Anand Neelakantan's Blog - Posts Tagged "anand-blog"
The Government and the business.
Recently, Kitex, the world’s third largest supplier of infant wear, announced the withdrawal of a 3500 crore expansion plan from Kerala alleging harassment by the state government. As per the director of Kitex, there has been no less than 73 inspections from government officials in a span of one month. The announcement was followed by a high stake drama with nine Indian states vying for investment by Kitex. Telangana government sent a private jet to the officials of Kitex to take them from Kochi to Hyderabad and offered mind boggling incentive. Pleased with the royal treatment of its new suitor, Kitex has announced a thousand crore investment that may lead to four thousand jobs in Telangana in the future.
Despite its stellar achievements in human development indices, Kerala always had a business unfriendly image. Kerala’s social reforms of the past century had resulted in a literate population who were savvy enough to take advantage of the booming oil economy in the Middle East. The huge remittance, sometime more than the entire GSDP of many bigger Indian states, have catapulted Kerala to have the highest standard of living in India . It was spared the fate of Bengal thanks to the foreign remittance by non resident Keralite. But its disrepute as a haven of militant trade unionists resulted in it missing the IT bus that helped the Bangalore and Hyderabad become global cities.
In the recent years, Kerala has been desperate to shake up the negative image. Its trade unions no longer hold the same terror as it used to be a decade ago. Trade unions are controlled by the politicians and is relatively easier to control if the political leaders sense a change of mood in the people’s tolerance level. The state bureaucracy, especially at the lower level, is a different story altogether. Fed by years of anti -capitalist slogans, the petty officials go with a vengeance against any form of enterprise, whether it is a tiny corner store or a multi-national. There is no dearth of archaic rules in India. Any local official can find some violation or another at most enterprises if he wants it. It is this army of lower level bureaucracy than the often blamed militant trade unions that is making Kerala business unfriendly in the recent times. Unimaginative politicians who cannot think of any other protest methods other than Hartals adds to the problem. Add to these, is the issue of higher population density, higher wages, a working class that is aware of its rights, higher environment consciousness and you face an almost impossible hurdle to industrialise Kerala.
Kerala has the highest minimum and actual wage in the country. A labour intensive industry like Textile will always find it cheaper to set up factories in places that has far lesser minimum wages. The nature of modern capital is such that it flees to the places of least cost. It is time for Kerala to think out of box. It is better not to have manufacturing industries that pollute this pristine state when one cannot compete in wages with other parts of the country. It would better to strengthen the tourism and service industry more and rein in the lower level buoerocracy than get into a bidding match for transferring government money into private coffers.
The Chief Ministers of various states are competing with each other by offering mind boggling incentives for businesses. The ostentatious reason is that these manufacturing units give jobs to the locals. Take the case of Kitex which has promised 4000 jobs. Most of it would be in the minimum wage level. Even if it provides another 8000 indirect jobs at less than minimum wages, it is a miserable return on investment on the tax payer’s money. The state governments would be better off using that money for direct transfer benefit for 12000 people instead of offering huge incentives to Kitex.
For the country to prosper, we need to encourage private enterprise, but that shouldn’t be at the cost of providing basic facilities to people. In the last Covid wave, we saw how inadequately prepared is our health infrastructure. Education system is in shambles. We are debating whether sustenance farmers should be given their tiny subsidy or not. There is raging debate on whether higher education should be subsidised. But when it comes to attracting private investment, there is no debate. The consensus now is that the poor rich businessmen should be given all possible subsidies. The private entrepreneur who cannot succeed without government subsidy, free land, electricity and tax benefits should wind up his business and take up a job.
When people and media rank states based on how many private billionaires they wooed, than on how well they perform their basic duties like providing health, education and law and order, we are walking in a perilous path. Big businesses are pitching one state government against another. For fear of the private industry fleeing to choose another rival state, the governments cannot even ensure statutory requirements from the factories. We now have a strange system where public money that should go for basic infrastructure development is siphoned off to ensure the private business is profitable. Some of the most industrialised states in India has the highest poverty level too should be an eye opener. Industrialisation is not an end in itself, giving a decent standard of living for the people is.
Despite its stellar achievements in human development indices, Kerala always had a business unfriendly image. Kerala’s social reforms of the past century had resulted in a literate population who were savvy enough to take advantage of the booming oil economy in the Middle East. The huge remittance, sometime more than the entire GSDP of many bigger Indian states, have catapulted Kerala to have the highest standard of living in India . It was spared the fate of Bengal thanks to the foreign remittance by non resident Keralite. But its disrepute as a haven of militant trade unionists resulted in it missing the IT bus that helped the Bangalore and Hyderabad become global cities.
In the recent years, Kerala has been desperate to shake up the negative image. Its trade unions no longer hold the same terror as it used to be a decade ago. Trade unions are controlled by the politicians and is relatively easier to control if the political leaders sense a change of mood in the people’s tolerance level. The state bureaucracy, especially at the lower level, is a different story altogether. Fed by years of anti -capitalist slogans, the petty officials go with a vengeance against any form of enterprise, whether it is a tiny corner store or a multi-national. There is no dearth of archaic rules in India. Any local official can find some violation or another at most enterprises if he wants it. It is this army of lower level bureaucracy than the often blamed militant trade unions that is making Kerala business unfriendly in the recent times. Unimaginative politicians who cannot think of any other protest methods other than Hartals adds to the problem. Add to these, is the issue of higher population density, higher wages, a working class that is aware of its rights, higher environment consciousness and you face an almost impossible hurdle to industrialise Kerala.
Kerala has the highest minimum and actual wage in the country. A labour intensive industry like Textile will always find it cheaper to set up factories in places that has far lesser minimum wages. The nature of modern capital is such that it flees to the places of least cost. It is time for Kerala to think out of box. It is better not to have manufacturing industries that pollute this pristine state when one cannot compete in wages with other parts of the country. It would better to strengthen the tourism and service industry more and rein in the lower level buoerocracy than get into a bidding match for transferring government money into private coffers.
The Chief Ministers of various states are competing with each other by offering mind boggling incentives for businesses. The ostentatious reason is that these manufacturing units give jobs to the locals. Take the case of Kitex which has promised 4000 jobs. Most of it would be in the minimum wage level. Even if it provides another 8000 indirect jobs at less than minimum wages, it is a miserable return on investment on the tax payer’s money. The state governments would be better off using that money for direct transfer benefit for 12000 people instead of offering huge incentives to Kitex.
For the country to prosper, we need to encourage private enterprise, but that shouldn’t be at the cost of providing basic facilities to people. In the last Covid wave, we saw how inadequately prepared is our health infrastructure. Education system is in shambles. We are debating whether sustenance farmers should be given their tiny subsidy or not. There is raging debate on whether higher education should be subsidised. But when it comes to attracting private investment, there is no debate. The consensus now is that the poor rich businessmen should be given all possible subsidies. The private entrepreneur who cannot succeed without government subsidy, free land, electricity and tax benefits should wind up his business and take up a job.
When people and media rank states based on how many private billionaires they wooed, than on how well they perform their basic duties like providing health, education and law and order, we are walking in a perilous path. Big businesses are pitching one state government against another. For fear of the private industry fleeing to choose another rival state, the governments cannot even ensure statutory requirements from the factories. We now have a strange system where public money that should go for basic infrastructure development is siphoned off to ensure the private business is profitable. Some of the most industrialised states in India has the highest poverty level too should be an eye opener. Industrialisation is not an end in itself, giving a decent standard of living for the people is.
The reservation question
The union government recently announced 27% reservation for OBC and 10 % reservation for the economically weaker societies in medical courses. As expected, this decision gave rise to extreme reactions supporting and condemning this move from various quarters. Caste is an eternal curse of India and like any other bane, it cannot be just wished away.
For thousands of years, caste discrimination had kept away most members of our society from positions of power. Contrary to popular perception, the quota system didn’t begin after Independence. In fact, the idea of the affirmative program that started in 1950s was the culmination of at least seventy years of effort. During the British era, some communities like Brahmins dominated in the government service despite being less than 3 percent of the population. In Travancore, on 1st of January 1891, a plea known as the Malayali memorial was submitted for fair representation of other communities in Travancore’s government jobs that were dominated by Brahmins. Though no immediate government action followed, it paved the way for the idea of social justice and representation by the quota system. In 1882 and 1891, the princely state of Kolhapur introduced reservations in favour of non-Brahmins in the government. In 1921, the provincial government of Madras Presidency under the Justice party passed a government order that entailed power-sharing agreement between six communities, Brahmins, non-Brahmin Hindus, Mohammedans, Indian Christians, Anglo-Indians, and Europeans. The quota system as we know now started in 1954 with the ministry of education reserving 20 percent quota for SC and ST and relaxation of qualifying marks by 5 %. In 1982, the quota was split between SC and ST as 15 % and 7.5 % respectively.
The biggest and most controversial change that happened was when Mandal Commission was implemented in the 1990s. The commission constituted in 1979 had no contemporary data regarding the population of each community or their social status and used the 1931 pre-partition, pre-independence census to arbitrarily decide the communities to be included in the OBC and allot 27% quota. This was a purely political decision and the most powerful and numerical castes forced their way into this quota system with their vote banks. In 1992, Supreme Court put a cap on the quota system at 50%, but this hasn’t stopped many states from adding more and more communities into the OBC categories and even SC and ST. In Tamil Nadu, the reservation applies to 89% percent of the population, defeating its entire purpose.
As expected, the vast majority of those who criticise the quota system are from the upper castes. The most vociferous argument is about the erosion of merit due to reservations. They argue for economic status-based reservation. The pro-quota proponents counter this by saying reservation is not a poverty alleviation programme but is meant for social justice and representation. Both these arguments are tenuous at best and absurd at worst. How do we measure merit? Performance in a competitive test taken in one’s twenties is a measure of a person’s worth for the rest of his life? Does any test measure compassion, competency, creativity, etc that is needed to perform a job? How is someone who has the privilege of money, caste, and means for specialized coaching to crack competitive exams meritorious than someone having none of these and yet scores slightly lesser marks in a test? If we take reservation as just a means of representation, what is the purpose of the test itself? The communities should elect or nominate their representatives for each job and profession rather than ask them to compete. How is a community as a whole benefitted if a few members of it gets some privilege?
The caste system in India is more layered, hierarchical, and complex than the racial discrimination practiced in many countries. Solutions like positive affirmation which may work in a society that has clearly defined privileged versus underprivileged like white versus black in USA, will not work in a society like ours where every caste is an oppressor and privileged compared to the ones that are one rung lower to them. In many Indian states, castes that hold vast swathes of lands and from who the scheduled communities face the most oppression are now beneficiaries of other backward community quota. Where is the social justice here? There are countless sub-castes in SC and ST and the benefit of reservation has gone only to the creamy castes within the Dalits, leaving many sub-castes in lurch.
In a country like ours with so much inequality, most of which are caste based, there should be no debate about the need for reservations for the underprivileged and the marginal. The debate should now move on to how we rationalize the quota. How can we ensure more equality? Perhaps, a social backward index could be the answer. Each individual can be ranked based on criteria like their caste, economic status, the caste’s relative status with respect to other communities, family status like how many members have already enjoyed/enjoying the quota, and so on. The total marks obtained in a test could be multiplied with such an individual index to arrive at the actual merit. This is not a foolproof method, but it would stop the clamor for every community vying for backward status and a creamy layer hogging all benefits.
For thousands of years, caste discrimination had kept away most members of our society from positions of power. Contrary to popular perception, the quota system didn’t begin after Independence. In fact, the idea of the affirmative program that started in 1950s was the culmination of at least seventy years of effort. During the British era, some communities like Brahmins dominated in the government service despite being less than 3 percent of the population. In Travancore, on 1st of January 1891, a plea known as the Malayali memorial was submitted for fair representation of other communities in Travancore’s government jobs that were dominated by Brahmins. Though no immediate government action followed, it paved the way for the idea of social justice and representation by the quota system. In 1882 and 1891, the princely state of Kolhapur introduced reservations in favour of non-Brahmins in the government. In 1921, the provincial government of Madras Presidency under the Justice party passed a government order that entailed power-sharing agreement between six communities, Brahmins, non-Brahmin Hindus, Mohammedans, Indian Christians, Anglo-Indians, and Europeans. The quota system as we know now started in 1954 with the ministry of education reserving 20 percent quota for SC and ST and relaxation of qualifying marks by 5 %. In 1982, the quota was split between SC and ST as 15 % and 7.5 % respectively.
The biggest and most controversial change that happened was when Mandal Commission was implemented in the 1990s. The commission constituted in 1979 had no contemporary data regarding the population of each community or their social status and used the 1931 pre-partition, pre-independence census to arbitrarily decide the communities to be included in the OBC and allot 27% quota. This was a purely political decision and the most powerful and numerical castes forced their way into this quota system with their vote banks. In 1992, Supreme Court put a cap on the quota system at 50%, but this hasn’t stopped many states from adding more and more communities into the OBC categories and even SC and ST. In Tamil Nadu, the reservation applies to 89% percent of the population, defeating its entire purpose.
As expected, the vast majority of those who criticise the quota system are from the upper castes. The most vociferous argument is about the erosion of merit due to reservations. They argue for economic status-based reservation. The pro-quota proponents counter this by saying reservation is not a poverty alleviation programme but is meant for social justice and representation. Both these arguments are tenuous at best and absurd at worst. How do we measure merit? Performance in a competitive test taken in one’s twenties is a measure of a person’s worth for the rest of his life? Does any test measure compassion, competency, creativity, etc that is needed to perform a job? How is someone who has the privilege of money, caste, and means for specialized coaching to crack competitive exams meritorious than someone having none of these and yet scores slightly lesser marks in a test? If we take reservation as just a means of representation, what is the purpose of the test itself? The communities should elect or nominate their representatives for each job and profession rather than ask them to compete. How is a community as a whole benefitted if a few members of it gets some privilege?
The caste system in India is more layered, hierarchical, and complex than the racial discrimination practiced in many countries. Solutions like positive affirmation which may work in a society that has clearly defined privileged versus underprivileged like white versus black in USA, will not work in a society like ours where every caste is an oppressor and privileged compared to the ones that are one rung lower to them. In many Indian states, castes that hold vast swathes of lands and from who the scheduled communities face the most oppression are now beneficiaries of other backward community quota. Where is the social justice here? There are countless sub-castes in SC and ST and the benefit of reservation has gone only to the creamy castes within the Dalits, leaving many sub-castes in lurch.
In a country like ours with so much inequality, most of which are caste based, there should be no debate about the need for reservations for the underprivileged and the marginal. The debate should now move on to how we rationalize the quota. How can we ensure more equality? Perhaps, a social backward index could be the answer. Each individual can be ranked based on criteria like their caste, economic status, the caste’s relative status with respect to other communities, family status like how many members have already enjoyed/enjoying the quota, and so on. The total marks obtained in a test could be multiplied with such an individual index to arrive at the actual merit. This is not a foolproof method, but it would stop the clamor for every community vying for backward status and a creamy layer hogging all benefits.
