Significance of Durga Shakti: A turning point for better governance?

Significance of Durga Shakti: A turning point for better governance?

Rajivan Krishnaswamy

Various social organisations and trade unions organise a candle light protest against the suspension of IAS officer Durga Shakti Nagpal in Lucknow.

In the wake of the Durga Shakti Nagpal controversy which hit headlines, former senior bureaucrat Dr. Rajivan Krishnaswamy raises an important question about whether the public outrage over the young IAS officer’s case reflects accumulated anger over "the state of public goods". He also asks whether the Durga Nagpal case can be a trend-changer resulting in a serious debate on genuine governance reform.

Now that the immediate news value of Durga Shakti Nagpal’s dramatic suspension and media aftermath is behind us, it is perhaps time to reflect upon the significance of the event for the politician-civil servant relationship and speculate on future prospects for clean governance in India, governance that protects and promotes public good. Three questions are explored here:

One, is the faceoff between Nagpal on the one hand, and the Samajwadi Party (SP) with the sand mafia on the other, just a case of a local conflict between politically-backed vested interests and an honest civil servant simply doing her job? Is a conflict, though painful for the civil servant, part of the occupational hazards of regulatory work in democracies? Or is it a symptom of a deeper malaise, reflecting a trend that is worsening and hence in need of social policy action?

Two, to what extent is it an issue of the Indian Administrative Service (IAS) versus other civil services? Recall that the SP has been highly vocal in saying that the State of Uttar Pradesh (UP) does not need any IAS officers at all, implying that they can run the administration better with officials fully under state control.

Three, what are the prospects for the future of governance in India? Does the intense public debate and open protest in Nagpal’s case suggest that cases of victimization of civil servants would decline in the future as public scrutiny can embarrass political leadership? Or would it embolden similar acts elsewhere, especially as she continues to be suspended, her husband transferred without cause, leaving the field wide open for even more blatant acts?

Episodes or trends?

When the number of individual instances of corruption become so numerous and pervasive, it is hard to dismiss them as episodic occurrences. They may be better characterised as trends. Dispassionate observers of the politician-civil servant relationship over the last 50 years would agree about two interrelated developments that point to a deeper malaise seen at all levels of government, but especially at the Central and State levels:

• The rising collusion between the three groups – political leaders, business interests and civil servants – in pursuing short-term gains even if it involves stealing public wealth directly, or harming the general public good.

• An increasing intolerance within government by the political and civil servant bosses towards the honest civil servant, skewing incentives, in turn, contributing to lowered standards of probity and progressive undermining of the greater common good.

 There is the grand corruption of large contracts that divert public money to further immediate private interests at the cost of the public good... In public procurement deals of huge commercial value, collusion can operate… A smart collusion ensures that only “cooperative” personnel are lined up along the progress of the file to eliminate potential disruptions. But when this is not done in advance and a civil servant becomes un-cooperative, s/he is sidelined, and in more blatant cases, disciplinary or even criminal proceedings initiated. Honesty is rebuffed repeatedly, and normal query on file calling for more information or seeking clear orders starts to look odd and becomes the subject of much corridor discussion. 

Assets with characteristics of “public” wealth such as the technology-based spectrum or a natural resource like coal, that have very high commercial values, are examples in recent times where large losses through policy have been alleged at the central level. At the State level too, licensing of mineral extraction, such as granite, for real estate involve collusive policy actions that have compromised public wealth. Such acts undermine future public revenues, apart from the inevitable environmental damage. These conspiracies cannot have occurred without tripartite connivance. When regulations themselves are fixed, such acts can even be perfectly legal but perfectly corrupt. They take on the nature of the very capture of the state.

Then there is the grand corruption of large contracts that divert public money to further immediate private interests at the cost of the public good. In public procurement deals of huge commercial value like defence at the centre, or excise regimes that favour cartels and even mass schemes needing repeated contracts like universal feeding at the State level, once again collusion can operate. Either the civil servant would initiate a patently absurd procurement or auction, or if the civil servant opposes such an act, the political boss has the confidence to find someone else that can do what is needed. A smart collusion ensures that only “cooperative” personnel are lined up along the progress of the file to eliminate potential disruptions. But when this is not done in advance and a civil servant becomes un-cooperative, s/he is sidelined, and in more blatant cases, disciplinary or even criminal proceedings initiated.

Since these acts have increased over time, and honesty rebuffed repeatedly, personal and professional costs to the honest civil servant increase at the margin. A normal query on file calling for more information or seeking clear orders starts to look odd and becomes the subject of much corridor discussion. The officer becomes mentally prepared to be, at the very least, summarily shifted from the post. The situation of Ashok Khemka appears to be a case in point – the officer, irrespective of the political party in power, has had an average tenure of six months over a career of three decades. When the lesson from each case of conflict is that honesty is costly, normal probity and resistance to corruption tend to decline.

In contrast with national and State levels, municipal and panchayat level politicians have yet to be delegated with powers to allocate public wealth, and local level bureaucracies have limited policy space. Not that corruption is absent, but typically, the money value is low. Examples such as a village administrative officer suspended for demanding a tip for a certificate, a forest ranger caught for ignoring illegal tree cutting, a block development officer charged for siphoning off part of a subsidy in a micro-credit scheme or a school teacher dismissed for demanding payments for grades, do find their way into local papers. As a matter of course, lower end government employees are more easily charged for acts of relatively petty corruption. Most multilateral assisted projects too, ironically, focus on the local levels for improving “governance” (euphemism for anti-corruption in development literature). The implicit assumption is that corruption decreases at higher levels of government – with no basis in experience. Sure, the local focus could also be because that is where the visible part of development projects is located, but could also be a convenient façade due to hesitation in confronting the client at the top.

The positive actions in running governance programmes through multilateral loans, and the punitive actions in catching the lowly serve to deflect attention from the more serious convivial relationship between the politician-businessman-official at higher levels of government. And the focus on petty, rat-like acts at lower levels deflects from serious dacoit-style acts of grand corruption and the less visible, insidious state capture at higher levels. It blinds us all to the old proverb that a fish usually rots from the head down.

The expenses for political success have been rising while the tenure of office is short and hence the need to recoup as soon as possible. Civil servants, on the other hand, have low financial costs for entry and a longer tenure than politicians, often with a pension for life including for a surviving spouse. Hence officials need to be undermined in other ways – transfers, suspensions, charges – to make them toe the line, with public good becoming a contested space. 

There have been several explanations for the rising misappropriation of public good through this nexus or for the official-politician conflict that sometimes comes in the way. A popular explanation runs as follows: the expenses for political success have been rising (it is rumoured that to win a parliamentary seat costs around Rs. 3 crores) while the tenure of office is short (five years) and hence the need to recoup as soon as possible. Civil servants, on the other hand, have low financial costs for entry (cheapest in money terms for the highest category of the IAS as the UPSC recruitments are beyond reproach, even though they cost more in terms of earnings lost in preparation time and the intense effort in competitive entry) and a longer tenure than politicians – at least thirty years – often with a pension for life including for a surviving spouse. Hence officials need to be undermined in other ways – transfers, suspensions, charges – to make them toe the line, with public good becoming a contested space. Advocates of strengthening all the civil services are probably motivated by institutional arrangements that insulate officials from pressures, to serve as barriers to rapid exploitation of public wealth. Unfortunately, counter examples abound, of officials acting with impunity and even guiding their political bosses through the intricacies of procedural requirements for legally diverting public wealth.

After the dismantling of the license raj in 1991, and the opening of the production of public goods like power and roads to the private sector, the opportunities for policy-based corruption declined. Advocates for further cuts in the public investments would like to reduce the scope for both the civil servant and the politician in making investment decisions. But there is little evidence to support this presumption – most acts of privatisation (starting from the disinvestment scandals in the 1990s), Enron and power, coal etc., have led to considerable losses. In fact, liberalisation itself, throws up more opportunities for conversion of public goods into private profits through bad policy.

IAS versus the rest: Debunking a red herring

We now look squarely at the question of the extent to which it is an issue of the IAS versus other civil services. The fact that Durga Shakti Nagpal is an IAS officer, has led the arguments in a potential red herring direction on the IAS itself – diverting from the core issue of misappropriation of public wealth. Note that the district mining officer was also summarily transferred but, without Nagpal, his case would not have received as much attention.

At one extreme, the SP that has stated it does not need IAS officers at all – meaning they do not want officials that do not do as bid. At the other extreme, and on the same basis, is the view that the IAS is the best hope for the protection of public good – a former Cabinet Secretary has argued that the IAS should be strengthened by policy actions such as fixed tenure etc. Both these positions are based on flawed premises. The SP argument presupposes that Nagpal did what she did because she was an IAS officer and the opposite camp that argues for strengthening the IAS, also lays great store by strengthened civil services. It is difficult to argue that she went after the sand mafia because she was an IAS officer. The non-IAS, District Mining Officer (also suddenly transferred) also seems to have been doing an excellent job. It is also unlikely that had Nagpal been from the state civil services she would have acted differently. There are innumerable instances of non-IAS officers who have upheld public interest against serious odds and equally significant number of IAS officers conniving in eroding of public interest (including a former chief secretary level officer from UP who had been found guilty in land scams). Therefore, the argument for strengthening the IAS through fixed tenures based on this case is weak. If anything, it would apply to all services.

On the other hand, the SP argument that an all India service like the IAS (with dual control of State and Central governments) is a hindrance to effective state government performance is equally weak. It presumes that non-IAS officers do not enter into conflicts with politicians as they are fully under state control. This too appears incorrect from the example of the district mining officer and from the example of the UP Chief Secretary (the head of the IAS) in suspending Nagpal without application of mind. And the dual control argument – allowing central government protection for Nagpal from arbitrary actions such as suspension in minutes – has proven to be no protection after all. The central government, and the department of personnel that has the powers to revoke the suspension, itself headed by an IAS officer, directly under the country’s Prime Minister, has remained silent. This, despite the Prime Minister as the departmental minister having been tasked by his party president to ensure justice was done. It would be interesting to document the discussions among the civil servants who actively participated in suspending Nagpal in UP and among those in Delhi who have the power to revoke but remain passive by not exercising that power. What exactly are they advising their political masters on the ramifications of this case?

Practical considerations would suggest that Nagpal, with hardly two years of work experience, and likely to spend another 30 years in UP, would be ill-advised to complain. Even if her suspension is revoked, she would be marked for life as “difficult” and probably end up with a career profile similar to that of Ashok Khemka. So for the SP to blame the IAS or the issue of dual control as the cause of the fiasco is unjustified.

However, some governments run by strong regional parties may be sympathetic to the view that the IAS has no special role, and its all-India status provides no value addition for the ruling government of the day. In Tamilnadu, for example, chief ministers have consistently held that directly recruited IAS officers are neither special, nor do they add value. Further they have through actions such as refusal to send these officers on central deputation, illegal suspension before voluntary retirement, cocked a snook at the central government and the associated notion of dual control. Nevertheless IAS officers have held key positions even with strong regional parties that are confident about their political strength and hence longer staying power – again showing that the issue is not IAS versus the rest as the SP has tried to pitch it.

60 years ago Sardar Patel argued that an all India Service was necessary to integrate a highly diverse country through good and unified governance after centuries of colonial rule and fragmented governance standards... But now, an objective assessment of the IAS would show that it has protected public good but also connived to erode it. 

The argument that the IAS is archaic and not relevant for today’s governance needs is, however, a more serious one – though for reasons different from those advanced by the SP. The sentiment behind creating the IAS is best summarised by Sardar Patel’s arguments in the Constituent Assembly debates. Patel argued that an all India Service was necessary to integrate a highly diverse country through good and unified governance after centuries of colonial rule and fragmented governance standards. Further, these objectives were to be achieved by a composition of IAS officers in states consisting of a ratio of insiders-outsiders selected through high entrance requirements. This system (the steel frame) was designed with the expectation that it would be less biased, prone to corruption and local influences. It would enable them to implement the union laws on the ground fairly uniformly, combined with their knowledge of local issues from establishing state cadres.

Now, around 60 years later, an objective assessment of the IAS with reference to these initial expectations would perhaps show mixed results. As argued earlier, the IAS has both protected public good but also connived to erode it. While the need for an all India policy and implementation framework for national public goods would probably justify the Indian Forest Service, the Indian Foreign Service, the Income Tax, Customs, Defence, and may be even the Police, it is not clear what national and integrating value the IAS brings to citizens. Further, if we take a random sample of IAS officers and stratify on the basis of caste, gender, region or class, and examine whether probity has an association with any of these attributes, one would not find any significant correlation, demonstrating that values such as probity in governance cannot be generated by designing ratios of insider/outsider or dual controls.

Are we at an inflection point?

We now turn to the issue of prospects for the future of governance in India. Could the Durga Shakti Nagpal case be a trend changer that results in serious debate on genuine governance reform? Would victimization of honest officials decline in the face of political embarrassment from growing public scrutiny? Or does this case reinforce a trend that emboldens more such acts? The prospects for change could potentially come from three sources: the bureaucracy itself, the political class, or the rising tide of civil society movements that are angrier and increasingly emboldened.

The reaction of the bureaucracy to the Nagpal episode could be, “Yes, this is what happens when you are young, you get hit, and there is no one to protect you, so next time walk away from confrontations; there are several sand mines but only one career.” This reaction type would reinforce the collusive trends and boost misappropriation. If the past is an efficient predictor, then the former reaction would, over time, subsume the latter. On the other hand, if this case is seen as a wakeup call, and energises all civil services (for example, several IAS associations have come forward to condemn the suspension) then the prospects for systemic reform improve.

The prospect for change from the political leadership is difficult to predict. Electoral democracies do not come cheap. The temptations for quick money and competitive compulsions of elections provide a fertile ground for collusion with business interests that not only generate money, but also benefit from policies and contracts. Hardly any democracy has found a foolproof solution to election funding. The significant positive signal of Sonia Gandhi in taking up the case has been dampened by the Manmohan Singh response asking first for a letter from the aggrieved official to do justice. Unlike on most other issues (food security, water sharing, Telangana or Bodoland) there is unanimity across political parties on amending the Right to Information Act to exclude them from having to share information. Yet, it can hardly be said that all political leaders are corrupt – in the past political movements have been motivated explicitly by social good. Moreover, in the game of electoral musical chairs, political strategy may lead to a realisation that it is better to support clean systems which do not work to their disadvantage when out of power. Political maturity may well lie in responding to people’s expectations in the times of hyper exposure in the media.

 The big unknown is the effect of the Durga Shakti Nagpal case on civil society. Over the years more and more sections of the civil society have accumulated anger against a corrupt system... The widespread disaffection is not only with acts of corruption but with the state of public goods… This anger, though sporadic and dispersed, is real. It may embed in it the kernel of a chance to change the status quo. 

The big unknown is the effect of the Durga Shakti Nagpal case on civil society. Over the years more and more sections of the civil society – as individual and as groups – have accumulated anger against a corrupt system. While “letterhead” CSOs do have questionable reputations, some of the collective action movements have shown remarkable staying power and an ability to channel public anger. The widespread disaffection is not only with acts of corruption but with the state of public goods, often expressed petulantly as “why should I pay taxes from my hard earned money for this corrupt neta-business-babu nexus to spend?” This anger, though sporadic and dispersed, is real. It may embed in it the kernel of a chance to change the status quo. A catalysing agent may be the new media which make collective action far easier. It can amplify voice and visibility at very low cost in terms of money, time or effort. A small voice can leverage disproportionate power through extraordinary and instant visibility.

Time will tell whether India is at a turning point – whether people’s pressure from below will join hands with political maturity from above. The civil service usually complies.

(Rajivan Krishnaswamy has a Masters and PhD in Economics from the University of Southern California, Los Angeles. He has worked in the IAS, at various levels, starting from city level administration to the prime ministers office. He was the CEO and MD of the Tamilnadu Urban Development Fund (1996-2003), after which he worked as Senior Urban Finance Specialist at the World Bank in Washington. Currently he is an independent consultant based in Chennai, working in China, Vietnam and Ghana.)

E-mail: rajivan.k@gmail.com

Excerpts from Vanzara's letter: Modi was my god

To Addl Chief Secretary (Home),

Government of Gujarat

I, D G Vanzara, DIG of Police (under suspension), undertrial prisoner No. 4826 in Sabarmati Central Prison, hereby tender this resignation with renunciation of all post-retirement benefits on the following grounds:

...While I was serving as DIG, border range, Kutch-Bhuj, I was arrested in the Sohrabuddin encounter case by the CID (crime) of Gujarat on April 24, 2007. Along with other police officers, I was lodged in Sarbarmati Central Jail till November 22, 2012. I was also arrested in the Tulsiram encounter case by the CID (crime) on July 7, 2010. After my shifting to Taloja Central Prison, the CBI opened two more cases, the Sadiq Jamal encounter case and the Ishrat Jahan encounter case.

As on today, apart from nine Gujarat/Rajasthan police officers in Taloja Central Prison, there are 22 other officers/men in different jails in Gujarat, [a total of] 32 including six IPS officers... Most of them had served under me. I have been making ceaseless efforts on behalf of all of them to persuade this government to be of assistance to my officers and me... With the passage of time, I realised this government was not only not interested in protecting us but has also been clandestinely making all efforts to keep my officers an me in jail so as to save its own skin from the CBI and to gain political benefits.

This government suddenly became vibrant only when Amitbhai Shah, former MoS (home), was arrested. Ram Jethmalani, the most learned, senior-most and highest paid advocate of India, appeared on behalf of him and got him released on regular bail within a record three months. In contrast, when I, along with Rajkumar Pandian and Dinesh M N, was arrested, nobody from the government bothered even to provide lip service to my family.

In spite of all its acts of treachery, I was gradually reconciling myself with this government when a skylab in the form of a Supreme Court order for the transfer of the Sohrabuddin trial to Mumbai fell on us from New Delhi. With all regard for the Supreme Court, I sincerely believe that but for the legal and political manouevrings of Amitbhai Shah, the trial of the Sohrabuddin case, followed by that of the Tulsiram case, would not have gone out of Gujarat.

The crux of the matter is that it was just to facilitate his trivial personal interest of fighting the assembly election of 2012 that Amitbhai Shah got the trial transferred. As if this was not enough, he also managed the merger of the Tulsiram encounter case into that of the Sohrabuddin encounter to prevent his arrest in the second case [and] closed the doors of regular bail to the police officers.

Under the circumstances, my officers and I feel ditched and hence there remains no reason for us to continue to trust this government and its ace strategist Amitbhai Shah, who proved himself completely self-centred. He has reduced himself to a mere custodian of the political interests of the Gujarat government, which he is jealously guarding. He has been playing with our lives without an iota of qualms of conscience.

I have been observing from 2002 that Amitbhai Shah as MoS, home, had been mismanaging a sensitive department like police... He introduced a British policy of divide and rule coupled with an equally dirty policy of use-the-officers-and-[discard]-them by spreading misinformation about them. A situation so [arrived] that no one in the department trusted the other; everyone perceived the other to be a potential spy or rival [and] as if daggers were drawn, [they] were out to harm or finish each other. The MoS (home) lost all credibility and the confidence of police officers and vice versa, which ignited the "yadavasthali of fratricidial police wars" in Gujarat that was later exploited by the CBI... So much so that the MoS, home, himself fell into the grave he used to dig for others.

I realised the truth in the statement of Mahatma Gandhi who observed, "States are soulless machines... governments have no conscience..." The only way open to my officers and me is to adopt the path Guru Govind Singh ordained to his disciples: "When all the doors for getting justice are exhausted, it is dharma to draw the sword." Accordingly, I have a moral justification to expose the real culprits behind the encounter cases by calling a spade a spade.

I, therefore, would like to categorically state in the most unequivocal terms that the officers and men of the crime branch, ATS and border range, during the period 2002 to 2007, simply acted in compliance with the conscious policy of this government in the context of the following circumstances:

The monstrous episode of the Godhra train burning and the equally horrible post-Godhra riots provided a pretext to Pakistan-based terrorist outfits to "convert Gujarat into another Kashmir" by exploiting the sentiments of Muslims all over the world. A series of acts of terrorism took place. It was in this context that "the proactive policy of zero tolerance for terrorism" was adopted by the government at the highest level of its hierarchy. The policy was most efficiently implemented by the police in general and by the crime branch and the ATS in particular.

I can say with pride that my officers and men could not only prevent Gujarat from becoming another Kashmir but were also instrumental in providing a solid atmosphere of durable peace and security... I state with all humility that, but for [our] sacrifices, the "Gujarat Model of Development" this government is so assiduously showcasing at the national level would not have been possible.

I used to get dozens of calls from the biggies of Gandhinagar who probably saw a saviour in me/my officers, but by the time I/my officers had outlived my/their utility and were arrested, nobody bothered to formally ask how we were!

The CID/CBI arrested my officers and me holding us responsible for carrying out allegedly fake encounters. If that is true, then the CBI investigating officers for all four cases have to arrest the policy formulators too as we, being field officers, have simply implemented the policy of this government, which was inspiring, guiding and monitoring our actions from very close quarters.

The logic is simple: the government and police officers are sailing on the same boat and have to swim or sink together. I would like to state in the most unambiguous terms that this government, through the dirty tactics of Amitbhai Shah, is managing only for itself... while ditching the police officers. By adopting such a suicidal path, this government, I am sure, is hastening its own death by drowning.

The Chief Minister of Gujarat has very rightly been talking of repaying the debt he owes Mother India. But it would not be out of context to remind him that he, in the hurry of marching towards Delhi, may kindly not forget to repay the debt he owes the jailed police officers who endowed him with the halo of a Brave Chief Minister among a galaxy of other CMs whose names do not carry the same adjective.

Let me also put on record that I have been maintaining my graceful silence for such a long period only because of my supreme faith in and highest respect for Narendrabhai Modi, Chief Minister of Gujarat, whom I used to adore like a god. I am sorry to state that my god could not rise to the occasion under the evil influence of Amitbhai Shah, who usurped his eyes and ears and has been successfully misguiding him by converting goats into dogs and dogs into goats for the last 12 years. His unholy grip over the administration is so complete that he is almost running the government of Gujarat by proxy.

I have to state in a nutshell that this spineless government, which is valiant only in words [and] otherwise cowardly in deeds and impotent in actions, has ceased to command my allegiance, trust and loyalty.

...I say goodbye to the Gujarat Police, of which I had been a proud member for the last 33 years.

D G Vanzara

IGP (under suspension)

Fuel for thought

It really is a no-brainer. India is grappling with a current account deficit (CAD) of $80 billion that is exerting tremendous pressure on the rupee.

(i) Controlling imports and (ii) reducing the trade balance are obviously one of the key strategies for reining in the CAD.

Crude oil is the largest component of India’s import bill, accounting for a third of the total. Any attempt to control the CAD should obviously start with reducing the crude oil import bill.

Iran, which is stifled by U.S. financial sanctions, is willing to sell oil to India in exchange for payment in rupees. What should the government do? Grab the offer, obviously. Yet, buckling to unfair pressure from the U.S., the government has been cutting down on imports from Iran over the past three years.

As India fell in line with U.S. sanctions, it reduced its oil imports from Iran from 21.2 million tonnes in 2009-10 to 13.2 million tonnes in 2012-13. In the first five months of this fiscal, the country imported just two million tonnes of crude oil from Iran.

However, the time has now come for India to unhitch itself from the American bandwagon and step up crude imports from Iran in its own interests.

According to a proposal the Petroleum Ministry has sent to the Prime Minister, the country’s dollar payments for its oil imports can be brought down by $8.5 billion (almost 10 per cent of the CAD) if it imports as much oil from Iran as it did in 2012-13, which is another 11 million tonnes.

This newspaper argued even at the time of imposition of sanctions on Iran that succumbing to U.S. pressure would not be in India’s interests.

With Iran offering the comfort of rupee payments through a bank account with an Indian bank in Kolkata,

India should now push the advantage and maximise its oil purchases from that country.

Such a move will ease the pressure not just on the current account but also in the forex market as the oil companies will be buying that many dollars less.

Oil companies are big buyers of dollars and have the potential to influence the forex market.

Meanwhile, the government’s announcement that fuel conservation measures will be announced soon has raised expectations and anxieties equally.

Ideas such as the one to close petrol bunks at night are not just bad but foolish, and Petroleum Minister Veerappa Moily’s suggestion to that effect caused considerable confusion before he clarified the position on Monday.

The best way to conserve fuel is to raise prices to market levels, which will hopefully push users to economise on consumption. T

he downside though is that it will have an adverse impact on inflation. Clearly, the choices are not easy but the government should keep in mind the interests of the common man while framing its strategy for fuel conservation.

Security and Defence

‘Without growth... we will be constrained in our ability to defend national security’

P Chidambaram

Until recently, we took a compartmentalised view of national security. Each threat to national security was neatly fitted into one compartment. The first, of course, was a war with Pakistan. That was fitted into a compartment and was meant to be deterred, or defended, through the might of our armed forces. A war with China was, and remains, unthinkable, and therefore that threat was fitted into another compartment and reserved to be dealt with through a mixture of engagement, diplomacy, trade and positioning of adequate forces along the borders. Beyond Pakistan and China, we did not perceive any external threat to our security. Other threats, such as communal conflicts, terrorism, Naxalism or Maoist violence, drug peddling and fake Indian currency notes were bundled together under the label, "threats to internal security" and were left to the ministry of home affairs. Some threats were not acknowledged as threats to national security and these included energy security, food security and pandemics...

A close examination of the threats to national security will reveal that each one of them is connected to one or more other threats. For example, the threat of terrorism is connected to the threat of proliferation of arms, including weapons of mass destruction. The threat to the security of our sea-lanes is connected to the threat to energy security. Low intensity conflicts have a direct bearing on social cohesion. Technology security will be the key to building new institutions. Natural disasters, especially those caused by climate change, can wreck food security. Pandemics and diseases, if uncontrolled, can diminish our capacity to defend the borders against our adversaries, or to defeat militants within the country. National security is, therefore, caught in a complex spider's web and unless we recognise that each strand of this web is connected to other strands, we would not be able to do justice to our fundamental obligation to protect and defend the security of the nation.

Defending and promoting national security stands on three important pillars: first, human resources; second, science and technology; and third, money. I have placed money last, not because it is the least important, but because it is the most important pillar of national security. Without money, we cannot nurture and build our human resources. We need schools, colleges, universities, libraries, laboratories, skills development institutions and, above all, highly qualified teachers...

Let me turn to science and technology. Every country that has moved up to the level of middle income country or a developed country has intensively promoted and heavily relied upon science and technology... None of the threats to national security can be effectively countered unless we embrace science and technology and impart instruction in science and technology, beginning at the school level...

The last of the three pillars is money. It is also the pillar that will support the first two pillars. Money comes out of growth... In our own times, we have seen the difference between the period when the Indian economy was on a high growth path and the period when there has been a noticeable slowdown. In the former phase (2004-08), we were able to provide for virtually everything that we desired, but also for exceptional items of expenditure such as the agricultural loan waiver scheme... When there is a slowdown, the consequence is the exact opposite... The medium-term response will be to contain expenditure, but that has its own consequences. A cut-back on public expenditure will further slow down the economy. It will also curtail the number of jobs that are created. A cut-back on social welfare will hurt the poor: less money for education or health care will deny, to many more people, access to basic education or basic health facilities. And, finally, a cut-back on expenditure on defence or on the police forces will severely compromise our defence and security preparedness and diminish our capacity to meet the challenges to national security.

It is a self-evident truth that growth is the key for greater public welfare and greater security. Yet, we adopt a disdainful attitude to growth... it is only sustained growth that gives as a chance to tune the growth model in favour of inclusive development. Without growth, there will be neither development nor inclusiveness... If we do not have sustained high growth over a long period of time, we will be, forever, an undernourished, undereducated, underprovided and underperforming nation... We will also be constrained in our ability to defend national security against both external and internal threats.

Today, we have a choice. We have a choice between becoming the third-largest economy of the world and a middle income country, or becoming one of the largest economies of the world that muddles along with the bulk of its people trapped in a life of low income, poor quality, high morbidity and great inequality. Needless to say, the two models of India will have very different consequences for national security. The first model will make India a secure nation, capable of defending itself, and a force of peace in the neighbourhood and elsewhere. The second model will leave the country exposed to every kind of threat to which will be added internal conflicts, and India will be viewed as a strife-torn country that is a threat to the peace and progress of the world and, in particular, Asia... Will India embrace the twin goals of prosperity and security?

Economy

Tax administration, heal thyself

Tax rate increases are in the air, especially since all of us have read about the fiscal cliff in the US, the 99 per cent vs 1 per cent fashion, President Hollande of France (an economy closest to us in its non-economic and Luddite views) proposing prohibitive tax rates on the rich, etc.

C. Rangarajan, advisor to the prime minister, stated, appropriately on Financial Inclusion day, that "one need not disturb the structure of income tax system as it is now. But add a surcharge for income above [a] particular level. I believe as we go along, we need to raise more revenues and the people with larger incomes must be willing to contribute more".

Note the populist appeal to the super-rich. They should be willing — or else, off with their heads (income). As discussed in my earlier article, Taxing the rich and other fantasies (IE, January 23), there is precious little evidence to support Rangarajan's recommendation. What the data do suggest, as documented extensively below, is that the reason tax revenue is considerably below potential is because the middle income group, those earning between Rs 5 to Rs 10 lakh, is quite "unwilling" to pay taxes, even at an average tax rate of 10 per cent! And that the most "willing" are the super-rich, those earning above Rs 20 lakh a year. The raise tax rates recommendation should be junked, especially since stable tax rates have generated "good" tax revenue and allowed compliance to increase more than threefold from the abysmally low levels which prevailed prior to the 1997-98 budget.

Until 2005-06, India, via CAG reports on the ministry of finance, had access to data, some data, on the distribution of income and taxation. After that — whoosh — all the information stopped. Now the reports only reveal the total number of taxpayers in the economy, about 3.24 crore, out of which about 1 crore file tax returns but don't pay any tax because their incomes are below Rs 1.8 lakh.

What the tax department, and all of us, should be interested in is maximising tax revenue. The table reports all the relevant tax parameters for fiscal 2011-12 — who pays taxes, who should pay taxes, rates of taxation, revenue collected, etc.

Some suggestive conclusions:

The total amount of personal income tax (PIT) that could have been collected in 2011-12 was Rs 517,000 crore or Rs 5.17 trillion. The total amount that was collected was Rs 1.72 trillion indicating an overall compliance rate of 33 per cent. So two-thirds of the taxable population avoided paying taxes altogether or paid two-thirds less taxes than they should have.

The dominantly large share of the flow of black money each year is indicated by the gap in tax collected and tax due and for 2011-12 this gap, Rs 3.45 trillion, is about 4 per cent of GDP. For the 10 years 2002-03 to 2011-12, 4 per cent of average GDP is Rs 20 trillion. This suggests that the recent estimates pegging black money at around Rs 25 trillion are in the right ballpark — and that our "missing tax" estimates are broadly correct.

The largest share of missing taxes is among those earning between Rs 5 to Rs 10 lakh a year. They are in the top 7 per cent of the population, they number around 25 million, and only about 10 per cent of such individuals pay any tax. How much missing taxes is in this group, a group for which the average tax rate is only 10 per cent? About equal to the entire tax collected in 2011-12: Rs 150 thousand crore.

About Rs 1 trillion is lost among those earning between Rs 10 and Rs 20 lakh a year. Such individuals are in the top 2 per cent of the population, and only a third of such individuals pay any tax.

The super-rich or those earning more than Rs 20 lakh a year: there were 88 lakh such individuals and 58 lakh paid taxes, yielding a compliance rate of 66 per cent. Missing taxes for this group: Rs 0.46 trillion, or only 13 per cent of the entire amount of PIT missing in India.

If compliance levels stay the same, a surcharge of 3 per cent on super-rich incomes will yield about Rs 2,600 crore. Alternatively, the government could make an effort, with support from its tax administration officials, to reduce corruption, reduce black money, and increase taxation of the top 7 per cent. If compliance in this group was brought to only the average of the economy — that is, 30 per cent — that alone would generate an extra Rs 35,000 crore, that is, five million extra taxpayers, paying an average tax rate of only 10 per cent, on average incomes of Rs 7 lakh. Okay, if tax administration increased compliance by only 3 percentage points, from 10 per cent to 13 per cent among this middle income group of Rs 5 to Rs 10 lakh, the extra revenue gained would be Rs 5,250 crore or double that gained from putting a 3 per cent surcharge on the super-rich.

These simple calculations yield at least three recommendations. First, it should be mandatory for the finance ministry to release data on tax compliance by income groups — a practice common in most economies in the world. Surely, no one can oppose the release of this statistic, so why isn't it being practised? Possibly because it will cast a very black shadow on the workings of the tax administration in India? Second, the biggest revenue gainer is via an increase in compliance, especially for the middle income group. Third, stop thinking of populist measures like surcharges on the super rich, or copy French measures like increasing tax rates for anybody. If any such measures are introduced in the budget, it would not be a "responsible" budget as the finance minister has promised — and not responsible by a long shot.

19-08-2013

The needless battle

Rupee defence strategy has deepened the gathering gloom on the India growth story.

The defence of the rupee is going horribly wrong. It has damaged two sources of hope for a growth pick-up in India — monetary policy easing and India's commitment to economic reform. When Chairman Ben Bernanke of the Fed talked about tapering quantitative easing in the US, it was expected that there would be pressure on emerging market currencies. Countries with weaker economies, and with larger current account deficits were likely to see more currency volatility. Instead of talking about this source of pressure, which all emerging markets faced when the dollar started appreciating, the government decided to step in to defend the rupee.

Evidence from across the world shows that a currency defence often fails. Every government trying to stabilise a currency is, therefore, fully aware of the chances of failure. A careful cost-benefit analysis of its strategy is thus an important pre-condition to initiating a defence. Since the global currency turmoil started, the government has been rolling out measures such as currency market controls, import duties on gold and silver, bans on purchase of gold coins and tightening of capital controls to stabilise the rupee. These dirigiste solutions seem oblivious of their likely impact on market expectations. They are based on central planning notions of bans and restrictions being the solutions to the economy's problems.

First came restrictions on currency derivatives markets by Sebi and the RBI. These markets inform people of expectations about the currency. This information may be unpleasant. The government may disagree with it. But instead of listening to what the market was saying, the authorities chose to try to silence it. Restrictions reduced the extent to which people could hedge their currency risk. This was a bad move, especially since the rupee was expected to become more volatile. It made investors less willing to buy rupee assets. Trading volumes on domestic currency derivatives markets fell sharply and the cost of hedging increased. Instead of making rupee assets more attractive, these measures have made them less attractive. Further, the restrictions have undermined the market's confidence about the government's commitment to financial market liberalisation.

Next came the liquidity squeeze and an increase in short-term interest rates. The complicated strategy hoped to keep long-term interest rates low. This, too, failed. When the rate hike saw a transmission of higher rates to treasury bill rates, long-term bond yields and deposit rates, it became increasingly clear that sooner or later bank lending rates would go up. To prevent that, the RBI kept the repo and CRR rate unchanged. This left the market in complete confusion. Were interest rates going to rise or fall? Statements by the authorities that the tightening was temporary till the rupee stabilises provided little comfort. Could the currency stabilise before US monetary policy went back to normal? How long was "temporary"? In an environment in which a monetary easing was expected to help push up growth, this sudden tightening was a shock. Interest rates are still high. The measures have undermined confidence about monetary policy easing.

After the liquidity squeeze failed to restore rupee stability, came tariff hikes and restrictions on gold and silver imports and tightening of capital controls under FEMA. Restrictions have been imposed on capital outflows by firms and households. Already, firms were suffering from the difficulties of the policy environment. If some of them were going to stay healthy by investing abroad, that was made more cumbersome. Hardly any money was going out by individuals investing abroad. But putting a restriction on these trickles sent out a bad signal to an already nervous market. These measures did not inspire confidence that the government's focus was investment and growth. Worse, they suggested that India's economic reforms are not deep-seated and can be reversed for short-term ends.

With the opening up of trade and the capital account, the currency market has grown very large. Old solutions, like selling a few billion dollars from our reserves to prevent appreciation, no longer work. Out of the three corners of the impossible trinity, a country can choose only two. For the last two decades, India had chosen to move towards an open economy and a flexible exchange rate. In the face of the QE tapering, it means choosing between rupee stability and lowering interest rates. But the government did not like having to make the choice. It wanted both. The only way to control the currency in such a situation is to close the economy. When the size of the market has shrunk adequately, the RBI can intervene and prevent depreciation without much loss of reserves.

If the rupee remains volatile, the government has to choose to either roll out the next measure it has on its list, or to find an exit route. FEMA allows the RBI and government to shut off all cross-border transactions for sale and purchase of assets. The market believes that as long at the rupee defence strategy remains in place, the authorities might impose restrictions on various other capital flows. This expectation has caused further gloom.

We should not lose sight of the big picture of Indian economic policy. The story of the last 20 years is one of slow but steady economic reform resulting in 7 per cent trend GDP growth. The day we walk away from the promise of slow but steady reform, the expectation of future productivity growth is shattered. This adversely affects the credit rating of India, stock prices, investment in India by locals and by foreigners, and capital flight from India. The needless battle the government has picked on the rupee, and the measures it has taken, have reinforced the already growing despondence about economic reforms. It has raised new questions on the India growth story. The government must immediately undo all the steps that have reversed economic reforms of trade or finance or capital account liberalisation. Otherwise, we will suffer deeper damage to the prospect of high GDP growth

Interviews that matters

'You either normalise with China or normalise with Pakistan. It's easier to normalise with Pakistan. In the long run, competition will be with China'

In this Walk the Talk on NDTV 24X7, Stephen P Cohen speaks to The Indian Express Editor-in-Chief Shekhar Gupta about the changing US relationship with India and Pakistan, and why India can play a crucial role in nudging Pakistan towards 'normalisation'.

Hello and welcome to Walk the Talk. We are at New Delhi's India International Centre and my guest is Professor Stephen Cohen, a guru of gurus, but more importantly a great student of the subcontinent.

Really appreciate being on your programme, I have watched it many times.

Thirty years of knowing each other and we've never done an interview. So we better get it right.

It's also a coincidence that it's the 50th year that I first came to India. In fact 50 years ago we stayed at the India International Centre.

Your children were very young then.

I had one baby here on the first trip and one was born here, so therefore he is an Indian citizen. My daughter is a professor, studied autism in India, and the son is a professor of history of Telugu. So we have a lot of India connection.

What has changed in the subcontinent and what hasn't in 50 years?

When I came here in 1963, we drove from Delhi to Patna, just to see what the country looked like. You couldn't do that now.

But what has changed is the attitude towards the United States, and there has been a roller-coaster of attitudes... When I came here right after the war with China, US-Indian relations were very close. The 1965 war took place and we were disillusioned, India was disillusioned. We broke apart, and for a long time, India turned towards the Soviet Union for weapons. When the Soviet Union collapsed, clearly that affected Indian strategy and that's one of the arguments I make in the book. The collapse of the Soviet empire sort of transformed India's relations with the United States. Also the economic reasons...

That's the new book?

Yes, the new book puts it in the larger context. The new book really is based on 50 years of research. My first books looked at Pakistan as well as India. I was originally interested in the role of the military in these two countries—why India went in one direction and Pakistan in the other. So, one book was on the Indian Army and the other on Pakistani army. The new book is about India-Pakistan relations as such and the transformation that may happen in the future. So it looks ahead 35 years, make it 100 years of conflict between India and Pakistan.

Tell us about the change in attitudes. In India, Pakistan, Washington, and the change in attitudes vis-a-vis each other. There are many variables.

In the case of Pakistan, we always believed that Pakistanis were a true ally. And they would tell us that. The Pakistani argument was that the Americans betrayed Pakistan many, many times. There was some truth in that but it was clearly an exaggerated story. I think the war in Afghanistan, the American soldiers in Afghanistan, has put paid to that argument.

I regularly teach American officers in various summer schools, and seven years ago they started telling me, 'Professor, I've served in Afghanistan for a year and the people who were shooting at me were coming from Pakistan. They are our ally. Why are they doing this?' I would tell them that Pakistan is playing a double game. And that began a slow shift in American opinion about Pakistan. Ironically some Republicans are more anti-Pakistani than the Democrats. It used to be the other way around.

Until about 10 years ago...

Yes. We needed Pakistan for the war against the Soviets in Afghanistan, that revived the relationship. I was in the State Department and I could see the process going on, and we wanted to believe what the Pakistanis told us because it was convenient.

When Pakistanis negotiated with America...

Their strategy is — it's not unique, but it's notable — they tell us what we want to hear, and they do what they want to do. And I found that during the (Ronald) Reagan administration, because Pakistanis would tell me what I wanted to hear, and since I knew Pakistan pretty well... Essentially what would happen was that we lied to the world about their nuclear programme and they lied to the world about our involvement in Afghanistan.

You lie for us and we lie for you.

Yes, but it's not a sustainable relationship.

Is it unravelling now?

Pakistan is important because of its location. My joke in Washington is 'Pakistan used to be important for its positive qualities, as the most liberal, modern Islamic state we knew of, it was a great ally many times, but now it's important because of its negative qualities'. Relationship with India has grown steadily. The nuclear deal broke through the psychological barrier.

We had never signed a treaty before.

Each side gave up something. We swallowed our non-proliferation anxieties. Our nuclear Ayatollahs had to be quiet for a while. India needed it and we needed India... But I think there is a long-term transformation because the Indian economy is very important to America and American businessmen. Plus we have the inter-penetration of societies.

What's better for India? That Pakistan-America relationship should stay intact, evolve or that the break should become more permanent?

The latter is a disaster, because for many years Pakistan used the United States to pressure India. During the whole run-up to the nuclear thing, when I was in government, the Pakistanis would tell us, 'We will sign whatever you want, get the Indians to sign first', and we would put pressure on India. The Pakistani strategy was brilliant. Now after Kargil, the Indians used America to pressure Pakistan, and that's been the case since then. We find ourselves between India and Pakistan for good or for bad. We are still confused what we can do with that relationship, but we see both sides coming to us to influence the other side. I think the book is about this... but I think the main argument in the book is for India and Pakistan to settle this themselves.

It's a much-abused term, and I remember as a student, you hated labels. You banned the use of words like 'superpower' and 'third world'... You used to tell us that these words close your mind.

India is a superpower in some ways, not in others. America is a superpower in many dimensions but not in all. And third world, I forget who said it, it is like third grade... India does not want to be the leader of the wretched world, but wants to be with the big boys. It also has a unique access to the rest of the world, which America doesn't have.

I'm using one more label. Was Kargil a gamechanger? In terms of a strategic blunder made by Pervez Musharraf? Because this sanctified the Line of Control as nothing else had done.

I agree with that, because the Americans came out and said, this is wrong, restore the Line of Control. In the book, I go further and I say that American policy should be to recognise reality. That that line is not going to be changed. You are two nuclear weapon states, you and Pakistanis can negotiate some kind of line.

Bill Clinton said that borders of the subcontinent can no longer be redrawn in blood.

I think that is a settled issue, there's no question about it. The issue is about some of the fuzzy areas in Kashmir, Siachen and others.

We are going through a period of particularly broken politics right now. We can't even give parliamentary sanction to an agreement signed with Bangladesh to settle our borders.

I think as people think through and discuss it, they will realise that these borders where there are no minerals, there is no body living there, can be negotiated... You give up something, you get something, and as long as you get something for what you are giving up, that's a good deal.

In the case of terrorism and Pakistan, which is the big issue here and should be really, can the Indians give up something or offer something in exchange for Pakistanis deciding....

In exchange for Hafiz Saeed....

Yes, I would be the first one to send a missile his way. It's outrageous of him to parade himself there. The danger is that Pakistan may be too weak to do anything. We are dealing with a nuclear Pakistan but also a weak Pakistan that cannot enforce its own laws. I was briefed by the ISI on the attack on Mumbai and the ISI defence, by the ISI director, was we didn't know about it. And to me not knowing about it and doing it consciously — I don't know which is worse. It's like Abbottabad.

Did you believe him when he said 'I didn't know'?

His nose got a little longer. The Pinocchio effect.

So what you are saying is that I don't know what is worse, like Abbottabad.

And I don't think he knew. Because in every bureaucracy, especially intelligence bureaucracy, people at the bottom know that people at the top don't want to hear something. Do it but don't tell me.

There's a wonderful expression, in fact invented in your country during Iran Contra hearings. Col (Oliver) North had to give President Reagan plausible deniability. So do you buy Pakistan's argument that they didn't know what was happening in Abbottabad?

I suspend judgement, because I find it risky to speculate... On the surface, it's quite impossible. The danger is that Pakistan didn't know about it. In which case we don't know what they know about the nuclear programme and other things. And a Pakistan, which is more a military power with terrorists etc, which does not have control, is a dangerous Pakistan. That's why the election of Nawaz Sharif was a good thing.

I'll make a statement that Pakistan and Afghanistan are now loosely called AfPak, the whole region.

A term I dislike.

Even I do. The two countries are so different and to club them together... you will not succeed in the next 200 years. They have more automatic rifles than all the Indian armed forces and paramilitary forces put together, and I think Pakistan has more nukes than us. How do you deal with that?

Some people would go the limit and pressure Pakistan, using pressure tactics. I told the Congress about eight years ago that Pakistan's policy was 'Help me or else... (I'll shoot myself)'. If you think Pakistan is a crazy state, then the threat of going down exploding everybody is credible. On the other hand if you think they act rationally, you've lost your country. So India faces a difficult dilemma, just like we faced with the Soviets. The more we demonise the Soviets, the more the nuclear threats get credible, and that's the making of a long arms race.

Just as Barack Obama and David Cameron are finding a way to dig their way out of the hole that is loosely called AfPak, India has to find a way to live closely to this hole forever. Either this hole gets filled or we dig a hole for ourselves.

I once had dinner with Zia (ul-Haq) right after his coup. I said 'General Zia, if Pakistan were in Africa, it would be a major power'. He said, 'Yeah'. Then he realised they were not in Africa, but next to India. So their obsession is that they are smaller compared to India. So you have to live with a country that is smaller than you but has more nuclear weapons that can do great damage. That's a dilemma America would have faced if Mexico was a radical Catholic country with 150 nuclear weapons.

We've got to deal with this. It requires transforming Pakistan's image of itself as a state that defines itself as anti-India and find another reason for Pakistan and India to live together. And I think there are a lot of ways to do that. Economic growth... South Asia is currently the least integrated economic region in the world. If India takes a leadership role... These are goals shared by most Pakistanis, even in the military.

Why do the angriest Muslims in the world live in Pakistan? They don't live in Palestine, Egypt, Iraq or Afghanistan, countries that have been invaded. Why in Pakistan, which has never been invaded?

The idea of Pakistan was created by unhappy Indian Muslims, and as they moved to Pakistan, the Mohajirs became disillusioned with Pakistan. Ironically many would want to come back to India, one way or the other. If Pakistan should break apart, you may be faced with millions of Pakistanis wanting to go back to their ancestral homeland — Mohajirs from central India, Urdu speakers. You don't want that, it would change Indian politics.

But there is another reason. Pakistanis at all levels, particularly diplomats and soldiers, believe they have been betrayed by the US, India can't be trusted, so betrayal has become a theme of their life now...

Part of Indian steps to create national unity is by being anti-Pakistani. And Pakistanis have always identified themselves as anti-Indians. Few countries have defined themselves as opposition to each other, it's a lifetime...

And then we have the larger problem — which is something that our prime minister believes and we agree with him — that India is caught in a situation of triangulation, because of China, Pakistan and India. China gives Pakistan a bit more nukes, rockets and uses Pakistan to balance us. So until we settle with Pakistan, we can't settle with China. How does India break out of it?

I've talked to your politicians about this, I won't mention names. One of them had a very perceptive idea, that you either normalise with China or normalise with Pakistan. It's easier to normalise with Pakistan than China. In the long run, there is going to be competition with China, not with Pakistan. You've proved that you are much better in economy, cultural power than Pakistan, and on the other hand Pakistan has the power that can hurt you. Hence it would be easier to settle with Pakistan without giving up vital Indian interests like Kashmir.

So the way to break out of this triangulation is to first move with Pakistan. You may have a better chance there.

It's about how to balance your opportunities and risks. In case of Pakistan, you have to look for countries with like-minded views. I think America is such a country, the Chinese are to some extent. The Chinese are desperately afraid of what might happen in Pakistan because they also have a Muslim minority population...

As a student of your work, I think your two books on India and Pakistani armies are still your finest books. How much has changed in these two armies, and will you renew those books?

I am going to renew the Indian Army book. At the end of the Indian Army book I had predicted that Indian military may be more politically involved, and I am not sure whether that will happen or not. It's been 45 years since I wrote the book, so far it hasn't, and I think it is an outstanding accomplishment. The problem is that the price for that may be lack of good military advice on strategic issues, and a sort of a whacky arms acquisition strategy...

Last time I saw Kayani (Ashfaq Parvez Kayani, the Pakistan army chief), I said to him 'Sir, you can't run Pakistan but you won't let others run either'. His response was 'Hmmm', that's all he said... But they agree and their behaviour indicates that they do understand they can't run the country. But can they find Pakistani leaders who will run the country properly? The first time I met Zia...

He called you Professor sahib....

The first time I met Zia, it was right after Indira (Gandhi) was elected, and he was bemoaning the quality of Pakistani politicians. I said, as a joke, that India has just had elections, there are a lot of spare Indian politicians who could run your country. He said 'No, we had them once before and we don't want them again'. I was joking, but he took it seriously. But I think that's one of the critical issues India might be able to help in. That is, how do you create a political culture in Pakistan which functions, which the military there will respect.

In one of our earlier conversations, you said India and Pakistan — this is getting a bit light now — you said there is a cricket gap, there is a kebab gap, and there is a hockey gap. I think the cricket gap has now been filled. So what about the other two?

The kebab gap is there. I told K Subrahmanyam...

Unlikely that he would be able to hold forth on kebabs.

He did in fact. I teased him, saying 'Well Subbu, Pakistani kebabs are ahead of Indian kebabs'. He frowned at me and took me to Bukhara (the restaurant). He is a vegetarian, and he ordered kebabs and looked at me and said, 'Eat the kebabs. Aren't they better than Pakistan's'? I didn't know what to say.

Have you found any other gaps lately?

Well, India is way ahead of Pakistan in tennis. I would say the Bollywood gap is enormous. I buy all of my pirated Indian DVDs in Pakistan, they are much cheaper there. I don't think Indians appreciate the attractiveness of their culture to many Pakistanis. Pakistanis are really South Asians, they wanted to be Middle-Eastern but they are South Asians. They have the culture, taste and temperament of South Asians.

The Pakistani army, which has always admired you secretly, would do well to listen to you because you are after all our foremost South Asian, not just South Asianist.

I try to say the same thing in and to both countries, because I don't want to get caught saying two different things and people asking me or accusing me of being pro-Indian or pro-Pakistani. On my first trip to Pakistan, the ISI showed me my file and said you are the pro-Indian professor, we know that.

But I try to be pro-American in the sense what American interests are in the region. In the book I say, maybe controversially, it's in America's interest for India and Pakistan to have good relations with each other, more than good relations with either of them.

That's why I have a new label for you now, 'Professor Cohen triple hyphenated — America-Pakistan-India', and none of us is complaining. So just keep coming back as it's always so stimulating to have a conversation with you.

Thank you. As long as I get my visa.

'Governance niyat ki baat hoti hai. It needs only integrity, ethics, some ordinary intellect'

Haryana IAS officer Ashok Khemka speaks about bureaucrats' real duty being to public, why there would be no scams if they performed that and why he has respect for politicians. This Idea Exchange was moderated by Editor, Punjab, Vipin Pubby

Ashok Khemka: A lot of people tend to call me a whistleblower, a word which in my context, I would say, I hate. I am not a whistleblower. Whatever I have done was my duty as per the rule of law. There is nothing which I did which I ought not to have done. (Addressing me) as a 'whistleblower IAS officer' keeps me aside and makes me not a part of my community, a servant of the public. (There is) a clear distortion in governance where people tend to be servants of the private and they say that's the norm for a public servant...There is some confusion about what is the government. For me, government is any authority which is the designated authority under the law. At a traffic crossing, the traffic constable is the government. Once he is deployed to do his duty there, he isn't supposed to be a coward just because there is a vehicle of a VVIP coming...

Ravish Tiwari: The traffic cop deployed on a street is the government there. But the moment he goes off duty, he isn't the government. So when Mr Khemka has been transferred, how can he be the government for next four days?

He remains the government till he relinquishes charge. The (transfer) order is typed, delivered and the next process is relinquishing charge. There is always a time lag between these two. In this, does the public servant function or does he sit idle and draw money from the public exchequer? If I continue on that post, I'm supposed to perform my duties. Let me answer you bluntly: on October 11, 2012, Thursday, at 10 in the night, I got my transfer order at my residence. I'm supposed to relinquish charge the next working day. So I should have relinquished charge on October 12. But mind you, this transfer order, in my opinion, was a violation of the statutory regulations. You can check the DoPT (Department of Personnel & Training) website...There was a minimum security of tenure of two years prescribed on that post...You cannot violate the law. I'm sitting on a post, I'm guaranteed a tenure of two years and probably this transfer was done out of malicious intent and incidents cited (in my letter)... I was waiting for a response. If I leave charge on October 12, that is infructuous, that response was to be enquired into by the committee. They refused to give their findings on that and that letter, as it is, is still unanswered by the government. October 13 and 14 were holidays. October 15, the second working day, I leave charge. Between October 12 and 15, was I not supposed to do my normal duties?

Sunil Jain: Whether it is Robert Vadra or not, eventually there is a process by which someone or a company gets land. Is there a systemic way of fixing the problem?

I have given the solution in Chapter 6 of my report. The first thing I've suggested is that there should be a law like there is in the Companies Act. When you join a company as a director, you give a declaration if you have a counter interest with the company's interest and in case that statement is wrong, you are liable for action under the Companies Act. In public service, you have no such law. So unfortunately, take the Land Acquisition Act, or in this case, the Punjab Scheduled Roads Act of 1963, through which the development plan is prepared. There is a direct conflict of interest with people who make decisions, which really makes you a billionaire. You only have to map-in the circle that this is going to be a commercial zone, because you have a vested interest there. So a declaration that you should have no conflict of interest is a sine qua non.

About licences, there can be a very easy way... The question is not if the government lost any fees. Aap sau rupaye ki cheez dus rupaye mein do, to nabbe rupaye to koi kamayega (If you give something worth Rs 100 for Rs 10, someone will earn Rs 90). Everybody will run to give Rs 10, because you are getting 90. It's a game of 90. That is going to the middleman. I erred in my report in one thing by saying it is crony capitalism, it is crony middlemen. There is no ism here. It is not capitalism of any variety I know of.

If I were to hold charge of the department, in a three-month period, I can fix the system of auctioning licences. It can be simple that look, this is the development plan, this is the commercial zone. Of this, 25 per cent of the area will actually be given a CLU for a commercial zone. It's not automatic. If you are in the DTCP (Department of Town and Country Planning) or you are a builder, you know how you get a licence. If you mark that 25 per cent of this area will be earmarked for it, you have tradable permits like you have carbon permits, you auction them and make that tradable. So the premium will go to the real entrepreneur who takes a studied guess. So the profit or loss is his. But not in this manner, where you know that the market value of the licence is X, you are issuing it at X/10, 9X/10 is going to go somewhere.

Governance jo hai, sirf niyat ki baat hoti hai (Governance is only about intent). It doesn't require too much of competence as an artist or litterateur or scientist would require. It requires only integrity, ethics, morality and some ordinary intellect. This can be implemented, I'm very sure, if given a chance, in three months.

For example, take industrial plots in any state. You'll find half of them go to cronies. Now, if I'm a crony, land is acquired under the Land Acquisition Act, you are a farmer, you surrender it at a cheap rate. After there is an industry plot developed there, the value multiplies several times. Therefore you find cronies coming, getting allotments...Why do you frame laws which make the rich richer or benefit cronies? Why is transfer permitted? You are given a plot for working on an industry. You can't work on it, you surrender it or maybe take your money back with some penalty. Why do you permit transfer? Why do you permit change of ownership? Why do you permit that a plot can be rented out or leased out to the actual developer?

Coomi Kapoor: There is a difference in the reaction to your case and that of Durga Shakti Nagpal. She has the Uttar Pradesh IAS officers' association's support. Sonia Gandhi has expressed concern. Your senior officers have not been very supportive. Why do you think this is happening?

I don't know. I don't do a thing with an expectation that I would get this support. There are some things where after effects are painful but it is to be borne with a little bit of stoicism, and I think now pain has become a pleasure. There's a sense of what you do is right and I want to stand up to others and say that look this is the right conduct, take pride in your work, take pride in your righteousness.

I have always felt that there is a feeling that most of them do wrong actions because they think that is manly...There is a feeling the more corrupt you are, or the post which has more scope for corruption, you are more manly. And obedience to rules is not important. I want to change the impression to say that obedience to rules is difficult...Obedience to rules means obedience to the rules of law. It's extremely difficult and that's where the courage lies.

And therefore, I hail Durga Shakti...It's not (about) the IAS, forget the IAS aspect, but her action is right. It's a very difficult job. A young officer of 28 years, a lady, going and catching the mining mafia, mind it, you can get killed.

Vipin Pubby: Do you think in Haryana you didn't get support because the president of the IAS officers' association is the chief secretary himself?

I won't like to comment.

D K Singh: You have a certain system to address grievances. Now that you are casting aspersions on the political executive, is it permitted under the conduct of rules?

Where did I cast aspersions on any public executive?

D K Singh: When you are calling your transfer malicious...

I said a hypothetical malicious allegation was levelled. I waited for a response. That's your right...The reference was made to the state government. It was not replied to and an inquiry was constituted to go into this letter. This letter remains unanswered even till date... And if you tell me why I'm here, I have not criticised any government action, any government policy, it's an idea exchange, as a free citizen, Ashok Khemka who is on leave today (August 15), here on his private visit, out of his own pocket money.

D K Singh: Can you please simplify... so where exactly did Robert Vadra commit illegality?

You should read the report. It's not fair for me to comment because the duty was given by the chief secretary to comment on the report. It was an official act, it was performed, delivered. The matter ends for me.

Vipin Pubby: Do you expect a logical conclusion?

I don't expect anything... See, people say, it won't lead to anything, the system would remain the same. The Gita says Arjuna was disoriented, that I'm killing my own, what will I achieve? The thought of what will I achieve will be the biggest weakness of the individual.

Sunil Jain: Does RTI help the bureaucrat, because now what he writes on files can become public and help him, like it happened in the 2G case.

I have a very sincere and a very firm belief: If bureaucrats were really public servants, this 2G and coal mines, there would have been no scams. What happens, out of 100 bureaucrats, 10 are always ready to join the queue and it's enough if you pick from them. RTI has brought in some degree of transparency but it's not a very great kind of revolution...There are ways to obliterate file notings also.

Ritu Sarin: They asked for a reply, you sent one. What do you expect will happen now? Elections are also coming near.

No, not related to elections. The correct course of action is that the government examine it and give out its observations point by point.

D K Singh: Have you given a thought to joining politics?

I have said earlier... that till 60 years, I'm in service and after 60 years, time will tell what will happen.

Shyamlal Yadav: To protect officers like Khemka and Durga Nagpal, what changes can be made in rules?

I don't recommend any changes. The most important thing is... it's my personal view... minimum laws but very strict implementation. You must know, if you do this, you will get a very predictable environment...There has been a fixation of cadre strength regulations guaranteeing me two years' security of tenure. Ensure me even that... Director, Consolidation, has a tenure security of two years and I had an 80-day tenure.

D K Singh: Between the bureaucracy and political executive, who is more responsible for corruption?

There are good people in both, there are bad people in both, there are inactive people in both. Personally speaking, I have a high regard for politicians. There are at least 20 politicians I can name off the hat, I think they are better in intellect, integrity and sincerity to their jobs than any bureaucrat I know on or across my radar.

...It's very difficult for them mind you. At the time of elections, you will see the kind of expectations people have. Sometimes, they are grossly illegitimate. Hum chahte hain Bhagat Singh humare ghar mein paida na ho, uske ghar mein paida ho (We want that Bhagat Singh shouldn't be born in our house but somebody else's house).

Vandita Mishra: It appears that you believe our institutions are beyond repair. And that hope lies in virtuous individuals walking alone?

Absolutely not. I don't give you that hope or image. It is not the economic institutions... as much as changing political institutions and governance. These are the delivery mechanisms...Can money bring in change in the delivery mechanism, of bringing good health and education to a village? For instance, if I give you a Mercedes but with it, a novice driver. Will you get into the car? He may kill you. Now, I have a car that has run 2 lakh km but I know I have an experienced hand on it. It is clear which one you will choose. Here we are debating what car to take, when it really does not matter.

Utkarsh Anand: Did the terms of reference of your inquiry require you to give an opportunity to other personalities to be heard before you came out with the report?

There is a report of the committee. The government asked me for my comments to it. I had no jurisdiction to summon anybody. If you see annexure C4, there is a letter of the chief secretary signed in his own handwriting stating that whatever records you have submitted, please prepare your reply just looking at the inquiry committee's report.

D K Singh: So is this debate anti-Vadra or pro-Khemka?

That is unfortunate, it is not A vs B. It's a national wealth issue. I do not want the debate to turn into A vs B.

Raj Kamal Jha: But then you are here, you are on TV, and we all are listening to you because you have questioned 'the son-in-law'. What kind of pressure does that come with?

I was very hurt by this (Congress) allegation (that I was working for the BJP), with another party offering me a ticket. But at times you have to develop a thick skin. I say again that till 60 years I am in service. Twenty years is a long period and I think this will be forgotten by then. After 60 years (of age), what I do being a free citizen... I do not have any resources. I don't do an act because I have a backing. It is my 22 years of service that I have. If you put that allegation, it is very uncharitable. This is why they managed 44 transfers, as I had nobody to speak for me.

Anindya Thakuria: During the Durga Shakti controversy, UP minister Shivpal Yadav was reported to have said that they can run UP without IAS officers. Do you think it can be done?

Surely, you can run the country without IAS officers. The IAS does not live on his own merit today, the IAS survives because it's the ruling class that needs it the most today. The justification for the IAS is only integrity. It is the wall between the ultimate decision maker and the technical people. I am not an expert on archives, then why should there be a Secretary, Archives, from the IAS?

(Views expressed by Khemka are personal and not of the government)

'Modi's rise is being seen with as much apprehension in Pakistan as you guys see Hafiz Saeed'

In this Idea Exchange, Pakistani filmmaker, writer and journalist Beena Sarwar talks about India and Pakistan's childish relationship, the doables in the peace process, and says that democracy in Pakistan is a process, not an event. This session was moderated by Consultant Editor Seema Chishti

Seema Chishti: You are a very well-known filmmaker, writer, journalist in Pakistan. Yours is a voice that is seldom silent, even on all kinds of new media. What do you think about the current India-Pakistan situation, and what do you think has changed?

I think one of the changes is the engagement of youth. We have a very young population, 60-70 per cent of population in India and Pakistan and probably all over South Asia is under 35 or under 25 years. Also, the new media that you pointed out is something that a lot of young people are engaged in.

It just seems that every time Pakistan and India come to any kind of understanding, it becomes a 'troubled time' because that's what suits various vested interests, and they include arms manufacturers, arms procurers, all kinds of right-wing forces on both sides. About the LoC also, what generally newspapers and media cover are the events. Somebody gets killed, somebody gets injured, that is an event. Very rarely is the process followed, what's behind it. What's happening at the LoC has been going on and building up for some time. And other people, much more qualified than I am, pointed out that when you have soldiers who are trained to kill, are given the go-ahead from their seniors, or politicians... So you have a situation at the LoC where before the ceasefire there was a much higher rate of casualties — civilians and soldiers. And now the rate of casualties is a lot less and it makes a lot more news.

Coming back to media, it is now in your face all the time. There is a lot of accountability because of that but there is also a lot more of holding people accountable in ways that people feel is morally right. For example, if you say something that may not go with the national narrative, someone will stick a mic in your face and ask 'why do you think that'. That puts people on the defensive. Jaise aapke (Defence Minister A K) Antony sahab ne kaha (Like he said), his initial statement was that there were men in Pakistan army uniform who killed Indian soldiers, some of them were and some of them were not. Now that is something I can accept as a fact. But when he changes that statement later to say that there were Pakistan army soldiers, I am going to question that. Because people in Pakistan army uniform were also attacking positions in Pakistan. In fact, the media should also question that. But I find that media in India somehow doesn't question, in general. Exceptions are always there, but the larger narrative that we see in Pakistan is that the Indian media tends to be less critical of its security narrative than perhaps it should be. And we question our security narrative perhaps a little more because we've had military rule.

Now for the first time, we've had a democratic election in which one government handed power to the next. This is the first time such a transition has taken place (in Pakistan). Democracy is not an event, it's a process. Democracy will not come to Pakistan with one election. It's not going to get reversed overnight. But anybody who chooses to look at the facts will see that things are changing slowly, the army is making some concessions. For example, the defence budget is not being presented in one or two lines like it used to be. Unfortunately, you have to go with the process, you have to be patient.

Seema Chishti: But do you think that the peace-loving people who are on the side of talks are actually in a minority here and there?

No actually they are not. I saw some personal examples, made some observations in my three-four days in India. I have interacted with people at the India International Centre, at Ramjas College, Delhi University, in Allahabad at a school, and with people on Facebook and Twitter. I have come across people who for the first time in these gatherings are not traditionally part of the peace brigade. I like the word peace monger because I think we need to be a little aggressive about peace. Social media is giving a way for people to assert themselves and to make their voices heard. But traditional media is not giving those people a voice. Those people are not represented in traditional media at all. Aapke analysts aate hain aur jo intellectuals aate hain TV par (The analysts and intellectuals who come on TV), those are the people who are quoted. Where is the ordinary person? I think, on both sides, there is a misrepresentation of what we call public opinion. If you just talk to ordinary people, it's a very different picture of Pakistan and of India that you will get.

Shubhajit Roy: When you talk in Lahore drawing rooms and you discuss this issue of growing peace overtures and then an incident like the one at LoC occurs... Is there a lot of anger, disappointment with your establishment?

No, I see India playing it up. You have five soldiers who died at LoC and you made a big noise about that. Our soldier was killed two days before that, did you report that? India and Pakistan have a childish relationship. We forget that if we have slapped once, then a slap came from the other side as well. I am not justifying anything, I am not saying that what anybody did is right or that it's right to kill. It's not. But remember, there are people being killed on the other side too and it's not one-sided. Also, remember that what we are facing in Pakistan is a militancy kind of situation, where there are armed and trained, conditioned people.

I just want to put it out there that we should not call them jihadis, we should call them fasadis (troublemakers). Because when you allow them to appropriate that term, that's letting them take the moral high ground, which is not there's to take. So the trajectory of all these Lashkars, it all began from the first Afghan war. Initially Pakistan supported them, but none of this was something that the people of Pakistan asked for or supported because none of these decisions were made by elected parliaments. These were decisions taken by military dictators.

Rakesh Sinha: How is the rise of Narendra Modi being seen in Pakistan?

I think with as much apprehension as you guys see Hafiz Saeed. Probably less, for Hafiz Saeed is not going to be an elected representative anytime soon. About Modi being PM, there is talk of it. But can he actually come and declare war on Pakistan? I don't think so.

Pranab Dhal Samanta: We hear from the new Pakistan government that they are serious about trade and economic cooperation. At the same time India has raised the issue of terrorism. What is the political climate in Pakistan? What is the doable agenda in the peace process?

First of all this government hasn't suddenly said this. Nawaz Sharif has been saying this since he was elected the last time. Every political party in Pakistan has said, publicly and politically, it wants peace with India... I think India right now needs to realise that if Pakistan's position on Kashmir was unreasonable before, then so is their position on terrorism. You need to fix that. It is time that we put our heads together and fought a common enemy, which is terrorism. But in the meantime, let's go ahead with everything else. We sign our visa regime, which is going to be implemented, then something happens on the border and then you cancel an agreement....

The visa regime can be done right away. Sir Creek was almost agreed upon and hasn't been done. Siachen was almost about to be signed and then apparently the Indian Army said they were not going to allow it. And issues of fishermen... Fishermen on both sides are violating international conventions. If someone violates them, you confiscate the catch and let them go. But they arrest them and keep them for years. Poor, illiterate people, sole breadwinners of their families usually, and their boats are also not returned.

Kunda Dixit, who is now the editor of Nepali Times, and I made a cartoon when I was in Kathmandu. The cartoon shows the backs of two little boys, skinny, naked boys, one is slightly tall and the other is shorter and they are having a peeing contest. They are peeing and where the pee ends there is a nuclear cloud. And at the bottom it said, 'who will go farthest in South Asia'.

Grow up. The bottomline is grow up.

Dilip Bobb: Ever since the elections, Nawaz Sharif has been keeping a very low profile. Even after the incident on the LoC, he didn't react immediately. How much control does he have?

The security establishment of Pakistan, the army and the ISI, has been used to running the show for over 60 years. They have been running the foreign policies, defence policies and economic policy. When Benazir Bhutto came to power in 1988, they told her, you can't take oath unless you agree on hands-off in these three areas. There was a lot of delay in her taking the oath because they were negotiating. Finally, she agreed. This is the question I asked Asif Zardari when he was released, and he said, 'Maybe, but after 11 years of our people being imprisoned, tortured, exiled, executed, we just felt that we had to come in and try and make things better'. And one of the things they did was immediately introduce a moratorium on the death sentences, which the past government has also done. They did what they thought was right at that time.

This control of the security establishment on these three areas has remained strong. But then, they didn't put those conditions on successive governments. Maybe, it's being phased out.

I think if Nawaz Sharif is circumspect and he is not reacting immediately, the point is that he is responding, he is speaking very positively still and firmly. He may not have all the control and all the power but he has the mandate of the people of Pakistan. And I think in the long run this is what will win out, as the process continues.

Seema Chishti: But does the nature of the mandate worry you? That it's just a coalition of regional parties?

Yes, it is a concern, and to be honest, the last time when Sharif was in power, we haven't forgotten his attempts to bring in Sharia law. But he has come a long way since then. On India-Pakistan, he is on the right track and he is going to have to make that decision between the right-wing groups and parties his party is supporting. Remember Sharif is basically a businessman and he knows that the key to Pakistan's survival right now depends on two things: One, winning the war against militants and two, getting the economy back on track. And both these things are linked with India, because when we assert our South Asian identity, when we look towards our eastern neighbour, it strengthens us against forces coming in from the Wahhabis and Salafis, and the Saudisation. So, we have to decide whether we want the South Asian version of Islam or the Arab version.

Seema Chishti: Can you tell us a little about popular culture in Pakistan and how it sees India? We have had a rush of some interesting things happening. There was Gadar but now we have Ek Tha Tiger, which takes a completely heretic look at R&AW and ISI. It's interesting how Salman Khan and Katrina Kaif are made out to be new models of cooperation.

I don't really follow Bollywood but sometimes I do watch some films. There is a new generation of filmmakers coming out of Pakistan who are going beyond documentaries to make feature films. But we are very far behind Bollywood. There is a film coming out, it stars Naseeruddin Shah and is called Zinda Bhaag. The directors are Pakistani and Indian and the producer is Pakistani. I know that Gulzaar saab is working on Kya Dilli Kya Lahore.

I think one of the reasons our plays, literature and our music are so strong is because we have not been Bollywood-ised. Unfortunately, all your creative avenues are overshadowed by Bollywood. We have a wonderful National Academy of Performing Arts in Karachi, which used to be the Hindu Gymkhana earlier. They are a repertory theatre and they have done some stage plays which are very creative and some of the plays they have done are Indian plays. And then there is this company that does things like Mamma Mia!, Grease, Chicago, full productions like on Broadway and they are coming out of Karachi.

There is a lot of art happening, which is very strong, especially the women artists, and I think one reason is that we are facing so much that, although a lot of it is not overtly political, it is strongly rooted in political thought and it's not divorced from the environment. Very subversive use of calligraphy or icons like burqa. You might have heard of an animated cartoon called Burqa Avenger. Feminists are up in arms that it glorifies the burqa, but if burqa women can fly and fight evil, then why not?

Seema Chishti: During the PDP government, the blasphemy law created news and then there was an assassination and the assassin was honoured publicly. How do you see Sharif handling this law?

I think that this is something even he is confused about, because of the dichotomy. He has to decide which way he has to go and those two ways are not compatible. The blasphemy law is still there. Again this is something that can be changed through process, through parliament.

The blasphemy law became a political issue, the right-wing made it into one. When this issue came up, they were on the decline and they were wondering how to get back in the limelight. This was an easy way to do it. Salman Taseer said nothing that was blasphemous but there was so much propaganda against him that it created the atmosphere that allowed this man to kill him.

This man, who killed him, was dismissed from the Intelligence Bureau or the Special Branch for his extremist views. How does a guy who was dismissed from one security establishment get a job with an elite VVIP person? There are a lot of questions.

Coomi Kapoor: In India there's a perception that Pakistan is a feudal society and decision-making is done by the elite, while India is more middle-class driven. Do you agree?

It is partly true, because we never had land reforms. That was the kind of quid pro quo that Jinnah got in return for the support of the Muslim feudal nawabs. It's also partly because the military ran the country for so long. I think it is changing and now you have people like Jamshed Dasti, a very ordinary middle-class guy, coming up and aspiring to join politics. Pakistan is not a static place. It's a place where a lot of change keeps happening and people in India look at it the way it was 20 years ago. There is a lot of feudalism but there are a lot of challenges to that feudalism also.

Rakesh Sinha: Post Malala Yousufzai, have things improved for girls in tribal areas?

I don't know if they have improved. There is a lot more consciousness. Girls are still being attacked, schools are still being attacked, teachers are still being attacked, health workers are still being attacked. The aspiration of ordinary people is to educate all their children, including their daughters. And the person who most wants daughters to be educated is the mother. This is happening all over Pakistan, even in the most conservative areas, people are trying to send their daughters to school. The failure of the government is in building infrastructure. If you are in a remote village then your school is so far away that it's risky, or the toilets of girls' bathrooms have no doors, things like that. The government has to really fix school infrastructure, make sure that there are no ghost schools and try and make education accessible to people.