We all woke up on 24th February 22 to see the news of Russia launching a ‘Special Military Operation’ against Ukraine. The early contours of the operation clearly suggested this was a full blown invasion and Ukraine and Russia were at war. Many of us, sitting in more peaceful circumstances, had the luxury to reflect on aspects of this war beyond the unfolding misery of the Ukrainian people.

The world in the last two decades saw many events which involved military intervention. Most of these were armed forces fighting militias or insurgencies and there was no ‘war’ in the traditional sense. This was the first major conventional war in decades in which two professional and well armed armies were facing off. Defence strategists and even armed forces around the world watched this with interest to learn or observe the war tactics and their failures and successes. I too watched with interest and following are some varied and unconnected thoughts, not necessarily about the war itself.

‘If you want peace prepare for war’.

Russia based on its superior strength decided to invade Ukraine. This phenomenon of a stronger state invading another state is hardly new and history is replete with such stories. One doesn’t have to go far into history for more examples. China occupied Tibet in 1949 and US invaded Iraq in 2003 on false claims and Pakistan backed Taliban invaded Afghanistan in 2021.

It is not uncommon to see learned people lament on the poor funding for health or education and the excessive resources for the armed forces. It hard to explain to them that without a viable state there is no scope for education, health or economy. Leaders rightly plan for the defence of the country in addition to others sectors. The death and destruction in Afghanistan and Ukraine should hopefully help them look at the larger picture. Peace is a prerequisite for every thing else.

Information War

The phrase ‘fog of war’ is often use to describe the incomplete information from the battlefield. It is natural that the news on tv may not have accurate information about the war. What however was unexpected was the ‘information war’ unleashed on mainstream and social media. In this, Ukraine was well ahead of Russia. If you believed social media you’d think the Russian invasion had stalled. The extreme lengths Ukraine and its international supporters went was mind boggling. The most sensational rumour was the ‘Ghost of Kyiv’ a phantom fighter pilot who is said to have downed multiple Russian jets in one night. This was later discovered to be a figment of imagination. The news that emerged after a week showed that Russia had made significant gains and had barely used its airforce.

The other aspect of Information warfare was role of social media platforms themselves. It was clear that all information on social media were presenting the Ukraine side of the ‘story’. The complete absence of the Russian view point was odd. It could be that Russians were being secretive or were not prepared for information warfare but I had an uneasy feeling that social media platforms were perhaps not keen to promote the Russian view. To add to my doubts, new handles from Ukraine were being pushed into my timeline but none from Russia. It was almost the social media had chosen sides and were using their ‘tech muscle’ to aid the information war.

This emphasis on ‘Information War’ puzzled me. It may have medium to long term benefits but in a current battle it is always blood, metal and fire that shapes the outcome.

‘US/Nato will fight Russia to the last Ukranian‘

Ukraine attempting to join NATO is widely accepted as the reason for this war. This crisis was predicted years ago. There is ample evidence that many prominent strategic thinkers in the United States had cautioned against inducting Ukraine into NATO simply because it will trigger a Russian response to counter this. Some even predicted a military assault by Russia on Ukraine, exactly like the one now. These warnings were ignored and a flawed policy was pursued. Ukraine is now paying the price. The US has followed the Monroe doctrine in 1823 (which opposed European colonialism in its neighbourhood) and opposed the presence of Soviet missiles in Cuba. It did not think Russia deserved such considerations.

Decades of unipolarity has resulted in chutzpah dominating US foreign and strategic policy rather than level headed thinking. The result of this has been series of debacles from Iraq, Libya, Syria, Afghanistan and now Ukraine. The US isn’t perturbed, their country is safe and their military industrial complex is laughing all the way to the bank. NATO which is a serious military alliance morphed into an exclusive socialising club, co-opting new members with no real thought to building military capacity to protect such an extended geography.

The responsibility for this war should also be shouldered by Ukrainian president Zelensky. He was either a US stooge willing to do its bidding or just plain naive and was manipulated by the US to be its cat paw against Russia. A sensible leader would have guided Ukraine gently westward without straining ties with Russia. His inability to navigate the treacherous waters of international relations and geo-politics has resulted in his people suffering this fate. It is ironical that he is being feted as a hero.

World War 3

As the Russian invasion was the first conventional war in recent memory, overenthusiastic people started talking about a world war 3. Many countries may not approve of Russia attacking Ukraine but may not necessarily commit to a war for or against Russia. Even now the vocal supporters of Ukraine do not want join the war to actively support Ukraine. A repeat of the world wars is unlikely to happen

The prolonged world wars of the past, which dragged on for years was possible because of one important factor that no longer exists. Colonies. The west had large colonies including India. India, in addition to funds and provisions for the war provided men in millions as cannon fodder. Of the millions recruited to fight a war that didn’t concern them, tens of thousands died fighting for Britain, a country they didn’t belong to. Also the extensive foot print of the colonial empires made an essentially European war appear like a ‘world war’.

If there is a ‘word war 3’, it will perhaps be a few limited physical skirmishes but will rely more on economic, technological and cyber war. If one were to talk of such a broad definition of world war then it is hard to define when a world war is on and when it finishes, if at all. Some argue that phase already started even before the Ukraine war.

EU vs NATO – Is that even possible ?

Europe has grown used to 70 years of peace and prosperity. The armed forces of most European nations are modest and cannot achieve much independently. I often feel Europe will rather sue for peace than fight a war. The reactions to the Russian invasion were revealing. The early call for imposing economic sanctions on Russia was not unanimous. Germany was too dependent on Russian gas and the Italians wanted some luxury goods to be exempted from sanctions. It was clear economics trumps morality. After the initial embarrassment of being disunited the west came together to impose sweeping sanctions on Russia. This included the ‘nuclear’ option of freezing Russian foreign exchange reserves. The west used its soft power to force corporates, universities, airlines and media companies to shun (or at least pretend to shun) Russia.

The last two decades has seen Russia growing as an energy giant and Europe increasingly dependant on Russian supplies. This is especially true of Germany. Russia has bypassed downstream Eastern European nations to directly built pipelines to Germany via the Baltic Sea. This was the Nord Stream 1. Further cementing German-Russian interdependence was the imminent commissioning of Nord Stream 2. I read a report that the US has always been uncomfortable with the co-operation between Europe and Russia. It made great efforts to scuttle such cooperation including Nord stream 1 with temporary success. Economics trumped and Nord stream 1 was a success. The Nord stream 2 was one more reason for the US to demonise Russia. By indirectly instigating the war, they have succeeded in forcing Germany to apply the brakes on this pipeline. If history is any guide, this will only be a temporary pause and Nord stream 2 will be a success. The US will be hoping they can see the back of Putin before that happens. In fact, it is hardly a few days since these sweeping sanctions, there was a report on March 3rd 2022 that the German economic minister made a comment that he is not in favour of bans on energy imports. The last word on this has not been written.

Germany is an important country in the EU. It is the largest economy. Any economic set back to Germany is a set back for Europe. Also many other European countries use Russian gas. Europe is clearly both geographically and economically linked to Russia. The interests of Germany and the EU ( which partly aims to balance the domination of US in global economy) is at odds with the aims of NATO ( which is militarily alliance against Russia and dominated by the US).

Unintended Consequences – Germany, Nuclear Weapons and Global currency

The German Chancellor announced that his country will sharply increasing defence spending to build the German armed forces as a knee jerk reaction to the Russian aggression. This was a reversal of German policies. Germany being the aggressor in the world wars had turned to peace, avoided large scale militarisation and eventually came under the US security umbrella and joined NATO.

This new surge in defence spending has the potential to reverse the status quo and raises the spectre of German military aggression. This will create unease in other European nations especially France. It is said France especially under Francois Mitterrand made efforts to partner with a unified Germany. He also pushed for the creation of the EU, which he thought would incentivise Germany to be at peace with others in Europe and especially not threaten French sovereignty.

This rise of a new Germany ( not relying on the US for security) will be a night mare for other European nations and also for the US. Will the Germans go a step further and try to acquire Nuclear weapons as part of their new security doctrine ? This German build up was an unintended consequence the US probably did not see coming when they were needling Russia using Ukraine.

The security provided by nuclear weapons became even more apparent when Putin brandished his weapons and NATO and the West meekly shied away from helping Ukraine after leading it up the garden path. Japan, another world war 2 aggressor, has a pacifist constitution which bans it from raising armed forces for power projections. It also bans nuclear weapons in its territory. Former PM Abe has for long called for amending the constitution to allow a greater role forJapan’s armed forces. He went a step further this week and asked for US to site Nuclear weapons in Japan. Unwillingness of the US may prompt Japan to go nuclear.

The economic sanctions on Russia were so strong that all nations have sat up and taken notice. This includes banning it from SWIFT and freezing its foreign reserves. The US dollar being the global reserve currency gives the US unparalleled leverage. There is already talk of viable alternate payment system to rival the SWIFT. The freezing of Russian dollar and other reserves in western banks will make nations plan for a different global reserve currency. Some are over enthusiastically suggesting it could be the renminbi but some other economists point out China with a surplus current account is not suited for a reserve currency. The possibility of a Digital crypto currency has a global reserve is being mentioned but the concept is too vague at the moment and perhaps unworkable. The US is still in pole position in the global economy but its actions has caused a rethink and may in the long run re write the rules of the global economy.

Indian Abstention at the UN

The Indian public baulked and squirmed at Russia’s naked aggression in Ukraine but were subdued in their criticism. This speaks volumes of the goodwill Russia enjoys in the Indian psyche. The nostalgia Russia evokes goes back to the Russian support in 1971 which helped India liberate Bangladesh, the unstinting support on Kashmir and regular supply of weapons including sharing cutting edge systems. This good will remains intact in spite of the recent moves to supply arms to Pakistan, closely aligning with China and revelations of how KGB bribed and bought influence at the highest levels of the Indian government during the early decades of the newly formed Indian republic.

The Indian government too did not condemn the Russian aggression publicly. It adopted a neutral stance at the UN and abstained in multiple resolutions that condemned Russian actions. It had its own compulsions to adopt such a position. 20,000 Indian students were trapped in the war zone. The focus was on repatriating the students for which it needed the support of both Ukraine and Russia. The Indian armed forces which use Russian hardware are facing off the Chinese at the Indian borders. Russian support for spares and weapons are critical. This is not the time to condemn Russia. Foreign policy is always about national interest and never about morals or principles. On Russia, the Indian government and the Indian public are on the same page.

The US and sections of Europe were enraged at the ambivalent position of India including at the UN. The western diplomats and their representatives in strategic community and media were tasked with making India change its position. They tried diplomatic coercion, shaming India and even social media abuse for India’s position with no success.

Not only do Indians have lingering good will for Russia but there is also a lingering suspicion of the US. It will take longer for India to forgot the US actions that hurt India badly especially the support for Pakistan. India is also wary of a unipolar world with unbridled US influence in geopolitics including being responsible for the chaos in Ukraine now. This is in spite of sustained improvement in India-US ties in the last two decades. This includes US going the extra mile with the nuclear deal, signing defence cooperation agreements, forming the Quad and helping with weapons and troop clothing during the India-China border clash.

A Refugee is usually brown and uncivilised!

Several reporters covering the outbreak of hostilities were horrified to find that the refugees were white, European and christian and civilised ! A refugee in their eyes was brown and by default from an uncivilised part of the world. The lid on this ingrained racist bias was blown off live on air while they were reporting on the Ukranians fleeing the war. They forget that the biggest wars in the world were created by ‘civilised’ Europeans. They also forget most of the brown refugees were perhaps fleeing the botched military interventions of the US and NATO.

Power of a Passport

It is common to see passports ranked as the most powerful in the world. The most common yard stick is the number of countries the passport holders can enter with minimal or no visa requirements. The top ranks are mostly rich and developed countries. However in times of crisis, Indian passport holders have realised their country moves heaven and earth to get them safely back to their motherland. Surely this too is a mark of a powerful passport. India has consistently helped its citizens reach home including in 2015 in Yemen when this happened with live skirmishes in the vicinity. The US failed to rescue its citizens from Yemen and asked India for help which was offered. Again in 2022, India is aiming for the impossible that other countries are not even attempting. India is rescuing its citizens from an active war zone. India has already rescued several thousand and at the time of writing 3000 plus students were trapped in eastern Ukraine with no easy access. I hope they too are rescued soon.

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The word ‘Hindutva’ was rudely thrust into the national discourse recently by politicians from the leading opposition party in India. An attempt was made to portray it as a negative and even violent force. There was an attempt to differentiate it from Hinduism which is the term used to refer to the spiritual belief and way of life of almost a billion people in the Indian subcontinent. For the common man in India, this nuanced attempt to differentiate between Hinduism and Hindutva was hard to grasp. A more current usage of Hindutva is as a synonym for political hinduism.

The strategy behind reigniting the debate on Hindutva appears to be an attempt to counter the well entrenched Prime minster Modi and to shore up the dwindling political fortunes of the opposition led by the Congress party. Prime Minister Modi is thought to enjoy overwhelming support from the Hindu community and it is hoped that dividing them as good and bad Hindus will somehow benefit the opposition. This might be an acceptable even if weak strategy, if Modi was the sole architect of Hindutva. It overlooks the fact that Hindutva has been part of the political lexicon for at least three decades. It has grown in strength with each decade and Modi is only the current flag bearer.

The rise of Hindutva has three major contributing factors acting in confluence – the ‘vote bank’ politics practiced by almost all political parties, the destructive effects of radical islam and the advent of social media like Twitter.

Vote Bank Politics

The first possible impact of Hindutva was felt in the mid 1970’s when Prime Minster Indira Gandhi used the Emergency to insert the word ‘secular’ in the Preamble of the Constitution of India . This was perhaps a response to what Prime Minister Indira Gandhi felt was the rising influence of the Right in the political arena. In a country where religion is intertwined with daily life and where religion influences government policies the mention of secular in the preamble was a farce. This would set the tone for electoral politics in India for decades to come.

This approach of allowing religion to interfere with politics was taken forward by Prime Minister Rajiv Gandhi. His name will forever be tainted by the now infamous Shah Bano case. His government passed the Muslim Women (Protection of Rights on Divorce) Act, 1986, which diluted the judgment of the Supreme Court and restricted the right of Muslim divorcees to alimony from their former husbands. This regressive law was done to appease the islamic leaders with the tacit understanding of electoral support to his party. This brazen caving in to pressure from radical elements from one particular religion caused a sense of discomfort in the larger society. This provided the first big impetus for the rise of Hindutva. The sentiments for a Ram temple, which ironically was also supported by Prime Minster Rajiv Gandhi himself, became the rallying point of the larger Hindu community. The call for a temple was as much about faith as it was about the demand for Hindu sentiments to be given the same weightage as the other religions.

Even as the Hindu Right began marking its presence with limited electoral victories it was treated as a pariah by the other political parties. Rather than acknowledging this growing sentiment, the political parties began using secularism to discredit the Right. They persisted with the old approach of ‘identity based politics’. This involved support to minority religions and caste based communities. This paid rich dividends to local and regional politicians. This success with identity based politics made the political parties double down and mangle secularism to mean overt support for minorities at the cost of the majority. The charade of secularism would include the visual spectacle of political leaders donning the costume of minorities and visiting their places of worship even as they avoided Hindu temples. A decade of identity politics in the 1990’s provided the second fillip for Hindutva. This rise of Hindutva led to the first (coalition) government led by a right leaning party.

The return of the Congress party to power at the turn of the century led to a continuation of identity based politics. This was again justified under the banner of secularism. Prime Minster Manmohan Singh went on to state that minorities have the first right over India’s resources even as the Congress leadership met chosen religious leaders from the minorities to garner support for a ‘secular’ government. It was almost as if the the ‘majority’ didn’t matter. This government also proposed the Communal violence Bill which among its many draconian provisions sought to make the majority community responsible for violence. It felt like the rulers were not representing the people but subjugating them. This and many other skewed policies against the Hindus provided more power to rise of Hindutva. This surge led to the the first Right wing Hindu majority government in India since 1947.

Rise of Islamic Terror

Terrorism has been showing a steady rise in India since 1980’s. This was initially sponsored by by Pakistan who armed terrorists and sent them into the border states. The scope of terror activities widened with bomb blasts in Mumbai in the early 90’s. A soft approach emboldened more such attacks including the audacious attack on the Parliament building in 2001. The right leaning government in power at that time threatened to goto war with Pakistan but developed cold feet. This further emboldened the terrorists and the decade from 2004-2014 saw regular terror attacks launched with impunity with the state seemingly unwilling to stop it. The government at that time which espoused secularism and had cultivated the minority community as a vote bank did not wish to acknowledge this menace and treated these attacks with kid gloves. This included the dastardly attack on Mumbai in 2008. There was massive public anger and open demand for retribution against Pakistan but the government did nothing.

Not only did the government do nothing about the 2008 terror attack but on the contrary elements within the government and ruling political party made a brazen attempt to pass this off as an internal hit job by the majority community. This included releasing books that peddled false stories about the Mumbai terror attacks. The overwhelming evidence gathered by the police thankfully nipped this vicious story in the bud.

This was followed by the framing of Hindu religious leaders as terror accused in a bomb blast. Top ministers in the government coined the term Saffron terror. Important leaders referred to Hindu terror as the biggest threat to the nation. The condoning of destructive terror attacks by certain religious communities while tarnishing the peaceful Hindu community was a hard pill to swallow. The Congress party gained a reputation for being an anti Hindu party, a tag that it may never be able to shake off. The perils of untrammelled Islamic terrorism in India with an attempt to brow beat the Hindus into submission by calling them terrorists provided added ballast to the rise of Hindutva.

Social Media

The advent of social media completely changed the rules of the information game. News and facts had no place to hide. Anyone could share views or report news without censorship or bias. This was true democratisation of news. The media houses that had a strangle hold on what the people were allowed to know felt defanged, even cheated. The old elite could no longer control the narrative. Hindutva which was much maligned in the mainstream media and whose point of view was suppressed was quick to sniff the opportunity to not only redeem itself but also call out the hypocrisy of the political parties, the media and the academia.

The Hindutva brigade on social media would go on to expose the religious bias in government policy while claiming to be secular. It would point out the bias in news reporting where elite and powerful were protected from criticism. It would point to the bias in reporting crime to protect one community while it exaggerated fault lines in another to aid identity politics. It would point out inaccuracies and omissions in history and the dubious role of academia. It did this day in and day out, for weeks, months and years. It would not only ramp up support for Hindutva but go on to build civilisational pride.

The most critical role played by social media was the virtual support it offered to the larger Hindu community. It erased the despair felt by the majority community at the raw deal meted out in the name of secularism. It helped in rapid consolidation of the Hindu voter in a way that countless political rallies could not have. Hindutva was steaming ahead on booster shots provided by social media.

Is there a Hindu Awakening ?

The steady rise in Hindutva over three decades has got people talking of a Hindu revival and Hindu awakening. They point to the back to back full majority electoral victories by a Right leaning party as evidence. They goto the extent of saying there is a Hindu reassertion after 1000 years of suppression – first by islamic invaders and later by christian colonisers.

It is true that currently there is a general awareness among the Hindus on existing imbalances in government policies and even laws. The demand to correct this is one of the signs of a Hindu awakening. This includes demand for parity in personal laws and management of educational institutions. There is a vocal demand for autonomy in management of places of worship which is denied only to Hindus and protection against religious conversions where Hindus are almost always the ones being converted. Academia and media which were dominated by the Left has enlarged to accommodate the views of the Right.

The signs of a Hindu awakening is also evident in the confidence with which the nation unanimously corrected the historical injustice of denying a Ram temple at Ayodhya. This was based on facts which were debated fearlessly and transparently. This was also accepted unanimously by the secular political parties. The latest sign was the inauguration of the Kashi Vishwanath Corridor where several hundred houses were acquired litigation free to renovate and expand the ancient temple. Kashi is the spiritual capital for Hindus. It has suffered several attacks by marauding invaders only to rise again. The rejuvenation of Kashi in 2021 is a historic and civilisational moment. It is widely believed this will be a catalyst for a true Hindu renaissance.

Head winds to Hindutva

The hubris of a Hindu awakening might make it easy to overlook the complex electoral reasons for the stupendous victories of the right leaning BJP in 2014 and 2019. A large factor in the victory is Prime Minister Modi himself. He has no doubt been propelled by the steadily rising wave of Hindutva but there is more to his victory. He attracts votes for his efficient governance, no nonsense attitude to policy implementation and friction free welfare delivery. This is as significant a factor as Hindutva in contributing to his electoral success. Any short falls in governance and economic welfare could result in electoral reverses and decelerate the rise of Hindutva.

The tidal wave of Hindutva may have ebbed and flowed over the last three decades but has shown an upward secular trend. It may rise further, it may not but it is unlikely to ever disappear. Political Hinduism is here to stay.

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Suggested Reading

1. https://www.firstpost.com/india/how-hindutva-is-the-hinduism-that-resists-10150231.html
2. https://www.firstpost.com/india/hindutva-is-the-assertion-of-hinduisms-political-identity-and-its-rise-is-an-inevitable-force-of-history-10197171.html
3. https://www.firstpost.com/india/opinion-varanasi-the-god-shiva-and-indias-prime-minister-narendra-modi-10242001.html

My view on the impact of Artificial Intelligence

The Matrix was a science fiction movie from 1999. It portrayed a world where machines were at war with human beings and even winning. Keanu Reeves who was the protagonist had to be rescued from the clutches of the machines to aid the war. The sheer boldness of the concept of the ‘matrix’ combined with eye catching special effects made it very popular. I loved it. Shortly after this there was another movie titled ‘I Robot’, which showed a futuristic world peppered with intelligent robots blithely helping human beings with their daily chores and activities. Will Smith, in this movie, plays the role of the paranoid cop who doesn’t trust these robots. His hunch turns out to be correct and the movie turns into a fight for supremacy of man over the machines.

Machines have been around since the invention of the wheel to the industrial revolution and beyond. They have helped with manual tasks and in many cases replaced humans. We can see this in farms, factories, construction sites but also in day to day situations like vending machines ,parking access control and more. The development of computers helped in performing some tasks of the human mind. Computers too are ubiquitous and can be seen in offices, academic institutions, retail stores and even homes. Machines and computers have been embraced by us even if it resulted in replacing human resource.

I first heard of Artificial Intelligence (AI) while in school. The concept appeared vague and my understanding of it vaguer. It did not have imminent application. In simple terms it was the ability of a machine to think and learn. AI was still not mainstream when the popular science fiction movies that I described above were produced. Robotics too was nascent and complex functional robots had not developed. There was Asimov, a robot developed by Honda but it was hardly jaw dropping.

My first brush with Robotics was in 2009 when I witnessed the DaVinci Surgical Robot in action. It was, and is, a marvel of technology. It was able to replicate fine finger movements that are essential for performing a surgery. Most people have a misconception that a robot is humanoid machine that works like a real human. The Da Vinci is nothing like that. It’s a giant block with arms. This is controlled remotely with delicate ‘joysticks’ attached to the surgeon’s fingers. If anything, it was like a giant video game console. Machines of the past did physically intensive or repetitive manual tasks but here was a machine that was capable of replicating non repetitive fine finger movements with precision. This, to me, was a paradigm jump in machine capability.

My interest in AI was rekindled in 2016. A machine called AlphaGo was in the news. It had successfully defeated the world champion in a game called Go using AI. The game of Go was considered the ultimate challenge for computers and a machine capable of defeating humans wasn’t expected to be developed for another decade at least. Future historians will look at the successful development of AlphaGo in 2016 as a watershed year in the evolution of AI.

I learnt that Go is a Chinese board game, played with back and white coins that lays great emphasis on human intuition. This is thought to be more complicated than chess. You may recall that a machine called DeepBlue beat Garry Kasparov, the world chess champion couple of decades ago. What is different you may ask ? This victory of AlphaGo was special not just because Go is more complicated than chess. It was also special because the way the machine achieved it. DeepBlue relied heavily on computing power (which today is available in most smart phones) but AlphaGo relied on AI – the concepts of ‘neural network’ and ‘machine learning’ were used successfully.

Rather than try to explain these terms which I can’t claim to understand, I will attempt to explain how AlphaGo achieved success. It was fed with millions of different Go games or board positions. Analysing this with its ‘neural networks’ it ‘learnt’ to predict human moves. This was refined further by making AlphaGo play against different versions of itself. With each game it played it ‘learned’ more and tweaked its strategy (neural networks) and bettered itself. The evolving product played almost like humans and surprisingly also came up with game moves not performed by humans before, resulting in game wins. The final product was formidable enough to beat the world champion 4-1. The victory itself was unexpected and the margin of defeat a complete shock.

Technology constantly gets better. In 2017 we had a better version of AlphaGo called AlphaGo Zero. This was a step ahead. Unlike the original AlphaGo it were not fed with millions of games or board positions. The neural networks were provided with broad rules and they relied heavily on machine learning. In simple words the machine taught itself the game from scratch. It made mistakes and learnt by trial and error and improved with each game. In the same year as AlphaGo Zero, another machine called Libratus that played poker was developed. It was also very successful using the same approach to AI. Both machines evolved to achieve victory against world champions. What was even more noteworthy was it took the new AlphaGo Zero just 3 days to reach the standard of the previous AlphaGo machine from 2016 that beat the world champion. This rate of learning a new and complicated task can never be matched by humans. It was increasingly clear to me AI was more efficient than humans minds. I had this uneasy thought they could replace us almost completely.

Many of us have benefitted from applications that use image and facial recognition based on AI. This could be using FaceID on your iPhone or by using electronic immigration gates eliminating the need for immigration officers. AI is already taking over human jobs and the technology is still nascent. In the future the applications for AI are endless. Even in 2017 it was predicted AI could be taught varied skills like stock market trading to cybersecurity to auctions and even political negotiations. If this seems far fetched I’d like to draw your attention to Google Duplex unveiled in 2018. The world was offered a glimpse of an AI enabled personal assistant in your phone. The demo showed the smartphone making phone calls on behalf of the owner and booking a hair cut appointment by having a normal conversation with a human being who is clueless that she is talking to a machine. It felt futuristic.

The scope of AI is ever widening . Apart from the earlier suggestions of being able to perform jobs in financial sector, cyber security and even dealing with people like customer service or political negotiation, AI can also be ‘taught’ creativity! AI can be trained to compose music, produce paintings or even write literature.

The medical profession is often seen as needing complex decision making based on knowledge and experience. It isn’t easy to replace a trained and experienced doctor with machines easily. However it would be naive to think doctors are AI proof. It is suggested that radiology and pathology can be aided with AI as their work involves interpreting complex images. AI has already proven to be successful in basic image recognition. AI enabled machines can ‘learn’ to interpret these complex images and eventually produce accurate radiology and pathology reports. There is more, soon your family physician could be an AI enabled chat bot. This suggestion might be offensive to doctors who spend years training in medical school. Early steps in this direction have already commenced. A company called Babylon Health is using AI to create a doctor chat bot. The early versions may not be perfect but AI by its very nature learns and it won’t be long before we have a reliable AI enabled doctor who is not human. To prove their point Babylon health put their AI enabled chat bot through an ‘exam’ in 2018. They picked up questions used for the MRCGP ( UK general practitioner qualifying exam) which are publicly available for trainees and got their ‘AI doctor’ to answer them. The machine after just 2 years of experience as a ‘doctor’ got 81% of the questions right in its ‘first attempt’. They argued this result was better than many humans sitting the real exam that too after years of training.

Convinced that AI will take over significant functions of a physician I wondered about the future of surgeons. You will recall from earlier, we already have human controlled surgical robots. Would it be a flight of fantasy to think that it would be possible to integrate AI into them, teach them surgery to produce an AI enabled autonomous surgical robot in the distant future ? It is likely this will be achieved one day. This concept of autonomous robots is not completely uncharted territory . Boston Dynamics, a robotics company, caught everyones eye with their agile Robot dog which exhibited some autonomy. When one sees the video of this dog finding its way around, it is easy to envisage a more intelligent and autonomous robot dog powered by AI.

All this narrative about the power of AI could be disconcerting to some but make many others sceptical. Are machines that infallible ? I too had some doubts until it was pointed out that machines don’t have to be infallible, they just have to be better than humans. I will take the example of self driving cars. This technology has been around for some time. Initially most of us didn’t think it was possible but now that early versions have proved to be successful we raise questions about its safety. We completely overlook the fact human drivers are not perfect and we also cause road traffic accidents. The machine doesn’t have to error free it should just cause less accidents than humans to replace manual driving. This is not impossible. Machines won’t need a sip of water while driving, won’t change the radio station, check messages on the phone, over speed or ever be found drunk driving. It will just focus on the task at hand and eventually become safer than humans and replace them.

The impact of AI on Humanity

Machines have consistently replaced blue collar workers. With advances in robotics that trend will not only continue but its scope will widen. AI will have a similar impact on white collar jobs. I hope by now you are convinced that this is no longer fiction but an imminent reality. Many desk jobs will be done by AI enabled machines that have been taught the job. The range of jobs that will be at risk will go beyond the traditional white collar and could include so called ‘gold collar’ jobs like- financial accountants, doctors, lawyers and more! It might start with an AI assistant to a human employee to reduce man power but evolutionary trends in AI show that they will one day be capable of replacing humans. If one were to take a long term view, this will result in very few employment opportunities. As unemployment rises this will lead to ‘under employment’ i.e due to abundant labour supply it will result in low wages for unskilled work that still need human input . The sports and creative fields will perhaps be valued like they are today. This is not because a robot isn’t more athletic or AI can’t be creative, but it is likely human performance and creativity will be desired. This is much like a hand crafted item being more valuable even if products similar to that can be mass produced in a factory. Not all of us will possess the talent to be a sports person or a musician or an artist. What if you aren’t among the lucky few to have a job in a world dominated by AI machines and robots? Professional video gaming maybe the popular job of the future!

I have often pondered how to tackle the problem of significant unemployment in an AI enabled era combined with an ever rising population. States will be compelled to come up with solutions. The arrows in the quiver could include Universal Basic Income, Population control (a forced one child policy and maybe even some incentives for having no children), making euthanasia legal and less regulated, restricting heath care for deserving candidates and no resuscitations beyond a certain age by law. Some of these are controversial but I am sure we cannot escape debating them in the future.

The other question I have considered is whether humans will be comfortable taking instructions from a machine ? I suppose most of us cannot entertain the thought of being told what to do by a machine. The reality I think might be entirely different. I will start with a ‘dumb’ machine like a speed camera/gun. If it says you were over speeding, chances are that you will accept the machines recording rather than contest it. Also you do not contest the math results of a calculator. It is not just about contesting a machine it is also about trust. If you wanted directions, you are more likely to trust Google maps over a human who points you in a different direction. We also allow machines to make decisions for us, like the electronic immigration gates which check our identity before letting us pass through. It appears we are at ease having machines control us. Soon we could see robots in law enforcement. An early glimpse of this was seen in May 2020 in Singapore, where a robot dog was used to monitor a park and advise people to maintain social distancing in view of the pandemic. In future this robot dog could be fully autonomous. The changes will be so gradual that one day we will be taking instructions from a fully autonomous bot with no human oversight.

The capability of AI enabled machines will keep improving. There is already research into AI enabled autonomous weapons and drones. The result of this will be a machine that will decide which human is dangerous and who is not. It will also make a decision to kill or not. This is controversial and worrying. A future world where most of the work is done by machines, where rules are enforced by machines and where warfare is performed by machines with no human micro management is not an unthinkable scenario.

If our laptop malfunctions we use the oldest trick in the book, we switch off and reboot. If the same thing happens to an AI enabled machine I suppose we can turn the power off and regain control. What if these intelligent machines learn to power themselves back on or learn to ‘disobey’ a shut down command ? What if a machine trained to enforce discipline or even kill refuses to turn off? What if they hack power grids to remain powered constantly ? What if they are all networked and act as a swarm ? Could we find ourselves in a battle to control these machines ? The movies from two decades ago don’t seem like fiction any more. By successfully developing AI, humanity has set the ball rolling to create its nemesis.

I am fascinated by the economy and follow news about it closely. Over the years the recurring emphasis has been on improving the rate of economic growth. This obviously leads to wealth creation, which translates into a better quality of life for the citizens but in some cases it actually helps moving people out of poverty. It was the latter that made the unwavering focus on economic growth almost a noble endeavour. I too have been sold on this idea of economic growth as a panacea and have even dared to become an ‘armchair’ economist.

This obsession with growth was achieved by human consumption of goods and services. This led to ‘globalisation’ and development of supply chains of goods and outsourcing of services making economies dependent on each other. It was not uncommon to hear the impact of global growth on the state of the local economy. The more people consumed the more the economy grew and people prospered everywhere. This was celebrated as a win-win for all. It was not all positive. There were unintended consequences of environmental degradation and perhaps climate change. The impacts of these were at times significant but the benefits were seen to be worthy of the price.

I have at times paused to ponder this relentless pursuit of economic growth. After all once upon a time, before the era of global supply chains or indeed this emphasis on consumption led growth, human beings lived a simple life in harmony with nature. They were not plundering the earth’s resources or degrading the environment. I even felt that one day humanity will be weary of chasing economic growth and choose go back to a basic way of living, eschewing profligate consumption and live in harmony with nature.

I have tried to imagine a world of sustainable living with healthier environments. Small clusters akin to villages, with their own farms and solar energy parks. The farms will make them self sufficient for daily needs and not be dependant on supply chains. The solar parks could provide electricity for homes and mobility by electrical vehicles. This will also be kind to the environment. Such fleeting ideas of utopia vanish and I return to the reality of the consumption led globalised world.

How did humanity get onto this ‘treadmill’ of economic growth ? Science allowed us to find cures for diseases leading to longevity and a population boom. This inevitably led to a spiralling appetite for consumption of goods and resources. Before long this led to a vicious cycle and we are constantly trying to keep pace with the demand and in some cases tapping into human greed to create demand for newer and flashier products. We were intelligent enough to survive and thrive but we also ended up on the treadmill of economic growth which we can’t seem to step off.

Why am I sharing my old thoughts now ? The Covid pandemic and the lockdown that followed has brought the flood lights back on these very issues – economy and its growth, globalisation and perils of unchecked urbanisation.

The pandemic itself was acutely felt in the big cities instantly highlighting the benefits of rural life. Rural life doesn’t automatically mean one is in harmony with nature but is certainly likely to be a more healthy life than being in congested and polluted cities. Importantly in the current situation it reduces the risk of being infected by a lethal virus. As the virus raged I wished I lived in a cottage by the sea away from the clusters of infection in the urban areas. I am sure many others had similar thoughts.

The lockdown had a serious impact on the economy. Life as we know it came to a stand still as did economic activity. Shops, offices and social establishments were all shut. With the passing weeks there is a realisation that life will not return to normal and some jobs will be lost forever. The impending recession and unemployment will be problems for a long time. The current pandemic also exposed the perils of being dependent on a global supply chain in times of crisis and emergency. This combined with the need to find jobs for newly unemployed people will spur the move away from globalisation.

The lockdown also forced us to step back from a hectic and stressful life to a more measured pace. It also prevented us from indulging in excessive consumption. We realised what we really need to get by in life and how we had earlier convinced ourselves about the need for frills in life. Will this realisation of what we really need combined with the fear of a deadly infection be the trigger for us to step back to a more simple life ? Perhaps not.

Is a life with minimal consumption a myth ? Although it is a fact that we did survive the lock down with minimal needs it is false to believe that this could be sustained forever. We need the economy to recover so that the entire population can survive. This is proof, if ever one was needed, that we are truly caught in the vicious cycle of a consumption led economy. Economic growth is an act of survival ! Economic growth is not a panacea but rather we are its slave.

The recent student protests in some pockets of India has brought the spot light on education and educational institutes. The most recent being the unruly and violent behaviour of ‘student goons’ of JNU. The JNU is in the grip of communist ideology and this isn’t new. The students indoctrinated in this evidently failed ideology are increasingly becoming a national nuisance. JNU is a unique problem and isn’t the focus of this article.

Shortly before the JNU fracas, it was the turn of the minority institutes including Jamia Milia Islamia in Delhi to indulge in violence while protesting against the CAA. Sadly this was in tandem with violent street riots and destruction of public property by members of the minority community . Sanjay Dixit in his article in medium.com went to the extent of calling the street riots ‘Direct Action 2.0’ similar to Direct action in 1946.

In this piece I focus on minority educational institutes. The concept of minority institutes in a ‘secular’ country was never a good idea. I am building on the thoughts of Arihant Pawariya who writes on minority or communal institutes in his piece in Swarajya on Dec 18 2019 (link at the end ). He opines that these are ‘glorified ghettos that have flourished in the garb of minority rights’. This thought is likely to resonate with the majority in the country.

He gives specific examples of marquee institutes that ‘belong’ to minorities but are overwhelmingly funded by the government. The minority tag allows them to reserve the seats to members of their sect/community at the cost of other citizens. It gives them exemptions from reserving seats for socially backward groups. The minority run schools are also exempt from RTE (Right to Education) social responsibility.

Pawariya calls for removing the distinction between minority and non minority institutes. I am in complete agreement for removing the policy of minority institutions including amending the constitution if needed as suggested by him. It is obvious allowing minority institutions as a policy is detrimental to social integration. Instead, he suggests the concept of two streams – the secular and sectarian institutes. I disagree here. I advocate a Uniform Educational Code for schools- much like a Uniform Civil code which is often talked about . All Indian students should only be offered modern science and accurate arts and history in schools and academic colleges. No child should be exposed to ‘Sectarian’ education only. Such sectarian education can be pursued as an extra curricular activity privately by parents if they so desire. This is different from research or learning at higher level which could relate to a particular religion or community. Importantly such sectarian schools should not have government financial support.

Even if there was a uniform educational code it is likely there will be ‘extra curricular sectarian institutes’ as people will be keen to keep alive the customs of their religion or community. In such sectarian or cultural institutes I would advocate government oversight ( but no funding) so that students are not indoctrinated or radicalised in a harmful way. The aim of these institution is to preserve a particular culture not the destruction of other cultures and civilisations or indulge in meaningless violence based on beliefs.

The unpleasant scenes of violence by students and others was received with revulsion by the society in general. This was not lost on the students and their supporters. They are now attempting a course correction by singing the national anthem and reading the preamble of the Indian constitution. This is a welcome change. Cynics would call this a show to fool the gullible. In more ‘normal’ times people identifying themselves with these institutes would be seen pouring scorn on the national anthem or the constitution. This has prompted novelist Manu Joseph to come up with one more of his sarcastic comments on Twitter. He tweets – Modi has introduced so many Indians to the word ‘preamble’. Although Manu Joseph said this partly in jest there might be an element of truth too. I wonder if this will actually make more people take notice of the preamble and the inevitable awareness of the improper way the preamble was changed without debate during the emergency in 1976.

I will conclude by bringing the focus back on education. It is important to offer a uniform educational code which mandates that all children should have a modern education including humanities, science, math and computers that will produce a generation fit for the 21st century. In this, teaching accurate history is very important ! Why History ? Isn’t it all about a being ready for the future? Shashi Tharoor famously admonished the British – ‘If you don’t know where you come from, How will you know where you are going ?’ This is valid for India too. The youngsters belonging to this ancient civilisation need to be aware of their history and those who are agitating on the streets need this even more.

References

Arihant Pawariya , Swarajya Dec 2019 -https://swarajyamag.com/ideas/memo-to-modi-and-shah-its-time-to-stop-pampering-communal-educational-institutions-like-jamia-amu-st-stephens-etc

CAA Riots: Failed Direct Action 2.0: Due to Krishna Niti that was not practised during Direct Action 1.0 – I discuss the reasons that made the #CAA agitation a failure compared to the agitation for Pakistan. Street riots, the ultimate weapon has failed. https://t.co/TVw7qqRikL

— Sanjay Dixit ಸಂಜಯ್ ದೀಕ್ಷಿತ್ संजय दीक्षित (@Sanjay_Dixit) December 28, 2019

Modi has introduced so many Indians to the word ‘Preamble’.

— Manu Joseph (@manujosephsan) January 8, 2020

Abhijit Banerjee writes on CAA and NRC in the Indian express. (link at the end)

Prof Banerjee’s desire to write about the CAA and pick faults in it force him to exaggerate problems like the example of a fictitious woman he met in Bengal who had no clue to any question posed to her. He asks the right question about the woman.Who are you ? Implying that this is a helpless person.  If you know nothing about yourself and no one else knows who you are or nothing about you, it sounds suspicious more than helpless. It is even more important for the state to know who you are ! This not only has security implications but it is also about being compassionate. Without an identity you cannot access state benefits. If in the bargain it proves you aren’t a citizen then that is the aim of the NRC. At this point the requirements for national NRC are undefined.

After indulging in some obfuscation about the benefits of migration – very relevant in rich countries with small populations – which can’t be stretched to fit India, he distracts by talking about internal migration. Internal migration is legal and has nothing to do with new citizenship, CAA or NRC. It almost appears as an attempt to highlight possible internal fault lines

After such circuitous and frankly meaningless logic he drops the most illogical bomb of them all. I quote ‘And the best way to get there is to embrace India’s vision of being one of the mother lodes of civilisation. Why not open our doors to everyone who signs up in our national mission of being democratic, open, tolerant and inclusive? ‘

It is this that makes my jaw drop and question his thinking or the lack of it. Which country in the world works like a charity ? Opening their borders to anyone and everyone who just ‘embraces’ the nations vision. Certainly India does not have that luxury. He is not a citizen of India. Will the county he belongs to have open borders and take in every one who just feigns belief in the nations vision ?

Often this logic of being the mother lode of civilisation is an attempt to guilt trip Indians in general and Hindus in particular to be true to their roots of being liberal, inclusive and accommodating. This liberal nature of Indians and Hinduism which is its biggest asset is turning out to be its biggest weakness in recent times. As political and intellectual vultures exploit this nature of Indians to force us to accommodate people of all beliefs including those who openly do not subscribe to the nations vision. It is time to call out such people and not be emotionally swayed.

Nation building is serious business. It is about empowering the people and giving them a bright future. It cannot be done with empty words of compassion and idealism even if it comes from the pen of Nobel laureates. The NRC is something all countries in the world practice. India is making a start and this should be encouraged . Make suggestions to improve the process not trash it completely.

https://indianexpress.com/article/opinion/columns/citizenship-amendment-act-caa-protests-nrc-abhijit-banerjee-esther-duflo-6193735/

The economy has been slowing for a while now. It started well before the elections and that was a worry as it may have impacted the prospects of the BJP in the polls. They survived thanks to the the social welfare measures like toilets, gas, housing and direct benefit transfer.

The economy has slowed further now and hit low growth figures. The opposition friendly media and economists are calling it a recession. This is laughable and they know it too. There is no negative growth, just slow growth. A recession requires two successive quarters with negative growth.

Before i go into possible causes. I have written a piece in May 2019 on what the economy needs and if you have the time do read it. The points mentioned are still relevant. It is posted in the same blog and the link is below (please copy and paste)

https://thiru.travel.blog/2019/05/07/indian-economy-from-2014-and-reform-agenda-for-2019-my-thoughts-2/?fbclid=IwAR3F7BRF1Pg5Z1e4zrbZTspazsgfzyhRHN93xX1rN6GT2DLDfUqlrDxupDE

Coming to current situation. The GST collections for November 2019 have again gone past 1 lakh crore suggesting there is an increase an economic activity – whether this is sustained or not we have to wait and see. Unlike in the past when the eceonomy was slowing and there was policy paralysis and drift the current government is constantly trying to intervene. Major changes will take time to have a result but they have done major interventions like corporate tax cut and lower tax for new investments and a real estate fund.

My take on the the reason for the slow down is two fold.

1. Continuing impact of the GST -The GST filing process is too complicated which the smaller business and MSME have failed to cope with. They are the probably not complying with GST and this is leading to a reduction in business and as a result on their ability to employ. The low business volume and low employment has a domino effect on consumption and growth. This cannot be corrected easily.The GST filing process needs attention. The govt is looking at it but acting slowly. Also a simplified GST process will probably still need some computer skills and online access making it a tough ask for many used to cooking the accounts using paper books. The aim of GST filing should be an app on a smart phone where invoices can be scanned uploaded and returns filed. I hope the GST council achieves this.

2. Credit availability – Banks aren’t lending due to NPA stress and now this has spilled over into NBFC inlcuding the failure of ILFS recently. Lack of credit impairs growth. The bank NPA is not a new problem but the NBFC crisis is new. The government should have acted faster on this. Bank recapitalisation has been attempted but this isn’t adequate. Privatising public sector banks with permission for foreign capital has been advocated by me earlier. This is still relevant. A low interest rate will also enhance number of people opting to obtain credit.

In effect the govt is doing something.(corporate tax cut and real estate fund) and there are things they have done but not fast enough (work in progress – simplification of GST & NPA clean up) and more things to do ( labour law reform & banking reform). The labour law reform along with new low corporate tax rates can be a real winner as it will attract foreign investment now moving away from China. Of course it will also need to improve ease in doing business.

In the near term the govt can consider a stimulus and rev the economy and this will be done at the cost of fiscal deficit. This is not an easy decision. Will an increase in spending be of long term benefit ? Will diverting the funds to rural spending -like for agriculture and MNREGA make a difference rather than spending on big infrastructure projects ? This one hopes will lead to short term gain in consumption and thereby increasing sales, yet keep the fiscal deficit under check.

My feeling is not to spend more for short term gains of growth. It is important to rein in the fiscal deficit.The aim should be to streamline GST filing and improving credit availability in the near term. Newer reforms like banking sector reforms should be pursued urgently as they will be needed for longer term growth. A proactive supportive role will help the economy recover in reasonable time.

———————-

Thiru Gunasagaran 

Disclaimer: This is based on the media reports, business news and thoughts of economists and politicians expressed over the years with a few of my personal opinions. 

With the general elections in India due to finish soon it is a good time to look ahead and plan the economic and reform agenda for the next 5 years. Before we look ahead it is important we review the reforms done in the last 5 years. 

The current government has improved the macroeconomic parameters and made India a bright spot in the world.The government has made significant reform by introducing GST and the Bankruptcy law. It has also introduced significant welfare reforms mainly by  converting the benefit of several schemes into electronic cash transfers direct to recipients bank account account. This is based on the JAM trinity(Jan Dhan bank account-Aadhaar ID-Mobile number).

The Past 5 years

After the new government took over the reins it went about improving the ease of doing business and has over the years made significant progress. India’s stated goal is to be within the top 50 ranks. I understand most permissions are now online without unnecessary interference from the bureaucracy. The FDI norms were further liberalised and many sectors were brought under automatic approval. There was also a huge push to improve infrastructure by unclogging the many highway projects and adding more. A new National Waterway Bill was passed and the government has also made investments in rail infrastructure. 

A policy less talked about but in my view very significant is the policy of e visa for visiting India. It not only enables movement of business executives but increases tourism arrivals with domino effect on several other sectors like travel and hospitality.

Following this the economy was on the mend and growth was picking up but this was when high denomination current notes were Demonetised by the government. A decision  that evoked shock, dismay, anger and even derision. A risk averse prime minister would never have taken this decision as the economy at this stage was recovering well.

My understanding was that Demonetisation was an attempt to kill ‘Black Money’. The government believed the black money would not be deposited in banks. The ruling party spokespersons were optimistic that 1.5 lakhs crore to 2 lakh crore or more would not return to the system giving the government and RBI a huge boost. The added benefits were thought to be controlling counterfeit notes and improving tax compliance and increase in use of digital money. At the end of the 6 week window to deposit invalid notes after demonetisation almost 100% of the notes returned to the system. The initial optimistic assessment of notes not returning to the system was wrong. The main benefit of extinguishing 1.5-2 lakh crores of black money did not happen. On this one single point I would deem DeMo a failure. 

Is this a failure of the government policy or was it the ability of the black money hoarders to beat the system and get the cash back into banks ? The government thought it was clever to demonetise notes overnight and catch everyone by surprise. In the 6 week window to deposit money, the Indian society showed that they were more ‘clever’ in getting the cash into the system denying the government the satisfaction of achieving its goal. 

Does that mean there was no benefit from DeMo at all ? It is important to appreciate that money returning to the bank does not automatically make it clean money. On the contrary it created a money trail forcing more people to file taxes or pay penalties- which is what made it ‘white’ money. It also uncovered lakhs of shell companies used for tax evasion and money laundering. The increased tax compliance and closing down shell companies has definitely created a cleaner financial sector which is a positive.

The shock DeMo did have a temporary negative effect. The economy ground to a halt and took a while before the growth recovered. There was undoubtedly significant hardship for millions of people. This hardship combined with the poor optics of almost 100% money returning to the system should have affected the ruling party’s political fortunes but instead the people voted for them handsomely in subsequent regional elections. How did this happen ? It is possible, the not so well off were willing to endure short term hardship because they felt the rich were forced to bin their black money and suffer losses. This probably made the government and the prime minster a darling of the masses.  Although it seems plausible, was the support for demonetisation really that simple? There was what I’d like to describe as the ‘Robin Hood effect’. An eminent economist in an interview mentioned that most of the very rich employed agents to get their money deposited in banks who in turn went to villagers and got them to deposit the cash in their accounts for a juicy commission. Also some of the poor acted as ‘money mules’ for a fee, helping the rich exchange notes running from bank to bank. Thus in an unexpected way the money from the rich made its way to the poor ! This is also what made demonetisation ‘popular’. 

The other talked about reform is the GST. This has been on the agenda for almost two decades and credit should be given to the government for implementing it. The central government assuaged the concerns of all states especially the industrialised states with many manufacturing units. They committed to matching revenues initially and also fixed percentage increase for the next few years till the GST is well established. This is what made all the states come on board making the GST a reality. 

The other reason why the GST wasn’t pursued with zeal by previous governments  was that it was felt it will contribute to inflation in the short term and inflation is a potent factor in electoral politics. In the last 5 years inflation has been low. How did the government prevent GST from stoking inflation ? When GST was envisaged it was meant to be a single tax rate. I was disappointed when the government introduced multiple tax slabs, picking and choosing items to be taxed at different rates.This made the process complicated. In hindsight the different rates ensured that food and daily use were taxed low while others higher and sin goods even more. This ensured that inflation especially food inflation didn’t shoot up. The tax slabs are already being rationalised and higher tax rates are planned to be phased out. 

The GST  was meant to be simple by eliminating multiple taxes and multiple tax authorities and reducing corruption but it also needed a complicated electronic filing and uploading. The large companies adapted to the change but smaller MSME probably struggled with this and couldn’t comply. I feel, those companies that couldn’t comply shut down and are contributing to the unemployment that the opposition is talking about. In time this will reverse. As an aside, in a country with such a high population it will be impossible to provide formal jobs for everyone and self employment will continue to be relevant. Jobs and employment may not be the same but this however is a different debate. In the long run the GST is a good idea and there is never a wrong time do implement a good idea. All criticism that it wasn’t implemented properly is likely exaggerated as such a radically new concept cannot be perfect from the start. The GST Council has proved to be responsive to the challenges of ironing out imperfections and will hopefully simplify the electronic filing process.

The bankruptcy bill (IBC) is much needed reform. This is having  some teething troubles including one company challenging it in court, but a start has been made. I hope with time it will deliver and improve the NPA’s in banks. Also from the point of ease of doing business we always talk about the ease of starting a business. It is equally important that there is also ease of exiting a business and that’s what this law enables.

The GST and IBC are the two biggest reforms of this government and will have an impact for decades.

The Next 5 years.

As we look ahead of what can be done to improve the economy it is equally important we do not take our eye off the reforms initiated by the previous government as they need continued attention to ensure their success. This includes –

1. GST and IBC – will need further refining.
2. Ease of Doing Business – to break into the top 50
3. Electronic cash benefits for welfare schemes can be expanded. 
4. Infrastructure – maintain the push for creating highways, waterways, railways and fibre optic and broadband 
5. Fiscal deficit – Maintain the glide path to reduce the deficit.

A cliched question that is often asked is what are the top three suggestions for reform. It is silly to believe just three suggestions can transform an economy the size of India. I will however make a top 3 suggestion that I think are a priority in addition to few more especially in Agriculture. These aren’t necessarily new, pathbreaking or revolutionary ideas.

1.Privatisation and FDI in Public Sector Banks

2.Privatisation of Public Sector Enterprises – like Air India

3.Electricity distribution and retail reform.

1.Privatisation of Public Sector Banks – If only one thing had to be done it is this. In in my view this is the reform that will have maximum impact. It is well know that most public sector banks need capital infusion as they are struggling  with huge NPA’s. The government announced a huge capital infusion plan of about 2 lakh crore over a period of time. This is a significant amount but may not be adequate. Also a new board was setup to improve governance of banks and reduce government interference. Both these have had only minimal impact. Not only is more capital required but also banks need to be governed professionally without government interference to give loans to crony capitalists. Privatisation will bring in new capital from outside the government and also reduce the influence of the government in bank decision making. Allowing foreign direct investment in banks increases the pool of capital allowing quicker recapitalisation of banks. I also feel with the fintech revolution in India its cheaper to acquire, maintain and lend to banking customers and this will attract more investors in the retail banking sector.

The quicker we have healthier banks the better for the economy. The growth of an economy is dependant on the credit availability. Banks with stressed assets and lending restriction are unable to provide new loans. This restricts private investment (and employment) which is essential for robust growth. It’s also true several large corporates with huge debts are unable to borrow which was referred to as the twin balance sheet problem( financial stress in both borrower and lender). Once credit starts to flow the issues of growth and employment will be automatically addressed. 

2. Privatisation of Public Sector Enterprises – A well known saying is the government has no business being in business. Yet India has bloated public sector enterprises which are managed by bureaucrats along with the whims and fancies of the political boss. Many of these are making huge losses which are paid for by peoples tax money. It’s time the government stems the annual money loss. There is already a proposal to close down unviable units and sell others but this is not being implemented. The biggest loss maker is Air India and this needs to be a priority. There was a failed  attempt to sell Air India and the government needs to review why no one was interested. I hope the government persists with its attempt to sell Air India after making appropriate changes to ensure a successful sale. The government currently relies on divesting shares to reduce fiscal deficit which helps in the short term. It should instead look at sale and privatisation of PSE.

Like Air India there are many non strategic companies that should be sold. Not only will these stop the waste of tax money it will divert the resources for better use like infrastructure or welfare or reduce the fiscal deficit.That more infrastructure or better fiscal deficit is good for the economy is a no brainer. I’d call this a low hanging fruit that needs to plucked at the earliest.

3. Electricity Reforms – There are two reasons why I have included this as one of the top three. The state electricity boards are inefficient and have racked up huge debts which cannot be good for the country in the long run and also poor retail service with load shedding is unacceptable for industry and to those wiling to pay for uninterrupted power.

Many past governments have attempted to reduce this debt and failed. The current government introduced the UDAY scheme to improve the debt and this has fared better than the previous attempts. These schemes are unlikely to solve the problem as long as the state enjoys a monopoly in transmission and distribution of power. The state electricity boards are not good at preventing electricity theft nor are they managing the finances efficiently nor are they providing acceptable customer service. There is no reason not to introduce competition to shake these boards out of their sloth. A Private company for power transmission will likely reduce power theft as there will be incentive to reduce theft and make a profit. Like wise a private player in retail distribution will provide good customer service and ensure continuous power to paying customers and not supply power at a loss to win elections. I hope ‘load shedding’ will be a thing of the past. A reliable power supply is important for a growing economy and also having many retail providers will ensure quick access to a new power connection which will also improve the ease of doing business rankings.

I was recently interested in roof top solar power generation and and I realised for an ‘on grid’ solar power system would involve having the electricity board install a new bidirectional meter. I gave up the idea of roof top solar as I didn’t want the hassle of dealing with an unresponsive office of the electricity board. A private player with responsive customer service might encourage customers to install roof top solar. This will also aid the target of 100GW of solar power generation that country aims to achieve.

In addition to these top 3 reforms the government should pursue other reforms like labour, land acquisition and in Agriculture.

Labour and Land – The previous government had a plan to reduce 44 labour laws to 4 codes but didn’t proceed as they probably anticipated resistance from labour unions. The recent bankruptcy of jet airways and its unpaid employees is good evidence that current labour laws are not protecting the work force but only being an impediment to growth. This should be pursued along with land acquisition reform which was blocked due to lack of political consensus. Both these will give a fillip to Make in India and creating physical infrastructure.

Agriculture – The regularity of feigning interest for the farmer during budgets and election made me interested in the farm and agriculture sector. That this is a problem area 70 years after independence suggest that the problems run deep. In spite of fertiliser subsidy, crop insurance and other support like MSP there is recurrent agrarian distress and farmer suicides. More of the same will not solve the problem.I have a few suggestions.

1. Irrigation – With all the improvement in science and engineering and after 70 years of being independent I think its embarrassing to get excited when there is a good monsoon or vice versa ! It’s ok for stone age men to be completely at the mercy of the monsoon but not in this day and age. There have been irrigation schemes in the past but these have not solved the problem nationally and some have been blighted by corruption. A comprehensive look at interlinking of rivers and ensuring nationwide irrigation along with drip irrigation technologies should be explored.
2. Market Restriction – Each state has its APMC(Agricultural Produce Market Committee) which controls sale of agricultural produce but is also a barrier to interstate trade and inter regional trade. The APMC in each state should be reformed to remove such restrictions. Maharashtra recently passed an ordinance to over come the limitations of the APMC. There should be an attempt to create a national market and also extend the reach of eNAM (electronic National Agricultural Market). A senior minister made  suggestion of creating a national body like the GST Council for agriculture and this is an idea that should be pursued.
3. Cooperative – Farmers should form cooperatives/company to insulate themselves from going into personal debt. This could be between contiguous land owners to share cost of farming and borrowing money as a farming company and not as individuals. They can share profits as per land holding. This will ensure no individual farmer is in debt much like corporates who are secure even when their companies are bankrupt. This requires a mindset change to work as team rather than ‘plough a lonely furrow’.  Also an author and economist suggested a cooperative like Amul but for agricultural produce. Amul made a huge contribution to milk collection and sales. There is no reason why such companies cannot be created for Agriculture. These Amul like companies can also invest in Cold storage in their region or this can be done by independent business’.
4. Procurement – The government is one of the biggest buyers of crops and they fix the MSP. This artificially creates surplus production of specific crops at the cost of some others while it can stoke inflation if the MSP is too high. A comprehensive review of government procurement, storage and the public distribution system should be done. If food subsidy is converted to an electronic cash incentive – the entire process can be avoided.
5. Encouraging investment in cold storage and Food processing – I believe the government has made some efforts including allowing foreign investment in food processing. In my view encouraging FDI in multi brand retail/food retail will give a fillip for cold storage chains and create a lobby against market restriction laws and procurement monopolies.

I hope the new government in 2019 is able to take the economy to greater heights.