A Nobel of economic sanity
PROF Amartya Sen has done the world’s poor, hungry and underprivileged a great service over the past half a century by advocating the need for emphasising various aspects of welfare economics.
ISI's tentacles in India
THE unearthing of a fresh plot to assassinate Union Home Minister L.K. Advani and Gujarat Chief Minister Keshubhai Patel at the hands of ISI agents has sent shock waves throughout the country.

GOVT & ‘BIG BANG’ THEORY
by G.K. Pandey
IT is not surprising that the country’s beleaguered stock market did not pick up much after hearing Finance Minister Yashwant Sinha’s statement a few days ago that the government was going to allow companies to buy back their shares.
Failures in Delhi on all fronts
by Rahul Singh
NEVER believe what politicians or political parties say. That holds true of politicians and political parties everywhere, but more so in India. And the more self-righteous a politician or political party is, the more disbelieving one should be.

. Economics at the service of man By T.K. Ramasamy NOT many Indian economists or their Third World associates ever believed that the Royal Swedish Academy of Sciences would ever anoint Prof Amartya Sen with the Nobel Prize. Of course Sen richly deserved the accolade but the Academy has been too much biased in favour of accumulation of wealth to look at a man who has laid total emphasis on the distributive aspect. Aftermath of a ‘white’ lie by K.K. Mookerjee I am against walking for just walking’s sake. There should be something more elevating to pursue than just one’s own good health. There should be something else like watching nature’s ever-changing beauteous garb, or listening to the warbling of birds or to words of wisdom from a friend whether garnished with humour or steeped in cynical irony.

75 Years Ago

Cremation Ground for Parsis
BOMBAY: After three days’ heated debate, the Bombay Municipal Corporation has rejected the application of the Parsi Cremation Society for the grant of a plot of municipal land for erecting an up-to-date crematorium for the use of the Parsis.

A Nobel of economic sanity

PROF Amartya Sen has done the world’s poor, hungry and underprivileged a great service over the past half a century by advocating the need for emphasising various aspects of welfare economics. He has redefined poverty in relation to development. The Royal Swedish Academy of Sciences has shown a certain degree of pragmatism in assessing the (f)utility of over-emphasising market economy and its derivatives. Professor Sen has shown that history did not end with the collapse of Communism. The so-called growth-oriented path to development shown by the proponents of unbridled globalisation did seem to lead us to prosperity. But the immediate practical application of a set of World Bank, IMF and East Asian Tiger prescriptions and precepts did not produce spectacular results. Professor Sen’s applied economics gave development a human face. Did the “Hedge Fund” stipulation of earlier Economic Nobels succeed in yielding a long-term capital management prospect? The Nobel choosers have often worked on impulse. They have honoured the still fully untried heart pill “Viagra” to the detriment of millions of people in search of potency. The Amartya Sen imprimatur of potency on economic philosophy lies in ways and means of socio-economic empowerment. He is the Keynes of the field of collective good. “Why not marry moral philosophy to social choice? Why not identify the root causes of inequality?” Having asked these basic questions, he has gone on to the understanding of human capabilities—to the importance of gender empowerment, health and education. For instance, what is it that causes famine? Professor Sen, through his empirical studies and instruments of applied economics, has enhanced our understanding of the mechanism at play before or during famines.

He was nine years old at the time of the Bengal famine. His mind absorbed the impact of the tragedy. Then he had the knowledge-redeemed misfortune of seeing the tragic aspects of hunger and poverty in Bangladesh, Ethiopia and Saharan countries. Shortage of food was not always the cause of famines, he felt. As the Nobel announcement says, “By analysing the available information about different individuals’ welfare when collective decisions are made, he (Professor Sen) has improved the theoretical foundation for comparing different distributions of society’s welfare and defined new and more satisfactory indices of poverty.” The shortage of food is not the main or the only explanation for famine. “Famines can occur even when the food supply is high but people cannot buy food because they don’t have the money”. Empowerment is the crucial issue. This total Indian, a teacher at Delhi, Harvard and Cambridge, is not against globalisation or liberalisation. What he advocates is the enhancement of human capabilities with public action and democratic governmental support. The sixth Indian winner of the Nobel Prize sees power and glory not in market mechanism but in human empowerment. There never has been “a famine in a democratic country.” The government should implement the lessons of his theories to charter a new course of development with the help of “social safety nets”.

ISI's tentacles in India

THE unearthing of a fresh plot to assassinate Union Home Minister L.K. Advani and Gujarat Chief Minister Keshubhai Patel at the hands of ISI agents has sent shock waves throughout the country. Earlier also there have been reports of this nature. Significant details should now be available soon as the leader of the suicide squad that wanted to kill Mr Advani in Coimbatore in February has been nabbed. The ISI man who divulged the latest information to the Gujarat police before he was killed in an encounter with commandos of the Anti-Terrorist Squad on Monday night, admitted that he had been given the unholy assignment by a terrorist outfit, which must be closely connected with the notorious ISI. He came to India from Pakistan by crossing the border in the Jaisalmer sector. At least three questions arise from this single incident. One, the ISI has been active in different parts of India, including Kashmir and the Northeast where its roots have grown deeper, for quite some time. Why have our intelligence agencies not been able to spread an equally effective counter-intelligence network to eliminate this menace root and branch? It is really disturbing that the growth of the activities of this notorious organisation should remain almost unchecked. The seven-pronged strategy that has been finalised at Wednesday's meeting of the Chief Ministers of seven northern states should have been formulated much earlier, keeping in view the growing tentacles of the ISI. Two, why has the Union Home Ministry not conducted a thorough study to identify the organisations, if there are any, which provide clandestine support to ISI agents? If this task has been undertaken, the public must be told about it. The well-known terrorist or extremist organisations operating from Jammu and Kashmir alone cannot be so successful as to spread the dirty network of the ISI to almost every part of the country. Any outfit or individual collaborating in this anti-India design deserves no sympathy, and must be tried and punished severely.

The third question relates to our vigilance in the border areas. Is the Indo-Pak border still so porous that our security forces are unable to prevent the entry of trouble-makers or finish them off then and there? Not only are ISI agents able to enter India frequently by crossing the borders , but also they bring with them RDX and other deadly substances used to kill innocent people to spread terror and hatred in society. According to the official figures made available during the Chief Ministers' meeting, explosives weighing 51,810 kg and Pakistani subversives numbering 7,125 have been pushed into India during the past few years. This, in a way, shows that our security and intelligence gathering arrangements are not up to the mark. Wringing hands in despair will not do. Still not much is lost. Before the ISI succeeds in implementing its dangerous designs like the one to kill the two BJP leaders, there is need to identify our weaknesses and launch an improvement exercise on a massive scale. Now one gets the impression that the government has become more serious in this regard, as it has announced that efforts will be made for greater coordination between the Centre and the states for intelligence gathering and other purposes. The government has also realised that the police will have to be familiarised with a new and more effective methodology to tackle ISI-trained terrorists. This realisation should have come much earlier. It could help the country save many of the lives lost in terrorist violence.

Besides India's renewed efforts to combat ISI-sponsored terrorism, Pakistan should be told in clear terms that enough is enough. The ISI must be asked by the rulers in Islamabad to shun its activities in India if they are seriously interested in repairing relations with this country. India has the capacity to respond to the hawks in Pakistan in their own language. But being a responsible power, it has been maintaining restraint so far. This should not be treated as a sign of weakness. There is a limit to ones patience. Pakistan should not force India to lose its patience. The consequences will be devastating. And it is the Pakistani establishment which controls the ISI will have to blame for this.

GOVT & ‘BIG BANG’ THEORY
Question of too little, too late
by G.K. Pandey

IT is not surprising that the country’s beleaguered stock market did not pick up much after hearing Finance Minister Yashwant Sinha’s statement a few days ago that the government was going to allow companies to buy back their shares. Nor, it appears, has the stock market, or industry sentiment, really perked up following his statement that the economy has begun picking up, and that revival is in the air.

Is that so because we are a nation of pessimists, who cannot see a revival when it hits us in the face? Why is it that not too many people seem impressed with what the government has done during the few months it has been in power. The fact is that it has got all but one of the Congress government’s fast-track power projects on track. The present rulers have introduced an Electricity Regulatory Commission Bill, and they have taken a policy decision to reduce the government’s stake in non-strategic public sector units to 26 per cent. They have delicensed the coal and petroleum sectors, liberalised the trade policy further, and made foreign investments more hassle-free.

The list is quite impressive. It is this thing, in fact, that makes the Finance Minister feel quite persecuted when people compare him unfavourably with his predecessor, Mr P. Chidambaram (after all, he has made quite a few more achievements than Mr Chidambaram did). So, is it really, as an aggrieved Mr Sinha put it in his budget speech, a case of “everything that he did was good, everything that I do is bad”?

Well, apart from the fact that Mr Chidambaram obviously had a lot more media savvy and knew how to package his proposals brilliantly, there is a lot to do with what economists call the “big bang” theory. The fact, as most people in the government would realise, is that there is just not enough good news emerging simultaneously to create that big bang so important if sentiments are to revive. For every piece of good news, there is at least an equal and opposite piece of bad news. And that is due to bad luck, as well as the government’s inability to take decisions quickly enough for them to be packaged as one big bang.

Let us forget, for the moment, the disaster over the various rollbacks in the budget — Mr Sinha says these were small things, and he’s probably right. The point, however, is that the BJP failed to make any big announcement after this. Nor, despite promising to do so, was it able to take any big decisions with regard to the economy after the nuclear tests.

At that time, one was told by BJP supporters that the government was going to announce buyback of shares that foreign participation in the insurance sector was going to be allowed, that a quick decision was going to be taken on Air-India’s aircraft deal which has been hanging fire for several years now, that the Urban Land Ceiling Act was to be repealed, that the Companies Act would be amended, among other things.

But nothing like this really happened. While the government is certain to bring in the Insurance Regulatory Authority Bill in the winter session of Parliament, it appears that Mr Sinha has lost the battle as far as allowing foreign equity is concerned. The aircraft deal is not going to be finalised in the near future as Air-India does not have any funds and the Urban Land Ceiling Act’s repeal has got stuck in the fact that the government does not have enough strength in Parliament to be able to see it through.

One option, on which Urban Affairs Minister Ram Jethmalani was keen to issue an Ordinance on this matter, but the government is not much interested in this course since it has received enough flak on the issue of the Central Vigilance Commission as well as the Prasar Bharati Ordinance.

And while Mr Sinha has also got much publicity by highlighting Mr Chidambaram’s complete failure in reining in his fiscal deficit, the point is this year’s fiscal deficit is also in trouble. The main reason, of course, is the fact that the government has not been able to make much headway in cutting subsidies and other expenditure (according to some estimates based on current trends, government expenditure is likely to go up by another Rs 12,000 crore over and above the budget figures). A large part of this, of course, is likely to come from subsidies such as those on fertilisers, where the government continues to fight a losing battle.

And it was just a week or so ago that the Petroleum Minister announced that the Cabinet had not agreed on the proposal to reduce subsidies on LPG and kerosene. This is despite the fact that the United Front government had prepared a policy on dismantling the administered price mechanism (APM), of which such reduction in subsidies was an integral part. The APM dismantling, in turn, was part of the effort to open up the sector to private players. So, what the minister’s statement really means is that because of the government’s inability to take a decision on LPG subsidies, the entire process of opening up the petroleum sector may be hit. The APM policy had been approved by the previous Cabinet and it was, as such, a Government of India’s decision.

What is worse, there are scores of Press reports on how Minister for Company Affairs M. Thambidurai has been withholding clearance for nearly 80 companies which wish to invest around Rs 1,000 crore. While the minister himself has been pulled up for this by the Prime Minister, still he has not felt the need to speed up matters.

It is instances such as this that have contributed to the government getting the kind of image it has got — that of a government which cannot get things done. The fact that the government has had to eat the humble pie on the Bihar issue, the CVC Ordinance, and the transfer of Enforcement Directorate chief M.K. Bezbaruah has contributed to this image. Interestingly, in the course of a recent newspaper interview, Mr Sinha said that this was not true, that his government was getting things done in time. Guess what his rationale was? He said that he had met various industrialists, and that since they had never taken it up with him, there were obviously no delays! It obviously never occurred to Mr Sinha that the industrialists might have been too polite, or too constrained, to take up the issue with either him or the Prime Minister. In any case, they probably reasoned that since the government had taken no note of the various Press reports which highlighted their problems, it was unlikely to take action just because the industrialists had complained in person.

This is the government’s real challenge: not just to do things, but to be seen to be doing things. Until that happens, the mood is not really going to change. Till then, I am sorry to say, the public will believe that Mr Chidambaram’s budget will always be better than that of Mr Sinha, or whatever the former did will always be virtuous, and whatever the latter does will always be bad!

Failures in Delhi on all fronts
by Rahul Singh

NEVER believe what politicians or political parties say. That holds true of politicians and political parties everywhere, but more so in India. And the more self-righteous a politician or political party is, the more disbelieving one should be.

I say this in the context of the sudden removal of the Delhi Chief Minister, Mr Sahib Singh Verma, and his replacement by the self-appointed culture cleanser, Mrs Sushma Swaraj.

The Bharatiya Janata Party touted itself as a disciplined, efficient, intelligent and clean party. That is the main reason it came to power in several states, including Delhi. The Congress party, which it ousted from those states, was widely seen to be corrupt, feuding, stupid and inefficient.

The BJP said to the Indian voting public, “You have kept the Congress in power for all these years and look at what has happened to the country. Give us a chance and we will show you that we can do much better.” Well, the Delhi electorate gave the BJP that chance and look at what happened.

A clean party?

The BJP made Mr Madan Lal Khurana Delhi’s Chief Minister. He was forced to resign after his name figured in the Jain hawala scandal. Though the courts later cleared him and he expected to be restored to his earlier position, the BJP, to his evident displeasure, did not bring him back. Instead, it allowed his replacement, Mr Sahib Singh Verma, to continue. Clearly, even his own party had something against Mr Khurana.

A disciplined party?

The feud between Mr Khurana and Mr Verma has taken on epic proportions, dwarfing the kind of infighting that one has seen in the Congress. It turns out that Mr Verma threw a huge tantrum when he was asked to step down. He eventually agreed, only on condition that Mr Khurana should not take his place. And Mr Khurana’s condition for accepting the chief ministership was that Mr Verma should not be given a ticket to contest the forthcoming assembly polls, nor should he be made a minister at the Centre.

Amazing! Nor is this all. Mr Verma, instead of taking his removal quietly and in a disciplined fashion, publicly aired his anger. “What was the big hurry in removing me?” he asked newsmen on Saturday night, while at the same time insisting that he had still not resigned and remained Delhi’s Chief Minister.

The bitter infighting between Mr Verma and Mr Khurana is what really led to Mrs Sushma Swaraj being more or less forced to take on the chief ministership. She was visibly unhappy at being taken away from the more important Central Information and Broadcasting portfolio, but tried to put up a brave face.

An efficient party?

Talk to any person in Delhi and he or she will tell you that things have never been worse. Both Mr Khurana and Mr Verma have shown themselves to be grossly inefficient in running Delhi. Power cuts and water shortages have become the order of the day in Delhi. Believe it or not, as much as 50 per cent of the power generated in the Capital is stolen. If you are willing to pay enough bribes you can run several airconditioners in your house, even get the power to run a factory, for free.

If your phone goes dead, a platoon of linesmen turn up at your house to restore the connection, for a substantial under-the-counter fee, of course (often, they are the ones who cut your line in the first place). When it came to power, the BJP promised to raze the unauthorised colonies that have sprouted all over the city. It has done nothing of the sort. More such colonies have come up.

You cannot get anything done in Delhi, from getting a birth certificate to permission to build a hotel, without paying a bribe. Though Delhi does not have the kind of gang wars witnessed in Mumbai, the law and order situation in the Capital is truly terrible, with murders and armed burglaries being reported daily. Air pollution is at an all-time high, so high in fact that the level of pollution is more than the maximum the machines can record! When the Australians said they would never again play a cricket Test in Delhi because of its pollution, they had a good cause.

An intelligent and smart party?

When the onion prices in the Capital reached an unprecedented Rs 50 a kilo, Mr Verma loftily declared, in the fashion of Marie Antonette, “The poor do not eat onions.” That has to be the quote of the year.

The BJP in Delhi has not only made a laughing stock of itself, it has also been unable to run the city administration efficiently or cleanly.

Aftermath of a ‘white’ lie
by K.K. Mookerjee

I am against walking for just walking’s sake. There should be something more elevating to pursue than just one’s own good health. There should be something else like watching nature’s ever-changing beauteous garb, or listening to the warbling of birds or to words of wisdom from a friend whether garnished with humour or steeped in cynical irony. Walk for walk’s sake is out of the question for me, and I am reinforced in my view by the immediate prospect of scientists discovering a pill that would do all the exercise, strengthening of the muscles, for me while I loll in my arm-chair.

I was thus a reluctant walker when my friend overtook me and held me by the button much like the Ancient Mariner in Coleridge’s poem. Normally, he is constructive in his approach to problems, and always searches for the silver lining at the edges of dark passing clouds. He started off by abruptly saying that India should confer the Bharat Ratna award on William Jefferson Clinton if and when he visits our country, or arrange for an extra-territorial ceremony at Washington itself.

“Why?”, I asked, “hasn’t he harmed us enough by his sanctions, by his denial of visas, and attempts at blocking technology transfer to India, besides his tilt towards Pakistan?.” “Because”, he replied, “Bill Clinton has revolutionised all educational framework throughout the world, and made a breakthrough in abolishing all taboos. And, mind you, this in spite of the fact that he tended to fall asleep whenever Monica Lewinsky broached her ideas about educational reforms. Bill has made a significant contribution to solving India’s intractable problem. In fact, he has helped the whole globe in tackling this problem of elders humming and hawing over “birds and bees” and not knowing what to say. The world owes a debt to him and he should, in fact, be a close contestant for the Nobel Prize. Since this prize is not within India’s competence to confer, we should give him our most prestigious award — the Bharat Ratna.

“Remember”, he continued jabbing a finger into my midriff, “what a tremendous benefit Bill has conferred upon us. Ours being a far more tradition-bound society, our educationists, parents and teachers have been struggling to find ways to impart sex education to the children. The parents shift the onus on to the teachers, and the teachers put the ball back into the parents court. They resort to lies and half-truths which comes more easily to us than in the land of the ‘cherry-tree cutting’ Americans. All adhere to myths like the delivery system of babes by long flying storks coming down chimneys. The children are left to fend for themselves. And now, by one fell stroke and the utterance of a ‘white’ lie at the White House, the whole problem has been solved. In every corner of the land, and even in remote habitations covered by television and penetrated by newspapers and tabloids, a mighty awakening has occurred. Now the children know more than parents and teachers, and the problem of the latter has been removed. It is nothing short of a revolution.”

The strain had become too much for me. Finding an excuse, I made a hasty retreat and vowed not to venture out into early morning walks however loud the warbling of birds and enchanting the golden glitter of the rising sun, unless I could be doubly sure that the coast was clear.

Economics at the service of man
By T.K. Ramasamy

NOT many Indian economists or their Third World associates ever believed that the Royal Swedish Academy of Sciences would ever anoint Prof Amartya Sen with the Nobel Prize. Of course Sen richly deserved the accolade but the Academy has been too much biased in favour of accumulation of wealth to look at a man who has laid total emphasis on the distributive aspect.

Yet in western academic circles his name has popped up every year as a possible winner; the leading lights did not subscribe to his theories and, in fact, most of them disliked him, but could not resist his creative brilliance or his dogged pursuit of what was once described as welfare economics. These economists of the neoclassical school must now be hoping that the glitter of the Nobel Prize will somehow diminish the lustre of his ideas and their compelling relevance to the present.

Loosely speaking, two sights and the surprise developments in a small southern state in India have powerfully influenced his theory of development. As a nine-year-old boy he saw emaciated men, women and children littering Calcutta streets and falling dead during the 1943 Bengal famine. The picture of these starving dying men from the rural work force stays singed in his mind. The result is his work on famine and the startling conclusion that famine deaths are not due to a shortage of foodgrains but due to the distortions in distribution inherent in the system. The traumatic teenage experience has propelled sensitive Sen throughout his adult life to think up changes in the system to empower ordinary man and give him his freedom of opportunities. This is what the Academy hails as the “ethical dimension” to economic theory.

The other shattering memory is communal killing in Calcutta during the Direct Action movement in 1946. He saw a man being killed in the name of religion and since then has been violently against exploiting religion to generate hatred or incite killing. Communal politics, as he sees it, divides the poor sections of society and to that extent weakens the drive for the empowerment of the poor. He thus locates communalism as an insidious instrument against the poor, and since the majority in this country are poor, it is also anti-people. His secularism is anchored to this humane perspective.

Kerala has been a dominant influence in his ceaseless search for a model of development, as against that of economic growth. During his long years of research in poverty and inequality, social statistics of Kerala have shone as an exception to the dreary figures from the Hindi-speaking states.

At that time he was also simultaneously working on China. He found that the progress in the social sectors in India as a whole is abysmal when compared to China as a whole; but Kerala has outstripped China’s national averages in all respects. It has a higher literacy rate, longer life span, lower mortality and a much lower birth rate. And Kerala is one of the poorer states in the country. Obviously, the per capita income in a state has nothing to do with the social development of the residents. The determining factor is the way the system functions or the policies the government follows. Development can precede economic growth, rather it should if the accretion of wealth were to be equitably shared.

As Sen reasons, education is the starting point of development and it widens an individual’s opportunities for jobs, and his wage offers him choices, including the crucial choice to order his consumption pattern. This way, Sen has placed man at the centre of developmental activities. The neoclassical school has generation of wealth at the centre with market bringing the investors and consumers together and ordering the priority of growth. In all poor countries, the common man is mostly outside the market and hence outside economic growth.

Sen’s contribution lies in shifting the focus from market to man, from economic growth to distributive justice. What he has succeeded in doing is to radically alter the perspective of economics, in a manner of speaking. Scholars will object, but economics as a discipline has all along been the hand-maiden of the capitalist model of development, reflecting its successes and failures. Capitalism has often been re-engineering itself mainly to overcome or head off crises which its very structure ignites. But it has unerringly emphasised generation and accumulation of wealth as its only goal.

This per force can benefit only a select few and the others are palmed off with comforting statistics like GDP and per capita income, which superficially induce a feeling of shared opportunity. Job losses are glossed over by unemployment benefits. To all this, Sen says a firm no, which is logically persuasive and morally forceful. He talks of development and projects a common man’s eye view of material progress and wellbeing.

In the case of Third World, his approach is as creative and innovative as Cambridge school’s subaltern history, history not as a chronicle of the deeds and wars of kings but the life and desires of a people. In the post-Sen Nobel Prize era, economics is no more about the plans and promises of Ambanis, Birlas and their tribe but the aspirations, achievements and opportunities of the common man. Or of just you and me.

Maybe economics will begin to wear a human face and boast of a Third World dimension to it. It is time too that western (read capitalist) stranglehold on economic theories yielded place to the Third World demand for a massive dose of distributive (social) justice. The Nobel Prize is a good enough starting point to press for this change.

Amartya Sen, Nobel Prize, public choice theory and primacy of man over massing of money, all this should turn the thought for a second to Mehbub-ul-Haq, again from this subcontinent (Pakistan), who too made the human development index the core criterion of development. He would have been the happiest man today that his college-mate, longtime friend and fellow-travellor of sorts has won the highest recognition. He died in July last. Let me toss a lazy coin in the wish well: a posthumous Nobel for Mehbub-ul-Haq who too tirelessly worked for bringing the common man within the ambit of economic development, to doubly legitimise Sen’s theory?

75 YEARS AGO
Cremation Ground for Parsis

BOMBAY: After three days’ heated debate, the Bombay Municipal Corporation has rejected the application of the Parsi Cremation Society for the grant of a plot of municipal land for erecting an up-to-date crematorium for the use of the Parsis.

Such a forward movement, initiated by only a very small section of the Parsi reformers, had given cause for a strong agitation among the Parsi community and all sorts of threats are levelled against the minority who favoured the movement also against the few Hindu Municipal Councillors who were championing the cause of the reformed Parsis.

Day after day, the Municipal Hall was full to its utmost capacity with the interested Parsi audience, amongst which were many ladies.

Their enthusiasm, all through the three days of the animated debate, knew no bounds. The Commissioner had to keep strict precautionary measures in and around the Municipal Hall against rowdyism and lawlessness.

The debate actually was on a letter of the Municipal Commissioner, as the head of the Municipal Executive, recommending the grant of a plot of land at the Love Grove Road on certain terms for the erection of a crematorium and a fire temple for the exclusive use of such Parsis who favoured such method of the disposal of the dead.