Politics of distribution

We today are finding out the consequences of a hung national election verdict of may 2004.
The nature of political discourse has taken a decisive turn towards redistribution politics.
Manmohan singh's regime has enjoyed the single longest spell of fast economic expansion in india since 1947 and what does the UPA contributed to economic reforms
a) a hare brained national rural employment guarantee program which
b) a new obc quota bill
c) a stalled SEZ program - this SEZ program could have had a serious transformational effect
d) dismantled APM mechanism which for three years has become the albatross around its neck

In short, this government has managed to fritter away the exceptionally strong growth momentum built and is unable to expand the opportunity set. The government chooses to be blind to past experiences and is increasingly making interventionist choices which have significant distortionary economic effects.
Listen to what Manmohan and PC have to say about industry recently- warnings about price cartels in a highly supply constrained scenario, a sudden envy over executive pay and finally post the stinging results of UP election, a meek Manmohan adding his squeek to providing reservation for economically backward upper castes. None of these provide comfort of the government being in touch with ground realities of a vast section of population wanting to get rich and that too soon. Redistribution will benefit only a small section - only rapid growth and labour reform can expand the pie to accomodate the aspirations of such a large population.
And then the brilliant insight of making agriculture viable - blind to data provided by 2 centuries industrialization which makes agriculture mechanised. The one that takes the cake is religion specific credit quotas for bank- credit risk reform of last 15 years is now turning full cycle.

There is no conviction and this government is deeply influenced by the need to distribute its wealth by its intervention through ham handed schemes under the influence of the Left and allies like DMK. The DMK infact can take credit for descending to obscene levels of redistribution politics by promising TV sets to voter. Redistribution economics has come back to haunt us and given coalition governments are here to stay, it is going to take a crisis to get the reform programs on track.

archive dump

Thursday, December 21, 2006

the sad nature of muslim polity in india is, since partition the clerics especially the deobandi's were given unusual space in policy making as a sort of reward for their opposition to partition. The educated and forward thinking muslim voice is weak and disorganized. So the exclusivist mindset of the narrow minded gets more mind/media/policy space- if you read the article in indian expfress-<<http://www.expressindia.com/fullstory.php?newsid=78438>>- they want exclusive iit/iims/boys only and girls only schools- which kind of betrays how forward thinking these souls are- what if the muslim kid is now forced to study in a mediocre college and pass out with a barely usable degree, would the muslim exclusive IITs work in the job market if quality education is not imparted? The only thing these exclusive IITs may achieve is to confuse recruiters and are a barely vieled attempt by the polity at extracting value out of a brand which they did nothing to create and everything to dilute. What if people from the IITs in the future batches destroy the hard earned reputation of uber intelligence and hardwork built by over 40 batches by being mediocre?
The more one reads sachhar committe excerpts the more i am convinced muslims need integration with the economic mainstream and not exclusion/segregation with priveliges which the states doles out. the indian state has a horrible track record in implementation of any projects and quite frankly the indian state and its lousy administration have killed and had more impact on the life of its citizens than its more radical enemies of pakistan and islamic terrorism.

quite frankly, given the really horrible representation numbers in jobs/schools and poor penetration of education/health/public goods in muslim dominated areas, my 2 cents is, if they create these 2000 schools, we're all for the better. i would rather have muslim kids educated in science and have half a shot at competing in the job market than them falling prey to an illinformed and illmotived soul in a madrassa , competing for a quick place in paradise and taking us on that ride with them.

Sunday, July 02, 2006

US Plays its Cards (Un) Wisely in Indian Subcontinent

As this post is created, the Indo- US civilian nuclear cooperation deal, with "non binding" riders is slowly finding its way through the legislative arm of the US government and with bipartisan support, is expected to become a law by the end of this month.

What the indian media, lost in a mild euphoriam did not cover, was the US Admn. sent notification of the intent to sell F16's with BVR missiles and JDAM kits to pakistan, along with a clutch of weapons with reasonably advanced technology. Indian analysts in the near future will be revising their assessment of the capability of Pakistan's forces.
(See Cmdr Vasan analysis of impact of sale of advanced Harpoon missiles & PC 3 Orion aircraft to Pakistan-http://www.saag.org/%5Cpapers19%5Cpaper1846.html & http://www.saag.org/%5Cpapers13%5Cpaper1235.html)

India's main maritime interests lie to the west of it to secure the energy flow from middle east and the current mandate to escort supply ships and patrol the andaman seas, seems to be based on misperceptions of chinese naval intent and capability. It is in india's core interest to limit chinese naval capability to the northern reaches of south china sea. India's interests are much better served by augmenting Vietnam's and Taiwan's naval strength. The former can be overtly helped and the latter , doesn't require need indian technology help, but trackII procurement can be aided. Indian stationing of naval assets in SE Asia must be carefully calibrated and reasonable information sharing with China is of need to prevent overt hostility.

The objective of US intervension in the subcontinent is to use India as a bullwark against Chinese domination of Asia and something India needs to play along. The arms supplies to pakistan are washington's insurance to keep india in check, ensure that its puppet govt. supports US war on terror by boosting the generals prestige, at the same time keep LM's fort worth plant running.
Indian analysts must clearly discern US interests, filter the high sounding words from the action which adversly impact its interests. The timid response to the proposed arms sale is another reminder to the lack of real spine in the indian government.
India should enhance its cooperation with Iran, provide it military supplies, ships, announce a possible sale of Brahmos missiles to the country and carefully calibrate with Russia, the sale of air defense missiles in response to the proposed sale of weapons to pakistan. This will inevitably create an uproar amongst the constituents in US , Europe and Israel, but will also enable the west understand our security concerns in arming a islamized nuclear capable client state which is under the heavy influence of Washington's biggest emerging strategic threat- China. The use of Iran as a bargaining card has been underplayed by the government and india can retract from statements made as a concession to the US Congress and Israeli pressure at the same time retain a certain leverage with Iran. The current obedience doesn't serve indian interests, not if "non binding" clauses and a sort of obedience review will be conducted by congress periodically

ahh after 6 months of utter madness at work i come back to blog - only to find the few posts i had written missing:( . As bill waterson says in the final strip calvin & hobbes, "everything familiar has dissapeared. The world looks brand new." " Its a fresh clean start. Lets go exploring..."
so hope to start blogging with renewed energy.