Tuesday, 7 September 2010
Saturday, 26 June 2010
Performing Ministers are a rare breed. They are like an oasis in the middle of a desert. When you find water in a desert, you would be a fool to throw it away.
Thursday, 27 May 2010
Richard Auty, in his 1993 publication Sustaining Development in Mineral Economies: The Resource Curse Thesis first used the term the Resource Curse to describe how countries rich in natural resources were unable to use that wealth to boost their economies and how, counter-intuitively, these countries had lower economic growth than countries without an abundance of natural resources.
The term "resource curse" refers to an economic phenomenon in which a dependence on natural resources can skew a country's political, investment, and education priorities, so that everything revolves around who controls those resources and who gets how much money from them and not on productivity and innovation that are essential for a country to maintain its competitive edge.
I have often found this phenomenon unexpectedly true. A great example is the one of Japan and Africa. Africa is the world’s most resource rich continent. It has a large quantity of natural resources including diamonds, gold, iron, cobalt, uranium, copper, bauxite, silver and most importantly oil and petroleum. On paper this looks like the dream scenario for wealth generation, yet Africa is the most underdeveloped and the poorest of all the continents in the world. In contrast Japan, a mountainous, volcanic island country, has very few resources and is the world’s second largest economy.
This paradoxical phenomenon is true even in the case of India. The majority of our resources are in states like Jharkhand, Chattishgarh, Orissa, Bihar and MP. But these are the worst performing and most backward states in India – forming a part of BIMARU – (the term economic analyst Ashish Bose coined in the late 80’s to highlight the never ending ‘sickness’ of economic development in these states.) A state like Gujarat which has no resources to speak of is the biggest and fastest growing state in India while Maharashtra, Karnataka and Tamil Nadu are not far behind. This is a classic case where India’s resources are in the east and centre while her wealth is in the West and South.
So what gives rise to this seemingly contradictory phenomenon?
When a country is excessively rich in a certain resource and knows it can make money off it, it stops challenging itself to innovate new products and as such a staleness sets in. This staleness is fine as long as the resource exists, but once it runs out – and there are no alternatives in place - BAM! You have a crisis in your hands. What also happens is that the energy of the citizens is then spent in getting hold of the resources instead of building a knowledge base – and as a result the country’s educational, scientific and democratic systems falter.
Japan knew exactly that it had no oil wells to dig – so instead its people dug in their own brains – and came up with world beating companies such as Sony and Toyota. Likewise, Facebook was not created because a large mine of diamond was unearthed, but because Mark Zuckerberg unearthed a large mine of new ideas in his brain. On every such occasion, people came up with new ideas because they had to – that is, the market dictated that something new and innovative be found – whereas in the case of oil rich countries all you had to do was dig and sell.
This is also why it is no coincidence that the most petrol rich states are also the least democratic states. Oil-backed regimes that do not have to tax their people for revenue—because they can just drill an oil well and sell the oil abroad—also do not have to listen to their people or represent their wishes. Because the money is being pumped in from the oil exports, they do not feel the pressure to reform their systems and make themselves more accountable. Bahrain was the first Persian Gulf country to discover oil and also the first country to start running out of it. Consequently, Bahrain reformed its political system and was the first Gulf country to hold a free and fair parliamentary election, in which women could run and vote.
While the Resource Curse thesis has no proof, and there are definitely countries out there that are exceptions (most notably USA), it nonetheless offers food for thought to countries that do not have much resources as well as those that have plenty – for what truly are the pre-requisites for economic development.
Thursday, 6 May 2010
When George W Bush ransacked Iraq back in 2003, it was on the pretext that the country had acquired Weapons of Mass Destruction - otherwise known as WMDs. While the country was destroyed and America secured its oil supplies, no WMDs were eventually found. So what became of those WMDs? Well thanks to Lalit Modi, we now know that you need not be in Iraq to find WMDs, you just have to be on twitter.
The opposition, keen on picking up any issue that could hurt the government, publicly pillored Shashi Tharoor. Tharoor himself gave an invalid excuse saying Sunanda Pushkar got the sweat equity in the franchisee for her role as a marketing executive, forgetting that, as MJ Akbar puts, “You do not get sweat equity in perpetuity, which means free and forever, with a starting value of Rs 70 crore, for being an unknown executive of a Dubai company.” The opposition did not buy this argument and the government was forced to accept Tharoor’s resignation – thereby this becoming the first instance where a minister in the government had to resign for alleged corruption ever since the UPA came into power in 2004.
Thursday, 29 April 2010
The green technology problem is essentially an engineering problem. We must find a clean fuel technology that is better and cheaper than the existing dirty fuel based one. And this is where India can step in. We have so many engineers, all we need to do is simulate 10k engineers in 10k garages trying 10k different things of which 1 thousand will be promising, a hundred will be really promising and 2 of them will be the next green Google and green Microsoft. And why do I sound so confident? Well, has anyone heard of the Nano before?
So how do we simulate an environment for engineers to innovate? How do we kickstart the companies into trying to innovate? The answer is as simple as it is straightforward: Remove the Petrol Subsidies and add a Petrol Tax.
Sunday, 11 April 2010
Back in the older days, I remember we would be filled with pride upon reading flattering statistics such as the number of soldiers in the Indian Army vis-a-vis the Pakistani Army. But something changed since then. Pakistan stagnated, India inched ahead while China simply pressed the fast forward button.
It was not long ago that India’s defence was superior to China’s. Now even such a thought is considered laughable. This article will make the case that India’s real competition will now come from China and not Pakistan.
In 1947, India and Pakistan were partitioned amidst much civil upheaval and riots. As is normal after any break up, feelings of jealousy and competitiveness arose. The two countries (Pakistan more so than India) made each other the centre of their development goals. So money began pumping in in trying to outdo each other. But while we were still infatuated with our Western neighbour, something was taking place quite discreetly on our eastern borders. A nation was busy reviving itself and clocking massive double digit growth. Having neglected that amidst the heavy illusion of false pride with respect to Pakistan, the result is that today, India is an ENTIRE generation behind China.
Today, China is building infrastructure that is surpassing America’s. Already the world’s fastest train has come up, covering the distance between Beijing and Shanghai in 2 hours 45 minutes (compared to which India’s fastest train the New Delhi-Bhopal Shatabdi express would take about 7 hours 10 minutes in covering the same distance!) A friend of mine, who has recently come from China, summed up the attitude differences very nicely, saying “In India we like to make comparisons with China, In China they like to make comparisons with America”
And this is the scary part. That China is not even bothered about us, taking us to be no more than a regional itch in the back. A mention of India is still hyphenated with Pakistan.
So what should India really be doing? My view is that we must stick to our democratic principles while finding a way out. Because we cannot and should not become a dictatorship, to take on China, we need to summon all our energy and determination to kick-start the democratic engine so that it delivers promptly and properly rather than laggardly and lethargically as is the case now. For that the government must be capable of taking tough decisions. Already the government was in two minds about the rollback of petrol prices. If the govt. is not even strong enough to stand by its own decisions then competing with the headstrong leadership of the Communist Party of China can remain a pipe-dream.
China’s decision making prowess is something that takes even the Americans by awe. But this does not directly imply that a democracy cannot function at high levels of efficiency. Case in point: America’s response to the launch of Sputnik by the erstwhile Soviet Union. That lesson of history, more than anything else shows that if democratic countries can pull up their socks and work in a single direction, they too can become unbeatable.
In the end I am reminded of a quote from Gurcharan Das that I hope will be the guiding light in our attitude towards our neighbours, “If Pakistan pulls us down into an abyss of terrorism and identity politics, China will lift us up, I think, firing our ambition for better roads, schools and health centres” The best example that describes India’s state versus that of China is the endless ruckus over our preparations for the Commonwealth Games and the smooth steamrolling by China at putting up Beijing 2008.
If Sardar Vallabbhai Patel were alive today, he’d be quick to comment, “Well folks the dragon has entered the forest and it’s about time the tiger got prepared.”
Tuesday, 19 January 2010
There is no doubt that anytime from now a new a Congress or Congress led government is formed, Rahul Gandhi will become India’s Prime Minister. It is inevitable some say.
Well it may be inevitable but is it desirable? More specifically, do good intentions translate into good governance?
Good intentions are necessary for good governance. But they are not enough by themselves. They have to be supplemented by foresight and effective man management followed by proper and prompt enforcement of the original ideas. As far as Rahul Gandhi is concerned, he may or may not have these qualities. We do not know – yet.
Rahul Gandhi is the dream candidate for the middle class. Educated, English savvy and handsome, he is just the man they would want to see representing India at the high table. But none of this means he will make a good PM. What it does mean is that India will have a...well... Educated, English savvy and handsome PM. That’s it.
One thing that does not work in Rahul Gandhi’s favour is that he has no experience of being in the government (although this does not automatically imply he does not know how governments are run.) He has been consistently (and cleverly?) avoiding any responsibility at the centre, opting instead to work for the party to strengthen its base at the ground level. This has been a move that has paid rich dividends. Not only has he managed to avoid taking any wrong action (how can he when he is not in the govt) thus keeping his credentials for a future PM post intact, but he has also reinvigorated the party workers.
In addition to all this, he has emerged, through what the opposition calls ‘Poverty Tourism’, as a messiah of the poor, thus earning himself the title of ‘Rahul Baba’ among the Dalits – a move that has definitely angered Mayawati. To his credit, he has resurrected his party in UP, and has matured as a statesman.
One can remember the time he made the ill-advised comment stating “that the 1971 break up of Pakistan was among his family's ‘achievements.’” Not only did this invite criticism from several Indian, Pakistani and Bangladeshi parties (noted historian Irfan Habib remarked that the comments were "..an insult to the Bangladesh movement.") but this gravely undermined India’s moral authority. Such comments are less forthcoming from Rahul Gandhi these days.
Another problem that arises, hypothetically, is how the likes of P. Chidambaram, Kapil Sibal, Kamal Nath, Pranab Mukherjee, etc who are so senior to him, will work under him? Or to see it this way: If you are Rahul Gandhi and you see that P. Chindambaram is not doing a proper job as Home Minister, how do you fire him?
But no one can write off Rahul Gandhi. Why? Because the last time someone wrote off a person for not having PM credentials, the person went on to create history. The person in question went on to become only the second prime minister after Nehru to get reinstated after completing a full term in office. He is perhaps the best example of a person who has turned out to be a successful Prime Minister despite no obvious previous record of effective leadership.
Ultimately how good a Prime Minister Rahul Gandhi turns out will largely depend on how he addresses four major challenges for India in the coming decade. On the external front, he will have to deal with an imploding Pakistan and an increasingly aggressive China. Andt at home he will have the enormous task of facing the Naxal challenge and of creating Inclusive growth as India prospers. While the first two issues may not be interlinked, the latter two definitely are. And the sooner he realizes this, the greater his chances become of being a successful Prime Minister.
An interesting fact is that if Rahul Gandhi’s surname was not Gandhi, he would not even be considered for the PM’s post with the current skillset that he has.
Another interesting fact is that no one from the Gandhi family has turned out to be a poor Prime Minister be it Indira, Rajiv or even Pandit Nehru.
So will Rahul Gandhi be any different? Quite frankly, I do not know. Only time will tell. Watch out for this space in 2019!