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The Hindu Editorial Analysis | PDF Download

Date: 18 March 2019

 

Lapse and collapse

  • Mumbai’s creaking public infrastructure must be urgently upgraded The pedestrian bridge that collapsed at Mumbai’s Chhatrapati Shivaji Maharaj Terminus, leaving six people dead and several injured, underscores the irony of India’s race to development on creaking urban infrastructure.
  • It was only in September 2017 that there was a stampede at Mumbai’s Elphinstone bridge that left at least 23 people dead, an incident that officials blamed on heavy rain and overcrowding on the rickety structure. Beyond such acute disasters, there is the chronic toll of eight people, on average, dying every day on the city’s railway tracks.
  • This is a dismal image for a metropolis that generates so much wealth, but cannot guarantee the safety of its public infrastructure. In the first response to the CST incident, the Maharashtra government and the Brihanmumbai Municipal Corporation (BMC) have launched action on the contractor who carried out repairs on the bridge five years ago, the structural safety auditor who had certified the bridge to be in ‘good’ condition among a total of 39 bridges, and some civic body officials. Such steps may serve to mollify public anger, and no one would argue against efforts to fix accountability for lapses. However, far-reaching administrative reform is necessary to raise public confidence in the way government works.
  • It is extraordinary that the BMC is wiser after the fact, and has determined that the quality of repairs performed on the CST bridge was not ‘up to the mark,’ since it collapsed within six years. It has also closed several buy footbridges, virtually confirming prolonged neglect of maintenance.

 

  • In a city where eight million passenger trips are made daily on an overburdened railway system, besides other modes of transport, the highest policy priority should be to raise levels of safety. In the wake of the bridge disaster, the municipal corporation must explain how much of its annual budget of ₹30,692 crore for the coming year will go towards improving facilities and safety for the majority of its citizens who ride trains and buses or walk.
  • Mumbaikars badly need a new deal in the form of a modernised bus system, with expansion of services that can be funded through a levy on private vehicles or on fuel. The move to privatise BEST bus services may result in greater pressure on other systems, reducing access and adding to the stress faced by citizens. Mumbai’s experience should serve as a warning to all fastexpanding Indian cities governed by municipal systems that have low capacity and capability to create peoplefriendly infrastructure.
  • Distortions in urban policymaking in recent years are all too evident, marked by support for loosely defined smart cities and personal vehicles, at the cost of basic interventions that will make the commons more accessible — roads, pavements, pedestrian facilities and public transport. The safe mobility of people must be prioritized.

Nehru, China, and the Security Council seat

  • Today’s policymakers fail to understand Nehru’s eminently sensible approach
  • Finance Minister Arun Jaitley recently said that India’s first Prime Minister, Jawaharlal Nehru, was the “original sinner” who favoured China over India for permanent membership in the UN Security Council. His assertion obviously refers to Washington’s feeler sent to New Delhi in August 1950 through the Indian Ambassador in the U.S., mentioning the American desire to remove China from permanent membership of the UNSC and possibly replace it with India.
  • The allegation that Nehru refused to take this suggestion seriously and thus abdicated India’s opportunity to become a permanent member of the UNSC is the result of the critics’ inability to comprehend the complexity of the international situation in the early 1950s and the very tentative nature of the inquiry.
  • The Asian landscape
  • This episode took place in August 1950. The Cold War was in its early stages, with the two superpowers in eyeball-to-eyeball confrontation that threatened nuclear catastrophe. The People’s Republic of China, which had just emerged from a bloody civil war and was seen at the time as the Soviets’ closest ally, was prevented from taking its permanent seat in the UNSC because of American opposition premised on Cold War logic. Furthermore, war was raging in the Korean peninsula, with U.S. and allied troops locked in fierce combat with North Korean forces supported by China and the Soviet Union.

 

  • Nehru was trying to carve a policy that ensured India’s security, strategic autonomy and state-led industrialization in these very dangerous times. He was well aware of the fact that pushing China out, as the U.S. wished to do, was a recipe for perpetual conflict that could engulf all of Asia. To him, the Korean War appeared a forerunner to more such conflagrations in Asia that could even turn nuclear.
  • The U.S. had dropped nuclear bombs on Japan only five years ago and many observers believed it would not hesitate to do so again in an Asian conflict, especially since nuclear deterrence had not yet become a recognised reality. Nehru did not want India to get embroiled in hazardous Cold War conflicts and become a pawn in the superpowers’ great game risking its own security.
  • Nehru’s approach to China was dictated by realpolitik and not wishful thinking.
  • He understood that peace could not be assured in Asia without accommodating a potential great power like China and providing it with its proper place in the international system. Moreover, China was India’s nextdoor neighbor and it was essential for New Delhi to keep relations with China on an even keel and not fall prey to the urgings of outside powers, the U.S. foremost among them, which were following their own agendas that had nothing to do with Indian security interests.

A COMBUSTIBLE CONTEXT

  • The so-called American “offer” to India of a permanent seat in the Security Council replacing China was made in this combustible context. To be precise, it was not an offer but merely a vague feeler to explore Indian reactions to such a contingency. The U.S. intended it to be a bait to entice India into an alliance with the West against the SinoSoviet bloc, as it was then known, and lure it into becoming a member of the “defence” organisations it was setting up in Asia to contain presumed “Communist expansionism”.
  • The enticement, as the correspondence between the then Indian Ambassador in Washington, Vijaya Lakshmi Pandit, and Prime Minister Nehru makes clear, was suggested during her conversations with U.S. Secretary of State John Foster Dulles and Ambassador-at-large Philip Jessup. When Pandit informed Nehru of these feelers, he responded, “India because of many factors is certainly entitled to a permanent seat in the Security Council. But we are not going in at the cost of China.” In September 1955, Nehru stated categorically in the Lok Sabha: “There has been no offer, formal or informal, of this kind… The composition of the Security Council is prescribed by the UN Charter, according to which certain specified nations have permanent seats. No change or addition can be made to this without an amendment of the Charter.”

 

  • Nehru refused to consider the American feeler not because he was a wide-eyed Sinophile but because he was well aware that all Washington was interested in was to use India for its own ends
  • Had India accepted the American bait, it would have meant enduring enmity with China without the achievement of a permanent seat in the UNSC. The Soviet Union, then China’s closest ally, would have vetoed any such move since it would have required amendment of the UN Charter that is subject to the veto of the permanent members.
  • It would have also soured relations between India and the Soviet Union and made it impossible to establish the trust required to later build a close political and military relationship with Moscow that became necessary once the U.S. entered into an alliance relationship with Pakistan. The Indo-Soviet relationship paid immense dividends to India during the Bangladesh war of 1971.
  • Mr. Jaitley and other critics of Nehru’s eminently sensible decision not to fall into the American trap would do well to analyse the decision in the particular strategic and political context in which it was made and not allow their current political preferences to dictate their amateurish conclusions.

The problem is jobs, not wages

  • There is obfuscation of both the existence of a jobs crisis and the diagnosis of it
  • It is well established that India is staring at a massive jobs crisis. Every single survey points to jobs as the biggest issue concerning voters, especially the youth. Yet, the Prime Minister and the government steadfastly refuse to even acknowledge this issue, let alone address it.
  • India’s jobs crisis is an economic issue, not a political one. India is not unique in experiencing rising joblessness and, consequently, income inequality. Many developed and developing nations are grappling with this problem, too.
  • Such a crisis requires acknowledgement of the issue first, then a vibrant public debate on solutions to tackle the crisis, and finally, a coordinated implementation of ideas. Instead, there is much obfuscation of both the existence of a jobs crisis and the diagnosis of it.
  • Demand and supply
  • The latest in this obfuscation is the notion that India does not have a jobs crisis but a wages crisis. According to this argument, every Indian youth who wants a job can get one, but not the wages she wants. This is a banal argument. This is akin to arguing that every Indian who wants to buy a house can buy one but just not at the price she can afford. What determines the price of a house? Apart from external factors such as taxes, the price of a house is simply determined by the demand for houses versus the supply of houses.
  • Similarly, what determines wages for an employee is the demand for such skills versus the supply of such skills. Wages are not determined by some external factor that is removed from labour market conditions. It is entirely a function of the labour market. In economic parlance, wage, or the price of labour, is an endogenous variable and not an exogenous one.

 

  • Let us understand this through the Prime Minister’s favourite example of frying pakodas, which is apparently evidence of the plentiful jobs that we are creating. The wages for a person frying pakodas is determined by the demand for pakodas in the economy and the supply of pakoda fryers. If the wages for pakoda frying are very low, it can only mean that there are far more people willing to fry pakodas for a job than there is demand for pakodas. Hence, their wages continue to be low.
  • In other words, the economy is not creating enough opportunities for the large number of unemployed people other than to fry pakodas at minimum wages. Of course, a person frying pakodas in a five-star hotel will get paid higher than a roadside pakoda fryer, presumably because her skill and productivity level are different. But for that same skill level, the wages of a person are determined largely by the demand for such skills and the supply of people with such skills. If demand is higher than supply, wages automatically rise; if not, they remain stagnant. To understand the unemployment issue as a wages problem shows ignorance.
  • Even if we grant the outlandish assertion that India has a jobs bounty but wages are not rising, this points to a labour market failure. Are we then saying that workers need to get unionised more and demand higher wages since the price of labour is not commensurate? It is a facile argument.
  • The proponents of the argument that there is a wage crisis and not a jobs crisis would do well to go back to economic history and study the work of Arthur Lewis, the Nobel Prizewinning economist from the West Indies. Lewis, in his seminal work in 1954, showed how in economies such as India and China, which have an “infinite supply of labour”, there tends to be a two-sector economy — the capitalist sector and the subsistence sector. His summary finding was that the living standards of all citizens in such two-sector economies are determined by the wages of the people in the subsistence sector. If there is demand for labour and skills in the capitalist sector, then the endless supply of labour from the subsistence sector will transition, and wages will ultimately rise only when the demand for labour exceeds the supply of labour in the subsistence sector.
  • The harsh and simple reality of India’s jobs situation is that we are not creating as many jobs as we need to. There can be many reasons for the lack of our ability to generate enough jobs but at the very least, we must first acknowledge this problem. Calling this a wages crisis and not a jobs crisis is neither helpful nor sensible. It is very critical that we don’t bury our heads in the sand and pretend that there is no jobs crisis but only some wage crisis, induced by labour market distortions. There could well be labour market failures too, but it is not a sufficient explanation for the jobs crisis.

 

FORMALISING THE ECONOMY

  • The proponents of the ‘there is a wage crisis’ argument also go on to say that the largely informal nature of India’s economy leads to low productivity and hence keeps wages low. So, their solution for higher wages is to embark on a mission to explicitly formalise India’s economy. Again, economic history tells us that formalisation is an outcome of economic development, not a cause.
  • No large market economy in history has embarked on an explicit economic policy for forced formalisation. The U.S. had its large share of ‘petty retail traders’ before World War II, which then paved the way for large-scale organised retail with advancements in transport infrastructure, technology and rising income levels. The U.S.’s economic policymakers did not wake up one morning and say, “The informal momand-pop retail industry is bad, so let’s formalise it by ‘demonetising’ the entire economy.”
  • India’s economic commentary today carries a ‘blind men and an elephant’ risk. It has a tendency to claim absolute truth based on limited subject experience. There is no need to complicate the state of India’s jobs market. The simple truth of it is that we do not produce enough jobs.
  • A Lokpal is an anti-corruption authority or ombudsman who represents the public interest. The concept of an ombudsman is borrowed from Sweden. The Lokpal has jurisdiction over all Members of Parliament and central government employees in cases of corruption.
  • The Lokpal and Lokayuktas Act was passed in 2013 with amendments in parliament, following the Jan Lokpal movement led by Anna Hazare in 2011.
  • The Lokpal is responsible for enquiring into corruption charges at the national level while the Lokayukta performs the same function at the state level.
  • As of March 2019, and ever since the related Act of Parliament was passed in India. Retired Supreme Court judge Pinaki Chandra Ghose is appointed as the first Lokpal of India by a committee consisting of Prime Minister Narendra Modi and Chief Justice of India Ranjan Gogoi and Loksabha speaker Sumitra Mahajan on 17 march 2019. PC Ghose likely to take charge as lokpal soon.
  • It comprises 8 members where 4 members (50%) are from judiciary and not less than 50% (≥4 members) are from ST, SC, OBCs, Women or minorities.
  • The term "Lokpal" was coined by Dr. L.M.Singhvi in 1963.
  • The concept of a constitutional ombudsman was first proposed in parliament by Law Minister Ashoke Kumar Sen in the early 1960s.
  • The first Jan Lokpal Bill was proposed by Adv Shanti Bhushan in 1968 and passed in the 4th Lok Sabha in 1969, but did not pass through the Rajya Sabha.
  • Subsequently, 'lokpal bills' were introduced in 1971, 1977, 1985, again by Ashoke Kumar Sen, while serving as Law Minister in the Rajiv Gandhi cabinet, and again in 1989, 1996, 1998, 2001, 2005 and in 2008, yet they were never passed.
  • Forty five years after its first introduction and after ten failed attempts, the Lokpal Bill was finally enacted in India on 18 December 2013.
  • The Lokpal Bill provides for the filing, with the ombudsman, of complaints of corruption against the prime minister, other ministers, and MPs.
  • The first Administrative Reforms Commission (ARC) recommended the enacting of the Office of a Lokpal, convinced that such an institution was justified, not only for removing the sense of injustice from the minds of citizens, but also to instill public confidence in the efficiency of the administrative machinery.
  • Following this, the Lokpal Bill was, for the first time, presented during the fourth Lok Sabha in 1968, and was passed there in 1969. However, while it was pending in the Rajya Sabha, the Lok Sabha was dissolved, and thus the bill was not passed.