Vivek Kaul
It was May 22, 1991. My summer holidays were on. And I was at my grandfather’s duplex flat in South Delhi. I had woken up very late. It must have been around 10.30am. As soon as I came down to the lower level, an uncle who has since become an Art of Living guru, told me that Rajiv Gandhi had been killed late last night( he didn’t use the word assassinated, that I remember very clearly).
Given his penchant for practical jokes, I thought that he was pulling a fast one on me, early in the morning. Those were the days before cable television became a part of our everyday lives, and so I picked up the Hindustan Times newspaper, my grandfather used to subscribe to, in order to verify whether he was really speaking the truth.
And as it turned out my uncle wasn’t lying. He wasn’t playing a practical joke. Rajiv Gandhi had been assassinated by a human bomb at 10.10pm on May 21. “Bofors killed him,” was a random remark I heard during the course of that day. But since summer holidays were on I had better things to think about than Bofors and how it killed Rajiv Gandhi.
This entire incident came back to me while reading an excerpt of an upcoming book titled Decoding Rahul Gandhi written by Aarthi Ramachandran. As she writes “Sonia writes in Rajiv that Rahul would telephone from America, “consumed with anxiety” about his father’s security arrangements. She says Rajiv’s specialised security cover was withdrawn after he became leader of the opposition and it was replaced with a force not trained for this specific task. Rahul, who had gone to the US in June 1990 to start his undergraduate studies at Harvard University, insisted on coming back to India at the end of March 1991 for his Easter break. He accompanied his father on a tour of Bihar and was “appalled to witness the lack of elementary security around his father”. Sonia says that before going back to the US, Rahul had told her that if something was not done about it, he knew he would soon come home for his father’s funeral.”
Something did happen to Rajiv Gandhi a couple of months later and Rahul had to comeback from Harvard for the funeral.
Rajiv Gandhi had taken over as the Prime Minister of India after the assassination of his mother Indira by her bodyguards. Riding on his honest image and sympathy for his mother the Congress party got around half the votes polled and more than 400 seats of the total 515 seats in the Lok Sabha.
In 1987, the Bofors scandal came into light and tarred the honest image of Rajiv Gandhi. Bofors AB, a Swedish company, had supposedly paid kickbacks to top Indian politicians of around Rs64 crore to swing around a $285million contracts for Howitzer field guns in its favour.
The impact of this on the Congress party was huge. It lost the 1989 election to an alliance of Janta Dal and Bhartiya Janta Party. Rajiv Gandhi had to become the leader of opposition. His security was downgraded and he was assassinated two years later. So in a way Bofors killed Rajiv Gandhi.
But if one takes into account the size of the scam at Rs 64 crore it was hardly anything in size to the scams that have come into light over the last few years. The coal scam. The telecom scam. The commonwealth games scam. The Adarsh Housing Society scam. The Devas Antrix scam. And so on.
Each one of these scams has been monstrous in proportion to the Rs 64 crore Bofors scam. There has been a surfeit of scams coming to light since in the second tenure of the Congress led United Progressive Alliance started. These scams would have been on for a while but they have been coming to light only over the last couple of years.
The Canadian American Economist John Kenneth Galbraith has an explanation for this phenomenon in his book The Great Crash 1929. “At any given time there exists an inventory of undisclosed embezzlement. This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars. In good times people are relaxed ,trusting, and money is plentiful. … Under these circumstances the rate of embezzlement grows, the rate of discovery falls o , and the bezzle increases rapidly. In depression all this is reversed. … Just as the (stock market boom) accelerated the rate of growth (of embezzlement), so the crash enormously advanced the rate of discovery.”
In an Indian context the economy and the stock market were booming between 2004 and 2008. 2009 was a bad year. Things recovered a bit in 2010. And have been looking bleak since the middle of 2011. And it is since then when all these scams have been coming to light. Galbraith’s explanation clearly works here. When things were good the scams were being created and as things turned around, all the scams have been coming to light.
But the bigger question here is will the people of this country remember about all these scams (and more that may be highlighted in the days to come) by the time the 2014 Lok Sabha elections come around? One Bofors scandal running into a few million dollars was enough to put Rajiv Gandhi out of power and even take his life in the end. But will all these billion dollar scandals carry enough weight in the days to come? Or will they just become background noise, leading to people not bothering about them, while deciding who to vote for in 2014?
As Umberto Eco (an Italian author) and Jean Claude Carriere (a french scriptwriter) write in This is Not the End of the Book: “But an abundance of witnesses isn’t necessarily enough. We witnessed the violence inflicted on Tibetan monks by the Chinese police. It provoked international outrage. But if your screens kept showing monks being beaten by police for months on end, even the most concerned and active audience would lose interest. There is therefore a level below which, news pieces do not penetrate and above which they become nothing but background noise.”
Isn’t India going through the same situation right now when it comes to scams? There is a race on among various sections of the media to highlight more and more scams (and rightly so). News channels talk about scams all day long. The front pages of newspapers are full of it. And so is the social media. So will a surfeit of scams make us immune to them?
I don’t have hard and fast answers to the questions that I have raised here. But I do have this lurking feeling that all this scam talk everywhere might just end up benefitting the Congress led UPA government, rather than hurting it. Or to put it in a better way it might not hurt the Congress led UPA as much as it should.
(The article originally appeared on www.firstpost.com on September 4,2012. http://www.firstpost.com/india/one-bofors-got-rajiv-but-will-upas-bag-of-scams-hurt-cong-443064.html)
(Vivek Kaul is a writer and can be reached at [email protected])
Rajiv Gandhi
Rahul Gandhi is paying for the mistakes of Indira Gandhi
Vivek Kaul
Some twenty eight days before my tenth standard exams I started reading William Shakespeare‘s Julius Caesar, seriously, for the first time. And I am still trying to figure out why the world fusses so much over plays written in a form of English that went out of fashion a long long time ago.
My memory of the play is very hazy now, given that it’s been two decades since. But what I do remember is that in Act 3 scene ii of the play comes a line which I found very relevant to the way world operates. “The evil that men do lives after them; The good is oft interred with their bones,” says the character of Mark Antony in that scene.
The evil that men (and women) do lives after them and in some cases the coming generations have to bear the consequences for it. Take the case of Indira Gandhi who systematically destroyed the institution of democracy. As historian Ramchandra Guha recently told CNN IBN “Nehru nurtured institution of democracy – an independent election commission, an independent judiciary, bureaucracy autonomous of political interference, pluralism, secularism. Indira systematically undermined all of this.”
This included democracy within the Congress party as well. During her heydays she first had Dev Kant Baruah installed as the President of the Congress party. Baruah is best remembered for saying “Indira is India and India is Indira”. Such was the level of the sycophancy that was prevalent when Indira Gandhi was at her peak.
After Baruah, Indira Gandhi took the presidency into her hands and was the president of the Congress party from 1978 to her death in 1984. Her younger son Sanjay more or less ran things within the party as well as the government (when Indira was in power) for a major part of this period.
She was succeeded as the President of the elder party by her son Rajiv who remained the President of the party till his death in 1991. This more or less institutionalized “dynastic” rule within the Congress. As Guha said “Even Nehru’s fiercest critic wrote at that time that the Nehru has no interest in promoting dynastic rule… Indira promoted first Sanjay and then Rajiv.”
With no democracy at the top of the Congress party, it simply wasn’t possible for the party to remain democratic at the state or the district level for that matter. The lack of internal democracy and the centralized nature of the Congress party led to the coining of the legendary phrase “high command”. It was also ironic that the world’s largest democracy was and is governed by a party with very little “internal” democracy.
More recently the party has seen Rahul Gandhi, fifth generation of the Nehru-Gandhi dynasty, at the helm of things, trying to correct the lack of democracy within the party. In October 2008, while addressing girl students at a resort near the Jim Corbett National Park, Rahul referred to “politics” as a closed system in India. “If I had not come from my family, I wouldn’t be here. You can enter the system either through family or friends or money. Without family, friends or money, you cannot enter the system. My father was in politics. My grandmother and great grandfather were in politics. So, it was easy for me to enter politics. This is a problem. I am a symptom of this problem. I want to change it.”
Rahul has tried to change this by trying to introduce some internal democracy within the Congress party by trying to ensure free internal elections. As Rasheed Kidwai writes in 24 Akbar Road – A Short History of the People Behind the Fall and Rise of the Congress, “Rahul Gandhi took it upon himself to bring about inner-party democracy in the Congress. He hired retired election commissioner JM Lyngdoh to design processes and implement policies to ensure that there were free internal elections within the party and that all initiatives and representatives were backed by elected representatives.”
While this is a good move but it is not going to lead to instant rejuvenation of a party that has constantly lost hold over the Indian electorate over the last two decades. Also, any move to initiate democracy within the Congress remains a non-starter given the lack of any democracy at the top.
Rahul’s mother Sonia Gandhi has been the President of the Congress since March 14, 1998, when the Congress Working Committee members led by Pranab Mukherjee invoked the Clause J of the Article 19 of the Congress constitution to throw out the elected President Sitaram Kesri. They then installed Sonia Gandhi as the President. This was unprecedented in the history of the party where an “elected” President of the party was thrown out by invoking a vague clause. The clause did not clearly point whether an elected President could be removed, by invoking it.
As The Hindu wrote after the death of Sitaram Kesri:
“The constitutional coup was hailed widely as restoring the party’s leadership back to the site of its only natural entitlement – the Nehru-Gandhi family. When the historians get to chronicle the import of that eventful day, most of the honorable men of the Congress would be shown to have acted way less than honourably; even those who owned their rehabilitation and place in the CWC to the old man had no qualms in abandoning him. The transition that day cast the Congress (I) once again in the dynastic mold, and the consequences are visible.”
Sonia Gandhi has been the President of the party ever since. Even if the party had presidential elections regularly the chances of anyone else other than Sonia Gandhi (assuming she continued to contest) winning the elections remained low. As Jitendra Prasada found in November 2000, when he ran against Sonia Gandhi, in the hope that she would ask him to withdraw his nomination and reward him with a senior position. Sonia never did and got nearly 99% of the votes polled. As Rashid Kidwai writes in Sonia – A Biography “As the date for the withdrawal of names drew nearer, Jitty Bhai waited in vain for a call from 10 Janpath offering a face saving, last-minute withdrawal. Humiliated and marginalized, Jitty Bhai realised that this gambit had failed. Accompanied by a handful of leaders from Uttar Pradesh, Prasada filed his nomination papers and was humbled in the party polls as Sonia went on to get nearly 99 per cent of the votes. The peacemakers and many of those who had encouraged Prasada to teach Sonia a lesson were nowhere in sight.”
Prasada never recovered from the humiliation he suffered at the hands of Sonia and died of a brain haemorrhage a few months later.
So try as much as Rahul might to revive the democratic process within the Congress party, it doesn’t really matter. To paraphrase what Dev Kant Baruah said about Indira Gandhi: “The Nehru-Gandhi family is the Congress. And the Congress is the Nehru-Gandhi family”.
The only constant in a party which lacks any ideology is the Nehru-Gandhi family. Given this, it doesn’t really matter if the Congress party has internal democracy or not. What matters is whether there is someone around from the Nehru-Gandhi family around to lead it.
It’s time Rahul Gandhi realised this and moved on from a full time party role to a role in the government while continuing with his role in the party as well. This will go in a long way in motivating the party cadre than all the moves to promote democracy within the party. There is nothing more that a Congress party worker likes than being led by a scion of the Nehru Gandhi family. This move also becomes even more important in a scenario where Pranab Mukherjee the principal troubleshooter for the party has decided to retire and move to the biggest house in the country.
It’s been nearly twenty three years since Rajiv Gandhi lost power to Vishwanath Pratap Singh. A Nehru-Gandhi family scion has not been a member of the Indian government since then. It’s time for Rahul and the Congress party to set that anomaly right.
(The article originally appeared on www.firstpost.com on July 30,2012. http://http://www.firstpost.com/politics/rahul-gandhi-is-paying-for-the-mistakes-of-indira-gandhi-396001.html/)
(Vivek Kaul is a writer and can be reached at [email protected])
Sonia’s UPA is taking us to new ‘Hindu’ rate of growth
Vivek Kaul
Raj Krishna, a professor at the Delhi School of Economics, came up with the term “Hindu rate of growth” to refer to Indian economy’s sluggish gross domestic product (GDP) growth of 3.5% per year between the 1950s and the 1980s. The phrase has been much used and abused since then.
A misinterpretation that is often made is that Krishna used the term to infer that India grew slowly because it was a nation dominated by Hindus. In fact he never meant anything like that. Krishna was a believer in free markets and wasn’t a big fan of the socialistic model of development put forward by Jawahar Lal Nehru and the Congress party.
In fact he realised over the years looking at the slow economic growth of India that the Nehruvian model of socialism wasn’t really working. This was visible in the India’s secular or long term economic growth rate which averaged around 3.5% during those days.
The word to mark here is “secular”. The word in its common every day usage refers to something that is not specifically related to a particular religion. Like our country India. One of the fundamental rights Indians have is the right to freedom of religion which allows us to practice and propagate any religion.
But the world “secular” has another meaning. It also means a long term trend. Hence when economists like Krishna talk about the secular rate of growth they are talking about the rate at which a country like India has grown year on year, over an extended period of time. And this secular rate of growth in India’s case was 3.5%. This could hardly be called a rate of growth for a country like India which was growing from a very low base and needed to grow at a much faster pace to pull its millions out of poverty.
So Krishna came up with the word “Hindu” which was the direct opposite of the word “secular” to take a dig at Jawahar Lal Nehru and his model of development. Nehru was a big believer in secularism. Hence by using the word “Hindu” Krishna was essentially taking a dig on Nehru and his brand of economic development, and not Hindus.
The policies of socialism and the license quota raj followed by Nehru, his daughter Indira Gandhi and grandson Rajiv ensured that India grew at a very slow rate of growth. While India was growing at a sub 4% rate of growth, South Korea grew at 9%, Taiwan at 8% and Indonesia at 6%. These were countries which were more or less at a similar point where India was in the late 1940s.
The Indian economic revolution stared in late July 1991, when a certain Manmohan Singh, with the blessings of PV Narsimha Rao, initiated the economic reform process. The country since then has largely grown at the rates of 7-8% per year, even crossing 9% over the last few years.
Over the years this economic growth has largely been taken for granted by the Congress led UPA politicians, bureaucrats and others in decision making positions. Come what may, we will grow by at least 9%. When the growth slipped below 9%, the attitude was that whatever happens we will grow by 8%. When it slipped further, we can’t go below 7% was what those in decision making positions constantly said. On a recent TV show Montek Singh Ahulwalia, the Deputy Chairman of the Planning Commission, kept insisting that a 7% economic growth rate was a given. Turns out it’s not.
The latest GDP growth rate, which is a measure of economic growth, for the period of January to March 2012 has fallen to 5.3%. I wonder, what is the new number, Mr Ahulwalia and his ilk will come up with now. “Come what may we will grow at least by 4%!” is something not worth saying on a public forum.
But chances are that’s where we are headed. As Ruchir Sharma writes in his recent book Breakout Nations – In Pursuit of the Next Economic Miracles “India is already showing some of the warning signs of failed growth stories, including early-onset of confidence.”
The history of economic growth
Sharma’s basic point is that economic growth should never be taken for granted. History has proven otherwise. Only six countries which are classified as emerging markets by the western world have grown at the rate of 5% or more over the last forty years. These countries are Malaysia, Singapore, South Korea, Taiwan, Thailand and Hong Kong. Of these two, Hong Kong and Taiwan are city states with a very small area and population. Hence only four emerging market countries have grown at a rate of 5% or more over the last forty years. Only two of these countries i.e. Taiwan and South Korea have managed to grow at 5% or more for the last fifty years.
“In many ways “mortality rate” of countries is as high as that of stocks. Only four companies – Procter & gamble, General Electric, AT&T, and DuPont- have survived on the Dow Jones index of the top-thirty U.S. industrial stocks since the 1960s. Few front-runners stay in the lead for a decade, much less many decades,” writes Sharma.
The history of economic growth is filled with examples of countries which have flattered to deceive. In the 1950s and 1960s, India and China, the two biggest emerging markets now, were struggling to grow. The bet then was on Iraq, Iran and Yemen. In the 1960s, the bet was Philippines, Burma and Sri Lanka to become the next East Asian tigers. But that as we all know that never really happened.
India is going the Brazil way
Brazil was to the world what China is to it now in the 1960s and the 1970s. It was one of the fastest growing economies in the world. But in the seventies it invested in what Sharma calls a “premature construction of a welfare state”, rather than build road and other infrastructure important to create a viable and modern industrial economy. What followed was excessive government spending and regular bouts of hyperinflation, destroying economic growth.
India is in a similar situation now. Over the last five years the Congress party led United Progressive Alliance is trying to gain ground which it has lost to a score of regional parties. And for that it has been very aggressively giving out “freebies” to the population. The development of infrastructure like roads, bridges, ports, airports, education etc, has all taken a backseat.
But the distribution of “freebies” has led to a burgeoning fiscal deficit. Fiscal deficit is the difference between what a government earns and what it spends.
For the financial year 2007-2008 the fiscal deficit stood at Rs 1,26,912 crore against Rs 5,21,980 crore for the current financial year. In a time frame of five years the fiscal deficit has shot up by nearly 312%. During the same period the income earned by the government has gone up by only 36% to Rs 7,96,740 crore. The huge increase in fiscal deficit has primarily happened because of the subsidy on food, fertilizer and petroleum.
This has meant that the government has had to borrow more and this in turn has pushed up interest rates leading to higher EMIs. It has also led to businesses postponing expansion because higher interest rates mean that projects may not be financially viable. It has also led to people borrowing lesser to buy homes, cars and other things, leading to a further slowdown in a lot of sectors. And with the government borrowing so much there is no way the interest rate can come down.
As Sharma points out: “It was easy enough for India to increase spending in the midst of a global boom, but the spending has continued to rise in the post-crisis period…If the government continues down this path India, may meet the same fate as Brazil in the late 1970s, when excessive government spending set off hyperinflation and crowded out private investment, ending the country’s economic boom.”
Where are the big ticket reforms?
India reaped a lot of benefits because of the reforms of 1991. But it’s been 21 years since then. A new set of reforms is needed. Countries which have constantly grown over the years have shown to be very reform oriented. “In countries like South Korea, China and Taiwan, they consistently had a plan which was about how do you keep reforming. How do you keep opening up the economy? How do you keep liberalizing the economy in terms of how you grow and how you make use of every crisis as an opportunity?” says Sharma.
India has hardly seen any economic reform in the recent past. The Direct Taxes Code was initiated a few years back has still not seen the light of day, but even if it does see the light of day, it’s not going to be of much use. In its original form it was a treat to read with almost anyone with a basic understanding of English being able to read and understand it. The most recent version has gone back to being the “Greek” that the current Income Tax Act is.
It has been proven the world over that simpler tax systems lead to greater tax revenues. Then the question is why have such complicated income tax rules? The only people who benefit are CAs and the Indian Revenue Service officers.
Opening up the retail sector for foreign direct investment has not gone anywhere for a long time. This is a sector which is extremely labour intensive and can create a lot of employment.
What about opening up the aviation sector to foreigners instead of pumping more and more money into Air India? As Warren Buffett wrote in a letter to shareholders of Berkshire Hathaway, the company whose chairman he is, a few years back “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down…The airline industry’s demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.”
If foreigners want to burn their money running airlines in India why should we have a problem with it?
The insurance sector is bleeding and needs more foreign money, but there is a cap of 26% on foreign investment in an insurance company. Again this limit needs to go up. The sector very labour intensive and has potential to create employment. The same is true about the print media in India.
The list of pending economic reforms is endless. But in short India needs much more economic reform in the days to come if we hope to grow at the rates of growth we were growing.
To conclude
Raj Krishna was a far sighted economist. He knew that the Nehruvian brand of socialism was not working. It never has. It never did. And it never will. But somehow the Congress party’s fascination for it continues. And in continuance of that, the party is now distributing money to the citizens of India through the various so called “social-sector” schemes. If economic growth could be created by just distributing money to everyone, then India would have been a developed nation by now. But that’s not how economic growth is created. The distribution of money creates is higher inflation which leads to higher interest rates and in turn lower economic growth. Also India is hardly in a position to become a welfare state. The government just doesn’t earn enough to support the kind of money it’s been spending and plans to spend.
Its time the mandarins who run the Congress party and effectively the country realize that. Or rate of growth of India’s economy (measured by the growth in GDP) will continue to fall. And soon it will be time to welcome the new “Hindu” rate of economic growth. And how much shall that be? Let’s say around 3.5%.
(The article originally appeared at www.firstpost.com on June 1,2012. http://www.firstpost.com/politics/sonias-upa-is-taking-us-to-new-hindu-rate-of-growth-328428.html)
(Vivek Kaul is a writer and can be reached at [email protected])