The Sant's Son -- A young Sikh remembers Bhindranwale

The traffic noise from the flyover outside the window was deafening and I could barely hear what Baljit Singh Brar was saying. Brar edits Jalandhar’s Aaj Di Awaz newspaper, aptly named, amid the din. “Where is Bhindranwale’s son?” I had to shout. He pointed at the man sitting quietly at the corner of his desk.

So this was the elder of the two sons of India’s most dreaded “separatist leader” from a quarter-century ago. Light brown eyes, five-foot-ten, tight black turban, flowing salt and pepper beard, ready smile, his two cellphones blinking. Ishar Singh looked like your friendly neighbourhood realtor, somebody you could trust enough to buy your house from.

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Ishar Singh is 37, the same age his father was the night he was killed in the devastated Akal Takht after the Army sent tanks into the parikrama of the Golden Temple. “My father died four days after his birthday,” Ishar said.

He remembers that an uncle, a subedar in the Army, identified the body. It took the Shiromani Gurdwara Prabhandak Committee and the Akal Takht nearly two decades to acknowledge that Bhindranwale was dead. On June 6, 2003, Ishar Singh was honoured with a siropa at the Golden Temple, watched by an assortment of old Khalistani diehards like Jagjit Singh Chohan and Wassan Singh Zaffarwal. Matters had been delayed because Bhindranwale’s successor at the Taksal, Baba Thakkar Singh, had persisted in proclaiming that the Sant was not dead, would reappear one day, and lead the Sikhs to glory. Every year now, Ishar Singh dutifully turns up at the Golden Temple for a memorial for his father on June 6, the anniversary of the climactic Blue Star battle. The Akal Takht organises an Akhand Path of the Guru Granth Sahib.

There is a certain morbid fascination with the families of history’s most infamous characters. What were the wives and children like? What did they come to? Were those men good husbands and fathers? So we know about Hitler and Eva Braun (no offspring); Saddam Hussein (wife and two daughters in exile in Jordan, both sons dead, both sons-in-law killed on Saddam’s orders); Velupillai Prabhakaran (killed with older son in final LTTE battle, wife, daughter and younger son dead in separate battle). What about Bhindranwale?

Ishar was just five years old when Jarnail Singh Brar was anointed the 12^th Jathedar of the Damdami Taksal. He left home and adopted the “Bhindranwale” after the village of Bhindran Kalan where the sect was originally located. “After that we only saw our father at his satsangs,” Ishar said. “But we were well looked after.” Did he miss his father? “From the family point of view I was sad, but from a Sikh point of view I was very happy.” The Jalandhar editor waved a laminated family photograph at me – a very young Ishar Singh with his eyes shut, an oddly self-conscious Sant Bhindranwale, his younger son Inderjit, his wife Pritam Kaur.

When he was ten, Ishar Singh was sent to study Gurbani under Mahant Jagir Singh at Akhara village near Jagraon. Immediately after Operation Blue Star, Pritam Kaur moved with her young sons to her brother’s home in Bilaspur village in Moga district.

Ishar does not have his father’s piercing gaze. He has a good sense of humour, but not the earthy wit that Jarnail Singh flashed as he held court on the rooftop of the Guru Nanak Niwas in Amritsar. Ordinary folk tiptoed into a meeting with him. There was always a hint of menace, helped by the young men lounging nearby with their rifles.

“I was detained for two days by the police in 1988 and tortured,” Ishar says, “but they had to let me go.” He was a good student, and stood first in his tenth-class examination in Sangrur district, winning a scholarship for the final two years of his matriculation. But just then, in 1991, he married Amandeep Kaur, whose father Joginder Singh perished with Bhindranwale in the fighting at the Golden Temple. Ishar never went to university. “My wife completed her BA,” he says proudly. He himself became a dairy farmer, and grew two crops, kank (wheat) and jhona (rice) on the family land.

“Many people offered to help us,” Ishar said. “We were never in need. My father did everything for the people, and they loved him.”

What had his father left him, besides his notoriety? “What more can he give me?” Ishar said. “I am very, very proud of him. I can never be bigger than him. I cannot add to his name, only reduce it. “

Ishar Singh does not believe his father ever preached violence. Could he begin to imagine the tension in Punjab in the early 1980s, Bhindranwale’s defiant, gun-toting drive through Delhi, the skirmishes on the periphery of the Golden Temple, the drive-by shootings of innocent civilians in Delhi, the assassinations of prominent opponents, and the terror in the air?

“My father never threatened, he only replied (to threats),” Ishar Singh said in the Jalandhar office. “He was accused of ordering the deaths of 70 Hindus for every dead Sikh. He was misquoted. Bal Thackeray had said India has 70 crore Hindus and two crore Sikhs and there are 35 Hindus to every Sikh. The Tenth Guru (Gobind Singh) had said each Khalsa can fight 125,000 enemies. My father only said each Khalsa can take on 70 enemies, and this was distorted.”

Whatever the ratio, I remember a tense journey in a state transport bus from Amritsar to Delhi in early 1984. The Sikh passengers were clustered near the driver, and the Hindu passengers were huddled in the rear. Nobody spoke. Only when the bus reached Ambala, and Punjab was behind us, did everybody relax.

Today Punjab’s highways are four-lane and traffic moves at high speed, save for the occasional tractor or the farmer with his wife riding pillion. Sometimes Blue Star seems twenty-five light years away.

So were Ishar Singh, his brother and his mother content with anonymity after the carnage of 1984 in Punjab and Delhi? Both he and Inderjit applied for passports, he said, and were turned down. “But you know how it is in India. Somebody pulled strings and we got our passports.” Inderjit emigrated to Canada in 1999; Ishar is reticent about where his brother works. A plastic factory, is all he will say. He himself has travelled to Britain, Australia, New Zealand and Canada.

On the outskirts of Toronto a gurudwara sports a large portrait of Bhindranwale on its gate. The dreams of Khalistan linger among the diaspora. Bhindranwale is alive and well on YouTube, where you can watch him make his straight-from-the-holster speeches. He has a Facebook fan group, and is a “trending topic” on Twitter.

“In England small children used to say to me, can I touch you?” Ishar said with a smile. “My father did not become so popular in one day. There are seven or eight thousand Sants in Punjab. Why are you asking me only about him?” Brar, the newspaper editor, jumped in to say younger Sikhs were admirers of Bhindranwale. “You should see the number of cars with Santji’s pictures on the dashboard,” he said. “There are Bhindranwale ringtones. Many gurdwaras perform ardas for him regularly.”

Ishar said his father never believed in politics, only in dharma. “Politics is based on deception, religion on morals,” he said. So how did he reconcile this with his own work as a property dealer, where so much black money is sloshing around? His reply was elliptical. “The government wants 45 lakh rupees to convert one acre to residential use,” he said. “How can this be honest?”

Where was 21^st century Punjab headed? “Most of the IAS and Punjab Civil Service officers today are from outside Punjab,” Ishar said. “Nobody wants to study.” He agreed that drugs were becoming a huge problem. “There are one or two gang wars in Jalandhar every day,” he said.

We were meeting on the eve of Gandhi Jayanti. Did he think Gandhi…. Ishar did not let me complete my question. “Don’t talk about Gandhi,” he said. “He betrayed the Sikhs in 1947.” And Brar the editor said “Whenever we talk about a weakling we call him ‘Gandhi’.” Ishar Singh laughed heartily, his eyes shining.

What about his own children? Ishar Singh spoke proudly about his daughter Jeevanjyot, who is 16. She studied “non-medical” subjects like physics, chemistry and mathematics, he said. What did she want to be? An interior designer, he said. That would be a lucrative choice, I said. He laughed again, in agreement. His son Gurkanwar is 13 and he does not know where his life will lead.

As we parted, Ishar Singh said, very much the realtor: “Tell me if you need a car. I have two or three. I can arrange anything. People are always prepared to help me.” We agreed to meet the following day at the Golden Temple for pictures.

The next morning Ishar Singh came to the Golden Temple with Bhai Ajaib Singh, an old associate of his father’s. Ajaib Singh said Ishar was the president of the Sant Kartar Singh Educational Trust, which runs two schools and a hospital in and near Mehta Chowk where the Damdami Taksal is headquartered. A tall Sikh in traditional attire was walking down the jute matting atop the marble parikrama, and both Ishar Singh and his companion stooped to touch his feet. “That was Giani Jaswinder Singh, the head granthi of the Harmandir Sahib,” Ishar said.

The Harmandir Sahib looked as glorious in the sunshine as it did 25 years ago. The Akal Takht, blackened and pocked by tank shells and heavy gunfire during the bloody fighting, had been restored to its old splendour. At the rear rose rows of whitewashed rooms where pilgrims could speed up the long waiting lists of akhand paths. The government has acquired land around the Temple and landscaped it, except in the front where the old shops still stand cheek by jowl, doomed to be moved soon. The quiet and peace was punctuated only by the shabad kirtan broadcast round the clock from the inner sanctum.

Thousands of people hurried about their devotions, oblivious of Ishar Singh as he posed for the photographer. Nobody came up to him in awe or reverence. He wore a saffron turban on this day, and he looked like just another pilgrim come to pay his respects.

Waiting to bid him farewell, I watched while Ishar Singh fiddled with one of his two cellphones, standing still among the milling worshippers. He appeared to be looking for something. Finally he said, “I want to show you something. Let’s move to the shade in the portico.” There, he proudly held out a picture on his phone. “My family,” he said. “That’s me, my wife, my son, my daughter.”

(This piece appeared in Outlook magazine, Oct 19, 2009)

The future of news

A lot of feathers are flying around after the AP decided to extend DRM to all its output . This follows close on the heels of Amazon's Kindle. What this means is, if you copy and paste AP text or pictures into your website or blog, or even tweet, you will be liable to pay the AP.

And there is of course Google's proposal to put every published book in the world in a virtual library that will then be accessible, downloadable, and eventually eliminate the need for physical books altogether.

So let's see now. India continues to have one of the world's lowest internet and broadband penetrations. Research house Frost & Sullivan predicted that Asia's broadband users would hit 171 million by the end of 2008. India's broadband penetration? 1.4 percent ! This compares with 90.8 percent in South Korea.

Sharm el-Sheikh and appeasement: a lesson in history

O tempora! O mores! Were that Cicero were alive today to witness the depths India is plumbing in self-deception, we might hear the opening words of his famous oration.

Leader after leader of the world’s biggest democracy is standing up to be counted with words that can only be described as desperation wrapped in dementia inside dyslexia.

“We have nothing to hide”; “We are an open book”. And, the day after Manmohan Singh delivered a courageous defence of the joint statement that has brought him so much vexation, Finance Minister Pranab Mukherjee made a speech in parliament that excoriated all the doubters.

And then Mukherjee said something that would make students of history blanch:

“Everybody knew that before the Second World War when Chamberlain entered into the Munich Pact, that it is not going to succeed, but it was considered necessary because they thought that the last effort should be made to save the world from the impending Second World War. This is the lesson of diplomacy, which we should not forget. Pakistan is going to exist and our relationship with Pakistan has not been cordial from the very beginning. But keeping the communication channel open does not mean it is conceding or surrendering on any particular point. Foreign policy is the extension of the national interest in the context of the external situation and atmosphere.”

Dear, dear Pranabda. He was barely three years old when Neville Chamberlain gifted Hitler the Sudetenland, the border area in Czechoslovakia where Germans were in a majority.

Chamberlain told his people he had averted war. He was proud of his appeasement and believed he had given Hitler what seemed to be his “reasonable” demand. After all, the same year (1938) Time magazine voted Hitler the Man of the Year.

Mukherjee can be forgiven for not remembering Chamberlain’s words: “However much we may sympathise with a small nation confronted by a big and powerful neighbour … If we have to fight, it must be on larger issues than that. I am myself a man of peace to the depths of my soul; armed conflict between nations is a nightmare to me... War is a fearful thing, and we must be very clear before we embark on it, that it is really the great issues that are at stake.” (emphasis mine)

Ringing words. And ringing words were what Prime Minister Singh delivered in parliament on July 29. “I say with strength and conviction that dialogue and engagement is the best way forward,” he said. And later, “Let me say that in the affairs of two neighbours we should recall what President Reagan once said – trust but verify. There is no other way unless we go to war.”

Let us refresh our memories on what the Sharm el-Sheikh joint statement said. "Action on terrorism should not be linked to the Composite Dialogue process and these should not be bracketed. Prime Minister Singh said that India was ready to discuss all issues with Pakistan, including all outstanding issues," the communique said. Bracketed? All issues ... including all outstanding issues?

That bit of “bad drafting”, as Foreign Secretary Shiv Shankar Menon so helpfully put it, was followed by a wan ruling party damning the prime minister with ten days of silence and then a pallid statement earlier this week that left it to him to hoist himself out of trouble.

The opposition outcry was led by the Bharatiya Janata Party, and what a glorious example they set! Atal Behari Vajpayee's peace-making bus trip to Lahore in early 1999 was followed by the Kargil war, which Pervez Musharraf now proudly says forced India to discuss Kashmir (ergo, "all outstanding issues" above).

I well remember the ignominy of shepherd boys noticing that all the commanding heights along the Srinagar-Leh highway had been quietly occupied by heavily-armed Pakistani "irregulars". (Ten years ago the Pakistanis had not learnt phrases like "non-state actors"). And Musharraf, who gave India a bloody nose, is today gleefully owning up to the Northern Light Infantry, battalions of which had been set up specifically to stage the Kargil attack. In fact, Musharraf’s smug boasts drowned out whatever few efforts were made to track down the families of the Indian soldiers who died in the Kargil war.

Anybody reporting on Kargil in 1999 knows that the Pakistanis agreed to end their "aggressive patrolling" -- another piece of doublespeak from Musharraf -- only after U.S. President Bill Clinton twisted Pakistani Prime Minister Nawaz Sharif's arm in Washington.

The sub-text in 1999 was the West’s fear that India and Pakistan would unleash their newly-acquired nuclear weapons on one another. The spectre of a subcontinental Armageddon has only grown over the past decade. “There are uncertainties on the horizon, and I cannot predict the future in dealing with neighbours, two nuclear powers,” Manmohan Singh told parliament, referring to Pakistan and China.

Five months after Kargil, Pakistan-nurtured “freedom fighters” again put India’s broken nose into splints with the hijack of Indian Airlines Flight 814 to Kandahar. We watched the humiliating spectacle of our foreign minister escorting terrorist leaders to the Afghan city to be swapped with the Indian hostages.

Nothing daunted, Vajpayee invited Musharraf to the Agra summit in July 2001 – an event that the Pakistanis turned to their own advantage with what can only be described as “muscular diplomacy”. Five months later, terrorists staged the attack on India’s parliament.

Again and again, Pakistan has extended its fist to India’s palm. And Musharraf, the man who taught his Indian interlocutors the fencer’s art of feint and thrust and parry and lunge, is now feted and wooed by Indian talk-show hosts and conference organisers who proclaim him the only man who cracked down on terrorism and wished for peace with his “big and powerful neighbour” (see Chamberlain above).

The travesty is that Musharraf did underwrite secret talks between his emissaries and Indian envoys that brought the neighbours within sight of a tantalising Kashmir solution, a formula that would render the 740-kilometre Line of Control redundant. But Musharraf’s own overweening ego brought about his downfall, and the secret talks now hang like a chimera over the blood and smoke of the Mumbai attacks.

Manmohan Singh made an admirable speech on Wednesday. It was a good speech from a man of peace. But the genteel negotiators of Delhi’s South Block must contend with the stomp and swagger of the denizens of Rawalpindi’s Army HQ. And the ever-hopeful Indians need to remember what Canada’s Lester Pearson said a long time ago: “Diplomacy is letting someone else have your way.” Not the other way round.

(This column appeared in Khaleej Times on August 1, 2009)

How to apologise without saying sorry

Apologising is never easy. Barack Obama knows this now. He made a non-apology apology last week to a Massachusetts police sergeant two days after saying the officer “acted stupidly” in arresting Harvard professor Henry Louis Gates Jr because he was trying to break into his own house.

Obama’s decision to wade into a local issue involving an African-American friend triggered a worldwide debate on race and the U.S. criminal justice system. The Cambridge Police Department dropped a charge of disorderly conduct against Gates and said the incident was “regrettable and unfortunate”, but demanded that Obama himself apologise and in an unusually direct rebuke said the president had used the right words but at the wrong party.

It was ironic that Gates should be involved in a racial row. When football star O.J. Simpson was acquitted of the charge of killing his estranged wife Nicole and her friend in 1995, Gates published a brilliant and critical analysis, “Thirteen Ways of Looking at a Black Man” in The New Yorker. “Many blacks as well as whites saw the trial’s outcome as a grim enactment of Richard Pryor’s comic rejoinder ‘Who are you going to believe — me, or your lying eyes?’” Gates wrote.

Not forgetting that Rupert Murdoch had to apologise to the victims’ families for planning to publish O.J. Simpson’s If I Did It.

But Obama, who shot into national consciousness with his carefully choreographed “colourless” campaign and was hailed as ushering in a new, post-racial United States, had to interrupt a White House press briefing on Friday to offer the kind of mea culpa that his wordmeisters must have sweated bucketfuls over.

Obama said he could have “calibrated those words differently”. Then he said:

“My sense is you've got two good people in a circumstance in which neither of them were able to resolve the incident in the way that it should have been resolved and the way they would have liked it to be resolved.”

It sounded like Obama had studied the same primer as Rita Bahuguna Joshi, who said after sledging Mayawati: “"I regret what I said in a fit of anger. If it is being misconstrued, if it's being misinterpreted, it is being taken out of context, then I regret it.”

Apparently Obama decided to “apologise” to Sergeant Jim Crowley after talking the matter over with his wife Michelle. The president has quite a few other things to mull over. His honeymoon is definitely over. A Zogby poll last week put Obama’s approval rating at 48%; 51% of those polled felt the U.S. was “on the wrong track”. This, pollster John Zogby noted, was about where George W. Bush was with voters just before the 9/11 attacks. A CBS News Poll put Obama’s approval rating at 57% -- down from 68% in April. The good news is that another CBS poll said more blacks in the U.S. – 59% felt that race relations have improved, up sharply from 29% in July 2008.

The bad news is that 43% of blacks believe they are stopped by police because of their race. DBW – Driving While Black – is not a nice place to be, even if you are driving an expensive BMW.

So on a range of issues – healthcare reform, the way the huge stimulus package is being spent, the backtracking on Guantanamo, the growing “surge” in Afghanistan – Obama is not coming through as a blazing reformer with a flaming sword.

Actually he is having a fairly easy time of apologising. His predecessor spent his first few months in the White House feeling regretful.

Very early in his first term, Bush had to apologise personally to the Japanese prime minister after a U.S. nuclear submarine smashed into a Japanese fishing vessel carrying schoolchildren off Hawaii, killing nine of them.

A few weeks later, a U.S spy plane with 24 crew members force-landed on China’s Hainan island after colliding with a Chinese fighter jet. The Americans sent a repatriation team to bring back the crew after an 11-day standoff, and said they were “very sorry” that the Chinese pilot had died in the collision.

You would think that after Vietnam, Cambodia and Watergate, Americans had had a lot of practice in deniability.

Ten years ago NATO planes bombed the Chinese embassy in Belgrade. China’s People’s Daily commented scornfully this May that the incident had been shrugged off by the U.S. as a “mistaken bombing”. “Taking into account that this event is a page already turned in history, the alertness and latent hostility that the U.S. holds towards China seems not to have vanished.”

Six years into its occupation of Iraq, we are only just beginning to hear a little less about the collateral damage of teenaged U.S. soldiers shooting dead civilians who did not slow down near checkpoints. We don’t hear apologies either about the civilian deaths caused along the Afghanistan-Pakistan border by unmanned drone bombings. The UN High Commissioner for Refugees said in April that 546,000 people have registered as refugees, forced to flee their homes by the relentless bombing.

Back to the art of apology. The Japanese used to have it down pat. Their language is peppered with apologetic phrases. Every time somebody brushed against me in an impossibly crowded Tokyo subway train both of us would mutter gomen nasai – forgive me. And Indians did not invent anticipatory bail – the Japanese routinely say shitsurei shimasu, “excuse me for what I am about to do”. But the coinage has got a little debased recently.

Much was made last year when Howard Stringer, the CEO of Sony, did not apologise personally for a series of mishaps in which Sony’s lithium-ion batteries caused laptops to burst into flames.

Observers noted that a lower-ranking Sony official bowed from a sitting position while apologising for the overheating batteries, of which Sony eventually had to recall 9.6 million.

In contrast, Citigroup’s former CEO Chuck Prince, apologising for problems that led to the closure of the banking giant’s Japanese private banking licence, stood up and bowed for a full seven seconds. Leslie Gaines-Ross, chief reputation strategist for Weber Shandwick, writes in Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation that CEOs need to follow three important steps when apologising: take responsibility, act quickly, and communicate sincerity.

Japan’s Prime Minister Taro Aso was tearful last week when he announced early elections and the dissolution of the Lower House. "My wavering remarks caused anxiety and distrust in the public and led to a fall in the party support rate," Aso was quoted by Kyodo as saying at the start of his speech. "I'm deeply repentant."

Apparently Aso had planned to apologise in the middle of his speech but his Chief Cabinet Secretary advised him to start off with an apology. In May, Ichiro Ozawa resigned in tears as president of the main opposition party over a political funding scandal.

Maybe Obama’s wordsmiths need to get together with Manmohan Singh’s to craft a non-apology apology for the Sharm el-Sheikh joint statement. Or maybe our diplomats and ministers just need to tear up a bit.

(This piece appeared in the Business Standard of July 31, 2009)

The government's fiscal profligacy has made a mockery of the FRBM Act

Pranab Mukherjee sounded pleased earlier this week when he told a TV interviewer that India’s projected fiscal deficit of 6.8 per cent of GDP in 2009-10 was still better than the 11 per cent projected in the United States. He did not mention the difference in the two countries’ GDPs, and he was not cross-examined about India’s budgeting process, which is in the grip of multiple sclerosis. This ailment is characterised, the dictionary tells us, by “inability to coordinate movements, blurring of vision and an abnormal tingling sensation”.

The abnormal tingling was evident in last Monday’s precipitous fall in the Sensex, which rocketed 52.57 per cent between January 1 and June 30 this year. In itself, that was aberrational behaviour considering that market capitalisation has fallen from a peak of about 140 per cent of GDP in December 2007 to 50 per cent of GDP in February 2009, as the Asian Development Bank (ADB) has noted. In comparison, the Dow Jones Industrial Average has actually fallen from 9,034 on January 1 to 8,447 on June 30, and the Americans know they are not out of the woods.

The warning bells are ringing loudly. Rating agencies have put India on notice for downgrades; Standard and Poor’s cut India’s long-term sovereign debt outlook to “negative” from “stable”. The ADB warned that fiscal stimuli can only have a short-term impact. “At a time of falling business confidence, expansionary fiscal policies could impair the confidence of investors unless clear signals are given that the present large deficits are truly temporary. General government debt is estimated to be 80.7 per cent of GDP (at end-March 2009), indicating little room for fiscal manoeuvre.”

The UPA government’s fiscal profligacy, abetted by the Reserve Bank of India (RBI), has made a mockery of the Fiscal Responsibility and Budget Management Act (FRBMA), which requires the government to cap fiscal deficit at 3 per cent of GDP and eliminate revenue deficit. The finance ministry acknowledges that the discipline imposed by the FRBMA enables the state to channel huge new funding into social-sector spending. The difference this time is that reckless spending has ballooned and lawmakers have become lawbreakers. The Economic Survey noted that the government’s fiscal stimulus, including higher salary payouts to state employees after the Sixth Pay Commission report, equalled 3.5 per cent of GDP last year.

How are government policies hurting business, manufacturing and capital formation? There are some clues in recent reports. The government plans to borrow Rs 400,000 crore from the market this year. RBI noted in its April policy statement that the combined central and state fiscal deficits, plus special securities issued by the Centre outside the market borrowing programme, would take the nation’s fiscal deficit to 10.8 per cent of GDP.

This means that private-sector borrowers will be crowded out of the market by the government-central bank behemoth. The gloom in the corporate sector is reflected in the National Council for Applied Economic Research’s (NCAER’s) Business Confidence Index, which declined to 81.9 at end-March, a 45 per cent plunge from 148.7 a year earlier and the lowest since October 2001.

Industrial production slowed very sharply to 2.4 per cent in 2008-09 from 8.5 per cent a year earlier. Exports and imports both declined; trade deficit soared 35 per cent to $119 billion. Exports in April and May this year plunged to $21.8 billion, 31.2 per cent down from a year earlier, and imports fell even more sharply to $32 billion, a 38 per cent drop. Foreign exchange reserves declined by nearly 17 per cent to $262 billion at end-May.

Employment has also taken a huge hit. Unemployment figures are poor estimates since 92 per cent of the workforce is in the “informal” or unorganised sector. On the ground, it is clear that millions of people have lost their jobs in gems and jewellery, textile, leather and small and medium businesses as well as automobile, tourism and transport sectors. Internal investment has plunged—growth in fixed capital formation declined from 12.9 per cent in 2007-08 to 8.2 per cent in 2008-09.

As an example of how carefully unemployment statistics need to be scrutinised, government figures show that employment in the organised sector grew from 26.73 million people in 1991 to 26.99 million in 2006. In other words, only 2.6 lakh workers were added to the workforce during these 15 years while the country’s population grew from 839 million to 1.12 billion.

Exactly how many people are out of work? The government estimates that the number of jobless totalled 36.7 million in 2006-07. It predicted optimistically that this would fall to 23.3 million in 2011-12. But that was before the global crisis.

Even when times were good, and the economy was growing strongly, Planning Commission figures show that unemployment rose from 6.1 per cent in 1993-94 to 7.3 per cent in 1999-2000 and 8.3 per cent in 2004-05. Unemployment among farm workers rose to 15.3 per cent in 2004-05. Growth in real wages of farm workers slowed down in the 2000s as agricultural growth decelerated.

Why is it critical for India to get its act together and put business back on track? If the external situation does not improve, the government has to find more revenue internally. The Economic Survey made a strong argument for disinvestment, saying the government should aim to raise at least Rs 25,000 crore annually from stake sales of up to 10 per cent of equity to the public. Mukherjee is aiming for a far more modest Rs 10,000 crore this year. The Survey also sets great store by the introduction of the General Sales Tax by April 2010.

Nowhere is the government’s failure to strengthen the foundations of the economy more evident than in the inexcusable delay in enacting world-standard legislations. The Companies Act of 1956 is due for a thorough cleansing and tightening, but amendments have risen and died in a succession of Parliaments. The Banking Regulation (Amendment) Bill 2005 is hanging fire. India’s taxation rules need urgent simplification, and Mukherjee referred in his Budget speech to the need to end “coercive tax collection methods”.

He also highlighted the newly set up Competition Commission: “The benefits of competition should now come to more sectors and their users and consumers.” He chose not to mention that the Competition Act of 2002 languished for seven years before becoming law.

(This piece appeared in Business Standard on July 12, 2009)

The Secret Life of the Manic Depressive Market

Not very long ago I watched a fascinating documentary by Stephen Fry on manic depression. I was reminded about the rollercoaster mood swings of people in that movie as I watched the markets on Budget Day. Panel after panel of pundits debated why the budget had not delivered the flavourful cocktail they thought the people had been thirsting for. Although the salaried class, senior citizens and women wage-earners benefited from some tax trimming, the consensus was that this was not a go-for-it reform budget.

Wait a minute – so the speculators and the day-traders and the swashbucklers were caught with their shorts down. Public memory is very short. People have forgotten that the Bombay Sensex rocketed 52.57 % between January 1 and June 30 this year. In comparison, the Dow Jones Industrial Average has actually fallen from 9034 on January 1 to 8447 on June 30. And China’s benchmark Shanghai Composite Index has also rocketed 71.6 % between January and June – but don’t forget that China’s much bigger economy is recovering faster than India’s – the OECD estimates that China will grow at 7.7 % in 2009 and 9.3 % in 2010.

So the journey of the Sensex this year can only be described as manic. Did the fundamentals merit this kind of irrational rise – or Monday’s depressive fall? India has been in the grip of a recession, just like the rest of the world.

Nobody really knows how badly the aam admi, the common Indian, has been hit – 92% of the workforce is in the “informal” or unorganised sector, so unemployment figures are poor estimates. Anecdotally, it is clear that millions of people have lost their jobs in the gems and jewellery, textile, leather and small and medium enterprise sectors. India does not also publish reliable bankruptcy figures.

Another indicator is the massive slowdown in industrial production, to 2.4% in 2008/09 from 8.5% a year earlier. Exports and imports both declined sharply; the trade deficit ballooned 35% to $119 billion, and foreign exchange reserves declined by nearly 17% to $262 billion at end-May.

Mukherjee listed several steps to aid exporters. But internal investment has plunged -- growth in fixed capital formation declined from 12.9 % in 2007-08 to 8.2% in 2008/09. External commercial borrowings dried up, capital accretion through the stock markets slowed to a trickle, and banks became much more reluctant to lend.

How many people exactly are out of work in India? We can try to piece the answer together from shards scattered in many places. The “Approach to the Eleventh Five Year Plan” (2007-12) said that unemployment rose from 6.1% in 1993/94 to 7.3% in 1999/2000 and 8.3% in 2004/5.

Unemployment among farm workers rose to 15.3% in 2004/05. Growth in real wages of farm workers slowed down in the 2000s as agricultural growth decelerated.

The Planning Commission estimated in 2007 that the number of unemployed totalled 36.7 million in 2006/07. It predicted optimistically that this would fall to 23.3 million in 2011/12. But that was before the global crisis. “This growing integration of the Indian economy with the rest of the world has brought new opportunities and also new challenges. It has made the task of sustaining high growth more complex,” Pranab Mukherjee said, almost ruefully.

Instead of bold changes in direction, the finance minister announced he would pump even more money -- Rs 39,100 crores ($8.3 billion) or a 144% increase over 2008/09 -- into the National Rural Employment Guarantee Scheme, which created jobs for 44.7 million people last year. This is going to be even more critical given that growth in the agriculture sector slumped to 1.6% in 2008/09 from 4.9% a year earlier.

So there may not have been breathtaking reforms, but there was plenty of stimulation, totalling Rs 186,000 crore ($39.6 billion) in 2008/09, and that pushed up the fiscal deficit to 6.2 % of GDP. That will rise further to 6.8% of GDP in 2009/10 – the finance minister proudly remarked that government expenditure will exceed 10.2 trillion rupees ($217 billion) this fiscal year, a leap of 36% over last year. That is going to be fuelled by a 50% rise in government borrowing. After his speech, Mukherjee told a TV interviewer that this was not too alarming because the U.S. fiscal deficit was likely to be 11% of GDP this year. Odious comparison indeed! A recklessly indebted government always crowds out other borrowers, and that can only have a long-term negative impact on manufacturing, services, and therefore exports. And that is why the Fiscal Responsibility and Budget Management Act, which requires the government to cap the fiscal deficit at 3% of GDP and to eliminate the revenue deficit, is so important.

Actually, as the RBI noted in its April policy statement, the combined Central and State fiscal deficits, plus special securities issued by the centre outside the market borrowing programme, will take the nation’s fiscal deficit to 10.8% of GDP. No wonder the ratings agencies are getting more and more twitchy by the day, and that Mukherjee said the challenge of recovery has to be shouldered jointly by the centre and the states.

“The deficit is too high and India cannot go on like this,” a senior international finance official told me. Alarming, he said, was the fact that the Reserve Bank of India had also flouted the FRBMA and started buying government securities again under the market stabilisation scheme – a dangerous spur for inflation. Intertestingly, the RBI’s April policy statement noted that the combined market borrowings of the central and state governments in 2008/09 were two and a half times the level in 2007/08.

Mukherjee said net market borrowings are likely to hit Rs 400,000 crores in 2009/10. In the first half of this fiscal year alone, the RBI has committed itself to purchase government securities under open market operations to the tune of Rs 80,000 crores. In the absence of a corporate-bond market, this means that “real interest rates” will be unrealistically high for companies who are getting muscled out of the debt markets by the government-central bank behemoth.

Mukherjee pledged to return to the “path of fiscal consolidation at the earliest”. But his ministry’s Economic Survey, published last week, said it might be time to go for an “FRBM-2” of zero fiscal deficits.

The stimulation cannot be denied – the Sixth Pay Commission is estimated to have pumped close to an additional Rs 117,000 crores ($25 billion) into government employees’ wallets since last October, and may have added 1.1 percentage points to GDP.

The OECD predicted last month that India’s GDP would likely grow at 5.9% in 2009 and 7.2% in 2010, after 6.7% in 2008/09. Mukherjee said the goal was to return to 9% growth. The stark reality is that India needs to grow at double digits if it is to address poverty, hunger, malnutrition, and illiteracy.

But the past year has laid to rest the myth that India’s “inclusive” economy shields it. Mukherjee referred in glowing terms to Indira Gandhi’s bank nationalisation 40 years ago as one of the bulwarks against global turbulence. “This is complete nonsense,” the international finance official said to me. “No Asian bank has run into any serious problems so why is India patting itself on its back? The conservatism of Asian bankers saved them.”

(This piece appeared in the Khaleej Times on July 10, 2009)