Monday, July 13

Welcome to the After-Budget Party

Our Republic's General Budget for 2009-10 is now in the public realm. Predictably enough, the debate it has generated has been far from secular, pitting commentators along predictably political lines. In fact, this periodic posturing, while repetitive, also provides moments of insight. As sample, tune in to the laborious constructs of the presumably neutral mainstream media (or at least its English-speaking contingent) to discern its overly friendly disposition to the Congress-led coalition (Padma awards, as the mean-minded may argue, do drive some value after all)!

Talking Budget, the backdrop of an unexpectedly euphoric win and utterly disarrayed Opposition had made the New Dawn call almost unequivocal. Against such epochal demands, the business-as-usual pronouncements that came by appear inadequate. Moreover, measured against some path-breaking early noises in 100-day vision documents from sundry ministers, Pranab Mukherjee's low-risk 2009 design seems destined for footnotes, not glorious acclaim. The flip argument could be that nation building is less about spectacular agenda than solid action. Let us, hence, leave it at the Budget being workmanlike; and have Time tell if its a winner.

The obvious related question therefore is to fix touchstones for socio-economic policy (relevant to the Aam Aadmi vs Big Business nonsense referred to in my last post too). To my mind, two axioms hold good in the prevalent operating context: as Reform's goals and success metrics. First, the focus on Outcomes has to increase. In simplest terms, this means turning the spotlight away from actions to its results. For instance, Telecom is a poster child of the positive impact of policy intervention on the economy at large. This, mind you, is despite the absence of China-like monolithic continuity in decision-making, a few highly visible recent coalition politics compromises, and some of independent India's biggest corruption scandals. A quick, illustrative sample of the multiple levels this can be seen in action:
  • Implicit in the mobilephone's transition from an aspirational lifestyle product to an ubiquitous one, is a story of enabled livelihoods. Today your plumber is a call away, cutting out sundry middlemen/ contractors, with obvious impact on the value chain
  • Connectivity has bridged distances that alternative investments in conventional infrastructure would have placed prohibitively out of bounds. That distant aunt is a first-attempt phone call versus literally shouting the thousand km Delhi-Patna 'trunk call', or worse, physical travel
  • What information availability (push or pull) has achieved is truly too complex to fully fathom. Central India's soyabean cultivator has the market on his fingertips now, with consequences on input/ output prices, in a fashion unimaginable in the Humble Farmer's reign
  • Its sheer convenience is perhaps the most important (after all, benefits remain theoretical without access). From chasing the friendly neighborhood DoT-man for an elusive connection, or to rectify the perennially 'dead' telephone; to being wooed by tariff wars, freebies and retention packages - it is a long way
In short, we need active Marketing of Outcomes. Dwell on our global leadership in airtime prices; or how one of India's most backward states is today the most spoilt for choice in telephony operators (almost all mobile). Similar stories from Banking, IT etc must establish that some nudges from the government (and occasionally despite them!) we can create true win-wins. Celebrating these - veritably 'selling' the Reform story - would go a long way to consign the People vs Business divide to the dustbin it so richly deserves.

This brings us to the second postulate: Growth and Opportunity is incomplete without Redistribution. We are no strangers to sectoral imbalances or geographic inequity, but limited percolation of the spoils of Reform could have the house come crashing down. Not to disregard the need for a laggard manufacturing sector to pick up, agriculture to step beyond Monsoon's shadow, more infrastructure to stimulate value-creation, or Hindi heartland to achieve Gujarat style growth; but these are insignificant compared to the damage potential of popular discontent. Doubting Thomases should note that a third of rural India (by the Government's own admission) lies in the Red Corridor, under Naxalite writ.

General disaffection of a chunk of our population from the Reform process, therefore, is New India's starkest reality. One rationale, though simplistic, for this is heightened awareness (akin to Maslow's Hierarchy of Needs). For instance, growing up in mofussil India in the 60s or 70s, there weren't many visible objects of wealth to pursue. New models of the ubiquitous Amby, as case in point, were too disingenuous for the layman to covet: it remained an indistinguishable part of the milieu. Thanks to the misplaced Socialistic slant in public policy, choice was limited: products were inelegantly sarkari or retrogressively shoddy, often both. Not so today - the flashiest and the best in the world is out here competing for eyeballs. And in case you were to miss it, TV broadcasts it live into your home!

This has clear implications for Reform. If the desire for the good life (even the powerful allure of downright decadence) is being stoked to an all time high, we have to ensure that the means chosen would always be above board. For this there have to be enough opportunities to go around - not easy for a nation with relatively weak tradition in entrepreneurial wealth creation - even assuming right intent. This is principal argument for Redistribution as stated goal.

By definition, both above axioms are long term. However, there is an immediate (and continuing) Emerging Market bugbear to face: Capital. Our policy mandarins, busy congratulating themselves for management of the global meltdown's impact (arguably an unintended by-product of their dilatory tactics on liberalization) need to be conizant of this. With 9% gone, at least in foreseeable future, and Divestment's war-chest stuck in a morass of political confusion, it is to be seen how equitable growth is funded (sample: an anchor scheme like NREGA by itself will need INR 100K Cr to sustain). Far more than the improved experiences with Market vs the State, it is this prospect of mounting government debt that may yet force Mr Mukherjee to push for a more effulgent New Dawn!

4 comments:

Anonymous said...

There is more to the Have and Have-not divide than meets the eye. Singur and Nandigram are more important in getting to understand any failings for the Budget than Shining India type glossy advertising. You should look at this through rural eyes than designer sunglasses yuppie India is getting carried away with nowadays.

Anonymous said...

This is not a TGIF list of recommended reads! I now head into the weekend on an even more sombre note. As our other Eco Soc friends would agree, the whole world of Policy is still muddied waters, even if MMS is now a second term PM and not 'mere' FM, struggling to right the 91 fiasco. Those debates still seem to hold good, like your Commie bashing. Play on!

-A

Anonymous said...

Suchlike expressions are meant just for reading … fear of blotching the substance, discourage, especially the ones with defective / low intellect, from lifting a finger in order to drop a line or two… Interesting, Intelligible and Intimidating, describes this edition.
The chronicle of telecom industry evolution and affiliated product line is indeed interesting… somehow while reading it one couldn’t resist thinking about the crusade which began with the evolution -“I want the newest, the swankiest and the ritziest phone in town”.
Fable account indicates the power of imagination; however, a factual account like this reveals the writer’s profuse intelligence.
“On the flip side, one could argue that the task of nation building does not have to ride on spectacular agenda but solid action”…. intimidating for morons, who think budget is that time of the year, when the m.r.p of their life saving drug Marlborow, fluctuates.

Anonymous said...

What is the difference between you and Lalu Yadav politics? You cannot justify corruption by the end goals being greater good. As an Indian outside India, I am ashamed at the repeated compromises in this name by the real poster boys of the telecom industry farce like Sukh Ram, Pramod Mahajan and A Raja. Bhaskar, you should remember that even the inhuman sacrifices of the holocaust were justifiable to some and that too in the name of greater good.