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The Hindu Notes for 11th September 2018

Much must change in Kerala

After the devastating floods, Kerala society as a whole now needs to reorient its relationship with nature

In a national calamity, people look towards a leader to extend them empathy, a sense of somebody being in charge and a route to a more secure future. By any measure, Pinarayi Vijayan, the Chief Minister of Kerala, has lived up to expectation on the first two aspects and may be expected to play a role in identifying the third after the State has had to face its biggest disaster in a century in the form of floods. He has reflected gravitas, displayed pragmatism and expressed a willingness to take assistance from any source. The last is a necessary corrective at a time when false pride, standing in the way of accepting the hand of friendship extended from the outside, is projected as a desirable nationalism. At the very same time, it is necessary to acknowledge the extraordinary outpouring of humanity and material assistance towards the people of Kerala from the rest of India. It is difficult to recall something on this scale as a response to a calamity in a distant corner of the country in recent times.

Natural capital and progress

Now that the Chief Minister has affirmed that the “last person has been rescued”, rehabilitation is progressing and plans are afoot to rebuild Kerala, it is hoped that the last will be approached with an open mind. This would be a mindset that recognises that much must change in Kerala’s civil society, which in turn would trigger change at the level of governance. Indeed a paradigm shift, being a profound change in the perception of progress, is needed. The central element in this new perception must be that a continuous decline of a society’s natural capital cannot be seen as compatible with progress. Kerala has justifiably been identified as having carved out a niche, and not just in India but globally, as a society with high human development at a relatively low level of income. While it may be pointed out that globally, many other societies, particularly to the east of India, have achieved the same in terms of some standard social indicators, it must be remembered that, as a part of India, it had also to deal with an ossified social structure in the form of caste and the inequalities it perpetuated. Social stratification was far less in east Asian societies making it easier for them to transform. For Kerala to have overcome this burden through a non-violent political revolution is a considerable achievement.

At times though, stories of our success relayed across the world may lead us to be somewhat swayed by praise. This may have happened to the leadership of Kerala society which extends beyond the political class to its intellectuals. While focussing on certain aspects of a society, external observers could miss others that are just as crucial in evaluating its development. Laudatory evaluations of Kerala have masked the decline in natural capital and associated ecosystem services that have accompanied the rise in income. The decline in natural capital has ranged from deforestation that contributes to rainwater run-off contributing to landslides, to sand-mining that leads to rivers over-flowing their banks, and building on the flood plains that were meant to provide a cushion. All of these contribute to flooding.

Too much consumption

When we have it upon the word of Madhav Gadgil — who may be considered India’s ecological voice and has studied the Kerala topography and its alteration — that human action may have exacerbated the consequences of the unusually heavy rain this year, we would be advised to hear the message. We know exactly the corrective actions necessary to reverse, possibly only at a glacial pace at that, the accumulated man-made factors responsible for this. At the centre of it is consumption. In relation to the ecological damage that it can wreak, Kerala consumes too much. At the centre of this consumption is luxury housing and commercial holiday resorts, of course luxurious. Structures much larger than necessary cover the soil with concrete, heightening rainwater run-off, and through their weight increase subsidence. Houses here have historically been built with sand mined from rivers. Once this source got exhausted, river sand has been replaced by manufactured sand which is a by-product of quarrying. Large-scale quarrying has meant loping off the top of hills and allowing water to seep into them, making them unstable. So at the back of much of the human factor that has exacerbated the flooding by changing the landscape is luxury housing. It is significant too that some of this housing is not even used or has very few persons living in them. This is hardly a rational use of a scarce resource such as land, especially when it has known catastrophic consequences.

Unsustainable trajectory

Altogether, Kerala’s much-acclaimed development trajectory is unsustainable as demonstrated during the recent floods, and needs a change. The needed change is radical and the reality is that its past cannot be a guide to its future. This past has been one of human development, but Kerala society as a whole now needs to reorient its relationship with nature. However inclusive this development may have been — and there is reason to believe that some of the claims made are exaggerated — that by itself does not ensure that the assault on nature will now end. Only the State’s civil society can guarantee its future on this score. Political parties are loathe to speak the language of responsible consumption for fear of losing out on votes.

While, going forward, a path-breaking environmental movement in Kerala’s civil society is necessary, it does not mean that governance in Kerala should be left unaccountable out of concern for peacability. Even in a past that has witnessed progress in the form of an elimination of social barriers, government in Kerala has remained unaccountable with respect to the economy. Malayalis have had to migrate in large numbers, leaving their families behind, to keep the home fires burning. Now with the new challenge of ecological sustainability arising, government — by which is meant the entire public sector — needs to assume accountability for the depletion of natural capital. Someone has to take responsibility for the pattern of land use in Kerala, the pathologies of which extend to building resorts on hillsides, turning every public space into a refuse dump for used plastic, and the continuous alienation of agricultural land, all of which may have had a role in exacerbating the floods. It is by now clear that the decentralisation of government has been unable to prevent these developments. Land use in the State needs review at the level of the State government.

Calling for a public review

Mr. Vijayan has been statesmanlike in saying that he will take material assistance from every quarter. He must now extend this approach to listening to independent voices on the rebuilding of Kerala. The obvious place to start would be to institute a public review of the dams in Kerala and how they are operated, focussing in particular on how their operation may have affected the flooding. Such a demand has been made by a section of Kerala’s legislators. Even a conservative body such as the World Bank had instituted an independent review of the Sardar Sarovar Project in the 1990s, and tailored its policy accordingly. Considerations of both transparency and confidence of the people in the functioning of the government machinery demand that such a review be instituted at the earliest.

Cause for caution

India’s GDP growth continues to be powered by consumption, not investments

A question being raised about the GDP estimates for the first quarter of this year (April-June) is: How should 8.2% GDP growth be interpreted in, or reconciled with, the overall context of some of the pronounced trends in the economy? These include the depreciating rupee, rising bank bad loans, or non-performing assets (NPAs), a trade deficit that has shot up to a five-year high, and retail fuel prices that are inching up every day.

One of the explanations being offered for the missing feel-good sentiment is that the faster growth has come on a low base which has produced a statistical effect, making growth appear faster. This is partly correct. The low base does explain a part of the growth estimated, but not all of it.

The full picture emerges from sectoral estimates, which show that while some parts of the economy grew faster, a few others did not. Agricultural GDP growth quickened as two successive years of good rains improved farm produce. Manufacturing and construction, both industries that were dealt a severe shock by demonetisation, recovered, as the cash shortage moderated. Policy support — such as simplification of the messy Goods and Services Tax collection systems — can strengthen this revival. If nurtured, it can be employment-positive.

Another barometer

Services growth slowed. Industries such as trade, hotels and transport, and the financial, real estate and professional services fall in this segment, as do public administration and defence services. Services growth is relatively more representative of the economic sentiment of the vocal among urban and semi-urban Indians. The performance of services probably explains the sense of disconnect with the growth estimate being expressed in some quarters.

Despite slowing as compared to a year ago, the services sector grew faster than the agricultural GDP. It is too early to conclude if rural distress — to address which the Narendra Modi government announced budgetary support — has ended or reduced significantly. Rural wage growth has remained stagnant for the past four years.

Surprisingly, the slower services sector growth has not been a drag on consumption. Private consumption expenditure growth has quickened, relative to the preceding quarter, as well as compared to the same quarter last year. The strong, sustained growth, despite the high base, suggests that a consumption boom is in the making. Government salary and pension hikes including at the State level are feeding this consumption spree that is funded by taxpayer money and has remained unaffected by the sharp surge in retail fuel prices. Consumer industries are also reporting robust rural sales growth. Pockets of the rural economy — land-owning large farmers, for instance — appear flush with disposable income.

Aided by consumption

The cause for caution is that the GDP growth continues to be powered by consumption, not investments. Consumption-led growth is sustainable up to a point, especially if it is financed by expanding the government (Centre plus States’ cumulative fiscal) deficit. The high growth in the years preceding the global financial crisis was driven by savings and investments. After the global economic downturn disrupted that trend, an investments famine followed.

A big expectation was that with Mr. Modi in the driver’s seat, investments would revive, but, as the quarterly estimates remind us, the economy is still not out of the investments slowdown. The share of investments in GDP dropped from 32.2% in January-March to 31.6% in April-June this year (although it is slightly better than the 31% in April-June 2017) — a direct consequence of the worsening NPA crisis.

A recapitalisation of banks was undertaken. It has not measured up to the problem. The insolvency mechanism has just about started functioning after dithering and delays. The government, in spite of its majority in Parliament, has made little progress in reforming public sector banks. Even the Nirav Modi scam could not shake it out of inaction.

With the government upbeat over the 8.2% growth, the risk is that in all the excitement, the message from the quarterly estimates (on the sustainable drivers of growth) might be lost.

Growing pressures

The estimates for the subsequent quarters of this year will not enjoy the benefit of the low-base effect. First quarter estimates are early indicators and not necessarily representative of the remaining nine months of a year.

To sustain the 8%-plus growth rate beyond the first quarter, through the rest of the year, will require a far more pro-active policy push than appears probable in an election year that is also fraught with global economic challenges and mounting macroeconomic pressures. Ranging from rising international crude prices to the risk of inter-country trade wars, these are likely to keep the current account deficit — and therefore the rupee — under stress. A depreciating rupee will inflate retail fuel prices, unless the Central and State governments cut the taxes on them. But tax cuts will increase the fiscal deficit. The Reserve Bank of India can hike interest rates to arrest the rupee’s depreciation. But that will further increase the cost of borrowing, including the government’s debt.

Reforms, by removing bottlenecks, could have promoted growth even in an environment of rising macroeconomic vulnerability. But Mr. Modi’s Independence Day speech has not spelt out any reform measures to be expected in the run-up to the general election. As of now, there are no signs that the full-year growth will beat the forecasts, most of which are about 7.4%.

The one who reached out to China

In the evolution of India-China ties, Atal Bihari Vajpayee’s contribution was seminal

India-China relations have come a long way from the period of enmity and bitterness that followed the 1962 war. True, they have not returned to the cheery days of Hindi Chini Bhai Bhai, but the maturity with which the leaders of both countries handled the Doklam crisis last year shows that the ties between New Delhi and Beijing are now based on a sound realisation that neither can ignore, much less antagonise, the other. Rather, comprehensive mutual cooperation between India and China is increasingly being seen as an imperative for peace, stability and progress in Asia and the world.

Change in attitude

In this evolution of India-China ties, one leader who made a seminal contribution was Atal Bihari Vajpayee. A politician in the non-dogmatic mould, Vajpayee was open to learning the lessons of history and, thus, revising his own views from the standpoint of India’s national interests. As a swayamsevak of the Rashtriya Swayamsevak Sangh, Vajpayee’s views on Pakistan and China in the 1950s were quite negative. However, by the time he became the Minister of External Affairs in the Morarji Desai government, and particularly when he served as Prime Minister, Vajpayee was a changed man. He had come to firmly believe that for India to emerge as a major global power, it must normalise relations with Pakistan (which meant finding a permanent and amicable solution to the Kashmir dispute) and comprehensively improve relations with China (which meant resolving the vexed border problem in the spirit of mutual compromise).

Vajpayee’s visit to China in February 1979 ended the chill created by the 1962 war. It was the first high-level political contact between the two countries after 17 long years. His ice-breaking meeting with Deng Xiaoping, then China’s paramount leader, started a new chapter in India-China relations that has continued till date.

In a tribute to Deng on his birth centenary in 2004, Vajpayee recalled: “I have pleasant memories of my meeting with Deng Xiaoping. The unfortunate military conflict in 1962, caused by the border dispute, had left a scar on the centuries-old affinity between the two great nations of Asia and the world. I called on him in the Great Hall of People in February 1979. I must say that the genuine warmth with which Deng Xiaoping received me — I too reciprocated that warmth in equal measure — helped in overcoming the psychological barrier and looking forward with optimism to a positive new chapter in our bilateral relations.”

Deng told Vajpayee: “We do have some issues on which we are far apart. We should put those on the side for the moment and do some actual work to improve the climate to go about the problem. Our two countries are the two most populous countries in the world, and we are both Asian countries. How can we not be friends?”

The creative solution that Vajpayee and Deng discussed to resolve the vexed border dispute was, in a nutshell, this: Do not let normalisation of bilateral relations become a hostage to the resolution of the border dispute. Develop bilateral relations in an all-round manner. Simultaneously, try to resolve the border dispute through dialogue and by ruling out the use of force to change the status quo along the Line of Actual Control (LAC).

In December 1982, when a delegation from the Indian Council of Social Sciences Research called on him in Beijing, Deng referred to his meeting with Vajpayee and reiterated his pragmatic view on the border problem: “When I met your former foreign minister in 1979, I put forward a ‘package solution’ to the problem. If both countries make some concessions, it will be settled... The problem between China and India is not a serious one... The problem we have is simply about the border. Both countries should make an effort to restore the friendship that existed between them in the 1950s. As long as we go about it in a reasonable way, I think it will be easy for us to settle our border question. Because this question has a long history, you have to take into account the feelings of your people, and we also have to take into account the feelings of our people. But if the two sides agree to the ‘package solution’, they should be able to convince their people.”

The next major milestone in India-China rapprochement was Prime Minister Rajiv Gandhi’s visit to China in December 1988. Deng told Gandhi, “Welcome... my young friend. Starting with your visit, we will restore our relations as friends. There was unpleasantness at each other. Let’s forget it. We should look forward. Do you agree with me?” Gandhi responded: “Yes.”

A different China

Vajpayee’s visit to China in June 2003, when I had the honour of accompanying him, witnessed a big breakthrough in bilateral relations. The China he saw this time was very different from what he had seen in 1979. Nowhere was this difference more striking than in the Shanghai skyline. Vajpayee and his delegation went on a boat ride along River Huangpu and what we saw on Pudong district, facing the historic Bund on the other side of the river, were glistening skyscrapers.

During this visit, India recognised for the first time that the “Tibet Autonomous Region is an integral part of the People’s Republic of China”. Some foreign policy experts, including some serving diplomats, were not in favour of this recognition. They felt it would prevent India from using the “Tibet Card” against China. But the realist in Vajpayee was convinced that his decision, apart from being in line with the unchangeable situation on the ground, was a helpful step towards improving bilateral relations. On its part, the Chinese side recognised Sikkim as a State of the Indian Union. The visit also saw an important breakthrough in trade relations — bilateral trade started rising rapidly thereafter.

An important upshot of the visit was the decision to fast-track the talks on the border dispute by initiating the framework of Special Representatives of the two Prime Ministers driving the dialogue. Accordingly, Vajpayee’s trusted National Security Adviser Brajesh Mishra and China’s State Councillor Dai Bingguo were appointed as the two special representatives. Vajpayee and Premier Wen Jiabao also agreed that the joint work on the clarification of the LAC should continue smoothly, which helped in maintaining peace along the LAC. After Vajpayee’s demise, Wen Jiabao sent a heartfelt condolence, calling Vajpayee an “outstanding politician”.

I met Mr. Dai in Beijing last year. He said, “Mr. Vajpayee was a leader with a vision and strategic thinking. He did not want the past to determine the present. He started a new era of cooperation in India-China relations. He had an open mind on the border issue and wanted it to be resolved soon on the basis of give-and-take. I was very hopeful about making progress.” He added: “Prime Minister Narendra Modi belongs to the same party as Mr. Vajpayee. He has an opportunity to become a New Vajpayee.” How true!

The importance of the Bahujan Samaj Party

The Assembly elections in Madhya Pradesh, Chhattisgarh and Rajasthan may turn on the alliances the party strikes

It is curious that in Madhya Pradesh, Chhattisgarh and Rajasthan, where Assembly elections will be held by December, political debates are largely centred on the BJP and the Congress. The role that the Bahujan Samaj Party (BSP) may play is still to be sufficiently addressed.

Numerical strength

One reason for the rising importance of the BSP in these States is the numerical strength of Dalits. In Madhya Pradesh, Dalits are around 15.2% of the population, in Chhattisgarh around 11.6%, and in Rajasthan around 17.2%. Dalits are scattered in different pockets of these States and can influence the election results in many Assembly seats. For instance, in Madhya Pradesh, there are around 60 Assembly seats (in a House of 230+1 nominated) where Dalit votes have the capacity to influence election results. In the 2013 Assembly election in Madhya Pradesh, the BSP got 6.3% of the vote. As there was a difference of around 8% in the votes secured by the victorious BJP and the Congress, many political analysts were of the opinion that if the Congress and the BSP had jointly contested the election, the result may have been different.

In Chhattisgarh, the Dalit population plays an important role in determining election results in regions like Janjgir-Champa, Raigarh and Bastar. In fact, Kanshi Ram, the founder of the BSP, understood the potential for Dalit politics that lies in these regions and contested his first parliamentary election from Janjgir in 1984. In Rajasthan too, the Dalit population is scattered in most parts of the State and had already asserted itself in past elections. In 11 Assembly constituencies adjoining Uttar Pradesh, there are concentrations of Dalit communities.

While it is true that the BSP alone cannot win many seats in these States, by forming an alliance with any dominant political force, it can influence the results, in some places decisively so. In the past, the BSP had not been in favour of forming alliances with other political parties, given its preference to form social alliances of castes and communities directly. But the party has changed its strategy of late. The BSP’s recent experience in Karnataka, where it tied up with the Janata Dal (Secular), and its success in forging an understanding with the Samajwadi Party for the Uttar Pradesh bypolls indicate a change of mind. The BSP is also keen to expand its base in these States. No other axis of mobilisation is likely to challenge the BSP’s influence among Dalits. This gives the BSP great negotiating power in striking deals with other parties in these States.

Change in strategy

In fact, the BSP has been trying to strengthen its organisation, from booth units to the State units. Previously, Kanshi Ram had tried to develop State leaders. But this effort withered away after his illness and death. Now BSP chief Mayawati is pursuing this strategy to nurture various lines of State leaders. This strategy is giving the party visibility.

A section of Dalit voters in these three States seems to be annoyed with their BJP-led governments due to various reasons. Cases of atrocities against Dalits, issues of reservation, and the Rohith Vemula case have upset many Dalits, and the BSP has been trying to mobilise its campaign along these lines.

The Congress is likely to be politically and electorally compelled to form an alliance with the BSP to get Dalit support in the forthcoming elections and prevent fragmentation of anti-BJP votes. A tie-up with the BSP would also help the Congress in other States in the 2019 parliamentary elections. The BJP, in turn, would like to prevent opposition unity and keep these elections multipolar. It is trying to minimise the impact of the Una atrocities, Rohith Vemula’s suicide, and growing doubts over its intentions regarding reservation by organising various programmes on B.R. Ambedkar and by promoting micro caste-based identity politics to break Dalit unity.

It is not yet clear what would be the impact of the BJP’s efforts, but the BSP has quite strongly emerged as a third force for the forthcoming Assembly elections. The BSP may play an important role not just in determining the outcome of the Assembly elections this year, but also in giving shape to a non-BJP Mahagathbandhan, or grand alliance, before the 2019 Lok Sabha election.