A social role for NITI Aayog

A social role for NITI Aayog
The Hindu, 17 January, 2015
Arun Kumar, CESP, SSS, JNU.

The NITI Aayog could throw light on long-term issues, with solutions that are not just economic or technological but also social and political — of strengthening democracy, building institutions and regaining policy space

NITI Aayog has had its first meeting with the economic experts. This was crucial since the government is trying to revive economic growth. The economy has experienced slow growth in spite of the revised national income data that has indicated faster growth. Industry, exports and so on, have shown tepid growth in recent years. The National Democratic Alliance’s electoral promise of an economic turnaround seems elusive in spite of its accelerating “reforms” by liberalising foreign direct investment (FDI) flows and land acquisition policies to signal its pro-corporate sector and big business inclinations.

Contradictory views

The budget is first a macroeconomic exercise and then a micro one catering to sectors of the economy. Two contradictory macroeconomic views are emerging from the government and its policy advisers. This is similar to the policy dilemma that the United Progressive Alliance faced earlier. The first view is to have a larger fiscal deficit so as to boost demand. The other view is to cut the fiscal deficit to keep the credit rating agencies (proxy for financial interests) happy so as to prevent a downgrade of the economy.

The Finance Minister favours the latter view and argues that a fiscal deficit imposes a burden on future generations who will have to repay the debt. This conservative view assumes that resources are constrained, so if the government spends more, the private sector has less to spend. But that cannot be true when the economy has spare capacity and can produce more. Increased government expenditures then boost the economy and lead to more investments via the accelerator. If increased spending is financed by increased direct taxation, that is even better. This is feasible in India since direct taxes are around 7 per cent of GDP which is low when compared to most other countries. But a government trying to signal its pro-business inclination would not wish to raise direct taxes like income, corporation and wealth taxes. 

Actually, tax rates need not be raised but only the concessions given in taxes (these are called tax expenditures and amount to 4.5 per cent of GDP) need to be curtailed to get more resources. But this may also be seen as anti-business. The other possibility is to tap the black economy (more than 50 per cent of GDP, according to me.) This requires political will which is not yet visible. The business community, the largest generator of black incomes, would see this also as anti business — it has been opposing introduction of general anti avoidance rules (GAAR). Even if the economy grows faster due to the reduction of the size of the black economy and businessmen gain, they fear it since a bird in the hand is worth two in the bush.

The NITI Aayog meeting does not seem to have considered these deeper issues. Advice was sought from former bureaucrats, journalists, industry lobbyists and academics. Media reports suggest a lack of coherence in the discussion or in the advice given. Some of the invitees had been present in the Finance Ministry pre-budget meeting last month. So, what was the point of the meeting now when it did not lead to clarity on long-term issues? Further, the time for incorporation of policies in the budget is over since most of it would have been formulated by now. It may have been better to circulate for comments a discussion paper on the Indian economy’s slowdown and its global interlinkages.

Dilemma with global echoes

India’s current economic dilemma has global roots. The eurozone, Japan and Russia are in trouble, the Chinese economy has slowed down and the U.S. economy is the only big one that has improved. In such a scenario, increasing exports in a big way would be difficult. Declining commodity prices (like that of petroleum goods) signal a weakening global economy. Uncertainty is deepened by the arc of instability due to failing states, from Afghanistan, Syria, Iraq, Libya, Nigeria to East Africa. The war in Ukraine and the rise of IS are compounding the problem.

Greece threatens the economic stability of the eurozone. The new government there is defying the dictates from the world of finance and has promised to end the austerity regime hoisted on the people of Greece. The Greek Prime Minister is telling the European powers that the economic rules of integration of the weaker economies of Europe into the eurozone need change. He is arguing that a substantial portion of the debt resulting from the earlier wrong policies needs to be written off. The other troubled economies of Europe — Portugal, Spain and Italy — are under increasing political pressure to follow Greece’s example.

U.S. President Barack Obama has proposed increasing taxation of the rich while giving more to the middle classes to reverse the growing inequity there. This move not only has a political strategy underlying it but also economic reasons that favour it. Given the Republican domination in the legislature and their conservative inclinations, it is unlikely that this proposal would be accepted any time soon. But, other countries would be forced to think about the idea, especially in the context of the developments in Greece.

In 2011, Mr. Warren Buffett gave a call to tax the rich more not only for the sake of equity but also to tackle the global economic crisis. This call was picked up in Europe with 16 of the wealthiest French urging their government to tax them more. Fifty wealthy Germans backed this petition. In Italy, the chief of Ferrari also lent support.

Inequity has grown in most countries since the mid-1970s following the domination of global financial capital over policies — spearheaded by the World Bank and the International Monetary Fund (IMF). These policies have not only marginalised other sectors of the economy but also promoted bubble economies that are prone to periodic collapse as it happened beginning 2007 and from which the world economy has yet to fully recover.

These policies promoted shadow banking and all manner of opaque financial instruments that created economic instability. A casino economy emerged with speculation leading to a fictitious boost in paper wealth, promoting a false sense of well-being among individuals and increased consumption by them. As inequality increased dramatically, and there was the marginalisation of the vast majority, there followed the “Occupy Wall Street movement”, termed as the “99% v the 1%” and which also popularised the term, “Main street versus Wall street”.

For people policies

Events in Greece and Mr. Obama’s suggestion suggest that the time has come to end the domination of finance capital over the rest of society. Policy space has to be recaptured from the world of finance by the democratic forces so that policies favouring the people can be initiated.

The dilemma currently facing Indian policymakers reflects these global trends. India’s rightward drift started with the Emergency in 1975 when Sanjay Gandhi marginalised the left of Centre thinking in the Indira Gandhi government. The trend continued during the Janata regime and thereafter under the Indira Gandhi government which had to approach the IMF for adjustment in 1980. Rajiv Gandhi, under considerable influence of the liberalisers, pushed this tendency faster. With the New Economic Policies in 1991 and the emergence of the World Trade Organization (WTO) in 1995, there was a paradigm change, with the policies of finance capital becoming entrenched.

For India, which remains very poor and very unequal, policies based on the interest of finance capital and a narrow section of society can only spell disaster. These policies push markets and technology-based solutions which marginalise the individual. The underlying idea is that if making democracy work is difficult, substitute it with technology. Those lacking faith in democracy and social institutions are (in the name of the poor) pushing an autocratic agenda based on greater use of technology. The hard work of creating and nurturing institutions that can deliver to the people and strengthen democracy is sought to be circumvented. So, one of the key proposals today is to push Goods and Services Tax (GST) even if it does not suit the needs of the vast unorganised sectors of our economy and benefits the MNCs and big business. The hard work of making taxation simple and effective and shifting to direct taxes is hardly on the agenda. Creating a large number of jobs is secondary to cash transfers, bullet trains for the elite and smart cities for the upwardly mobile.

The flyovers of Delhi were built to ensure smooth traffic flow but now have speed bumps to slow down vehicles and which leads to jams. The technological solution failed because the institutional design of management of urban traffic is flawed and that is because policymakers did not go deeper into the problem in their urge to provide quick fix technological solutions. The NITI Aayog could throw light on such long-term issues (with solutions that are not just economic or technological but also social and political) of strengthening democracy, building institutions, regaining policy space and so on.

arunkumar1000@hotmail.com

When accountability is not institutional

When accountability is not institutional

The Hindu, Updated: January 8, 2015

Arun Kumar, CESP, SSS, JNU

Higher education in India suffers from a lack of a democratic leadership that understands its true nature. For those heading academic institutions, accountability is personal and not institutional or societal. The erosion of autonomy and accountability in centres of education is the biggest challenge an aspirational and rising India faces

The Director of the Indian Institute of Technology (IIT), Delhi, has resigned because he was sought to be marginalised by the Ministry of Human Resource Development (HRD). The faculty and alumni of IIT have come out in his support but the issue festers. Unfortunately, this has little to do with the real problem facing IITs — a lack of adequate faculty and little cutting-edge research. Even before the indiscriminate expansion of the IITs began, these institutes faced a shortage of faculty; at times to the extent of 40 per cent. The IITs face a reverse filtration of talent. The best obtain a B.Tech degree and either leave for foreign shores or move on to study management. The second best continue pursuing higher degrees which in turn leads to a weak research programme. Like IIT Delhi, other institutions of higher education in the capital have also been in the throes of crisis.

The country’s best university, Delhi University, has been in a state of turmoil for several years. Its vice-chancellor, who has been responsible for this continues in spite of accusations of wrongdoing. His presence is demoralising for academic staff and the student community. Since a university is not about its buildings but crucially its students and faculty, their alienation damages the institution irreparably.

The Indira Gandhi National Open University (IGNOU) faces a crisis because the earlier vice-chancellor recklessly expanded its scope. While this provides a false sense of dynamism, for an institution of higher learning, this spells trouble since it is almost next to impossible to get good faculty in a short period of time. Dependence on outside experts for courses is problematic since they do not bear primary responsibility. The vice-chancellor, accused of wrongdoing, is under investigation.

Autonomy being eroded

These are not isolated institutional problems. They are generic in nature and can be found to exist in different degrees in almost all institutions. What plagues Delhi University once prevailed at Jamia Millia Islamia and Aligarh Muslim University. A shortage of faculty and the use of ad hoc teachers affects almost all universities. The key problems confronting higher education in India are quality, equity, access and financing. In the last 10 years, there has been a massive ad hoc expansion of Central Universities, IITs and Indian Institutes of Management resulting in a shortage of faculty by 40 to 50 per cent. Established older institutions are doing a bit better but not much since about 33 per cent of the positions at Delhi University and JNU lie vacant. Shortage by itself does not reflect the extent of the problem since quality of faculty is crucial. Appointment of ad hoc teachers at salaries close to minimum wages and for years at a stretch is demoralising and results in a deterioration in quality. Our education system is plagued by the separation of teaching and research. Knowledge is largely acquired through rote learning of notes or reading books that are a “cut-and-paste job”. Thus, understanding is at a discount. Consequently, many Indian intellectuals tend to be “derived intellectuals”, recycling knowledge from the West. Exams are mechanically passed by “mugging up” material which is then promptly forgotten. Knowledge is neither assimilated nor converted into wisdom. The result is that the system largely produces people with indifferent quality and where industry complains of a lack of skills.

The highest National Assessment and Accreditation Council (NAAC)-rated university, Jawaharlal Nehru University (JNU), faces declining standards of research. The university, whose raison d’être was research, confronts growing instances of plagiarism because those in authority brush it under the carpet. The problem is being dealt with mechanically by providing software. Instead, the real problem is the breakdown in trust between student and teacher. Many students have little time to spend on their dissertation since they are working elsewhere and/or preparing for competitive examinations.

Some faculty in order to be popular dilute standards and supervise three or four times the number of research students prescribed under University Grants Commission (UGC) norms. There are others who run non-governmental organisations and institutions outside JNU. The result is a conflict of interest and where academics with little time for research supervision allow anything to pass. There is a lack of leadership at JNU but this is true of other institutions also where decisions are not made on time.

“The claim that India has arrived on the world stage rings hollow without an independent technology base”

All this is symptomatic of a lack of a vision of higher education in the entire system — from the Ministry to the UGC to the institutions of higher learning. The Ministry and the UGC expect their diktat to run, little realising that their demands from these institutions may not suit all. “One size fits all” and “standardisation to achieve standards” is anathema to higher education. Such prescriptions damage the better institutions as has been the case with the introduction of the mechanical Academic Performance Indicator (API)-based recruitment and promotions. Rather than ensuring quality, this move has led to the emergence of poor quality journals, conferences and so on and the promotion of mediocrity. It is undermining the autonomy of academics which is crucial in fostering accountability to the long-term interest of society.

The HRD Minister’s conclave with the vice-chancellors of the Central Universities in September suggested fundamental changes in the running of these universities. Since the Central Universities are some of the premier universities in the country, what they do becomes the model for other universities. Therefore, it is important to know whether what was discussed would help resolve the problems of these universities. The same vice-chancellors who created the problems described earlier are now heading the committees working on the proposed changes.

Apparently, a council of the vice-chancellors of the Central Universities, with the Minister of HRD heading it, has been proposed. In addition, all the Central Universities are to be brought under a common Act, there is to be a common curriculum, a teacher’s recruitment board, transferability of students among these universities and so on. If any of this is implemented, the autonomy of Central Universities will be severely eroded. This was the programme of the United Progressive Alliance government and is perhaps being pursued because the bureaucrats of the Ministry are driving the agenda.

Key problems

Good faculty are reluctant to join newer institutions as they lack infrastructure and because many of them are in remote areas. Transferability of teachers across Central Universities can only spread good academics thin and lead to a deterioration of quality in established universities. In an authoritarian system, this can be used to punish teachers by posting them to remote areas, thus undermining autonomy and leading to sycophancy.

When transferred to weak institutions, good academics could become demoralised. Sending weak academics to good institutions may not lead to their betterment but could result in a deterioration of quality in these institutions. Good students would not transfer to weak institutions but poor quality students would want to migrate to good institutions and this could lead to corruption.

Teaching and research

Independent intellectuals are seen as being troublemakers and are harassed. Mediocre academics, realising that they cannot excel academically, resort to petty politicking and/or become sycophants of those in power in order to climb the ladder. Those at the top take the support of the latter group and adopt the principle, “show me the face I show you the rule” It is this group that violates rules secure in the knowledge that the authorities will not act against them. They bring a bad name to higher education and erode the accountability of the institution.

The government has announced a slew of programmes like ‘Make in India’ which depends heavily on a strong research and development capability which in turn requires a dynamic system of higher education. The claim that India has arrived on the world stage rings hollow without an independent technology base. It is no wonder then that we are forced to borrow technology from China for bullet trains or ask the U.S. to help clean our cities. The ‘Swachh Bharat’, ‘Clean Ganga’ and other such campaigns require citizenship which a democratic and inclusive education system can deliver but a purely formal education system cannot. Unless the crisis in higher education is tackled, the government’s best laid plans can be derailed.

In brief, higher education in India suffers from a lack of a democratic leadership that understands its true nature. Those heading these institutions are usually the favourites of those in power (political or money). They largely implement the agenda of their masters and, therefore, do not feel the need to be accountable to the academic community. To them, accountability is personal and not institutional or societal. They undermine the autonomy of the democratic bodies of universities, like the academic council through threats and inducements. Some institutions have no unions that can balance the autocratic behaviour of their heads. Thus, the erosion of the autonomy and accountability in institutions of higher learning is both from within and without. This is the biggest challenge before an India that aspires to arrive on the world stage.

arunkumar1000@hotmail.com