With no one Noticing, BJP is Bringing One-Party Rule

Neue Wache- a building in Berlin, Germany- was erected in early 19th century. In the initial years, it was a memorial to Liberations Wars but later served as the site of annual celebrations by the then powerful Nazi Party. The building houses a sculptor, ‘Mother with her Dead Son’. This very statue is a reminder of the costs of war, war that was seen and projected by Hitler as a means to achieve dominance. Hitler may have died after having drastically failed to realise his ambitions, Germany endured endless sufferings. No family existed that did not lose its member in war. The costs of Hitler’s ambitions were paid by common people, and the statue where a grieving mother is holding her dead son symbolizes this.

It is very simple to understand that the overly ambitious, divisive and great-at-oratory leader plunged not only Germany but all other countries into darkness. Nations have learned their lessons, and a large-scale war has been averted ever since. Indeed, countries have fought proxy wars and the places which were at the heart of these conflicts could never recover from the damages. Iraq, Yemen, Syria and many more countries have only produced war refugees and asylum-seekers, not farm or industrial goods.

What about the present political environment in India? Although analysts have taken note of economic gloom and negative GDP growth, are we realising what’s in the making? Is there a more dangerous thing that seeks our attention?

The signs are all here, and sadly no one is noticing what’s coming. The ruling BJP has, time and again, echoed its stance of making a ‘Congress-mukt Bharat’, and to a large extent, they have achieved it. Now one must try to make sense of why the BJP is so adamant at wiping off Congress from the Indian political landscape. It’s because Congress is the only political party that can replace the BJP; the others can only co-exist with the BJP and can never throw it completely out of power. The BJP’s design and party’s long-term goal has virtually nothing to do with India’s socio-economic well-being, the only goal is to remain in power.

And the party has been making all attempts to attain the goal. It is for a reason why the PM and his team invoke militaristic pride every now and then. If there is one thing that is sustaining BJP’s win in national and state elections, it is their clever way of invoking ultra-nationalism. While many are talking about this chauvinism, no one is actually realising where it can take India in the long-run. What do you think will be the electoral outcomes in next 15 years? Indeed, no one can correctly predict, and hence assuming that the BJP will maintain the current trend is not advisable. But what will happen if say people start voting for some other party, which comes out with a slim majority to form government at the centre?

Do you think the BJP will concede? The answer is available; we only need to read the signs. The PM was wearing a military uniform in his recent address on Diwali; why would he do this? A chief of defence staff (CDS) has been appointed to ‘address fragmented approach of armed forces and bring synergy’. In another scene, a section of the film industry is finding political patronage by making films on wars where historical facts can be distorted to instill a sense of militaristic pride in the Indian audience. And lastly, other leaders of the BJP- from national to local levels- have been endorsing a majoritarian stance so that in any event of electoral failure, mass can be mobilized in the name of militaristic and majoritarian pride.

The coming years in Indian politics are quite worrisome. If voters continue to back the BJP by sacrificing their personal growth, BJP can go for misadventures like the Nazi Germany that will ultimately cost India irrespective of whether we win or lose such unwarranted wars. And if voters ultimately decide to shun the BJP, the party will then use the section of populace that blindly backs their ideology to create unrest and maintain the one-party rule. From many in India Inc. to overly sentimental backers, BJP will use them all to ensure they cling on to power. The costs will be borne by the country and its wider population.

The Fall of Many, the Rise of Oligarchs

Two datasets are out in the open. One, the Indian economy in FY ending 2020 grew at slowest pace in a decade (coronavirus not to blame), and two, some richest men of India saw their wealth soaring in the same period. India suffered contraction in quarter ending June but billionaires, including chairmen of Reliance Industries and Adani Group, are getting richer. All this may seem normal on its face but we need to know what lies beneath this disparity where the country is becoming poorer but a few aren’t.

In virtually no time, Reliance’s Jio has become the undisputed jewel of India Inc. Foreign investors are rushing to buy stake in the enterprise and their analysts know that Jio will give great returns. What began with a disruption in the telecom industry by luring the mass with free voice calls and data has now spread in many sectors. Reliance can now be a common man’s grocery, clothing, internet, digital payment and toys (Hamleys) supplier, and much more, all at the same time. From ports to airports and green energy to edible oil, Adani is almost everywhere and is setting new records with deals like airport takeovers and world’s largest solar contract.

Why did we refer to the term ‘oligarch’ in the title? Oligarchs are typical to Russia and former USSR, and their rise was fueled by the nexus between politics and industry. Oligarchy means ‘the rule of the few’. These private players are dominant forces in the economy and no matter what happens to health of the nation’s economy, they manage to thrive, and thrive well.

The second part of the title says ‘the fall of many’ and these are the small and medium businesses in the Indian economy. Now that they are under intense pressure, the government has only one relief for them- borrow more. This vicious measure will result in small businesses shutting shops and banks reeling under their NPAs. Soon, and it’s already happening, small grocery stores in the neighbourhood will face death at the hands of ‘oligarchs’ who will have both- better bargaining power and economies of scale. Oligarchs will decide what the mass buys, where they buy it from and what price they pay for their purchases.

And this rise of oligarchs doesn’t come without clandestine sponsorship of the ruling government. Now if Facebook wants its WhatsApp payment business to get regulatory approvals, it must not only show bias towards the ruling party in its conduct of normal business operations, it should also invest in the business of the oligarch, the oligarch who in turn funds the ruling party. That’s nexus, easy.

But what about the popular support? India, indeed, is a democracy where elections must be won to hold on to power. And this popular support is derived by playing the nationalism card. It’s too simple. Shun all rationality and pragmatism, and issue a clarion call of nation-first. Urge people to reject imports and go for local alternatives backed by the argument that lesser the imports, greater will be the prosperity. But why not answer this- by keeping competition over price and quality out and giving local provider a free rein to pass off substandard and pricier goods in the market, who are you really allowing to prosper?

From rail projects to renewable energy to 5G infra, the oligarchs can now prevail without having to face competition over price and/ or quality. Who, however, is at loss when competition disappears and a select few control everything? It’s the common man. And in such a scenario, small and medium firms too have no option but to bow out. Just think why the farmer, who produces and sells for little to the middle-man, never thrives but the middleman does? Because the middleman has a better bargaining power and this is the same when small businesses compete with oligarchs.

The informal economy of India is collapsing but the wealthy few are becoming wealthier. We are already in the phase where we are facing the threat of oligarchy, the rule of the few.

why it is impossible to create new jobs in existing industries

one can take cue from the agriculture sector of india, where the demand for farm produce is not commensurate with supply, to understand the jobs generation issue. on the supply side, the number of growers is high and this has resulted in glut in the market for such crops as wheat and sugarcane. by contrast, farmers who have wisely shifted towards alternative options, for example floriculture, are prospering in an otherwise distressed sector.

this is enough to understand what needs to be done in manufacturing and services sectors to generate jobs for the large number of youths entering the labourforce.

be it the conventional textile industry or telecom, the demand for their products has hit the wall. thus, these industries cannot be expected to generate the jobs needed in the economy. the information technology sector is not in similar distress and new engineers (with updated skills) are being recruited. this is owing to demand for new tech, including cloud, artificial intelligence and robotics, for which the supply side needs to produce more and for which more and more workers are required.

the government’s skill india scheme failed to take note of the fact that by skilling young Indians in conventional industries where the supply is already more than demand, we are only creating unemployable skilled youths. another area of pain is that even the demand cannot be boosted since new buyers are either jobless or underpaid.

for india to create new jobs, we need to closely study the supply and demand sides of all sectors of the economy. this study would reveal that unless we create an altogether new supply side, the dream to create jobs will remain as such. the country needs to invest heavily in emerging industries, for example cannabis (coca-cola has recently announced its plans to infuse cannabis in its beverages) and lithium-ion battery powered electric vehicles.

the underlying problem is that we are wasting our time and money in skilling the workforce keeping in mind traditional jobs and industries. this is exactly the same as is with the farm sector- the supply side is already outperforming the demand side. the best way to create jobs is to identify promising new industries, encourage setting up of new enterprises in these and skill youths with respect to these findings.

answer to india’s financial distress is ‘wage restraint’

wage restraint as a policy action can be traced back to germany, a european country that has trumped china (the so-called ‘factory of the world’) in terms of positive balance of trade. germany is a net exporter and its economy is one of the most stable and commanding. the edge was attained on the back of curbing any imprudent rise in wages of the working class.

on the contrary, asia’s third largest economy, india, never cared about the rising government bill on account of salaries.central government employees or those of state governments or public sector undertakings, including banking companies, are paid salaries that are not proportionate either to their labour or to the financial capability of the employer.

why do we have a current account deficit? simple, our exports are less and we import more. let us go in some detail. since our wages are high our exports become expensive than those by other countries where wage restraint is exercised. also, since the spending capacity of the middle class has seen an upward trend, all owing to rash pay hikes, we import more to satisfy our consumption needs.

this means the senseless hikes in salaries (and we talk here of public servants since they set the benchmark for the private sector) is dealing a blow to both, exports as well as imports, thus comes the current account deficit that calls for frequent high-level meetings and unattained commitments.

the recently adopted 7th pay commission recommendations have only upped the bill of the government and the states have followed suit. what you have done is you have only increased the spending capacity of public servants, which was totally uncalled for. and then you have assigned a foolish task to the central bank to limit inflation within the agreed percentage.

the effect is the rbi is struggling with the policy rate-inflation maths. what needs to be a simple policy action of rationalizing salaries of public servants (since private sector is run on market economics) and shunning the practice of setting up of pay commissions or at least mandating them to follow prudent economics while suggesting any hike has gone to become a puzzle that the cabinet, central bank and policy think tanks have been unable to decode.

indeed, india cannot be expected to copy exactly the same german wage restraint model; it has to be tailored according to our national scene and priorities, even political compulsions.

lower the superannuation age of state employees to use demographic dividend

india is being positively looked upon by the otherwise aging world economies owing to its ever-high proportion of population in the working age group that is expected to spur economic growth. you may find endless bonuses of this, the bottom line is this group needs work, while the sad contrasting picture is dismal job growth rate of the indian economy.

while infrastructure spending spree of the current government has given the hope for some occupation opportunities in roads, railways, ports, energy and similar sectors, would this state-backed, public spending-fueled exercise be able to serve the millions staring at work in coming days?

the most rational solution is freeing the government sector employment space by lowering the age of superannuation, be it in central, state, autonomous bodies, public sector enterprises or state-owned banks. from current 58 or 60 as the age of retirement, it has to come down to at least 55, or even 52, and as a compulsion, not as a voluntarily exercisable option.

the logic behind this is that most of the indian workforce possesses skills that cannot be categorized as specialized or exceptional, hence the economy will not be able to produce jobs through market determined factors.

banking and many other state jobs require at least 90 per cent of the staff to perform general accounting/ transaction tasks and an employee with even 20 years of such experience and drawing unrealistically high salary is no better than a fresh graduate.

the current government is facing a dilemma where a proportion of population employed as government servants is well-off and can lead a modest life after retirement, while on the other end is the so-called demographic dividend, the youths, that seeks urgent job creation.

and the bitter truth is that the information technology sector is fading, 3d printing is further threatening livelihoods of factory workers, industrial growth rate isn’t encouraging enough and infra projects cannot employ them all.

the only possible way out to stall any hostile outcomes owing to unemployment that will only produce frustrated and disheartened youth is to free space in government jobs by lowering age of superannuation, providing reduced pay benefits to these retired employees and placing the young generation in these roles.

believe it, neither this demographic dividend will all become entrepreneurs, nor the present job-intensive sectors like information technology, bpo, textile, leather, steel or agriculture can provide ample prospects for this impending trouble (yes, trouble, if not taken care of wisely and rationally).

india’s information technology high is fading

the gem of india’s service sector and of country’s export constellation is in the midst of an inevitable calamity. the scene is far more alarming than it appears at its face, and if corrections aren’t introduced promptly and forcibly, the ripple effects will be felt across the economy.

in short, indian it isn’t just driving the service sector and exports, it has also fueled real estate, tourism and hospitality, textile and automobiles, thanks to unprecedented salaries drawn by mid-level, top echelon and even entry level staff in some cases.

factors are many, to count a few are automation that will spark a war against human resource, india’s hefty dependability on outsourced projects from united states and many european and asia-pacific countries that is slowly subsiding owing to a backlash from nationalistic fervor and diminishing globalisation, sub-standard and outdated skills of indian workforce that works more in factory-styled way.

the cherry on the top is heavy pay packages of it employees that have now turn  unmanageable, all owing to lessened outsourcing, further fueled by thousands of engineers graduating every year and having studied obsolete lessons.

this group comprising of it professionals drove boom in real estate by purchasing flats, in automobile sector and in consumer electronics, besides many goods and services produced in the economy. thus, the collapse of indian it will not only rupture one sub-sector, it will be detrimental to the entire economy.

and in light of prevailing circumstances, chances of infusing a new breath of life are minimal. from reworking salary packages to undertaking massive skill development and a renewed focus on domestic assignments, overhauls are many, but the will lacks.

the only saving lot in this gloomy picture is the bpo wing that although isn’t viewed with as much dignity as the it wing, but the basics of bpo (since it solves everyday problems that need manual and basic interventions by comparatively less-paid employees) are far more resilient and long-lasting.

for it sector, it’s high time they mend their ways or their earlier than anticipated departure is inevitable, an event that may be a giant blow to india’s overall economic and financial well-being.