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Growth may pick up, but concerns remain
India may well clock the highest growth rate globally, but more is needed to create jobs and reduce poverty
With more than one quarter of the year and two months of the monsoon over, it is time to take a look at what the whole year is going to be like. Are there signs of recovery? If there are, are they robust? What are the short- and medium-term concerns of the country?
Sectoral trends
The monsoon has been somewhat below expectations — the overall rainfall deficiency was 3% (as of July 25). Though it may seem negligible, it has to be noted that there were 11 meteorological divisions (of a total of 36) which were deficient. The area sown has come down. Rice-producing Bihar, for instance, has been severely affected. However, the monsoon can pick up. There is no consensus on the future behaviour of the monsoon. Agricultural growth may at best be equal to what it was last year — 3.4%.
The services sector may perform better because public expenditure will be maintained at a high level. This is to be expected, as this happens to be the year before the elections. As for the industrial sector, we have data for the Index of Industrial Production (IIP) for the first quarter. They show substantial improvement over the corresponding period of the previous year. It is important to remember that the correlation between the IIP and national income data on manufacturing is poor. Some sectors (automobiles and railway freight traffic) in the first quarter have done well. The combined revenues and profit of 370 large companies have shown better performance in the first quarter, even though they are on a weak base. The problems of the goods and services tax (GST) may have been largely overcome, but it is still a work in progress. A pick-up in the growth rate in the manufacturing sector is likely.
Looking at the overall GDP, after several quarters of low growth, there was a strong pick-up in the last quarter of 2017-18. If this momentum is maintained, the growth rate (2018-19) will certainly be above 7%. How much higher above 7% will depend on a number of factors. International financial institutions have forecast a growth rate of 7.3%. The Reserve Bank of India (RBI) expects it to be 7.4%. However, we need to take note of certain concerns that can come in the way of faster growth.
External environment
The external environment is far from reassuring. Trade wars have already started and can get worse. The U.S. has raised duties on several products such as steel and aluminium, and on certain products imported from China. In turn, China has retaliated. India has also been caught in this exchange. It is difficult to forecast how much worse this will become. Besides these, there are country-specific sanctions such as those against Iran, which have a direct impact on crude oil output and prices. India benefited from the fall in crude prices earlier but this position has reversed. There has been some lull in crude prices. As a net importer, India’s balance of payments can take a beating if crude prices rise again. India’s current account deficit was as low as 0.6% of GDP in 2016-17. It rose to 1.9% of GDP in 2017-18, mainly because of crude price rise. India’s trade deficit has always remained high. In 2016-17, the merchandise trade deficit was 4.8% and rose to 6% of GDP the next year. The answer lies in raising our export growth which has shown severe swings in recent years. It is partly a reflection of world trade. The fall in crude oil prices had also affected our export growth earlier. In 2017-18, India’s export growth rate was 9.78%. There is an inescapable need to raise our export growth rate.
In this context, we need to ensure that the rupee does not appreciate in real terms. Despite a current account deficit, India’s rupee had remained strong because of capital flows. With a rising trade deficit and some outflow of capital, the rupee has depreciated. This is not unnatural. The RBI should act only to ensure that the adjustment is smooth and there are no violent fluctuations. But what is really important is to make our exports competitive. The exchange rate is only one element. Improved efficiency in production and better infrastructure are equally important. Maintenance of domestic stability also plays a key role. Over the medium term, we need to search for an alternative fuel.
Reviving the banking system
The banking system continues to be a source of concern. The RBI’s latest report on financial stability shows that the gross non-performing asset (NPA) ratio of scheduled commercial banks rose to 11.6% (March 2018). The ratio for public sector banks was 15.6%. This is indeed a very high level of NPAs. Some part of the increase is also due to the adoption of a more rigorous definition of NPAs. The high NPA level has a dampening effect on the provision of new credit. In fact, credit to the industrial sector has slowed down considerably. Recapitalisation of banks has become an urgent necessity. Of course, this will impose a serious burden on the fiscal position. Many suggestions, which include asset reconstruction companies, have been made to resolve the NPA issue. A quick decision has to be made. Unless the banking system recovers fast, it is difficult to sustain a high growth of the industrial sector. Medium-term banking reforms will have to wait until the immediate problem is resolved.
Impact on the fisc
The third concern relates to the fiscal position. So far in the current year, the Central government’s fisc has been within limits. At the end of the first quarter, the fiscal deficit as a percentage of total deficit for the year as a whole was 68.7% — a strong improvement over the deficit in the corresponding period last year.
There are two aspects of the fisc which need to be kept under watch. One relates to GST. It is estimated that GST revenues are currently running behind budgetary projections. Perhaps revenues may pick up in the second half. But one doesn’t know. It is also not clear how much of the refunds are outstanding. Any significant shortfall can put the fisc under stress.
The second concern relates to the impact of the proposed minimum support prices (MSPs) for various agricultural commodities. The MSPs have been raised sharply in the case of some commodities. Except in the case of rice and wheat (where there is unlimited procurement at MSPs), there is no indication of how the MSPs will be implemented in relation to other commodities. If market prices fall below MSPs, there are only two ways in which farmers can be assured of the minimum price. One is the M.P. model where the State pays the difference between market price and MSP. But this can turn out to be a serious burden if market prices fall steeply. This is apart from the administrative problems involved in implementing the scheme. The other alternative is for the government to procure excess production over normal production so that market prices rise. This alternative may be less burdensome. However, this alternative will not work if the MSP is fixed at a level to which the market price will never rise. Thus the burden on the government as a result of the new MSPs is uncertain and needs to be watched. The possibility of cutting expenditures if revenues fall below projections is remote in a year before elections.
The expected growth rate of 7.3-7.4% may be reassuring. It may even be the highest in the world economy. Nevertheless, it falls short of our potential. It is below of what is needed to raise job opportunities and reduce poverty. It is true that the external environment is not helpful. All the same, a stronger push towards a much higher growth is very much the need of the hour.
C. Rangarajan is former Chairman, Economic Advisory Council to the Prime Minister and former Governor, Reserve Bank of India. He is also Chairman, Madras School of Economics, Chennai
Making ‘lateral entry’ work
How India can tap into new sources of leadership talent
Most CEOs are grappling with one particular challenge, irrespective of industry or geography: getting the right leadership talent. Governments face this challenge too. The Indian government has responded to this challenge by taking the initiative to invite executives from beyond the ranks of the civil service to apply for certain Joint Secretary posts. While the idea clearly has merit, success is not automatically guaranteed. At Egon Zehnder we have worked extensively with governments around the world on similar initiatives, and have identified five elements that increase the chances of success.
Establish objective criteria: The key decision makers involved in making a senior appointment rarely agree on what skills, qualities and experiences the role requires— and when they do, there is no guarantee that the requirements agreed to are the ones that are actually needed to be successful. This is why the process must begin with a real probing of the position and its larger context. For example, prior to one county’s national elections, we were asked to establish the hiring criteria for 100 key governmental appointments. We interviewed current and former officeholders; mapped strategic priorities; and factored in the cultural differences between ministries. The result: a foundational talent strategy that could be used by whichever party won.
Having objective criteria also gives decision makers confidence that their appointments will be able to stand up to public scrutiny without fear of seeming biased towards or against candidates for caste, geography, political affiliation or other considerations.
Target the talent you need: Public announcements inviting lateral entry applicants for open government positions preserve transparency but are not very effective recruiting strategies. Top talent has many options outside of public service. Government, therefore, cannot sit back and wait for these candidates to present themselves. It must proactively identify and approach executives with the desired skills and experience. Precisely because the competition for talent is so intense, most successful corporations — even those regarded as highly desirable employers — follow this strategy. Very often governments are reluctant to follow suit so as to not appear to favour candidates. This is where the objective criteria come in. The fact that a given executive is approached and encouraged to apply is no guarantee that he or she will be appointed.
We worked with a freshly installed administration in Latin America to build an extensive database of hundreds of private sector leaders considered to have the skills necessary to help fight the country’s urgent economic and social challenges. These executives were then proactively invited to apply and added to the pool of open application candidates. We then assessed this expanded group and recommended numerous successful candidates to key roles.
Look for potential to succeed in this environment: Our work with governments around the world suggests that in addition to the right motivation there are three key personal traits that predict success of lateral hires in such roles.
The first is resilience. Government bureaucracy can be tough on outsiders; it is essential to have the ability to persevere in the face of constant pulls and pressures and aligning multiple stakeholders.
Successful lateral hires also have a high level of curiosity. They acknowledge that they don’t have all the answers, are eager to learn and model their behaviour accordingly. These candidates know that while they may have many useful new ideas, they also have much to learn from career civil servants and that government has its own systems, formal and informal, that must be grasped before any innovations can be proposed.
Finally, they have the ability to engage others. The ability to build consensus among stakeholders is essential.
Less is more when it comes to selection panels: The government screening process traditionally includes appearing before a section panel of three to five interviewers, who each take their turn investigating topics they have divided between themselves. Unfortunately, this approach often results in only a surface-level understanding of the candidate. We have found that one-on-one or two-on-one interviews allow for a much more meaningful exploration of key points of a candidate’s career, their mindset and approach.
More focussed interviews should be supplemented with extensive referencing with finalist candidates. This combination of data will provide insight into a candidate’s character, integrity and moral compass — all critical qualities for government roles.
Accelerate the new hire’s integration: Successful recruiting is only part of the equation; the selected lateral hire must also be primed for success in his or her new organisation. We were able to demonstrate the benefits of a systematic approach with a senior executive that we hired for the cabinet of a European country. We started by identifying cultural differences between the executive’s old and new environments and helped develop strategies the executive could use to navigate this change. We then created an extensive playbook with detailed profiles of the management team outlining each person’s priorities and concerns, and provided coaching to help the executive best position himself with his new peers.
India’s lateral entry programme has the potential to introduce new thinking and new expertise into key ministries. Leveraging on lessons learned elsewhere will allow India to more completely draw from the country’s rich array of talent while maintaining the objectivity necessary to preserve the public trust.
Egon Zehnder is a leading global leadership advisory and executive search firm. Rajeev Vasudeva is its Global CEO; Pallavi Kathuria is its India Managing Partner
How to move a mountain
Seven decades after Independence, the massive obstacle of caste is still difficult to dislodge
At a recent lecture-demonstration of Koodiyattam, a complex form of Sanskrit theatre practised in Kerala, one of the leading exponents of this beautiful art, Margi Madhu Chakyar, performed an episode from the epic literature titled “Kailasoddharanam”, the lifting of Mount Kailasa. Ravana, finding Mt. Kailasa in the way of his chariot, asks the mighty peak to step aside for him. As Siva’s abode, the mountain refuses. Ravana climbs down from his vehicle, and by sheer physical prowess shifts the colossus. In the complete story, after an angry altercation, Siva, placated, bestows upon Ravana the indestructible weapon Candrahasa, a gleaming curved scimitar.
At the University of British Columbia (UBC), in Vancouver, Canada, on July 12, Margi Madhu performed only the act where Ravana encounters Kailasa as an obstruction, lifts it, and sets it down elsewhere. Madhu’s ability to conjure the incalculably heavy weight of the mountain, the supra-human strength of Ravana and the clash of two titans, one animate and the other inanimate, had many spectators in tears. In the larger Ramayana Ravana may be the anti-hero, but in “Kailasoddharanam”, he is undoubtedly the hero.
The intensity of the actor’s facial expressions and the taut muscles of his limbs conveyed the unsurpassable difficulty of the task and the enormity of Ravana’s will. Madhu’s arms flexed, his eyes bulged, his forehead creased, his calves pulled, his spine bent backwards. He trembled with concentration, his slender body stretched tight like a bowstring. Those watching believed he would collapse with strain. Koodiyattam’s expressive drums raised the crescendo of stress to an almost unbearable level. But Ravana’s determination allows him to succeed in his impossible goal. He hoists up the mountain with his bare hands and hurls it away like a mere rock.
Viewers were overwhelmed with empathy for Madhu’s protagonist. This episode raised the question for anyone facing an enormous obstacle: How to lift a mountain? How to get something humongous, static and immovable out of one’s way? If the obstruction presents itself as organic and immutable, a very fact of nature, to what inner reserves of courage can one have recourse? Who is more obstinate, our adversary or us? How can we achieve what is apparently outside the purview of our capacities?
The Koodiyattam was staged at the 17th World Sanskrit Conference in Vancouver. I was scheduled to speak in a public forum on caste and gender in Sanskrit studies, along with Kaushal Panwar, who teaches Sanskrit at a college in Delhi University. We were to tell the ‘story of our Sanskrit’ (the title of the event) to Mandakranta Bose, a senior Sankritist at UBC. We were asked to both share our experiences and draw on our expertise. The conversation took up from Marathi Dalit academic Kusum Pawde’s classic essay, “The Story of my Sanskrit” (1981), Prof. Panwar’s moving and inspiring account of her own journey from manual scavenger in rural Haryana to Sanskrit professor in the capital, as told on the television show “Satyameva Jayate” (2012) and my column echoing Prof. Pawde’s piece (2014).
That night Prof. Panwar analysed the low status of women and sudras in the Manusmriti and the Rig Veda. I discussed Sanskrit as a philological resource and a tool of historical research, which nevertheless presents peculiar challenges to women scholars on account of the deeply entrenched orthodoxy and patriarchy of Sanskrit pedagogical environments. Prof. Bose described how as a young student in Kolkata, she was forced to switch from the study of Mimamsa (Vedic Hermeneutics) to Natyasastra (Performance and Aesthetics), because the former was considered a prestigious subject reserved for male scholars, while the latter was a lesser topic open to females.
Caste, gender and Sanskrit
The large audience, consisting mostly of Indian scholars, including women, attacked us vociferously. The Western academics present maintained an uncomfortable silence, as though passively witnessing an internal dispute among Indians. The disrespectful behaviour of the learned assembly was appalling. Our testimonies were not controversial; we presented genuine and truthful personal observations gathered over decades of study and reflection. As invited speakers, we told our story of Sanskrit calmly and authentically, despite grave provocation and repeated interruption.
The low status of women, sudras and communities considered polluted was raised systematically by Jyotiba Phule, B.R. Ambedkar and E.V. Ramasamy ‘Periyar’, as also other significant thinkers in the Hindu reform sects of Bengal, Punjab and Maharashtra, and the non-Brahmin discourses of the south, throughout the colonial period. The combined legacy of modern India’s critical anti-caste and feminist thought stood solidly behind our remarks. Yet we found Sanskrit professors at leading universities making absurd claims, for example that caste is unrelated to birth; that Hindu society is inherently gender-blind; or that if the term “varna” does not occur, there is no discrimination.
The evening hit significant roadblocks: one, the meaning and provenance of the word “Harijan”; and two, the question of equality and inequality in the Hindu Vedas, smritis and sastras, versus the Indian Constitution. Great Sanskrit pundits found it politic to lecture us about the grammatical rules by which “Harijan” can mean “child of god” in Gujarati (as envisaged by Gandhi) or “embodiment of god” (in Sanskrit), disregarding the Dalit movement which has unequivocally rejected this label for its patronising tone. We did not expect to hear this moniker uttered and defended.
Many colleagues identified themselves as Hindus, giving primary allegiance to their “sacred texts”, not as Indians committed to egalitarian citizenship guaranteed by the laws of the land. They did not treat Sanskrit texts critically, as scholars, only as unquestioning believers. Some claimed that reservations policy discriminates against Brahmins whilst encouraging undeserving SCs, STs and OBCs. Others alleged that India’s Constitution favours minorities, leaving Hindus exposed and vulnerable. The resentment and bitterness of an empowered and dominant majority was disturbing to see.
Dislodging Caste
After this troubling encounter with the regressive face of Indology, watching the Koodiyattam performance inevitably recalled the mountain that is caste. The founders of the republic thought they would dislodge it through Herculean efforts, but generations later, citizens still find it unshaken and their fundamental rights obstructed.
Not to suggest that caste society is some holy mountain, a divine abode of the gods, no. But our collective political will to remove this massive social structure has to be profound, shattering and furious. Alas, the unfortunate reality is that prevailing forces of orthodoxy and reaction will demonise, humiliate and attempt to subdue whosoever confronts the gigantic caste system.
Periyar and Ambedkar set fire to the Manusmriti in their radical protest against caste almost a century ago. But in the age of Hindutva, outdated injunctions glorifying a hierarchical and unequal social order have risen again from the ashes. We must be ready with our torches, and our resolve to move mountains.
Ananya Vajpeyi is a Fellow at the Centre for the Study of Developing Societies, New Delhi
Death of a Marxist
Egyptian economist Samir Amin observed the dangers of our world but also its possibilities
On Sunday, August 12, Samir Amin died. With him went a generation of Egyptian Marxists who came of age in the time of Nasserism and departed with the world in tatters. Amin was born in 1931 in Cairo. He was doing his PhD in Paris when Gamal Abdel Nasser and the Free Officers overthrew the British-dominated monarchy in Egypt in 1952 and directed their country towards a path of non-alignment.
Amin’s thesis — in economics — was written while he was active in the French Communist Party. In the thesis, he thought hard about the problems of his native land and other countries despoiled by the colonial menace. For Amin, as with other dependency theorists, the Third World suffered from theft, plunder as well as deindustrialisation, and then unequal exchange. The policy space for the new Third World states — Nasser’s Egypt amidst them — was narrow. Emancipation would be difficult. It would take courage to break the yoke of monopoly capitalism, to rise from the penalty of colonialism and advance towards a necessary socialist future.
Amin, like others in his generation such as India’s Ashok Mitra and Brazil’s Celso Furtado, did not go immediately into the academy. He went home to Cairo, where he worked in Nasser’s Institute for Economic Management (1957-1960) and then to Bamako (Mali), where he worked as an adviser in the Ministry of Planning (1960-1963). Amin would talk fondly of these years, of the experience he had in trying to move an agenda for the development of his country and that of other African countries. The limitations set by the powerful countries of the world — the imperialist bloc led by the U.S. — and by the system of monopoly capitalism prevented any major breakthrough for states such as Egypt and Mali. Amin’s first book, published in the 1960s, was on the experience of development undertaken by Mali, Guinea and Ghana. It warned against any facile belief in progress. The unequal system in the world generated profits for the powerful and generated poverty for the weak.
In his most important book, Accumulation on a World Scale (1970), which propelled him into the front ranks of dependency theory, Amin showed how resources flowed from the countries of the periphery to enrich the countries of the core through a process that he called ‘imperialist rent’. When the system changed in the 1970s, Amin tracked these changes empirically and theoretically. It was in this period that he wrote , Delinking: Towards a Polycentric World (1985), in which he called for the disengagement of countries of the periphery from the development agendas and pressures from the countries of the core.
Era of greater chaos
With the fall of the U.S.S.R. and the rise of the U.S. to unparalleled power, Amin wrote of the ‘empire of chaos’, of a new era that would result in great inequality, precarious labour, the destruction of agriculture and the dangers of political religion. What Amin tracked in 1992 would become clear two decades later, when he revisited these same themes in The Implosion of Contemporary Capitalism (2013). Monopoly firms had sucked the life out of the system, turning businesspeople into ‘waged servants’ and journalists into the ‘media clergy’. An unsustainable world system, with finance in dominance and people whipping from one precarious job to another, seemed to threaten the future of humanity. He surveyed the world and found no real alternative to the monopoly-dominated system that — like a vampire — sucked the blood out of the world. This did not mean that history was to drive humanity over the precipice. Other choices lay before us.
For the past 40 years, Amin was based in Dakar (Senegal), where he led the Third World Forum. Here, he looked out of his window and observed the dangers of our current world, but also its possibilities. This year is the 200th anniversary of Karl Marx’s birth. In one of his last texts, to honour Marx, Amin reflected on a line from The Communist Manifesto — that the class struggle always results “either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes”. This sentence, he wrote, ‘has been at the forefront of my thinking for a long time’. He was not interested in defeat: “The uninterrupted revolution,” he wrote, “is still on the agenda for the periphery. Restorations in the course of the socialist transition are not irrevocable. And breaks in the imperialist front are not inconceivable in the weak links of the centre.”
However bad the situation — harshness and ugliness everywhere — our struggles were unbeaten and our futures uncharted. As long as we are resisting, he would say, we are free.
Vijay Prashad is the Chief Editor at LeftWord Books and the Director of Tricontinental: Institute for Social Research
A rainbow coalition
Kerala is increasingly becoming a transgender-friendly society
Where have Kerala’s hijras gone?” was the rhetorical headline of my story on transgender individuals (TGI) published in The Hindu a decade ago. The story opened with this sentence: “After a quarter century of tortured life as a woman trapped in a man’s body in a Kerala village, Geeta had fled to Chennai 16 years ago.”
The story described how Geeta was “taunted, insulted and physically harassed at school, home and on the street, just because I talked and behaved like a woman.” It ended on this pessimistic note: “Small wonder then, transsexuals are not visible in Kerala.”
A decade later, the State is a different place. The socio-cultural landscape has changed to tolerate an increasing visibility of TGIs, with the result that those who had fled the State are returning. Thus, there have been newspaper headlines recently on TGIs getting driving licences, two people getting college admission under the TGI quota, separate washrooms at Maharaja’s College, and even the State government paying ₹2 lakh for a sex change surgery.
In the past, unlike in Tamil Nadu and many of the north Indian States — where the Aravaani-hijra community has had a social space and specific roles to play — in Kerala, TGIs were near-invisible. The truth, however, is that social hostility forced them to either leave the State while in their teens, end their lives, or lead a subhuman life until death. For TGIs, Kerala was the worst State to be in.
So, in the span of a decade, how did society in Kerala transform itself from being hostile to being grudgingly accommodative?
“It’s the result of a strong political will,” says psychiatrist and social commentator, C.J. John. “It’s an interesting case of politicians and administrators acting to reform social attitude.” The ‘State Policy for Transgenders in Kerala 2015’, which aimed to provide the “right to live with dignity” reflected this political will. The previous government (Oommen Chandy) and the current government (Pinarayi Vijayan) walked the extra mile to implement the policy. Kochi Metro set an example by allotting a jobs quota. Village and district panchayats and municipalities have been tasked with finding jobs, running special training and skills programmes and welfare projects. Police harassment has fallen drastically. A TG Justice Board addresses issues of discrimination and violence while a TG cell in the Social Justice Department handles issues such as housing. The TGI rights scene is shining.
Several other factors preceded the government’s pro-active approach, including the global campaign for gay marriage, the national campaign for decriminalising homosexuality (scrapping Section 377), the pride parades and the rising voices of Dalits, LGBTs and other marginalised communities. A hyper-active Malayalam media mirrored and transferred the energy to an emerging band of TG activists. The anti-HIV campaign threw up a battery of trained TGIs who later spearheaded the rights drives.
The writer is a Deputy Editor and Chief of Bureau with The Hindu
in Kozhikode
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