Vijay Kumar Gaba

Let me explain my point with the help of the following examples:

Bail is acquittal

I recently visited Chaubeypur Village in the Varanasi district of Uttar Pradesh. A decent sized urbanized village located about 25 km from Varanasi city, Chaubeypur is representative of the unplanned and unsustainable urbanization of numerous Indian villages.

In Chaubeypur, I met Chote Lal (name changed) who is accused of 2 murders, arson, land grabbing, extortion, and rape of a middle-aged woman. Presently out on bail, he gleefully boasted to have committed some of these crimes. When I tried to discuss the law and order situation in the area with Vimal Saxena (Name changed), a lecturer at Law College in Chaubeypur, he appeared rather bemused at my naivety. On a little prodding, he asked a counter question – “Have you ever noticed why a bail order is invariably celebrated and makes big headlines in India?” I literally was at a loss for words, as I could not think of any logical explanation for celebrating a bail order.

“For the accused of criminal acts, two-thirds of cases end with the bail order. Once the accused is released on bail, the case remains of little consequence. The cases could be dragged to eternity. In most cases witnesses would vanish; complainants and/or accused would die; the complainants would run out of money/patience to pursue the case; or the complainants would be forced/lured to withdraw cases. Therefore, anyone who is confident of securing a bail order is fearless and not afraid to commit heinous crimes. The situation is no better in civil matters. Property and family disputes, in particular, could drag on for decades without any resolution.”

Interacting with Chote Lal and Vimal Saxena for 20 minutes would give you a fair idea of the malaise plaguing the Indian justice delivery system. Anyone who has been in a situation warranting a judicial or legal intervention would know this situation very well. But still, no one talks about solutions for this grave problem!

Jugaad is celebrated as a “unique skill”

In the past five years, in particular, social media has been incessantly flooded with messages highlighting the architectural excellence of medieval India, as reflected in our temples, water bodies, forts, etc. The messages everyone sees in the media conveniently ignore the fact that we are unable to build a 10 km stretch of road that could sustain 25mm of rain in a day.

The point is that the ‘jugaad’ mindset has perennially pushed back India and Indians tenaciously into survival mode, preventing the development of a strong foundation for economic growth and prosperity. The ‘jugaad’ mindset reflects poorly on almost every aspect of the socio-economic life in India. This has severely impacted the pursuit of excellence, a hallmark of Indian art, culture, engineering, architecture, and industry till the 19th century, at least.

The ‘jugaad’ mindset has also doggedly constricted the vision of an average Indian entrepreneur. Except for a handful of Indians, most of whom have the benefit of studying and/or working overseas, not many have thought about scalable business models. Consequently:

·         Despite having over 2000yrs of the rich tradition of fashion, fabric manufacturing, dress designing, and abundant raw material availability why no Indian textile or fashion brands figures prominently in the global fashion and textile industry?

·         Despite being one of the oldest civilizations, the tradition of living and networking in communities, spending considerable time in chaupals and doing Adda till late at night, and availability of tremendous IT skills – no Indian thought of creating Facebook – an e-chaupal with over US$800bn in market cap.

·         Despite claiming ourselves to be the world leaders in the field of religion, spirituality, culture, etc. we could not create Mecca, Vatican, and Jerusalem out of Vrindavan, Kashi, Tirupati, Ajmer, Haridwar, etc. Most of these places are filthy and abysmally inadequate in basic tourist infrastructure.

·         Despite slavery for many centuries, why do we still depend on those very foreigners for the supply of equipment, arms, and ammunition for our armed forces?

·         Why failing to win an Olympic gold medal is a subject of national shame; failing to get a nomination for the Oscars is a subject of national disappointment, but not getting a single Nobel for mathematics, science or literature post-independence does not evoke any regrets or discussion. Remember, we always proudly claim ourselves to be pioneers in the fields of mathematics, physics, astrophysics, metallurgical and medical sciences, etc.

·         Why do we derive pride from the success of emigrated Indians who have taken foreign citizenship?

·         Why an average Indian male feels proud of being sexist when our religion, culture, and traditions propound the supremacy of feminine power (The Mother Supreme)?

·         Why does an average Indian feel proud of being racist when our religion, culture, and traditions preach the universality of human (Vasudheva Kutumbakam)?

These are not but just a few of the illustrations that explain the harmful effects of the ‘jugaad’ mindset. ‘Jugaad’ in the economic field is as dangerous as in personal life (like self-medication) and politics (caste and religion-based politics, adhocism in key socio-economic policies, etc.)

It is because of this jugaad mindset that a large proportion of the Indian populace could not develop respect for intellectual property rights – others and their own.

Compliance is for the cowards

 When you see these pictures, what comes to your mind first?

Are these funny? Are these worth appreciating? Do they highlight the quintessential Indian character? Do you care?

Now tell me—

·         Have you heard of anyone protesting or suing Amir Khan for openly desecrating the historic Red Fort, a heritage building in movie PK?

·         Did you find engineering students drinking alcohol in college campus in 3 Idiot, acceptable?

·         Did you find Amir Khan riding a scooter in the critical care ward of a Hospital acceptable?

·         Did you noticed that Salman Khan is romancing on a motorbike without wearing a helmet?

·         Did you find this overloaded lorry in Fevicol advertisement impressive or funny?

·         Did you ever thought of complaining about the famous and celebrated Mumbai Dabbawallahs blocking traffic, causing inconvenience to passengers in local trains, or you find it regular or rather part of a great service to the nation?

·         Does the latest TV advertisements of Sporto sportswear and CEAT tyres, that describes Indians as incorrigibly non-compliant, offend you, or you would just laugh it off?

Once, I sent these photographs to 50 people, randomly selected from my contact list, for their comments on these pictures. The mail was sent without any preamble.

No surprises there. None of the respondents pointed out any problems with these pictures.

28 respondents just found the pictures funny and answered in LoL emojis. 3 respondents said, Amir Khan is any day better than Salman Khan. 5 respondents have asked who is the actor jumping the road divider and dancing in front of the motorbike. Two of them also wanted to check whether there is Govinda amongst the Dabbawallas' group seen in the given picture.

14 respondents answered with just "???"

The respondents include professionals working with MNC banks, large IT firms, infra developers, exporters, and Indians working in foreign countries as senior managers. 20 are women. All are in the 35-50yr age bracket.

There is no dearth of people who consider wearing a helmet while riding a motorbike, wearing a seatbelt while driving a car, and ignoring a phone call while driving an act of cowardice. Just by not following lane discipline while driving on roads, people cause massive traffic jams, wasting millions of work hours and fuel worth billions of rupees.

It is a common practice for most private schools and teachers to assign tasks to small children, that they could not be reasonably expected to perform on their own. In most cases, teachers are fully conscious that the parents will be completing such assignments. The parents are usually bothered, but somehow choose not to register their protest to teachers; rather they choose to complete the assignments themselves. Of course, the children get their first lesson in non-compliance in their preschool tenure itself.

It is undisputed and inarguable that a section of Indian businesses has been violating the law of land and rules of compliance with impunity for long. Have we witnessed industry associations like CII, Assochem, PHDCCI etc., strongly reprimanding their constituents or issuing a mandatory advisory to all its constituents and members not to indulge in such practices and ensure full compliance with the law & rules in force?

The entire nation knows how the staff members and officers of banks conducted themselves during the Demonetization period. How many of these bank employees have been punished even with a reprimand? How many of the citizens who bribed these bank employees to get their currency notes converted out-of-turn, are ashamed of their act of non-compliance?

The point in case is that "compliance" does not appear to be a high priority on the agenda of even the most educated, wealthy, and responsible citizens. It is unfathomable for a habitually non-compliant society to develop sustainably and grow at a faster speed to become truly a global force.

I shall be traveling for the next 3 days., and may not be in a position to write my daily posts. I shall therefore offer my solutions for improving compliance standards and reforms in the justice delivery system next week. These solutions could form a basis for a larger debate in society and at the policy-making level to evolve an appropriate policy framework

In the meantime, I shall be happy to receive input from readers in this context. 

Also read

Battle Ground 2024 - Forces are aligned

Battle Ground 2024 - The Narrative and Rhetoric

Battle Ground 2024 – The Problems

Battle Ground 2024 – In search of solutions

Battle Ground 2024 – Political solutions

Battle Ground 2024 – Political Reforms

Liquidity update: Over the past few months, liquidity in the interbank market has been relatively range bound, largely tracking the normal inter month seasonal patterns. However, overall system liquidity, including the government’s cash balance, has increased because of the larger-than-expected RBI dividend and the liquidity infusion from the INR2,000 note’s withdrawal.

As of 26 July, interbank liquidity was approximately INR1.24trn, while overall system liquidity was INR3.6trn on 14 July. As a percentage of NDTL, interbank liquidity is approximately 0.7%, while overall system liquidity is 2%. Despite the increase we have seen MIBOR spike above the MDF rate on various occasions.

What has been affecting INR liquidity? Currency in circulation (CIC) has been decreasing since the RBI announced that the INR2,000 note would be withdrawn . Since the announcement, CIC has declined by INR1.36trn up to 14 July. This is in line with our assumption that there would be a INR1.5trn injection of liquidity into the system by September. Going forward, we would expect a reversal of this, as Q3 FY23 approaches, as CIC usually picks up around election season.

On the FX side, the RBI bought approximately INR1.25trn worth of US dollars in the first two months of FY24. This has led to a large injection of liquidity, while weekly data show the numbers have been more muted in June and July. We continue to monitor the forward book, as we have seen a reduction in the outstanding long USD position.

On the government’s cash balance, we currently estimate this was around INR1.6trn on 14 July. The recent boost has come from the larger-than-expected RBI dividend (INR874bn). The government has repaid the Way and Means Advances (WMA) drawdown taken at the end of FY23. Bond supply will remain high over the coming months with no maturities; however, there will be a net maturity of INR1.5trn in T-bills. Overall, for now we expect a somewhat stable government cash balance over the coming period.

In terms of RBI actions on the liquidity front, OMO sales stopped in the early part of this year and the RBI has remained absent in the market since. However, under the LAF facility, the RBI has continued to intervene via the VRRR and VRR route. In June and early July the RBI intervened asymmetrically, by taking out liquidity on the VRRR once the MIBOR/call rate dropped below the policy rate, while remaining hesitant to inject when MIBOR/call rate spiked.

Liquidity projections From our projections, we continue to see FX interventions as the largest driver for FY24, and if the RBI continues to buy US dollars aggressively for its reserves, we can see a liquidity infusion of over INR2.5trn from this channel. While on the flip side, if INR comes back under pressure owing to global growth concerns or rising commodity prices this may flip back negative. As noted above, we expect outflows from CIC to resume over the coming months and pick up owing to the elections. On OMOs, we still expect the natural drains on liquidity to warrant the RBI conducting OMOs in Q3 FY24; however, as our economists have pushed back on the timing of for the RBI’s rate cuts to February 2024, we think the RBI is unlikely to start OMOs significantly before the RBI’s first rate cut. Subsequently, we have pushed back our timing on the start of OMOs to Q4 FY24, but still expect INR500bn of OMOs this year. For Q3, we would expect the RBI to be more proactive with tools under the LAF, predominantly through the VRR route.

Center’s fiscal in check in 1QFY24 (Kotak Securities)

The Center’s fiscal deficit remained under control in 1QFY24 at 25% of FY2024E. Though corporate tax collections remain weak, receipts were buoyed by CGST and personal income tax. Expenditure remained well-supported by capital expenditure in railways and roadways, even as revenue expenditure is being tightly controlled. For now, we maintain our GFD/GDP estimate at 5.9%, in line with FY2024E.

GST collections remain in range: GST collections for June (collected in July) were 10.8% higher yoy at Rs1,651 bn (May: Rs1,615 bn), with CGST at Rs298 bn (Rs310 bn), SGST at Rs376 bn (Rs383 bn), IGST at Rs859 bn (Rs803 bn) and compensation cess at Rs118 bn from Rs119 bn in May. After the distribution of IGST, June CGST and SGST revenues (before refunds) were at Rs696 bn and Rs708 bn, respectively (Exhibit 2). CGST + IGST collections are currently at a monthly run-rate of Rs663 bn in 1QFY24, with the required run-rate at Rs683 bn. For now, we expect CGST collections to be close to the FY2024E target.

Receipts in 1QFY24 buoyed by RBI dividends, income tax and CGST: Gross tax revenue in 1QFY24 was 20% of FY2024E (3.3% higher than 1QFY23) and net tax revenue was 18.6% of FY2024E (14% lower than 1QFY23). Total receipts were at 22% of FY2024E (0.5% higher than 1QFY23), led by non-tax revenues (mostly due to RBI dividends) at 51% of FY2024B. On the tax front, CGST+IGST collections were at 25% of FY2024E (11.4% higher than 1QFY23) and personal income tax was at 22% of FY2024E. The drag in revenues was from corporate tax collection in 1QFY24, at only 15% of FY2024E ((-)14% growth over 1QFY23) and excise duty collections at 15% of FY2024E ((-)15% growth over 1QFY23). Direct tax was at 18.3% of FY2024E ((-)1.9% growth) and indirect tax was at 22% of FY2024E, (9% growth).

Railways and roads support capex; revenue expenditure kept in check: Expenditure in 1QFY24 was at 23% of FY2024E. This was propped up by capital expenditure at 28% of FY2024E (59% higher than 1QFY23), which continued to be supported by (1) roads at 39% of FY2024E (23% higher than 1QFY23) and (2) railways at 33% of FY2024E (70% higher than 1QFY23). Loans to states for capex rose sharply in June, pushing the 1QFY24 spend to 23% of FY2024E.

Revenue expenditure in 1QFY24 at 22% of FY2024E was in line with last year’s levels, 0.1% lower than 1QFY23.

Maintain our FY2024 GFD/GDP estimate at 5.9%: We see a limited slippage risk in FY2024’s fiscal estimates. Though the higher-than-budgeted RBI surplus transfer provides a significant buffer, it could be offset by a divestment shortfall (market risk), downside risks to tax receipts (trend in 1Q shows some weakness in corporate tax collections) and/or risk of higher spending, given the busy election cycle. For now, we see limited risks of fiscal slippage in FY2024 and maintain our GFD/GDP estimate at 5.9%.

India’s Core Sector Index Rises to 5-Month high (Centrum Broking)

Eight core industries, with 40.27% weightage in the index of industrial production (IIP) recorded a growth of 8.2% in June. Previous months eight core index was revised up from 4.3% to 5%. The cumulative growth across these eight industries during the April to June period in the current fiscal stood at 5.8% compared to 13.9% in the previous fiscal. The recent figures for core infrastructure thereby indicates healthy growth in the economy. However, demand side continues to remain weak on the global side, but the government expenditures helped to keep the core industries afloat. As per government’s front-loading of capex, have helped the cement and steel production to perform well this quarter. We continue to expect strong growth in the production of cement and steel sector in the upcoming months. India’s Fiscal deficit for the first quarter of FY23 stood at Rs. 4.51 lakh crore against the full year target of 17.87 lakh crore.

 Eight core industries shows healthy growth

·         Production of crude oil continued to see a contraction for 13th consecutive month. Crude oil production contracted by 0.6% in June’23. The cumulative index contracted by 2.0% during the first quarter. On monthly basis the index contracted by -3.05% compared to a growth of 4.93%.

·         Refinery products recorded growth of 4.6% compared to a growth of 2.8% in the previous month. Whereas Natural Gas grew for the month and recorded 3.6% compared to a contraction of 0.3% in May’23. The oil basket in general has been disappointing for the past few months as demand has been low which can be seen as the prices have been low.

·         Coal production registered a high single digit print of 9.8% in June compared with growth of 7.2% in May. To the contrary, on monthly basis coal production saw a contraction of -3.1% compared to a growth of 3.97%. The cumulative index increased by 2% during April to June period. The rate of growth has picked up after slowing down for the last three months, indicating revival in demand.

·         Steel production grew by 21.9% in June compared to 10.9% in the previous month on YoY basis. On a monthly basis as well, the steel production performed well, as it recorded a growth of 1.15%, compared to 0.79% Its cumulative index increased by 15.9 per cent during the quarter April to June.

·         Fertilizer production rose by 3.4% in June compared to 9.7% in Mau, on YoY basis. Whereas, on a month on month basis the fertilizer production contracted by 5.35% compared to 16.43% increase in the month of May. Its cumulative index increased by 11.3 per cent during the quarter April to June.

·         Cement production witnessed a growth in May by 9.4% compared to an increase of 15.3% in May, on YoY basis. The growth in cement production was led by the current capex push by the government. Moreover, on monthly basis it expanded by 1.68% compared to a contraction of 0.31% recorded in the previous month. The cumulative index increased by 12.2 per cent during the quarter April to June. We continue to believe that this sector will see major growth due to robust increase in construction activity in upcoming months.

·         Electricity production recorded encouraging numbers as it recorded 3.3%. The May numbers were revised up from -0.3% to 0.8%. On monthly basis, it recorded a positive growth of 0.89% compared to 4.84% in the previous month. The cumulative index increased by 1.0 per cent during the quarter April to June.

India Auto: Slow growth for PVs and 2Ws in July 2023

Our dealer surveys for July-23 indicate: 1) passenger vehicle (PV) demand has been tepid, especially for the small car segment, with discounts inching up further, and waiting periods lowering (Fig. 8 ) (Fig. 7 ) ; 2) Medium and heavy commercial vehicles (MHCVs) wholesale volumes were up, but given seasonal weakness, discounts have also inched up; 3) two-wheeler (2Ws) demand recovery remains slow, especially given a delayed festive season.

Overall, we maintain our view that consumption will see a re-balancing of growth in FY24F, where the mass segment such as 2Ws can witness a demand pick-up, albeit from a low base, while PV demand is likely to slow down.

Monsoon activity has picked up well (7% above normal as of 27 July [link ]), and bodes well for rural demand as well, in our view.

For Jul-23, we estimate PV industry wholesale volume at ~353k units, up 3% y-y. However, retail sales would be slightly lower, leading to ~15k inventory build-up, on our estimate. We maintain our PV industry growth estimate at ~6% y-y for FY24F.

In 2Ws, we expect wholesales to be up 1% y-y in Jul-23F. Retails are likely up 8% y-y, implying limited inventory build-up, given a delayed festive season in 2023. We expect MHCV wholesale volume to rise 11% y-y.

For tractors, we expect volumes to be up 10% y-y in Jul-23F.

EV registration data for July-23: 2W EV retail sales have increased marginally from 3.5% in Jun-23 to 4.3% in July. Ola Electric, TVS Motor and Ather Energy continue to dominate the segment. We note that the FAME-II scheme is unlikely to be extended beyond Mar-24 which can lead to slower adoption rates.

Our Commodity Cost Index has stabilized (Fig. 13 , Fig. 14 ) while OEMs have taken price hikes. Hence, OEMS will have gross margin tailwinds in FY24F, partly offset by higher A&P and discounts.

IT Services: Q1 fails to live up to modest expectations (AXIS Capital)

Q1FY24 results reflect weaker-than-expected performance vs modest expectations across Tier 1 techs, while Tier 2 techs saw mixed performance – Coforge, PSYS, and KPIT fared better, while LTIM and MPHL continued to struggle. Margins were ‘flat to up’ YoY although down QoQ, due to seasonal factors aided by easing of supply side and tight cost control (including delayed wage hikes in some cases). Hiring remains in check.

Q1FY24 weaker than expected

Tier 1 techs saw a weak start to FY24, with companies missing modest growth expectations, except Infosys. Tier 2 techs also had mixed fortunes like the prior quarters – Coforge and PSYS fared better, while LTIM and MPHL struggled relatively. Within the ER&D coverage, KPIT continued to sustain steam, while LTTS and Tata Elxsi struggled relatively. Growth moderation spread to Europe sequentially, while North America continued to be weak. Amongst verticals, companies continued to see near-term challenges in financial services, hi-tech, and communications.

Margins held up YoY; seasonality pulled down margins QoQ EBIT margins for Tier 1 techs (except for TechM) were up YoY, driven by easing supply side pressures and tight cost optimization (in some cases, delayed wage hikes as well). Margins were down sequentially on account of seasonal factors, including increments, visa costs etc. Companies continued to see tightness in sub-contracting and utilization, as hiring stayed tempered, with Tier 1 techs seeing headcount decline for a third quarter in a row.

Guidance cut Infosys’s FY24 outlook on both growth and margins was below par, after the disappointing exit for FY23. Wipro’s Q1FY24 revenue guidance confirms fears of the company’s historical troubles resurfacing, as industry demand tailwinds have ebbed. HCLT’s guidance was along expected lines, while Coforge’s revenue guidance is reassuring, given street’s concerns around higher BFS exposure for the firm. KPIT retained its growth guidance (while math indicates it should have been upgraded), and it will review its guidance in Q3FY24 (we expect an upgrade). Despite the Q1 miss, LTTS retained its overall growth guidance of 20%+ YoY cc – guidance ask rate for the next three quarters at 4.1% CQGR.

Continue to advocate a tactical approach In line with our sector reports (on Tier 1 techs and Tier 2 techs), we continue to suggest a selective approach within the sector, based on a combination of earnings and valuation comfort, unlike the quasi-uniform rebound seen for Indian IT services firms through FY20-H1FY23, as growth is likely to remain polarized in the current macro backdrop.

Of course, coming from much behind, India has joined the world’s leading economies in terms of the size of GDP. The development of physical infrastructure has been remarkable in the past couple of decades. India has attained strong positions in the areas like IT services, automobiles, pharmaceuticals, etc.

However, the development of social parameters has not gathered the desired momentum. The regional and household disparities have remained wide and deep. Income and wealth inequalities have continued to widen despite a strong affirmative action plan in terms of reservation in education and government jobs for the backward castes and communities. The constitutional guarantee of “Equal Rights” is far from fully implemented. There is a perceptible lack of equality in access to credit, information, professional opportunities, etc.

The problem well highlighted

In fact, the regional socio-economic disparities and cultural differences are well highlighted. These are popular ingredients of any political and cultural marketing campaign in India. However, the awareness of the differences that exist at the state level is relatively poor.

To a person sitting in Mumbai, Bengaluru, Chennai, or Hyderabad, the state of Uttar Pradesh (UP) may not mean much more than – the Taj Mahal, Varanasi, Lucknow, Kebab, taxi drivers, and construction labor. Very few residents of the western and southern states appreciate that UP is as diverse as India itself. Various regions of the state, i.e., Awadh, Brij, Rohillkhand, Bundelkhand, Purvanchal, and Doab, have distinctly identifiable histories, food, dialect, customs, deities, and problems.

People from Bundelkhand and Doab regions in particular have been agitating for a different political identity for themselves for a long time. The regions also differ in terms of caste, community, and religious dynamics. Differences in terms of weather, water and electricity availability, crop patterns, flood-draught cycle, political influence, urbanization, physical infrastructure, income disparities, and other social indicators are also rather stark. The same holds true for many other states also.

Unjustifiable socio-economic disparities amongst various states and regions within states, materially different socio-economic status of various castes and communities in different states, have frequently led to demands and agitations for new administrative units (states and districts).

The legislatures have been mostly unsuccessful in developing and adopting a consensus framework for a federal structure of the country (Though some attempts like Sarkaria Commission have been made). Certainly, there has been a marked improvement in state-center relationships in the past 25 years, but this could be more due to political compulsions rather than any structural change. This has been the period when regional parties have played a critical role in government formation at the center. The strains in center-state relations reemerged as soon as a single-party government got installed at the center in 2014.

It would therefore not be unreasonable to say that the post-independence political organization of the country designed primarily on a lingual basis may no longer be relevant in the current context.

Moreover, the tradition to appoint by nomination rather than purely on the basis of election has killed meritocracy in politics and promoted inequality. Despite all claims of a robust, vibrant, and functional democracy, the political system in India appears to be working in a quasi-feudal style

The political problem, therefore, is to develop a political organization that fully assimilates the aspirations of the people, addresses specific local problems, promotes mutual trust & harmony, bars incompetence and knavery from public office, and ensures that the best is selected and prepared to rule for the common good.

A utopian solution

I may now present the broader contours of my utopian socio-political structure. Some may want to draw prima facie similarities with the Communist State. But trust me it has nothing to do with a Leninist, Maoist or even Marxist state. My utopian structure does allow equal opportunity to all, but through "democratic election" and not by "arbitrary nomination". Moreover, commitment to community (communism), culture (religion & traditions), and reverence for Mother Nature (sustainability) are the core and non-negotiable elements for me, whereas in a communist state, these are mostly redundant.

It is pertinent to mention that I am only proposing a broad concept based on the principle of equal opportunity, and full devolution of power to the local administration to address regional peculiarities and aspirations. A larger debate may be needed to bring out a workable detailed constitutional framework from this broader framework.

The primary governance unit — Local Council

(a)   The primary unit of the country should be a democratic assembly of people in a town or village (Town or village council).

(b)   Each town or village should directly elect a suitable number of representatives on a periodic basis. The winning candidate must win at least 51% of the eligible votes (not just the votes cast).

(c)    Every adult citizen domiciled in that town/village for at least 10 years, should have an equal opportunity to get elected for a term of 3 years. No person shall be elected for more than 3 terms.

(d)   Election expense of all candidates who could show support of at least 10% of eligible voters should be funded by the state. Other candidates may be required to fund their own expenses. The spending limit may be fixed, say Rs10, per eligible voter in the constituency. All expenses should be paid through the designated State office only.

(e)    The performance of each Local Council member should be evaluated on an annual basis by an independent agency. A member failing to score the passing grade should be barred from politics for a period of 6yrs.

(f)    The Chairperson of the Local Council should be elected by the members elected by the public, through a secret ballot. The winning candidate must have a minimum of 51% of elected Council members supporting him/her. Each such Chairperson should constitute an advisory board of local experts to advise him on governance matters. Members of the advisory board should not be paid any remuneration or be accorded any privileges or entitlements.

(g)    Primary health, education, civil infrastructure, scientific research, art, culture, law & order, affirmative action (reservations etc.) may be governed exclusively by the Local Council.

(h)   All citizens are accorded a right to uniform education and primary health services, to be implemented by the Local Councils. Private, for-profit, investment is allowed only in technical education, and specialized health services.

The secondary governance unit — District Council

(a)   Towns and villages with largely homogeneous demographic characteristics should be grouped in various Districts. Each District should have an independent governing council. All such District Councils should be empowered to impose & collect direct taxes and indirect taxes on intra-district trade; frame rules for engagement with other District Councils in the country, including exploitation & sharing of natural resources; movement of labor & capital etc.

(b)   Local Councils falling within a District should elect from amongst their present and past members, who have served at least 2 complete terms to such local council, to the District Council.

(c)    The number of members representing each Local Council should be in proportion to the population, area, and social indicators of each such Local Council. Areas with stronger social indicators get to elect a few extra members. This should promote healthy competition amongst Local Councils to improve the social indicators.

(d)   The district council should have a fixed term of 6 years, with half the members retiring by rotation every 3 years. No member should be elected to the District Council more than once.

(e)    The performance of each district council member should be evaluated on an annual basis by an independent agency. A member failing to score the passing grade should be barred from politics for a minimum period of 10yrs.

(f)    The Chairperson of the District Council should be elected by the representatives elected by Local Councils, through a transparent secret ballot. The winning candidate must secure a minimum of 51% of elected representative members supporting him/her.

(g)    Each such Chairperson should constitute an advisory board of experts to advise him on governance matters. Members of the advisory board should not be paid any remuneration or be accorded any privileges or entitlements.

(h)   District council should fund the affairs of each local council falling within its jurisdiction.

The third tier — National Council

(a)   Each District Council should elect members to the National Council, in proportion to population, area, and social indicators.

(b)   Districts Councils should elect from their best-performing past and present members who have served at least one complete term on the District Council.

(c)    The Chairperson of the National Council should be elected through a secret ballot. The winning candidate must secure a minimum of 51% of elected representative members supporting him/her.

(d)   Each such Chairperson should constitute an advisory board of experts to advise him on governance matters. Members of the advisory board should not be paid any remuneration or be accorded any privileges or entitlements.

(e)    The National Council shall deal only with common matters of national interests, such as foreign relations & trade, national defense, rivers, highways, national power grid, taxes on inter-district trade, space missions, natural disaster relief, etc.

…to continue next week

Also read

Battle Ground 2024 - Forces are aligned

Battle Ground 2024 - The Narrative and Rhetoric

Battle Ground 2024 – The Problems

Battle Ground 2024 – In search of solutions

Battle Ground 2024 – Political solutions

“I believe that you want the millions of India to be happy, not that you want the reins of government in your hands. If that be so, we have to consider only one thing: how can the millions obtain self-rule?”

[M. K. Gandhi, Hind Swaraj]

Over the past seven decades, the political structure has taken the shape of a pyramid form, whereas the social structure in the country continues to be in a ladder form.

In a pyramid structure, the space at the top is limited. The people are continuously at struggle with each other. Those who have reached the top fight with each other to stay there. They have also to fight with a multitude of other people who are trying to reach the summit. To survive at the top, you need to push all others down. The concepts such as mutual trust, harmony, cooperation, equality, justice, etc. have little relevance under this structure. The laws of the jungle prevail - the strongest survives and his interest is accepted as justice. This intense and consistent struggle to survive, seldom allows the leaders at the top to bother about the people below.

On the contrary, traditionally Indian society is structured in a ladder form. The ultimate goal is well-defined as salvation from this material world. The space at the top is unlimited. There is no competition. Most people wish that the person ahead of them moves higher faster so that they could also move up. It's like a queue in the temple. You want the people ahead of you to move forward faster so that you could also get to worship the deity sooner. No one pulls anyone back. Everyone pushes the others forward.

I have been highlighting since ever that one of the best things India has got in the past 150years is Mahatma Gandhi. And the most unfortunate thing to occur since independence from British rule in 1947 is the brazen desertion of Mahatma Gandhi by Indian politicians. To my mind hanging his pictures in government offices or currency notes and naming roads after him is even more contemptuous given the blatant irreverence for his principles and ideas.

Mahatma Gandhi understood Indian society as no other Indian leader in modern India did. Based on his understanding, he suggested the model of Swaraj (self-rule). Trust me, the Gandhian idea of Swaraj could have been proposed only by a person like him who had experienced India so intimately.

M. P. Mathai explains the Gandhian idea of Swaraj very succinctly as follows:

“Although the word swaraj means self-rule, Gandhi gave it the content of an integral revolution that encompasses all spheres of life. “At the individual level swaraj is vitally connected with the capacity for dispassionate self-assessment, ceaseless self-purification and growing swadeshi or self-reliance".

Politically swaraj is self-government and not good government (for Gandhi, good government is no substitute for self-government) and it means continuous effort to be independent of government control, whether it is foreign government or whether it is national.

In other words, it is the sovereignty of the people based on pure moral authority. Economically, poorna swaraj means full economic freedom for the toiling millions. For Gandhi, swaraj of the people meant the sum total of the swaraj (self-rule) of individuals and so he clarified that for him swaraj meant freedom for the meanest of his countrymen. And in its fullest sense, swaraj is much more than freedom from all restraints, it is self-rule, self-restraint and could be equated with moksha or salvation."

In one of his letters to Leo Tolstoy Gandhi explained Swaraj as follows:

“Independence begins at the bottom. A society must be built in which every village has to be self-sustained and capable of managing its own affairs. It will be trained and prepared to perish in the attempt to defend itself against any onslaught from without. This does not exclude dependence on and willing help from neighbors or from the world. It will be a free and voluntary play of mutual forces. In this structure composed of innumerable villages, there will be ever-widening, never ascending circles.

Growth will not be a pyramid with the apex sustained by the bottom. But it will be an oceanic circle whose center will be the individual. Therefore, the outermost circumference will not wield power to crush the inner circle but will give strength to all within and derive its own strength from it.”

Thus, the individual is the sole basis of Swaraj. Swaraj is unfathomable without dispassionate self-assessment, ceaseless self-purification, and growing self-reliance at the individual level; and sovereignty of moral authority, as against the political authority.

Swaraj encompasses a fiercely competitive free market, moral duty to be free, fearless, truthful, fair, just, self-reliant, nationalist, and religious.

This Swaraj, many argue is Utopian in the current context. Some argue that it is desirable but we have traveled too far down the road we took post-independence from British rule, and it is too late to go back and begin again.

In my view, this defeatist and fatigued attitude is unwarranted. What we need is a zero-base discussion on the subject and solutions will emerge that would lead us to the desired goal of making 1.3bn people free, fearless, and happy. An incremental approach howsoever sincere might not yield the desired results.

With this in mind, I dream of a free, fearless, and fair socio-political organization for the country."

During my various visits to the hinterlands of the country, I found strong evidence of numerous democratic assemblies within various communities and localities. From my experience, I know for certain that most Indians not only feel comfortable working with the members of their own community but are usually most productive when operating within the network of their “Own people” or "Community".

This “communism” is arguably a key strength of Indian society. Therefore, in my view, the social ecology model suggested by author and activist Murray Bookchin which advocates a “stateless, classless, decentralized society consisting of a network of directly democratic citizens' assemblies in individual communities/cities organized in a confederal fashion” appears relevant in our context. Unfortunately, our politicians and social activists have dissipated the term “communism” to mean a defunct political ideology that claims to have its genesis in the ideology of the 19^th century German philosopher Karl Marx.

Besides, religious fundamentalism (which is usually referred to as “communalism” in the Indian context), is mostly a political problem in India. A secular political system, as envisaged by Mahatma Gandhi and incorporated in the soul of our Constitution, would automatically weaken these minuscule elements leading to their eventual extinction.

My solution to India's political problem is thus predicated on our ability to build and nurture strong communities that live in harmony with nature.

Tomorrow I shall present the broad contours of the political structure that in my view can rid our country of nepotism; conflicts between various interest groups that undermine the national interest; mediocrity at the expense of meritocracy; promote communal harmony, equity, and cater to the aspirations of all the people.

…to continue

Also read

Battle Ground 2024 - Forces are aligned

Battle Ground 2024 - The Narrative and Rhetoric

Battle Ground 2024 – The Problems

Battle Ground 2024 – In search of solutions 

It would be fair to assume that most students will leave the answer sheets blank and leave the examination hall, distraught. Some may try to test their ingenuity and offer random literary solutions to complicated problems, still hoping to score zilch. A few audacious ones may contend that being literature students, they are naturally the only genius around. These few would offer detailed literary explanations which may not make any sense to the conventional students of physics or literature and still insist that the solutions offered by them are the best. Hoping to pass with distinction, they might also take this opportunity to ridicule the students of physics and celebrate their superiority. The last category mostly includes politicians, and often politically motivated bureaucrats.

I am inclined to view the present-day global economy as the examination hall described above. Only a few of the participants (economists, bankers, administrators, politicians, regulators, traders, borrowers, lenders, consumers, producers, et. al.) seem to have much clue about what is happening around them; and only a few of them actually have a decent understanding of the problems. These people, having an understanding of the problem, unfortunately, are too busy popularizing the problem; sometimes in a hushed sound; but mostly raising the decibel to the maximum; sometimes in the secret chambers and sometimes in front of the mammoth crowds; sometimes with audacity and sometimes with jitters in their spine. They are not offering any solution; often waiting for the problems to get resolved on their own.

What matters today is to make an effort to find solutions, howsoever radical or unassimilated these may seem. We need to administer a sense of calm to the stressed nerves of the common people, who are finding the current conditions unfairly severe to them.

Finding solutions

“For indeed any city, however small, is in fact divided into two, one the city of the poor, the other of the rich; these are at war with one another; and in either there are many smaller divisions, and you would be altogether beside the mark if you treated them all as a single State.”

In my view, most of the problems being presently highlighted may just be the symptom of the problem and not the problem in itself. In finding solutions, we would need to focus on the underlying problems and not merely the manifest symptoms.

For example, in an electoral democracy, the child of a politician contesting and winning an election should not be a problem. After all, it is the people who have elected such a child to public office, just like anyone else. Especially when no one is complaining about poll rigging etc. The true problem here is unequal opportunity. And this problem is not limited to politics but to every sphere of life - education, law, medicine, art, business, religion, etc.

All those complaining about the dynasty in politics fail to provide a solution because they are scared of addressing the underlying problem, which pervades deep into our personal and social lives.

In the past 10-11 years, I have made multiple attempts to understand the problems that have been ailing Indian society and therefore the Indian economy. From the experience I gained through wandering across the vast landscapes and meeting thousands of common people in the hinterlands, I have earned some understanding of the problems, I mean rhetoric apart. Moreover, since I enjoy the advantage of not being a formal student of economics, statistics, finance, politics, or sociology - I enjoy the liberty to assess the problems from a commonsense viewpoint and devise solutions that do not necessarily conform to the established conventions.

Since I have written on these issues frequently and consistently, my old readers may find the presentation that follows in the next few days repetitive. However, I still find this exercise worth doing as it reinforces my commitment and faith in the great India story.

I must emphasize that this is to initiate a larger debate on the desirable social, political, and economic order for the country. I have been accumulating thoughts on this for the past ten years. The readers may pick whatever they like, debate it, improve it, and introduce it back in the stream. It is important to clarify that I do not claim any proprietary rights over these thoughts. I claim to have liberally and unabashedly plagiarized the thoughts of various common and eminent people; published wisdom; and my own experiences.

…to continue

Also read

Battle Ground 2024 - Forces are aligned

Battle Ground 2024 - The Narrative and Rhetoric

Battle Ground 2024 – The Problems