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Contemporary issues related to human development , regional and global.

Category: Railways

GETTING INDIA BACK ON TRACK?

GLOBAL FINANCE CAPITAL AND YOJANA BHAVAN
Review of the book ‘Getting India Back On Track’
Edited by Bibek Debroy, Ashley J. Tellis and Reece Trever,
Published by Vintage Books, Random House India, April 2014

1.Introductory:

Published just before India’s sixteenth Loksabha elections, the 314 page book ‘Getting India Back on Track: An Action Agenda for Reform’ has a forwarding note by Ratan Tata, the icon of Indian capitalism. Such icons have disappeared from USA and most other developed countries, long ago. In India they survive, thanks to its backwardness and the English speaking elite classes with their vast media power.

State monopoly capitalism has taken over the economies of most OECD countries: They jointly try to enforce a new imperial order, with the support of a global financial market, presently regulated by IMF-WB-WTO combine. According to Ratan Tata, Getting India Back on Track was brought together by some of the ‘most incisive policy minds working on India, who are experts, commentators, and practitioners….’ .It is a product of the Carnegie Endowment for International Peace-CEIP (1), a Global NGO sponsored by French Government: The book is, naturally, consistent with its founding objective of providing professional help to developing countries in the building of capitalism.

Tata himself is a trustee of this unique NGO network or think tank of policy research centers operating from Russia, China, Europe, the Middle East, and the United States. Its mission, as stated in the website, is to “advance the cause of peace through analysis and development of fresh policy ideas and direct engagement and collaboration with decision makers in government, business, and civil society… Working together, our centers bring the inestimable benefit of multiple national viewpoints to bilateral, regional, and global issues.”. It provides policy inputs to not only World Bank and IMF but also to NATO for helping to hold the world together under their hegemony.

‘Getting India Back on Track’ means putting back on rails, the reforms and economic restructuring programs that were getting derailed, thanks to numerous political expediencies, global as well as local. Introductory chapter of the book by its general editor, Ashley J. Tellis, Senior Associate of CEIP and a senior bureaucrat in US Government, is titled “Completing Unfinished Tasks”, gives fairly detailed instructions for returning the country to a path of high growth, when a new Government assumes power after Loksabha elections.

The 28 page introductory essay by Tellis paints the so-called Indian socialism of yesteryears as a disaster, reviews the ongoing reforms with great enthusiasm, and concludes with a highly diplomatic warning: “Neither India nor the world-and especially its partners such as the United States-can afford to watch fortune elude New Delhi for another five years.” However, the last article, ‘Rejuvenating Foreign Policy’ by C Raja Mohan, a well known defense analyst and columnist in Indian Express does not reveal any such diplomatic sensibilities, when he simply insists: “revitalizing strategic partnership with United States must be the foundation on which the new government pursues its great power relationships”. Between these two articles are sandwiched, some sixteen chapters contributed by those, who are considered as experts on Indian development.

2. Perceptions at macroeconomic level.

First chapter, by the young Indian economist Ila Patnaik repeat the well known World Bank sermon on the virtues of maintaining macroeconomic balance in a national economy. The second Chapter titled Dismantling the Welfare State is by Surjit Bhalla, a seasoned investment analyst and a board member of NCAER, considered as the think tank of Indian reforms; it simply ridicules the welfare policies of Indian State. This chapter examines the efficacy of redistribution in Indian economy and tend to conclude that, “re-distributive politics have made India a welfare state before its time. Bhalla seems to forget that vast majority of the Indian workforce are employed, even today, in the informal sector and are denied the benefits of even permanent employment (2).

Those who enjoy the benefits of minimal social security are less than ten percent of Indian workforce, just the reverse of the situation in developed societies. Bhalla have not looked at the real problems of India’s welfare politics at the national and state level or from the broader perspective of Human Resources Development and Management, needed for a nation building. He simply pleads to improve the effectiveness of PDS and MGNREG schemes by preventing leakages through the Adhar route, initiated by UPA Government with lot of fanfare and then kept under suspended animation.

Bhalla, like the Adhar experts, looks at ICT as a tool for tightening of administrative controls from top and not as a tool for expanding and deepening of the democratic process. Evidently, he does not know about, what large sections of the working class in the informal sector of Kerala, could achieve by way of minimal social security with the help of tripartite labor boards and welfare fund schemes starting from the grass root level, even before the enactment of MGNREA. Even in implementing MGNREGA, left governments were far better than the others, with Tripura judged as the best performer among all states. It is not surprising that there is widespread opposition from state governments against the move to dilute the act.

3. Managing, natural resources energy and environment

Four chapters are dedicated to the use of resources; land (Chapter 10), water (Ch-11), energy (Ch-12) and environment (Ch-13). Barun S. Mitra and Madhumita D. Mitra, who have jointly authored the chapter on land, appear to be social activists with very little exposure on the ground realities related to India’s land resources. They want land to be an easily trade-able commodity with minimal of regulation and transaction costs. They simply share the impatience of big investors, especially the foreign ones, in matters related to land acquisition and management. They lament on the extremely slow pace of implementing the Land Acquisition Rehabilitation and Resettlement (LARR) Act of 2005 that entitles state governments to short-circuit several land related statutes for the speedy implementation of Special Economic Zones. In the name of deepening democracy, the authors even suggest settling of land and environmental issues directly with local governments, bypassing the authority of State Governments.

Tushaar Shah and Shilp Verma who have jointly authored the Chapter on water management are well known experts in ground water management. Both are Fellows of Integrated Water Systems and Governance Group of UNESCO-IHE, a UN institution operating from Netherlands and they were involved in the rehabilitation of irrigation systems in India as well as abroad. The chapter praises the great achievements in the management of irrigation pumping systems in Gujarat by investing Rs.1200 Crore in separate irrigation feeders with the objective of preventing theft.

Neglect of management improvements, governance reforms and institutional innovations are identified as the root cause for the poor management of India’s water resources. The article explores different models for the integrated ground water management in Eastern India consisting of UP, Bihar, West Bengal and Odisha and projects including a solar version of the same. The need for strengthening of Central Water Commission (CWC) is rightly emphasized for pursuing such adventurous ideas but, the authors fail to see the even more pressing need for capacity building at the state level by creating its subsidiaries at the state level and federating them into a central body.

The chapter on energy, by Sunjoy Joshi, a former IAS officer and climate change enthusiast, highlights the rapidly increasing energy dependence on imports. He points out that energy import constitutes a quarter of India’s current accounts deficits and puts the blame for the deteriorating situation on the so called half-dismantled planned economy. He makes some casual remarks on the problems of power sector which has turned extremely inefficient under the impact of quarter century of reforms dictated on from outside (3). He has nothing much of a solution other than leaving everything to the global market players and market forces.

In sharp contrast to the energy chapter, Chapter on “Manging the Environment” by Ligia Noronha of TERI has made several positive suggestions. She briefly reviews the prevailing unsatisfactory ecosystem management practices related our rivers, forests and coasts and then suggests a five point agenda for the next five years. She is of the view that, “the central government needs to apply the principle of subsidiary to the case of environmental management in India to ensure that different levels of government take responsibility for those dimensions of environmental quality within their jurisdictional boundaries, leading to better environmental management across the board….

….This would also allow for greater public voice in the design of programs, enable feedback for the fine-tuning of policies, and reduce the number of layers of bureaucracy, thus making clear jurisdictional responsibilities for enforcement and service,.”. These recommendations are sound, perfectly rational and scientific but calls for capacity building at various layers of Government and also democratic decentralization of administration as in socialist societies but, unlikely to be accepted by a bourgeoisie society dominated by big monopoly capital.

4. Burden of agriculture and poverty of Indian peasantry

Indian capitalists and their professional advisers look at the Indian peasantry as a burden and liability. The chapter titled, Revamping Agriculture and the Public Distribution System is the contribution of Ashok Gulati, who had held positions like Chairman of the Commission for Agricultural Costs and Prices. He looks at Indian agriculture mainly from the point of view of its capacity to contribute to GDP and comments with a sort of wry satisfaction: “With all these positive signs -overall production, trade, grain stocks, and investments in agriculture -the picture seems reasonably optimistic, and even rosy at times. But at the same time, one also hears about farmers’ suicides and farmers complaining about returns in agriculture not being good enough to keep them in agriculture.” Gulati takes a summary view that ‘considering the size of the country and and its diverse agriculture’, this ‘could also be true in some pockets.’

It is surprising that, eminent Indian economists like Ashok Gulati and others refuse to look at the common Indian peasantry as a deprived class under the bourgeoisie landlord regime that look at Indian agriculture mainly as a resource for earning foreign exchange needed for its own comfort and expansion. They oppose the subsidized supply of irrigation, power and fertilizer to farmers and insist on the immediate switch over to direct transfer system for subsidies, through the Adhar, an untested high cost system based on imported computer hardware and software.

Mounting inefficiencies and anomalies that have developed in the administration of the support systems, including technology development and R&D, mostly managed by Central Government, with very little role or participation of state and lower level governments and farmer collectives, are hardly of any concern for these experts (4). The article makes a casual reference to the greatly successful Amul cooperative model in Gujarat but does not even mention on the success of cane sugar cultivation in Maharshtra on a cooperative basis. There is no mention on the prospects of repeatability of these models to other crops and regions.

The chapter have failed to take a view on resisting the imminent threat of WTO treaty on farm products. Despite the advice and media campaigns by India’s bourgeoisie experts, the new BJP Government of Prime Minister Modi have so far refrained from signing the WTO treaty on farm products, which would have opened the flood-gates of cheap farm exports from OECD countries, supported and subsidized by their well organized R&D and technology inputs provided at the national level. (5)

5. Urban development and the transport sector

Somik Lall and Tara Vishwanth who have authored the chapter on Managing Urbanization are experts from the World Bank, who have studied extensively the urbanization problems of third world countries. This chapter has made a realistic assessment of urban development in the country and examines the present situation, based on the performance of the $24 billion Jawaharlal Nehru National Urban Renewal Mission (JNNURM), launched in 2005.

JNNURM, with massive inputs from multilateral agencies and touted as the panacea for our urban development problem, is now facing a serious crisis according to these World Bank experts: “The lack of municipal capacity, allowing only a minimal role for local bodies in preparing city development plans or detailed project reports, was noted” by the latest appraisal report in May 2011 (6). There is an urgent need of large capacity building and augmenting of manpower resources at various levels in order to overcome these problems..

Obviously this could not be done because of the overriding conditions on cutting down the size of Government and reducing staff strength and staff expenses by state governments. Most of the JNNURM investments like its KSRTC experiment in Kerala have failed to achieve their basic objectives. JNNURM assuming the responsibility of centralized bus purchases and similar reforms make little sense. Authors suggest more detailed studies on the failures of JNNURM in achieving its declared objectives. The basic problem appears to be the absence of appropriate state level organizations to work with the JNNURM of Central Government.. .

Lopsided policies in the transport sector, have further worsened the slum situation in towns and cities. Rajiv Lall, noted columnist in business journals and Ritu Anand who was the Chief Economist of IDFC have written the chapter on Modernizing of Transport Infrastructure. It argues for the speedy expansion of National Highways and Indian Railways through the PPP route with little or no involvement of lower level governments. Experiments with the PPP route were a failure all over the world and India is no different. Contractual and regulation problems faced by the PPP route in the country are discussed in some detail in this chapter and it appears there are too many of them for which there are no easy solutions. Roads other than NH, waterways, coastal shipping, ports and shipping are outside the scope of this chapter.

6. Crisis in the manufacturing sector

Chapter-4, titled Revisiting Manufacturing Policy is authored by Rajiv Kumar, well known Indian economist and author of several books on Indian economy: It has not attempted any sector-wise or sub-sector wise analysis of the totally disappointing performance of India’s manufacturing industries, under the quarter century old reforms. To quote from its opening page:”With a gross value addition of $226 billion, India’s manufacturing sector looks tiny when compared with China’s at $1.9 trillion. Consequently, its share of global manufacturing is a mere 2.2 percent, compared with China’s 18.9 percent. Employment in absolute terms has declined in the formal manufacturing sector from 55 million in 2004-05 (12.2 percent of India’s total workforce) to 50 million in 2010 (10.5 percent). Share of manufactured exports in India’s total exports has also declined from 74 percent in 1991 to about 61 percent in 2011-12.”

This is not surprising: Reforms had removed, at one stroke, all quantitative restrictions on the import of industrial goods and technology: Instead, a calibrated tariff regime was put in place, aimed at, (a) liberal import of technology and capital goods at very low customs duty, (b) easy import of intermediate goods and components at fairly low tariff and, (c) discouraging import of consumer goods and consumer durables, by enforcing very stiff import duties. This sort of import regime was desired by our big capitalists and their associations and it was progressively implemented during the nineties.(7)

Impact of this calibrated liberalization on Indian industry has not been fully studied yet, as revealed by Rajiv’s article. Public Sector Units like BHEL, SAIL, MAMC, HEC, HMT, ITI, BEL, Shipyards and others serving the capital goods sector were the first hit by the new regime. Highly skilled employees were offered VRS or simply retrenched. Reforms blocked or delayed their expansion-diversification schemes. Tens of thousands of small and medium entrepreneurs who had built the capability to serve the capital goods industry sector closed shops.

R&D institutions like the CSIR, ICAR, ICMR and others which were already underutilized due to their foot-lose relationship with agricultural, health, defense and infrastructure sectors were pushed into irrelevance. The budding electronics manufacture was simply wiped out. Industries manufacturing consumer goods and consumer durables having technology collaboration with leading foreign companies had a big boost initially but, collapsed as their principals decided to push their own brands and products in the vast Indian market.

Reasons for the crisis in manufacturing industry are far more basic and fundamental and the measures suggested by Rajiv Kumar, such as diluting labor laws, improving administrative efficiency etc are unlikely to bring any results. Screw driver technology has virtually taken over several sectors of Indian industry, and that is why India does not have a healthy automobile industry, even though its roads are flooded with cars and bikes of all makes and brands.

China presents a different picture because, its industry was encouraged to serve the national economy and develop itself by serving the domestic needs of modernizing its own agriculture and basic infrastructure like electric power, railways, shipping, telecoms etc including national defense and security. The so called investment and export led growth, forced on our country by global advisors and blindly practiced by it for the last quarter century, has proved to be disastrous and destructive for Indian manufacture. Instead of telling this real story, Rajiv Kumar goes round and round repeating the need for developing a vibrant manufacturing industry for the country!

7. Health education and employment

India presents a confusing picture on the health front. True, the best and world’s most expensive health care is available in India provided one has the purchasing power. In Chapter 7, Confronting Health Challenges, AK Shiva Kumar makes some international comparisons between India and other countries, including SARC countries: “We find that health outcomes in India are far from equitable. Differences in morbidity, mortality, and nutritional status linked to differences in socioeconomic status caste, class, gender, and geography persist ….. It is a little-known and sad fact that health conditions in India are similar in some respects, and even worse in others, to those prevailing in sub-Saharan Africa….Close to 43 percent of children under five in India are moderately or severely underweight; the proportion sub-Saharan Africa is 21 percent…India’s health performance is particularly disappointing because it has fallen behind Bangladesh and Nepal on many health indicators, despite a higher per capita income and two decades of rapid economic growth.” (8)

It is clear that building super specialty hospitals with five star facilities in the corporate sector is not the solution to overcome this backwardness: Their contribution to improving public health care is marginal and consume bulk of the critical resources by way of expertise and manpower. Moving towards a system of universal health care is the only solution and Shiva Kumar points out that; “Almost every country in the world that has achieved universal health coverage or is working toward it has done so through the public assurance of comprehensive quality public health care for all. Though treatment is nearly free in India, only 22 percent of the population in rural areas and 19 percent in urban areas access government facilities for outpatient care.” (9)

Improving the quality of public health-care system and winning over the confidence of people is seen as a near term possibility by Shiva Kumar: He pleads for an attitudinal or cultural change as the first step for moving toward a system of universal health coverage: “Indian society, including both the central and state governments as well as the influential middle class, should more firmly embrace the concept of universal health coverage.” (10). The influential middle class as well as the English speaking intellectuals may not get enthused by such counsellings: However, he has put forward valuable suggestions for a joint initiative of Central and State Governments for building up a credible public health care system for the country, that need serious consideration by the working class movement as well.

Lavish Bhandari who has done extensive work on inequality and socio-economic performance at the level of states, districts and cities of India is not a specialist in education by theory or practice. He leads “Indicus Anlytics, India’s economics research firm” and has Phd from Boston University in economics.

After a detailed review of India’s educational system as it emerged after independence, he concludes Chapter 6 titled, “expanding education and skills”, with a totally pessimistic note: “The absence of an overall vision is the primary flaw of the education regime in India today….At the primary and upper primary levels, improved quality can best be achieved though greater community participation and parental involvement in overseeing delivery and content. At the secondary and tertiary levels also he suggests fundamental revolutionary changes and believes that it could be done through action by the central government, and none requires any changes in the laws” (11).

This is a simplistic approach, considering the cultural and linguistic diversity of India. Central Board for Secondary Education (CBSE) in Delhi, directly administered by Central Government, was responsible for the policy distortions that have accumulated in India’s education system, during the past few decades: English speaking elite classes have used CBSE for the virtual shift-over to English medium special schools from the traditional system of neighborhood schools. This was a silent counter revolution that has simply redefined education in our country as a passport for migration in search of foreign jobs. Takeover of university and professional education by the corporate sector with the help of the English speaking intelligentsia was the next logical step. Brain drain and skill drain have increased; a major impediment to economic progress. (12).

Chapter 5 by Omkar Goswamy is on job losses in the national economy and the future manpower requirements for supporting specified GDP growth rates. He is a manpower consultant operating from Delhi, and Chairman of CERG Advisory, a corporate consulting firm.

Goswamy’s comments on the so called labor market flexibility in the Indian context is rather interesting: “Despite the existence that prevent unfettered entry and exit of labor in the organized sector, the fact of the matter is that India has a reasonable labor market flexibility. For one, the vast unorganized sector, which account for more than 90 percent of India’s 470 million workers or there abouts, has absolutely no entry or exit barriers Moreover, the legal right that allegedly prevent extra hiring in the organized sector such as sections 25(N) and 25(O) of the ID Act 1947 or provisions of the Contract Labor Act 1970-are often overstated.” (13)

In the projections for future employment scenario in the country, no shift whatsoever, from unorganized sector to organized sector seems to take place. And, Goswamy even concludes that if the average growth rate hovers around 4.5 to 5.0 percent per annum, India will never generate a demand for labor even vaguely in line with its future supply. Tables, he had created and presented, illustrate that the additional job creation needed by Indian economy for a 7 to 7.5 percent GDP growth will be only an insignificant fraction of the total workforce. (14)

It means, around 90 percent of Indian workforce will continue to work in the unorganized sector as of now and there is little scope of reversing this ratio and getting on par with the developed countries even by 2040. This raises the most fundamental question: how, from where and for whom Indian reforms should begin?

8. Rule of law and quality of governance

Chapter 14 and Chapter 15 are attempts to evaluate the status of rule of law in the country and the quality of governance by Indian state: The first one titled “Strengthening Rule of Law”, was jointly authored by Devesh Kapur a Chemical Engineer from Banaras Hindu University tuned expert on Indian diaspora and Milan Vaishnav, an associate in the South Asia Program at the Carnegie Endowment. The next one, Correcting the Administrative Deficit, is by Bibek Debroy, Professor at the Center for Policy Research New Delhi and co-editor of the book under review.

The chapter on rule of law points out the numerous basic deficiencies in India’s legal system, starting with its antique statutes and ending with lack of autonomy and accountability. Indian courts hardly follow modern management systems and according to the authors, “the clogged, dilapidated plumbing of Indian courts has led to multiple efforts to create alternative systems”. India with 1225 police officers per million population is one of the least policed country in the world. They take note of the cultural gap between a tiny, very selective Indian Police Service (IPS) and a large, ill-trained constabulary under the state governments and stress the urgent need for organizational and structural changes.

The chapter on administrative deficit has repeated the need for decentralization and transforming of India’s highly centralized administration into a federal entity, expressed in most other chapters of the book, barring the one on education, where it was needed most. Debroy argues that, unwarranted decision-making has concentrated in New Delhi, leading to widespread corruption and scams, and this can be brought down only through decentralization of the administration. According to him, neither the attraction of big pay scales nor the threats by way of vigilance inquiries have discouraged the corrupt bureaucrats and ministers. The need for central authority is conceded but it appears that India is excessively centralized even compared with China.

Debroy argues that consultations at the time of national planning or inter-ministerial meeting etc are no substitute for “decentralized governance which consists of political decentralization, administrative decentralization, fiscal decentralization and economic decentralization. Decentralized governance could also extend to the efficient provision of goods and services and optimal levels of governance …… Decentralization also implies the devolution of authority within individual states and the empowerment of the third, more local tier of governance ; we will focus on central-state relations.”. (15)

Debroy had concluded that management of central-state relations should be one of the most important agenda items for the new government. Toward the end of the chapter, he recalls briefly the outcome of past debates on central-state relations and argues that these could be the long term goals because implementing them may call for constitutional amendments (16). Thus, after building up a fierce argument in support of decentralization and federalism, he settles down for a fairer deal by the current finance commission.

9. In conclusion

Not only Debroy but also most other chapter writers have pleaded for decentralizing of administration and or reorganization of the Indian state on federal lines. Central Government had amassed too much of unwarranted power during the early years of planning, as explained by Debroy.

JP movement of the seventies had challenged this trend, demanding a harmonious blend of jana-sakti and raj-sakti. Left had looked at India as a multinational country: A federal Government at the Center, decentralized administration and more autonomy for State Governments were the core part of their political ideology. Federalism was the very backbone of regional parties. Rajiv Gandhi had even amended Indian constitution for creating a three tier Panchayati raj, which could not take off. BJP has explicitly admitted in its latest election manifesto, the urgent need for revamping of central-state relations: It has, now, topped up this with a promise of cooperative federalism in the Presidential speech (17).

However, there are the vested interests, who are scared of upsetting the apple cart: The big business in India, supported by global finance and large sections of our intellectual classes, especially the English speaking intelligentsia, who are quite comfortable with most of the powers, financial, economic and political, concentrated around Delhi and the national parliament.

The book, Getting Back On Track, hardly gives any direction for the modernization of India’s agriculture, for the development of its industry and infrastructure or building up a system of governance that suits the country of continental dimensions. Its sponsors are the agents of global finance capital, who have chosen Ratan Tata as a collaborator, in order to wean away the people of India from the Gandhi-Nehru tradition of Swaraj and Socialism and a development model based on technological self-reliance. They occupy several important tables in the Yojana Bhavan but would love to have it demolished or demobilized at the earliest.

And fortunately, compared to the years of freedom struggle, Indian working class and their trade unions are far better equipped today, intellectually as well as organizationally: They are sure to see through the book and its contents and use them for advancing their own struggles against the tyranny of global capital.

Notes and references

1. See web site http://www.ciep.fr/sites/default/files/atoms/files/plaquette-ciep-en.pdf
2. This is based on the ‘Report on conditions of work and promotion of livelihood in unorganized sector brought out in 2008, by the National Commission for small enterprises in the unorganized sector’. This report is an eyeopener on the so called Welfare State theories about India. Five Year Plans, Planning Commission and Public Sector Enterprises were meant as instruments for protecting the national economy from neocolonialism and not for building welfare capitalism or socialism. .
3. World Bank Report June 2014 by: Sheoli Pargal and Sudeshna Ghosh Banerjee http://dx.doi.org/10.1596/978-1-4648-0233-1
4. For a detailed analysis of this mismatch, see my article “Indian Agriculture: Search for Patriotic Alternatives”, in Perestroika Glasnost and Socialism, published by Partridge India, 2013
5. Now there is a India-US understanding to defer the issue indefinitely
6. See p-168 of the book under review
7. My article ‘The Public Sector in India’ published in the Marxist of Dec 1988 had pointed out the thrust and direction of India’s public sector investments. They were addressed to the core sector and served as the technology generators of the nation and helped to retain its economic independence in good measure. The reforms instead of further building on this skilled manpower and expertise resorted to its wanton destruction through VRS and closures. Big capitalists had preferred the consumer goods and consumer durable sector with foreign collaboration which were far less risky and enjoyed a highly protected market.
8. See p-123
9. See p-128
10. Page 129
11. Page-118
12 See my blog: CBSE for equity and excellence? : https://kvijaya40.wordpress.com/
13. Page-96
14. Tables 2and 3 on page-94 of the book
15. Page-273
16. Page-274
17. Blog: Cooperative federalism of Modi Government https://kvijaya40.wordpress.com/

22-1-2014/EOD

COOPERATIVE FEDERALISM: INDIA NEEDS A FEDERAL RAIL BOARD

INDIA NEEDS A FEDERAL RAIL BOARD
By Engr. K Vijayachandran F.I.E

 

The first rail budget of Narendra Modi Government has disappointed the people and of most Indian states. Though the Prime Minister passionately intervened through visual media and expressed his solidarity with his rail minister, Sadananda Gowda, market sentiments stuck to the negative note: Shares registered an average loss of 3.5 percent in a single session.

It appears, the Railway Board , the Rail Ministry like most other central ministries and even the PMO continue to be infested and dominated by foreign financial consultants and agents of multinational corporations, as in the UPA days. Delhi reality is that, even before a Central Minister and his personal staff settle down in the new office, these experts and advisors are ready with policy papers and policy announcements.

Confluence of opinions on government budgets and policies by the lay public on one hand and market sentiments on the other, as in the case of IR Budget 2014, is rare and rather unprecedented. Possibly, the market down-slide was speculative and got sparked off by the unreasonable hypes, triggered by the regime change. However, the reasons for negative reaction from the general public were genuine. People were expecting announcements of new schemes, introduction of new trains, and for the expansion of rail systems that were long long overdue.

Census 2011 has counted a total of 598,110 census villages and towns in the country and there are only 7172 railway stations in the country. This means bulk of our population centers are unlikely to have a proper rail link. After the British left, only only 11,000 route KM has been added to the Indian rail system. Most this 20 percent increase was effected during the first four decades of national independence. During the twenty five years of economic reforms; annual addition was only around 100 KM or at the best around some ten new railway stations per year.

In fact this new additions did not even compensate for the closure of rail stations in the name of financial losses. With the stress on express and super fast trains and neglect of passenger trains, a large number of rural railway stations have a deserted look today and are facing closure. At the same time. many of the large stations look dirty, ill-maintained, user-unfriendly and overcrowded, despite the best efforts of the employees whose strength was being arbitrarily cut down at an average rate of 17,000 per year during the past two decades.

Planned retrenchment was resorted to on a large scale on the plea that, IR was a losing concern and has outgrown the real social needs. But rail penetration in the country continues to be far below the international experience, on the basis of geographical area as well as population. India has 60 route km of railway per million people, and 20 route km per 1000 sqkm of land area. This is far below that of USA (803/22), France (603/63), Germany (520/117) or Japan (192/63). China was far behind India in rail penetration at the time of its revolution, but it has more than doubled its route rail length during the past sixty years to around 65,000 KM.

Despite the cutting down of employee strength and slow down of network expansion during the two decades of economic reforms initiated in late nineties, IR had continued to increase its output in terms of passenger as well as goods traffic. Number of rail passengers crossed the 8.2 billion in 2011-12, a 6.4 fold increase in six decades, and in terms of passenger-km the increase was nearly 16 times. In goods traffic, IR was concentrating on long-distance bulk goods and its output increased to 667 billion ton-km, an 18 fold increase during the same period. (1)

With its 13 million skilled employees in 16 zonal railways, 8 manufacturing units, 12 public sector undertakings and a dozen or so service organizations, IR is mammoth business organization with an annual turnover of over Re. 123,000 Crore. It is a major resource base for the country with regard to engineering and technology development. Its potential to contribute to the economic development of the country is substantial even outside of rail development. But this is not being put to use, even for the expansion of rail network, as needed and desired by the people Indian states and their elected governments. IR budget presented in the Indian Parliament two days ago is an open confession of this sad reality.

It is now proved beyond reasonable doubts that, the economic reforms and structural adjustments forced on the country as part of the globalization drive, was an utter failure and a disaster in the case of IR. Starting some two dozen express and super-fast trains or opening up of ultra-modern rail corridors with bullet trains through the FDI and PPP routes, will not solve the basic problems facing IR. Only way to reach out the half a million Indian villages through a national rail network is to re-build IR on a federal basis, as visualized in my earlier blog (2).

Modi Government could have used the occasion of presenting its first rail budget as an initial step toward implementing the concept of Cooperative Federalism propounded in the Presidential address of Pranab Mukherjee (3). Instead, it has taken to the surrealistic game of flaunting toys like bullet trains that makes little sense in the current national context.

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References:
1. Calculated based on data from IR website: http://www.indianrailways.gov.in/railwayboard/
2. Paper titled, “Indian Railways: In search for a New Vision”, published in my book, Perestroika Glasnost and Socialism ISBN 978-1-4828-1353-1, published by Partridge. The book examines the possibilities of improving the efficacy of Indian State by reorganing it on federal lines based on the experience of USSR. The paper was republished as a WordPress blog: https://kvijaya40.wordpress.com/2014/02/13/indian-railways-go-round-and-round/
3. See my just previous last blog  on Cooperative Federalism

COOPERATIVE FEDERALISM OF MODI GOVERNMENT

 

CENTRE-STATE RELATIONS AND COOPERATIVE FEDERALISM
By Engr K Vijayachandran F.I.E

Views of Prime Minister Modi on the re-defining of Central-State relations are seen reflected in the presidential speech of Pranab Mukherjee: “India is a federal polity. But, over the years, the federal spirit has been diluted.”.

In order to correct the situation the President had promised to “re-invigorate fora like the National Development Council and the Inter-State Council” and introduced a novel concept of Cooperative Federalism, possibly intended to deepen the economic relationship between State and Central Governments. He did not elaborate on how the concept will translate itself and help to rectify the distortions.

Our constitution makers had looked at the development and upkeep of basic infrastructure, physical as well as social including language and culture, as the joint responsibility of Central and State Governments. For a newly liberated multinational country of continental proportions a federal type governance was most appealing.

However, roles of state and lower level governments, as well as those of Inter-State Council, National Development Council, Planning Commission and other policy making institutions at the national level, built up during the early years of national independence, as well as that of Loksabha and Rajyasabha, were drastically eroded in recent years, thanks to the highly authoritarian economic reforms.

Central Government, along with its elaborate Committee of Ministers and PMO, had virtually taken over the sole responsibility for infrastructure development, with the help of foreign and Indian monopoly capital, leading to numerous scams of national shame. Even the Planning Commission was charged of breeding crony capitalism. And, despite massive doses of privatization and foreign direct investments and experimenting with PPP concepts, Indian reforms have failed to deliver results.

Experience of India’s Power sector, where reforms had an early start, is typical: Indiscriminate import of equipment and systems are causing costly breakdowns in our national and regional grids. Reforms have inflated capital costs and further increased the financial losses of State Electricity Utilities. They have turned totally dysfunctional: Uninterrupted quality power at lowest possible costs is not their motto anymore. (1)

Electricity generation using imported fuel is on steady increase, while our own fossil fuel reserves remain under-utilized. Role and functions of Central Electricity Authority (CEA), the federal organization that was in charge of power sector as per the 1948 Electricity Act, was taken over by Power Ministry and virtually re-assigned to international consultants in the pay role of global capital and MNC monopolies.

Prices of electricity are increasing all over the country and its quality deteriorating: Solution lies in reversing the reforms initiated in the early nineties for force-opening up of the national market for electricity as well as power equipment. Federal character of the power sector need to be urgently restored in national interests.

In the telecom sector, the two legged policy of having state-wise circles and centralized technology development by Central Public Sector Units was given up, in order to force open the national telecoms market. Net result is abject dependence on imports in the telecoms sector, not only for hardware and software needed for the modern communication systems but even for their maintenance. The only silver line in the cloudy communication system are the great achievements in space communication technologies developed by ISRO, despite imperialist boycotts.

Reforms had struck telecoms sector, when the ICT revolution based on microchips and Internet technologies started its sweep. Instead of mobilizing the technology resources of central and state public sector organizations as well as academic R&D institutions market oriented solutions like state wise auctioning of spectrum rights was resorted to by the Center leading to massive scams and corruption.

It is time that we restructure India’s telecoms sector on a federal basis with an expanded role assigned to central and state public enterprises. Does it fit in with the concept of Comparative Federalism of Modi Government?

Indian Railways is, possibly, most suited for exploring and enriching the idea of co-operative federalism suggested in the Presidential speech: IR is a leviathan insensitive bureaucratic organization, presided over by a cabinet minister, supported by one or two ministers of state, and then the Railway Board, its Chairman and half a dozen board members etc etc, and all connected up in series and in parallel (see-https://kvijaya40.wordpress.com/2014/02/13/indian-railways-go-round-and-round/ ).

There are fifteen zonal railways, each administered by a General Manger, who looks after the construction and operation of rail lines and related systems of the zone. The nature and number of complaints with regard to their performance indicate, that they will perform far far better, if IR is organized state-wise, as in the case of P&T, BSNL, DD, CEA and good old Electricity Boards etc etc, and several other central government functions.

It will be even better, if these state-wise zonal organizations are converted into public sector undertakings, with equal shareholding by IR on behalf of Central Government and then by the concerned State Governments, as in the case of Delhi or Chennai Metro. A full fledged rail minster and a skeletal rail department in every state, for servicing and supporting this joint enterprise will greatly enhance the policy planning and management capabilities in the country with regard to rail development.

This sort of structural reforms will bring the administration and management of our on-rail resources in the country closer to the people, and their elected Governments at the state as well as lower levels. Rail penetration continue to be very low in our country and only very few towns and villages were connected to the rail system after national independence.

Water tight division of responsibilities between central and state governments and the three lists annexed to Indian constitution, viz Central, State and Concurrent are a colonial legacy, inherited from imperialists. An earlier blog of mine, ‘Third Front and RE-Envisioning of Indian Unity’ (https://kvijaya40.wordpress.com/2014/02/16/third-front-should-re-envision-indian-unity-12/ ) examines the several areas where economic relationship between Central and State Governments could be immediately deepened within the existing constitutional framework, by taking the route of cooperative federalism.

Cochin International Airport Ltd (CIAL) virtually owned and managed by GOK, erroneously quoted as a PPP model, is a splendid example for the potential of Co-operative Federalism. Air Kerala the dream project of State Government and a project of great relevance to the regional economy could take off instantly, provided it is promoted as a subsidiary of Air India. And the much talked about Palghat Rail Coach factory will roll out immediately, if it is re-envisioned as a JV of Kerala and Indian Railways.

Like IR, there are several CPSEs and Central Government organizations which have distinguished themselves as technology generators for the national economy. I had the good fortune of brokering a deal in 1987, between GOK and ISRO: Kerala High-Tech Ltd (Kel-Tech) promoted with Dr, Kasturirangan as Chairman is today, a proud partner in BrahMos Aerospace, an Indo-Russian Joint Venture (www.brahmos.com) (3).

Why not put the concept of Co-operative Federalism on the fast tract, instead of PPP that has proved to be a virtual non-starter?

********

 

Notes and references:
1. Power situation worsens, Government looks helpless: page 139, article by author, Perestroika Glasnost and Socialism ISBN 978-1-4828-1353-1, Partridge 2013
2. Today, India is mostly dependent on imports from China for its telecoms hardware and software Indian telecoms industry has virtually lost its lead to the Chinese thanks to our mindless reforms.
3. This totally non-conventional project was the brainchild of Engr. Sudhakar and a dozen of his ISRO colleagues. It caught the imagination of the Communist leader KR Gowri, the then industries minister of Kerala. With the color of Government changing the project did not have a smooth sail but managed to survive several layers of pettiness spanning over a quarter century thanks to its technological relevance.

 

Indian Railways go round and round

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INDIAN RAILWAYS: IN SEARCH OF A NEW VISION*

(Reprint of an article written in response to the rail budget two years ago)

In December 2009, Mamata Banerji presented in the Indian Parliament the Vision 2020 document for Indian Railways (IR). In the introductory part of this document she had stated: “When I was the Railway Minister last time (1999-2001), Indian Railways was the second largest railway network under a single management in the world in terms of route length, after the Russian Railways. It has now slipped to the third position. Our Vision is to put it on the road to regain the Number Two position in the coming decade and thereafter gain the Number One position in the subsequent decades not just in size, but in every other significant respect.”

 

This, indeed, was a grandiose vision, not only about IR but also about the Minister herself. Within two years, after presenting her vision document, Mamata shifted to Kolkata and since then, she has been ruling over IR from the writer’s building, with the help of her nominee railway minister, Trivedi. Mamata is now unhappy over her nominee’s performance: First, he did not do enough for West Bengal and secondly he had proposed a seemingly unpopular revision of rail tariffs, in consultation with her arch rival, Pranab Mukherjee. The good old critics of Mamata from left, right and center, now have their last laugh over her vision document,

 

Indian railway ministers, as a rule, play populist games and try to do something extra for their native states. Mamata was no exemption, despite her tall talk on Vision 2020. Foreign experts and consultants have made dozens of proposals for reforming IR, as part of restructuring the national economy. However, they remained on paper, like the Vision 2020. The only agenda that got implemented, related to staff reduction: As a result, IR suffers from under-staffing today, in terms of quality as well as quantity: Present staff strength is around 14 lakh, two to three lakh less, compared to two decades ago. Last year, 80,000 new hands were recruited anew, and the current budget targets inducting one lakh new employees.

 

Manpower in IR was growing pretty slow even in the past, compared to its galloping output. True, with higher train speeds and better technologies, labor productivity increases. However, the historical data, presented in the chart “Indices of Growth”, show that, there was a 12 fold increase in output, in terms of passenger and goods traffic, with human resources stagnating or increasing only marginally. Not only staff strength but also the route kilometer length of IR has registered only a marginal increase after national independence. In Kerala, we had experienced a big improvement in rail traffic, but that is not the case with most other states. Very few Indian villages and towns in India got connected to the rail after the British left the subcontinent.

 

Rail penetration in the country continues to be far below the international experience, on the basis of geographical area as well as population. India has 71 route km of railway per million people, and 19 r-km per 1000 sqkm. This is far below that of USA (803/22), France (603/63), Germany (520/117) or Japan (192/63). China was far behind India in rail penetration, but it has more than doubled its route rail length after independence to around 65,000 KM.  It may be noted, however, that India was making large investments in doubling of lines as well as in gauge conversion. IR could increase the productivity of its manpower with the help of such improvements in track and related communications systems, as well as higher capacity traction equipment, as evident from the index chart.

 

Express and long distance trains as well as suburban trains were the major contributors for the 12 fold increase in the output of IR with relatively fewer employees. Quality of service as well as law and order on the tracks and stations were the major causalities in this blind pursuit for higher and higher worker productivity. A railway employee was a respected citizen during British days and even his modest quarters were looked up on with respect by common people. All these have changed now and railway employees were considerably devalued, socially, within the span of a generation.

 

IR has succeeded to keeping up its relatively good safety records; however crime rates were steadily increasing in recent years. People in general are unhappy with IR, despite its lower costs and more comfortable travel in comparison with alternatives. Dirty coaches, over-crowded and ill-maintained railway stations with extremely poor civic amenities, and not-so-polite employees whose services are strictly rationed, are the order of the day. Indian railway stations were noted for their safety, security, dignified environment, neatness all round and even good quality tasty food.

 

Plenty of working people retrenched by IR, as non-essential staff: with the stress on long distance express trains, neglect of passenger trains, a large number of our railway stations bear a deserted look, today. In the good old days, even the wayside stations were offering parcel booking services to anywhere in India, and had certain minimal go-down facilities. They have mostly disappeared, now. Railway stations in our rural districts are dying a natural death: their assets and facilities could be of use and economic relevance to local populations, if they are salvaged and properly maintained.

 

Indian Railways were created out of the numerous small rail systems, constructed by British East India Company, and the numerous other companies floated by foreigners. This imaginative PPP adventure of eighteenth century had set up the first rail system in the country in 1853, just four years before Sipoy Mutiny or the First War of Indian Independence. These decentralized initiatives were close to the local communities and local environment in their own ways and for their own reasons. There were numerous mergers and acquisitions of these small ventures, later, and spanning the two centuries: IR and its organization in the present form had evolved over the last six decades of national independence.

 

IR, as on now, (see Chart) is a complex organization and provides work space for some 14 lakh employees: They work in numerous enterprises, organizations and departments with varied objectives, occupations and assignments that are of great relevance to the national economy. Thanks to its historical background, IR happens to be the father and mother of not only most engineering disciplines in the country, but also of numerous non-engineering professions such as accountancy, project planning, economics, project financing, and even information technology. IR has contributed to the self-reliance of our national economy in a big way, and is a major resource for industrial development.

 

IR looks like a leviathan and is a bureaucratic organization, presided over by a cabinet minister, supported by one or two ministers of state, and then the Railway Board, its Chairman and half a dozen board members etc etc, and all connected up in series and in parallel. There are fifteen zonal railways, each administered by a General Manger, who looks after the construction and operation of rail lines and related systems of the zone. The nature and number of complaints with regard to their performance indicate that they will perform far better, if re-organized state-wise as in the case of P&T, BSNL, DD, CEA and Electricity Boards etc, and several other Federal Government functions.

 

It will be even better, if these state-wise organizations are then converted into public sector undertakings with equal shareholding by IR on behalf of Central Government and then by the concerned State Governments, as in the case of Delhi or Chennai Metro. A full fledged rail Minster and a skeletal rail department in every state, for servicing and supporting this joint enterprise will greatly enhance the policy planning capacity at the state level, with regard to rail development as well as planning of the transportation sector. As on now, the state governments have very little expertise in these sectors. This sort of basic reforms will bring the administration of our massive on-rail resources, closer to the people, and the elected Governments at the state as well as lower levels.

 

Production units of IR under the General Managers, Public Sector Units like CONCOR,  CRIS, IRCON, IRCTC, RITES, IRFC, as well as RDSO, as well as the R&D organization of IR should continue their autonomous existence as on now, and they should expand and diversify as necessary. Central Government and the Railway Board will be better placed to prioritize and monitor the work programs of these more important strategic organizations from a national perspective. They could effectively monitor the performance of the railways at the state level, but will be relieved from attending to minor responsibilities related to their day to day operations. IR will enter a phase of centralized policy making and decentralized administration: It has all the systems and procedures as well as checks and balances needed for this transformation, quickly and effectively. No external consultancy, Indian or foreign, will be needed for the purpose.

 

State governments will be only happy to share the responsibility of rail development in the country. Central Government could play its visionary role far more effectively. Business will be rewarded with a world class rail infrastructure. Workers and trade unions may not raise objections, so long as their rights and perks are protected. What is needed is a change in our mind-set to accept the participation of State Governments in the management of our national rail network. That sort of participation will be far more desirable, practical, and productive than all sorts of PPP models that are being designed and contemplated, now.

 

* Published in the Passline of March, 2012.

 

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