Narendra Modi often hands out a sop or two during his mega speeches – announcing for example direct flights from foreign capitals to his home state of Gujarat, which pleases overseas Gujaratis in his audience. 

On January 16 in Delhi however he went far further and, in a speech to a big audience of mostly young entrepreneurs, announced a swathe of much-needed incentives for new business start-ups, including tax breaks, an app that could register a new company in one day instead of several weeks, a five-year Rs8,000 crore ($1.2bn) credit guarantee scheme and a four year Rs10,000 crore ($1.5bn) investment fund.

Modi StartUp Selfie

So detailed were his announcements that he had to abandon his usual impromptu style of Hindi oratory and read the details from a prepared script. “The less the less government is involved, the greater the progress,” he then said. “Please tell us what not to do”.

The audience was ecstatic, combining some of the “Modi Modi” chanted fervour of overseas Indians in the US and UK and elsewhere, with appreciation that the government is at last about to tackle some of the basic problems that eager entrepreneurs run up against with India’s slow moving but usually persistently unhelpful bureaucracy. Currently, many start-ups go abroad because of the hassle in India.

Called the Startup India Movement, this is the latest of a series of branded schemes launched by Modi. They include Make in India (aimed at job creation in manufacturing industry), Swachh Bharat Mission (Clean India including rural toilets,) Pradhan Mantri Jan-Dhan Yojana (financial inclusion and universal banking), and Digital India (e-governance and countrywide access to internet). 

make-in-indiaCritics often say that these are primarily publicity stunts to boost Modi’s image – typified by him wielding a broom for Swachh Bharat, and being lauded by a long line of top businessmen with adulatory speeches at the launch of Make in India.

That they are stunts is beyond question – such events at home and abroad are central to Modi’s style of prime ministership. 

The main point however is whether the schemes will gradually transform the way that India is run by providing access for the poor to toilets and banks, providing jobs in a revived manufacturing industry, making the internet universally accessible, and opening way for India’s many budding entrepreneurs to start companies – and quickly close them when they fail.

modi-swachh bharat .jpgIf these things happen, and progress so far has been slow, Modi will have begun to achieve his aim of changing the way that India is run, opening up fresh opportunities for economic growth, job creation and poverty reduction.

The evidence so far however is that he is not focussed enough to make these changes happen. In particular, he has not begun to change the way that most bureaucrats work at all levels. On Startup India, this means that civil servants and others will no doubt continue to extort bribes and raise petty problems whenever possible – despite Modi’s claims to the contrary, corruption continues at all levels of government, apart maybe from the top ranks in Delhi where it does appear that bribes are rarely paid.

Modi’s speech came at the end of a day-long conference in Vigyan Bhavan, Delhi’s official conference centre, and was notable for the absence of India’s business establishment. Instead, there were founders of start-ups such as Uber, the app-based taxi service (and Ola, its Indian equivalent), Flipkart which is India’s answer to Amazon, InMobi, a mobile advertising firm, and a host of others.

Everyone called Modi “Sir”, but that seemed to be youthful respect rather than middle-aged businessmen’s fawning, and everyone spelt out the problems of starting-up new businesses in India. The complaints included complicated taxes, archaic regulations (such as having to keep records on employees on paper and not just in a computer), difficulties in quickly opening and closing a start-up.

That he, and Amitabh Kant, a top industry ministry bureaucrat and branding expert who organised the event, had listened in advance was shown by the string of some 20 announcements.

However, as always happens in India, the effectiveness of what Modi announced will depend on regulations and other details that have yet to be drafted, and how they are applied in practice. For example, the application of a definition of a start-up is not clear. Whether the app-based registration of a new company will actually deliver in one day seems problematic. A three-year tax exemption also looks odd since most new businesses do not make profits in that time.

As usually happens, the ideas are good – and there has been a general welcome that a government has formally recognised start-ups as a category of business needing encouragement.

But Modi and Kant and other supporters of the announcements will have to focus more than is usual on implementation, now the adrenalin rush of the launch event is over.

JAN 11: Narendra Modi visited Pathankot with Ajit Doval, the National Security Adviser, on January 9 and praised India’s response to the raid. The attack was condemned in Pakistan by both the civilian and military leadership – the first time this has happened. The US put pressure on Pakistan to speed up its promised investigation into the identity of the organisers. Doval said this morning that the planned talks with Pakistan would go ahead  “only if Pakistan takes action” against those responsible.

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When Narendra Modi was elected India’s prime minister, the main hope was that he would transform the muddled and inefficient way that many of the country’s institutions and organisations are run. Economic reforms, which dominate media and parliamentary debate, are also important, but Modi was primarily seen as a capable regional politician and leader who could wreak administrative change nationally.

Twenty months after last year’s landslide election victory, his failure to make significant  changes was graphically demonstrated by a terrorist attack last weekend on an Indian Air Force base at Pathankot (below) in the state of Punjab.

Pathankot HTThe base was not properly protected and defended against such terrorism, despite being just 25 kms from the border with Pakistan, and the response by security forces was muddled and badly organised, though the attackers did not manage to destroy any aircraft. There are also suggestions that India’s border paramilitary forces may have been involved in drug smuggling from Pakistan that was linked with the terrorists.

The event threatens to undermine Modi’s more innovative approach to foreign affairs that led him on Christmas Day literally to drop in on Pakistan prime minister in Lahore for a few hours when he was flying back to Delhi on from Russia and Afghanistan. Though sourly criticised by the opposition politicians for being more a photo-op than measured diplomacy the visit, which was the first by an Indian prime minister to Pakistan for 11 years, could potentially help to improve the two countries’ tortuous relationship.

PM Modi in Russia

Ajit Doval with Narendra Modi

The attack is seen in India as an attempt by extremists, probably supported by Pakistan’s military and ISI secret service, to undermine progress that the Modi visit might generate. It coincided with an attempted raid by gunmen on the Indian consulate in the Afghan city of Mazar-i-Sharif. The Pakistan-based Jaish-e-Mohammad (Army of Mohammad), an Islamist group close links to the Pakistan military, is believed to have been responsible and, significantly, Pakistan has not tried to deny that the terrorists crossed from its territory into India.

The Pathankot attack began on Saturday January 2 after six terrorists had crossed the border in an area used for decades by drugs and other smugglers and, in the 1980s, by Khalistani (Punjab independence) fighters trained in Pakistan. They broke into the air base, which was not equipped with protection against terrorism, in one case reportedly climbing and swinging in from trees on the 24-km perimeter. Border patrols and thermal imaging were inadequate and the initial police responses were confused and slow. Floodlights were not working in some areas and buildings are located against perimeter walls, making access easy.

Complicating the story, the India Today website has reported suspicions that arms and ammunition used by the Pakistani terrorists were part of a drug consignment that was concealed by smugglers, and that the terrorists crossed the border separately using the same route, possibly with the connivance of Indian officials.

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troops take positions at the Pathankot base

Criticism has built up over the last two or three days, especially on social media, blaming Ajit Doval (above), the national security adviser, who is a former spy chief and one of Modi’s most trusted and empowered officials. Based in the prime minister’s office with executive authority for security (as opposed to just an advisory role), he was in charge of the response and claimed it an intelligence success just two days into the three- or four-day operation. The buck stops with him before it reaches the prime minister.

The sharpest and most targeted criticism has come from Ajai Shukla, a former army officer and now one of India’s leading defence journalists and commentators. Writing in the Business Standard on January 5, he said “National Security Advisor (NSA) Ajit Doval’s inept handling has transformed what should have been a short, intelligence-driven, counter-terrorist operation into something that increasingly seems like a debacle.”

At the end of a discussion on India Today Television last evening the anchor, Karan Thapar, concluded that the response had been handled “ineptly” – none of the former generals and analysts on the programme disagreed. Manoj Joshi, a leading commentator, calculated there had been five serious incursions and terrorist raids in the area since 2013, the last just six months ago, but security had not been improved.

Parrikar PathankotManohar Parrikar, India’s defence minister, who was not in charge of the operations, seemed uneasy and ill-prepared when he (not Doval) was paraded at a media conference (right) on January 5.

He even said that five of the Indian casualties had died because of “bad luck”. They were members of the low-key Defence Security Corps (DSC), made up of retired armed forces personnel who guarded the base. Their “bad luck” was that they were shot by terrorists firing into buildings. An officer in the crack National Security Guard (NSG) died while handling a dead terrorist’s unexploded grenade. There has been criticism – by Shukla and others – that Doval flew in 160 NSG commandos with little Punjab experience to lead the attack on the terrorists instead of drawing on 50,000 army troops stationed nearby.

Pathankot is significant not just for India-Pakistan and defence reasons but because it illustrates how appallingly so much of the country’s government agencies work. It smacks of the jugaad (fix it) and chalta hai (anything goes, or it will all be alright on the night) approach that I highlighted as a serious national failing in my book IMPLOSION: India’s Tryst with Reality.

Modi has told the defence establishment that it needs to shed its “chalta hai” approach, but he has failed to push through changes there or elsewhere.

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Modi’s Santa Claus type appearance (above with Sharif) in Lahore on Christmas Day built on a rapprochement between the two countries that first appeared when he and Sharif were photographed chatting at the opening of climate change negotiations in Paris on November 30.

This began to unravel blockages to talks that had been caused both by both countries. A week later, the national security advisers and foreign secretaries met on neutral ground in Bangkok. Overall this marked an attempt by Modi to reverse a belligerent and aggressive stance he and Doval had adopted a year earlier.

Now they have to decide whether talks planned next week between their foreign secretaries should go ahead. India’s foreign ministry spokesman, Vikas Sarup, said this afternoon that the government has asked Pakistan to take “prompt and decisive action” against handlers of the attack. “The ball is in Pakistan’s court. We are waiting for Pakistan’s action on actionable intelligence… we are not giving any time frame… prompt means prompt,” he said.

“Prompt and decisive action” are the words that Sharif has also used, saying it would happen. But the military and not the politicians call the shots in Pakistan, so action is not certain.

India’s first priority however should be to equip sensitive bases against terrorists, and to force the somnolent defence establishment and security forces literally to smarten up.

Posted by: John Elliott | December 24, 2015

Merry Christmas!

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unknown_1512ant_25674_bigMUMBAI: Christie’s and Saffronart have this week established Mumbai as an internationally significant centre for Indian art auctions with record prices being achieved, not just for established modern artists, whose prices have been steadily climbing with three overall world records in the last three months, but also for classical miniature painting and sculptures that are now attracting new collectors.

Last night, at the Christie’s auction, an untitled 55in x 40 in oil on canvas (below) by Vasudeo Gaitonde, who died in 2001, was sold for a total of $4.4m (Rs29.3 crore on a hammer price of Rs25.5 core). Well above the estimate of $1.9 to $2.3m, the $4.4m was both a world auction record for the artist, beating an earlier Rs23.7 crore ($3.8m) record, and also the highest auction price achieved for any modern Indian work of art. It was bought by an international collector telephoning in from outside India in a keenly fought bidding contest.

The Christie’s sale totalled Rs97.7 crore ($14.7m), the highest for any auction held in India, beating the previous record of Rs96.5 crore that was set by the auction house at its first Indian sale two years ago. This is the result of careful selection of works that have not been trailing round the auction circuit, backed by intensive international marketing and the buzz of an auction in Mumbai’s iconic waterfront Taj hotel.

The night before, Saffronart which is the leading Indian auction house, staged its first sale of classical Indian art (which cannot be exported), and had the rare achievement of a 100% sale of the 70 lots on offer.

The overall sales total of Rs16.4 crore ($2.5m) included a record total price of Rs6.5 crore ($981,000), four times the estimates, paid it is believed by  a Delhi collector, for an elegant 15th-16th century 33in high bronze statue of the Hindu goddess Parvati (above) from the collection of a famous Bombay architect. Though below prices achieved abroad, Saffronart said this was the highest auction price paid in India for any classical work of art.

vs-gaitonde-untitledIt was the result of persistent bidding by two collectors who, coaxed slowly in very small $5,000 steps by Hugo Weihe, Christie’s former auctioneer for India sales and now with Saffronart, brought the hammer price up from Rs4.5 crore, where it could have rested, to the final Rs5.4 crore. Weihe later said it felt like the moment in 2005 when he brought the hammer down in New York on a $1.45m bid for a Tyeb Mehta work, marking the beginning of a boom in modern Indian art auction prices.

Saffronart also set a new international benchmark for Basohli miniature paintings that were done in the Himalayan foothills in the 1700s. Out of a set of four, two (one of them below, 6.25in x 6.25in) produced a new joint record Indian price for a Pahari (from the mountains) work of Rs96 lakhs ($145,455). That was on a hammer price achieved by both works of Rs80 lakhs.

In line with other recent auctions, these results show that good prices are being paid by serious collectors for the best works, especially for those with good provenance, a point that both auction houses have stressed this week.

unknown_1512ant_25389_bigSaffronart’s miniature paintings came from a famous collection made in the mid-1900s by a British army officer, Colonel R.K.Tandon, triggering rival claims of the relative superior provenance virtues with Christie’s, which had a classical section in its auction for the first time. This included miniature paintings from the collections of the Maharajas of Bikaner in Rajasthan, with members of the family in the auction room, possibly marking  a new departure for these families selling their old collections.

Till now, the main collectors of miniature paintings, especially Mughal works which fetch higher prices, have been in the UK and US, plus the Middle East, buying and selling works that were taken abroad many years ago and thus were not caught by the current ban on the export of antiquities. Indian collectors have been more rare. Specialists however believe that this now could be changing as Indian collectors of the modern art realise the attractiveness and prestige of the best miniatures and sculptures, many of which can be obtained for around $10,000. That is far less than they might pay for the best modern works, and is also lower than prices being paid abroad.

Souza top price lot 41 SaffronLast week, Saffronart also had a successful sale of works on paper by F.N.Souza, one of the country’s most famous artists, with 83 (98%) of the 85 lots on offer going for a total of Rs5.6 crore ($846,182). Peasants in Goa, (left) an early (1947) 20in x13in oil on paper, fetched the top price of Rs24 lakhs ($36,364).

The Christie’s auction was slightly blighted by an allegation from a Dubai gallery owner that two works, including a major one, Bindu (below), by Syed Haider Raza that was estimated to fetch up to Rs15 crore ($2.3m) were not genuine. Christie’s rejected the allegation and said Raza himself had recently been photographed with the work at a preview of the sale. Bidding however stopped at Rs7.5 crore, which was below the reserve price, so the work did not sell.

syed_haider_raza_bindu_d5959044gThe previous record price for Indian modern art was paid achieved at a Christie’s auction in New York in September when $3.5m ($4m including buyer’s premium) was bid for Birth, a monumental 8ft x 4ft oil on board by Souza. The previous record price of $2.6m for a work by Souza, who died in 2002, was set just a week earlier at a Saffronart auction in Delhi. His  5ft x 4ft Man and Woman Laughing went to for a hammer price of Rs14.6 crore (Rs146m) – Rs16.8 crore ($2.6m) including the premium.

Taken together these results, with high prices for the top works and high percentages of total sales, confirm that collectors react to strong marketing by the auction houses and are willing to pay substantial prices for the best works.

In Delhi after a series of foreign trips, prime minister Narendra Modi has trying to plug some of the gaps that have emerged in his and his government’s performance in recent months. Japan’s prime minister Shinzo Abe and the Pakistan government have played ball with potential deals and talks, but Rahul Gandhi and his mother Sonia have been unwilling to let their Congress Party co-operate in parliament, despite the damage that they are doing to the Indian economy.

There has been considerable criticism that the implementation of Modi’s foreign policy has not matched the razzmatazz of his many high profile visits abroad. In particular, announcements of deals that now total over $100bn have not made much progress, and his approach to relations with Pakistan has had little coherence.

Both these issues have been at least partially addressed in the last week or two. Shinzo Abe has just been visiting India for a constructive high profile visit, and relations with Pakistan have been eased.

Abe Modi Delhi Dec 12 '15 - Business StandardAbe’s talks with Modi yesterday (Dec 12) produced a string of deals carrying, unsurprisingly, a billion dollar tag – this time $35bn, which is the same figure that was attached to announcements (some different, some the same) when Modi visited Japan in September last year.

Judging by their body language (above), there is greater warmth and understanding between these two prime ministers than between Modi and other world leaders, apart possibly from President Obama. Certainly the warmth looks more spontaneous than the reserved smiles that Modi had in the UK for David Cameron last month.

Real progress has been made with Japan after five years of negotiations on a civil nuclear deal that would allow Japanese companies to build nuclear plant rectors in India and also to make parts for US and French (GE, Westinghouse and Areva) companies’ Indian projects.

Japan has in the past been wary because India has nuclear weapons, and the proposed deal will now have to go through various legal and possibly difficult parliamentary procedures in Tokyo, as well as finalisation of technical details. But the progress is significant, not least because it emphasises co-operation between two countries that regard China as a sometimes hostile neighbour.

Japan has also beaten China on co-operation with India for the development of high speed “bullet” trains, which significantly comes just after China defeated Japan on a similar project in Indonesia. It has agreed to make a $12bn 50-year loan at just 0.1% interest for a high speed train to be completed (supposedly) in seven years between Ahmedabad in Modi’s home state of Gujarat and Mumbai. This forms part of a plan for bullet trains connecting the major metros.

The rest of the $35bn is more tentative and problematic – a $12bn “Make in India” fund for Japanese investments in India that will only happen when India’s procedures are eased, $5.5bn for a projected Chennai-Bangalore industrial corridor, and $5bn for other projects. Other agreements included defence liaison on the South China Sea where China is making territorial claims, and on defence manufacturing.

Tokyo had been disappointed by the last of progress made since Modi’s visit to Japan 15 months ago, and it now remains to be seen whether Abe’s visit will change that.

Modi-Sharif-Paris climate talks - Nov 30 '15 PTIThe rapprochement between Pakistan and India first appeared when the countries’ two prime ministers were photographed chatting intensely (left) at the opening of climate change negotiations in Paris on November 30. This began to unravel blockages to talks that had been caused both by India over whether Pakistan should talk to separatist leaders from Indian Kashmir, and by Pakistan wanting the sovereignty of Kashmir to be included in any agenda.

A week later, the foreign secretaries and national security advisers of both countries met on neutral ground in Bangkok for talks that were only publicised after they had taken place. They agreed to carry forward their “constructive engagement” and that led to a visit by Sushma Swaraj, India’s foreign minister, to Pakistan, ostensibly to attend a conference on Afghanistan. She met Pakistan’s prime minister Nawaz Sharif and, in a nice touch, his daughter. The next step is for the two countries’ foreign secretaries to meet again to revive a broad-based dialogue

Modi was probably motivated on these initiatives partly because he was being widely criticised for allowing good relations, which he established with Sharif when he first became prime minister, to crumble, and partly because he should attend  a South Asia regional cooperation (SAARC) conference in Pakistan next year so needs to remove diplomatic blockages.

This does not mean that the talks will get anywhere, though Indian analysts are suggesting there might be more hope of progress because Pakistan’s new national security adviser, Nasser Khan Janjua, a retired army general, has been picked by Pakistan’s army chief, Raheel Sharif (no relation to the prime minister), who controls what happens on the relationship. This means that India will be negotiating with the army chief’s representative instead of politicians who lack final authority.

Meanwhile on domestic issues, Rahul and Sonia Gandhi have been stopping proceedings in the Rajya Sabha, the upper house of parliament, and have thus stalled progress on important general sales tax legislation, which the government hoped to pass in the current session that ends on December 23.

Sonia-Gandhi_Gumlal2_PTIThe Gandhis have been protesting because they were ordered on December 7 to appear in a Delhi court on December 19 to explain alleged irregularities in financial dealings involving a defunct Congress newspaper, the National Herald that owns valuable properties in Delhi and elsewhere, and a company, Young Indian, controlled by them and two other Congress officials.

It seems highly improbable that the Gandhis had any intention of personally benefiting from the financial arrangements, but it does appear that they regarded the newspaper and its properties as, to quote Outlook magazine this weekend, “their personal fiefdom”, and maybe allowed some irregularities in the company dealings.

The summons certainly seems to have destabilised Sonia and her fellow party leaders, who reportedly met till 3am one night last week to discuss the implications. Sonia even told reporters (above), “I am the daughter-in-law of Indira Gandhi. I am not scared of anyone. I am not disturbed”, as if invoking the name of India’s former prime minister would somehow gain public sympathy.

The court action has been initiated by Subramanian Swamy, a maverick politician and former minister, who has been running a vendetta against Sonia Gandhi for some years, even alleging she has had financial support from the Russian KGB and secretly exported valuable antiques to shops owned by her family in Italy.

Instead however of dismissing Swamy’s National Herald accusations as they have his other stories, and dealing with the court summons as a legal matter, they organised protests that stalled the Rajya Sabha for four days and disrupted the Lok Sabha (lower house). They claimed that it was a political vendetta by the government, which in other circumstances could well be true because governments in India regularly initiate and then slow down legal actions against rivals and wayward supporters for political ends.

This time however it is unlikely that the Modi government organised the court decision. In the previous week, parliament had been making unusual progress with constructive debate and Modi was trying to build bridges with the Congress leadership.

There is still time for parliament to pass the sales tax legislation if the Congress dynasts behave like ordinary citizens and sort out the National Herald muddle in court, negotiate as responsible politicians with the government on some amendments and allow parliament to do its job.

Posted by: John Elliott | November 27, 2015

The King of Bhutan’s hopes in 1987 for Gross National Happiness

Extracts from the text of my “Financial Times” interview in April 1987 recording Bhutan’s search for “economic prosperity and political stability and social harmony”.

Bhutan-King4-Jigme-Sinagye-WangchukWhen Bhutan’s King Jigme Singye Wangchuck (right) first started talking in the 1970s and 1980s about Gross National Happiness being the guiding principle for development of his tiny remote Himalayan kingdom, people elsewhere thought the idea rather quaint and unreal.

Now the idea of GNH is being embraced in various parts of the world in a search for a better and more sustainable way to manage affairs ranging from the protection of the environment to worker participation in companies, and from organic farming and corporate social responsibility to government purchasing policies.

This became evident at a GNH conference held at Paro in Bhutan earlier this month, which was organised by Dasho Karma Ura, president of the Centre for Bhutan Studies and GNH Research, and attended by around 750 international delegates.

At the conference, I made a speech based on a rare interview given to me in 1987 for The Financial Times by King Jigme Singye Wangchuck, which formed part of an FT article on Bhutan published on May 2 that year (below). Inevitably, the article only contained a few quotes from the king and I have reported those on this blog before, initially in 2008.

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I have recently found my old 1987 notebook (below) and have transcribed the full interview, which lasted for more than 90 minutes. Below are extracts that I delivered at the conference, shortly after Tshering Tobgay, the prime minister, echoed the King’s thoughts of approaching 30 years ago and told the delegates: “We need to understand that the notion of progress goes well beyond lack of income or consumption to include non-monetary aspects such as weak social connections, the psychological costs of alienation and isolation, the exposure to risks and the experience of vulnerability”.

I began by explaining that the King, who announced in 2006 that he was abdicating in favour of his son and is 60 this year, had talked at length to me about his worries and dreams and his hopes for GNH. As he spoke, I quickly realised these were the concerns of a 32-year old who had a few years earlier realised the enormous challenge of being in charge of this small secluded nation at a time of great international change – and an awareness of how some other countries had got it wrong.

Notebook cover IMG_4657I said that my interview was the first time that the King had spoken at length about this with any reporter.

As I had discovered when I came back again to Bhutan in 2011 on my first return visit after 1987, my FT article is regarded in the country as a significant piece of historical record.

“We are convinced that we must aim for contentment and happiness,” His Majesty told me.

“Whether we take five or ten years to raise per capita income and increase prosperity is not going to guarantee that happiness – a lot of things go into it including political stability and social harmony, and the Bhutanese way of life, as well as economic development.”

Later he said, “We have seen many countries which have done economically very well, but none which has a modern society and kept a strong tradition and culture. We have seen examples of cultures being eroded with extreme modernisation”.

“We want to continue both as a modern trading nation with the best modern technology, but we would like to blend that with our system and culture.

“I think we can do it. We have to do it if we are to have GNH and a quality of life that is good for Bhutanese persons…..We can do it because we have a small population, endowed with great mineral and other national resources, and we have water resources – the fastest cleanest rivers in the world.”

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The first time the King had mentioned GNH to foreign journalists was in Bombay in 1979, though he is reported to have talked first about it in Bhutan 1972. He was in Bombay, on his way back from a Non-Aligned Movement conference in Havana, when an Indian journalist asked him, standing at the airport, about Bhutan being a poor country. Bhutan had just voted differently from India at the conference over the admission of Cambodia’s Khmer Rouge, so maybe that provoked the somewhat abrasive question.

The King replied that instead of just focusing on GNP, it might be more useful to measure Gross National Happiness.

The next recorded time he spoke about it was to a New York Times correspondent, Michael T. Kaufman, who visited Bhutan and whose report appeared on April 29, 1980 (and again with a brief mention in a November 1980 article). The King was reported saying, “There is a gross national product but there is also gross national happiness”. He wanted to improve the standard of living while not endangering other standards of contentment.

I met the King when I was The Financial Times’ South Asia correspondent based in New Delhi. I succeeded in obtaining what was, for a foreign correspondent, an extremely rare invitation to visit the country from the then foreign minister, Lynopo Dawa Tsering, who held the post from 1972 to 1998.

As we began our discussion, I felt I was listening to a young man who realised what a huge task he had, as he almost worried his way around the subject of opening up yet protecting Bhutan. Twice in my notebook I made margin notes saying I felt it was time as a reporter politely literally to bow out and let the King get on with other things, but twice he continued talking around the basic theme, adding to my impression that he was exploring a way forward as he spoke.

“The priority is not so much development as creating very efficient, very strong, very clean dynamic government – that is the most important factor now” he said,

“For the past 25 years we gave priority to development work – now we have to be very cautious because if we chart our course carefully, we can get economic prosperity and political stability and social harmony”.

Bhutan needed a smaller government – there were 13,889 civil servants and he was thinking of reducing them by a minimum of 2,000 that year and maybe later a total of 3,000. Retrench people who are not productive, he said, but with bonuses for relocation, he said, explaining how he would increase the budget. This was “a very painful job and also sensitive”.

Clamping down on corruption

He was “clamping down very hard on corruption” and wanted to make the Civil Service Commission “very strong, moral, and ethical”. Corruption had started when development started in 1961. “The level compared with developing countries elsewhere is not serious, but is serious for our standards. It was rare before development, (but now it is right from the government to the (local) government level. It has to be curbed immediately”.

The biggest problem had been lack of education and skilled manpower, with a problem of too much development work and a lack of ability. “Biting off more than one can chew,” said the King. “The pace of development work and our ability to provide manpower – the gap was widening – so we were compromising on quality”.

In formulating the country sixth (the latest) economic plan “we stress culture more – it was always there but, in the last 26 years of development work, we never took any serious step on it because we felt no need to take any initiative”.

Development over 26 years had affected Bhutanese way of life. “We took it for granted that no special attention was needed”.

Bhutan people were very carefree – that was a social factor. So special action was needed where there was a problem when development work had harmed the way of life. Stressing the need for culture and tradition within the civil service, the King said that there was now a government department to look into that – no-one had been responsible before.

A new problem in the last 14 years had been that “our own people started stealing gold tankas and ransacking and selling in Darjeeling and Nepal”. That was “unthinkable 10 to 14 years ago” because it was sacrilegious. Also numerous monasteries had been ransacked and antiques had been stolen from village homes. Villagers started selling their valuables and handicrafts so much that some of the best religious items had been lost.

The King talked about tourism and how people were complaining about tourists climbing sacred mountains, and that some monasteries were being closed.

Foreign influence

On foreign investment he said, “If we unilaterally opened up, a lot of (money from) tax shelters would be mis-used and would not use our national resources”. So Bhutan was deciding on each case individually. That was, he said, “nothing to do with keeping foreign influence out, but making sure it will be used well and be repaid.”

“Generally it is not so much outside influence we worry about, but every Bhutanese individual has to be very productive, confident, patriotic and nationalistic. We have opened up in a big way for 26 years. Don’t want a policy of isolation…. For the future, our prosperity and well-being will be to produce goods and trade. So we can’t afford isolation, and we need to trade in South Asia and beyond”.

This was before the King began to change the political system, introducing a form of parliamentary democracy and reducing the power of the monarchy, but he indicated he envisaged change. In the ‘50s, people had not wanted a national assembly – till then, people just said ‘Yes’ to what government officials said.

The King’s “role has been changing in the last 20 years”, he stated. “We are looking for the right system – we have no hang-ups or restrictions. We have today in the palms of our hands the chance to mould any system which will help us face challenges. We are searching for the best sort of system – the main thing is that the system must work”.

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GNH and GDP could not just be centred around prosperity.

“We have to make people happy and include the Bhutanese traditional culture…..We will have to modernise, open up, but it has to be clearly blended with our tradition and culture….All a question of using educational institutions to mould the characters of students and how they behave. We have 12 years to instil whatever we want to mould the ideal Bhutanese citizen…. Every individual must be nationalistic, patriotic, skilled.”

On India, the king praised Rajiv Gandhi, then the Indian prime minister and 10 years older than him, as “ the best prime minister India and neighbours can have”. But he then added on India, and this is even more relevant today than it was then: “One thing we don’t like is that the Opposition in India’s aim is solely to pull the Government down, and to obstruct the Government from doing well, even if it realises the aim of the Government is good for the country.

“We have no objection to political parties. The problem of democracy in the third world is it only operates if all the people are literate and can know what the government does – in the third world most people are not aware of what government does, so participation of people is not so great”. The literacy level in Bhutan was 25% and the aim was to get to 35-40% quite quickly.

There was a need to “study the advantages and mistakes of countries that have gone through our stage of development 30-40 years ago….. Knowing is one thing, but using that experience is important…..How efficient, capable our government and leadership is will determine success and failure for the future and the well-being of our people – so long as a small government.

IMG_4650“A big government compromises on facilities – that is a problem in third world countries. The problem is not a lack of aid or money but not having a very efficient strong government, so a lot of money has been squandered. If most developing countries had a stronger more efficient government, they would not have such problems….If we have capable government, there is nothing we cannot achieve.

“Being a very small country, we can’t afford failures or problems not overcome – but we have no choice but to have a very clear view….Today we have a major advantage of time and opportunity which we can either use or waste it…..We are at a crossroad where we can achieve any objective – social harmony, political stability, economic development.

“Otherwise we can dig a very deep hole for ourselves which would create very serious problems for our country,” said the King.

The King’s drive for GNH is now continued by his son, King Jigme Khesar Namgyel Wangchuck who was crowned in 2008, and by the government. Inevitably, the pressures of modernisation have created fresh stresses and challenges. A recent survey for example conducted by the Bhutan Studies centre found that people in remote villages were less happy than those who had moved to cities because they felt they were missing out on what was available in urban areas and were also suffering from a lack of labour to work the land.

Bhutan would  however have far more problems now if it had not started the GNH trend that has successfully influenced at least part of the approach to development and governance.

If King Jigme Singye Wangchuck were to be talking to me now (he rarely appears in public and never gives interviews), he would no doubt say that not enough had been achieved and would repeat his remark that “if we chart our course carefully, we can get economic prosperity and political stability and social harmony”.

LONDON: It can’t often happen that prime ministers from two different countries together address the same audience of tens of thousands, both of them looking to the same people for votes and other political support. Even more remarkable is that the two politicians use the event to build a hitherto non-existent personal bond and to enlarge business and other links between their countries.

Modi Wembley Cameron IMG_0377

That was what developed last evening at London’s vast Wembley Stadium in London when David Cameron, British prime minister, cashed in on a mega event organised by overseas Indians in the UK to welcome their hero, Narendra Modi, India’s prime minister.

Cameron had no need to be there – Modi has addressed similar though smaller audiences elsewhere without an escort – but the British prime minister seized the opportunity and even forecast that Indians were becoming so involved in the country that “it won’t be long before there is a British Indian prime minister in Downing Street”.

IMG_4518Introducing Modi, who of course needed no introduction, Cameron said, “We are all winners today”, and even managed a few words in Hindi.

The two men hugged and Modi, who had just lunched with Queen Elizabeth at Buckingham Palace, responded by starting his 90-minute speech in English. It was, he said, a  “historic day for a great partnership between two great nations and two great peoples, and we are celebrating this special relationship”.

They arrived at the football stadium 45 minutes late after the crowd had been entertained for over two hours with pop and traditional warm-up acts from a wide array of artists, including north London’s Shree Muktajeevan pipe band and drummers, dressed and sounding like Scottish bagpipers, and the London Philharmonic Orchestra accompanying both an Indian group and playing the national anthems.

Modi is an expert at mobilizing a mass audience and he excelled last night. He repeatedly thanked Cameron, and started by talking about the two countries’ links. Next came international issues such as India showing the world the “right path” for “saving humanity” over issues such as global warming and terrorism.

modi in parl

That all got bursts of rapturous applause, as did promises to supply electricity to Indian villages, install toilets across the country, and provide bank accounts for the poor. Even references to attacking corruption got applause. Mention of Modi’s home state of Gujarat was several times a winner, which pleased the heavily-Gujarati audience, especially when he announced that direct flights from London to the state would start next month.

The event was the high spot of Modi’s 50-hour stay in Britain, which ends at lunchtime today when he flies to Turkey for an international  conference.

It began with a rather sombre formal greeting ceremony (above) with grey-coated Scots Guards and a Welsh Guards band in the circular Treasury Courtyard just off Whitehall with David Cameron looking grim, as he did at a joint press conference later in the Foreign and Commonwealth Office, and Modi (who arrived 12 minutes late) looking suitably stern.

The British government did its best to make sure that the trip was memorable and that Modi felt welcomed. In addition to lunch with the Queen, Modi made a speech in parliament (above) and there were neat gestures such as Tower Bridge and the London Eye being floodlit with the Indian national colours of orange, white and green, while a fighter jet flypast had similarly coloured trails.

IMG_4506

Efforts have been made by both sides to avoid Modi’s controversial past as Gujarat chief minister during riots ion 2002, and as the current leader of a government and party that is developing a reputation for anti-Muslim Hindu Nationalist rhetoric. But both Modi and Cameron had to face up to the issues with blunt questions asked by the BBC and The Guardian newspaper in a joint press conference.

“India is becoming an increasing intolerant country. Why?“, asked a BBC reporter, having been picked by Cameron to ask the first question. Modi talked about India’s Buddhist and Gandhian traditions and said acts of violence would be dealt with. The Guardian wanted to know how Cameron felt inviting someone who has been shunned for years after the Gujarat riots. The answer was that the past was the past and Modi, elected with a high majority last year, was now the prime minister so it was right to have the visit.

The questions were tough, but they did allow both prime ministers to deal on the record with an issue that was blocking nearby streets and being aired aggressively in the British newspapers.

IMG_4510Parliament Square (above) and part of Whitehall were closed to traffic for most of the first day. All streets between that area and Modi’s hotel near St James’s Park were also closely guarded by police in order to keep hundreds of shouting protestors away.

The causes ranged from complaints about the Gujarat riots and Hindu violence to a current dispute over Nepal constitution, while Pakistani Kashmiris shouted for India to free its region of Kashmir.

British newspapers joined the noise. The Times was one of the worst with a headline saying, “Hold your nose and shake Modi by the hand”, while The Guardian went over the top with “India is being ruled by the Hindu Taliban”, written by India-born artist Anish Kapoor. The Daily Telegraph had a large front page photo of Modi headlined “All is forgiven, Mr Modi”, but a news story inside said “Pomp and ceremony for an ex-pariah” The Independent had a measured editorial titled “All due respect”, but that was spoiled by a “blood on my hands” cartoon (below).

This is not the sort of reception that an Indian prime minister should generate in London, with streets closed and nasty headlines and cartoons, but it showed how unwise Modi has been to allow his government to earn an authoritarian and anti-Muslim reputation that exacerbates memories of what happened in Gujarat.

Modi cartoon IMG_0379

Modi made a well drafted speech in parliament on the first day, full of references to the two nation’s closeness. An address to businessmen in the City of London’s Guildhall was a more humdrum list of (sometimes exaggerated) claims about how the government is reforming India’s economy and government.

There was nothing dramatic or unexpected in the announcements that the two sides said totalled some £9bn ($13.7bn), but there were useful initiatives on climate change, defence collaboration, cyber co-operation, and counter-terrorism. There was a list of over 20 commercial deals, most of which would have happened without the Modi visit. They ranged from a Madam Tussauds waxworks in Delhi to mostly smallish banking, insurance, healthcare and energy investments in both countries.

Overall, the visit has been a success in building new bonds, and it should lead to a significant boost in relations between the two countries, providing both sides follow through on what has been agreed. Modi is being correctly criticised for not progressing multi-billion dollar announcements made when he has visited other countries.

In this case however, India seems to be one step ahead of Britain because Navtej Sarna, a top diplomat who has just been appointed India’s new high commissioner (ambassador) in London, was part of Modi’s delegation, whereas the UK has strangely failed to announce a successor for Sir James Bevan, who ends his posting as high commissioner in Delhi next week.

Both prime ministers have too many other priorities and crises to handle to be able to pay much attention to Indo-British relations once this visit ends today, so top level experienced diplomacy is needed immediately to keep the new momentum going.

For Modi, it’s now back via Turkey to the problems he left behind in India a few days ago – a divided BJP after the Bihar election defeat for which he and his chief aide and party president Amit Shah were mostly responsible, aides and supporters who see Hindu nationalism as a more important priority than economic development, and his own failure to establish a record as an effective as opposed to limelight-seeking prime minister. That’s quite an agenda, but will he realise the need for change?

Namo-Wemb

Posted by: John Elliott | November 11, 2015

Modi tries to revamp his battered image as he flies to London

Focus on City of London finance, meeting the Queen, and a Wembley extravaganza

LONDON: It’s tempting to wonder whether Narendra Modi’s crushing defeat in the Bihar state assembly election announced last Sunday has, in a small way, had the sort of catalytic impact on him that India’s financial crash in 1991 had on the then Congress prime minister Narasimha Rao and his finance minister, Manmohan Singh.

Rao and Singh quickly opened up the Indian economy in 1991, so the idea is probably over-stating things. Yesterday however, in advance of a visit this week to the UK (his first since becoming prime minister), Modi did try to burnish his flagging image after the Bihar debacle and after 18 months of failing to establish himself as an economic reformer.

The government announced relaxations of foreign direct investment limits and regulations that should have been introduced months ago in areas such as defence manufacturing and banking, real estate management, air transport, media, and some retail stores.

Narendra Modi in Kashmir recently

Narendra Modi in Kashmir recently

The timing is significant in connection with the UK visit, which begins tomorrow morning, because Modi’s primary interest is the City of London as a financial centre that can provide investment for projects in India. His officials have made sure he spends some time there, and the programme includes an address at the City’s Guildhall.

I was told some weeks ago that Modi had three main interests for the visit – one was making a splash in the City, one was lunch with the Queen at Buckingham Palace, which will happen on the 13th, and the third was a mega event where he will be cheered by some 60,000-70,000 adulating overseas Indians in London’s Wembley Stadium after the royal lunch.

He is also addressing members of the British parliament, and is being hosted for a night by David Cameron at Chequers, the prime minister’s official country residence. And there is to be a fly–past by Royal Air Force jets trailing India’s national colours of orange, green and white.

ROYAL China 124124This is the least that Cameron and the Queen could do after the splendours of a full state visit that they laid on last month for China’s president, Xi Jinping, which included a ceremonial coach ride (above) along The Mall to the palace, and a formal state banquet.

Not everyone was keen on welcoming Xi – Prince Charles is happier in the company of the Dalai Lama, who lives in exile from Tibet in India. But Cameron and his China-enthusiast chancellor of the exchequer, George Osborne, did not publicise human rights issues, or their responsibilities towards China’s former British territory of Hong Kong, in their enthusiasm for Chinese investment in projects ranging from high speed railways to (dangerously and inexplicably) nuclear power plants.

There is also considerable antipathy towards Modi, whose controversial record as chief minister of Gujarat during fatal riots in 2002, is still resented – he was shunned by the British government for ten years.

There will be protests over Gujarat and other issues during his visit. Last Sunday, which was Britain’s Remembrance Day for those killed in two world wars, an image was briefly projected onto the Houses of Parliament (below) of Modi wielding a sword with a swastika and the words “Modi not welcome” – created by the Awaaz Network that monitors religious issues in South Asia and the UK.

Modi-Not-WelcomeThe UK is far from Modi’s top foreign priorities – the list is led by the US, Japan and China, and he has visited a total of nearly 30 countries since he was elected 16 months ago. A plan for a visit at the beginning of this year was shelved, partly because of the British general election and partly because of a visit to India by President Obama.

It is the first time an Indian prime minister has visited the UK (apart from multi-lateral conferences) for nine years, which is surprising given that there are some 1.5m overseas Indians in the country with ten members of parliament and 24 members of the House of Lords of Indian origin. Tata Motors is the biggest manufacturing employer and Modi will visit the company’s Jaguar Land Rover factory in Solihull.

Cameron has been trying to woo India for some years, making three visits to the country, sometimes accompanied by a posse of cabinet ministries, but to little effect.

He and Modi have very different backgrounds and, below the surface, one cannot expect the rapport that seems to have developed with Obama. Cameron comes from a posh privileged upbringing in the British shires and jobs in public relations, while Modi comes from a very poor background with a father who ran a railway station tea stall and a life spent in Hindu nationalist organisations and politics.

But Cameron will be a high profile generous host, accompanying Modi on much of the visit and introducing him at the Wembley jamboree, where there will be a massive firework display marking this week’s Diwali festival of lights celebrations.

This will be by far the largest of a series of overseas Indian pop star-type spectaculars that Modi has addressed in places ranging from New York to Shanghai and Dubai to Sydney. His audiences are part of his political base, especially in the UK where there are estimated to be some 600,000 people from his home state of Gujarat, all with votes or influence on families back in India.

There will be the usual package of announcements that always happen on such visits. Modi has been collecting multi-billion dollar pledges in countries he has visited, and some $15bn is expected this week. Included, according to reports, will be an order for 20 Hawk trainer jet aircraft to add to existing orders, telecoms investments, and special bonds for infrastructure projects, plus initiatives on anti-terror measures, economic development and energy and climate change.

But Modi has failed so far to ensure that his ministers and officials follow up on the multi-billion dollar announcements, and scepticism about his real interest in implementation after his trips is developing in various countries including the US and Japan.

The test will be whether yesterday’s announcements of relaxed foreign investment rules heralds a new continued push for economic and manufacturing investment, or whether it was just a knee-jerk image-boosting reaction.

Posted by: John Elliott | November 8, 2015

Narendra Modi and the BJP routed in Bihar state election

Indian politics have today been hit with the biggest disruption since last year’s general election, with prime minister Narendra Modi’s Bharatiya Janata Party suffering an unexpectedly heavy defeat in the state of Bihar’s assembly polls. 

A close result had been widely predicted, but that proved wrong and a mahagathbandhan (grand alliance) headed by Nitish Kumar, chief minister for the past ten years, has won 178 seats in the 243-seat assembly, while Modi’s BJP-led group has only 58.

The winners Lalu Yadav (left) and Nitish Kumar

The winners – Lalu Yadav (left) and Nitish Kumar

This is a personal defeat for Modi, who addressed about 30 election campaign meetings, far more than is usual for a prime minister in a state election, and was relying for victory on his personal charisma that won him last year’s general election. It is also a significant defeat for Amit Shah, Modi’s abrasive chief aide and president of the BJP, who exemplifies the Hindu nationalist and anti-Muslim approach of many leaders both in the party and in the RSS, the ideology-driven parent organisation.

It is also a serious setback for his government, which needed a victory in Bihar to begin to build up its minority position in parliament’s Rajya Sabha (upper house) where members are indirectly elected via the states.

Modi leaves in a few days for a visit to the UK where, next Friday November 13, he will address what was expected to be a celebratory assembly of some 70,000 overseas Indians in London’s mammoth Wembley Stadium. He will no doubt still be cheered like a pop star, as he has done at similar spectaculars in other capitals over the past year (though there have been some reports of a backlash). It will be worth watching to see if he shows how he intends to recover his political authority in India.

Modi and Shah ran a divisive campaign, which included trying to rally Bihar’s majority Hindu electorate with anti-Muslim rhetoric. The BJP claims it had a development-oriented agenda, but that did not emerge from most of the campaign speeches at a time when the national focus has been on extremists trying to ban beef eating and restrict freedom of speech.

Narendra Modi (left) and Amit Shah

The losers – Narendra Modi (left) and Amit Shah

Nitish Kumar , leader of the Bihar-based Janata Dal United (JDU) party has won a remarkable victory, being voted in as chief minister for a third consecutive term.

The most surprising aspect of the result however is that Bihar’s Rashtriya Janata Dal (RJD) party, led by Lalu Prasad Yadav, a former chief minister convicted of massive corruption, has won more seats than Kumar’s party – 80 compared with 71, going up by around 55 whereas Kumar has lost some 45. The Congress Party also did surprisingly well, winning 27 seats, up from just four in the last (2010) state assembly election.

Yadav is disqualified from standing for election or holding political office, but he is still his party’s leader and is lauded for leading a social revolution in the 1990s that empowered his backward Yadav caste. 

This indicates that the election result stemmed from a strong vote by Lalu Yadav’s large Yadav caste and other low castes and Muslims combined with recognition of Kumar’s development record, and concern about the Modi and Shah divisive approach.

Kumar has done an amazing job building roads, bridges, and electric power supplies, as I saw on a visit to the state a week ago. That was specially evident in his first term in office, but he has shown little or no interest in promoting private sector business and entrepreneurship, which the BJP could have been expected to do, had it won.

Kumar therefore has two main challenges. One is to ensure that he and not Yadav’s RJD runs the government – and, linked with that, he attacks corruption which he has failed to do effectively in the past. 

Second, he needs to broaden his development horizons for what is India’s poorest state so that businesses begin to appear along the roads that he has built, and that so far non-existent investment comes in from elsewhere in India. 

The result marks a new low point for Narendra Modi and the BJP, which also suffered a unexpectedly major defeat in Delhi’s assembly elections at the beginning of this year. Modi’s image, and that of the government, has slumped in recent months, partly because of Hindu nationalist and anti-Muslim rhetoric from ministers and other activists that he has failed to curb over the past 12 months.

Few real successes

His government has few lasting successes to chalk up on economic and social development, or on foreign affairs. Modi has launched many campaigns such as Make in India, Digital India, and Clean India, but he has failed to show firm results in reforming the way that India is run, and has developed a reputation for being more interested in personal glory and symbolism than in implementation. That is in stark contrast to his reputation as chief minister of Gujarat before last year’s general election.

He has also failed to build constructive relations with chief ministers of states, including some run by BJP politicians who do not belong to his camp in the party, as well as those from other political parties. The lieutenant governor of Delhi, who reports to Modi’s home ministry and has some key administrative responsibilities, has continually tried to undermine Arvind Kejriwal, leader of the populist Aam Aadmi Party that defeated the BJP earlier this year.

Abroad, Modi has had major successes with more than 20 high-profile foreign trips, such as the one he is about to make to the UK, and he has even been billed in the past few days by Forbes’ magazine as the world’s ninth most powerful person. But there have been few firm investments from tens of billions of dollar promises he has reaped in places ranging from China and the US to Japan and Dubai, and little evidence of real power.

In South Asia, he has squandered much of a constructive approach that he began to adopt last year with India’s neighbours. Government policy on Pakistan has little coherence, and Modi’s successful efforts at establishing good relations with Nepal have turned into a disaster with a blockade of oil and other supplies from India, triggered by a constitutional row in Nepal. India also last week inexplicably lodged a formal complaint at the United Nations for the first time over Nepal’s human rights record.

The impression in all these areas is that the prime minister is not focussing on following through and implementing the announcements he has made. Much will now depend on how he reacts to today’s defeat – whether he reshuffles his ministers and sidelines those who have been the most disruptive, and whether he begins to emerge and act as a statesman and leader.

Perhaps the unkindest remark on television, as today’s results have been emerging, came from Vir Sanghvi, a veteran commentator. Referring to Modi’s UK trip and the overseas Indians’ Wembley Stadium event he said, “He might win in Leicester or Wembley but not in Bihar”.

Posted by: John Elliott | November 1, 2015

Bihar voters have a difficult choice in current assembly elections

Nitish Kumar has achieved a lot but can he drive entrepreneurial development?

The voters of Bihar, India’s poorest state, have a difficult choice deciding who to vote for in current assembly elections if they put aside their usual caste and religion-based preferences and go for the party that will be best for development.

They can choose a mahagathbandhan (grand alliance) headed by Nitish Kumar (below), chief minister for the past ten years, who has transformed many aspects of daily life in what was a mafia-ridden basket-case society.

nitish_kumar_21032013Or they can choose Narendra Modi, India’s prime minister, who has dominated the BJP’s election campaign but has not announced the name of the regional politician he would anoint as chief minister.

This suggests that the voters’ safest choice is Kumar, the capable leader they know, who can be expected to expand the road, bridges, electric power and other government-funded infrastructure developments that have been built, along with improved basic education and law and order.

Modi has no such track record, but he and his Bharatiya Janata Party (BJP) do understand and promote private sector business and entrepreneurship, which Kumar has neither done nor talked about beyond some hopes of food processing factories. Modi would also bitterly resent what would be a humiliating defeat by Kumar and could be expected to restrict central government help for the state.

Bihar is now ready to expand from its largely government-funded economy, and from farmers producing mostly for their own consumption, to productive private sector business activity, says Shaibal Gupta, who runs the Bihar-based Asian Development Research Institute. This means encouraging local small endeavours ranging from roadside outlets to industry with inward investment from companies based elsewhere. Currently, there is virtually no such investment, and tens of thousands of hard-working Biharis emigrate elsewhere in India and abroad to find employment ranging from menial manual labour to software engineering.

The trumpet call of every Bihari ~ move with the BJP in Bihar ~ come let's change BiharNationally, this is an important election because Modi desperately needs to win, for two reasons.

First, he cannot afford politically for the BJP to repeat the devastating defeat that it unexpectedly suffered in Delhi’s assembly elections early this year. His image has been hit both by the government’s lack of tangible achievements and by his failure to rein in his Hindu nationalist extremists, and neither he nor his unpopular henchman, BJP president Amit Shah (they are together on the poster above), need another setback.

Second, the BJP needs a clear victory in order to begin to build up its minority status in India’s Rajya Sabha, the upper house of parliament whose members are indirectly elected via the states. The government’s ability to implement urgently needed new legislation will be curtailed until the BJP has a majority of the seats, which will not be till 2017-18 at the earliest, and even later if it loses in Bihar.

My hunch is that Kumar will win, but I’ve heard about the possible advantages of a BJP victory while visiting Bihar in the past week. I asked in the capital, Patna, and elsewhere, “which party does Bihar need”, rather than journalists’ more usual “who will you vote for” and “who do you think is winning”.

Bihar’s politics are sharply polarised around caste and by the unbridgeable and politically-sharpened divide between the majority Hindus and the Muslims who make up 17% of the population. That divide was dramatically illustrated when Amit Shah, reflecting the BJP leadership’s fear that it was losing, brazenly tried to rally the Hindu vote on October 29 by saying that “crackers will be burst in celebration in Pakistan” if the party did not win.

lalu-48Bihar has been one of India’s poorest state for decades. Some 80% of the population are “multi-dimensionally poor” compared with a national average of 55%, according to estimates based on a UN Human Development Report index that includes levels of health, education, and standard of living as well as income.

A social and political revolution was set in motion by Lalu Prasad Yadav (right), a populist politician who parades his roots by keeping cows in his Patna garden. He became chief minister in 1990 and ruled for 15 years together with his uneducated wife Rabri, who stood in for him for nine years after he was banned from office and briefly imprisoned for corruption. He empowered his own backward Yadav caste and others, replacing the established high caste social elite that had thrived under British rule and continued to dominate after independence.

He ignored economic development, seeing no need to do anything more than caste empowerment. He is still regarded as a hero by many Yadavs who make up 14% of the population, even though he led the plunder of the state’s exchequer in a fodder scam which he inherited from his predecessor. That cost the poverty-stricken state and its government some Rs950 crore ($200m at the time) in lost revenue.

Bihar was therefore desperate for economic development when Nitish Kumar came to power in 2005 with his Janata Dal (United) party. He headed a National Democratic Alliance coalition with the BJP, which allowed him leeway to establish and implement policy.

Starting from such a low base of neglect, Kumar made rapid progress that still continues. Economic growth, which had been almost stagnant from 1990, has averaged 10% since 2005. Crime – notably robbery and kidnapping that were double the national average – has dropped significantly, partly helped by speeding up cases and creating an auxiliary police force of ex-army staff.

BJP workers checking election lists during Patna's polling day

BJP workers checking election lists during Patna’s polling day

Roads have been transformed, as I saw on my visit, with smooth tarmac surfaces, even on usually rough village roads, that rival anything I have seen elsewhere in India. Five-year build-and-maintain contracts encourage quality work by contractors who usually do shoddy work and make money out of constant repairs. A three-hour journey to the north-east of Patna was only blighted by a 5.8kms semi-crippled bridge across the River Ganges that is gradually being repaired, though far too slowly.

Electric power, which was only available for a few hours a day, and was unavailable in rural areas, is now on tap for 12 hours or more in over 36,000 of the state’s 40,000 villages, with some, I was told, getting 20 hours. Supplies are bought on the national grid and there has been some improvement in Bihar’s power generation.

Attendance at schools has improved dramatically, encouraged by a national mid-day meal scheme, and by a Kumar initiative to provide girls at secondary schools with money to buy bicycles so they can cycle safely to school.

Keota village schoolIn Keota village, near Dalsing Sarai just north of the Ganges, Rajeev Chaudhary, the head of a girls’ school (left), told me that an average of 400 out of 670 registered pupils attended every day and were successfully persuaded to stay for afternoon classes after the midday meal. State-level incentives included Rs1,800 cash pay-outs to those who achieved 75% attendance, though that had been relaxed during the election.

Corruption has however remained rampant because Kumar handed power back from Lalu Prasad’s Yadav mafias to civil servants who, unrestrained, have cashed in, demonstrating how endemic graft and extortion are in India. Kumar has not been interested in developing non-government social society organisations that might provide some offset, so the civil service is dominant. Tertiary education colleges have declined.

Despite these problems, this is a remarkable development record, showing what can be done by a determined chief minister. It compares for example with two other poor states – Orissa where a popular though somnolent chief minister has little drive, and crime-ridden Uttar Pradesh where there is no reforming zeal.

Kumar was re-elected in 2010 at the age of 59, when his coalition with the BJP won 206 out of 243 seats in the state assembly, routing both the Congress Party whose campaign had been run by Rahul Gandhi, and the Rashtriya Janata Dal party led by Lalu Yadav (though he personally is banned from active politics).

By this point, Kumar was even seen as a possible prime minister of a future coalition government. But his political stock declined when he broke with the BJP in 2013 because he could not accept Modi’s personal brand of overt Hindu nationalism. He meekly stepped down from the chief ministership, handing over the post to a party colleague who he later ousted, taking the job back himself. That has led to a redrawing of political alliances. Kumar has teamed up with his old political opponents – Yadav’s Rashtriya Janata Dal party and the Congress Party – against his old ally, the BJP.

bihar_museum

But Kumar has his drawbacks. He is said by those who know him to dislike new ideas that challenge his views, let along criticism, and he deals roughly with those who challenge him. That is most graphically illustrated by an astonishing new Bihar Museum (artist’s impression above) that is being built on a vast site in central Patna at a cost of Rs500 crore (£50m, $70m). Designed by a Japanese architectural firm, the structure now being built looks an anachronism in such a poor state and has been widely criticised. Kumar is said to see it as a foundation for his laudable aim to build mass tourism around Bihar’s Buddhist sites, though critics say he sees it as a monument to his reign.

His political ego is however mild compared with Modi and Shah whose faces dominate election posters as if they, not some un-named politician, would be chief minister. A former deputy chief minister, Sushil Modi (no relation), is regarded as the front runner, but he has not been named partly because he comes from a small minority cast and others might object that he had been chosen, and partly because, some people suspect, Modi wants to name someone else.

Modi has put a lot of poitical capital into the campaign, addressing some 25 rallies which is far more than any other prime minister has done in a state election for decades. That is a measure both of how he and Shah regard him as a potential vote winner, and also how desperate they are to win.

Whether they have calculated wrongly, and the BJP is heading for defeat, will begin to emerge when exit polls are broadcast on the evening of November 5th after the last day of polling ends. The count then takes place next Sunday the 8th.

Experts say the result is too close to call and, with 30% of the 66m electorate under 30 (3m of them first time voters), anything could happen.

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