It is Sonia who needs to read Rajan’s Economic Survey

Vivek Kaul 
Raghuram Govind Rajan, the chief economic advisor to the government of India, likes to talk straight and call a spade a spade. He was the first economist of some standing to take on Alan Greenspan’s economic policies at a public forum. In a conference in 2005, Rajan said “The bottom line is that banks are certainly not any less risky than the past despite their better capitalization, and may well be riskier. Moreover, banks now bear only the tip of the iceberg of financial sector risks…the interbank market could freeze up, and one could well have a full-blown financial crisis.”
This was during the time when the United States of America was in the middle of a real estate bubble. Everyone was having a good time. And no one wanted to spoil the party.
Alan Greenspan hadn’t achieved the ignominy that he now has, and was revered as god, at least in economic circles. Hence, any criticism of the American economy was seen as criticism of Greenspan himself. Given this, Rajan came in for heavy criticism for what he said. But we all know who turned out to be right in the end.
Recalling the occasion Rajan later wrote in his book 
Fault Lines “I exaggerate only a bit when I say I felt like an early Christian who had wandered into a convention of half-starved lions. As I walked away from the podium after being roundly criticised by a number of luminaries (with a few notable exceptions), I felt some unease. It was not caused by the criticism itself…Rather it was because the critics seemed to be ignoring what going on before their eyes.”
What this tells us is that Rajan doesn’t hesitate in pointing out what is going on before his eyes, even though it might be politically incorrect to do so. This clearly comes out in the Economic Survey for the year 2012-2013. A part of the summary to the first chapter State of the Economy and Prospects reads “With the subsidies bill, particularly that of petroleum products, increasing, the danger 
that fiscal targets would be breached substantially became very real in the current year. The situation warranted urgent steps to reduce government spending so as to contain inflation.”
The last sentence of the above paragraph makes for a very interesting reading. This is probably the first occasion where a government functionary has conceded that it is the increased government spending during the second term of the UPA that has led to a high inflationary scenario. This is not surprising given that Rajan holds a full time job teaching at the University of Chicago.
Rajan’s thinking is in line with what the late Milton Friedman, a doyen of the University of Chicago, had been talking about since the early 1960s. As Friedman writes in 
Money Mischief – Episodes in Monetary History: “The recognition that substantial inflation is always and everywhere a monetary phenomenon is only the beginning of an understanding of the cause and cure of inflation…Inflation occurs when the quantity of money rises appreciably more rapidly than output, and the more rapid the rise in the quantity of money per unit of output, the greater the rate of inflation. There is probably no other proposition in economics that is as well established as this one.”
And that is what has happened in India with the government spending more and more money over the last five years. This money has chased the same number of goods and services and thus led to higher prices i.e. inflation.
Rajan has never been a great fan of subsidies and he looks at them as a short term necessity. In an interview I did with him after the release of his book 
Fault Lines, for the Daily News and Analysis(DNA), I had asked him whether India could afford to be a welfare state, to which he had replied “Not at the level that politicians want it to.”
In another interview that I had done with him in late 2008, for the same newspaper, he had said “There is a real concern in India that government in India is not doing enough of what it should be doing…I don’t agree that we should overspend and run large deficits but I think we should bite the bullet and cut back on subsidies where we can for the larger good of the public investment into agriculture, roads etc.”
This kind of thinking that Rajan is known for clearly comes out in the Economic Survey. The subsidy bill (oil, food and fertilizer primarily) for the current financial year 2012-2013 (i.e. the period between April 1, 2012 and March 31, 2013) is estimated to be at Rs 1,90,015 crore. This has to come down. As the Economic Survey points out “Controlling the expenditure on subsidies will be crucial. Domestic prices of petroleum products, particularly diesel and liquefied petroleum gas (LPG) need to be raised in line with the prices prevailing in international markets. A beginning has already been made with the decision in September 2012 to raise the price of diesel and again in January 2013 to allow oil marketing companies to increase prices in small increments at regular intervals.”
The question is that will this be enough. The amount budgeted for oil subsidies during the course of this financial year was Rs 43,580 crore. These subsidies are given to oil marketing companies because they sell diesel, cooking gas and kerosene at a loss.
The amount budgeted against oil subsidies will not be enough to meet the actual losses. As the Chapter 3 of the 
Economic Survey points out “The Indian basket crude oil was $107.52 per bbl (April-December) in 2012 and even with the pass through effected in the course of the year, under-recoveries of OMCs surged and were estimated at Rs1,24,854 crore during April-December 2012-13.”
So for the first nine months of the year the oil subsidy bill was more than Rs 81,000 crore off the target. By the end of the financial year this might well touch Rs 1,00,000 crore. This of course will need some clever accounting to hide. Chances are that the finance minister P Chidambaram might move this payment that will have to be made to the oil marketing companies to the next financial year.
Hence it becomes even more important to cut these subsidies in the years to come. As Rajan writes “
The crucial lesson that emerges from the fiscal outcome in 2011-12 and 2012-13 is that in times of heightened uncertainties, there is need for continued risk assessment through close monitoring and for taking appropriate measures for achieving better fiscal marksmanship. Openended commitments such as uncapped subsidies are particularly problematic for fiscal credibility because they expose fiscal marksmanship to the vagaries of prices.”
The phrase to mark over here is that 
‘open ended commitments such as uncapped subsidies are particularly problematic‘. This is something that Sonia Gandhi, president of the Congress party, and Chairman of UPA wouldn’t want to hear. This specially during a time when Lok Sabha elections are due in a little over a year’s time and this budget is the last occasion which the government can use to continue bribing the Indian public through subsidies.
It will be interesting to see whether the finance minister P Chidambaram takes any of the suggestions put forward by Rajan and his team, when he presents the annual budget tomorrow. Or will this Economic Survey, like many before it, be also confined to the dustbins of history?
The piece originally appeared on on February 27, 2013

 (Vivek Kaul is a writer. He tweets at @kaul_vivek ) 


Is Manish Tewari’s media diktat a sign of Cong returning to 1970s?

sanjay gandhi

Vivek Kaul

Manish Tewari, the minister of information and broadcasting, who probably spends more time in television studios defending the Congress party, than in his office, recently issued what his ministry called an ‘advisory’ on the way television channels have been covering the protests against the gang rape of a 23 year old women in a moving bus in Delhi.
A part of the advisory had this to say “It has been observed that some private satellite news TV channels in their 24X7 coverage have not been showing due responsibility and maturity in telecasting the events relating the said demonstration and such a telecast is likely to cause deterioration in the law & order situation, hindering the efforts of the law enforcing authorities
Whereas Rule 6(1)(e) of the Cable Television Networks Rules, 1994, which contains the Programme Code to be strictly adhered to by all private satellite television channels, provides that no programme should be carried in the cable service which is likely to encourage or incite violence or contains anything against maintenance of law and order or which promotes anti-national attitude.
After Tewari’s senior in the party as well as the government Sushil Kumar Shinde equated the protesters in Delhi to Maoisits, Tewari wants the nation to believe that the coverage of the protests in the heart of the capital could promote an anti-national attitude. What has the world come to?
I can’t help but compare this situation to the scenario in the mid 1970s when Indira Gandhi, as the Prime Minister had declared a state of internal emergency and the politicians of the day directed the newspapers to fall in line. (There were no television channels back then other than the state owned Doordarshan).
As Vinod Mehta writes in 
The Sanjay Story “The Chief Censor of India issued a dictat to the press…: ‘No criticism of the family planning programme. This includes letters to the editor.’”
Indira Gandhi’s younger son Sanjay had unleashed an ambitious male sterilization programme to control India’s burgeoning population. “The problem, of course, was that Sanjay did not have the time for gentle act and sustained persuasion. He wanted results, latest by day after tomorrow. A young man in a hurry he disastrously miscalculated the quantum of ‘motivation’ necessary to get people to the operating table,” writes Mehta.
Given this, Sanjay’s ambitious programme came in for a lot of criticism and one of the impacts of that was that the press was asked not to criticise it. The same thing albeit in a milder way is happening right now. Tewari’s veiled threat against covering the Delhi rape protests comes after his predecessor Ambika Soni ( a known Sanjay Gandhi crony) stopped government advertisements to the 
Daily News and Analysis (Read about it here) for a while late last year.
The state of internal emergency was declared in India with effect from the midnight of June 25, 1975. That morning most Delhi newspapers did not come out because the Congress government had ordered power supply to be cut in Bahadur Shah Zafar Marg where most newspaper offices are based in Delhi. As Tavleen Singh writes in 
Durbar “But with typical Indian ineptitude, the officials had forgotten that the Stateman and the Hindustan Times had their offices in Connaught Place.”
Soon Inder Kumar Gujral who was the information and broadcasting minister was dismissed given that he wasn’t deemed to be effective enough. “Sweet, mild Inder Gujral was replaced by Vidya Charan Shukla. The story of the minister’s sacking that drifted around newspaper offices was that Mr Gujral, an old friend of Mrs Gandhi, had objected to Sanjay ordering him around and Sanjay had responded by ordering his immediate dismissal. The unsmiling brutish Shukla warned us at the first press conference he held that any defiance of press censorship would be dealt with harshly. He was soon dictating which stories we should give ‘prominence’ to and these were usually related to an event attended by Sanjay Gandhi or an idea that had come from him,” writes Singh in 
Durbar. While it is difficult to see Manish Tewari morphing into another Vidya Charan Shukla, his recent dictat to television channels is a milder form of what Shukla did with the newspapers in the mid 1970s when emergency was in operation.
The period of emergency also saw the power in the Congress party pass onto the next generation i.e. from Indira Gandhi to Sanjay Gandhi. As Mehta writes “Around November ’76 Mrs Gandhi was finally sold on dynastic succession not only on the ground of filial devotion but because she thought that the country’s destiny safe in her son’s hands…No coincidence then that in December ’76 the Censors issued a written directive to the press asking it to refrain from using the prefix ‘youth leader’ in connection with Mr Sanjay Gandhi.” Sanjay Gandhi became the real leader ‘overnight’ and gradually took over the running of the government of the day from his mother Indira, despite never being a part of it.
Along similar lines Rahul Gandhi, the proverbial prince in waiting, will lead the Congress party in the 2014 Lok Sabha elections, it was recently revealed. What remains to be seen is whether Rahul gradually takes over the running of the government from his mother Sonia as well, like his uncle did from his mother nearly 36 years back. Sonia Gandhi despite never being a part of the government wields tremendous control on it.
The emergency was a blot on the Indian democracy. But it didn’t really impact the man on the street, the average Indian, the man who actually goes out and votes, and who we now know as the 
aam aadmi, in any major way. “In February ’76 a Bombay monthly, now undeservedly extinct, sent a reporter to the interior of Maharashtra to determine what impact the Emergency had had at the grassroots level. The reporter returned with the not unexpected news that most villagers didn’t even know there was an emergency in the country,” writes Mehta.
Until of course Sanjay Gandhi caught onto the idea of male sterilization to control the Indian population. But he was a man in a hurry and soon forced sterilizations were being carried out through out North India and states like Maharashtra and Rajasthan. Quotas were set for different chief ministers. Navin Chawla, another known Sanjay crony, who rose to become the Chief Election Commissioner of India, and who was one of the bureaucrats helping Sanjay Gandhi implement his hair-brained scheme, said “One had to prevent poor people living like animals and breeding more poor people.”(As Vinod Mehta quotes him in The Sanjay Story).
Soon forced sterilizations were happening all over the place. Even the beggars around the Taj Mahal in Agra were rounded up and forced to undergo 
nasbandi. And this finally made people realise that an emergency was on in the country. As Mehta writes “Before June ’76 the Emergency was a peripheral phenomenon in rural India. The constitutional changes, detention of opposition leaders, curtailment of fundamental freedoms, censorship of the press, were hardly likely to affect life of the Indian peasant….This ignorance was rudely shattered with the launching of the sterilization programme. And it was this which took Emergency to the heart of India, to its hamlets and small towns.”
When elections finally happened in 1977 this turned out to be a major issue and the Congress party was booted out of power the first time since independence. The entire frustration of the emergency came to be consolidated largely around one issue and that was 
nasbandi. Mehta quotes author Sasti Brata as saying “The elections have not proved that democracy flourishes in India, the elections have only proved that men don’t like to lay on tables and have their things cut off.”
Is something similar happening in an India, which is clearly more urban now than it was in the 1970s, right now? Has the frustration of being under nearly eight and a half years of misrule of the Congress party led UPA, all getting consolidated under the issue of a 23 year old women being raped in Delhi? The nation has forgotten the 2G scam. The commonwealth games scam. The nexus between Robert Vadra and DLF. The coalgate scam. We have adjusted to the price of almost everything going up at a very fast pace and the fact that our salaries are not going anywhere. We don’t seem to mind the high EMIs.
But will we forget the fact that a 23 year old women who had her whole life in front of her and who was getting back home from watching a movie on a late cold Delhi evening, happened to board the wrong bus, only to be raped and almost killed by a set of goons?
That time will tell!

The article was originally published on on December 27, 2012.
(Vivek Kaul is a writer. He can be reached at [email protected]

Shinde-speak shows all that is wrong with the government

13-sushil-kumar-shinde-300Vivek Kaul
A few things that home minister Sushil Kumar Shinde said today tell us very clearly what is wrong with the approach of the Indian government to the recent public protests in Delhi against the rape of a 23 year old woman. 
If we meet students today, tomorrow we may have to meet Maoists
First and foremost how can the home minister of the world’s largest democracy say something as casual as this. At one go he has associated the students and the general public protesting in Delhi to Maoists who kill people day in and day out. The liberal historian and writer Ramachandra Guha told me in a recent interview that Naxalism is one of the biggest threats facing the country right now. Mr Shinde wants us to believe that the protests in Delhi are as big a threat as a Naxalism? How crazy can that be?
The second point that comes out here is that if the government does not come out and meet the Maoists (or Naxals as they are more popularly called) who else will? But Mr Shinde seems to be so comfortable in his bungalow in Lutyens Delhi that for him Naxalism might even be something that exists in a foreign country that is not India.
Or how else do you explain his statement “when 100 adivasis are killed in Gadchiroli, should the government go there?” Yes minister, the government should go there. If people of this country are being killed the government has to make every effort to stop it.

They are throwing stones at the police
This was Shinde’s explanation on why the police started lathi-charging and tear gassing the citizens of this nation who had gathered to protest. As a Delhi police commissioner put it “hooligans have taken over this protest.”
But as usual there are two sides to the story. As Shuddhabrata Sengupta writes in a column “The violence began, not when protesters threw stones, but when the police started attacking people. Stones were thrown in retaliation. The television cameras that recorded what happened show us the exact chronology. The police were clearly under orders not to let people up Raisina Hill. Why? What is so sacred about Raisina Hill? Why can a group of unarmed, peaceful young people not walk to the gates of the president’s palace?”
Shinde wants us to believe that the force was used to protect the Rashtrapati Bhavan which is built on top Raisina Hill.
Let me just deviate a little here. A few years back George Bush visited London. This was the time when War on Terror was at its peak. Bush had to meet Tony Blair at his 10 Downing Street residence cum office. While the meeting of Bush and Blair was on, Britishers protesting against the War on Terror and the indiscriminate bombing of Iraq, were allowed to pass through 10 Downing Street, shouting their version of “
Bush-Blair hai hai!”.
Why can’t that happen in India? Is Pranab Mukherjee’s security risk greater than that of the President of the United States and the Prime Minister of Great Britain put together?
Assuming even if the protesters threw the first stone did that mean that male policemen should have been allowed to go around mercilessly beating up women and senior citizens? The police behaved along expected lines having long been a hand maiden of the government. As Gurucharan Das told me in an interview earlier this year “after Indira Gandhi the police became a handmaiden of the executive. The police lost its independence.”
Also why was there no effort made to engage with the protesters while they were there? Other than some statements being made by the junior home minister, whom no one had heard about till a few days back, almost nothing credible came from the Union Government.
In his address to the nation today Prime Minister Manmohan Singh is heard saying 
theek hai at the end of his speech. Did the Prime Minister really believe in what he was saying or was it just an act that he was putting on? A scene from a movie at the end of which the director says cut, and the actor asks “theek hai? ya ek bar aur karte hain? (was it good enough? or shall we do it once more?)”
When Sonia ji herself had met protesters, they should have been happy
This statement of Shinde is the world view of a member of the Congress party whose be all and end all in life is to get a darshan from the lady herself. The allegiance of a Congressman like Shinde is to the Gandhi family and not the nation and public which elects them to seats of power.
As Tavleen Singh writes in her new book Durbar “Years later, the ultimate subscriber to the idea of democratic feudalism, Mani Shankar Aiyar, admitted in a television interview with Karan Thapar that the party was just not proud of its dynasty but knew that it was the ‘adhesive’ that held things together.” As a Facebook/Twitter joke going around puts it “What Sachin Tendulkar’s retirement from ODIs tells us is that everything comes to an end, except the Gandhi dynasty.”
Getting back to the point, what does meeting of the protesters with Sonia Gandhi have to do with the issue at all? And if protesters feel like continuing their protest even after meeting Mrs Gandhi what does it tell us? It tells us that the assurances even from the lady who runs this country by ‘remote control’ weren’t convincing enough for the protesters to stop protesting.
When political parties protest, call bands, damage public property, burn buses and try to shut down the country, the police conveniently look the other way, but when some people in Delhi want to protest it becomes a security threat to the President? And they police respond by lathi charging, pushing the media out of the scene and shutting down metro stations. The politicians of this country keep reminding us time and again that we are the world’s largest democracy. If we are the world’s largest democracy then why are we shutting down metro stations?
Varchasva” a word in Hindi which best describes the situation at hand. The closest English translation of the word is “absolute power”. And absolute power makes people behave in the way the government of India led by Sonia Gandhi and Manmohan Singh is currently behaving.

The article originally appeared on on December 24, 2012.
(Vivek Kaul is a writer. He can be reached at [email protected]

It’s luck: Explaining Sonia’s rise, BJP’s 2004 loss and cricket debuts


Vivek Dehejia is an economics professor at Carleton University in Ottawa, Canada. He is also a regular economic commentator on India for the New York Times India Ink. He has most recently co-authored Indianomix – Making Sense of Modern India (Random House India, Rs 399) along with Rupa Subramanya. The book is along the lines of international bestsellers like Freakonomics and The Undercover Economist, and tries to answer a wide array of questions ranging from why did Jawaharlal Nehru did not see the 1962 war with China coming even though there was a lot of evidence to the contrary, to why seatbelts don’t save lives. Dehejia speaks to Vivek Kaul in an exclusive interview. Excerpts:
One of the controversial ideas in your book is that the BJP’s India Shiningcampaign of 2004 was not as much a disaster as is made out to be. Why?
I am glad you asked that. We think it is one of the interesting contributions of the book. I would agree with you that it is a controversial hypothesis because we have this received narrative of the 2004 election – which is that the poor voter had punished the BJP/NDA for the triumphalist India Shining campaign. Even the BJP bought into this interpretation. This has had far-reaching consequences. If you look at the political history of India since 2004, what was the lesson that was drawn? The lesson that everyone drew from the so-called disaster of the India Shining campaign was that you cannot win an election based on economic reform, economic policy and economic success.
And you don’t agree the India Campaign was a disaster…
Our argument here is that if you look at the numbers, if you look not just at the seats won but at the vote shares as well, you get a different story. Yes, there was a swing away from the NDA, but the actual vote share difference between the NDA and the UPA was just over 2 percent. The NDA won 33.3 percent of the vote and the UPA won 35.4 percent of the vote. For us that 2 percent difference in vote share can equally be attributed to a number of other explanations, such as bad luck, as it is to anything else.
Or let me put in another way; if you look at those results, basically it came down to a coin toss. A third of the voters voted for the NDA, another third voted for the UPA and a third voted for somebody else. As we see it, the role of luck and randomness in an outcome should not be underestimated.
That’s a very interesting point…
The NDA might well have won the election. And, in fact, they actually would have won if the DMK hadn’t pulled out their 16 seats at the last minute. And that really was what made the difference. Hence it is very difficult to conclude that it was the voters punishing India Shining. In all Indian elections, there are many regional and local issues at play and then there are issues about the complex way in which alliances work. Our point in the chapter really is that it is a very appealing narrative. We like to have these very convincing explanations because to say well, you know, it was bad luck doesn’t seem like a very satisfying explanation. But if we know that the BJP lost because they had this India Shiningcampaign and the poor voters punished them for it, that appeals to human psychology. We want to have a convincing story that explains everything.
A convincing and simple story that can be broadcast on TV..
That’s right. A story that can fit into a sound byte.
You also talk about the role of luck in Sonia Gandhi‘s life. If it was not at play she would not have ended up at where she is now…
We sort of tell the story as to how she met Rajiv Gandhi at a particular Greek restaurant in Cambridge, England, on a particular day in 1965. That itself was a chance event. Maybe if she did not like Greek food, or if she had gone on a different day! And the number of chance occurrences it took to go from being the shy Italian housewife that she was to being the most powerful person in the country. It took two assassinations and five unexpected deaths. The assassinations, of course, of her mother-in-law and her husband, and then the deaths of five senior Congress leaders (which included Rajesh Pilot, Sitaram Kesri and Madhavrao Scindia). The probability of that happening is so small that you have to call that an accident of fate. Or luck. Or randomness. Or whatever you want to call it.
Any other interesting examples on luck?
We have this study by Shekhar Aiyar and Rodney Ramcharan, two economists of the IMF, who look at the role of luck in test cricket. And they found, amazingly, that the advantage of debuting at home for test cricketers actually had a long lasting effect on their careers – which was really surprising. You would think that if you debut at home, sure it would effect your performance in the debut series, but in fact it has a long-lasting effect.So basically people who debut at home end up playing a lot more…
That’s right. Selectors unfairly punish those who debut abroad and don’t do well. Therefore, you are more likely to be dropped from the side once you debut abroad and don’t do well. But also there could be some learning by doing here. If you debut at home you are able to hone your skills and technique on your home turf and, therefore, you become a better player. Both things could be going on there. But the bottomline is that it is a result of luck because these Test schedules are set months and years in advance, and when someone is picked up for the national side is really the luck of the draw.
An extended portion of your book deals with Jawaharlal Nehru and the fact that for a very long period of time he did not see things heating up with China in 1962, despite there being evidence to the contrary. What is the broader point that you were trying to make?
That forms a central part of our chapter on cognitive failure when we draw on recent behavioural economics literature. The point and the purpose of looking at Nehru in the lead up to the 1962 war was how could something so obvious be missed. It had become clear at that point that China was flexing its muscles. It was a nationalistic state and the border issue was going to be a real problem. But the fact was it apparently caught Nehru by surprise. He himself admitted that he was more or less been living in a dream world before the war. He said: “We were living in an artificial atmosphere of our own creation”. So how could Nehru’s own assessment have been so far off the mark and have changed so radically over a short span of time?
And what did you figure out?
Certainly, one of the several possible interpretations is that Nehru and Krishna Menon (the Defence Minister when the Chinese attacked India) and people around them had succumbed, perhaps to a cognitive failure, where they couldn’t perceive the Chinese threat for what it was. They were looking at it through a different lens.Could you explain that in some detail?
Krishna Menon, for example, was ideologically towards the left and he found it very hard to accept that China, being a socialist state and being an Asian power, could have any threatening impulses towards India. This showed an ideological blind spot to Chinese nationalism that had been detected as long back as 1950 by the shrewd Vallabhbhai Patel. So the broader point we were trying to make is that a strongly-held ideological view can blinker you to some realities that don’t fit in with that view. There is this pattern that one sees where  leaders can become overconfident in a lead-up to a crisis because what is happening doesn’t fit their world view of things.
From Nehru you jump to rail accidents in Mumbai…
Yes. A staggering 15,000 people die on railway tracks throughout India every year. Of this 40 percent, or about 6,000 deaths, take place in Mumbai alone on the suburban railway network.
And why is that?
If you look at it from a strictly conventional economic point of view, there is a cost-benefit calculation. So someone who is crossing the tracks at an unfenced point will reckon that he is saving the time it would take for him to get to the next safe crossing, i.e. the foot over-bridge. But that foot over-bridge could be several kilometres away from where he is. If, say, you are a daily wage labourer who has get to the construction site and give your name to the foreman, if you arrive half an hour or 45 minutes late you might miss out on a day of work and so the day’s wages. So the cost can be pretty high. That would be the end of the story from conventional economics and you would say let’s build more foot overbridges to reduce the time cost.
But that is not the whole story?
Let me tell you a little story. Biju Dominic, a former ad man and a co-founder of FinalMile, learned about the daily tragedies on the Mumbai rail system while teaching a class at the railway staff college. So he and his team started gathering some data. They realised that 85 percent of those trying to cross tracks were adult males. Of course, this may also reflect the fact that it is mostly men who are trying to cross the tracks. Also children were most adept at crossing tracks. An interesting finding was that people who are used to crossing tracks tend to underestimate the danger to their lives. This is a classic example of the overconfidence bias, along similar lines that had happened in Nehru’s case before the 1962 war with China. While crossing they don’t consciously realise the risks they are taking. They filter out the boiler plate warning signs and the text signs.
That’s very interesting…
So given the possibility of cognitive failure, it’s possible that some targeted interventions might change that tradeoff. FinalMile came up with three specific interventions. First, they painted alternate sets of railway ties (that’s the series of metal beams that connect the two ends of the track) a bright yellow. This was to help compensate for the psychological fact that people tend to underestimate the speed of large moving objects. With an alternate set of ties painted yellow, someone would be better able to gauge the speed of an oncoming train as it as it passed from the painted to the unpainted ties. Suppose you are in a high a speed train and you are looking out at the landscape, it is hard to tell how fast you are going, unless there is some reference point for the speed. That was one nudge.
What was the second one?The second one was to get the train drivers to switch from a single long warning whistle to two short staccato bursts. Again, this was based on neurological research that showed that the human brain was more receptive to sound that was separated by silence. And the third, the most striking nudge, was an image. People tend to filter out generic boiler-plate kind of warnings. So here they actually hired an actor to portray the wide-eyed horror of someone about to be crushed by an oncoming train and made a poster of it. The poster was vividly visceral enough to really get to someone’s gut, to effect someone psychologically. It is much harder to filter out something like that vis-a-vis a generic sign which says it’s dangerous, don’t cross here. And the poster was put up at points were people crossed tracks. Those were the three interventions.
And how are the results?
They started at Wadala. In the first half of 2010, the number of deaths dropped by 75 percent to nine from the previous year. When we spoke to them in February this year we were told that railways were rolling it out at the Mulund, Vikhroli and Ghatkopar stations. But the other point that we note there is that the success of that really won’t show up in any kind of statistic because if someone looks at the poster and decides not to cross or makes it across safely because of the yellow paint on the ties, it will be the absence of a statistic.
Another interesting piece of research you talk about are seat-belts…
Our inspiration is this classic 1975 article by Sam Peltzman, at the university of Chicago, who wanted to test whether seat-belts saved lives in the United States (US) where everyone had just assumed without argument that seat-belts must save lives. And what Peltzman found was that, in the US, that turned out not be the case. What was going on was that since the cars were now safer, the driving became more rash. The human reaction was, now that my car is a little safer, I can drive a little faster and I don’t need to worry as much about getting into an accident. The human behaviour offset the effects of a well-meaning government programme.
You can find examples of this everywhere. We give an example of sports equipment. There is some evidence now that in team sports where there is a lot of protective gear, you actually see more violence on the pitch. So American football and ice-hockey have a lot more protective gear and so you get a lot more violence. It’s the same thing because the players feel safer as drivers feel when they wear the seat-belt. But in soccer there is relatively very little protective gear and hence very little violence.
How does the seat-belt thing work in an Indian context?It’s not been very much studied but we found this one interesting study by Dinesh Mohan at IIT Delhi. The Delhi seat-belt law came into effect in 2002. What he found was that seat-belts saved very few lives. If you look at his paper, he concludes that the seat-belt law at most saved around 11-15 lives per year in Delhi out of nearly 2,000 fatalities.
Why was that the case?
There are two things going on here. The fatality rate for drivers and front seat passengers was already relatively low. And that dropped a bit after the seat-belt law came in. The deeper explanation is that most of the victims are not the front-seat passengers or the drivers. They are the other people. They are pedestrians. They are two-wheeler drivers. And others. With seat-belts in place drivers are essentially transferring the risk from themselves to the pedestrians.
An interesting part of your book is where you talk about how Indian states that were ruled by native princes are doing much better economically than the states that were ruled directly by the British. Could you tell us a little bit about that?

One of the questions that we like to ask in India is what if we hadn’t been ruled by the British, would we have done better? Or questions like: were the British good for India? And here there are all spectrum of opinions. There was a debate published an American magazineThe New Republic between Niall Ferguson and Amartya Sen which looked at this question. Sen wrote that had India not been colonised by the British then it might have evolved in a different (and) better way than with the colonisation. Then Ferguson replied to that. And Sen had a rejoinder. Ferguson is very much a believer in the British Empire. His argument is that the British Empire in its later phase did a lot of good for its colonies by integrating them into global trade and finance.
So what is the point you are trying to make?
It is very tempting to say that Indian economic performance or growth stagnated during 190 years or 200 years of British rule, and then growth began to take off after independence. The point we make is that by itself it tells you nothing and you have to have a counter-factual scenario. What are you comparing it with? And this is where we draw on the research of Lakshmi Iyer of the Harvard Business School.
What is this research about?
She very interestingly compares the economic performance post-independence of those regions which were directly ruled by the British as against those which were ruled by the princes of princely states. And she shows statistically that the native-ruled regions have done better on average even post-independence. And that is a very striking result. One sort of hypothesis is that the British, to the extent that they were more likely to rule states that generated taxation revenue for them (because tax on land and agriculture was a big source of revenue), may not have invested so much in physical capital and human capital as the Maharajas and Nawabs may have. At least, among the more progressive princely states, they probably realised the good value of education, health and so on and began to invest in that.
Can you give an example?
You can take the example of the Maharaja of Baroda, Sayajirao Gaekwad III. He ruled from 1875 to 1939. He had compulsory primary education, including that for girls. He put in place a number of socially progressive policies. That sort of legacy is still being reaped till today. That is one possible explanation and a suggestive idea.
The interview originally appeared on on December 19, 2012.
Vivek Kaul is a writer. He can be reached at [email protected]

“Rahul Gandhi is completely mediocre…He should find another profession”

ramachandra guha
The New York Times has referred to him as ‘perhaps the best among India’s non fiction writers’; Time Magazine has called him ‘Indian democracy’s preeminent chronicler’. Meet Ramachandra Guha, one of the few intellectuals in India, who is a liberal in the classic sense of the term.
He has pioneered three distinct fields of historical inquiry: environmental history (as in The Unquiet Woods, 1989), the social history of sport (A Corner of a Foreign Field, 2002), and contemporary history (India after Gandhi, 2007). He is currently working on a multi-volume biography of Mahatma Gandhi.
His latest book Patriots and Partisans (Penguin/Allen Lane Rs 699) is a collection of 15 essays based mostly on all that has gone wrong in modern India.
“Rahul Gandhi is completely mediocre… He has no original ideas, no heart for sustained and hard work. He should find another profession,” he says in this interview to Vivek Kaul.

You write that “Indian constitution had always been impalatable to the Marxist-Lenninists since it did not privilege a particular party(their own), and Hindu radicals since it did not privilege a particular faith (their own).” Can you discuss that in a little detail?
Marxist-Leninists the world over believe in a state run for and by a single party, their own. Hence the problems encountered by the Communist Party of China, which is paranoid that a call for freedom and democratic rights will lead to the dismantling of their monopoly. Indian Marxist-Leninists are no exception. The Naxalites fantasize about planting the Red Flag on the Red Fort. Even the CPI(M) still somewhere believes that one day it will be the sole party in control in India.
And what about Hindu radicals?
A core belief of the RSS(Rashtriya Swayemsevak Sangh) is in a Hindu Rashtra, a state run and for Hindus. Muslims and Christians in this scenario have always to prove their loyalty, in fact, they have to acknowledge their distant or proximate, real or fictitious, origins in a Hindu family and in Hindu culture. When the NDA came to power, under the influence of the RSS they constituted a Constitutional Review Commission. Knowing that the former Chief Justice, M. N. Venkatachaliah, was a practising Hindu with a profound knowledge of the scriptures, they asked him to head the Commission, hoping he would advocate amendments in the direction they desired. To their dismay, Justice Venkatachaliah said the secular Constitution of India was completely sound.
Which is a bigger threat to India, naxalism or Hindu bigotry?
In the 1990s, Hindu bigotry; now, Naxalism. Things may yet again change, or an altogether new threat may emerge. Historians cannot predict!
In one of your essays you talk about the senior Congress leader Gulzari Lal Nanda, who was twice the acting Prime Minister of India, dying in a small flat in Allahabad. You also talk about Lal Bahadur Shastri to highlight how upright Indian politicians used to be. What has made them so corrupt over the years?
Ironically, leaders of the CPI and CPI(M), despite their strange and archaic ideology, are perhaps the least corrupt of Indian politicians. They do not have Swiss bank accounts and do not sup with corporates. The compulsions of election funding, the state’s control over natural resources (including land), and sheer venality and greed have encouraged leaders of all other parties to become grossly wealthy by abusing their office.
There remain exceptions. Manmohan Singh is completely honest in a personal sense (though complicit in the corruption of his party and government). And there still remain some outstandingly upright judges, IAS officers, and Generals. The day his term ended, Justice Venkatachaliah moved out of his Lutyens bungalow in New Delhi and returned to his modest home in Bangalore. Others would have at least stayed on for the six months allowed for by the law, using that period to lobby for another sarkari post with perquisites.
You also suggest that if Lal Bahadur Shastri would have been around for sometime more India would have been different country than what it is today. Could you elaborate on that a little bit?
Shastri has been greatly under-rated both as politician and Prime Minister. It was he who laid the foundations of the Green Revolution (although Indira Gandhi took the credit). He was a far more focused leader in defence and military matters than his mentor, Nehru. He had initiated moves to open out the economy and encourage entrepreneurship. And he was scrupulously honest and completely non-sectarian. Had he lived another five or ten years India may today be a less discontented democracy and a less corrupt society.
Normally when people want to refer to dynasty politics in India they talk about the Nehru Gandhi family. You say it should be just the Gandhi family. Why do you say that?
I show in my book, with concrete evidence, that the dynasty originated with Indira Gandhi, not Nehru. I think this dynasty is now on its last legs. Its charisma is fading with every generation. And Rahul Gandhi is completely mediocre. Rajiv at least had a vision–of making India a technologically sophisticated society. Sonia has enormous stamina and determination. Rahul has no original ideas, no heart for sustained and hard work. He should find another profession.
Has chamchagiri increased in the Congress party over the years? Are the chamchas of Sonia Gandhi bigger chamchas than the chamchas of Rajiv, Sanjay and Indira Gandhi?
Quite possibly. As there is less to go around, there is more active chamchagiri to get what remains. The cult around 10 Janpath in Congress circles is sickening.
Are the Internet Hindus the new kar sevaks?
Yes and no. They have the same bigoted worldview and fanatical fervour of the kar sevaks, but express this through the safe medium of the Web. The kar sevaks had more raw energy, travelling to Ayodhya, provoking riots on the way there and on the way back. The Internet Hindus are as narrow-minded and sectarian as the kar sevaks, but, since their abuse is verbal and not physical, far less dangerous.
Gurucharan Das talks about the need for a new party which understands the Indian middle class in his new book India Grows At Night. You also make a slight mention in one of the essays. Do you see that happening? Does the Aam Aadmi Party(AAP) look like filling in that gap?
The anti-corruption protests of 2011 were an important wake-up call to large sections of Indian society, not just the politicians. However, for the energy and passion to have a substantial and enduring impact, the movement must stay focused, and be patient. Too much media attention is inimical to solid grassroots work. The leaders of AAP should, for the moment, stay away from TV studios and build state-level units and forge alliances with civil society groups across India. To fight the next General Elections would be foolish and premature. They should aim rather to make an impact in the General Elections of 2019.
Over the years have we become less liberal as a society than we were before?
It may not be accurate to say that we have become less liberal as a society. On the whole, Indians are more aware of the rights of Dalits and women than they were 50 or 60 years ago. Sectarian religious sentiments on the ground are markedly less intense and polarizing than they were 10 or 15 years ago. At the same time, the media only gives space to extreme positions. And the state capitulates to bigots when it should stand up to them. This capitulation is sadly true of all parties.
Why did the UPA encourage India’s greatest artist to flee into exile? Could it not protect his life and dignity in his own homeland? Why did the Left Front not provide protection to Taslima Nasreen? The tragedy is that the so-called secular parties cave in most easily to the sectarians and the bigots—the Congress to the Hindu right, the Congress and the Left to the Muslim right, the NCP and the Congress in Maharashtra to the Shiv Sainiks.

Could you elaborate on that?
About four years ago, I wrote a piece in a Delhi newspaper known to be read by senior Congress leaders and Ministers. I said there than when the next Republic Day awards were announced, the Government should give MF Hussain the Bharat Ratna and Salman Rushdie the Padma Vibhushan. This would be just reward, no less than their artistic and literary genius deserved. It would strike a blow for artistic and literary freedom. And it would simultaneously insult Hindutvawadis and the mullahs. The rest of India (namely, the majority of Indians) would praise the Government, and the bigots would be speechless, the Hindutvawadis not knowing whether to praise the Government for honouring Rushdie or abuse it for honouring Hussain, and the mullahs confused in the other direction.
But that moment has now passed…
Sadly, Hussain is now dead, the moment has passed, and one does not see the Government—any government—stand up boldly for liberal and democratic values. This is the tragic paradox—that while society as a whole may be becoming slightly more liberal, the further progress of liberalism is halted by the encouragement to illiberal forces by the state and political parties.
The interview originally appeared in on December 17,2012

(Vivek Kaul is a writer. He can be reached at [email protected])