Tuesday, June 05, 2007

Securing Kerala

In recent weeks, Kerala Chief Minister Achuthanthan has caught the state by surprise by sending earthmovers and bulldozers to Munnar to remove illegal encroachments, including properties owned by politicians of all hues. In the process, his actions have won the hearts of some of his staunchest critics among the public. Around the same time that Achuthanthan decided to move against what has come to be known as the "land mafia", he also announced plans to reverse paddy reclamation projects throughout the state. As rice has fallen out of favour with Kerala farmers, paddy fields have given way to other crops and commercial enterprises. Expressing concern for the state's food security, Achuthanthan has proposed actions against real estate firms who buy paddy fields and convert them for alternative purposes. Unfortunately, these latest developments show that he, among other politicians, have a poor understanding of Kerala's needs.

Illegal encroachments are consequences of an economy with increasing disposable income but comparatively few investment opportunties. And whether we're talking about non-resident Keralites sending home more and more remittances every year or real estate firms reacting to economic opportunities in Kerala, the reality is that Kerala has to proactively react to the demands of an increasingly wealthy population. And this is where it is falling behind today.

First, let us give Achuthanthan credit where he is due. Forest lands are government property for the very reason that free markets are imperfect. Forest lands have enormous positive externalities, because they are an important link in the biological cycle. Some of the Munnar forests contain the most pristine vegetation in Kerala. They are habitats to wild animals that form an important part of the food chain. They potentially harbor plants whose medicinal value are inadequately documented. Forests also act as carbon dioxide reservoirs, playing increasingly significant roles as the world searches for solutions to air pollution. They hold more benefits to society than can be accounted for, and thus do not compensate private holders as they should. In private hands, they would not be conserved as they mean more to society as a whole than to private individuals. Their viability are best left to a public authority appointed by society. However, forest departments and land revenue departments can be lax when there are not enough incentives in place to maintain healthy forests. Let us not forget that it is the political class which is responsible for many instances of illegal encroachments, so change should begin at the top. So, let us hope that our Chief Minister also turns his attention to the systemic flaws that lead to the misuse of public lands.

In contrast, the Chief Minister's plans for paddy fields, have very little to do with the reality of a growing Kerala and owes more to his fixation on food security. This unhealthy obssession is partly rooted in Kerala’s history. In particular, the political class in Kerala still suffers a hangover from the food crisis in 1964, when the existing Communist government was booted out and the state was placed under Central rule. The four states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala were then consolidated into a single food trading zone. Instead of letting food prices prevail at market rates and intervening for the most marginalized consumers, the Central government placed price ceilings on the stocks it purchased in the name of rationing. So while wealthier consumers in Kerala were able to pay the rates that Andhra suppliers demanded, ration ships ran out of stock as the State government refused to budge on prices. Kerala tided over the crisis temporarily with imports from countries including the U.S. and Pakistan and over time developed a more efficient distribution system. So, Achuthanthan's concern for rice’s dwindling prospects in Kerala almost seem justified. Almost.

It is difficult to justify a labor-intensive crop like rice in a state that has near 100% literacy and is better off by putting its human resources in more productive industries. Kerala's achievements in educating its people are precisely why paddy fields are dwindling from their peak in the 1970s. The mass spread of education, pre- and post-Independence, opened up alternative sources of employment for millions of Keralites within the short span of two or three generations. Workers from communities that historically depended on agriculture suddenly found more lucrative opportunities in retail, education, civil service, construction, tourism etc. It's the classic textbook case of economic diversification within an increasingly skilled workforce. Meanwhile, rice's viability as a crop has diminished significantly with rising labor costs.

But despite the diminishing contribution of rice to the local economy, Achuthanthan believes that Kerala should spend valuable taxpayers' money on increasing the cultivation of rice in the name of food security. If we define food security as a state where people are capable of feeding themselves, Kerala is not facing a food crisis by any measure. If anything, most Keralites are employed in those jobs where they are most productive and can earn enough to feed themselves. The only need for an intervention would be for those marginalized consumers, or "non-consumers", for whom the price of rice puts it effectively out of their reach. It is conceivable that these non-consumers have grown in number in recent times as food prices have risen. Yet, is forcing farmers and industrialists to switch to paddy the most effective way to feed these marginalized people?

If Achuthananthan's true goal is food security, he has two options: 1) procure food at market rates and subsidize them for the marginalized consumers or 2) grow food locally and provide it to the needy. The latter is far more disruptive because it ignores the merits of a competitive market and creates a deadweight loss to the state. With option 1, he can obtain rice at the cheapest rates possible from other sources. With option 2, he forces farmers to grow rice in the place of more valuable and less-labor intensive crops and thus reduces their incomes. But, even if he were to subsidize those farmers and prevent any loss of income to them, Kerala would be paying for a relatively expensive crop, creating an even greater bill for taxpayers. So, one has to assume that Achuthanthan believes that there is some intangible benefit the balances the cost of encouraging paddy growth. Therein lies the unspoken, irrational fears that "food security" have come to represent.

Food security as an argument belies many of the irrational fears that politicians hold about free trade and farming constituencies. Achuthanthan’s paddy project is inherently about his staunch belief that Kerala should produce its own food and his insecurity with free markets. According to our leaders, we should support rice farmers even if we have to pay more for their rice and create fields when there is no need for more. This irrational argument ignores the very basic fact that Kerala consumers are not restricted to Kerala’s products and should be able to choose from the larger Indian and world markets. The hype around "food security" also ignores Kerala’s ability to focus on more productive sectors of the economy so that it can create more wealth and its people can eat more than a daily plate of gruel. In a nutshell, paddy reclamation is a wasteful exercise for a state with better things to do.

Yet, there is no dearth for meaningful reforms if Achuthanthan seriously wishes to pursue greater food security for Kerala. For example, he can begin by reforming one of the most antiquated laws in Kerala agriculture, the Kerala Land Utilisation Order of 1967. The 1967 legislation was passed with the express intention to lock up agricultural land in Kerala, including paddy fields, within agriculture. Passed in the hindsight of the ’64 crisis, the Order introduced tremendous restrictions in converting fallow paddy fields to commercial usage. However, as rice prices have fallen and labor costs risen since the Act was passed, huge swathes of paddy fields have been converted surreptiously or left barren in the absence of government permission. In the process, environmental activists have lost considerably in their fight to reforest paddy fields and restore pre-agriculture ecosystems as needed. Owners of smaller landholdings have been unable to take advantage of much needed capital investment and consolidation. And illegal encroachments have proliferated as scrupulous dealers have turned their eyes to less well protected public lands in the absence of commercially zoned real estate. The ’67 Order is increasingly endangering the delicate relationship between public and private lands. Ironically, it has even failed to play any substantial role in increasing food security. Because in a market like India, where people are free to trade across state borders, food security has little to do with local crops and more to do with economic security.

Kerala's food crisis in 1964 was only superficially the result of inadequate agricultural output. The 1964 crisis was in part driven by Kerala’s impoverishment and lack of economic diversification. A community’s dependence on agriculture leaves it exposed to a considerable amount of risk, for e.g. the risk that a bad drought will bring a poor harvest. Kerala's lack of value-added products and a largely unskilled workforce in the 1970s left a large section of society exposed to the highly variable price of a commoditized product. So in the past, local food insecurity has always fed economic insecurity and vice versa – i.e. a fall in food production often led to a loss in income for a large portion of Keralites, thus reducing the ability to buy food and so on. Today, the situation is very different with Kerala having diversified significantly into the services sector and a large proportion of skilled and unskilled workforce having migrated overseas. The debilitating link between food production and economic insecurity has weakened considerably. Most Keralites no longer rely on the comparatively cheaper and inferior rice from public distribution system as they are generally wealthier than their predecessors and can afford to buy better quality rice at prevailing rates. Ultimately, Achuthanthan's paddy reclamation initiative is not only a solution to a non-existant problem; it also does little to improve Kerala's economic security, which as history shown, is the best driver of food insecurity.

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Saturday, December 09, 2006

Exporting suicides

It is a sad fact that Kerala has the highest suicide rate in India. A friend of mine once speculated that the Malayalee is a unique creature prone to caving into peer pressure which forces people to resort to extreme measures in desperate times. Any doubts surrounding that idea should have been repudiated by Lee Ban Seen, a Malaysian contractor, who committed suicide this past November and attributed his death to delays in the Kerala State Transport Project (KSTP) in a note he left behind.

Ever since Lee Seen's suicide, the state machinery has shifted into a blame game. It began with the CM, Achuthanandan, blaming the previous UDF government for leaving "scope for corruption through a clause on payment of Rs. one lakh compensation per day for delay if the required land for the work is not handed over."[i] Following him, Finance Minister Isaac Thomas claimed that the state government was not responsible for the project delay, so there was no veracity to the allegations that Lee Ban Seen had "committed suicide due to a delay in the payments". He also singled out the PWD Minister M K Muneer from the previous UDF regime alleging that "Muneer cannot absolve himself of the charges as serious financial irregularities have taken place during his tenure like awarding tender at a much higher rate and realisation of liquidated damages",[ii] to which Muneer retorted that the project and procurement procedures was signed by the prior LDF government headed by E.K. Nayanar and accused Isaac of raking up the issue to create a distraction. Isaac then shifted his ire on the contractors "attribute[ing] the problem to "cash crunch" and "poor" management of the Malaysia-based Pati Bel Company that was given the contract for the work."[iii] In a reaction fit for Shakespearean irony, two of the three major contractors terminated their contracts three weeks after Lee Seen's suicide.[iv] Isaac now estimates that the project originally estimated to cost the exchequer $81 million or Rs. 388 crores, would now cost the exchequer more than 500% as much at $417 million or Rs. 2,000 crores. On the surface, it's hard to tell whom to blame and where the fault lies. Our collective experience with both contractors and politicians has taught us to trust neither. Yet, that is not the case here. A variety of direct and indirect sources point the finger quite clearly at long-standing flaws in the system and more directly at both the LDF and UDF governments.

The KSTP project was conceived in 2002 in the midst of a fiscal and infrastructure crisis in Kerala. Motor vehicle traffic on Kerala's roads had been rising annually by 13% since 1990. However, 70% of the State Highway roads remained single-lane (3.8 meters wide) roads and the rest were merely dual-lane roads (7.0m) with limited shoulder space. By itself, the limited space at worst contributes to traffic jams and inconvenience residents and businesses. To make things worse though, less than 70% of Kerala road network's annual maintenance needs, which are estimated at $50 million, are met by the PWD's slim budget. This gap contributed to a substantial backlog of at least $100 million in overdue maintenance expenditure. As a result, Kerala is also infamous for one of the highest accident rates of any state in India at 2,500 deaths annually. Loss of life and property cause an estimated loss of $100-200 million per year, or the equivalent of 1-2% of Kerala's annual GDP.[v] Ordinarily, such infrastructure needs would have remained unfunded. But, after years of unmanaged government expenditure and economic stagnation, Kerala's fiscal crisis forced it to look outward to make up for the gap in funding, lest it grew larger as the PWD's budget grew smaller.

When the World Bank was brought in, it was keenly aware of Kerala's fiscal crisis. For the past decade or so, Kerala's government expenditure had outstripped its revenue both in absolute size and growth. While total revenue grew annually during 1993 -2002 at 11%, total expenditure grew by 13%, taking Kerala's fiscal deficit from 1.4% of GDP in 1993 to 4.5% of GDP in 2002. Faced with an over-stretched revenue base, the government took on additional debt to finance this deficit. But, at a debt/GDSP ratio of 32%, Kerala's debt burden was considerably higher than all of the southern states (AP, TN and K) as well as the Indian average of 24%. On a per capita basis, Kerala carried Rs. 7,414 of debt, placing it in significantly more danger than the next worst southern state, AP, at Rs. 4,724 and the Indian average at Rs. 4,996.[vi] Needless to say, the WB was particularly concerned about the Kerala government's ability to pay its dues, which it termed "Fiscal Strain", and went so far as giving the government a prescient rating of "Substantial Risk".[vii] The only other risk that WB rated as worse was GOK's ability to pay them on time. The WB's answer to all these risks was to place its funds in a separate account "outside the treasury system", which were to be "available to the project in advance, on a quarterly basis from the State budget, on the basis of cash forecasts."[viii] In hindsight, the WB is probably kicking itself in the shin for not doing more.

After a thorough analysis of these and other factors, WB agreed to lend GOK a loan of $255 million with the tacit, and for some reason, inexplicit understanding that GOK would contribute around $81 million on its own. Interestingly, while the loan agreement expresses scope for GOK to put up its own money to the extent that it is "required" to complete KSTP, it never binds GOK to a specific amount. Although GOK presented a plan to put up additional funding to support the WB initiative, it never committed to this amount legally. So, in theory, the total project funding came out to $336 million while in reality, the actual funding could have been as low as $255 million. Moreover although the project was secured by the WB, in practice, the project was managed by the PWD. Understanding this gap between financing and management is the first part of understanding the KSTP fiasco.

The second part of disentangling this mess lies in understanding why the costs of the project ran up. Signs that the projects was running into delays were evident as early as November of 2005, when Muneer publicly admitted costs increases in the project of around Rs. 500 crore, bringing the state's share of the project to approximately Rs. 888 crore, or $185 million.[ix] However, he also stated that the project's costs overruns would not exceed Rs. 2,000 crores as rumoured. Five months later, however, Isaac announced that the project would end up costing the state "roughly" Rs. 3,000 crores to complete.[x] This proved to be an overestimate as he revised that down to Rs. 2,000 crores more recently. While Isaac claimed that the cost overruns were not due to the lack of payments, his views appeared not to be shared even within his own government when the PWD Minister T.U. Kuruvilla admitted a few days later that there had been delays in land acquisition. That the Kerala government's record on acquiring land is notorious is nothing new. However, no one foresaw that its ineptitude in this matter would drive the project to a halt. Upon examining his allegations, one is forced to conclude that Isaac was simply dodging the blame.

Isaac's first claim was that "irregularities" in the procurement procedure had resulted in expensive bids and contributed to the cost overruns. Even if we grant Isaac that logic, the fact is that the bids were no more or less expensive than typical road projects. As the table below shows, on a per kilometer basis the winning bids for KSTP were by no mean exorbitant or unusual, unlike what Isaac claims:

Isaac's second claim, that cost overruns were the result of PATI, the Malaysian contractor that hired Lee Seen, experiencing financial difficulties due to internal mismanagement is just as ludicrous. While PATI's public financial records show that its corporate parent, UEM Builders, incurred a loss of $76 million in 2005 in its Construction & Engineering division, the PATI-BEL is involved in at least one other project in India currently, which is reportedly proceeding without any delays. And if that is not enough to repudiate Isaac's allegation, it should also be noted that Road Builder, a financially-healthy contractor, also pulled out of the project citing lack of payments. So Isaac's claim that the cost overruns are due to financial mismanagement on the contractors' parts is not only incoherent, but also incorrect.

In the end, one still has to ask what compelled Lee See Been to the extreme measures he took? Some have speculated that it was the debt that Lee Been took out from domestic banks to pay his workers' monthly salaries when proceeds from the government were not forthcoming. But, I find this hard to believe because no reasonable manager takes out personal loans. In all likelihood, the loans were made out in the company's name. At worst, Lee Been could have lost his job for misplacing his trust in the government's financial solvency and desire to pay his firm. However, considering Lee Been’s flawless reputation at his workplace, that was also an unlikely possibility. So, if you rule out the financial reason, what remains?

I believe what drove Lee Been to the end of his wits was the political element, which is the third and final key to understanding the KSTP fiasco. A lot of evidence points to the fact that Lee Been was driven to the end of his wits by the political apathy and constant bureaucracy he had to face. But, it was Gouridasan Nair's piece in The Hindu that gave me the final clue. In his article, Nair concludes that the Finance Department, which was compelled to pay expenses owed by the PWD, "will be able to do so only if it is able to keep the PWD on its side, particularly given compulsions of coalition governance."[xi] Coalition governance - it's a word with different shades of meaning. In recent years, India has witnessed a massive change in its electoral dynamics from single-party governments to coalition-based fronts. So, most people are used to hearing about coalition politics, fractured policies and delayed implementation. It's the price one pays for participating in as diverse a democracy as consensus in a coalition government is fleeting and temperamental. However, there is a considerable difference in governance theory between day-to-day management and policy setting. The former is the business of running the state machinery and that includes infrastructure maintenance. The latter is the business of charting out its future and foreign policy. Maintaining roads requires no vision. It is a mundane job, best handled by technocrats and not politicians. So although we are used to hearing law bills and policy initiatives being delayed on account of politics, we remain optimistic that the daily affairs of governance remain untouched. And that's where reality bids goodbye and Kerala begins.

You see, regardless of GOK's financial duress, the KSTP was doomed from the start because it was handled by the PWD, an ill-equipped and poorly managed institution. Even the WB noted "problems with the [PWD’s] organization structure, administration, delegation of administration and financial powers, overstaffing, development and staff training." Although it's political blasphemy to compare a state department to a corporation, the reality is that infrastructure maintenance is a job that requires expertise in financial and management skills. And just as you let the inventory and capital expenditure guys in a company manage maintenance expenditures, so should the job of maintaining Kerala's roads be left to the experts. Which brings us to the question of what is the PWD if they are not experts at managing roads?

As part of its appraisal report, the WB conducted an evaluation of the PWD and came up with an alarming assessment. As it states, "a preliminary institutional audit of PWD highlighted gaps and deficiencies in several areas, including road development and maintenance planning, road safety, quality control, financial management planning (including delays in payments to contractors) and transport coordination." Need we a better indication of where the KSTP experiment would have ended? A department whose leadership structure changes with each outgoing political party cannot be trusted to act independently or accountably.

But as the WB saw it, there were several promising mitigations to the inherent risks. First, GOK had drawn up a Road policy to "rehabilitate roads…in a phased and timely manner". Second, GOK had created a State Road Fund that would "seek to generate user charges through road tolls and dedicated fuel levies." The third promising development was the establishment of a Road and Bridges Development Corporation of Kerala, "to raise funds through loans, shares and borrowings" in order to maintained selected parts of the road and railway network. Lastly, the PWD was drawing up an Institutional Strengthening Action Plan (ISAP) to develop its technical, managerial and financial capabilities with the help of an Australian engineering consultancy, SMEC. Were these measures enough to breed success?

Well, hindsight is always 20-20, but I believe too many concerns were swept under the rug by the WB in the beginning itself.

What the KSTP saga demonstrates is that Kerala currently does not have the management skills, capacities and efficiencies to handle large infrastructure projects. Therefore, financial institutions including the WB, who are best placed to effect change, must insist on reform prior to loan disbursement. As the events of the last year and more have shown, the Kerala PWD department is in dire and quick need of organizational reform to make it autonomous and independent of the political regime. Infrastructure maintenance after all is a public need, not a policy option.

In this regard, the WB could take a leaf out of the Asian Development Bank’s (ADB) book. In 2001, the ADB loaned $250 million to the Maharashtra government exclusively to pursue reform in its public sector undertakings including the state PWD. Among the initiatives to reform the PWD were several key elements aimed at enhancing the agency’s independence and efficacy: 1) separation of regulatory and operational functions 2) empowerment of implementing agencies and 3) social security net including VRS scheme for redundant PWD workers.[xii]

In the movie Sandesham, Satyan Anthikad has Thilakan tell his wayward children, "First fix your house, then fix society." It's advice that could have served the World Bank and the State Government well. Sooner or later though, there won't be any Lee Seens left around to pay for their mistakes. By then, no one will trust either organization in Kerala.

In the interest of simplifying conversion rates, I used the USD-INR exchange rate of Rs. 48 per $1 used to assess the project cost in 2002, throughout this article.

[i] “Kerala Govt not to withdraw corruption cases:CM”. newKerala.com News. November 22, 2006.
[ii] “Road project controversy; Kerala FM blames former PWD Minister.” The Hindu, November 28, 2006.
[iii] “Minister joins issue with opposition on KSTP issue”. PTI. November 23, 2006.
[iv] “Road Builder terminates RM112m Kerala project”. The Edge Financial Daily, November 24, 2006.
[v] World Bank appraisal report.
[vi] Kerala Economic Review 2003.
[vii] The appraisal report rates risk on a scale of High, Substantial, Modest and Negligible in order of declining risk.
[viii] World Bank appraisal report.
[ix] “Kerala: second phase of State transport project from January”. The Hindu. November 11, 2005.
[x] “Kerala's financial position grim, says Minister”. The Hindu Business Line. May 23, 2006.
[xi] “Finance Department's intervention a crucial turning point for KSTP”. The Hindu. November 25, 2006.
[xii] Technical Assistance to India for Preparing the Madhya Pradesh Road Sector Development Project. Asian Development Bank, October 2001.

Thursday, October 26, 2006

A Creation Myth

Two weeks ago, I posted a blog to assess the public perception of violence in politics. The question was:

Do you think that hartals and shutdowns are favoured by:
1) A minority of the political parties?
2) Almost every party in Kerala?

Of the 39 voters who voted, 30 opted for (2). Before writing this article, I might have done the same, since almost every political and trade organization in Kerala has called a shutdown at some point in its history. It is only fair to believe that no one has developed a philosophical opposition to the idea of a shutdown.

But, it also makes sense to see the other side of the coin. 9 respondents chose (1) and therein, I see a different perspective on the issue and possibly some support for what I am about to claim. I believe that violence in Kerala politics is no longer a by-product of its grassroots movements; it is actually a political institution in itself.

The notion of institutions in our state politics may seem laughable. Given the chaos, scandals and scams splayed in the public media on a daily basis, the common man may be right in thinking that our leaders have no control over their cadets and followers, let alone themselves. But, at some point you have to ask yourself – Why is politics caught in a stagnant culture where strikes and hartals called at a whim are obeyed?

After looking at the rolls from the 2006 elections, I can offer a short one: violence has become an incentive in certain parties. Much in the same way that companies promote certain executives over others by measuring their sales performances, certain parties have and continue to use violence as a yardstick for political performance. In short, he/she who makes the most noise gets promoted the fastest. And not just any noise, it has to be a ruckus that is worthy of capturing the attention of the public so often fed a stale plate of “revolutionary” politics.

By law, any person running for election has to submit information regarding their criminal history or lack therefore. This information includes the IPC sections under which a case against a candidate is charged, so it is pretty easy to figure out who is charged with what, including unlawful assembly, rioting, assault, murder or intimidation. I looked for candidates with cases charged under three large categories: unlawful obstruction (IPC 143, 145, 149, 283), rioting (146, 147, 148) and assault/intimidation (323, 332, 353, 333, 358, 152, 324, 307, 308, 508).

What I found is that on average, the left-leaning parties (CPI(M) and CPI) are accused of engaging in more than twice as many illegal obstruction activities as the next party (DIC). Below, I have listed the top ten parties when it comes to candidates who are engaged in illegal obstructions, i.e., hartals and shutdowns.

You might say that that is an unfair measure if a very small contingent is accused in an atrociously high number of cases. Well, let us take a look at the proportion of candidates charged with such cases in each party. Again, the CPI(M) and CPI parties come out on top as between 60% and 80% of their candidates have been charged with such activities. The nearest party (DIC) is about 40% culpable. Still high, but when you combine with the frequency of the charges, the left is entirely in a league of its own.

Ok, so you say, illegal obstruction activities are not that serious. After all, what is a hartal or shutdown here or there? It’s all “peaceful”. I beg to differ and I could not have a bigger begging bowl. Let us kick it up a notch and take a look at instances of rioting.

Rioting is far more serious than hartals and shutdowns, because mob violence is the worst expression of a civilization. It is what happens when people disagree to talk and resort to violence to express themselves. It is anathema to a society that overcame bigger problems like subjugation and foreign oppression through non-violence. So, how does the left score?

Why don’t we kick up the violence meter all the way? Let us take a look at how the parties rank on the basis of assault / intimidation cases.

Note that in all three categories, a candidate in the highest-scoring party is about twice as likely as the runner-up and more than thrice as likely as the second runner-up to be charged with a crime.

Lastly, I present what I like to call the “Politician of the Month” roster. Most companies hand out “Employee of the Month” awards in recognition for what they view as outstanding performance. Highly competitive organizations run themselves by differentiating between their employees’ abilities. Politics is no different. But are you at ease with the yardstick used in our current state of politics?

The conclusion is inescapable to me: there is an unspoken “revolt, then get promoted” mechanism in the left-leaning parties. Revolution and progress have become synonymous to them. How has this happened?

The story begins with the left’s entrenched appeal to the poor and downtrodden. Politics is like any other territorial battle. The most effective way to cordon off a vote bank is by ensuring that everyone else is fiercely opposed. After all, when life seems like a zero-sum game, why change the rules of the game? Why not perpetuate the perception that the haves benefit at the expense of the have-nots? Why not oppose any benefits that could have come from egalitarian land reforms by freeing industry and other more productive uses of land than agriculture? Why not see it to that the poor are actually gainfully employed? Because the left is more than an ideology in a democracy – it is a self-preserving organism like everything else.

People often juxtapose capitalism and communism as alternate economic systems. This has been our greatest folly and the biggest hoax the left has pulled off because communism is not an economic system. It is a creation myth – a story of how people fall into classes and are by birth, opposed to each other. Here is the irony though. In a dictatorship, communism has no opponents and therefore, it can happily pursue the economic welfare of all. In a democracy however, communism is just like any other political entity. And poor democracies in particular are perfect breeding grounds for the left. Because unlike other political parties, the left already has a handy divisive myth. It can protect and perpetuate its vote banks. That is why the story of class warfare has become a self-fulfilling way of life in Kerala.

Endnotes to Methodology:
I included every case, regardless of whether it was pending, bailed, stayed or sentenced. The only exceptions I made, of course, were those that were acquited, of which needless to say, there were very few. I also excluded 50 candidates whose information was not available or was illegible in the ECI database.

Sunday, October 08, 2006

How many naughty politicians does it take to screw Kerala?

In the movie, the Patriot, the legendary Benjamin Martin (played by Mel Gibson) questions the revolutionary forces recruiting men for their war against England, “"Why should I trade one tyrant 3000 miles away for 3000 tyrants one mile away?" The question although posed in a colonial setting is relevant to anyone who is concerned about who leads Kerala. Let me digress for a moment.

The 2004 General Elections in Kerala may not have seemed very different from previous elections, but was unique in one aspect. It was the first time a 25-member team called Election Watch Kerala organized the first public dissemination of information concerning electoral candidates from Kerala. It was widely publicized in local magazines and newspapers. If the name of the organization sounds familiar, it’s also because the parent NGO, Election Watch, is based in Andhra Pradesh where it has been monitoring electoral rolls for quite some years now. One of the main conclusions of Election Watch Kerala’s public report was that "unlike many other states, Kerala does not have a serious problem of criminals entering the election arena. Most cases declared by candidates relate to law and order issues and are a by product of Kerala's agitation politics."

Note that this is the same period that threw up erstwhile candidates as Babloo Shrivastava into the election foray. So it should come as no surprise that Kerala seems to be better off. Or is it?

It is true that by and large, Kerala does not have a significant influx of candidates with criminal backgrounds into elections. However, there is the problem of Kerala's “agitation" politics, which is an issue that has grown uncontrollably. Of all the Indian states, Kerala is most prone to strikes and hartals, which effectively shuts down essential and non-essential services in the state.

Whenever I ask people what they think about how to put an end to this situation, it appears that we run against a wall. There is a perception that every political party is in a cartel favouring this method of political protest. What I want to know is how widespread is that notion. So, I propose a survey:

Do you think that hartals and shutdowns are favoured by:
1) A minority of the political parties?
2) Almost every party in Kerala?

It may be fair to ask what is the point of this survey. Well, I have been doing some research on the side and looking at the 2006 State Assembly electoral rolls myself. There were more than 900 candidates in the election, so I have been a little busy for a while. But, I think it would be interesting to test this hypothesis by analyzing the criminal backgrounds of these candidates and looking at their penchant for hartals and violence – behaviour that our dear Chief Minister labelled as “naughty”.

If you haven’t caught on to the significance of the answer, consider for a second what would happen if the electoral rolls suggested that option (1) was the answer. I say “suggest” because there is a leap of reasoning you have to make. But if there is one ideology amidst others that promotes this form of protest, then I think that’s of concern to everyone who hates Kerala’s 1 shutdown a month practice. Wouldn’t you want to know if you were being ruled by one tyrant or too many?

So, tell me, how “naughty” do you think our politicians are?

Thursday, October 05, 2006

Reply from Election Watch Kerala

Dear Abhishek,

I am a sorry to say that Election Watch Kerala is somewhat in the doldrums at the moment without sufficient volunteers for work. The demise of our Chairman Prof M.N.V.Nair has weakened us. The members are still keen on the work except that each is busy in his or her own work and unable to provide the kind of time and effort that we managed to put in during the 2004 election. We need fresh blood to take our work forward.

As far as the 2004 data base is concerned, I shall be happy to check out its availability and share the data with you. I think we did have information on how many had cases against them due to agitational politics. This was significant in the case of Communist party candidtaes who have come through the ranks (DYFI, SFI, etc.) and their 'graduation' process involves proving their capabilities through such agitational politics.

I agree with you that the agitational politics has become somewhat meaningless and is a block for Kerala's growth. However, a lot of the problems stem from the image such agitations create rather than any real difficulty. It is worth nothing that the last two decades have seen very few workers strikes and agitations, especially for wages or working conditions. The agitations are mostly political in nature and related to percieved injustices of various policies (education, globalisation, etc.). Kerala is probably the only state that has at least one bandh every year against generic issues like 'globalisation".

Will get back to you on the data base issue.




A Letter to ElectionWatch Kerala

Dear Sir,

I am an Indian based in the U.S. and am very interested in India-related issues, especially electoral reforms. I have a bachelor’s degree in economics and I keep abreast of economic and political issues related to India and Kerala in particular.

Recently, I have begun researching the backgrounds of Kerala Legislative Assembly candidates through the help of the ECI database containing their affadavits. I noticed that your organization has prepared a study of the candidates for the General Elections in 2004. I am focusing on the 2006 State Election candidates. Although the election has already been conducted and therefore, making people aware of the candidates' backgrounds may seem like an outdated goal, I think it is still highly relevant to show the public what can be done.

One of the conclusions of your report on the 2004 elections in Kerala was "Unlike many other states, Kerala does not have a serious problem of criminals entering the election arena. Most cases declared by candidates relate to law and order issues and are a by product of Kerala's agitational politics."

It is true that by and large, Kerala does not have a significant influx of candidates with criminal backgrounds into elections. However, there is the problem of Kerala's "agitational" politics, which is an issue that has grown uncontrollably. Of all the Indian states, Kerala is most prone to strikes and hartals, which effectively shuts down essential and non-essential services in the state. Most people assume that these state-wide shutdowns are supported by political parties from the whole spectrum. Another assumption is that people react complacently and accept such calls for hartals and shutdowns. I wish to test those perceptions by studying the ECI database and analyzing whether such practices are supported by just a few candidates or a significant proportion.

I would like to request your assistance in helping research this topic. Kindly feel free to forward this email to whomever you think appropriate.


Abhishek Nair

Friday, September 15, 2006

How Hartals and Bandhs Hijacked our State

Recently, the Kerala chapter of the Confederation of Indian Industry (CII) said “a single day's shutdown costs the state a staggering 7 billion (or 700 crore) rupees”.

Put that estimate and Kerala’s population together and that translates to a cost of 233 rupees per Keralite for a single day’s shutdown. No, don’t look in your wallet; your pocket change is probably still there. The money in your bank vault is probably still there as well. And your house isn’t going anywhere. So, what’s the problem, you ask? Well, let’s suppose that you’re not a government employee and that’s fair to assume since only 3% of our labour force is employed in the government. Are you self-employed? Well, you’ve just lost your daily wages. Are you employed by a private firm? Well, you can be sure that in the long run, your job is in jeopardy as the firm loses money.

Wait, so what, you say? The average Keralite earns less than 150 rupees per day, you say? Ahh, but you ignore the potential that is Kerala. For every rupee that the average Keralite earns, he or she loses out at least another rupee in potential wage increases. Why? Because of the complete absence of any substantial manufacturing industry in our state. Because of the complete lack of any sizable investments in our infrastructure. Because of the 20% of our educated youth who walk around unemployed. Because of these simple frustrations that crop in our lives. All because bandhs and hartals have scared any sensible entrepreneur or investor from Kerala.

Bandhs and hartals have become everyday occurrences in Kerala in stark contrast to the rest of the country. In other parts of India, a call to strike rarely affects all sectors of the economy in the fashion that is afflicted on our state. When a party or trade union calls for a dharna or bandh in Kerala, life comes to a standstill and the average person stays at home. When the same happens in Delhi, Calcutta or Madras, people go to work, stores stay open and general life goes on. Why has our work culture reached this stage?

Most people can point quite readily to the source. Public employees are not required to keep attendance and the costs of cutting work are far lower for them as they are salaried employees. The opportunity cost is even lower for politicians. In fact, they actually gain voting lobbies in the form of government workers and trade union members through such stunts. In contrast, employees in private firms have much to lose by resorting to coercive forms of protest. That is why you see one or two private bus strikes every year. And even those do not lead to full-scale shutdowns. The power to paralyze life has come to define the life of the public sector.

But what a narrow section of society it is. According to the Directorate of Economics and Statistics, government employees constitute 3% of the total working population. Political party workers constitute at most another 0.5%. How can such a narrow section intimidate the rest of society?

Well, they would not be anywhere without outright support by their unions. Most government employees are unionized and all political parties are by default, organized. The same cannot be said for Kerala’s self-employed businesses, which are affected most by these hartals. At last count, this sector constitutes 31% of Kerala’s labour force, a formidable voting bank that can turn the current state of stagnation on its head. Intimidation and apathy, however, have struck this section into inaction. No one wants to say no to bandhs or hartals as long as they are the lone voices in the wilderness.

The writing on the wall is clear. The need of the hour is a new social contract and a grassroots operation to back it.

Monday, September 11, 2006

Kerala today: the home away from home

I wrote an essay for a competition in Kochi when I was nine. The topic was “My Home is my Heaven”. I won and I like to think it was because of my writing skills. But the truth of the matter is that it was an issue near and dear to my heart. Many expats have a very keen sense of what their home is and my family is no different. At home, my parents insisted that we speak Malayalam, irrespective of the fact that we lived in Germany. In hindsight, this was of great comfort to my brother and me, because the trials and tribulations of learning English and German in a completely new school cannot be understated. I had a very strong sense that my home lay at the nexus of my family and my culture and coming home from school was probably the best part of my day, just because it felt familiar. But I wonder how many of us romanticize our culture and ignore the society that hurts that culture.

“God’s own land”, a popular characterization of Kerala, is a misnomer. If God were to be reborn today in Kerala, he would grow up to either work as a government sector employee or migrate abroad to work. Migration is perhaps too harsh a word, since a large number of Malayalees work just outside the state border. In any case, God would visit Kerala once every year, meet his hypothetical family and return to work after a few weeks of some well-deserved rest. Because Kerala is the home away from home for most working Malayalees.

Our society is ailing and I can see the symptoms. With the exception of my parents and brother, most of my family lives in India. So that makes for a busy itenerary every time I go home. Every year I visit my relatives, I find their homes growing emptier and emptier. This is the normal course for nuclear families, but in most societies, nuclear families move away from their parent homes, much like birds growing out of their nests. What I see is a carving out, where the breadwinner in the family works for long periods away from their homes. This has bred the lack of role models and a stagnant culture in Keralian society. Today, the politics of our state are ruled by people whose vested interests lie in perpetuating the very conditions we should alleviate. We have generated a vicious circle of debt in our state that if left unchecked, could pose much more serious social problems than those that face us today. We have earned the label of a “consumer state” but underrate its implications for our generation and those to come.

The imperative to act lies on all of us, because the actions needed are both big and small. Malayalees, expats and residents, must push for reforms. So, let’s begin by forming a common agenda. Each week, I am going to highlight what I view as a particular problem with Kerala. And I am going to propose a solution. The nonsense carried on in our state in the name of politics is disheartening, but we should not underestimate the power of the word: the ability to bring people with common interests to organize to do good.

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Bandhs and Hartals: the absence of a work culture in Kerala