Media and People Power

We, Indians are among the truly privileged people enjoying all liberties including freedom of speech and expression guaranteed under the Constitution. The pleasure of being able to write or say what you please, subject to laws of libel and reasonable restrictions imposed to protect the larger public interest, is indeed a rare one even in the post-war world. Not too long ago thousands were jailed in East Europe for merely saying what they believed in, or worse still for speaking the truth. Even today, the citizens of the world's most populous nation have no right to freedom of speech and expression. Sometimes it is clear that we take our blessings for granted, and do not have adequate appreciation of liberty.

Over the past 60 years after independence, the three constitutional organs of state have fallen far short of our hopes and expectations. Legislatures have become battle fields, and no serious public policy is evolved, nor accountability of the executive enforced by our elected representatives. Most legislators are content to be disguised executive, seeking and obtaining state patronage, privilege and pelf. A vicious cycle of unaccounted money power, illegitimate election expenditure, polling irregularities, abuse of public office, corruption and perpetuation of feudal oligarchies is operating, making citizens somewhat helpless. Executive office has become a private estate, and legal plunder has become the norm. Both the elected executive, and appointed public servants have become the modern-day monarchs, and the notion of public service is all but forgotten. Honesty and survival in elective public office are increasingly incompatible. The judiciary has become very much a part of the problem. Law's delay and the breakdown of rule of law have nudged our society into near anarchy. With 25 million cases pending in courts, many of them for several years and decades, a well-developed market has developed for criminals and musclemen to provide rough and ready justice.

In the face of the colossal failure of the three constitutional organs of state, the citizen is reduced to a state of abject helplessness. Cynicism and despair have become all too pervasive; very often in far greater proportion than the situation warrants. Many of our travails are but an inevitable part of the maturing process of an emerging democracy. However, as our democratic evolution coincides with the age of technology, instant communication and rapid transformation, there is a revolution of rising expectations. As reality is well-short of expectation, there is perpetual disappointment and frustration, further worsening the already complicated situation.

Thanks to free press, India remained a democracy against all odds. In this complex environment, the one institution which nurtured, sustained and strengthened our democracy is the press. The role of media during freedom struggle and after independence has been an extraordinary and inspiring saga. Gandhiji and his colleagues always relied on the print media to propagate their message, and inspired the educated middle classes to form the bulwark of the freedom struggle. Once the message was spread, and a solid phalanx of middle classes was formed to lead the movement, mobilizing the masses for freedom was relatively easy. After independence, the early excitement and enthusiasm abated, and as institutions of state became moribund and dysfunctional, the media played an extraordinary role, with few parallels in the world. It is this fierce independence, unflinching courage and undiminished idealism exhibited by the press which broadened and deepened our democracy.

The greatest moment for the media was during the epochal period of the 70's, marked by people's movement against corruption and mis-governance, increasing state oppression culminating in suppression of liberty in the name of emergency, and the eventual resurgence of freedom with the glorious verdict of 1977 unseating the establishment and restoring the lost freedoms to people. Rarely have the people spoken so unequivocally and courageously, conquering fear and prejudice, breaking traditional barriers and resisting inducements. At a time when the electronic media were completely state controlled, the role print media played in safeguarding democracy and restoring liberty was an outstanding one. There are many less dramatic, but equally potent illustrations of the media's heroic role in confronting the establishment, humbling the mighty, defending the citizen, and acting as the sentinel of freedom. The quality, courage, catholicity, and concern for human values exhibited by Indian media is second to none.

Post-emergency period saw a breathtaking expansion of the media. The 90's saw the rapid spread of electronic media, as the march of technology with the advent of satellite television made state control irrelevant. It is ironic that the state, which controlled all facets of electronic media for decades, is now a helpless bystander as the private channels became the authentic sources of news and views. It is also a sign of times that this is not a result of any deliberate policy or soul searching by the state, but a product of communications revolution which could not be blocked by the political class. This, more than any other event, presages the future of the media. For about 40 years after independence, the state was the dominant player in generating and propagating news, and in determining the fate of the media by its policies (newsprint), laws (emergency), control (electronic media), and patronage (advertisements). But now all that has changed. The dismantling of the license-permit-quota raj on the one hand, and the communications revolution disregarding national boundaries and state controls on the other, have created breathtaking opportunities for the media. The future role of the media is in their own hands, and is no longer dictated by external agencies.

That even in India, which still is home to the largest number of illiterates and the poor and malnourished on earth, there has been a breathtaking proliferation of mass media is evident. The facts speak for themselves: over 62,483 newspapers of all kinds, of which about 24,927 are in Hindi, over 18 crore combined circulation of newspapers and periodicals, over 800 films annually with unbelievable number of audiences, 120 million radio sets with 24.6% of (rural) population regularly listening, 79.4 million television sets (2001) with half the population of India regularly watching the terrestrial TV channels, over 267 million Indians with regular access to cable television, 21% of the population covered by FM radio, nearly 248 million telephones and rapidly expanding, over 209 million mobile phones, over 5 million personal computers and internet users projected to be 100 million by end of 2007….. the list is quite impressive. The last decade has seen a remarkable expansion of media and communications network and coverage. With literacy levels increasing rapidly over the past decade, and more and more people having disposable incomes after meeting the basic needs, media's reach and influence are only going to grow over the next decade and more.

Have this expansion and power of media been translated into greater public good? Is our democracy more mature now? Is there more informed public discourse on account of the media? Are media still a part of the solution as perceived for decades, or have they become a part of the problem? Are there signs of self-correction and growing public-spiritedness, or is there more decay and crass consumerism at the cost of rational discourse and public good? These are troubling questions which haunt all lovers of liberty and democracy. Obviously, when we are dealing with a vast country and innumerable newspapers and television channels, there cannot be any sweeping generalizations. There is much that is good and healthy, and there are parts which are perverse and sickening. But we can safely say that the bulk of the media today represents a moral force for the rejuvenation of republic and transformation of democracy. By its very nature, the press is an empowering, ennobling, invigorating and liberating force. In an open and competitive system the media act as moral instruments to hod those in authority in check, and promote public good. Healthy skepticism, irreverence of authority, a capacity for self-deprecation, fierce independence of spirit, moral outrage at egregious discrimination and injustice, and tolerance of heterodoxy and respect for diversity are the hallmarks of our media. These are also the vital ingredients of a democratic society. Happily, given our past, the maturing of our institutions, the power of the media, and the spirit of liberty pervading our people, there is no likelihood of our freedoms, including freedom of speech and expression, ever being extinguished again. There is no external threat to the media in future.

But there are certain danger signals emanating from within. A potent instrument of freedom is increasingly becoming a private tool for profit or perverse pleasure. Let us examine some of the less savoury aspects of the media today.

First, there is an ever-increasing obsession with power games. Politics, a noble endeavour to promote public good and happiness, has become a fiercely competitive exercise for personal aggrandizement and private gain. There is intense excitement in media's coverage of politics. Power games are analysed endlessly, and endless space is devoted not to issues which effect people's lives, but on who is winning and who is losing, who is rising and who is falling, who is teaming up with whom, and splitting from whom. This approach to politics as a spectator sport, often a bloody, no-holds barred fight to the finish, has severely undermined our democracy, and retarded its evolution. Politics has now become an alternative to medieval blood sports, appealing to the worst gambling instincts, completely divorced from the lives and well-being of citizens. While the nature of political recruitment and the compulsions of a flawed process of power are largely responsible for this decline, the media have contributed heavily to this unhappy state of affairs. As a result, we have only change of players on our political scene, but the rules of the game remain unchanged. This had bred enormous cynicism about our political process.

Second, in many cases the morbid curiosity in the game of power and the natural instinct for political voyeurism have progressed further. The media, instead of playing the role of an impartial, and critical umpire, have been sucked into the vortex of partisan politics, and started taking sides. These political preferences are often not based on ideologies and policies, but are an expression of personal bonds and mutual gain. Public interest has taken the back seat and truth has become the casualty. Diametrically opposite conclusions are drawn from similar facts by the same newspaper depending on the players involved. While invocation of Article 356 in one case is strongly justified in the backdrop of certain facts, such a course is stoutly resisted in another identical case because the players happen to be different! This playing of favourites, and twisting facts and logic to suit convenience, have distorted public discourse and made sections of the media very suspect in the eyes of the people. This undermining of the legitimacy of the media, and increasing suspicion that media groups have their own private agendas, have diminished their credibility and persuasive power, even as their reach and power are growing.

Third, media business is seen increasingly as any other profit-making business. Undoubtedly financial viability is the key to sustainability, and no paper can run for long if there are constant losses. However, while bottom-line has to be kept in mind, treating newspaper as a commodity like any other is a gross perversion of the freedom of expression. There are countless other business where you can peddle consumer products and make a tidy profit. By its very nature, newspaper cannot be a very profitable business. Printing and exhibiting whatever appeals to the lurid tastes and base impulse of the readers and viewers regardless of consequences to the society is nothing short of abdication of the sacred responsibility to promote rational and enlightened public discourse. This commodification is growing rapidly with corresponding decline in the obligations to the community.

Fourth, even when the intentions are honourable, there is decline in professionalism. The more competent and conscientious journalists are doing an outstanding job. But the bulk of the correspondents are both uninformed and casual about their profession. The rank incompetence and shoddiness have been repelling many discerning citizens. Journalism has become just another job in many cases. Worse still, in many cases, particularly in regional and local newspapers, the potential nuisance value of a correspondent has its own pecuniary rewards! The bonhomie with which powerful politicians, bureaucrats and businessmen deal with pressmen is converted as a source of patronage and private gain. These unhappy tendencies are blunting the moral sharpness of media, and reducing their efficacy as guardians of public interest. If these tendencies of corruption and degradation are not checked soon, there is a real danger of this vital institution too falling by the wayside.

Fifth, the power of the media is exercised by some of the media flippantly. Reckless hedonism and unchecked narcissism have become quite common in the name of giving the readers what they want. To cite one instance, several newspapers and television channels have treated an ageing star's birthday festivities are far more important than the centenary celebrations of Lok Nayak JP! This pandering to the whims of the glitterati, and treating the general public as a source of amusement and enrichment of the privileged few is both undemocratic in principle and immoral practice. Harmony can be preserved in an inequitous society only when the privileged exercise restraint and act with deep sense of responsibility. If the media ignore the plight of the poor and underprivileged, and indulge in theatrics and circuses as in Roman amphitheaters, the broad consensus in society for democracy can easily evaporate. Democracy is the art of elevating morally unacceptable status quo to a level of dynamic tension, and resolving potentially violent conflicts by social transformation. If hope and faith in the future are extinguished, and if a modern democracy is merely a cosmetic substitute to a feudal oligarchy, then ordinary people have no longer a stake in the preservation of democratic order. The media will ignore this at their own peril, because democracy and liberty are the basis of a free press.

Sixth, increasingly what is most noisy is regarded as news. Substance is ignored for style, and image is given precedence to reality. Decibel levels and not the weight of the issue, local arguments and not evidence, slogans and not rational logic are dominating our political and social scene. The media, in the mistaken notion that what is most strident is news, are inadvertently encouraging such tendencies. As Mark Twain said, often a hen which only laid an egg cackles as if she has laid an asteroid! If we confuse the egg for an asteroid because of the cackling, it does not speak highly of our judgment and discerning ability. A casual glance at the newspapers reveals this lack of judgment which is the luxury the lazy and incompetent enjoy. A noisy walk out in the legislature on a trumped up issue, feigned emotion for a self-serving cause, and dramatic pronouncements divorced from truth are given far too much visibility impairing rational discourse.

Finally, there is far too much cynicism and despair in our society. The press, instead of offering sensible and practical answers, is adding to these dark emotions and feelings. It cannot be anybody's case that things in India have deteriorated over the past 55 years. We are better off than ever before, and there is overwhelming evidence that things are improving steadily. However, there is increasing gulf between our potential and its fulfilment on the one hand, and expectation and reality on the other. There is moral indignation and justifiable anger an account of this increasing gap. Such anger is the moral force which can accelerate progress and improve the human condition. If, however a sense of balance is not preserved while condemning what is wrong, there is a danger of throwing the baby with the bath water. The only antidote to the ills of a democracy is more and better democracy. There are no knights in shining armour on white horses who can resolve our dilemmas. The media owe it to the country and themselves to promote a sense of optimism by focusing on a clear destination and showing a direction. Otherwise, there is a danger of media becoming a part of the problem, instead of being the solution.


Today our democracy is in a curious phase. For all appearances, we are a robust democracy with competitive elections, political freedoms, peaceful transfer of power and real authority vested in elected governments. But deeper analysis reveals several troubling features corroding our liberties, perpetuating inequities and discrimination by birth, sustaining self-serving oligarchies and political dynasties, and delegitimizing the political process. This prismatic political culture coexists with a rapidly growing economy and a self-confident entrepreneurial and professional class. But the fruits of growth are shared only by about 40% of the population, and the bulk of the people are not given the opportunity in wealth creation. Their potential remains unfulfilled and avoidable suffering continues unaddressed because the Indian political system never addressed the fundamental issues of equity and opportunity. Quality education accessible to every single child irrespective of circumstances of birth, reasonable healthcare free of cost to every citizen, productive skills to participate in wealth creation, and income enhancement in agricultural and rural sector are the four greatest challenges in today’s India. Only when we accomplish these goals will all Indians partake in the feast of economic growth and share the dreams of a great power fulfilling its destiny. Such a transformation is the function of politics.

True politics is a noble endeavour to reconcile conflicts in society and to fulfil the potential of every child. Our current political culture based on pelf, privilege, patronage, muscle power, dynastic succession, feudal fiefdoms, arbitrary use of power, private gain at public cost and perversion of the most elementary principles of democracy is at the root of the crisis of governance and perpetuating inequities in India. We need a new political culture based on genuinely democratic political parties, transparent funding, constitutional methods of mobilizing public opinion, rational debate, and genuine agenda to empower people and release their energies.

The only powerful instrument people have at their disposal in creating such new politics for a new generation of Indians is free and vibrant media. Our glorious tradition of free and fearless media gives us a great headstart in this endeavour. The young Indians constitute 73% of our population, and are hungry for change. The rapid spread of telecommunications offers us a great platform to communicate to the vast multitudes of India effectively and mobilize public opinion. Economic growth gives us the cushion to withstand the tremors of transformation. The people are ready for change, as their experience taught them that mere periodic elections and change of governments do not fulfil their aspirations. The media should play a critical role in this second freedom struggle, just as they played a vital role in galvanizing the middle classes in the national movement against the colonial power.

There is much that is wrong with our society and polity today. There is also much that we can be proud of. There is a lot more we can accomplish. Most of our problems are not intractable – we do not have to rediscover fire or reinvent the wheel. We are fortunate to line in an era of spectacular scientific progress and human advancement. Avoidable suffering can be prevented better than ever before, and human potential can be fulfilled in its fullest measure in today's world. Many pioneers, thinkers, scholars, activists and practitioners showed the way we can make life more glorious and society more harmonious. The media need to focus on these solutions. Mere description of what is wrong, if overdone, reduces us to being masochists. We need strong willed, optimistic, determined, sensible pursuit of those collective goals which make life worthy. The media, print and electronic, have done a lot to make life tolerable, to keep hope alive, and to sustain human spirit in the face of monumental problems our society has faced over the decades. A reasonable level of prosperity, human dignity, realistic opportunities for vertical mobility, and confidence in the fairness and justice of our political and social institutions are well within reach of all of us. Once lives and work in the next few decades will be judged by one single yardstick – have we fulfilled this promise? The media have a pivotal role in this gigantic, exhilarating and eventually rewarding task. The anticipation and excitement with which we wait for the morning newspapers, and the pleasure with which we tune in our favorite channel are testimonies to this great potential of the media in our society. There is every reason to hope, and believe that our media will play an even more glorious role in fulfilling our potential as a nation, and promoting human happiness.

Lok Satta Party pioneers intra-party democratic process in India (will conduct organizational elections by secret ballot)

Lok Satta party is all set to create history on the Indian political scenario.

For the first time in India, a political party, i.e. Lok Satta party is organizing intra party organizational elections by secret ballot and preferential voting for over 50 divisions as per the constitutional norms laid down by the party.

Addressing the media at a press conference held today at the party head quarters, Dr Jayaprakash Narayan- National coordinator, said "The Party's Constitution reflects the values of internal democracy, total transparency, and member-control. Apart from the Party's agenda and vision, there are critical measures institutionalized in the party's structure and functioning, which make it the harbinger of 'new politics for the new generation", he added

Speaking on the subject of a new political culture, Dr JP Narayan elucidated," All Party candidates for organization office will be chosen by the members of the party through a secret ballot. There will be affirmative action policies to promote leadership of women, youth, backward classes and minorities and Scheduled Castes and Scheduled Tribes.

Elucidating further on the internal electoral structure, he further said," Article XXI of Lok Satta Party constitution mandates the creation of an autonomous Electoral Authority to oversee all internal party elections in the precincts of Greater Hyderabad Municipal Corporation (GHMC).

The party spokesperson chipped in further and said" The Election Authority for the city of Hyderabad will have the flexibility to constitute lower level election authorities at the level of Division to assist in the conduct of the organizational elections.

Don't enter into MOUs on Rural Public Schools

The Lok Satta Party today dubbed the State Government's scheme to promote Rural Public Residential Schools with private partnership as a populist scheme meant to benefit managements rather than rural students.

Mr. D. V. V. S. Varma, Lok Satta Party Secretary, in a statement asked the Government not to go ahead with the signing of MoUs with private managements but review the scheme.

Mr. Varma pointed out that that of the 31 lakh students in the 9000 odd high schools in the State, only 3.50 lakh students will get admissions in the 294 schools to be started at the rate of one per Assembly constituency. If the students admitted under management (25 per cent) and merit (25 per cent) quotas are excluded, only 1.75 lakh students or a mere four per cent of high school students benefit.

The Government was publicizing the scheme that benefits a paltry percentage of students with great gusto to gain political mileage. The proposed schools will not reform high school education. And the Government had totally ignored primary education in its bid to promote rural public residential schools. According to surveys made by Asar and Sarva Siksha Abhiyan, primary education is in a parlous state with 62 per cent of students not able to write even the names of their teachers, 50 per cent their parents' names and 8 per cent their own names.

Mr. Varma demanded that 20 per cent of seats in primary and upper primary schools under private managements be reserved for the free education of poor students. He wanted Government schools to be strengthened on par with private schools.

The Lok Satta, if voted to power, will provide free and quality education to all irrespective of their caste or economic status.

Dr JP's Padayatra from 23rd October 2007

Dr JP's Padayatra from 23rd October 2007


LSP demands closure of all liquor shops in localities where Dalits and poor people predominate

If women demand, even the licensed liquor shops should be closed


Interacting with media today, Lok Satta Party's Secretary Sri DVVS Verma stated that his party is moving forward to ensure ?liquor-free villages/towns. He stated that Lok Satta party will be adopting a multi-pronged strategy to combat the menace of liquor problem. In this direction, the Party's National Coordinator, Dr Jayaprakash Narayan will be leading a Padayatra on 23rd October 2007 from Peddagotipadu in Guntur district. The three-day Padayatra will conclude on 25th October 2007 evening in Guntur with a public meeting.

Sri DVVS Verma pointed out that over 200 Dalit women in Peddagotipadu have resorted to indefinite hunger strike against the presence of a licensed liquor shop in their village and one of them even attempted to commit suicide. In spite of District Collector's report to Excise Commissioner to relocate the licensed liquor shop, no action has been taken thus far. DVVS Verma stated that the Padayatra, based on principles of Satayagraha, is being carried out to demonstrate Lok Satta Party's complete support to the legitimate demands of the Dalit women in Peddagotipadu. Mr. Verma demanded closure of the licensed shop in all in localities where Dalits and poor people predominate.

Apart from immediate closure of belt-shops, Mr Verma demanded that if large numbers of women in a locality demand the closure of licensed liquor shops, then their demands should be heeded. He also demanded that all political parties should take a vow in front of people stating that they will not distribute liquor during elections.

Mr Verma also stated that LSP is aiming to ensure a few pre-selected mandals as liquor free mandals. He stated his party will be using multiple means such as Padayatra's, citizen's arrest under Section 43 of CRPC and other constitutional means to give impetus to the on-going liquor control agitation.

Speaking on the occasion Mahila Satta State Convener D. Lakshmi, stated that they are operationalisng liquor control committees in various villages to ensure that closed belt shops are not re-opened. She called on various civil society organizations and media to join hands in this noble endeavor to find a lasting solution to the liquor problem in the state.

Lok Satta Party's spokesperson Y. Ramadevi referred to the recent incident where a mother killed her drunkard son in Namligonda village in Warangal district. She pointed out that such tragic incidents could have been avoided had the successive governments taken a proactive stand on removing the belt shops in the state.

On this occasion, Mahila Satta State convener D. Lakshmi, and Lok Satta Party's spokesperson Y. Ramadevi unveiled posters for Padayatra.

Minimum Support Prices for Agricultural Commodities - Letter to the Prime Minister

Esteemed Prime Minister Dr. Manmohan Singh ji,

There is enormous unrest in the farming community in Andhra Pradesh resulting from the severe discrimination in determining the minimum support price for paddy. In this connection, we appeal to you to examine three interrelated issues of procurement price of rice; trade policies in relation to agricultural commodities and marketing regulations affecting the producers' interests.

Procurement Price of Rice:

It is estimated that a quantity of about 90 million tons of paddy is produced by the farmers in the country and this is the largest quantity in the food-grain basket. There is a misconception in the minds of the policy makers that when paddy is converted to rice, only 65% is redeemed and the balance is wasted. However, the residual products like husk, broken rice etc., are valuable and marketable products. 100 Kg of milled-paddy would yield 65 kg rice, 10-12 kg of broken rice, 8 kg of cattle feed and the balance would be husk. The government already has a scheme to modernize all rice mills to enhance the yield of rice and minimize wastage in milling. Hence, the difference in value between wheat and rice is very marginal and accordingly the minimum support price difference also should be marginal.

Government of India is spending huge money on Food Corporation of India (FCI) for maintaining the buffer stocks. It is estimated that an amount of Rs. 760 is spent by FCI, as handling and carrying costs for one quintal of rice every year. Compared to this expenditure by FCI, the additional support given to the rice farmer by way of a proper minimum support price is negligible. The high operational costs of FCI are because of its highly centralized and corrupt administrative apparatus. Given these problems, public distribution system needs to be reoriented to meet the requirements of the people below poverty line by creating Grain Banks managed at the local level. This will definitely reduce transaction, transport, handling and storage costs, while enhancing the rural employment opportunities. Most importantly, it will eliminate corruption and leakages in the system, and reduce food subsidies.

Trade policies in respect of agricultural products:

As on date, the government seems to be having ad-hoc export and import policies with reference to many agricultural products. For instance, 7,90,000 tonnes of wheat has been imported from international markets by paying Rs. 1600 a quintal during 2006-2007, when the Indian farmer was paid at the rate of Rs 750 per quintal.

Similarly, cotton is imported periodically by paying higher prices for a limited quantity to meet the short-term domestic requirement and this step has an adverse affect on the price of cotton in the local markets. Such irrational, ad-hoc, anti-producer policies are distorting the market forces, and severely depressing prices of agricultural commodities. In case of garment industry, cotton cost is only a small proportion of the final product price and yet short-sighted policies have done great damage to the farm sector. Not surprisingly the largest numbers of farmer suicides are from the cotton-growing-areas.

Political sensitivity of onion prices since 1980 is well-known. The government certainly has responsibility to help consumers in times of severe price escalation. However, the producer cannot be penalized. And the government has an obligation to buy the produce at market prices and subsidize the consumer. Instead, over the years, dramatic short-term steps were taken to depress the prices and the farmers were left in lurch. At the same time the government and Planning Commission keep emphasizing the importance of rejuvenating agricultural sector. As a great economist and architect of liberalization policies promoting competition and choice, you are more aware than anybody else of the crisis afflicting Indian agriculture. When over 60% of people depend on agriculture, which accounts for 19% of GDP today, a simple arithmetic tells us that the average rural per-capita is only 1/6th of that of the urban population. This is a potentially an explosive situation causing devastation to millions of households resulting in agrarian strife. Successive governments have been aggravating this crisis by acting in a cavalier and short-term fashion without deeper reflection or long-term sustainable policy.

When the World Trade Organisation (WTO) permits an aggregate of 10% subsidies, government policies have not merely denied active support to agriculture, but have actually done everything possible to undermine agriculture by depressing and distorting the markets. The least that the farmers expect from the government headed by a great economist and true champion of fair competition is to let the market forces prevail and provide judicious support to the poor consumers through subsidies when needed. It follows therefore, that our farmers should get benefit of international prices whenever there are supply constraints. Our farmers should also be supported by strong government protection through minimum support prices whenever the prices are depressed. Unfortunately, the exact opposite policy prevails now to the long-term detriment of agricultural economy.

Restrictions on Marketing:

There are about 7,810 regulated markets in the country. The average area to be covered by a regulated market varies from 200 Sq.Km to 780 Sq.Km. Most of these markets are controlled by middle men and commission agents. Small farmers suffer from poor access to markets and are forced to sell their produce to the local trader-moneylender-input supplier at a price dictated by him.

The farmers are also getting short-changed in the market yards, which are headed by nominated bodies. The commission agents and the traders join hands to offer the lowest possible price to the agricultural produce, apart from short-changing the farmer in weighments and charging exorbitant commission (20% - 25%) as against the authorized commission of 4%. In order to address this situation, all the restrictions on movement, storage, processing and trading of agricultural commodities should be immediately lifted. However, the government should insist on reporting requirements in order to keep track of demand-supply situation. The farmers must be organized and empowered to undertake various marketing operations including exports.

Under these circumstances, Lok Satta Party earnestly urges you to immediately take the following steps:

The paddy procurement price of at least Rs. 1000/- per quintal should be announced. On a long-term basis, there should be parity between paddy and wheat as has been the case historically.

Agricultural trade policies must be immediately rationalized. When the international prices are higher, domestic farmers must have an unfettered right to export. In order to sustain the public distribution system, the government must procure at market prices or at minimum support price, whichever is higher, and bear the cost of subsidy. Minimum support price must guarantee fair returns to farmers as recommended by the National Commission on Farmers chaired by Dr. MS Swaminathan. Import of agricultural commodities if any should be only to the extent of actual demand-supply gap when there is inadequate production of agricultural commodities. Imports must never be resorted to as a mechanism to depress agricultural prices. All regulations on agricultural trading, movement, storage, processing and marketing should be immediately repealed.

I am sure your government understands the gravity of the situation and will act swiftly to ameliorate the distress of paddy farmers in Andhra Pradesh, and help rejuvenate the agricultural and rural economy.


Yours Sincerely,

Dr Jayaprakash Narayan

Special Court immediately needed

Corruption allegations against Dr. YSR and Mr. Naidu

Special Court immediately needed

Special Judges should be appointed by the Government
Assets of corrupt public servants should be confiscated

Given the ongoing allegations and counter-allegations between Dr YS Rajasekhar Reddy and Chandrababu Naidu, Dr. Jayaprakash Narayan demanded that the State government must immediately constitute a Special Court to probe the issue of disproportionate assets. He strongly emphasized that this is not a private affair between the current and former Chief Ministers of Andhra Pradesh. Lok Satta Party demanded that the investigation must be totally free from political pressures and a Special Independent Prosecutor with impeccable credentials should be appointed by the Chief Justice of High Court. Dr.JP also demanded that the State government should promulgate an ordinance for confiscation of assets of corrupt public servants.

Under section 2 (c) of the Prevention of Corruption Act (1988), all Ministers, MLAs, elected representatives at State and local levels clearly fall under the definition of ?public servants?. Citing historical precedent for considering elected representatives as public servants, he referred to the famous HG Mudgal case, where the sitting MP was forced to resign for tabling questions in the Parliament (then known as the Provisional Legislature) for personal remuneration.

Additionally, under the section 13 (1) (e) of the Prevention of Corruption Act, possession of disproportionate wealth or pecuniary resources by a public official or by someone on his/her behalf is a crime. This Act mandates that public officials receive income from lawful sources only and they must also declare it to lawful authorities. Punishment for violation is imprisonment from one to seven years and fine.

Dr. Jayaprakash Narayan demanded that the State government must immediately constitute a special court for investigating corruption allegations against public servants under section 3(1) of the Prevention of Corruption Act. The section 3(1) enables the State government to appoint as many judges as necessary. Given these powers, the current debate over whether the probe be handled by a sitting or retired judge is merely sidetracking the issue.

To eliminate the influence of political pressures, he also demanded that a special prosecutor with impeccable credentials should be appointed by the Chief Justice of High Court to probe the issue. Constituting an Inquiry Commission would be a time-consuming process as the findings of such commissions cannot be acted upon directly and would have to be placed in the court of law for further trial.

Lok Satta Party also demanded that if a public servant or her/his family members are charged with holding disproportionate assets then the burden-of-proof must lie with that public servant.
He also called for immediate implementation of Benami Transactions (Prohibition) Act, 1988, which precludes the person who acquired the property in the name of another person from claiming it as his/her own.

Lok Satta Clarifies Stand on Power Subsidies and Subsidised Rice

Dear Sri Sainath,

I invite your kind attention to your column on Oct 12 in The Hindu: ‘Incredible India’ right here at home.

[Click on the link below for the article on Hindu

http://www.hindu.com/2007/10/12/stories/2007101255291200.htm]

You made a reference to Lok Satta Party’s (LSP) platform on subsidies. I would like to clarify the Party’s stand on power subsidy to farmers and subsidized rice.

1. Power subsidy

Lok Satta Party believes that the debate on power tariff for agriculture is skewed. In the AP context, TDP government collected about 2 – 10% tariff through slab rates (Rs 50 per HP. Later raised to Rs 250 per HP). The current Congress government is offering it free of cost. All that is being debated is whether power should be free, or upto 10% of tariff should be collected. LSP believes this is a spurious debate on a non-issue for the following reasons:

Un-metered power, poor distribution management, and corruption are causing loss of nearly 27% of power.

Farmers are getting low quality power with voltage fluctuations, and often motors get burnt about twice a year on an average. Each time repairs cost about Rs 2000 – 3000, resulting in an annual expenditure of about Rs 5000 for each farmer with an agriculture pumpset.

Villages get very poor quality of power, often interrupted by outages or load shedding. In many villages about 6 hours’ power supply in summer is the norm. Even PHCs and schools run without power.

Corruption is rampant in power sector at every level.

Lok Satta movement outlined all these problems as early as in 2000, and argued for decentralized distribution management with effective energy auditing. Lok Satta Times’ issue of October 2000 examined the issue in detail. A team of experts including late Dr Tatarao, Sri Balaramireddy, Sri TL Shankar, Capt Jalagam Ramarao, Sri KP Rao and Sri SR Vijayakar examined the power sector crisis and recommended solutions.

As a result of Lok Satta’s advocacy, four feeder lines in Andhra Pradesh were handed over to franchisees for effective distribution management. The results, despite bureaucratic hurdles, corruption and lethargy, were impressive. In Kallacheruvu of West Godavari district, the line losses were reduced from 27% to 9% (a saving of 18%). Voltage was fully stabilized in farm sector, and incidence of damage to pumpsets was brought down to zero! Corruption was eliminated with people’s participation. Under one feeder alone, over ten youngsters were trained and employed in a sustainable manner.

Lok Satta Party has been advocating replication of such a model in the whole state. The power savings will be of the order of Rs 2500 crore, about 100,000 jobs will be created, voltage will be stabilized, and villages can be supplied quality power round the clock. Our party has made a public commitment to achieve these results. In such a model, power tariff for agriculture is a short-term, marginal issue. Farmers can be assured quality supply, villages will get 24 hour power supply, and the power subsidies can be continued for sometime until farmers’ condition improves. This rational management of power sector is Lok Satta Party’s stand; not casual and irresponsible populism. Sadly, given the low quality of our public discourse and lack of depth in debate, issues are seen in simple ‘Yes’ or ‘No’ terms.

2. Subsidized Rice:
Lok Satta Party has not offered any additional food subsidies. We are merely committed to two things:

Better targeting of all food subsidies including free rice now available to the indigent (Annapurna Antyodaya scheme).

Transfer of public distribution to the district government, and offering the subsidy saved by better targeting as an incentive to the local government to enhance its resources.

Right now, for a population of under 8 crore, 1.8 crore families are covered by food subsidies to which the poor one entitled. Official rural poverty figures in AP are at 16%, and probably 30 – 40% people deserve food subsidies. And yet, over 90% of the people are covered now! Despite this there are lakhs of poor families which do not have a ration card! This is what needs to be set right, and Lok Satta Party is committed to revamping the public distribution system.

I hope you will take note of our stand and inform your readers, so that serious and rational debate on subsidies can be promoted.

With warm regards,
Jayaprakash Narayan
(National Coordinator)

Lok Satta's agenda a great hit, says Dr. Jayaprakash Narayan

Please click on the link below
http://www.loksattaparty.com/english_site/hit.pdf

Dr. J. P. Pleads for Assistance to Police Official’s Family

Lok Satta Party’s National Coordinator Dr. Jayaprakash Narayan (Dr. JP) today requested Chief Minister Dr. Y. S. Rajasekhara Reddy to provide all relief and help to rehabilitate the family of Mr. E. Madhava Reddy, Sub Inspector of Police, Malakpet, who was fatally mowed down by a speeding lorry as he chased and tried to stop it. “There cannot be a more painful incident than this in which a uniformed police officer was disobeyed and run over by a wayward lorry driver in a wanton act of culpable homicide”.

Dr. JP suggested that Mr. Madhava Reddy’s family be extended benefits on the lines of police killed in extremist operations. Under the policy, the Government treats deceased functionaries as on duty until retirement and provides wages and allowances to the family. In addition, one of the surviving members of the family is provided a Government job at an appropriate level depending on educational qualifications.

Dr. JP wanted the Government to ensure payment of wages and allowances to the family of Mr. Madhava Reddy until his retirement and pension after the retirement age. Mr. Madhava Reddy’s son, aged 26 and a Bachelor of Science, be appointed assistant sub-inspector as a special case. “Such a gesture from the Government would enhance the morale of all serving policemen and give them the strength and confidence to discharge their duties in the face of danger and adversity”.

Dr. JP called on members of the family of Mr. Madhava Reddy in the morning and conveyed his condolences.

In his letter, Dr. JP said the death illustrated the malaise afflicting the public order machinery. “We have eroded the self-esteem, confidence and image of the police severely, and as a result lawful orders of uniformed officers are ignored with impunity. The culture of permissiveness is a direct consequence of undue political interference in the day-to-day functioning of the police…”.

Dr. JP called for making crime investigation independent and isolated from political influence and professionalization of law and order police.

Stamp Out Terrorism, Appeals Dr. JP

Lok Satta Party's National Coordinator Dr. Jayaprakash Narayan (Dr. JP) said today that terrorism had to be uprooted ruthlessly to protect society and civilization. In a statement, Dr. JP described terrorists, who took the lives of innocent people through bomb blasts in Hyderabad, as cowards.

"No religion sanctions terrorism although its perpetrators invoke religion for their acts. Terrorists are essentially barbaric people who have nothing but hatred for mankind and all values of civilization."

Dr. JP said blaming the police and Intelligence agencies for failure to prevent terrorist attacks was unwarranted. Even if Intelligence had information about likely terrorist attacks, they would not know when and where they would strike.

In times of crisis, people, political parties and the Government should stand united and do nothing to disrupt normal life. Calls for 'rasta rokos' 'bandhs' would merely serve the cause of terrorists, who were bent on destabilizing the country.

Dr. JP said that Governments in their bid to stamp out terrorism should not abridge people's fundamental rights. China could do without terrorism because it had a totalitarian system. "The need of the hour is striking a fine balance between national security and civil rights."

Dr. JP underlined the need for police reforms to ensure that the personnel were productively utilized. While thousands of police personnel were deployed as gunmen, intelligence personnel were used to serve the interests of the ruling party. Dr. JP in the morning called on the blast victims undergoing treatment in hospitals. Eleven Lok Satta volunteers donated blood to Chiranjivi Blood Bank for the benifit of victims.

Citizen, Wealth and Society

To Paraphrase Dickens, we seem to be living in the best of times, and in the worst of times!

On the one hand, there is undiluted exultation among growth enthusiasts. Low tax rates, 9% growth, high savings, declining deficits – all seem to be promising. “If only we pursue the reform agenda, particularly in pension, insurance, and labour sectors, things will only get better”, claim market fundamentalists.

On the other hand, there are signs of deepening political unrest. Repeated political setbacks and mid-term rumblings in the ruling coalition, the agrarian unrest, violence in Nandigram leading to tragic deaths, and the killing of 55 unfortunate policemen in Chattisgarh by Maoist guerillas – all these paint a more somber and distressing picture. Which of these two versions reflects the reality? And what can the society at large, and the wealthy segments in particular, do to protect the gains of reform and minimize the social strife?

It is now universally acknowledged that the ‘invisible hand’ of the market is a greater force of common good than the benevolence of the rulers. But even 30 years ago, this was not so obvious. I entered government service as a starry-eyed socialist with great faith in the power and intentions of the State. Then, in early 80’s, my stint as special officer of Visakhapatnam Steel Project, then India’s largest public sector project (Rs 8000 crore), looking after land acquisition, rehabilitation, labour relations and public order issues, cured me of my illusions. I learnt to my consternation that public sector in India is largely the private sector of those in public office, giving endless opportunities for pelf, privilege, patronage and petty tyranny. Mercifully, things have improved since then with progressive expansion of competition and choice. The communications and consumer goods revolution, and accelerated growth are two obvious gains of liberalization.

But the market cannot be the panacea to all our problems. The state clearly cannot abdicate from key sectors. Without creating opportunities to the poor for vertical mobility, we cannot promote equity or growth. Even in developed democracies, there is evidence that birth and wealth are determining a child’s future much more than talent and hard work. Despite the avowed classlessness of American society, the bottom quintile of population is finding it harder than ever before to reach the top quintile. Such social stagnation is not only detrimental to harmony, but it also undermines growth as the talent and potential of a large section of people are underutilized. The state in modern world has a vital role in helping fulfill that potential, and preventing avoidable suffering.

But what about society, particularly the privileged and wealthy segments? Do they have an obligation to society beyond wealth creation in search of profits? Market fundamentalists may argue that it is glorious to be rich, and greed is good; therefore pursuit of wealth in self-interest is the best contribution the wealthy can make. But that is not how the capitalist West behaves! The charities of Bill Gates and Warren Buffet are known to all. The great North American Universities of Harvard, Yale, Carnegie Mellon, Johns Hopkins, Cornell, Vanderbilt, Stanford, McGill, Duke, Illinois Institute of Technology and Vassar College were all built through private charities. Smithsonian Museum, and several foundations – Ford, Kellogg, Rockefeller, Mellon, Carnegie and Kresge – are all promoting public causes with private funds. Those wealth creators understood the best value their money could get, and pursued public causes with vigour.

There are three areas in which private fortunes can promote public good in contemporary India. First, wealthy citizens must work for political transformation. The recent by-election for Lok Sabha in Karimnagar (AP) is widely believed to have cost nearly Rs 90 crores for the parties and candidates – mostly for vote buying. Chamundeswari (Karnataka) by-election to State Assembly easily holds a record for expenditure, at over Rs 50 crore! In some cases, the vote of a MLA in the Legislative Council election in AP is rumoured to be costing Rs 1 crore! These astronomical sums show how politics has become big business, with attendant corruption, cronyism and perversion of justice. The competition and wealth creation are bound to suffer in such a political climate. The wealthy would be wise to invest a part of their fortunes in creating new politics for the new generation, and make politics again a moral endeavour. Or else, the political rot will devour the robust economy sooner, than later.

Second, education and healthcare need not only public attention, but private funding through charities also. If Bill gates and Warren Buffet dream of elimination of all preventable diseases all over the globe, our wealthy entrepreneurs can fund these activities in our own country. If the poor are driven to desperation for want of opportunities, it will hurt the whole society and economy. The collapse of higher education and inadequacy of school education are there for all to see.

Finally, many public goods – libraries, museums, parks – can be funded by private charities. Our cities are becoming unlivable concrete jungles and ghettos, even as real estate prices are skyrocketing. If we value our quality of life, we need to improve our own neighborhoods. The true legacy is what we leave for posterity in the form of public good, not the fortunes our children inherit, making them smug and slothful.

It is time that those who, by talent and hard work, or birth and privilege, command vast resources stood up for larger public good in their own enlightened self-interest.

Dr. Jayaprakash calls for justice to Telengana

Dr. Jayaprakash Narayan, National Coordinator of the Lok Satta Party, today demanded that constitutional status be provided to regional development boards, the 610 GO be implemented in letter and spirit and that the next river water tribunal go into disparities in water allocation within different regions of the State. These issues should be sorted out whether Telanagana was going to be formed or not.

Addressing a media meet, Dr. Jayaprakash pointed out that regional development boards recently constituted did not enjoy any constitutional status of Article 371D of the Constitution. The Constitution should be amended to provide them constitutional status, powers and resources. In fact, the Telangana Regional Development Board could be entrusted with the implementation of Government Order No. 610.

Dr. Jayaprakash pointed out that neither the Congress nor the Telugu Desam Government had the political will to implement the G.O. issued as early as in 1985. The Congress was in power between 1989 and 1994 and again since 2004 while the Telugu Desam was in power during the other periods. The GO involved the repatriation of just 28000 of the 9.5 lakh Government employees from Telangana to Andhra.

Referring to regional disputes on the sharing of the Krishna and the Godavari river waters, Dr. Jayaprakash said the next river waters tribunal should go into allocation of waters among different regions within the State. Thanks to Sir Arthur Cotton, some coastal Andhra districts had benefited while Telangana and Rayalaseema did not get adequate waters. The Godavari and the Krishna should be treated as one basin since the Krishna waters cannot be diverted to the Rayalaseema region unless the Godavari waters are diverted into the Krishna basin downstream.

Dr. Jayaprakash called for a national debate on caste-based reservations in the context of the raging disputes between Malas and Madigas in Andhra Pradesh and Gujjars and Meenas in Rajasthan. Treating castes as vote banks, most political parties were indulging in cynical and manipulative games. He made it clear that the Lok Satta was totally in favour of reservations so long as birth-based discrimination continued. He, however, wanted the reservation system to be refined. Any scientific system should give weightage to factors like caste, economic status, parents' educational status, rural or urban background, education in Government or private school and medium of instruction.

On Special Economic Zones, Dr. Jayaprakash said that they should not be constituted in agriculturally prosperous land except in rare circumstances. He suggested that farmers be paid more than market rates for their lands and be given one acre of developed land for every two acres acquired for them. This can be done if more land than is required for an SEZ is acquired.

A great opportunity squandered

Mr. Chidambaram enjoyed great advantages while presenting this year’s budget. The growth rate is impressive, and by all accounts sustainable in the medium term. Revenue increase is the highest in recorded history. Fiscal deficits are at last being contained. Savings rate is almost one-third of GDP. And the government is politically stable.


Considering these advantages, the FM seems to have squandered a priceless opportunity to set a new direction, and give concrete shape to the vision of inclusive growth. There are no serious errors of commission, but errors of omission are aplenty. True, there are no new taxes except the 1% additional surcharge on all taxes for secondary and higher education. Import duties have been slashed. The emphasis on agriculture is necessary and justified, but not matched in action.


What are the errors of omission?


First, the actions on agriculture are inadequate. Focus on seeds, more credit and replenishing ground water reserves and improving water harvesting is welcome. But there are other glaring areas which remain unaddressed. Most farmer suicides pertain to cotton growers. The unfair advantage to OECD farmers on account of high farm subsidies ought to be neutralized by increasing import tariff on cotton. The real challenge of agriculture is establishing market linkage and creating value addition to agricultural produce to enhance rural incomes. Credit cooperatives are still under stultifying government control, and over 60% of farmers have no recourse to institutional credit. Aggressive measures to restructure and liberate cooperatives along with cash support are necessary. The Budget failed to act on all these fronts.


Second, the effort to improve ITI’s infrastructure is welcome. But there are millions of educated youngsters who lack skills and are unemployed. Despite high growth rate, employment in organized manufacturing sector remains stagnant. Even I.T. and other sectors are handicapped for want of skilled workers. A massive national programme for skill promotion is vital today. The FM failed to address this issue of employment and skill promotion.


Third, FM did initiate a modest social security scheme for the unorganized poor. But it is too modest to make an impact. 92% of our work force is in unorganized sector. Out of the nearly 40 crore such workers, FM’s proposals touch only 15 million families, of which 7 million will get support this year. This is too anaemic an approach to make a serious impact on the plight of the unorganized workers.


Fourth, while Education allocations have increased, and school enrolment has improved, outcomes are far from satisfactory. In healthcare, even allocations are paltry, still stubbornly remaining below 1% of GDP. And there is no effort to create new incentive mechanisms to guarantee quality healthcare to all. As a result, despite rhetoric on social sector, allocations are insufficient and outcomes are poor. The Budget failed to address these fundamental issues.


In infrastructure sector, power and urban transport pose formidable challenges. Power sector net losses are about Rs. 26,000 cr. per year, and subsidies touch almost Rs. 40,000 crore. Distribution improvement with local participation is the key. The budget indicates that the government has thrown up its hands in despair in this vital sector. In urban transport, low cost, effective choices need to be given incentives and promoted. No such effort is discernible in the Budget speech.


Handicrafts sector has been plagued by years of neglect and decay. Support to a few handloom clusters is welcome, but insufficient. A national programme of diagnostic survey of all handicraft clusters, and support by way of credit, technology, infrastructure, skills and marketing are critical. If revival of certain handicrafts is unlikely, then promotion of alternative skills and reemployment are necessary. The Budget does not explore these options.


There is huge migration to big cities, and villages are getting depopulated. A concerted effort to promote in situ urbanization to provide amenities and services and encourage local migration through market incentives is necessary. The Budget simply ignores this mounting challenge of unchecked migration and rise of urban poverty.


The real estate boom has further boosted the black economy. A comprehensive approach to provide house sites and housing to urban population, and promote open transactions to curb the menace of black money is needed. For instance, long-term capital gains tax on land can be significantly reduced. The FM left this whole sector to realtors and land grabbers, allowing serious distortion of market prices and continued real estate bubble which could seriously undermine our economic gains.


Finally, the Budget did not pay any attention to the economic aspects of governance challenges. A nation-wide land survey and digitization of records are needed; the police forces needed to be modernized to meet the growing challenges in a humane and effective way; the court system needs to be expanded and made accessible. All these need significant investments and incentives and support to states. The Budget ignored these sectors while making allocations.


All in all, a great opportunity has been squandered.


Jayaprakash Narayan

Will the FM Grab the Opportunity?

Friends,

Probably, no Finance Minister had it so good as Mr. Chidambaram now. Our growth in robust and confidence is high. The government is stable, and most free market policies are accepted across the political spectrum. The FM may not be able to repeat the ‘dream budget’ of a decade ago, when direct taxes were reduced dramatically and the process of liberalization was given a fresh impetus. But he can reshape the future with next week’s budget.

But the good news is tempered by signs of uncertainty. Inflation is rising, even as farm sector languishes. This is a classic case of neither the farmer nor the consumer being happy! Power and transport sectors continue to be in serious crisis. With employment in manufacturing remaining low, the demographic ‘dividend’ can soon turn into a nightmare. Productivity remains low, with poor education and health status holding back our population. As the Economist fears, there are enough portents of trouble which can derail our growth engine.

What then could be the focus areas of this budget, a part from the widespread expectation of reduction of import duties? Five areas need urgent attention, and this budget could mark radical departure in all these sectors and make 10% growth in the next decade a reality.

First, the focus should be on education. It is sad that even now we only emphasize enrolment and literacy, and Sarva Siksha Abhiyan is our only flagship programme. Despite allocations in primary education, outcomes are appalling. Enrolment has picked up; but recent surveys (ASER 2005 and 2006) indicate that most of our children are not benefited. 28.5% of all rural children in 11-14 years age group attending both private and public schools, are not able to read a short story (one paragraph) of grade 2 difficulty; 45% cannot do a simple arithmetic division. We need to invest in teacher training, inspections, random tests to measure outcomes to enable midcourse correction, and stake-holder empowerment. And we need to quickly put in place a massive programme for imparting quality secondary education. We cannot sustain a modern economy or a robust democracy with only a smattering of literacy. Every child must be guaranteed twelve years of school education which prepares her for productive work or higher education.

Second, our health care continues to be in shambles. The National Rural Health Mission is a modest beginning, but not good enough. Public investment must rise to at least 2% of GDP by 2011. Even more important, the incentives need to be altered by risk-pooling mechanisms, money following the patient, and local control and accountability. A nation which aspires to be a big power and an economic giant cannot allow 80% of children and 56% of women to be anaemic, and millions of people meeting untimely deaths and families facing economic ruin on account of sickness.

Third, the bulk of young people joining labour force have neither skills nor opportunities to be productive workers. Our organized work force in manufacturing sector is still of the order of only 6 million, constituting 1.3% of the labour force. About 100 million youngsters will join the labour force over the next decade. Most of these new entrants are eager to create wealth and make a living, but lack the skills and opportunity. In the long term meaningful education should impart skills. But these youngsters are waiting today for work. Therefore, a massive national programme to impart skills to make them employable is vital. Its cost will be modest, and gains in social harmony and economic growth will be immense. Coupled with that, labour laws need to be liberalized, to stimulate small and medium enterprises and promote employment.

Fourth, agriculture continues to be in crisis, even as a storm is raised over increase in prices of pulses and onion. Several steps should be initiated to stimulate rural economy; effective market linkages to assure fair price to both farmers and consumers; increase in import tariff on cotton to deny subsidised OECD farmers advantage at the cost of our farmers; massive promotion of value addition of agricultural produce along with infrastructure for storage and preservation; and improved credit through rejuvenation of cooperatives. The FM should launch a massive programme to assist states, provided they come forward to liberate markets and cooperatives from bureaucratic clutches. Our agricultural market committees in most parts of India, except in Punjab and Haryana, where Sir Choutu Ram’s Mandi Act created robust markets, have become dens of corruption and patronage. The plight of cooperatives under stultifying state control is well known. Vidyanathan Committee made practical recommendations, and the FM needs to act on them.

Finally, power and transport sectors need special attention. Decentralized distribution of power through the community or franchisees, metered power distribution with effective energy auditing and massive up-gradation of distribution network to prevent technical losses are vital to transform power sector. Our cities are slowly getting paralyzed because of bad transport, and economy is bound to be affected as growth is increasingly urban. High cost public transport choices like tube rail (about Rs. 150 Cr per KM) must give way to low cost models like rapid bus transport system, and integrated management of rail and road transport.
The current mood of optimism and robust revenues give the FM a priceless opportunity to accelerate growth and sustain it, while promoting equity and harmony.

SEZs and Stakes for All

The government’s announcement of review of the policy on rehabilitation of land-losers in SEZs indicates the complexity and contention involved in land utilization and industrialization in a densely-populated, poor country like India.

Two major criticisms have been leveled about SEZ policy. The first is that the government should change the overall policy and legal environment to promote economic activity, instead of creating islands which are free from regulatory obstacles. This is a valid point in principle. But in a vast and diverse democracy, changing the policy and legal environment for the whole country is easier said than done. Such far-reaching changes, however desirable, are time-consuming, and involve painstaking negotiations and long-term engagement to build a consensus. Therefore, the short-term booster to economic investment through SEZs is a sensible policy tool, provided it presages long-term change of investment climate.

The second criticism in that the incentives offered are excessive and inequitable, and will entail revenue losses. A closer examination shows that SEZ incentives are largely the same as those available to export-oriented units. The one exception is SEZ units can participate in trading activities. It makes sense that these economic incentives should be uniform throughout the country, while other policy and regulatory incentives will, of necessity, be applicable to notified SEZs for the time being. The loss of revenue on tax-incentives is notional, and the argument that the additional investment growth and jobs will more than offset this revenue loss is reasonable.

In addition to these policy issues, there are five operational issues which need to be addressed immediately. First, what kind of land should be acquired for SEZs? The government policy is both fair and reasonable. The government says that mainly waste and barren land and, if necessary, single crop agricultural land alone should be acquired. Location-specific industries (port-based etc) may sometimes require valuable agricultural land. Otherwise, the stated policy should be strictly enforced. The claim that loss of cultivable land will undermine food security is exaggerated. Conversion of 100,000 ha of land, or even more in future, would reduce farm land by less that 0.1 percent. With the decline in share of agriculture in GDP, greater industrialization and shift of occupations are both necessary and inevitable. India cannot continue to be a largely agrarian economy if we harbour ambitions of rapid economic growth and global power status.

Second, should land for SEZs be bought on market principles or acquired by compulsion through state power? The land acquisition law and past precedents do permit the state to acquire land for a company for a ‘public purpose’, and industrial growth does qualify as public purpose. If needed, the law can be amended to make it more explicit. But as a rule, it is preferable to encourage private purchase through market mechanisms including negotiations and bidding. However, there are occasions which warrant state intervention. For instance, a recalcitrant owner of one critical but small piece of land can thwart the whole project by demanding abnormal price or refusing to sell; or a location-specific industry needs land which owners are unwilling to sell. In such cases, land acquisition may be the last resort, and even then fair price should be fixed through negotiations rather than depending on registered sale deeds (declared sale prices are often undervalued to avoid stamp duty or conceal black money).

Third, how do we ensure that land losers have stakes in SEZs? Mere ‘compensation’ at current market prices is insufficient when the asset value would appreciate significantly. Land losers suffer the heart burn of relative deprivation as the values skyrocket, and their neighbours benefit from their sacrifice. One elegant and equitable solution would be to treat part of the land as equity in the project. In addition to the normal compensation, the land owner could have right of owning a part of the developed land in the SEZ. This could be about 10% in industrial projects, and 20% in infrastructure projects. With huge real estate boom, even 10-20% of the land would fetch the owner multiple returns relative to the original compensation. Such equity stakes will make SEZs attractive to the land losers.

Fourth, the displaced persons need to be imparted skills necessary for wealth creation, and absorbed in the projects coming up in SEZ as far as practicable. In 1985-86, a massive project was undertaken to train 8000 youngsters in displaced families of Visakhapatnam Steel Project (Now RINL), and all of them are now productively employed. Until that training, the displaced persons sought employment without skills, and the project officials could not engage that many peons and messengers in a modern steel plant! A national programme of equipping unemployed youth with skills is overdue in any case, and SEZs should be the starting point. Once SEZs provide local employment, much of the resistance will disappear.

Finally, how do we integrate SEZs in the local governments, even as their autonomy is assured? In AP, in 1996, the industrial infrastructure corporation created a viable and successful model. The local entrepreneurs were handed over the management of the industrial estate, and were given the authority to raise service charges (‘taxes’) from the units/plots in the area. An agreement was concluded between the local government and the industrial estate, transferring 30% of the taxes raised to the municipality. In effect, the industrial township subsidized the municipality while quality of services and local autonomy were protected. Such an innovation would be ideal for SEZs.

There are bound to be some losers in any growth process. But with sensitivity, openness and innovation, we can create stakes in growth for all groups.

Jayaprakash Narayan

A clarification

Friends,
Several of you have sent emails on the Margadarsi issue and Lok Satta Party’s stand. Clearly, there has been a misunderstanding about our position. I gave a statement in good faith with an intention to raise the quality of public debate, and focus on key issues in dealing with financial institutions. We have neither supported, nor opposed any individual, group or party.

The statement essentially outlines three objectives in dealing with such matters.

Protecting depositors’ interests: Deft handling by regulatory agencies is required to prevent a run on deposits.

Promoting financial stability: Trust in institutions is critical to prevent a cascading effect and eventual collapse.

Role of the Regulator: The RBI, as the Central Bank, has an impeccable record of regulating financial institutions and laying down monetary policy. The Central Bank must act to protect the depositors, prevent cascading effect, penalize wrong doing, and it must be allowed to do so without fear or favour.

All these are unexceptionable points made in the hope that the quality of public discourse will be enhanced by reason, dispassionate analysis and a problem solving approach.

At no stage did Lok Satta Party attack any party or government, nor did it support any individual or group. However, when society is aroused by passion with great ease, it seems to be difficult to steadfastly pursue public interest sans partisanship. Several people misconstrued our comments as unreserved support for a business group, or unrestrained attack on the government. A careful examination of facts clearly proves otherwise.

This stand on preventing a run on deposits is consistent with the Lok Satta’s movement’s stand, earlier, when urban banks were collapsing. Lok Satta then strongly criticized the government’s inept handling of the situation and argued for a revolving fund with contributions from banks and governments to give confidence to depositors.

Lincon once said, “Public opinion is everything; without it nothing can be done, and with it nothing can fail.” In this case, people are divided on the issue and positions are taken easily, and articulated with passion. Once we had realized that for a Party dedicated to creating new politics for a new generation, this issue is a needless digression, I publicly stated that Lok Satta Party would serve public interest better by staying away from the issue. Since then, we have maintained silence on the subject.

Some of our friends and well – wishers have, obviously, strong views on the subject, and they are entitled to them. Lok Satta Party has no interest in the matter, except to protect the interests of depositors and promote rule of law.

I hope you understand and appreciate the fair, balanced, rational, legally correct and morally sound position of Lok Satta Party on this issue. Some may still disagree, and we respect their views. But we have an excruciatingly difficult task of building a better democracy, and we need to put this episode behind us. The nation’s future and the opportunities created for all children irrespective of birth are far too important to permit needless digressions.

Breaking the realty-black money nexus

Dear Citizen,
In the midst of robust growth indicators, one issue which is causing concern is the black economy and the role of real estate in that. Some estimates put this parallel economy between 25 and 50% of the accounted GDP. The negative consequences of such a large parallel economy are all-too-evident.

Corruption is both a cause and consequence of unaccounted money.

• Competition is eroded with tax evasion, and genuine tax-payers find it difficult to survive in the market.
• Tax, GDP ratio is depressed as a large part of the economy is unaccounted.

The consequent failure of public services and decline in infrastructure are all evident in India. With poor quality public goods, the poor suffer disproportionately. The consequent decline in productivity affects the whole economy. Parallel economy encourages wasteful expenditure, and resources are misallocated at the cost of pressing national needs. Unaccounted and untaxed money breeds envy and discontent in society. All these causes and consequences of parallel economy are well-known.

In India, real estate is the sector which feels the impact of black money most. Our land prices are shooting up irrationally. True, land is a scarce commodity, and cannot be created. This supply constraint is further aggravated by our cultural obsession with land. Far too many people are in search of land as a safe investment outlet.

While land is a scarce commodity by definition, the demand-supply gap is aggravated by bad policies and misgovernance. Despite our small land mass (2.5% of the world's land surface), India accounts for almost 12% of the global agricultural land. There is also huge potential for developing residential and industrial areas. Mere building of roads and creation of infrastructure will open up vast areas for utilization. Instead, development is limited to small pockets, and real estate prices are reaching the stratosphere.

The new development of townships and special economic zones is hampered because land holders typically want to hold on to their property for speculative purposes. Experience teaches us that land prices shoot up a hundred times or more with even modest development, and therefore no farmer or land-holder is content with the measly 'compensation' offered under the Land Acquisition Act. Even if above market prices are offered to owners, there is severe resentment as farmers do not share in the anticipated prosperity.

High stamp duties have traditionally fueled black economy, as sellers declare sub-market prices to reduce tax liability. In a market dominated by unaccounted money, those who wish to disclose real prices are at a great disadvantage. The seller has to pay high capital gains taxes with full disclosure. If he wishes to buy a property, in turn he has to pay a large part of the sale consideration - typically 50 to 70% - in cash, which in turn needs black money! Most people are therefore forced to evade taxes and further enlarge the parallel economy.

Land registration has always been a source of corruption. Rent seeking for placement of officials dealing with land records and transfer of property is ubiquitous. In turn, the officials extort payments from citizens for all land-related documentation and sale registrations. Absence of periodic land surveys and poor record-keeping have added to the woes of citizens and corporates. Land ownership is difficult to establish, and many innocent buyers have been cheated by unscrupulous real estate agents. This further shrinks supply of reliable land with assured titles, and leads to escalation of land prices.

Corrupt state politicians and bureaucrats are increasingly using their control of government land and land records as a source of patronage and extortion. With the decline of license-permit raj, control of land has become one of the key sources of corruption. The state politicians can dramatically alter the fortunes of favoured individuals and corporates by allotment of land.

• There is no rational policy for land allocation, nor is there a proper assessment of realistic needs.
• In alienation of government land, market does not operate, as there is no competition and all decisions are discretionary.
• On the few occasions when land is auctioned, the prices are inflated unrealistically as realtors indulge in strategic high bidding to enhance the market value of their other assets, or some buyers pay unreasonably high sums in a state of irrational exuberance.
• Rent control laws have further inhibited development of land, and created scarcity by diminishing supply.
  
  Clearly, unrealistic real estate prices, huge black economy and phenomenal corruption are a drag on the economy. This will eventually inhibit growth and enhance the risks to individuals and businesses.
  
  The government can act in a few simple ways to disentangle the complicated mess we have created over the decades.
  
  First, supply can be enhanced by opening up more land for development by building roads and infrastructure.
  
  Second, stamp duties need to be rationalized, and land records updated by periodic surveys and computerization with full public access to all information.
  
  Third, in all developmental projects like special economic zones, land losers can be given equity in the form of ownership of a portion of the developed land. This will give farmers a share in the prosperity and make available more land for development.

Finally all alienation of land for profitable activities should be non- discretionary and by public auction.

Simultaneously, a few concomitant steps need to be taken to curb black-money in land related transactions.

• Giving right to charities to acquire land at 50% above the declared purchasing price within 6 months.
• High vacant land tax to inhibit speculation without development; and
• A reasonable estate duty on inheritance of non-agricultural land are measures which promote transparency and equity.

The governments need to act with clarity and good sense before our growth is hampered by irrational land prices and the growing black economy.

Rehab deal for farmers won't stem suicides!

My fellow citizens,
The union government's announcement of the Rs.17,000 crore rehabilitation package for farmers in the 31 suicide-prone districts of AP, Karnataka, Kerala and Maharashtra focuses attention on the plight of agricultural sector in a fast-growing economy.

Emphasis on irrigation, interest waiver, watershed development, seed replacement and dairy industry is welcome.However, the deeper causes of agrarian crisis need to be critically examined and addressed.

Three fundamental long-term trends have led to the prolonged crisis.

First, agricultural commodity prices have been declining world-wide and in India for decades.

The recent growth spurt in global economy witnessed steep rise in the prices of industrial raw materials.But food prices are stagnant, as greater prosperity does not increase food consumption beyond a point, and higher production actually depresses prices.

Second, the restrictive trade and pricing policies of agricultural commodities had caused immense damage to farm sector for decades until the 90's, and weakened rural economy and farmers' capacity to withstand shocks.

Belated efforts to restore balance in the terms of trade coincided with accelerated shift to services, leading to neglect and decline of agriculture.

Third, the share of agriculture in the gross capital formation (GCF) fell dramatically over two decades from 15.4% in 1980-81 to 8% in 2001-02.

As a share of GDP, GCF in agriculture fell from 3.5% to 1.6% during this period.

The crisis has been aggravated by distorted priorities and irrational policies of governments over the years. Three examples will suffice.

Free power or un-metered power at fixed slab rates promoted excessive investment and over exploitation of ground water, and eventually led to water depletion, failed tube wells, indebtedness and impoverishment.

Stultifying state control and consequent corruption and cronyism in cooperatives undermined a potentially vibrant support system, denying farmers credit, quality inputs, market access, processing facilities, technology and management.

Undemocratic and unaccountable control of markets in most states denied farmers market intelligence and bargaining power, and made them vulnerable to money lenders, extortionists and mafias.

The misery of rural populace has been compounded by the criminal neglect and failure of state in education and healthcare. Even poor farmers and labourers are forced to spend huge sums out-of-pocket for indifferent private schooling and hospital costs. A high proportion of rural families incur huge debts at usurious interest rates to meet rising hospital costs, driving many to despair.

Even a casual glance at the comparative trends of GDP growth in farm and non-farm sectors indicates the magnitude and gravity of the crisis afflicting agriculture.

• About 55% of the population dependent on agriculture shares only 20% of the GDP.
• In effect, the income per capita of this vast population is only one-fifth of the rest of the people dependent on industry and services.
• With agriculture growing at 2% and the rest of the economy recording over 9% annual growth, the share of agriculture is failing each year by almost 1% of GDP. If the current trends continue, agriculture's share of GDP will decline to about 14% by 2014.

Even maintenance of the income per capita differential of 5:1 between other sectors and agriculture would require a shift of about 11% of population from agriculture to non-agricultural occupations, reversing the current ratio of 55:45.

Given the slow rise in employment opportunities in non farm sector, such a huge occupational shift seems impossible; which means that agricultural incomes will register a further relative decline from the current ratio of 1:5!

Clearly, the majority of the population has no place in the growth bandwagon, making rapid growth unsustainable, and society and polity unstable.

The farm crisis needs a robust, all-out response from the Indian state. Certainly we need to invest heavily in agriculture, harness every drop of water, and enhance productivity through better inputs and extension. But much more needs to be done.

First, wherever farmers need protection from cheap imports, tariffs need to be raised. Cotton is a good example. Foreign governments are heavily subsidizing their cotton farmers, and Indian farmers are unable to compete because of low import duty. It is no accident that a large proportion of suicides are in cotton belt.

Second, national policies must be pursued in respect of ground water, cooperatives and markets. Judicious price incentives will remove distortions in ground water use, and democratization, member-control and competition will liberate the cooperatives and agricultural markets from the clutches of corrupt politicians and bureaucrats, and unscrupulous money lenders and mafias.

Third, the focus should be on value addition, particularly in case of perishable crops. Extreme price fluctuations and distress sales can easily be prevented by creating a network of processing industries, guaranteeing fair price to both farmers and consumers.

Fourth, a massive programme should be launched to promote high value crops like medicinal plants, and bio fuels. India is well-placed to take advantage of the next agricultural revolution in the offing, as both food and fuel will compete for the same land, with the end of the era of cheap oil.

Fifth, special attention needs to be paid to artisans, occupational groups, animal husbandry, poultry and fishery sectors. Agricultural crisis acutely affects the artisans and occupational groups in villages, and skills, credit, market linkages and a measure of social security to them are critical. Sixth, we need to develop urban amenities in rural areas and promote non-farm activities and services sector.

Finally, the state needs to focus on its core functions and guarantee good quality, accessible, free education and healthcare to all citizens.

Much of the rural distress is the consequence of state's failure in basic services.

We cannot sustain high growth rates, nor can we alleviate rural distress, without transforming our politics and governance.

Make the poor more productive

Dear friends,
The impact of economic liberalization on poverty levels in the country has been vigorously debated by economists and politicians over the years.

The data seems inconclusive, and scholars often seem to arrive at conclusions suspiciously close to their own ideological proclivities. The broad consensus appears to be that poverty is declining; it is difficult to conclude that the decline in poverty is attributable to liberalization and rapid growth; and the decline in poverty is less than what the free market enthusiasts hoped.

Ultimately, from the perspective of those who are neither investors enjoying dividends or capital appreciation, nor owners of fixed assets enjoying rental income, employment and income are the key determinants of economic prosperity.

Employment statistics may give us a better indication of the impact of growth on the lives of the poor.

The findings of the six quinquennial surveys of NSSO on employment situation between 1977-78 and 1999-2000 make interesting reading.

· The proportion of those employed in the population has been higher (380-390 per thousand) in rural India in the period 1988-2000 than in urban India (315 - 324 per thousand).

· Correspondingly, the number of unemployed persons per thousand population has been higher in urban India (18-22) than in rural India (7-12) during same period.

· In general, all over India, unemployment fell during 1988-94 (from 22 to 18 per thousand in urban areas, and from 12 to 7 in rural areas), and remained unchanged during 1994-2000.

Clearly, higher growth has not made a significant dent in unemployment.
Also a higher proportion of population is employed in villages than in towns, though rural employment is at the low end of the value chain and yields subsistence income mostly. Urban unemployment seems higher largely because the unemployed rural youth are migrating to towns and cities in search of livelihoods. The Southern and Western states are close to population stabilization levels, and villages are getting depopulated on account of migration.

Unemployment is highest among the 20-24 years age group, just as youngsters enter the job market. Over 85% of all the unemployed are between 15 and 29 years of age. This shows that in most cases unemployment is not on account of lay offs or job hopping. Clearly, young people are considered unfit for employment as they lack skills, and in time they acquire some skills and get employment.

In most advanced societies, unemployment declines with education. As young people acquire new skills through education, they become more productive wealth creators, and are in demand in the job market. The striking feature in India is that in each social group, unemployment rises with higher level of education!

There is a clear and unambiguous link between unemployment and poverty. The percentages of unemployed below poverty line among ST, SC, OBC and others in the country stood at 37.6, 29, 27 and 16.9 respectively. At least 37% of the ST unemployed were living below poverty line, while only 17% of the unemployed belonging to the social groups "Others' were below poverty line.

From this analysis, three broad conclusions can be drawn.

First, migration to urban areas is accelerating among young people of employable age. Villages are getting depopulated on account of lack of job opportunities, and cities are getting congested and the urban poor live in appalling conditions.

Second, education is often of indifferent quality, and there is an increasing disjunction between education and skills. It is not uncommon to find even engineering graduates unemployed, or working for paltry wages of Rs 3,000 per month.

Third, even when employment of some form is available, the wages are low on account of low productivity and little value addition. Jobless growth, or subsistence employment with low wages will neither reduce poverty nor stimulate demand for good and services. Eventually, unemployment will retard both growth and social cohesion.

The state must play a proactive role in employment generation in five areas.

First, a massive programme of skilling of our youth should be launched with participation of public sector, private businesses and financial institutions. Micro efforts of this kind have been very successful, but the challenge lies in their replication on a mass scale.

Second, our education needs to be substantially improved, with meaningful skills imparted at high school and college. Apprenticeships and technology workshop instruction in Germany, vocational technical schools in France, community colleges in the US, and vocational training institutes with internship in Latin America - all have useful lessons to offer. Our own polytechnics and ITIs have largely been ineffective, as the skills imparted are inadequate, the institutions did not respond to changes in the labour market, and there is no interaction with industry.

Third, we need to create economic activity in rural areas by creating urban infrastructure and amenities, and promoting manufacturing and service sectors based on local resources and needs.

Fourth, a significant boost to rural economy is needed by incentivizing value addition to agriculture through post-harvest technologies and agro-processing.

Finally, the state must improve delivery of education and healthcare so that the people at the low end of economic pile can get basic services free of cost, and their productivity is improved.

There is much that needs to be done to eliminate poverty, enhance skills and productivity, and promote employment and incomes. From whatever starting point we examine these questions; the answers are always linked to the nature of our politics and governance. It is time we cleaned up our politics and created a first rate governance mechanism we sorely need, and richly deserve as a people.
Don't you think so?