The Relevance of Planning Commission

Reference to the article “India’s public planners couldn’t end poverty, but its private sector can”, by Mr. M.J. Akbar in Times of India dated 2^nd November 2014, the author has welcomed the demise of our Planning Commission, which was set up by our first Prime Minister in 1950, to guide our newly independent nation towards a “progressive widening of the public sector and the reorientation of the private sector, to the needs of a planned economy.”

That it did meet its desired objectives against the backdrop of the challenges confronting a newly independent nation, is far from any doubt. Furthermore, its role in shepherding our economy amidst the challenges in successive decades, such as wars, droughts etc is also well established.

The key premise behind the argument that Planning Commission now deserves a decent burial is that the pubic sector and the government institutions can no longer be entrusted with the role of assuming the commanding heights of our economy, and need to be replaced with the private sector.

Prima facie, post liberalization, there seems to be much merit in this assumption. However, the rude jolt experienced by the most ardent proponents of a free economy post the collapse of Lehman Brothers in 2008, together with the sub prime crisis in the US that occurred due to the emergence and collapse of the housing bubble there, is still fresh in our memories. The corrective actions taken by the US Treasury and the quantitative easing by the US Federal Reserve, to fight perhaps the most serious threat to the US economy since the Great Depression belies the simplistic premise as indicated above.

In the Indian context, cases of Kingfisher Airlines, Satyam scam, National Spot Exchange Crisis, arrest of a former CMD of a well known Public Sector Bank for extending loan to companies with weak financials, as well as the caution by our former Comptroller and Auditor General, that the proportions of Non-Performing Assets in the banking system are a  crisis waiting to unfold, all together point towards the serious limitations of private enterprise the live up to the expectations as envisaged by the proponents of a free economy.

As a corollary, it only lends sufficient credence to the theory that the role of the Planning Commission as a key catalyst to ensure planned development of our economy, with adequate checks and balances to prevent catastrophic consequences of certain decisions can never be dispensed with.

In a nutshell, while the Planning Commission should have been allowed to evolve and adapt as per the changing times both internally (within our country) and externally (rest of the world). Sounding death knell was certainly inadvisable.

It goes without saying that given our Public Sector Enterprises with the kind of resources, both in terms of managerial talent, skilled manpower, assets etc, is still capable of retaining their past glory, both domestically and internationally, and provided there is a serious attempt by the government to address the key issues plaguing some of them.

To conclude – while we need to ‘unleash our animal spirits’ and create world class private enterprises, public sector enterprises and the government sector in general can be facilitated run neck- to-neck with their private sector counterparts. The government cannot lose sight of the need to create an egalitarian society, as economic imbalances are the breeding grounds for social unrest, and other serious law and order related issues. Article 399 (a) of our constitution directs the state to ensure that “….the citizen, men and women equally, have the right to an adequate means of livelihood.” Or in other words jobs.

Is it not possible for the Planning Commission to facilitate such objectives?

.    

BRICS Bank and MH 17 Crash- Some Implications

 

Two major international developments, though totally unrelated, have vital implications for each other.

One was the establishment of BRICS Bank at the just concluded BRICS Summit at Fortaleza in Brazil, with the laudable objective of facilitating infrastructure development in the member nations to begin with, as well as to provide extra forex to the member nations in the event of a crisis. It is also expected that the availability of funds by way of Contingency Reserves Arrangement to the tune of $100 billion, will help reduce market volatility in the member nations, as the US gradually withdraws its stimulus, besides of course facilitating better economic relationship among BRICS member states.

The second development, a tragedy which has shocked the world, is the downing of MH 17 in eastern Ukraine. Russia is a common factor in both these developments, for one being a member of BRICS, and secondly, being a principal player in the Ukrainian crisis. In the recent weeks Russia has been accused of transferring heavy weaponry to the insurgents- like the surface-to-air Bak missile system, thought to have brought down the MH 17.

As Russia now finds itself isolated and in the midst of an unfavorable world opinion, regarding its role (indirect of course) in the downing of MH 17, the BRICS leadership could be at crossroads regarding their respective positions in the international forums vis-a-vis Russia, with specific reference to the Ukrainian crisis. This crisis has revealed its disastrous potential for other unrelated players as well, through the MH 17 tragedy.

That an important member of BRICS could defy the well established international order, and arm the insurgents in a sovereign state to further its interests vis-a-vis that state, can by itself prove to be a huge dampener for the BRICS member nations, in their quest to forge mutual trust among each other, something which is a critical minimum foundation, on which the very edifice of BRICS Bank can sustain itself.

It would be worthwhile recalling that way back in 1979, when the erstwhile Soviet Union moved into Afghanistan, the US through its ally Pakistan, armed the insurgents in Afghanistan to enable them counter the Soviet forces. Two decades later, on Sept 11 2001, the world witnessed the worst possible terror strike in modern history, which had its repercussions in the world economy as a whole. The US was forced to actively intervene in Afghanistan to wipe out the epicenter of world terrorism, an outcome of proxy war played out in the early eighties. That the US is struggling to get out of Afghanistan is also worth observing.

This has important lessons for Russia as well, besides for the world community as a whole, which cannot be insulated from the side effects of the ill conceived actions in any part of the world by the superpowers, something which has been well established by now, with Iraq being another manifestation.

Now, how would the BRICS leadership respond to such a development in international geopolitics, and would the much required cohesiveness facilitated by a glue called 'trust' remain unscathed among the BRICS member states? It would be something to be curiously watched in the near future.     

 

That the ultimate implications of such developments would be on BRICS Bank as well, needs no further elaboration. 

Open Letter to Rahul Gandhi

Dear Rahul ji,

I am pleased to introduce myself as a fellow citizen based out of New Delhi.

While the poll results have taken everyone by surprise, both positive and negative, yet under no circumstances can it be a ‘write-off’ for the Grand Old Party of India, the Indian National Congress.

In March 1977, I was a school going kid, and I distinctly recall the first ever major rout for the INC, then known as Congress (I). While it was manifestation of public anger against the imposition of emergency, and some excesses committed during that period, yet I as a teenager could not fathom the extent of public anger then, because I was exposed to amazing discipline in the Public Sector Undertakings, as my father served in one of them. The timely arrivals and departures of  trains, law and order being under control due to fear or whatever reasons, which those days were immaterial to me, and above all the mass campaigns through hoardings and print media by the government of the day, promoting virtues of handwork, discipline, the need to prevent wastages etc. had caught my imagination.

That rout of the Congress (I) was so overwhelming, that some sections of the media even wrote obituaries of the Party. But three years later, that very electorate was wise enough to vote Congress (I) back to power with equal vengeance.

   

Thus, if history is any guide, an electoral debacle is by no means an indicator of the future fortunes of any political party in India. Certainly, the results of other elections which followed subsequently could bear this out equally well

.

After having the privilege to serve the Nation through treasury benches in the Lok Sabha for two consecutive terms, it was in any case time for introspections, soul searching, correctives, and overhaul of the entire set up of INC, to be prepared for playing a greater role in shaping the destiny of our Nation in the future.  And this electoral outcome has indeed come as an opportunity for INC, as now it will compel each and every party member across the length and breadth of our country to do some serious soul-searching and brainstorming, so as to ideate on the future course of action and necessary correctives.

While key reasons behind such a massive debacle would be debated and discussed threadbare in various sections of the media, and within your own think tanks, along with the suggested correctives, kindly allow me to suggest the following for your kind perusal:

a)      Shake up the entire administrative set up of the Party units, by adopting a bottoms-up approach. The lower most party worker should be the most vocal member in the Party meetings as he or she being in touch on an ongoing basis with the ground realities. His or her voice and opinion should serve as key inputs for overall policy formulations of the INC,

b)      Insist on a non-negotiable basis, a moral code of conduct for each Party cadre. Senior citizens who were either a part of our freedom struggle, or those who grew up in British India would still recall nostalgically those days when being a member of INC was a matter of pride and prestige. Gandhi ji’s ideals had rubbed into most of the Party cadres then. Today, people are just fed up with corruption, anti-social elements sponsored by Political parties, and above all, the menace of dharnas, rowdism, etc indulged by some party cadres. This should stop and its end should be non- negotiable for INC. Any party cadre involved in any unlawful activity or indulging in provocative statements which can arouse passions and can create law and order problems, should be dismissed without any delay

c)      If you are indeed committed to public service, then you do not really need the positions or power generally bestowed upon the elected representatives of the people. Unfortunate events like natural calamities, bereaved families of farmers who were compelled to end their lives due to draught, bereaved families of our security personnel who made the supreme sacrifice on the line of duty etc should be the key focus of your selfless service. It should not be done just for photo-ops, but rather to transform the INC to a genuine public service oriented organization,

d)      Even though your numbers in the Lok Sabha  do not qualify INC being categorized as the Principal Opposition Party, yet you can keep the Modi govt on its toes by engaging in enlightened debates on the floor of the House on various bills and policy measures it decides upon. The debates may or may not be fruitful on the floor of the House, but would be highly fruitful and effective in the social media where a significant chunk of our electorate aged 18 to 25 years is. Certainly, Modi government would not be able to ignore the public opinion generated through social media. Of course, it goes without saying that even if you intend a scathing criticism of the Modi govt on any issue, please ensure that you do not lose sight of civility and courtesies required in public discourse,

e)      Assembly polls in some states are due sooner or later, Re-energize your Party cadres in those states and be a foot soldier along with them, by going to the electorate requesting them for another chance to meet their aspirations, through a clean, efficient and effective governance of the state. Do not lose sight of the fact that one of key reasons behind this debacle was lack of confidence among the electorate that INC would be able to meet their aspirations. Call it a mere perception issue, but the fact of the matter remains that it did wreck havoc on your fortunes at the hustings,

f)        All attempts should be made to ensure that Congress ruled states become model states of our country, through clean, efficient, and effective governance. While it would be very tempting for INC to dismiss BJP’s spectacular performance at the polls, to slick marketing and brand building exercise backed by heaps of money flooded by top industrial houses, yet it would be a grave mistake to ignore the real brand ambassadors for Modi were our fellow citizens from other states who had some linkages to Gujarat, and who were a witness to his governance style and the state of affairs in Gujarat. It was their word of mouth publicity that contributed in no insignificant way to the Modi wave or Modi Tsunami as may call it

.

The list could go on…..

Rahul ji, it is now time for each member of the INC to brainstorm enthusiastically and collectively without pointing fingers and indulging in blame game, to work out the strategies and action plans, and  go to the people of  India with the sole objective of genuinely regaining the trust and confidence, albeit slowly but steadily.

Wishing you all the very best in your endeavors to rejuvenate the INC, and expecting amazing turnaround in your fortunes in the near future.

With Warm Regards

Navneet Dhawan

Ukraine Crisis – Some Reflections

It was really a treat to read Swaminomics titled ‘Disarmament is for wimps: Go get your nukes if you can’, in Times of India dated 20^th April, 2014.

The author Mr. Aiyar, forcefully argues in favor of nuclearisation of any nation state, as a panacea for ensuing its territorial integrity. He has dwelt upon the fact that when the erstwhile Soviet Union collapsed in 1991, Ukraine emerged as one of the independent states with a massive 1,190 nuclear warheads, more than the arsenals of Britian, France, and China combined. But according to Mr. Aiyar, Ukraine mistakenly thought that the Soviet Union’s collapse heralded the end of Moscow’s domination. So, it agreed to give up all its nukes and send them to Russia for destruction. In return,  the US, Russia, and Britain, signed the 1994 Budapest Memorandum on Security Assurances, pledging to safeguard Ukraine’s territorial sovereignity. This was then greeted with a universal applause.

According to Mr. Aiyar, today Ukraine knows it made a terrible mistake, as it can no longer deter its powerful neighbour. Last month, Russia sent troops to annexe Ukraine’s Crimea Province. Now Russia threatens to split the rest of Ukraine, converting Eastern Ukriane, where a quarter of the population is ethnic Russian, into a puppet state, just as it earlier used armed muscle to convert Russian ethnic regions of South Ossetia and Rbkhaza in Georgia, into puppet states. And unfortunately enough, neither the US nor the UK, both Budapest Memorandum guaranters are willing to stop Russia militarily.

To further buttress his point, Mr. Aiyar highlights the fact that while the US was quick to invade Afghanistan, Iraq, and Libya, it does not dare touch North Korea which has violated the UN Charter repeatedly, attacked South Korean ships and poses a security threat to East Asia. Simply because North Korea has nukes.

Prima facie, there is much merit in Mr. Aiyar’s hypothesis. And it may be possible as he predicts, that non-nuclear states like Japan, South Korea, and Saudi Arabia may go nuclear in future, as they may not consider it wise anymore to outsource their security to western powers, going by Ukraine’s woes.

But it would be worth reflecting on some anecdotes from international relations, which have a strong bearing on this hypothesis:

a)      If indeed President Putin had hegemonic ambitions in his region, then how come he decided to wrest control only of Crimea, and has eyes on part of Ukraine only? There are other CIS countries as well, which are in a state of abject poverty and underdevelopment. Most of their well educated and skilled citizens have migrated to Russia and elsewhere in search of better opportunities. Their existing citizens might be willing to give up their so-called independence, in return for economic prosperity, better governance, and above all fool proof security as existed during the Soviet era. To cite just one example, during one of my visits to a CIS country few years ago, I was taken to a facility which once supplied warm water round the clock, during peak winters to the entire capital city of that country. That was during the Soviet era, but it was now lying abandoned and was in ruins,

b)      Hypothetically, had Ukraine retained its nuclear warheads till date, it may not have been able to avert its current woes, as Russia is also one of the world’s leading nuclear powers. President Putin would have been too shrewd enough to realize that no Ukrainian leader would dare risk a nuclear confrontation with Russia, as that could imply complete annihilation of that state,

c)      If the UK and the US are hesitant to take on Russia militarily today, the reasons are more economic, and have less to do with the military costs of such a confrontation. Their economies are now just coming out of recession and slowdown, and hence they simply cannot afford any misadventure, which can set their economies back to the mess. Given an interdependent globalized world, the Russians are only too well aware of this fact, and Russian economy would  also not be able to get away unscathed, should the US and UK economies were to suffer disastrous setbacks again,

d)      History has an answer for this deadlock today. It would be worth taking a cue from the Cuban missile crisis, when both the US and erstwhile Soviet Union came dangerously close to a nuclear confrontation. The ending of that crisis peacefully, bears out saner counsels from both sides triumphing ultimately. Same can be expected in the current scenario as well,

e)      And finally, coming to Mr. Aiyar’s prediction about Japan, South Korea, and Saudi Arabia turning nuclear powers to safeguard their territorial integrity. His contention is that Saudi Arabia is fearful of both Iraq and Iran. It is worth noting that nearly a quarter century ago, Saddam Hussein invaded Kuwait, and the allied forces led by the US evicted him few months later. Reason? Kuwaiti oil. The same would hold true if either Iraq or Iran were to repeat the stupidity of Saddam Hussein, by threatening Saudi Arabia. Such an analogy can be extended to both Japan and South Korea as well. Both may not be oil rich, but certainly have tremendous economic opportunities for most of the world community.

To conclude, while the Ukrainian leaders need not regret so much on their decision to give up nuclear warheads when it became independent, but they certainly need to regret of not making Ukraine an economic powerhouse, which might have been a powerful deterrence to Russia for embarking upon any misadventure, as that would have meant sabotaging its own economic interests.