:

For the people of J&K, the biggest benefit of the state having greater legislative latitude under Article 370 has been the radical restructuring of agrarian relations. It was the first state in India, much before the communist government in Kerala, to carry out non-compensatory land reforms.

… These land reforms along with a massive debt write-off undertaken over 20 years, from 1951 to 1973, transformed the lives of rural masses and underlie J&K’s better-than national average human development indicators.

Samar Halarnkar in this piece for Scroll, argues that the move marks the slow un-democratization of India:

Aided and approved by vast swathes of the media, the Opposition, the administration and the Indian people, the Kashmir deception is the most impressive feat yet achieved in the slow, gradual process of dimming the lights of India’s democracy.

India has been set on course towards the darkness for some time. Successive Congress governments deliberately allowed India’s democracy to be clouded by the continuation and deployment of laws – old and new – meant to be used by a ruler against the ruled.

We did not complain enough when thousands suffered the wrongful use of vaguely worded laws: against terrorism, criminal defamation, information-technology misuse and sedition, the last of which has been freely used over the years against sloganeering students, villagers protesting power plants and cartoonists.

What Now?

I can not help but talk about the continued media clampdown in J&K. It’s been a week and news from the state has been a trickle, not a storm, as one would expect. The manner in which the move was hurried through, raises these legitimate concerns:

1. Future of media freedom in India – because even as we speak, reports suggest that people in and outside of Kashmir can’t still reach their families, and journalists aren’t moving freely in the state to be able to send regular reports.

2. State of democracy in India – because, firstly, the state assembly had no role to play in this move, and the parliament didn’t discuss a sensitive provision such as this enough before the bill was rushed to voting.

3. Position of courts on the government move – National Conference party has already challenged the government move in Supreme Court, but legal experts say this may not be a cakewalk. Here is The Print report that explored instances in the past when Indian courts have ruled on Article 370.

4. Role and future of political parties in J&K 

5. Will this bring about peace or conflict in the region?

6. Implications for India’s federal structure – Louise Tillin wrote in The Hindu:

 This is not the first time that a Central government has used its powers to bifurcate a State in the absence of local consensus. This was also seen with the creation of Telangana in 2014. As in the case of Telangana, the creation of the Union Territory of Ladakh does respond to a long-run demand in this region with a substantial Buddhist population. However, the decision to transform the remainder of J&K State into a Union Territory, at the same time as annulling Article 370, is a departure with profound and as yet unknown consequences in Kashmir, and wider implications for Indian federalism.

There are undeniably worrying aspects to the latest development in J&K. While there are no clear answers to this now, it’s important to say that the manner in which the government went ahead with scrapping of article 370, it should not keep us in any illusion about the state of the democratic process in India. We could only hope that good sense prevails and there is no repeat.

Much Fuss Over GDP But How Do We Measure Happiness?

The debate over India’s GDP numbers (economists are still locking horns over the truth and objectivity in these figures) was back into currency with this Arvind Subramanian piece published in June this year. He said that India may have overstated its GDP figures by 2.5 percentage points every year since 2011. Another insightful piece said the figures may have been overstated by 1-1.5 percentage points. This is significant, and while there may be a difference in figures quoted, inaccurate reporting of GDP is now an elephant in the room, too big to ignore.

GDP is an important economic tool. It measures the production of all goods and services bought and sold in an economy each year, by this very fact, has been of utmost importance to economists trying to measure economic growth. But of late, there have been concerns that GDP my not be a perfect tool to measure growth. Jacinda Ardern, New Zealand PM took it a step further when she said her government is going to look at fresh ways to measure happiness and wellbeing of the people of her country.

So, what are we going to do when we fix our GDP numbers back home? May be, join the global efforts on finding means to measure happiness, because number-driven GDP is already being punched for being an ineffective tool.

Courtney Goldsmith, in this piece, argues why GDP as a measure of economic growth may not be effective:

In an independent review of the UK’s economic statistics published in 2016, Sir Charles Bean wrote that GDP is often viewed as a “summary statistic” for the health of the economy. This means it is frequently conflated with wealth or welfare, though it only measures income. “Importantly, GDP… does not reflect economic inequality or sustainability (environmental, financial or [otherwise]),” Bean wrote. What’s more, GDP is not the precise and flawless figure that many believe it to be – it is merely an estimate. “This uncertainty surrounding official measures of GDP is inadequately recognised in public discourse, with commentators frequently attributing spurious precision to the estimates,” Bean continued.

Sarah Arnold, Senior Economist at the New Economics Foundation (NEF), told World Finance that GDP as a measure of economic activity is simply a means to an end: “It has become so synonymous with national success that the rationale for pursuing economic growth in the first place seems to have been long forgotten.”

Putting the flaws highlighted by Bean and Arnold aside, GDP is still an inaccurate measure of prosperity, as it fails to convey much of the value created in the modern world. GDP was developed during the manufacturing age and, as David Pilling, Africa Editor of the Financial Times, wrote in his book The Growth Delusion: Wealth, Poverty and the Wellbeing of Nations: “[GDP] is not bad at accounting for production of bricks, steel bars and bicycles.” Where it struggles, though, is with the service economy, a segment that accounts for a growing proportion of high-income countries’ economies. “[Try GDP] out on haircuts, psychoanalysis sessions or music downloads and it becomes distinctly fuzzy,” Pilling wrote.

GDP’s preference for tangible goods also means it is insufficient at capturing the value of technology.

Of course, the number-focussed measure of GDP may not be equipped to assess job quality, wellbeing, carbon emissions, inequality, and physical health, key indicators of happiness and wellbeing that development economists have been focussing on.

Goldsmith, in her piece, further argues:

For GDP, which does not distinguish between good and bad production, bigger is always better. …Wars and natural disasters, too, can be a boon to GDP as a result of the associated increase in spending. Comprehensive wealth, on the other hand, accounts for all of a country’s assets, including: produced capital, such as factories and machinery; natural capital, like forests and fossil fuels; human capital, including the value of future earnings for the labour force; and net foreign assets.

GDP’s neglect of natural capital in particular has received more attention in recent years. Natural assets, such as forests, fisheries and the atmosphere, are often regarded as self-sustaining, fixed assets. In actual fact, all of these resources can be – and are being – depleted by humans. Since the 1990s, economists have looked into the possibility of putting a price tag on natural resources to ensure their value is taken seriously. Ecological economist Robert Costanza published a paper entitled ‘The Value of the World’s Ecosystem Services and Natural Capital in Nature’ in 1997 that valued the whole of the natural world at $33trn. While Costanza’s research was highly controversial, the idea of accounting for natural depletion within the landscape of economic growth is becoming more common.

This McKinsey report says:

GDP as a unit of measure has not kept pace with the changing nature of economic activity. Designed to measure the physical production of goods in the market economy, GDP is not well suited to accounting for private- and public-sector services with no output that can be measured easily by counting the number of units produced. Nor does GDP lend itself to assessing improvements in the quality and diversity of goods and services or to estimating the depletion of resources or the degradation of the environment associated with production. Transformative change in technology is not easy to measure using GDP because so much of the benefit accrues to consumers.

World Bank too has touched upon the subject with its own concept of “comprehensive wealth“, covering in its sweep all produced capital such as factories and roads; natural capital like forests and water; human capital, which leads to earnings; and net foreign assets, to project a fuller picture of economic wellbeing and growth. Experts today are also working out ways to measure intangible qualities of happiness and knowledge but we have a long way to go.

There are interesting cues here, in this Econlife piece published today, which questions if money could indeed buy happiness, by comparing GDP, social support, life expectancy et al of the top 10 happiest countries (according to the UN Happiness Report) in the world.

I think happiness couldn’t ever be measured except in smiles and those trying to chase happiness are the unhappiest lot. Think of this at a national level and tell me: is it possible to make everyone happy? I like it when they say, happiness is a state of mind. Of course, this is because this happiness question weighs heavy on my soul so escapist statements best resolve the moral dilemma. However, honestly, GDP and happiness do not always go together, that’s very much true. 

Does Capitalism make you materialistic?

Capitalism Didn’t Invent “Keeping Up with the Joneses”

https://mises.org/node/47286
— Read on mises.org/node/47286

Absolutely interesting piece. This one breaks the myth about capitalism making people materialistic. It’s all about creating more choices and opportunities. What you pick remains your sole decision. Don’t blame capitalism for it.

Yes! US-China Trade War is slowing down the world economy

The global economy is not doing well, and trade tensions between the United States and China have a role to play. Even as the rift continues, another conflict I wrote about yesterday also needs early resolution before it snowballs into something big.

IMF’s World Economic Output Update released earlier this week underlines the fallout of the trade war between US and China. According to its latest forecast, real global economic growth will drop to 3.2% this year, 0.1 percentage point slower than the forecast made in April. These are worrying figures given that the growth figures stood at 3.6% last year and 3.8% in 2017.

The impact of the deterioration of the US-China trade talks can be seen from the slowing growth rate of global trade during the conflict period, the report underlines. IMF’s forecast for growth in global trade by 2.5% now is 1 percent lower than the forecast made in April. Here is another clear and concise analysis of the trade slowdown on Mishtalk. This is especially worrying because global trade since 2017 has seen robust periods of growth. On tariffs, the IMF has also said that attempts to address trade imbalances by taxing imports are hurting the world economy without fixing the problem.

Trade was also a main concern in the IMF’s annual External Sector Report released last week, with Chief Economist Gita Gopinath warning that such conflicts are shaking the global economy. Another important finding of the report underlined the big shift in global economies: China, which had the world’s biggest current-account surplus a decade ago, is now close to balanced trade with developed countries like Germany and the U.S. dealing with largest surpluses and deficits.

To get back to the ripple effect trade wars have been having on world economies in recent months, Gopinath, in her note on the report, says:

Trade actions and tensions have so far not significantly affected global current account imbalances, as trade has been diverted to other countries with lower or no tariffs. Instead, as highlighted in an earlier blog, these trade tensions and related uncertainties are weighing on global investment and growth, especially in sectors most integrated into global supply chains (where production is carried out across multiple countries).

Slowing growth mostly was found in emerging markets, with India forecast lower by 0.3 percent compared to earlier forecasts, followed by Russia, Brazil, and Mexico. Besides the US-China trade tensions continuing to impact growth across the world, the report also cited policy uncertainty as another impediment to growth. The solutions to mitigate the slowing growth, according to Gopinath, also hinge on policy decisions of governments across the world, policies that are pro-trade and contribute towards strengthening the rules governing international trade:

Many countries are now near full employment and have limited room to maneuver in their public budgets. So, governments need to carefully calibrate their policies to achieve domestic and external objectives. Countries with excess current account deficits, like the United Kingdom and the United States, should adopt or continue with growth-friendly fiscal consolidation, while those with excess current account surpluses, like Germany and Korea, should use fiscal space to boost public infrastructure investment and potential growth.

Moreover, carefully tailored and sequenced structural policies should play a more prominent role in tackling external imbalances, while boosting domestic potential growth. Reforms that encourage investment and discourage excessive saving—for example through the removal of entry barriers or stronger social safety nets—would support external rebalancing in excess current account surplus countries. Reforms that improve productivity and workers’ skill base are appropriate to promote exports in countries with excess current account deficits. Even economies with external positions that we assess to be broadly in line with fundamentals, like China and Japan, need to adopt policies that address domestic imbalances and prevent a resurgence of external imbalances; this requires structural reforms that facilitate competition in sectors like services.

Exchange rate flexibility remains key to facilitating external adjustment. As highlighted in this year’s analytical chapter, varying features of international trade, including the extent of integration into global value chains and trade invoicing in a dominant currency like the US dollar, can weaken some mechanisms of external adjustment and limit the benefits of exchange rate flexibility in the short term. So, exchange rate flexibility may need to be supported with other policies that bolster the export response, including through improved access to credit and transportation infrastructure. Allowing exchange rates to play their role, however, remains key to deliver durable medium-term rebalancing. 

Another report from the World Trade Organization, released this month, underlines a sharp increase in trade protectionism. Approximately $340 billion a year of trade faced tariffs, the report said, marking the second-highest figure on record, surpassed only by the $588 billion in restrictions reported in WTO’s earlier monitoring report.

All these reports, released in quick succession this month, flag trade tensions as detrimental to economic growth. Yet, bilateral conflicts continue, and while there is no alternative to WTO however ineffective and slow it may be at times, not all conflicts can be resolved by the WTO. This year and next are critical to seeing if sparring countries can come together and find effective institutional frameworks for trade negotiations that benefit all.

India and US Trade War Isn’t Unreal

United States–India trade ties have been in news for all the wrong reasons, of late. There may be optimism that it’s just a mini conflict that can be resolved easily, but the road ahead is nothing short of thorny. It’s a crisis that can snowball into a big rift if not managed properly. The institutional arrangements that currently exist between US and India are unable to manage this conflict, as is clear from the continued tone of President Trump’s tweets and statements on India. What makes worse is the protectionist nature of the governments in both countries.

Let’s look at what both sides have built in trade over the years which will be all exposed to risks if the trade ties continue to be volatile:

  • Bilateral trade in goods and services grew at an average annual rate of 7.59 percent between 2008 and 2018. This was double the value from $68.4 billion to $142.1 billion.
  • US was India’s second-largest trading partner in goods in 2018, and the single largest export destination with $54.5 billion worth of goods shipped to the US in 2017.
  • India was the ninth-largest trading partner of the United States in 2018 with US exports to India accounting for 2 percent of overall US exports in 2018, valued at an estimated $33.1 billion, up 87.3 percent from 2008.
  • US service exports to India were an estimated $25.8 billion in 2018, up 157 percent from 2008.
  • US arms exports to India touched $15 billion in the past decade.
  • Exports to India supported an estimated one hundred and ninety-seven thousand US jobs in 2015.
  • Bilateral FDI more than doubled from $24.3 billion in 2009 to $54.3 billion in 2017.

These numbers are enough to understand how important the US-India trade ties are. But as things stand, the disagreements are chronic and deep.  While Indian government’s efforts to engage in trade talks with the US have increased since 2018, the scope for existing Trade Policy Forum and the Indian Ministry for Commerce and Industry for talks between both countries remains limited. It doesn’t help that for bilateral talks, neither of the two countries has figured out an institutional mechanism to engage with each other beyond the Free Trade Agreements (but the recent conflict over FTAs negates even the possibility of any more FTAs in the near future). AT the WTO, they have sparred constantly with no concrete results.

A report released this month by the Atlantic Council’s South Asia Center recommends that both US and Indian governments take steps to manage short-term disagreements and establish a more constructive relationship in the medium and long runs. This would clearly mean reviewing the existing institutional frameworks for reform, brainstorm on creating avenues for market opening agreements and draw a roadmap for the FTAs. It’s indeed a difficult ropewalk but much-needed. Read the detailed report here.

The Big Show About Getting Nothing Done

This blog comes a bit late in the day, but I still wanted to put together some of the important thoughts that have emerged on the G20 summit this year. The big show about getting nothing done – this seems to be the prevailing criticism about the G20 meet in Japan’s Osaka. Of course, Ivanka Trump seems to have made more news than the key issues_sustainable growth, innovation and health_for the summit in 2019. Ahead of the summit, trade analysts keenly watched the highly anticipated talks between US President Donald Trump and Chinese President Xi Jinping, expecting a breakthrough in the ongoing trade war between the two economic superpowers. G20, after all, is a congregation of some of the world’s largest and most powerful economies where world leaders deliberate on the important economic and political issues of the day.

Yet, this year’s event has come under severe criticism from trade experts who mostly are terming the G20 as utterly incapable of advancing solutions to global challenges. It’s true, if you look at it, that G20 actually is a forum of bureaucrats who are good at meetings but not really generating workable outcomes. This year, for instance, what really transpired at the summit are mere mentions of climate change in its communique and US’s repeated justification of its withdrawal from the Paris accord, both quite dull and drab efforts at communicating urgency on the  very serious issue of climate change that has begun its onslaught across the world — from record heat waves in Europe, unprecedented rains and landslides to ecological disasters in Japan. (If you need more convincing on Paris accord and climate change, here is a very useful piece that I absolutely recommend to you.)

All said and done, what is true is also that globally, a broad-based organization taking care of world trade issues at the scale of G20 hasn’t emerged yet. All the best ideas that world leaders may have on pressing global issues in trade and development may stay as ideas if not for a forum like G20 where they, in the least, get discussed.

G20 this year, for instance, didn’t move forward on the utterly critical Dispute Settlement issues, a longstanding pain point in international trade, even as American president Donald Trump keeps violating all trade rules with impunity.

Folks at the NRDC, Han Chen and Claire Wang specifically, have termed this year’s G20 summit as symbolic of Japan’s failure to commit to issues of climate change and coal phaseout. Japan is the world’s 6th largest contributor to cumulative carbon emissions.

They say:

Despite the climate costs Japan has already suffered, its own climate policies are woefully out of date. Prior to the G20 summit, Japan released an uninspiring long term climate strategy that is severely out of line with climate needs, along with watered down language on climate in the draft G20 communique. Japan’s plans for domestic coal expansion and international coal finance continue to draw international criticism, since OECD countries should be phasing out of coal by 2030. The G20 as a whole has also dramatically expanded coal finance, spending at least $63.9 billion on coal per year,  despite committing a decade ago to phase out fossil fuel subsidies.

….Two weeks before the G20 summit, Japan’s cabinet adopted its Long Term Strategy on climate change as part of its commitments under the Paris Agreement. The Strategy seeks to achieve net zero emissions in the second half of the century, but does not set a specific date by which to meet this target. It also maintains Japan’s existing goal to cut emissions 80% by 2050, without specifying a baseline from which to measure emissions reductions. By delaying its net-zero target until after the middle of the century, Japan remains inconsistent with a 1.5C warming limit, which requires reaching net zero emissions by 2050.

So much for the drama in world trade and continued inefficacy of global institutions who continue to be hijacked by the hegemony of the US. Over to next year’s summit now, but if this no-show continues, the voices that doubt its very existence will only grow louder and rightly so.

Democracy versus Growth?

CapturevIs democracy dying?

This question seems to be back on the mind of economists this week. I live in the world’s largest democracy but it often confounds me. It confounds me when I see people voting for leaders who don’t do justice to their roles. It distresses me when politicians make policies that are in conflict with basic economic reasoning, but they do because they want votes from certain sections of voters. I get worried when, in the name of democracy, parties appease certain sections of people with regressive, anti-development policies. I have said enough but economists have been arguing for long if democracy is good for development, development being a difficult word here and much debated as well on its intent and purpose. Anyway, let us focus on democracy and growth for today, which seems to be the focus on this February 2019 publication by  Acemoglu, Naidu, Restrepo, and Robinson in which they argue that there is substantial evidence that democracy impacts GDP per capita positively with as much as 20% increase in GDP per capita of democratizing nations.  They add that the positive effects are driven by greater investments in capital, schooling, and health.

Yet, in his critique Alex Tabarrok argues that the academic literature has at best weakly established the causal effects of democracy on growth. Examples beyond academics to question Acemoglu et al’s research exist and the biggest one is non-democratic China’s rise as an economic superpower. Tabarrok argues the recent research’s contention of 20% growth may not be attractive enough for non-democracies to want to switch to demoracies and that there must be something more to democracy than the GDP per capita link. Read more of his thoughts here.

However, for the first time in three years, the decline of democracy stopped in 2018 according to The Economist’s Democracy Index. According to this index, Norway, Iceland, Sweden, New Zealand, and Denmark are the top five democratic countries in the world, whereas Chad, Central African Republic, Dem. Republic of Congo, Syria and North Korea are the bottom five. India is on number 45. Hmm!

Here is another interesting piece which talks about the queer contradiction that even as freedom the world over is in decline, the appeal of democracy endures! Yet, a conflicting report from Freedom House suggests otherwise primarily because of the rise of autocratic leaders such as Donald Trump.

WHAT ATISHI’S DEFEAT AND PRAGYA SINGH THAKUR’S WIN TELL US ABOUT INDIA

More than 100 years ago, in the iconic Citizenship In A Republic speech, US President Theodore Roosevelt outlined the key drivers of a successful republic: the quality of its citizens and high calibre political leaders who would hold the average citizen to a high standard—not just by words, but by deeds as well. The Aam Aadmi Party’s Atishi fits this idea of a high calibre leader, one who is, as Roosevelt said, critical to the success of a democracy.

Atishi, born to Delhi University professors Vijay Singh and Tripta Wahi, studied at St Stephen’s and Oxford University, excelled at academics, and chose to work for Aam Aadmi Party (AAP) when she could have chosen the path of corporate opulence just as an overwhelming number of people with pedigree do. The 37-year-old was AAP’s only female candidate in Delhi, besides being the only woman on its highest decision-making body. In one of her interviews, she said she chose politics because that is the path that helps bring change.

Yet, today as we stand, electoral trends point to her losing out on her political debut to BJP candidate from East Delhi, Gautam Gambhir, another political debutante and star cricketer who is far removed from everything she stands for: the politics of development, social policy and genuine groundwork. Atishi also trails behind the Congress candidate from East Delhi, Arvinder Singh Lovely.

As Delhi’s education advisor since July 2015, Atishi was at the helm of large-scale education reforms in the government schools of Delhi with stunning results. A gaping divide separates government-aided education from private school education in India and she helped bridge the gap with policies and programmes that sought to replace the tarred image of government schools with that of swanky and sharp ones where classes do happen and dedicated teachers show up at school for children from India’s underclass. Her door-to-door campaign turned the BJP’s religious slogan of “Mandir wahin banayenge” into “School wahin banayenge”, a clear marker of the kind of politics she has been vouching for.

But in the din of Indian politics, strong interplay of caste and religious identities can take well-meaning leaders down. This could explain the lead of the BJP’s Pragya Singh Thakur—who has absolutely no development agenda to boot—in Bhopal even as Atishi trails. Pragya wears her Hindu nationalistic robes with fervour, rides on the politics of saffron symbolism, and played the victim card in her campaign by talking of police cruelty while she was jailed.

Atishi’s struggle has been a departure from Pragya’s politics. For Atishi, being in the electoral fray with confusion over caste and religion turned out to be a self-defeating thing to do. Advising the government on winning programmes can win women respect but to talk of real development as a woman politician fighting to win is even worse—or so it appears.

In India, being a well-meaning woman in the electoral fray isn’t enough. The political structure is designed to accommodate women in non-threatening roles with little or no career progression to bigger political roles. Those who co-opt into the system survive with glorious wins. Like Pragya Singh Thakur has. Many view women as intellectually or economically weak to win an election. From Lalu Yadav’s cheesy references to actor and BJP MP Hema Malini’s cheeks to Congress candidate and actor Urmila Matondkar’s rival calling her a bholi bhali ladki to SP politician Jaya Prada being called derogatory names—all this drama and mansplaining in politics is contemptuous and sickeningly sexist, and yet it continues to resist women from moving forward.

Atishi’s surname of Marlena, given to her by her Leftist parents, was attacked first with rumours projecting her as a Christian. Days into her political campaign, Atishi had vehemently said that the only plank for her in the elections would be her work on health and education and her vision for East Delhi. Very soon, her surname was called into question and we heard Atishi declaring her caste at birth: “My actual surname is ‘Singh’ and I come from a Punjabi Rajput family.” This is how she went around telling people, frazzled about the fuss over her caste and religious identity. Atishi ultimately dropped her the name Marlena.

In the rabidly masculine world of politics, Delhi’s East Delhi constituency looked like just another post waiting to be swallowed by the saffron surge. Gautam Gambhir was just the BJP’s foot soldier like hundreds of others, guarding the post as votes were cast for the overpowering persona of Modi. Atishi and her report card, her campaign videos and her repeated emphasis on developmental issues were just weak straws against a very strong saffron wave. The fact that Atishi suffered an attempt at her character assassination doesn’t seem to matter.

While it can be safely said that in seats that went to the BJP, the votes were cast for Modi, was it also Atishi’s aggressive campaign that weakened her position in a highly sexualised campaign? Popular support for macho, sexually-charged campaigns that male politicians run and women politicians like Pragya Singh Thakur co-opt into silences women with an agenda to work.

The Modi wave

“How will women participate in politics if treated this way?” was the common refrain during Atishi’s very difficult campaign, during which she publicly broke down. Atishi has been raw, articulate, and human. And her campaign relentlessly kept putting the focus back on real issues. In contrast, 49-year-old Pragya Singh Thakur’s contest in itself was an escape from the problematic questions that her candidature and now her win raises. An accused awaiting trial in the 2008 Malegaon bombings, she, as her political rival and Congress’s veteran leader Digvijaya Singh has said, is the face of Hindu terror. She faced arrest for terror charges, but has consistently used it to her advantage by playing the victim card. Her frequent references to her “tortuous” jail time and other comments have kept stirring controversies, the latest being the one where she called Mahatma Gandhi’s killer a patriot.

When examined through the lens of gender, Pragya Singh seems to have successfully channelled gender as a weapon to shame the state apparatus and its dealings with terror accused free of any other identity of privilege except religion. A sadhvi for Hindus remains a sacred identity and Pragya Thakur’s allegations about police torture on her body remains, if not a political issue, definitely a religious issue, finding appeal with the masses.

Way forward

Even today, women constitute only 11.8 per cent (64 of 543) seats in the Lok Sabha and 11 per cent (27 out of 245) seats in the Rajya Sabha. A 2017 report by the Inter-Parliamentary Union (IPU) and UN Women indicates that between 2010 and 2017, the share of women representatives in the Lok Sabha rose only by one per cent. This means that the percentage of women elected to Parliament has stagnated between three and 11 percent ever since the first Lok Sabha was constituted 67 years ago in 1952.

This is a paradox, considering the increasing share of women voters in the electorate. From 48 percent in 1971, the turnout of women increased to 60 percent in 1984 and then to 65.3 percent during the 2014 general elections.

While the sheer size of women voters is heartening and the representation of women in Parliament may have a long way to go, it is time the debate on women’s participation in politics discussed the quality of women in the electoral fray and not just increasing the number of women in Parliament. To be sure, the same standards could be applied to male candidates as well, but we often fail. However, given the sheer impact of women’s political participation on the life of a nation, it’s important that we are clear about the role models we have: the ones who burn the unchartered path to build anew, or those who fall into the macho-masculine narrative of male politicians and close the room for negotiation.

This story was first published here.

Bharti’s cellular theory of growth

Olhanpur, Bihar: Until about three years ago, Nizamuddin Ansari, 65, a retired head clerk from the Indian Railways mail service, spent most of his days on the verandah at home. The monotony of watching over his courtyard as the women of his family went about their household chores would be broken by the occasional visitor or a money order from his sons employed in Jeddah in Saudi Arabia and Dubai. Then, the small plot of unused land he owned next to his house got a celebrity tenant: Bharti Airtel Ltd.

The company wanted to set up a phone tower on the plot before it made a debut at Olhanpur, Ansari’s village of some 25,000 people, in Bihar’s Chapra district.

(Left) A one-stop Airtel shop in Olhanpur. Recharge coupons of between Rs10 and Rs50 sell the most here ;and the Airtel tower in Olhanpur (in the background). Bharti Airtel was the first telecom company to enter the village. Madhu Kapparath / Mint

The Ansari household then had two men employed in West Asia (the number has since grown to six), who would be lucky to see their wives and children once a year. Phone conversations were the only way to stay in touch.

Also See Olhanpur(Map)

The land would bring a monthly rent of Rs10,000, adding to the family’s income of around Rs50,000 sent home by family members overseas and from farming.

Within a year of Bharti Airtel entering Olhanpur in 2006, Ansari gave up his landline connection provided by Bharat Sanchar Nigam Ltd, a state-owned phone services provider, and bought five mobile phones for his family of 11, mostly women.

(Left) Parashar Telecom, a distributor for Airtel in Chapra, struggles with power cuts. Outages can sometimes last around 12 hours a day here; and Khushboo Paan Bhandar at Pathera village makes a busy picture of an Airtel retail store. Here, and mobile phone coupons sell like hot cakes. Its 14-year-old proprietor, Mukesh Chaudhary (behind the counter), says he makes an additional Rs45 a day selling phone recharge coupons. Madhu Kapparath / Mint

The phone firm launched its services in Bihar early in 2005, and in the four years since, has built a coverage presence in all of the state’s 38 districts. Of at least 18.67 million customers in Bihar, according to end-February data with the Telecom Regulatory Authority of India, or Trai, the company has 7.15 million customers.

One out of four of Olhanpur’s residents have a phone, say Bharti Airtel executives—double the 12.6% phone penetration in the country’s villages and small towns.

Village voice

Also Read earlier stories in Bharat Shining series

Indians are second only to the US when it comes to using phone minutes. Mobile phone customers in India record almost 500 minutes of use a month, ahead of the 423 minutes the Chinese record, according to data collated by consultancy BDA Connect Pvt. Ltd.

Such is the pace of expansion and growth in demand for phone minutes that the load on the Bharti Airtel network—and indeed other networks—keeps mounting daily. “We set up more towers…(but) the demand for fresh connections keeps rising,” says Manish Kumar, a territory manager for the firm in Chapra.

Elsewhere, his company sets up 100 towers every day, a task shared by Indus Towers Ltd, a 42%-owned unit, says Sudhir Gupta, vice-president of marketing at the tower firm.

Phone services are perhaps what comes closest to perfect competition in India. Sure, there are instances of collusive price changes, but when it comes to earning that extra rupee of profit, those in the business can be cut-throat. Almost.

So, within 12 months of Bharti Airtel building its tower at Olhanpur, Reliance Communications entered the market—it is now ranked second by customers, behind Bharti Airtel. In January, work got tougher for the likes of territory manager Kumar when two more competitors, Vodafone Essar and Idea Cellular Ltd, reached the village. “We haven’t seen the demand for Airtel declining but, certainly, people now have more choices,” he says.

The Ansari household has let out another piece of land to the latest two entrants to set up towers. Its income from rent has gone up to Rs30,000 a month and Naimuddin Ansari, 32, Ansari’s youngest son, has quit his accountant’s job at a New Delhi firm to return and help manage his father’s newfound occupation.

Hyper-local logistics

On days when networks fail in Olhanpur, there is much angst. “Poor connectivity is something the people here can’t stand even for 10 minutes,” says Sanjay Kumar, guard at the Bharti Airtel tower here, who doubles up as one of the two distributors in the village.

That happens often. Frequent power cuts mean that the towers rely on diesel-run generators for electricity backup—power cuts can sometimes last around 12 hours a day here. “The tanker comes every Monday, and if we run short of fuel during the week, we have to wait until Monday,” says Kumar.

The last time Bharti Airtel’s network failed for two days about eight months ago, villagers stormed the tower complex and protested till a tanker carrying diesel was called in from Chapra.

On a busy street at Pathera, a village neighbouring Olhanpur, Bharti Airtel’s distribution march—what chief executive and joint managing director Manoj Kohli calls his “matchbox strategy” to benchmark phone card availability to matchboxes in every village of India—is at work.

At a small paan (betel leaf) shop, its 14-year-old proprietor Mukesh Chaudhary makes an additional Rs45 a day selling phone recharge coupons. “Earlier, every passer-by would run into my shop asking for Airtel recharges. I figured this was also a product I could sell,” he says.

In neighbouring Khaira village, Bharti Airtel distributor Rajesh Pandey makes hundreds of photocopies of an emailed leaflet of the company’s latest tariffs to distribute in local markets. “We have no time to lose when a new offer comes. Photocopies of the schemes reach faster and are more economical,” says Pandey, who distributes Airtel coupons in six villages in Chapra, including Olhanpur. Recharge coupons of between Rs10 and Rs50 on prepaid phone connections sell the most, he adds.

Bharti Airtel also has a drive it calls FoS (feet on street) in rural areas, where distributors travel to sell prepaid phone cards, recharge coupons and related company offers to consumers.

To effectively serve rural customers and save on costs, Bharti Airtel has launched a programme called I-Serve, under which the company trains village shopkeepers to become a one-stop Bharti Airtel store—where customers can not just buy recharge cards but get their queries answered.

Azimullah Khan, who owns an electrical products store, is one such I-Serve shopkeeper. Last fortnight, a bunch of youngsters came with a question to Khan, who in his previous job drove a truck in Saudi Arabia for 16 years. They alleged the network provider was overcharging. “They had accidentally activated several alerts on their mobiles for which they were being charged. The problem is that they still do not know how to use their mobile phones,” he says.

Khan, whose shop also repairs cellphones with a locally trained hand, fixed their problem and sold them more recharge coupons. Bharti Airtel expects such on-the-ground distributors to save on customer service costs—but for Khan, the youngsters would have called up at the firm’s customer helpline using expensive call centre services.

Changing lives

As phone services spread in rural India—according to latest data from Trai, some 27.6% of India’s nearly 400 million phones (including around 38 million fixed-line phones) were in its villages and small towns—slow but potentially big changes are taking place.

In Olhanpur resident Gaffar Khan’s days in West Asia in the late 1970s, his wife Nazma Khan would travel to the district headquarters 20km away to make a phone call, or post a letter that would reach Khan weeks later. “There was not even one phone booth then in the nearest Khodaibagh market,” Khan says.

Three decades later, no household in Olhanpur faces that problem.

Local phone access can ease trauma, as Sushila Devi found out. The 32-year-old housewife’s husband, Surendra Prasad, works at a Chapra factory and visits home once a month. Cradling her newborn, Devi recalls how last month she called him as labour pains mounted. “Just after my call, he was by my side with the doctor when I delivered my child,” she says.

At a broader level, economists say the spread of mobile phone usage is cranking up economic growth through enhanced productivity.

A January study by the Indian Council for Research on International Economic Relations, or Icrier, a New Delhi-based think tank, says increased penetration of cellular technology has contributed to higher and more inclusive economic growth. States with 10% higher mobile phone penetration than others, it concludes, have grown 1.2% faster.

The economic benefits are yet to reach states such as Bihar, which has to boost its state-wide teledensity of 16% by at least half to reach the ideal benchmark—the study found benefits begin to accrue once penetration crosses 25%. “If Bihar were to enjoy the same mobile penetration rate as Punjab, then, according to our results, it would enjoy a growth rate that is about 4% higher,” the Icrier report says.

For now, new businesses are mushrooming around phone services at Olhanpur.

At Khodaibagh market, Ragini Kumari, 6, is perhaps the youngest customer at Mehta PCO, a public phone booth that uses a battery-powered inverter to charge up to five mobile phones at a time for Rs5 each. Kumari, a class I student, visits Mehta PCO at least twice a week to charge her father’s handset since the generator connection at her home runs for just 2 hours in the evening, she says, before sprinting back home.

 

Published in Mint.

Reading Hindustan in Bihar

Raghopur, Bihar: At 3am, a newspaper van from Searchlite Printing Press in Patna sets out in the dark with bundles of Hindustan, the best-selling Hindi daily in Bihar (Hindustan is published by HT Media Ltd, which also publishes Mint). It makes its way through a narrow, straight road to Khushrupur, around 40km away, every day.

Click here to watch video

214b91b0-1a20-11de-99ef-000b5dabf613.flvBy 4am, when a nondescript roadside tea stall in Khushrupur wakes up to business, the van has already dropped 100 copies of the newspaper on the steps of a deserted temple next to it.

The copies of the newspaper, wrapped in two neat bundles, make a curiously small package waiting to be delivered to readers in neighbouring Raghopur, in Vaishali district, a predominantly rural district of 2.1 million people.

At least 3 hours after the bundles have been delivered, Munshi Rai rides in, empty milk cans straddling his bicycle.

Also Read Earlier Bharat Shining Series

Also See Raghopur (Map)

The nimble-footed milkman from Khushrupur, perhaps, has the most important job in the diyara, a term used to describe regions surrounded by rivers. Raghopur, sandwiched by the river Ganga, falls in the diyara area. It sustains its economy on a thriving business of dairy products and farming.

Here, Rai is the lone carrier for Hindustan, which has an 86% market share of the total Hindi readership in the state, with six million readers and 29 sub-editions, as per the Indian Readership Survey of 2008; it is a key market for the newspaper and part of its aggressive plan to access places in difficult terrain.

There are just 100 copies to be sold, but in the seven years since the newspaper entered Raghopur, it has been more about accessibility than volumes.

When Raghopur, known mostly for being the assembly constituency of former Bihar chief minister Rabri Devi, struggles with heavy rains and sees its only pontoon bridge over the river collapse year after year, the milkman takes the route less travelled to carry the area’s only newspaper to its agents there.

Ashok Singh, distribution agent for Hindustan in Raghopur, likens the place to the ancient civilization of Mesopotamia, modern-day Iraq, which was located between the Tigris and Euphrates rivers, and literally means “land between two rivers”. “Raghopur is Bihar’s Mesopotamia. This is not the kind of place where one can send a newspaper. The real issue here is of access, and we have addressed it,” Singh explains.

Arduous journey

It’s a rough 7km journey to Raghopur, located just across the Ganga river from Khushrupur. There are no pukka roads, and after a 4km trek through fields of arhar—the most commonly consumed pulse in India—one must walk through a sandy riverbed. During the monsoon, when the river fills up, one takes a boat.

Rai has been taking this route every day, as an all-weather alternative to the pontoon bridge, since 2002, when Hindustan’s first 20 copies entered Raghopur on his bicycle.

This also means thatHindustan’s readers depend a lot on the way Rai prioritizes his day. Besides the speedy delivery of the newspaper across the river, Rai also frets about the timely departure of Patna-bound trains from the Khushrupur railway station. These trains carry his home-made paneer (cottage cheese) for sale to hotels in the state capital.

On days when they run late, Rai picks up the newspaper bundles late. “I am first a milkman. After this comes everything else,” he says matter-of-factly.

The daily trip to Raghopur is part of his dairy business; picking up the bundle of newspapers and delivering them happens alongside, for a monthly payment of Rs500 from the Hindustan agent in Khushrupur.

On days when he is delayed, the newspaper’s business faces two obvious risks: a delay in distribution and pilfering of a few copies before the bunch is picked up. As happened on 16 March, when a combination of fever and delayed local trains caused Rai to reach Raghopur shortly before noon.

For the newspaper’s sales strategists, penetration of rural markets involves a two-pronged approach: build a varied network of information providers from the regions, such as the postman, milkman, bus conductors and drivers, and encourage local vendors to sell the newspaper.

“Earlier, the information providers were paid a fixed monthly remuneration and after the growth of market, we have also introduced vendors on a commission basis,” says Vijay Singh, area manager (sales), Hindustan, Bihar.

An addiction

The efforts towards providing Raghopur with a daily newspaper, which included identifying Rai as the most viable carrier throughout the year, have led to the making of a powerful brand in rural markets. For most readers in Raghopur, it is more than just a bunch of papers carrying news; it is an addiction.

At the hardware shop of high school graduate Rukkha Singh, where the first copy is handed out every morning, shopkeepers from the neighbouring markets and prospective buyers gather to read the headlines. Depending on the subscriber’s generosity and patience, they might even be able to go through all the pages.

Hence, within a flexible congregation of merchants, buyers and passers-by, one newspaper copy translates into hundreds of readers.

Nearby, at the village choupal (gathering place), youngsters assemble around a circular cement bench and take turns reading it. Some flip through the sports pages; some pore over the political news and the conversation slowly escalates into a heated debate.

One strong USP, or unique selling proposition, is the newspaper’s emphasis on localized content and regional dialects that its readers can connect with.

“In Bihar, the local dialects change every 40km. The Hindi daily has consciously moved away from puritanical notions of Hindi to incorporate popular terms from local dialects in its reports, which appeals to a large number of people,” says Mammen Matthew, resident editor of the Hindustan Times, the English daily published by HT Media, in Patna.

Developing a grapevine

Hindustan in Bihar has developed a local news network in districts, blocks and villages, the three levels at which local administrative bodies in India function, to tap local news and issues that have a bearing on people’s lives, which, in turn, has improved its reach.

Shailesh Kumar, a stringer for Hindustan in Raghopur, concentrates on crime and development issues in the region and believes that while newspapers the world over are dying, rural markets in India would continue to read them for decades ahead. “Here, literacy is also just about the level people can read newspapers. People have time for newspapers,” he says.

Prior to Hindustan’s launch in Raghopur, the newspaper agent, who is also a lawyer, surveyed the villagers to arrive at a prospective readership figure.

In a place mostly sustained by the dairy business and farming, 20 copies is all he could arrive at. The money here, he says, is ample, with each household making an average of Rs250-300 a day, and several families living off the money made from the hemp trade dismantled in the early 1970s by the state government.

Literacy levels in the midst of this prosperity are dismal. “If you talk about education here, it’s considered a joke,” Ashok Singh says.

But news generates enough heat in Raghopur, where political awareness is at an all-time high after railway minister Lalu Prasad contested state polls from the assembly constituency in 1983 and later fielded his wife Rabri Devi.

Reflecting rural shift

The newspaper’s advertisement spaces also reflect a rural shift: In excess of 90% of advertisements come from either local sources or government departments. Whether it is advertisements for locally made tobacco products, jewellery stores or motorcycles, advertisements in Hindustan reflect the tastes and aspirations of its readers.

Hindustan’s first day at Raghopur was eventful. On the day copies of Hindustan reached Raghopur, a group of youngsters from the village chaupal rushed with a copy to former panchayat (village council) member Lallan Singh’s house. As it turned out, the newspaper had carried the examination schedule for the first-year undergraduate exams of a local university where Singh’s granddaughter Pushpa studied. “The exams were to commence in the next few hours and because the newspaper had carried the schedule, we rushed her to the examination centre in Jiddupur village, around 10km away,” Singh says.

In the years that followed, Hindustan has captured local news in the region effectively—from the blast in a firecracker factory in Khushrupur in 2005 to the corporeal punishment meted out to students in the region’s Navodaya Vidyalayas.

It has also served as an information provider on job vacancies, Kisan Credit Card camps in villages and newer, fuel-efficient motorcycles.

Ashok Yadav, 28, who owns a paan shop just at the turn of a busy alley in Raghopur, has been reading the newspaper since the year it made its debut here. He sports long hair, put in currency by the captain of the Indian cricket team, M.S. Dhoni, and reads the sports pages first.

Yadav, who has passed high school, considers the newspaper to be more than just a source of news. Each time he sees the manager of a local bank who once charged him money to open a savings account, he thinks about writing to the newspaper for action. “If I write, will they not help?” he asks.

Published in Mint.

Kamla Balan bridge: it’s a disaster waiting to happen

Jhanjharpur, Bihar: On an apology of a road leading to this small town in Madhubani district, thick and diverse traffic—from trains to four-wheelers—chugs along on a century-old bridge over the Kamla Balan river.

Lifeline: The century-old bridge facilitates the movement of 14 trains and 500 vehicles every day to and from Jhanjharpur. Ashish Gupta / Hindustan

One by one, the vehicles cross the “sorrow of north Bihar”. As the sorrowful Kamla Balan—known for its copious floods—flows precariously underneath, the 10ft-wide bridge wilts under an uneasy distinction.

In a state that has brimmed with tragedy and sorrow, it is another disaster waiting to happen.

By an unchallenged act of political wisdom exercised in the early 1970s, this has been a rail-cum-road bridge for more than 30 years, facilitating the movement of 14 trains and 500 vehicles every day to and from Jhanjharpur. It serves as the state’s sole link to its northernmost regions.

As rickshaws, trucks and cars jostle for space on the bridge, everything comes to a halt at the railway gates when trains arrive, only to trail them in close proximity.

But with last month’s epic floods washing away villages in neighbouring districts, the bridge now battles pressing concerns, raised year after year when the river swells to life-threatening proportions.

“The bridge has already outlived its life. When floods come raging, no one knows what will happen,” says Sushil Kamat, a lineman at the railway checkpoint that guards both ends of the bridge.

The Kamla Balan, marking an exception to its yearly ritual, has not flooded Jhanjharpur this year—but it flowed above the danger mark eight times in the last month. At 50m, the river starts flowing over the bridge, submerging the rail tracks.

“Road and rail transport then is closed for days. Transportation costs for us increase and we suffer huge losses,” says Ajay Tidrewal, who owns a petrol pump in Jhanjharpur.

From people trying to get to the district headquarters in Madhubani to vehicles carrying food and vegetables to local markets, work and business come to a standstill with the northernmost regions of Lokha, Phulpras and Nirmali, and even Birpur Barrage on the Nepal border, cut off from the rest of the state.

In a year when the river doesn’t bring floods, travel is easier—by a fraction. Naresh Jha, who takes the 220ft bridge—built by the British in the early 1900s primarily for rail services—every day to reach the district headquarters in Madhubani with cargo on his truck, says it is often an hour-long ordeal to get to the other side.

“One vehicle in the way, even if (it is) a motorcycle, means my truck has to wait till it crosses the bridge and one is lucky if another vehicle doesn’t follow soon after that,” he says.

Accidents are another risk many travel with, with several instances in the past when vehicles were rammed by trains owing to technical errors at rail signal posts. “There is hardly any place you can escape to if you are caught in the tracks. You either jump into the river or get crushed,” Jha says.

Since 1972, not much has changed, except that thick wooden slabs were put on the bridge to pave way for road transport, in a constituency that elected the Congress party’s Jagannath Mishra five times between 1972 and 1994—he was the state’s chief minister thrice in this period.

Earlier, people either took small boats or trains to cross the river. Even today, records at the Jhanjharpur railway station show the metre gauge track on the bridge to be a fairly busy one, with an average of 400 ticket reservations a day and about 1,300 people taking the local trains from the town to neighbouring towns.

But in Jhanjharpur, where the bridge serves as an example of adversity turned into opportunity by politicians, the sole transport link for the region continues to be more lifeline for its people than burden.

Last year, and for each alternate year before that, the Kamla Balan raged with such ferocity that its embankments were destroyed and the bridge suffered serious damage.

“When rivers carrying heavy silt are contained between embankments, it leads to a rise in the level of the riverbed. The rising bed level leads to construction of higher embankments and in many areas, rivers as a result flow above the surrounding ground level, as in the case of the Kamla Balan. Now, floods here come roaring like lions,” says Dinesh Kumar Mishra of Barh Mukti Abhiyan, an Indian Institute of Technology (IIT), Kharagpur, engineer-turned-activist, who has been trying to re-establish cultural and political ownership of rivers since 1991, when the movement took shape.

Officials at Jhanjharpur’s flood control division say six of the bridge’s 11 pillars are now clogged with the river’s silt, allowing little or no water to flow over to the other side, putting the bridge under tremendous pressure each time the river swells.

For desilting work, the division has written to the state government thrice, between 1995 and 2005, but got no response. “This is unfortunate for a place that has remained the constituency of the chief minister,” says 62-year-old Mishra.

It was more than three decades ago that the rail bridge, with approval from then railway minister Lalit Narayan Mishra—a member of Parliament from the constituency in 1972—was converted into a rail-cum-road bridge.

Link road: The 220ft bridge, built by the British in early 1900s, may have outlived its life, but there is still no alternative to it in sight.

Nitish now continues his father Jagannath Mishra’s legacy in Jhanjharpur, and admits that the region needs separate bridges for rail and road transport. “I have sent a proposal to the state government to this effect. The old bridge has outlived its utility and a new bridge needs to be constructed urgently.”

But even as the national highway network being built in the region envisages another road bridge on the river, Nitish says there’s no alternative to the Kamla Balan bridge site.

“This bridge is the short-cut route to many parts in the region. If this crumbles, we (will) need to build another adjacent to it. No other bridge anywhere on the river can match it,” Nitish adds.

For the people of the region, the bridge, seen by many as a construct of political opportunism, continues to symbolize at once a benefit and a bane.

Sheela Devi—who has been living on the river’s embankments for 40 years now and grows vegetables—lost a daughter to the floods years ago. But each year the floods come, she returns to the bridge to celebrate and sing songs.

“I need no boats like before. I can walk to cross over to the other side, even when water flows,” she says. “We celebrate the floods as they make the banks fertile with silt. This is our tradition.”

 

Published in Mint.

The management of Bihar

At Patna’s congested Dak Bunglow intersection, where maddening traffic throbs like the impatient pulse of its people, a life-size billboard dazzles passers-by, announcing an ambitious venture: a “world-class business school for transforming Bihar”.

The plan for the proposed transformation is simple: The B-school will help students set up new ventures, consult and collaborate with public and private entities, follow a curriculum focused on regional development, and engage in state-centric research.

Ever since the Rs15 crore venture rolled in mid-2009, advertisements of the Indian School of Management (ISM) have, in a reassuring way, referred to its young founders Gaurav Singh and Aman Singh, to their academic credentials, and to their roots.

Both the Singhs are from Bihar, and in their early 30s. Both graduated from the Indian Institute of Technology (IIT) in Delhi; one then joined the Indian Institute of Management (IIM) in Kolkata, the other the Indian School of Business (ISB) in Hyderabad. Both have worked for companies such as Schlumberger Ltd and JPMorgan Chase and Co.

But curious and sometimes anxious calls wouldn’t stop. “Mostly to ask about the fee structure and placements,” Gaurav Singh says with a grin. “This is one place where parents are interested in education—and genuinely so. But what you have at this point is a series of study centres, which just hand out degree certificates, which makes them sceptical.” Soon enough, a hundred applications reached ISM; more are pouring in. With a batch of 40 students, ISM will start classes next month.

 

In a state obsessed with the dream of sending its children to IITs, B-schools such as ISM are now becoming a fad—a symbol of Bihar’s changing aspirations as the government spends more, new ventures and international firms expand their presence in the state, all demanding a high-quality workforce.

“Bihar has changed, and opportunities are emerging,” observes Pramath Raj Sinha, founding dean of ISB, and a native of Bihar who is now mentoring ISM. “It’s a shame that people had to leave the state earlier. But if Pune can become an education hub, there is no reason why Patna cannot.”

In recent years, Bihar’s gross domestic product has grown by an annual average of 11%, according to the state’s 2008-09 economic survey—a rate second only to Gujarat, albeit one often questioned by experts. Service sector companies such as banks, telecom, retail and insurance firms have flocked here.

The flourishing businesses of telecom companies such as Reliance Communications Ltd, Bharti Airtel Ltd and Vodafone Essar Ltd, for instance, have opened up jobs for people within the state. According to a 2008 study conducted by the Associated Chambers of Commerce and Industry of India, Bihar registered India’s largest increase in annual telecom subscribers, posting a growth of 88.2% in 2007-08, compared with 51.1% in 2006-07.

Four years ago, the mention of an MBA would have swayed few people. When he was growing up, Zeeshan Ahmad had heard only of three career options: IITs, medical colleges, or the Indian Administrative Service.

After obtaining his bachelor degree from Patna University, Ahmad would have headed for an MA, but for a B-school fair he came across on his way back from college one day. “That’s when I realized the importance of employability,” he says. “I asked myself: What would an MA get me, and what can an MBA (get me)?”

Ahmad enrolled at Amity Global Business School (AGBS) in Patna, launched in July 2009, to pursue his MBA, with 24 others selected from 300 applicants. He is now working with Sudha Dairy for a summer internship.

The MBA dream has triggered a deluge of both applicants and institutions. Patna, once a city of the working class and small-time traders, is now home to a smart new set of management schools, promising placements with companies such as Microsoft Corp., Ranbaxy Laboratories Ltd and American Express Co. “B-schools across the country have a number of students from Bihar, but within the state, there was a certain class of people who wouldn’t know about an MBA or wouldn’t consider it,” Sinha says. “With the new B-schools, this is changing.”

C.B.P. Srivastava, director of AGBS in Patna, who was previously head of Icfai Business School in Hyderabad and who hails from Bihar, recalls that a decade ago, there was just one B-school in Patna offering an MBA. Today, there are roughly 100 B-schools in the city alone, most offering distance education courses, positioning an MBA degree as a ticket to a well-paying job. Several of them such as the Arcade Business College in Rajendra Nagar, with cramped classrooms and a handful of faculty, act as study centres for universities such as the Madurai Kamraj University or Sikkim Manipal University.

“Management education has entered Bihar as a storm and overtaken all professional courses,” Srivastava says. “It’s the first choice of every student these days. There are 58 MBA institutes affiliated to Punjab Technical University in Patna alone.” But there is a flip side: Lured by glossy brochures, few care about tenuous affiliations, Srivastava adds.

The entry of private players also reflects the declining standard of education in state-owned universities, where coursework is often marred by repeated strikes, even as the demand for education soars. Most recently, on 1 July, Patna University staffers went on an indefinite strike over pay scales, an annual ritual of sorts at the university.

The idea of setting up a B-school in Patna came to Gaurav Singh in 2008, when he was browsing through the website of the All India Council for Technical Education (AICTE). Singh found several applications for approval for B-schools from various states. “There were none from Bihar,” Singh recalls, “which was surprising, as many students from the state opt for studies in business schools all over the country.”

ISM Patna, which is awaiting AICTE approval, will offer, apart from a two-year, full-time postgraduate diploma in management (for an annual fee of Rs3.5 lakh), executive programmes for working professionals and a business incubation unit for local entrepreneurs. Around the same time Singh was toying with his idea and lobbying for investment, the Bihar government had already leaped to establish the Chandragupt Institute of Management Patna (CIMP). It was originally named “Indian Institute of Management, Patna”, in July 2008. But while CIMP, already AICTE-approved, couldn’t retain its original name, it follows the syllabus and practices of IIM-Ahmedabad, from where several of its faculty are drawn for guest lectures.

V. Mukunda Das, CIMP’s director, served as a faculty member at the Institute of Rural Management Anand (Irma) and IIM-Kozhikode in the 1980s and 1990s, before he was invited to CIMP by the Bihar government. “I was told this is going to be the next IIM,” he asserts, “And mind you, we are just 23 months old! For our age, we are doing reasonably well.”

At the core of management education at CIMP is “rural marketing”, a module Das developed at Irma in 1980. With chief minister Nitish Kumar as its chairman, one of CIMP’s priorities is to train young people to work within the state. It has set up a microfinance research centre in partnership with National Bank for Agriculture and Rural Development and collaborates with United Nations Educational, Scientific and Cultural Organization for research on sustainable development management.

In CIMP’s corridors, an enormous bunch of students seems to bear along an air of enthusiasm for business in their home state. Neha, a second-year student who only uses her first name, worked earlier with a non-profit organization in Bhagalpur and now plans to work with a microfinance institution. Neelanjan Sinha, an electrical engineer from SASTRA University in Thanjavur and an ex-employee of Tata Consultancy Services Ltd in Chennai, came back to be with his parents and hopes to work in Patna after his MBA. Smriti, an English graduate who also uses her first name only, chose CIMP over a rural management course at the Xavier Institute of Social Service in Ranchi; she teaches children from Patna’s slums as part of CIMP’s social responsibility initiative.

The biggest hurdle for B-schools in Bihar remains the mindset of its students and their parents. When Das joined CIMP, he was startled by the number of parents who offered money to secure admission for their children. “I hear about quota for politicians, MPs and MLAs all the time, which shocks me,” he says.

Amity’s Srivastava adds that parents often mistake B-schools to be placement agencies. While CIMP and Amity have not graduated their first batch yet, they have attracted companies such as Sudha Dairy, PepsiCo India Holdings Pvt. Ltd, HDFC Bank Ltd, Indian Overseas Bank and IDBI Bank Ltd for summer internships.“Most think after they have enrolled the children and paid fees, their job is done,” Srivastava says. “We are at pains to explain that becoming employable takes more than that.”

And some habits die hard. Already, students have staged sit-in protests at CIMP and at the Catalyst Institute of Management and Advance Global Excellence (Cimage), a year-old business school, for placements this year. “I am not amused,” frowns Neeraj Agrawal, Cimage’s director. “This is what you expect in a state which takes politics too seriously, don’t you?”

 

This last part of the Bihar Series was first published in Mint.

The roads more travelled

By any measure that day in May, at the peak of summer, was an important one for Nawada, one of Bihar’s 37 districts. The bridge over the teeming Sakri river at Kadirganj block opened that day and soon enough two decisions on either side of the river, though seemingly disparate, were taken.

In Kadirganj, on one side of the river, Naseeb Baig, a small-time weaver often seen bent over his loom, decided to send his silk cloth directly to wholesale buyers in Bhagalpur, instead of approaching middlemen.

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In the village of Bhadaun, on the other side, farmer Ramesh Paswan’s 13-year-old daughter Geeta enrolled in class VIII at the SJBK Sahu High School in Warisaliganj, the nearest high school in the vicinity across the river.

The reason behind both decisions was the same: the new bridge, which at a stroke had connected the Dariapur and Warisaliganj blocks, two irreconcilable regions separated by the river for decades. “Because of the bridge, the route to Bhagalpur is now direct and I can send my goods from here,” Baig says. “I don’t have to…send it through people, who would first ferry it to the district headquarters and from there to Bhagalpur.”

Click here to watch a slideshow on how better infrastructure has improved education and health facilities in Bihar

No one knows if a bridge ever existed on this stretch, but Girish Narayan Singh, project engineer for Nawada in the Bihar State Bridge Construction Corporation (BSBCC), a state-owned enterprise, remembers well the awe on every villager’s face when construction began.

“They would see truckloads of building material and machines pile up along the river banks and gather out of curiosity,” Singh, who supervised the bridge’s construction, recalls. “After waiting for hours, they would ask: ‘Are you all just unloading material, or (do you) intend to build the bridge too?’”

No less dramatic than the changes it wrought is the fact that the 2.5km bridge, one of the 400-odd constructed by the Bihar government in the last 54 months, was built in a record three months. Even as India debates Bihar’s 11% gross domestic product (GDP) growth, as proclaimed in its 2009 Economic Survey, “the importance of roads and bridges as catalysts of socio-economic development remains intact”, says Partha Mukhopadhyay, a senior fellow at think tank Centre for Policy Research in New Delhi. “In Bihar, there appears to be a big emphasis on rural connectivity and rehabilitation of district roads.”

To read the first two stories in the series, go to www.livemint.com/biharseries

Some of the quickest consequences of new roads and bridges have been better connectivity to markets and to service providers such as schools and hospitals. Mukhopadhyay says that with connectivity, economic activity in villages might change, tending towards growth in high-value agriculture, traditional services and even manufacturing, since around 40% of Indian manufacturing still exists in rural areas.

“Bihar is also a curious case,” Mukhopadhyay says. “While it is one of the poorest states, initial results from the Indiapolis project (an urban growth survey) show that it has a large number of big villages with high population density, which fulfil two of the three conditions for being urban. The only requirement it doesn’t meet is that at least three-quarters of the male workforce must work outside agriculture.”

Infrastructure is one sector where statistics support claims of change. Last December, Bihar topped cement consumption in India, with an annual growth of 36%. The state economic survey claims that the construction sector grew 43.85% in 2008-09. The new infrastructure being built, including roads and bridges, contributed 13.4% of the state’s GDP, against 4.2% in 2003-04.

Safety has, unsurprisingly, been a concern. In 2003, Satyendra Dubey, a graduate of the Indian Institute of Technology, Kanpur, and an engineer with the National Highways Authority of India, was killed allegedly by the land mafia while handling a bridge construction project. But things have changed since.

“Earlier, no contractor was willing to start construction and risk being targeted,” says Girish Chandra Mishra, a deputy general manager at BSBCC. “Now, 70% of our contractors are from the state only.”

BSBCC today has a budget of more than Rs1,000 crore, and its voluble managing director, Pratyay Amrit, has introduced single-window clearance, electronic tendering and an online mobile system for real-time tracking of projects and engineers on the field. “There are sops such as international holidays and bonuses for engineers,” Amrit says. “Where they don’t work, I also use fear to get work done.”

In his last four years, Mishra has handled nine projects sanctioned by the Asian Development Bank in Bihar, been trained in contract procurement and negotiation, and started to use a BlackBerry to monitor bridge projects. “Engineers are now going to Japan, Canada and Australia for training,” he says. “There is a great deal of motivation. Can you imagine, we just bagged a public-private partnership project worth Rs1,502 crore.”

The effects of such activity are in plain sight. In Patna district, where four bridges have been built since 2006, farmers such as Ram Bacchan Paswan have direct access to the foodgrain market in Dariyapur, in Masaudhi block, and have also opted for more expensive crops. “There is better transport now, which is why I can buy seeds and fertilizers in the local markets,” Paswan says. “Travel costs too have come down, and goods can be transported in less time.” He is now growing more green vegetables—which earn more—because he can sell them fresher, with the distance to Patna’s wholesale market reduced from 15km to a mere 7km.

A recent study conducted for BSBCC by non-profit Research and Development Initiative (RDI) in New Delhi claims that bridge construction has led to a decrease in school dropout rates, improved law and order, better access to higher education and public health centres, and a growth in cash crops and real estate prices in areas neighbouring the bridges.

“Several of these bridges are very small, but in very crucial areas, where just for a small distance, two blocks or villages would be cut off from each other,” Jitendra Chaudhary, a senior researcher who led the RDI team to Bihar, says. “This is where construction of roads and bridges has reaped maximum benefits.”

In flood-prone districts such as Katihar, Araria, Madhubani, Mujaffarpur and Sitamarhi, more than a dozen bridges have not only joined catchment areas to the rest of the state, but also led to increased vehicle movement in the interiors and, therefore, better business. “Such infrastructure development has impacted primarily the automobile and dairy businesses,” says S.P. Sinha, president of the Bihar Industries Association.

The number of motor vehicles registered annually in Bihar now stands at around 150,000—against 80,000 in 2006—and Patna provides an example of the automobile boom. At 17-month-old Mahindra Priyadarshini Motors in Saguna More, prospective buyers flock in large groups. Sales manager Ramesh Tripathi says they sell roughly 250 vehicles a month. The dealership sold 1,600 vehicles in 2009 and expects to cross that figure this year, having sold 900 vehicles till May. “The delivery time from the Nashik plant to Patna has reduced from 20-25 days to 10 days because of improved roads,” he says.

Nearby, at Priyadarshini Ford Motors, general manager Amiya Mohanty says the showroom has sold more than 500 cars in the nine months since it opened. “I was at a car dealership in Jamshedpur before,” he says. “We would wait for customers. But now, given the burgeoning demand, we are even trying to open more showrooms, and also get Volkswagen to Patna.” The showroom already has 300 pending bookings for the newly launched Ford Figo.

Better roads have opened new markets for perishable goods. Sudha Dairy, the state’s leading dairy firm, has been able to go national, spreading to 10 cities outside Bihar in the past 18 months. Having spurred a white revolution in Bihar, the dairy sold 30,000 litres of milk in Delhi and Kolkata last month.

“Because of better roads, we now collect 1.2 million litres of milk from the remotest of villages, unlike 400,000 litres before the infrastructure improved. Now, we are even planning to reach flood-prone districts in the state and as far as Kathmandu (the capital of Nepal),” says Sudhir Kumar Singh, managing director of Sudha Dairy.

Experts also predict the improved roads will boost the food processing industry. A 10-year vision document identifies 100 villages to be developed as rural agribusiness centres, bearing an investment potential of around Rs1,500 crore in the food processing sector alone. “What is most interesting…is that the farm and non-farm sectors are growing together,” says Anit Mukherjee, an associate professor at think tank National Institute of Public Finance and Policy.

O.P. Shah, a former chief of the Bihar Chamber of Commerce, is today a franchisee partner in the state for Hindustan Unilever Ltd (HUL). Shah says he wouldn’t have opened a Rs30 crore detergent plant in Hajipur if not for the restoration of law and order, and improved roads. “HUL was scouting for a local entrepreneur for a detergent plant in Bihar since 1993,” he says. “But no local player came forward earlier.”

Perhaps most tellingly, BSBCC is even being used as a motivational example in schools—at least in Vidya Datri’s classes.

At the primary school in Mobarakpur Sahajpura in Nawada, which has seen its enrolment rise from 160 children to 195 in the six months since the road outside the school was laid, Datri, a 35-year-old teacher, points to the glistening, charcoal-coloured ribbon from the window and addresses her students: “Children, study hard. Just as the government has made the roads shine, it will make all of you shine too.”

First published in Mint.

Next in Bihar Series: The management of Bihar”.

Bihar sees a growing tribe of rural migrants

Amipur may be a small dot along the national highway from Patna to Nawada, but its ambitions are big. In the 50-odd households in the village, sparsely populated and rife with an uneasy quiet, most men have left for work outside Bihar.

Siyaram Chauhan is the one who returned. He was rescued last month by the state government officials from a brick kiln in Uttar Pradesh’s Bahraich where he worked as a bonded labourer. Savaged by rigours of work, his body is dark and he is afflicted with constant cough and fever but when he talks about the days in Bahraich, Chauhan’s eyes glint with hope, and apparent hunger. There were, he remembers, “piles of bricks to bake, even though it burnt hands” and “plenty of food”.

So when the season of brick kilns kicks in in October, Chauhan says he will venture out again. Like several others from the village, he is part of the rapidly growing tribe of migrants—while Bihar’s capital Patna, 120km from Amipur, wakes up to return of the moneyed class and an economic boom riding the wave of massive construction activity, its rural poor, stricken with poverty and unemployment, have stepped up migrations from the state in bigger numbers than before.

A yet-to-be released study by the Indian Institute of Public Administration (IIPA), one of the major social science research organizations in India, a draft copy of which was reviewed by Mint, and the first ever dedicated research on migration of the rural poor from Bihar, estimates the number of migrants at 5.2 million, much higher than the 3.5 million estimated by the National Sample Survey Organisation in 2001. “Seventy-three per cent of both migrant and non-migrant households perceived an inclined trend in migration even in the last two to three years of the new government. With underdeveloped industrial base and largely subsistence agriculture combined with the recurrent flood and drought problems, social violence, caste enmity and above all, population pressure have created massive push forces, driving individuals out of home desperately in search of livelihood opportunities,” says Girish Kumar who compiled the IIPA study with colleague Pranab Banerji.

Click here to see a slideshow on the rural poor leaving Bihar in search of greener pastures

The postal-order economy, which thrives on money orders sent by people to their families, of the state has been booming. “On an average, every migrant is able to send Rs15,000 annually to the state which works up to Rs7,500 crore, 5% of the GDP of Bihar,” Kumar stresses. “Improvement in law and order and infrastructure will have an impact on the high-income group but migration of the poor will continue.”

What spurs drought-prone Amipur’s wave of migrations, says labour enforcement officer for Nawada district Kishore Jha, is a thriving cartel of local contractors who create debts for landless labourers.

“Trucks after trucks line up in villages here to ferry people outside the state. Till a few years ago, people would travel in hordes; now we do routine checks, so they are provided train tickets and discreetly move in smaller groups. What doesn’t seem to stop is the blatant exploitation,” Jha adds.

Chauhan agrees: “My employer in Bahraich promised to pay Rs150 per day, but would hand out only Rs125. When I protested, he demanded the advance of Rs25,000 he had paid to me for leaving my village and taking up his work.”

Overnight, he found himself in debt and for the next three years, he was forced to work as a bonded labourer until the day police came hunting.

Much like the colonial days when the British shipped thousands of labourers to their colonies in Africa and South America, migration in Bihar continues to be distress-induced. Fifty-seven per cent migrant households in Bihar are in debt, estimates the IIPA study.

Back in the village, the sun sets right over the ripening paddy fields and Chauhan spends all day plucking arhar (a variety of pulse). Very soon, all the crops would go for sale and he would be left without any work. He hasn’t heard of the Mahatma Gandhi National Rural Employment Guarantee Act, which ensures 100 days of employment to the rural poor.

“This is what the problem is. They just don’t know the options available to them because they are illiterate,” says Jha. It is here in the villages that people no longer talk about Punjab and Haryana, which for the large part of the 1990s offered farm jobs to labourers from Bihar.

This wave of migrations has a new slogan: Dilli chalo (Let’s go to Delhi). “The exodus has now tilted from rural to urban destinations such as Delhi, Faridabad and Noida, where migrants are working in factories as unskilled labourers,” Kumar says.

In a state where agriculture continues to be the backbone of its economy, the slow progress of industrialization is also failing its rural population. There are seasonal agricultural jobs available but even with regime change, not enough industrial units have come up to generate employment.

At the State Investment Promotion Board, the newly set up body to attract and approve investment projects in Bihar, adviser S. Vijay Raghavan claims 156 investment proposals worth Rs91,000 crore have been cleared by the board in the last three years including those for 19 power plants, 23 sugar mills, 18 food processing units and 16 steel processing and cement plants. “We estimate that these projects would create job opportunities for at least 100,000 people in Bihar,” Raghavan stresses.

On the ground, though, projects will take years to take off, and Raghavan admits as much. “We have cleared the proposals but all the major investments will happen in the next tenure of the government,” he states.

The latest Bihar Economic Survey (2008-09) underlines the factors leading to high level of industrial sickness in Bihar: inadequate infrastructure, lack of working capital, non- availability of raw material, inadequacy of road network and communication services, poor and uncertain power supply and weak research support. “What is needed now is to identify and promote some rural areas with ancillary businesses to create employment,” says Binod Khadria, a professor at School of Social Sciences at the Jawaharlal Nehru University in New Delhi.

But migration in each case is not always due to lack of awareness and employment opportunities in Bihar, which has seen massive infrastructure work in the past four years—at least 500 bridges and flyovers have been constructed.

For a number of migrants, moving outside the state for work is a symbol of upward social mobility and freedom from the repressive caste hierarchy in the state.

In Amirpur village in Nawada district, infamous for its caste violence such as the massacre at Chakwai village where 10 people from backward castes were killed in 2004, Shivalak Majhi’s father Sukhdev worked as an agricultural labourer for 40 years, but could never buy a small tract of land. “We were always hand-to-mouth, and half the year, my father would have no work. My mother would then clean toilets in the rich households,” Majhi, who belongs to the Dalit community, says.

By the time Majhi was 20, he took the train to West Bengal with his two cousins—for better wages and work. “I work in a dye factory in Murshidabad for Rs140 a day. If I had stayed back in the village, I would perhaps have tilled land or done menial chores in households for peanuts,” he says. He is back in the village for his sister’s wedding.

Only 42% of migrants working in rural areas would appreciate having a job in Bihar, notes the IIPA study. “Out-migration for employment sake has now become a craze in rural Bihar. It has entered into the life cycle of nearly one-third of the households. So much so that now staying at village is equated with laziness among the fellow villagers,” says Girish Kumar.

For many, it’s the lure of better wages—in Bihar, farm labourers get paid anywhere between Rs70 and Rs120, and year-round employment that readies them for migration.

But for the likes of Naresh Mahto, it’s a matter of social prestige. A native of Gaya district, he works in a Sulabh Shauchalaya as a sweeper in Delhi. But when he goes back home, no ones asks what he does.

“Everyone is happy that I am making good money here,” he says. “I live in Delhi.”

First published in Mint. Next in the four-part series on Bihar: “The roads more travelled”.

Bihar sees reverse brain drain

It was perhaps the worst of times. With the fall of night, Patna would blanket itself in a pall of darkness, interrupted occasionally by traffic thinning rapidly with each passing hour. Downed shutters in shops would signal fearful business, rickshaws would accept no late evening passengers and women and children would be home before sunset. It was, for all practical purposes, a self-willed curfew.

As a painful memory of his growing up days, Sumit Prakash still has this vivid remembrance of his home town: notorious, lawless and hopeless about the status quo like a defeated warrior. “Six-seven years ago when I would go visit my parents in Patna, I wouldn’t be moving around without a bodyguard; I wouldn’t even be allowed to walk up to an ATM alone!” he recalls.

One fine morning in 2007, he realized this was changing. While Prakash and wife Smita Choudhary were driving back from a holiday to Sydney, where they both worked as business managers for different firms, his Patna-based father, who had just been denied visa from the Australian government on account of his old age, called up. “He asked us to return home. We had everything going for us, but we had no close family in Australia. Our option was Bombay or the United States where my brothers live but that day, out of the next 5 hours of the drive, we spent three hours talking about Patna,” he says.

The recurring leitmotif of the conversation centred around the improving law and order situation and infrastructure in Bihar and the record number of convictions in the state since the new regime under chief minister Nitish Kumar took over in 2005.

That is why, in February 2008, Prakash and Smita, homesick and looking for purpose in their state of birth, came back to settle down and run the family-owned school Prarambhika in Patna’s upmarket Boring Road. And just like them, there are many—engineers, doctors, management consultants, students and businessmen born and brought up in Bihar, but away for better education and employment during the previous regime led by Lalu Prasad of the Rashtriya Janata Dal (RJD)—who are returning to the state driven by emerging opportunities.

“For the first time in the last 60 years, there is a concerted effort to build the state. I wouldn’t say rebuild because there was no such thing as role of the state in Bihar earlier. Now, the place of the bahubalis (musclemen) has been usurped by the state. Convictions took place across all castes and classes unlike before when only people from the disadvantaged sections would suffer. Because of this, respect for the state and faith that police will act against lawbreakers has remarkably increased,” says Saibal Gupta, director of Asian Development Research Institute, a non-profit research organization based in Patna. There have been convictions of 49,000 people since 2005 including charge sheeted politicians such as Shahabuddin, a former member of Parliament from the RJD.

Neither had Anjay Thakur, a commercial pilot trained from California and a professional photographer who returned in late 2008 to look after the family-run hospital Shushruta Surgical Clinic. Not very long ago, Anjay’s father Rajeshwar Thakur, Patna’s leading laparoscopic surgeon, would close his hugely popular clinic in Patna city locality at dusk. “Earlier, doctors travelled with bodyguards. One doctor was shot down and we also know several doctors who got threat calls for extortion,” he says, adding that kidnapping and ransom were industry here.

Thakur’s family hospital is now in expansion mode with him at the helm of affairs, which is unusual for his accomplishments. In Thakur’s return lies abandonment of two promising careers in India’s metros.

After various stints of flying and dabbling in photography with stalwarts such as Farrokh Chothia and Atul Kasbekar in Mumbai and running a studio of his own in Delhi, Thakur’s interest in family’s hospital projects sparked owing to various reasons. “I had offers from IndiGo for flying, but when recession set in, it was withdrawn. Around that time, my family was planning to set up a hospital in Noida close to Delhi. My father suggested that it should be built in Patna,” he remembers.

From the gloomy flashback of the city in the 1990s, Thakur now mulls on the present. His voice lifts up as he describes his mornings at the Patna Golf Club, his impromptu road trips across the state and outside and most of all, the night life quickening to metropolitan tastes.

That Bihar is indeed becoming a state where aspirations and enterprise have replaced sense of insecurity and scepticism is evident from the newly opened restaurants and bars that serve till midnight, social gatherings in its clubs where young people have replaced the older members and lavish weddings. “Earlier, people were scared to show off wealth. At the club where I go, there would only be old people my father’s age but now, I see many of my generation and even younger, which goes on to show that people are indeed returning and that homes no longer have just old parents,” Prakash says.

Anjay, while dusting off his Mamiya, Nikon D2X and F100 cameras which he says he used for shooting stills of Bollywood movies such as Ek Ajnabee and Pyare Mohan, particularly remembers the use of Jimmy Jib cranes, mostly used in film shootings, at a marriage in Patna recently. “Can you beat that? How many people do you think can afford to shoot weddings with a Jimmy Jib?”

Apart from Prakash and Thakur, who have family ventures to manage and run, there are many who have returned to start from the scratch.

Bibhuti Bikramaditya worked with nSYStech Co. Ltd, an information technology firm in South Korea, as a project manager before setting up Tech Brains Pvt. Ltd, probably the first electronics design company in Bihar, in 2008. “I come from a small village and when I started doing decent abroad, I felt I should do something for the state,” he says.

Bikramaditya, while in South Korea, formed Bihar Brains Development Society (BBDS) in 2004, a forum for non-resident Biharis, which eventually shifted to Patna with him three years later. At the Society, he organizes scientists, entrepreneurs and students to brainstorm on opportunities that can be created in Bihar apart from promoting local talent.

For his electronics design company, Bikramaditya has also hired engineers from engineering colleges in the state such as National Institute of Technology (NIT) and Maulana Azad College of Engineering and Technology, Patna. “We are also helping NIT to set up a chip design lab. Then, there are several student exchange programmes we facilitate for colleges in Bihar with universities in Seoul,” he says.

The state government, too, is trying to reach out to people and exhorting them to return. Chief minister Nitish Kumar has a weekly jan sunwai (public hearing) at his residence. Police stations across the state have been freshly painted and refurbished and emphasis is being laid on faster registration of complaints. For the Global Bihar Meet in 2006, Kumar’s government also roped in Bikramaditya, who was then in South Korea, as international coordinator for the event.

But even Bikramaditya admits that the next step for the government, after fixing law and order, should be encouraging entrepreneurship, which will create jobs and bring in investment. “People right now are driven by the feel good factor,” he says. “Now, we need more dynamism from the chief minister; he needs to be the Narendra Modi of Bihar.”

Yet, at the Bihar Chamber of Commerce, where until a few years ago angry businessmen would lash out at the state’s top police officers for failing to check crime spiral, the topics for discussion have moved to traffic snarls in the city, frequent power cuts, public denial for paying for parking and lack of civic manners in people.

For those returning from the metros, it’s adjusting to this change in lifestyle and attitude that is bringing in the conflict in their happy vision of getting back to their roots.

“As a society which hangs out together, there is little of it. All my friends still remain outside the state, which is why I get to share my father’s friends,” says Prakash.

During his golf practice sessions, he eventually made a few friends, but wife Smita, who handled mergers and acquisitions at an Australian firm and now is the vice-principal of Prarambhika, says she continues to be constrained by a society, which is intensely patriarchal. “When I walk into a bank, it’s my husband people address even if I have asked the question. At 31, people refuse to believe that I can get work done. But I know it would be foolish to expect a drastic change overnight,” she says. “Since I have decided to live here, I have also decided that I am going to do everything and enjoy it too.”

This first appeared in Mint. Next in the four-part series on Bihar, read “The growing tribe of migrants”.