10 ISSUES AND INSIGHTS MUMBAI | THURSDAY 9 MAY 2019 >

> one of the Election Commissioners has CHINESE WHISPERS been dissenting on its recent decisions How organisations become institutions but the anxious majority of two has been taking up technical and specious argu- ments to suppress the dissenting views That sinking feeling It is credibility that converts an “organisation” into an “institution” by arguing that the decisions are only A floating restaurant on Tehri lake, administrative decisions. which the Uttarakhand government had In fact, even the usage of the word “cri- man-made law) says so, but also any organisation. How these differ- The Election Commission’s views launched last year to boost tourism in sis” can be an emotive issue. because society builds an acceptance ences of opinion are handled, how the on right and wrong, however different- the state, sank partially in the lake Instead, this column is about institu- of its conduct due to the court’s pris- bickering is resolved, and how allega- ly they may be perceived, are vital for earlier this week. While no one seems to tions and societal expectations that lie tine credibility. tions are handled in the organisation, the smooth running of elections. know how it got submerged, local at the heart of how “organisations” trans- It is credibility that converts an are what define whether an organisa- Elections will indeed take place and the authorities are working to pull it out. form into “institutions”. When the organ- “organisation” into an “institution”. It tion is an institution. results will by and large bind society The restaurant, named Marina, was a isation is the one that sits at the apex of is not for nothing that it is said that jus- For any institution to have long- (there will indeed be challenges to its first-of-its-kind restaurant in the justice delivery, there is an unstated tice must not only be done but must standing credibility, how its own people decisions). But at the end of the polls, region and had wowed many when it requirement of credibility beyond inter- also be seen to be done. There are and the people who come to it are treat- for the entire nation to feel that it has was unveiled. However, the boat was preting law, that lies at the core of societal judges from whose courts, the party ed, is a vital feature. Censoring differ- had “free and fair” polls, the credibility not in use for months since its opening acceptance of its decisions. given an abject defeat would leave with ences of opinion or beating up the mes- of how the Election Commission con- — apparently none of the local tour Constitutionally and legally, the a sense of satisfaction of having been senger can come easy in an organisation ducted itself would point to whether operators came forward to take it on WITHOUT CONTEMPT Supreme Court is always right because heard well. And there are judges from that is not an institution. A real institu- the Commission was merely an organ- lease or rent, as hoped by the state SOMASEKHAR SUNDARESAN it is final. It is not final because it is whose courts, the party with a fabulous tion would factor in dissent, differences isation that organised polls, or if it was government. Some jumped on to social always right. Decisions by any institu- victory would leave with a sense of of opinion, and be transparent about it. an institution that presided over the media to ask if it represented the fate of tion can be open to being perceived as relief that luck favoured her, with no Justice Ginsburg and Justice Scalia of sacred task of running the process of the state government too. either right or wrong. That dispute has real satisfaction of having had a deserv- the US Supreme Court have had views letting people decide who should serve his column is not about the to end somewhere and that road ends ing win. All of this is because, it is only diametrically opposite to each other — them and rule their destiny. The Supreme Court and the merits at the Supreme Court. However, like humans who can run the system. the former a “liberal” and the latter a Supreme Court must not be seen mere- T of what lies at the heart of the any other organisation, it has to be Where humans function, there will “conservative” — but they were the best ly as an organisation that handles the Shock and awe current crisis of confidence. For a prac- manned by human beings. A core be differences of opinion. There can of friends and aired their differences in last and final appeal on disputes and After facing repeated tising lawyer, discussing such subjects essential feature of being human is be bickering. There can be healthy approach to law and justice through must remain being seen as the institu- complaints on the is fraught with the risk of being misread being fallible — we are liable to make debate. There can be false and gen- their judgements. tion that presides over the sacred task widening trade deficit as being a commentary on the merits mistakes, and can go quite wrong. And uine allegations of wrongdoing. There Cut to a different constitutional func- of justice delivery. from US Commerce of who is right and who is wrong, with therefore all controversies and disputes can be acute unfairness perceived in tionary — the Election Commission Secretary Wilbur Ross, potentially grave consequences at the end there. Society accepts that ending how decisions on human resources are which sits at the apex of conduct of elec- The author is an advocate and independent Commerce and hands of the fraternity (and sorority). not just because our Constitution (also taken — it is an essential feature of tions in our country. We now learn that counsel. Tweets @SomasekharS Industry Minister Suresh Prabhu (pictured) chose to calm US nerves in a rather unconventional way. Addressing a large public gathering of US officials and industry, Prabhu said while India's exports to the US far outpace its Patanjali’s slippery quest for oil imports now, a day might come when the exact opposite will happen, forcing India to deal with it's own trade deficit crisis. The valuation hurdle over its acquisition of Ruchi Soya could delay its plans to boost growth While US officials appreciated Prabhu's candour, some Indian representatives in ARNAB DUTTA companies in the country, after the the room were visibly shocked, fully aware Committee of Creditors (CoC) approved RUCHI’S LENDERS of New Delhi's own problems in controlling ust when it seemed on the brink the major’s proposal last Top financial creditors (~ cr) runaway imports from China. of ending to Patanjali’s manage- week. Now though, according to SBI group 1,816.0 J ment, its battle for acquiring informed sources, other private beleaguered edible oil maker Ruchi lenders, too, are planning to revisit the Central Bank of India 816.0 Soya has hit another hurdle. This time, blueprints of the proposal. Punjab National Bank 743.3 Hoping for divine intervention the objections have come from a couple The problem is rooted in the Indore- Standard Chartered Bank 608.5 of creditors of the debt-laden firm — based firm’s valuation. According to DBS Bank Singapore and DBS India. Ruchi Soya’s calculations, it owes its Corporation Bank 540.0 DBS India, the local unit of creditors ~12,146.58 crore against a total Singapore-headquartered financial claim of ~13,742.86 crore. Out of the total Top operational creditors (~ cr) services group DBS, and DBS Bank amount claimed by its financial and RaboBank International 865.0 Singapore have approached the operational credits and various govern- Standard Chartered 336.5 National Company Law Tribunal ment departments, Ruchi Soya disap- Trade Support (Hong Kong) (NCLT) in Mumbai challenging the proved claims worth ~1,596.28 crore. recently approved deal to sell Ruchi The oil maker's 27 financial creditors, IT ALSO OWED MONEY TO 15 PLUS Looks like the two top contenders in the Soya. The group — one of the many of which DBS is a part, have approved GOVERNMENT AUTHORITIES/ high-stakes battle for the Lok creditors that dragged the edible oil dues worth ~9,384.75 crore, while the DEPARTMENTS Sabha seat are hoping for divine maker to the insolvency tribunal — approved amount of the operational intervention to see them through. told NCLT that it finds the creditors is ~2,716.6 crore. Source: Ruchi Soya Industries Congress candidate deal insufficient to cover its (see table) (pictured) and dues. And it wants a larger However, the money that crore, against Ruchi Soya’s total significantly, after a period of aggres- account the overall declining financial candidate (pictured) share of the money that financial creditors of Ruchi approved debt of ~12,146.58 crore, is sive product launches and entry into performance during 2017-18, sharp have been frequenting temples and other Patanjali has offered to pay Soya would receive, if the not enough to cover even the half of new but unrelated categories. increase in debt borrowings with holy places in the area. In the last 43 days for Ruchi Soya. Patanjali deal goes through, the debt. Patanjali had virtually lost The company is now more depen- increase in interest cost and financial of campaigning, Digvijaya Singh has According to Ruchi is a little less than ~4,350 the race in mid-2018, when the CoC dent on financial lenders to fund its charges owing to large debt-funded visited as many as 83 temples. Pragya Soya’s latest release, dated crore — or just 46.35 per had given its consent to Adani capacity expansion plans and thus capex incurred over the past two years Singh Thakur, who started campaigning April 26, DBS Bank cent of their approved dues. Wilmar’s bid. Then, in December, more open to scrutiny. At least five and lower turnover and profitability since April 19, has visited 21 temples since Singapore and DBS India are The banks are reluctant to Adani Wilmar withdrew its proposal new food parks are coming up across levels reported in 2017-18 and first then. Such is the fervor that on two of its financial creditors take the haircut at a time to acquire Ruchi Soya, citing pro- the country — in Uttar Pradesh, nine months of 2018-19”, it noted. Wednesday when Congress' Singh took to whom it owes ~297.24 when the cumulative non- longed delay as a concern, while Maharashtra, Andhra Pradesh among Ruchi Soya could have gone a long part in a roadshow with religious leaders, crore. In the pecking order performing assets (NPAs) of Patanjali revised its offer to ~4,350 others. way in lifting its fortunes. Edible oil is groups of people were seen roaming of the amount of money due, DBS Bank top six private banks is in excess of ~1 crore for financial creditors — from This is having an impact on its rat- the largest packaged food category in around with saffron scarves draped Singapore is Ruchi Soya's 15th largest trillion and even higher for public sec- ~4,100 crore. ings. In April, rating agency ICRA the country (~1.63 trillion in size) and around their necks. While many claimed creditor with pending dues worth tor lenders. Global ratings agency Fitch, The latest round of trouble may be revised Patanjali Ayurved’s long-term is growing at over 20 per cent, accord- they were police personnel in civilian ~242.96 crore, and DBS India stands at in a February report, said loans worth of greater concern to the Haridwar- credit rating to ‘A plus’ and for short ing to Euromonitor International. clothes, the state police rejected the claim, 23rd place with dues amounting to ~3.5 trillion have not yet been recog- based firm. After growing at a break- term to ‘A1’. On March 30, another rat- Ruchi Soya’s wide portfolio of brands stressing that the organisers had enrolled ~54.28 crore. nised by banks in India as non-per- neck pace between 2011 and 2016, its ing agency, Brickwork, reduced the and export markets is expected to fit volunteers and that these volunteers were DBS’ opposition has come at a time forming assets and they run the risk of top line growth has muted to less than firm’s ratings for bank loan facilities well into Patanjali’s scheme of things, free to wear whatever they wanted. when it seemed that Patanjali had turning bad. 15 per cent in 2017-18. And its scope to ~2,612.15 crore from ~3,005.55 crore. as it looks to expand into West Asia and bagged one of the largest edible oil Patanjali’s revised bid of ~6,000 for portfolio expansion has reduced “The revision in the ratings takes into the US.

INSIGHT > LETTERS

Hope against hope approached the EC before approaching A five-step ignition to private investment the top court? While the entire nation This is with may be keen on hearing its final deci- The agenda for reform for the new government is reference to sion, let us not hope against hopes, “VVPAT case: more so when the SC has already reject- huge but action and commitment on a few SC rejects plea ed a similar plea. headline items could ignite animal spirits of Opposition Anjana Gupta New Delhi leaders” (May ering around the 29 per cent mark now. 8). The summa- About freedom, incentive The outgoing government did well ry rejection of to spend, particularly on infrastructure, the VVPAT This refers to “Policy to boost exports to make up for the sluggishness of pri- ILLUSTRATION BY BINAY SINHA review plea of 21 Opposition parties, led on cards” (May 7). What the working vate investment. As a short-term strat- by Andhra Pradesh Chief Minister N group is proposing to do will be helpful. egy, it works. In the medium term, gov- Chandrababu Nadu (pictured), must However, these are routine in nature ernment capacity to spend have come as a bolt from the blue for and these alone will not provide the productively and speedily is limited. It all of them. The members also included required push in export. One must is also distracting for the finance min- the National Conferences’s Farooq therefore look at other option. Here are istry, which is the most pivotal ministry Abdullah and Communist Party of a few suggestions: DHIRAJ NAYYAR in any government. Its focus tends to India MP D Raja. n Hold discussions with those who have be entirely on maximising revenue and It may be pertinent to observe that a larger share of the domestic market, building elaborate expenditure plans, this group was over-ambitiously look- compared to the export market; rather than plotting structural reform. sector is a burden for the whole econo- efit consumers through competition ing to persuade the apex court to n Do everything we can to boost R&D fter several months of high volt- For private investment to be at the top my and causes distortions which deter and lower airfares. increase the EVM's VVPAT slips count in the steel industry. age politics, the next govern- of the menu, within the ministry of private participation in several sectors. Fourth, rein in the taxman. While it to 50 per cent in each assembly seg- n The textile industry should go for val- A ment that takes office later this finance, the balance of power needs to If there are no buyers forthcoming for is the duty of the tax department to col- ment but the Supreme Court did not ue added products based on manual month will inevitably have to shift shift away from the departments of rev- these PSUs, they must be closed down lect all taxes which are due, the current consider it worthy and simply refused design, which can only be done in focus to the economy. The new govern- enue and expenditure to the depart- rather than being forced down the approach of setting targets for tax offi- to “review” its order of April 8. India. ment will inherit an economy growing ments of economic affairs and financial throat of the handful of performing cials is often counter-productive. The Curiously enough, the Court also dis- n The sugar industry should be given reasonably fast with only moderate services. This doesn’t mean the govern- PSUs. And if the government really system cannot become coercive and missed the plea of the senior advocates freedom and incentive to produce inflation. That should permit a gener- ment should adopt austerity, but if the wants to give a booster shot to private extractive and therefore a deterrent to A M Singhvi and Kapil Sibal (both blendable alcohol to reduce import ous dose of ambition. Of course, a new challenge is to deliver more jobs and investment, it must put out its better investment. A reorientation in strategy belonging to the Congress party) which of crude. government, even a reelected one, will better paid jobs, then priority must be and larger assets, PSUs and others like is urgently required. later sought the hike in the said verifi- N P Sinha Jamshedpur have a plethora of items on its agenda, given to reviving private investment. roads, airports, ports, for strategic sale. Fifth, there needs to be a dialogue cation of slips to the extent of 25 per not least the gamut of manifesto The agenda for reform is huge but It can do so via the stock market and within the government on alternative cent (as a confidence building mea- Letters can be mailed, faxed or e-mailed to: promises. That could diffuse focus. It action and commitment on a few head- diversified shareholding or through (to courts) methods of dispute resolu- sure), much to their discomfiture. The Editor, Business Standard would make eminent sense for eco- line items could ignite animal spirits. transparent auctions. tion. There is not likely to be any Interestingly, they have now peti- Nehru House, 4 Bahadur Shah Zafar Marg New Delhi 110 002 nomic policy in the next six months to First, the new government must com- Third, the government must do immediate solution to the massive tioned the EC for the same 50 per cent Fax: (011) 23720201 · E-mail: [email protected] singularly focus on one variable: pri- mit that it will not apply any policy away with all FDI caps that remain backlog at various levels of the judicia- VVPAT verification of EVMs, as the last All letters must have a postal address and telephone vate investment. change with retrospective effect and across sectors. They make no sense in ry but the government should strive to resort. Should they not have first number The fact is that growth is being pow- that it will not change the rules of the a 21st century economy, especially take out some of its disputes from that ered by consumption and government game abruptly and suddenly. The Modi when import dependence in the most morass and resolve them in a different > spending. The other two — arguably government missed a trick by not strategic sectors like defence is grow- forum, like arbitration perhaps. If the HAMBONE more powerful — engines of growth, repealing UPA’s infamous retrospective ing steadily and when Indian firms alternate framework has fewer levels namely, private investment and tax amendment and while it has been don’t have the capacity to take over of appeal, it would only help. exports are still sluggish. Indeed, if pri- mostly disciplined on policy certainty, failing firms in some other critical sec- If the new government can rev up vate investment gains momentum, the there have been a couple of missteps. tor. For example, if only foreign air- the engine of private investment in its consumption and government spend- Second, the new government must lines were permitted to own 100 per first six to 12 weeks, it would have ing engines (as also exports) get more execute the strategic cent of an Indian airline (it is capped accomplished much of the hard work fuel. When India grew its fastest (2003- disinvestment/privatisation plans at 49 per cent), there might be buyers for its entire five years. 08), private investment as a share of approved by the outgoing government. for Jet Airways and Air India which GDP was around 36 per cent. It is hov- A loss-making and inefficient public would save thousands of jobs and ben- The author is chief economist, Vedanta OPINION 11 > STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

Volume XXIII Number 190 ILLUSTRATION: BINAY SINHA MUMBAI | THURSDAY, 9 MAY 2019 PROGRESS IN ASIA'S POPULOUS NATIONS Per capita GDP Share of world GDP Exports Female labour Human (current $) (%, current $) to GDP ratio (%)’ force participation Development More questions on GDP rate (%) Index Next govt must prioritise restoration of faith in official data VALUE RANK Country (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) ndian official data for both employment and output has increasingly begun to be questioned both internally and internationally. This concern began to be 1980 2018 1980 2018 1980 2017 1990 2018 1990 2017 2017 expressed first when the “new series” data for the gross domestic product (GDP) Bangladesh 274.3 1,744.5 0.2 0.34 5.5 15 23.6 36 0.39 0.61 136 Iwas released in 2015, which revised growth sharply upwards. This growth con- China 309.4 9,608.4 2.74 15.82 5.9 19.8 73.2 61.3 0.5 0.75 86 tinued to be relatively robust — according to the government, the fastest among India 276.4 2,036.2 1.7 3.21 6.1 18.8 30.4 23.6 0.43 0.64 130 large economies — even as other high-frequency indicators of economic activity Indonesia 673.2 3,870.6 0.89 1.21 30.5 20.2 44.5 52.2 0.53 0.69 116 appeared to contradict that story. Part of what may have gone wrong has been reported Pakistan 384.9 1,555.4 0.28 0.37 12.5 8.2 14 23.9 0.4 0.56 150 in the Mint newspaper. The crucial difference between the “new series” GDP data Sources : IMF World Economic Outlook, World Bank, UNDP Human Development Reports and the series being used earlier was that the new data chose to measure output by taking into account data on corporate profits. Theoretically, this is a major advance over using output surveys. It adds into the calculation growth in such corporate activ- female half of national labour forces. In 1990, China’s ities as marketing, for example. According to the official statisticians of the time, this FLFPR was a strikingly high 73 per cent, almost two improvement could be incorporated because of the availability of the MCA21 data — and half times India’s. Although the FLFPR declined Populous Asia: in both countries over the next 28 years, in ratio terms, the ministry of corporate affair’s database of registered companies in India. However, the gap widened in China’s favour. Indeed, despite the it is now known that this database, at least as used in the GDP calculations, has decline, China’s FLPFR remained easily the highest serious flaws. The National Sample Survey Office, between June 2016 and June 2017, among these five nations in 2018. Unfortunately, the examined the MCA21 and found that over a third — 36 per cent — of the companies A 40-year retrospect decline in India brought her FLFPR down to the lowest considered “active firms” could not, in fact, be traced or were incorrectly classified. of the five countries by 2018, well below Bangladesh’s Former Chief Statistician of India Pronab Sen has told this newspaper that this and marginally lower than Pakistan’s. In 1980, Indonesia was the most prosperous. Today, China is The last three columns report on trends in the problem may not be as great as feared. Even if some of these untraceable companies well-known Human Development Index published are shell companies, Dr Sen argues, their profits still reflect actual transactions in the streets ahead of the rest in the UNDP’s annual Human Development Report economy and thus should be taken into account when calculating GDP. However, since 1990, when the first one was launched by this argument is limited in two ways. First, the method being used to extrapolate ometimes it is instructive to step away from the in 2018 (it would be an even more pleasing 30 per Mahbub ul Haq and Amartya Sen. Columns nine overall private corporate output from MCA21 data was in any case controversial. If hurly burly of current economic and financial cent, if computations were done in terms of pur- and 10 show the computed values of each country’s some of the base being used for extrapolation was of shell or non-existent companies, Sissues in India and glance back at the long-term chasing power parities). But here again, the story is human development index (HDI) in 1990 and 2017, development record of countries. This column puts dominated by China, whose 2018 share of 16 per while the last column gives the rank for each nation then theory suggests that they should have been treated differently. Otherwise, there together some basic numbers and associated com- cent in the world economy was five times higher in 2017. (The ranking in 1990 is not shown as it is not is a very real danger that output growth is being overestimated — precisely the accu- mentary for the five most populous nations of Asia. than the next largest country’s, notably India’s. comparable with that in 2017, since the number of sation that has been thrown at GDP data since 2015. They (and their respective 2018 Indeed, if China is omitted, the countries for which the HDI was computed had The reliability and accuracy of macro data in India have never before been in populations in millions) are: share of the other four populous swelled to 189 by 2017, compared to only 142 in 1990). question. It is unfortunate that these issues have begun to plague official data in China (1,395), India (1,334), Asian countries in global GDP Several interesting facts emerge. First, and most India precisely when questions about jobs and overall growth have become particularly Indonesia (264), Pakistan (201) increased from a measly 3.1 per significantly, all five populous countries showed sub- and Bangladesh (165). Together cent in 1980 to an unimpressive stantial increases in their HDI values over the 27 years. politically sensitive. For investors, too, this is a fraught time. Private investment has these countries comprise 45 per 5.1 per cent by 2018. Second, in percentage terms the biggest increase was not recovered partly because there is still doubt about the future trajectory of the cent of the world’s total popula- For much of these 38 years in Bangladesh (56 per cent), followed by China (50 Indian economy — doubts which are underlined and enhanced by unreliable and tion of 7.46 trillion in 2018, with (at least till 2008 and some per cent) and India (48 per cent). Third, because of possibly overstated growth data. In other words, problematic data prints have real China and India singly account- would argue longer) the world the combination of a high base value in 1990 and a effects on the economy. It is vital, therefore, for the government to emerge from a ing for 18.7 per cent and 17.8 per economy and its constituent strong percentage increase over the next 27 years, cent, respectively. nations were benefitting from China is far ahead in the most recent (2017) ranking state of denial and address these problems. After the elections, the next government The first two columns of the the very substantial (and broad- at 86, followed by Indonesia at 116 and India at 130, will need to establish an independent inquiry into what may have gone wrong with table show the per capita GDP, A PIECE OF MY MIND ly, rule-based) liberalisation of with Pakistan at the bottom with its rank of 150. GDP and employment data, and also work out how it can be depoliticised and made in current US$, of these coun- SHANKAR ACHARYA international trade and capital So what are some takeaways from this brief 40- more transparent. After privacy concerns have been addressed through anonymisation tries in 1980 and 2018. It is inter- flows that occurred after 1950. year retrospect of key development indicators on or other methods, the MCA21 data should also be made available to the public so that esting to note that, by this yard- Columns five and six bring out Asia’s five most populous nations? First, it’s really a independent academic research can cross-check official claims. After all, no govern- stick, in 1980, Indonesia was most prosperous (or the large increase (approximate tripling) in the share story of China and the rest. Whether one looks at least poor), with Pakistan second, China third and of exports (of goods and services) in the GDP of China, changes in per capita income, engagement with the ment would like to prove correct the quotation that is often attributed to former India and Bangladesh bringing up the rear. By 2018, India and Bangladesh, the three poorest countries world economy or human development, China is British Prime Minister Benjamin Disraeli: “There are three kinds of lies: lies, damned the picture had changed dramatically. China’s in 1980. Export shares declined in Indonesia and streets ahead of the other four countries. This should lies, and statistics.” extraordinary 35 years of sustained 8 per cent plus Pakistan, in the first mainly because of declining oil come as no surprise since only China has become per capita real GDP growth (together with changes exports and in the second mostly due to poor policies. an economic super power. Second, three of the other in prices and currency valuations) increased her per As a consequence, China, India and Bangladesh also nations, India, Indonesia and Bangladesh have done capita GDP (in current US$) by over 30 times to nearly increased their share of global merchandise exports, reasonably well on most of the indicators. From Justice denied $10,000 by 2018, two and half times higher than the with China increasing her share from below 1 per where matters stood in the late 1970s, in the wake of runner-up, Indonesia, and six times more than bot- cent in 1980 to nearly 13 per cent in 2017 as she the second “oil shock”, it is possible to argue that SC panel falters on transparency and fairness test tom-of-class Pakistan. It’s not that the other four became the world’s largest exporter. Over the same both Bangladesh and India have probably done better countries had stagnated; over the period, their per period, although India’s share of world merchandise in the ensuing 40 years than most analysts would he procedure through which the three-judge committee’s findings exon- capita GDP (in current $) rose four to eight times exports quadrupled from 0.4 per cent to 1.7 per cent, have expected. Third, somewhat surprisingly, erated Chief Justice Ranjan Gogoi raises more questions than answers. their levels in 1980. It’s simply that China’s explosive that was still only one-eighth of China’s share in 2018. Pakistan has clearly slipped down the league tables One of the anomalies in the apex court is that the CJI’s permission is growth was historically extraordinary and unprece- Turning to employment conditions and human with respect to all indicators and now is firmly at the required to proceed with any complaint against an employee. Since he dented for a large, populous nation. development, columns seven and eight report cross- bottom of the class. T Columns three and four show how Asia’s populous country data from the World Bank on female labour himself is outside the purview of this rule, minimum propriety demanded he followed nations have greatly improved their share in the world force participation rates (FLFPR) in 1990 and 2018. The writer is Honorary Professor in ICRIER and former the highest standards of due process and allowed the formation of an investigation economy over these 38 years, from a pathetic 5.8 per This indicator sheds light on general employment Chief Economic Adviser to the Government of India. committee that included an external member — Justice D Y Chandrachud had sug- cent in 1980 to a much more respectable 21 per cent conditions, especially for the usually disadvantaged Views are personal gested the names of several retired Supreme Court justices. Instead, a three-member panel of judges was set up which was, it was later learnt, not a formal internal com- plaints committee but some unspecified intermediary called an “internal committee”. In parallel, a one-man panel was constituted to inquire into a charge by one male lawyer that the sexual harassment charges were part of a larger conspiracy to India’s enigmatic state finances frame the CJI. Note that this investigation has been handed off to an external repre- sentative, a retired Supreme Court judge but the specific charges against the CJI were ndia’s public sector borrowings remain stuck at fiscal deficit (excluding UDAY borrowings). Seventh Pay Commission (SPC) called for higher to be examined by three judges who have a reporting relationship with him. This elevated levels. However, the underlying mix Assuming that the proportion remains wages and pensions; (2) UDAY borrowings raised committee then ignored the minimum procedures by disallowing the admission of I has been changing. The period FY13-17 was char- unchanged, we can work out a rough estimate of the interest bill; (3) lower oil prices hurt tax revenues; acterised by the central government lowering its fis- the actual fiscal deficit, long before the data are and (4) the slowdown in the real estate sector documents and records that the complainant had set out in her sworn affidavit, of cal deficit and the states offsetting these efforts by released. Armed with this, we look into recently depressed stamp duty revenue. Some of these pres- not calling witnesses she identified in her complaint or of allowing her lawyer to be running wider deficits. Then, in FY18, after lowering released state budgets. sures have eased. Most SPC wage increases are com- present. When she withdrew rightly highlighting these procedural lapses, this “com- the deficit every year since FY13, the central gov- Our study of 18 state budget documents suggests pleted. UDAY borrowings are done. And oil prices mittee” went ahead ex-parte and found the CJI not guilty. ernment paused. Meanwhile, after rising almost that the FY18 actual could be closer to 2.5 per cent are higher than a few years ago. As such, states are The reasoning by which the panel came to this decision was submitted under every year since FY13, the state fis- of GDP, lower than the 2.8 per cent indeed on a better footing. a sealed cover. The minimum requirement of providing the complainant with a cal deficit fell notably in FY18, actual fiscal deficit in FY17. This Unfortunately, this is where the good news ends. according to our analysis. What’s marks the first notable fall in the State finances are just one part of the fiscal picture. copy was ignored. It is also worth considering whether such a serious accusation driving this? And are we at an inflec- state fiscal deficit in five years. Adding on the central government and the private demands that the document be placed in the public domain. The committee’s tion point for state finances? A lower fiscal deficit in FY18 also sector enterprise (PSE) borrowings are likely to citing of a precedent in withholding publication of its report has also been proven First, we need to address the makes sense from a bond issuance remain elevated at 8 per cent of GDP. to be specious. The judgment concerned — Indira Jaisingh versus Supreme Court data limitations we face with state perspective. The states’ aggregate net Furthermore, there are several risks on the fiscal and Anr — concerned a “preliminary enquiry” involving an “in-house procedure” finances. The fiscal data for India’s market borrowing fell in FY18. It is horizon. State finances are vulnerable to oil prices. against a High Court judge. This committee had, however, not clarified whether it states have several peculiarities. At not surprising then that the actual Also, over the last year several states have announced the start of the fiscal year, every fiscal deficit also came in lower. farm loan waivers and direct cash transfers. If more was following in-house procedures and its findings are not preliminary in nature. state announces the budget esti- And this is not where it ends. states follow suit, without the weeding out of old By not making the report public, the panel has been found wanting on the require- mate for the fiscal deficit. Towards PRANJUL BHANDARI The net market borrowings fell schemes, this could lead to a ratcheting up of current ment of transparency. the end of the year, they announce again in FY19, by 0.2 per cent of expenditure. It is ironic that four Supreme Court judges — including the Chief Justice of India a revised estimate. And, one year GDP. Assuming that the proportion The outlook for capital expenditure at the gov- — appear to have pitted themselves against a significant section of the lawyer com- later, they release the actual data. Actual data are of state deficit funded by market borrowings remains ernment level remains dull. For FY20, all three arms munity, two brother justices, Chandrachud and Rohinton Nariman, and an organi- superior as they are audited and, therefore, final. at 80 per cent, we believe the FY19 actual fiscal of government — the centre, the states and the PSE The coexistence of three versions of the data would deficit to be released next year will be lower than — are budgeting for lower capex. sation called Women in Criminal Law Association over a matter of due process for not be a problem but for the fact that the actual the FY19 revised estimate of 2.9 per cent. Until we Capex faces a double whammy. The government which the apex court set out pioneering guidelines two decades ago. Even more dis- aggregate state fiscal deficit has turned out to be get the actual number, we are pegging the FY19 state is not spending much on investment and the private turbing is the open display of institutional power against a junior woman employee lower than the revised estimate over the last few fiscal deficit at 2.5 per cent of GDP. No worse and sector is being crowded out as the government is complaining of sexual harassment by the head of that very organisation. It was a years. And the difference is rising. no better than the actual fiscal deficit of FY18. running an elevated fiscal deficit. Over time, this great opportunity for the Supreme Court to walk the talk on fairness, but the apex This creates a problem. Until the actual data are And, finally, our analysis suggests that states could weigh on India’s potential growth. court faltered when it came to dealing with its own. No less questionable was the available a year later, how does one think about the are pegging a fiscal deficit of 2.5 per cent of GDP All told, elevated borrowings and insufficient states’ fiscal stance? Is it rising, or falling? for FY20. In short, after almost touching 3 per cent, capex are likely to keep us on our guard, despite crude deployment of state power by arresting women lawyers who were protesting We have a technique to figure this out. What is not state deficits have fallen and seem to be resting at some improvements in state finances. peacefully against the panel’s modus operandi and demanding that the complainant subject to revision is every state’s net market borrow- 2.5 per cent. be treated with a minimum of legal propriety. ing. Over the past three years we find that net market What's driving this fall? A confluence of factors The writer is chief India economist, HSBC Securities and borrowings are funding about 80 per cent of the state was pressuring the states during FY13-17: (1) The Capital Markets (India)

and key employees are, according to both A critical point that both the author influence that these prestigious tech giants authors conjectures that we will all live in AI’s dystopian future authors, overwhelmingly male. Women make is that this narrow world from which have today far outranks governments or a “post-border” world, i.e. a world order in are rare to find among their leaders or the leaders of these giant companies and academia or even Hollywood, so what they which national borders do not exist any- the background and the world is ruled by among the venture capital and private their key employees come from and live in say tends to be given greater credence than more, national governments don’t matter what one calls “Big Tech” and the other equity firms who supply them with capital. creates in inbuilt bias into the algorithms these hitherto prestigious groups. as well, power is exercised only by the tech calls “Tech Titans”. Greene’s Big Tech is These male stars are, in America, almost they design: They assume that the users of And both echo an even more serious giants. Digital feudalism reigns supreme made up of Amazon, Facebook, Apple exclusively drawn from private schools their services are all like them. concern that a very small group of tech and human beings are like “the wooly live- and Google and Amy Webb’s Tech Titans (signaling wealthy parents) and Ivy League Both authors point to the heavy hand giants end up making deciding what news stock of a feudal demesne grazing under have these four plus the Chinese web universities and are overwhelmingly white of the governments in the creation and sup- you get to read, what and who you converse the watchful eyes of barons in their hilltop players, Alibaba, Tencent, Baidu and with almost no representation of Blacks port of these tech giants. Amazon has a $10 with…in other words this small group will Cloud Castles”. BOOK REVIEW Microsoft and IBM. or Hispanics. China’s dominant search billion contract with the Pentagon and make decisions for the rest of us. Both authors go well beyond such cau- A reader would be well justified in rais- engine Baidu is dominated by graduates Google has helped the US Department of The authors believe (one says so directly tionary tales and have specific (though dif- AJIT BALAKRISHNAN ing an eyebrow and wondering what pos- of the same elite American universities; Defense analyse Drone footage. They say and the other implies) that the people in ferent) suggested plans of action to deal sible harm could these entities do other Carnegie Mellon, MIT and University of that NASA contracts are increasingly being power today, be they politicians or civil ser- with this frightening future. oth these books have one mission: than making us all spend too much time California Berkeley. Collectively, they form given to Silicon Valley companies, be it to vants or intellectuals, are completely BThey are cautionary tales. They away from our near and dear ones and a tribe of their own; Amy Webb’s name for Musk to build space ships or to startups “unaware of technology and have no liter- endeavour to caution a thinking person sit gazing at laptops and mobile phones, them is “AI Tribes”, where the AI stands devoted to predictive policing techniques. acy around it at all.” Both the authors speak SILICON STATES: The Power and about the dangers that lie ahead as the or waste time gossiping with online for Artificial Intelligence. A common trait The links between the Chinese tech giants of the decision-making elites lack of pre- Politics of Big Tech Information Age dawns. And it’s important friends or, at worst, tempt us to buy things among these AI Tribes is that they have and the Chinese state are not publicly paredness to deal with AI and the speed Lucie Greene to note that neither of them is a left-lean- online that we really don’t need to live a spent years immersed in mastering pro- advertised but is believed to be as close. In with which it is developing and taking over ing, anti-capitalist missionary. Lucie normal life. gramming language skills plus disciplines normal times, such relationships would many functions in human society. “What HarperCollins, 288 pages, ~699 Greene works for the international adver- Both spend considerable effort to point like game theory and computational biol- have been laughed off (or condemned) as happens to society when we transfer power tising agency J Walter Thompson and Amy out that the people who run all these giant ogy and neural nets. They have had no crony capitalism, but both the authors to a system built by a small group of people THE BIG NINE: How the Tech Webb teaches at New York University’s worldwide companies are drawn from a time or energy to study, for example, the express concern because companies that is designed to make decisions for Titans and Their Thinking Stern School of Business. So, in a sense narrow segment of the populations of their role of Muslim women in literature, or the involved in such projects have to tread “a everyone? What happens when these deci- Machines Could Warp Humanity these are cautionary tales from insiders. own countries (America and China) and history of colonialism and other such top- tricky path between national security and sions are biased toward market forces or Both paint a dystopian future in which the world where their services dominate ics that deal with learning about the full transparency”. an ambitious political party?” Amy Webb elected governments have slipped into over all other players. First, their leaders human condition. Both authors warn that the cultural Where can all this lead to? One of the Publicaffairs, 320 pages, ~599