Chanakya's New Manifesto: To Resolve the Crisis Within India (8 page)

This sort of behaviour on the part of government radically alters the role of the Opposition too. In the vision of the makers of our Constitution, the Opposition would, while fulfilling its fundamental role of questioning, scrutinizing and—when occasion demanded—opposing government policies, be as committed as the government in power to the overall good of the nation and the people. In other words, it would, in terms of its constitutional mandate, provide a
constructive
opposition, without diluting or blocking the government’s mandate to govern for the welfare of the people.

Today, this has changed. In a situation where the ruling coalition is inherently and visibly unstable, and the prospect of replacing or toppling it is an ever-present possibility, the Opposition becomes predatory by reflex, opposing any positive move by the government for the sake of it, motivated only by the possibility of somehow assuming power if the government falls. The result is that there is not even a semblance of governance where the coalition in power is concerned.

Governance is not some intangible theoretical abstraction. It can be concretely measured, and most obviously in the quality of lives that ordinary people lead. But in India now, the gap between what is achievable and doable, and what is actually delivered has reached unacceptable proportions. It is essential to provide some examples of this governance deficit, in order to understand the magnitude of the opportunities missed before moving on to how the situation might be tackled, according to
Chanakya’s New Manifesto.

Agriculture is a good place to begin with, since close to 60 per cent of India’s population lives off this sector. As a result of a verifiable absence of governance, agricultural productivity continues to grow at the abysmal rate of 2 to 3 per cent. We have the world’s largest endowment of fertile agricultural land, but our food productivity is very low. China’s rice yield per hectare is twice as much as ours. That of Vietnam and Indonesia is 50 per cent more. Even a successful farming state like Punjab only has an average rice harvest of 3.8 tons per hectare; the world average is 4.3 tons. Merely to parrot year after year that India has beaten its previous record of foodgrain production means nothing, since the overall increase in agricultural growth is little more than 2 per cent.

Agriculture urgently needs infusions of technology and infrastructure. Government policies should have focused on better seeds, fertilizers and pesticides, improved and wider irrigation techniques, credible credit avenues and effective satellite mapping. Successive governments should have worked to expand storage facilities, develop cold chains, and improve the transport network. They should have upgraded research and development (R&D) in agriculture. Brazil spends 1.7 per cent of its GDP on agricultural research. What we spend does not even register. There is a clear need to have a policy on market-led interventions, and an emphasis on increasing the ratio of cash-yielding crops. In addition, agricultural tariffs need to be analyzed and revised. Mexico and the Philippines have become market leaders in the export of mangoes, a fruit indigenous to our country, and one we take pride in.

The country is still saddled with the inexplicable Agricultural Producers Market Committee Act (APMC) that forces farmers to sell to ‘market yards’ as part of government procurement. Thirty to thirty-five per cent of the food produced under this act perishes during storage and distribution. The Food Corporation of India has a storage capacity of around 70 million tons. About 25 million tons rot every year. In 2012, as much as 75 million tons were left to rot. Moreover, the farmer gets only a third of what the consumer pays because middlemen ingest the balance. There are eight to ten ‘links’ in the farm to consumer supply chain. Each adds a profit margin of 30 per cent. The result is that the farmer is inadequately compensated and the consumer unfairly charged. A new APMC Act, which seeks to reform the malpractices of the old, has been around since 2003, but not been implemented. It is known that ‘every rupee as a contribution to the GDP from farming is twice as effective as other interventions in alleviating rural poverty’.
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And yet, the only response of governments to this crisis is to keep increasing the minimum support price, as a result of populist pressures.

The key sector of power generation, is also witness to the disastrous consequences of governance deficit. No Indian needs to be condemned to live in darkness, but a great many still do not have access even to an electric bulb. Why? Our power plants run at 71 per cent of their capacity. The aggregated loss of our state power utilities was $138 billion or over
7 lakh crore in 2006-2007. In 2010 it was a mind-boggling $445 billion, more than
23 lakh crore. The privatization of power distribution is an obvious option but no national policy has been formulated that has found favour with the states. The Delhi government was one of the few states that rightly opted to privatize power distribution. As a result, the number of power cuts has gone down, and in 2011, electricity thefts came down from 50 per cent to 11 per cent.

The nation’s overall power generation has gone up, but most mega power projects are unable to take off because of a mandatory pricing policy that guarantees losses. Most worryingly, even those power plants that are operational have for months been on the verge of running out of fuel. At least seventy thermal plants are in the disaster zone. In 2012, for example, forty-four had coal stocks of less than fifteen days. Twenty-six entered ‘super critical’ coal stock positions, with less than a week’s supply. The country is actually facing the risk of a large-scale blackout. We had a taste of what lies in store when, on 31 July 2012, north India experienced the world’s biggest blackout—the northern, eastern and northeastern grids collapsed, simultaneously affecting over 350 million people. The immediate cause was lax grid discipline, but the fundamental problem remains an acute shortage of power. Added to this are endemic issues of unchecked power theft, poor maintenance of transmission lines, the absence of a strong regulatory authority and populist policies including free giveaways. These problems are not beyond management; they can be tackled with good governance. The Gujarat government is reported to have ‘filed over a 100,000 FIRs against power thieves, segregated its feeders and today has 24x7 three-phase power supply to all its 18,000 villages.’
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Better governance is also the reason why the current government in Madhya Pradesh has more than doubled its installed generation capacity and, by 2013, hopes to supply power 24x7.

Five years ago the shortage of coal was 43 million tons. Today it is over 140 million tons. This is an unbelievable situation for a country with the world’s fourth largest coal reserves. The reason for this artificial scarcity has been glaringly plain to governments for years now. The monopoly of Coal India Limited, a public sector company which the government accepts wastes 25 per cent of what it mines, has to end. The Coalgate scam in 2012, in which the government was accused of mala fide and arbitrary allocations of captive coal mines to a chosen few, rightly grabbed the national headlines. However, for the long term, what is needed is to bring in a coal regulator, introduce pricing reforms, and open up coal to the private sector. Secondly, while environment issues are important, it is equally essential to have transparent and scientific rules to govern extraction. The arbitrary policy of ‘go/no go’ for mining clearance has jeopardized 600 million tons of coal in 203 mining blocks. Policy making in this area is near frozen since decisions are split between various departments dealing with power, coal, land and environment. As large parts of the country struggle with seemingly perennial power scarcity, the government’s routine response is to set up yet another Empowered Group of Ministers (EGoM).

Paralysis in governance hits the quality of life of every Indian, in every walk of life. The Indian railways, with one of the largest networks in the world, is used by millions of Indians. But today, their safety is seriously at stake. In 2011, a major train accident occurred almost every month; some months recorded more than one accident, the worst being July 2011, when there were as many as seven accidents claiming over a hundred lives. From April to July 2012, there were ten accidents claiming eighty-seven lives. Currently the network productivity of Indian railways is half that of China. The railways ministry needs to urgently enhance safety measures by investing in new rolling stock, track renewals, training, electrification and electronic signalling; the cost of doing all this has been estimated by two expert committees set up by the government at anything between one lakh crore to eight lakh crore. Raising passenger fares is the obvious step in response to such a situation, since Indian railways is deeply in the red. However, the compulsions of political expediency have persuaded successive railways ministers to shut their eyes to the solution. Nitish Kumar raised fares in 2002, but his successor Lalu’s short-sighted populism led him to actually reduce fares on three occasions. Mamata Bannerjee as railways minister went against the advice of the PM and finance minister and did not raise fares for eight years. The support of her Trinamool Congress party was vital to the ruling coalition and so she got away with it. In any case, fighting her political battles in West Bengal, she hardly had any time to devote to her department and look at alternative policies to get the country’s railways back on track, such as involving the private sector in modernizing stations and freight terminals, or setting up public private partnership (PPP) projects on large swathes of unused railway land.

The same sorry story is manifest in other key areas of the country’s infrastructure. For instance, better and more roads contribute over 0.5 per cent to the country’s GDP, quite apart from adding to the convenience of travellers. But all major road construction projects are behind schedule, and the government could not even appoint a chairman for the National Highways Authority of India for over a year. New and upgraded ports facilitate international trade and investment and reduce prices for the consumer, but as many as eleven of the sixteen major projects in the pipeline are delayed. Clearances for the Jawaharlal Nehru Port Trust and the Chennai Mega Container Terminal were pending for three years. For the Orissa Dhamra Port, the concession was signed in 1998, but even after the private sector firm Larsen & Toubro picked up the entire stake in the project in 2004, environment clearances took three years. The concession for the Dighi Port in Maharashtra was signed as far back as 2002; the plant only became operational in 2011.

The condition of our civil aviation sector makes for even more dismal reading. According to the International Air Transport Association, airlines globally made a profit of $18 billion in 2011. In India, passenger traffic increased by 16 per cent in 2011. Yet, Indian carriers lost $400 million, over
2,000 crore. Air India’s outstanding loans and dues are in the vicinity of a staggering
70,000 crore! The solution has been clear to anyone with even a basic knowledge of economics: the government must disinvest its stake in Air India and allow the carrier to restructure and revamp on sound business principles, as has been demonstrated by airlines like Indigo. In fact, the entire disinvestment plan of the government has been patchily implemented, with too little being disinvested too late. The government must get out of sectors it has no business to be in, such as civil aviation, and if it isn’t willing to entirely exit the sector it must allow for much greater partnerships with the private sector. The decision to partially allow FDI in aviation was finally taken towards the end of 2012, but even this much-delayed move will not help until tough decisions are taken on the nation’s long-standing money losing air service—Air India.