India Banao!

One of the satisfying things about the vacation in India this December was the successful completion of the reading of the book, ‘Imagining India’ by Nandan Nilekani. I commend the very thought behind this book. To the extent that all progress is about ideas, it is a rather useful exercise to jot down which of them have arrived, which of them are in the process of arriving and which of them are yet to. That is what this book has done. So, at the outset, the question of whether this book is a useful addition to the catalogue of recent books on India is easily answered. It is.

Is the book an end-product in itself or is the beginning of a process or part 1 of a sequel. I personally see this book as part 1 of a two-part book or the first of a trilogy. There has to be one or a few sequels. I shall elaborate.

For a book that lays out all the good ideas, the issues are whether this book is too big and second, whether this tries to tackle too many ideas too superficially. My response to the first is yes. It is perhaps a bit too long and that might play right into our natural laziness. That would be a pity.

The second issue is more easily answered. Probably, it is good that it lays out all the ideas that the author thinks are important. So, it is alright if he spreads himself a bit thin but it is important that he follows up on some of them and fleshes out the details.

I got this feeling particularly in the discussion of pension – unfunded pensions, etc. The discussion of whether the stock market is the place to be for employee pension contributions needs greater analysis and investigation. The conclusions on whether the stock market is a good long-term investment have been based on the stellar performance in the last quarter century ending 2007. If we take a much longer view, then the performance of the stock market in the 20th century was driven largely by a very high dividend yield at the beginning of the century. Dividend yields have shrunk now to nothing. This is true not just of America but of India too. Therefore, the idea that stocks would be good investments for the long-term is a plausible hypothesis in the twenty-first century. At best, they might be one of the asset classes that investors should consider.

Further, financial literacy is extremely important for any one to manage their savings. The recent crisis has demonstrated that not many experts to have it. The behavioural aspects of investing, the ability to recognise the situations when one’s greed drives investment decisions is crucial. It is not just an issue of technical competence or product knowledge. That can make a big difference between a nest egg and just a nest with no eggs. That is why balanced portfolios are important, rather than stocks-only portfolios.

I think I have digressed a bit. But, that was just meant to illustrate the need for a more in-depth discussion of some of the ideas out there in the book.

I really enjoyed the discussions on the demography and on the Indian cities. The former was analytical and the latter was embellished by the author’s experience with BATF. It was evident. It was reassuring to see the author not being carried away by the arguments that take India’s rise for granted simply because demographics are in favour and because demographics do explain a part of the rise of East Asia in the last few decades of the 20th century. But, it is not all.

That city and municipal administration have been neglected is also consistent with how State governments have failed to devolve power to local administrations. It is covered in another chapter. Cross-linkages between the ideas covered in the book naturally exist. Some of them will and do overlap and the book does identify the cross-linkages and overlaps but not sharply enough. However, more work is needed on this aspect (cross-referencing chapters and ideas) to ensure that readers will understand the multiplier effects of some of the ideas in contention – for good or bad.

For example, it was a delight to read how good pavements (again part of the civic administration issues) would contribute to citizens’ health. So, good public transportation policy and availability are both essential to manage pollution and energy needs but also to ensure that citizens jog and walk without being run over by millions of private vehicles!

The mention of how the inhuman treatment of scavengers was easily solved by the introduction of dry toilets (sulabh sauchalaya) gives lots of room for thinking - the importance of lateral thinking comes through in this example. Sometimes, we view things in B&W terms but this example is a reminder of how technology can help to address social problems. It was a powerful idea and it deserves a fuller treatment.

On the response of businesses to competition, the discussions on the Mumbai clubs then and in the Nineties were interesting. It was good to see that the author makes a distinction between pro-business and pro-market reforms. We still have not had enough of the latter.

The author’s penchant for understatement and at the same time, willingness not to flinch from making important points was evident not only in this instance but also in many other instances.

There was lot of new information too. For example, names of many good organisations (the Public Health Foundation of India is an example) and individuals are introduced to readers for the first time. Some of us might wish to associate with some of these individuals and organisations.

Also, it was heartening to read that the Ministry of Urban Development has introduced a Municipality Accounting Manual. I just read that Mr. Shailesh Gandhi has been appointed as the Central Information Commissioner and that is a heartening development.

The author’s disappointment at PM Dr. MMS’ ambiguous comments on reforms after he became PM comes through somewhat feebly, in my view. On reforms, I think India has unfortunately demonstrated that it is possible for ideas to arrive and then regress too. Where an idea has come to be accepted, some of the protagonists themselves have developed cold feet and engaged in dangerous revisionism.

So, a discussion of ideas that are in reversal – under the current UPA dispensation – would be justified in my view. I have started reading Arvind Panagariya’s treatise on the Indian economy. In his introductory chapter, he lists many of the impressive reform measures that the previous NDA government managed to implement (page xviii). They were quite impressive. In fact, not only NDA’s achievements but also the subsequent regression should have received greater coverage.

The author had acknowledged Yashwant Sinha as one of the reformers. Another reformer, conspicuous by omission, is Dr. Arun Shourie. It was to the credit of PM ABV that he turned Arun Shourie’s combative energy into a creative one to pursue reforms in telecom and pursue genuine privatisation.

One can imagine how difficult and hence how creditable it was, to achieve privatisation especially when Sensex was just around 3000-4000. The present government has not only put it on the backburner but also takes pride in nationalisation! Ideas can travel back in time a long way, unfortunately.

Reforms – economic liberalisation or more precisely, the role of the State in facilitating and regulating economic activity (where necessary) as opposed to actively engaging in it itself – merit considerable discussion and coverage in the second book. I hope it is coming.

That brings me to the next point. The author has discussed the works of many of the reformers – Rajiv Chawla, Vittal, etc. That is a nice thing. He has also taken care to mention how much they had worked and how focused they were to see through what they believed in.

It would be interesting to read accounts of how some of these change agents brought about the changes in spite of all odds. That is what set the stage for others to pursue major reforms. They eased the path. Therefore, retracing the path that reformers traversed to achieve success in their chosen goals will be a useful guide for not only thinking about but also achieving change.

All ideas go through the following stages: Idea (creativity) – ownership (some one owns it) - process (of change) - product (end goal). How did the ideas that have already been accepted (English language, demographics as boon, entrepreneurship, globalisation, etc.) go through this process to result in final acceptance by the public at large?

Of course, these ideas may or may not have gone through every step in the sequence identified above but putting them through this framework helps to see what is missing in pushing through the ideas that are languishing still. It might help to zero in on the bottleneck or resistance and their precise nature.

Finally, it would have been good – it would not have been construed as an advertisement – to hear about the ideas that the author is working on (he has mentioned some of them in passing), about some of his initiatives that are meant to help the ‘contentious ideas’ achieve acceptance and take-off.

Overall, the book is an important milestone in the evolution of a modern, secular and liberal India. It is good to see Mr. Nandan Nilekani continue the effort through his blog now (http://imaginingindia.com/blog/)

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Every truth passes through three stages before it is recognized.
In the first, it is ridiculed, in the second it is opposed, in the third it is regarded as self-evident
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