The Lion’s Meow: a closer look at Make in India

The logic behind the government’s Make in India initiative is clear. As Prime Minister Narendra Modi stated in his speech at the launch of “Make in India Week” in Mumbai on 13 Feb 2016:

We launched the Make in India campaign to create employment and self-employment opportunities for our youth. We are working aggressively towards making India a Global Manufacturing Hub. We want the share of manufacturing in our GDP to go up to 25 per cent in the near future.

The specific goal is to increase the share of manufacturing in India’s Gross Domestic Product to 25% by 2022, which is expected to generate approximately 100 million jobs for Indian workers (see Ab ki baar, cut-and-paste sarkar for Make in India’s similarities with the UPA’s 2011 National Manufacturing Policy).

So how are we doing so far? If you believe the headlines, pretty well. Responding to the lifting of foreign direct investment (FDI) caps in several sectors, efforts to improve the Ease of Doing Business and of course Prime Minister Modi’s frenetic wooing of investment in foreign travels, gross FDI flows to India jumped 27% to $45 billion in 2015-16, an all-time high. Even the Finance Ministry’s usually measured 2015-16 Economic Survey touted the FDI increase as a success for Make in India.  With our social media feeds full of stories about this or that investment, clearly the #MakeInIndia lion is roaring.

But the closer you get to the lion, the more the roar sounds like a meow.

Consider the most recent FDI data from the Reserve Bank of India (RBI), broken up by sector, since Make in India specifically concerns manufacturing. After an encouraging jump to a record $9.6 billion in 2014-15, FDI in manufacturing actually fell to $8.4 billion in 2015-16 (below the $9.3 billion it had reached in 2011-12).

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Note that these numbers cover inflows approved by the RBI and other agencies, and exclude share purchases, reinvested earnings and so on. This pattern is consistent with data from the Department of Industrial Policy and Promotion, analysed here.

Furthermore, the percentage of FDI flowing to manufacturing, which has been in the range of 35-40% for the past four years, dropped to 23% in 2015-16. Rather than manufacturing, services — think e-commerce providers like Amazon, Snapdeal and Flipkart, ride-sharing services like Uber and Ola — seem to be drawing a greater share of investment.

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What about the broader economy? After all, Make in India’s main objective is to raise the share of manufacturing in the economy as a means of generating jobs.

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Sadly, no meaningful change yet: the share of manufacturing has been flat for the past decade, with a slight downward trend (data here and here).

Here’ the rub: there is no doubt that building infrastructure, liberalising land and labour laws and improving the ease of doing business is difficult and time-consuming, and will take time to play out. But the Modi government needs to convince voters that change is happening, and fast.

Which is the genius of the Make in India campaign: it is essentially a branding exercise under which the government claims credit for pretty much everything and yet nothing. Every factory inaugurated, every defence deal signed, every shovel stuck into the ground will now be accompanied by the hashtag #MakeInIndia, even if the percentage of GDP arising from manufacturing stays exactly where it’s been for the past decade.

Consider this recent tweet from the official Make in India handle:

The Tejas is an Indian fighter plane that has been in development for more than two decades and first flew in 2001, but let’s label it #MakeInIndia. The BrahMos is a modified Russian cruise missile with Indian software that entered service with the Indian Navy in 2005, but, hey, why not #MakeInIndia.

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How various regions fare in Modi’s Cabinet

There has been much talk of the politics behind Prime Minister Narendra Modi ‘s 5 Jul Cabinet reshuffle. It hasn’t escaped anyone’s attention that several new appointees came from Uttar Pradesh and Gujarat, both states in which the BJP has big stakes and that have elections due in 2017.

But how important is regional representation in the appointment of ministers? One way is to look at how under- or over-represented various regions are. This map (from the business news daily Mint) shows that Hindi heartland and western Indian states have the strongest representation:

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A good first cut, but this only gives us absolute numbers. And it shouldn’t surprise that the more populous states get the most ministerial positions. One way to check under- or over-representation is to compare a state’s presence in the Council of Ministers with a baseline expectation of how much it should have. One way to do this is to look at the ratio of a state’s share of ministries with the proportion of Lok Sabha seats that it has (a number that is also roughly aligned with its population share).

And here is what we find:

Best represented states in the Council of Ministers (ministry share/LS seat share)

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Surprise! Goa and Arunachal Pradesh are at the top of the list, since the appointments of Defence Minister Manohar Parrikar and Minister of State for Home Affairs Kiren Rijiju give each 3.5 times (or 350% of) their parliamentary presence (proportionate representation is equivalent to 1, or 100%). However small states skew these results because the appointment of only one or two ministers can give them huge over-representation.

Sticking to the larger states, Uttar Pradesh and Bihar now stand demoted. The best represented are Haryana (2.1), Madhya Pradesh (1.9),  Rajasthan (1.7), Gujarat (1.6), Jharkhand (1.5), Bihar (1.4), Uttar Pradesh (1.3) and Karnataka (1.2). The poorest represented are Tamil Nadu (0.2), West Bengal (0.3), Odisha (0.3), Telangana (0.4), Assam (0.5), Chhattisgarh (0.6), Andhra Pradesh (0.8) and Maharashtra (0.9).

The states with the highest representation include those with well-established state BJP units that comprise the party core (with Haryana a notable outlier). Conversely, the states with the lowest representation are mostly those where the BJP is weak (with the interesting exceptions of Assam and Chhattisgarh where the BJP is the ruling party).

Regional representation isn’t the only factor in allocation ministerial positions, administrative ability and identity group balancing being other plausible drivers that could explain some of the deviations from 1 (or 100%). But the broad pattern seems consistent with a patronage model of politics in which political parties need to keep their base happy, motivated and delivering benefits to supporters.

Update

Another way to predict how much representation a state “deserves” would be to look at its contribution of parliamentary seats to the ruling coalition, in this case the 331-member National Democratic Alliance (NDA). The pattern now appears somewhat different:

Best represented states in the Council of Ministers (ministry share/NDA seat share)

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This time the small states are joined at the top of the list by large states in which the NDA has a limited presence. West Bengal and Tamil Nadu score high because they account for two and one ministers respectively, the same as the number of MPs they sent to the Lok Sabha. Among the larger states, the best represented are West Bengal (4.2), Tamil Nadu (4.2), Odisha (2.1), Haryana (1.8), Madhya Pradesh (1.4), Punjab (1.4) and Karnataka (1.3). 

Other than Madhya Pradesh, which remains in the overrepresented column, the Hindi heartland and western states now seem more fairly represented, staying close to their weightage in the NDA: Bihar (1.1), Jharkhand (1.1), Rajasthan (1.0), Gujarat (1.0), Uttar Pradesh (0.9). Under-represented NDA states include Chhattisgarh (0.4), Maharashtra (0.6) and Assam (0.7).

From the NDA’s point of view, Modi’s Council of Ministers provides a good balance. No major state other than Kerala gets short shrift (though some in BJP-ruled Chhattisgarh, Maharashtra and Assam might grumble).

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Fact checking Modi’s WSJ interview

Prime Minister Narendra Modi gave a wide-ranging interview to the Wall Street Journal to mark the second anniversary of his government. Modi argued that he had restored confidence to India and put an end to the “sense of policy paralysis, bad economic conditions and corruption” of 2012 and 2013.

As usual, there was a grain of truth, and also the exaggeration and sleight-of-hand that we have come to expect from him (look here for a check of other claims by Modi).

Consider Modi’s highlighting of the Pradhan Mantri Jan Dhan Yojana (PMJDY) as an instance of how his leadership had ended “a sense of negativity and a sense of deep inertia in the government machinery”:

If you see my Jan Dhan Yojana, you’ll find that I mobilized the whole government machinery so that in a definite period of time, the country’s poorest could be linked to the mainstream of the economy, its banking system.

Certainly, the PMJDY has accelerated the spread of basic savings bank deposit accounts (BSBDA), and increased their usefulness by adding overdraft facilities and life and accident insurance. But the truth is that the entire architecture of financial inclusion (BSBDAs, Aadhaar, electronic payments, RuPay cards) was created and implemented long before Modi took office. Modi often talks as if he singlehandedly brought the poor into the financial system, but the facts show that India’s financial inclusion programme was already established and growing rapidly.

In the two years before Modi, the UPA opened 44 and 61 million BSBDAs respectively, which under Modi jumped to 147 million in 2014-15 and 67 million in 2015-16 (see table below). If we conservatively assume that another government would have opened 61 million BSBDAs per year (as the UPA did in 2013-14), then the Modi effect looks something like this:

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Modi’s mobilisation of government machinery did have a positive effect: we can quantify it at around 92 million accounts, or 20% of the 457 million accounts opened (as on 30 March 2016). Impressive, yes, but the “policy paralysed” UPA also brought millions of poor households into the financial system. Indeed, there was a downside to Modi’s big 2014-15 push: the number of accounts with zero balance was 45% one year after PMJDY began, although it had declined to 26% by 26 May 2016. The growth in account openings consequently slowed in 2015-16.

If Modi did end “negativity” and “inertia” in the government, the PMJDY is definitely the wrong story to pick.

Modi went on to say:

My country had lost a lot of face on account of corruption relating to the coal scam, the scam involving auctions of the 2G network. But within a short and fixed time period, we have ensured transparency. Auctions are now actually held openly and online in front of media.

There is little doubt that the coal and 2G controversies damaged the UPA and helped Modi’s election victory. Indeed, the Modi government has overseen a spate of auctions to allocate natural resources since he took office. But this is not new: the UPA auctioned 3G and 4G spectrum in 2010, and 2G spectrum in 2012 after the Supreme Court cancelled the flawed January 2008 allocations in February 2012.

Likewise, the Modi government had to auction coal blocks after the Supreme Court (in September 2014) cancelled the allotment of 214 coal blocks made between 1993 and 2011. The Modi government could be commended for its speed, but it didn’t have any choice in the matter either.

What Modi deserves credit for is the passage of the 2015 Mines and Minerals (Development and Regulation) Amendment Bill that requires mining rights to bauxite, iron ore and other minerals to be auctioned. The UPA sat on a similar bill for six years before the Modi government succeeded in passing it.

In defence of his economic policymaking record, Modi also stated the following:

In India, reform in the insurance sector, reform in the defense sector, reform in the Bankruptcy Code had been pending for years…  In defense, in my country, there was no private investment. Today I have allowed it to 100%. In insurance, private investment was not allowed.  I have allowed it… I have allowed 100% foreign direct investment in the railways.

Now it’s entirely true that the Modi government succeeded in doing what the UPA had failed do for many years: to raise the FDI cap in insurance from 26% to 49%. It also passed a comprehensive Insolvency and Bankruptcy Code this year that should help clean up Indian banks’  balance sheets. And FDI is now permitted in railway infrastructure (though not in rail operations) whereas previously it was allowed only in metro rail.

But the claim regarding defence FDI is simply wrong. Consider the UPA’s July 2013 policy on FDI in defence:

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Here’s the Modi government’s current policy:

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The new policy is certainly more liberal than the older one, but it is misleading for Modi to say “today I have allowed it to 100%”. Just as it does today, the government had the power in July 2013 to approve defence investments with 100% FDI if it had wanted.

And the reality? No 100% FDI proposals have so far been approved. Here’s what Defence Minister Manohar Parrikar told parliament in April 2016: “From August 2014 to February 2016, a total amount of Rs.112.35 lakh (Rs 1.12 crore) has come into the country as FDI in the defence sector”. Damp squib.

Finally, Modi stated that:

If you look at the entire post-independence phase of the country, you will find that in terms of money volumes the maximum disinvestment has taken place in the last two years.

An odd formulation, considering that disinvestment began in 1991-92, but Modi is, at first cut, correct. The Rs 48,234 crore raised through disinvestment in 2014-16 is somewhat higher than the Rs 45,697 raised by the UPA in 2009-11.

But that’s too simple: if you’re comparing long periods like “the entire post-independence phase of the country”, you need to account for inflation: the value of a rupee raised in 2004-05 is not the same as in 2014-15. A proper comparison requires us to deflate the value raised from disinvestment with an appropriate, consistent index, in this case the Wholesale Price Index (base 2004-05).

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We find that the volume of disinvestment by the Modi government (in constant 2004-05 rupees) at Rs 26,671 crore is dwarfed by the Rs 33,464 crore the UPA2 raised in its first two years. Even in 2012-13, under the “policy-paralysed” UPA, the value of equity divested was greater than in either of the Modi government’s two years in office.

But the cold reality is that disinvestment has been an embarrassment under both the Singh and Modi governments, and basically reduced to a fiscal deficit padding sham in which a third to a half of funds have come from the state-owned Life Insurance Corporation. The following chart (sources here, here and here) says it all:

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It could be that the NITI Aayog or the Bank Board Bureau proposes a genuine transformation of the public sector in the coming months. But until that happens, Modi would be well advised to avoid flaunting what is a policy embarrassment from every perspective.

 

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No end of the road for the Congress

Here’s a look at the Congress Party’s national prospects, first published as an oped in the Hindustan Times:

After a merciless series of election defeats since 2014, it’s tempting to write off the Congress as a leading national force. With few visible signs of a Congress revival, some argue that India’s regional parties are now the main bulwark against the BJP.

This certainly seems to be the case with the next big state election: Uttar Pradesh in 2017. The Congress is very much the underdog, with the BSP seemingly best positioned to beat back the BJP. The Congress’ current irrelevance was shown up — if in a small way — in the two recent UP by-elections where, in the absence of the BSP, voters dissatisfied with the Samajwadi Party gravitated towards the BJP.

But it may well be premature to write off the Congress. Even in its present nadir, the Congress is either the ruling party or the principal opposition in six of India’s 12 largest states (which account for 80% of the Lok Sabha seats). The BJP, at its current zenith, is one or the other in six states, although it clearly hopes to add UP to this list soon. Obviously ruling a state counts for more than being the opposition, but the Congress remains the only feasible alternative in a big swath of the country. Recall that the party ruled only two such states (Orissa and Madhya Pradesh) when Sonia Gandhi took over in March 1998. In military terms, the party’s intentions might seem suicidal to some, but its capabilities cannot be ignored.

Things will remain tricky for the party through early 2017. It will need to put in a respectable performance in UP, which at a minimum means winning enough seats to affect government formation in the state. It will have to fight off a challenge from the Aam Aadmi Party in Punjab and retain some of the smaller states. This won’t be easy: The BJP could lose a third of its 2014 UP vote of 42% in a four-way race and still have a chance of winning the state.

But once the Congress is past this stage, opportunities may begin to open up in Gujarat, Madhya Pradesh, Rajasthan and Chhattisgarh, all of which are ruled by the BJP and together account for 91 of the 543 parliamentary seats. The Congress won just three of the 91 in 2014. As tempting as it is to project BJP’s invincibility indefinitely into the future, the fact is that all of these governments are vulnerable to a challenge, and the Congress will be the only party positioned to take advantage.

Gujarat has been plagued by a Patidar agitation and its chief minister is facing allegations of cronyism. The three-term Madhya Pradesh and Chhattisgarh governments are also battling corruption charges, while Rajasthan tends to seesaw between the BJP and Congress (although the BJP will also be defending a large vote margin — as the AIADMK just managed in Tamil Nadu). The Congress will be in danger of losing its last major state, Karnataka, but the risks will weigh against the BJP.

So how does any of this matter? Despite the 2014 Modi wave, the national landscape is still shaped by state politics. While dissatisfaction with the UPA was obviously a factor, the data from the Centre for the Study of Developing Societies show that satisfaction with the ruling state government was perhaps the most important determinant of voting. Consider that the Congress’ 2014 vote share in Karnataka actually rose in comparison with 2013; but the BJP gained seats because of its merger with BS Yeddyurappa’s splinter party.

It is possible, as many commentators assert, that the Indian voter’s disenchantment with the Congress is irreversible. But it’s too easy to extrapolate the most recent trend into the future. Nationally, the Congress is positioned to the left of the BJP, ready to reap any disappointment with Narendra Modi’s development rhetoric, possesses a deep bench of younger leaders and has more boots on the ground than any other contender.

And if the party shakes off its stupor and survives the UP and Punjab elections, it has the chance to take the battle to the BJP heartland.

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Arvind Panagariya spins an infrastructure tale

There’s something about serving in the Modi government that converts seemingly sensible people into inept spinmeisters. Consider the respected Columbia University economist and NITI Aayog Vice Chairman Arvind Panagariya. In an 8 May 2016 Business Standard op-ed titled The turnaround in infrastructure, he reeled off the Modi government’s many accomplishments in this arena. Following which he warned critics to “ponder the fate of infrastructure in the country had the previous administration continued.”

Except, if anybody bothers to look closer, Panagariya’s claims turn out to be irrelevant, misleading or simply false. In fact the “previous administration” equalled or exceeded many of the Modi government’s infrastructure achievements.

Consider highway construction. Panagariya points out that the government has unblocked Rs 3.5 lakh crore out of Rs 3.8 lakh crore worth of stuck road projects, and that “the construction (sic) of national highway projects awarded has risen from 3,500 kilometres in 2013-14 to 8,000 kilometres in 2014-15 and 10,000 kilometres in 2015-16.” So far so good.

But then he proudly adds:

“Road construction has risen from 8.5 kilometres a day during the last two years of the previous government to 11.9 kilometres in 2014-15 and 16.5 kilometres in 2015-16.”

A near doubling of the highway construction rate, pretty impressive right?

Not even close. Real data show that, in its last two years, the United Progressive Alliance (UPA) built 13.7 km/day of highways, compared with 14.3 km/day built in the first two years of the Modi government. That’s pretty much the same pace. In Panagariya’s defence, his fibs aren’t as blatant as Roads Minister Nitin Gadkari’s ravings (see Nitin Gadkari’s highway jumla), but they’re still way off.

As the chart below shows, there is no need to lie. The UPA did well, and in 2015-16 the Modi government did a bit better.

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Let’s look at railways next. Panagariya claims that:

In railways, the average rate of expansion of tracks has risen to 7 kilometres per day during 2015-16 from 4.3 kilometres per day during the previous six years. Investment in railways during 2015-16 has been double the average during the preceding five years.

An impressive increase, at least at first glance. But hold on. Panagariya is conflating track expansion with track commissioning. This detail is taken from Rail Minister Suresh Prabhu’s 25 Feb 2016 budget speech, in which Prabhu changed the measure of rail expansion from “completion” to “commissioning” because “nothing has started functioning until it has been commissioned”.

Fair enough. But, just out of curiosity, what does the old “track completion” metric, used for so many years, show?

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Say it ain’t so! What the Modi government claims to be a six-year track expansion high under this convenient new metric turns out to be a six-year low according to the now-discarded metric. Could the policy paralysed, rudderless UPA really have built tracks faster than the 56-inch Modi Sarkar? We’re still waiting to hear whether the government has hit its more ambitious 2,500 km target for 2015-16 (according to the old measure), but keep in mind that even this just about tops the UPA’s 2,300 km plus record in 2010-11 and 2011-12.

What about the claim that the Railways’ investment in 2015-16 was “double the average during the preceding five years”? A former Railways official points out in a 10 May 2016 Indian Express article that the Rs 94,000 crore railway investment figure for 2015-16 includes Rs 15,081 crore in funding for joint venture partners, a category not previously included. A like for like comparison shows the Railways’ investment to amount to Rs 70,000 crore in 2015-16, a record number but nowhere close to double the previous five-year average of Rs 48,000 crore. Busted.

(This propensity to spin isn’t new, as Manoj K noticed in Railway Ministry: 8 Achievements That Really Aren’t in July 2015.)

There are other claims in Panagariya’s op-ed, including some that may be true. Consider:

In domestic civil aviation, the total number of passengers carried has jumped from 66.4 million in 2014 to 80.8 million in 2015.

Great, but this had almost nothing to do with government policy.

In power, the government has already electrified 6,816 villages in the last two years compared with 5,189 villages in the three years before that. The prime minister has now announced his intention to bring electricity to the 12,000 villages or so that are yet to be electrified, by May 1, 2018.

A good effort, no doubt, but still modest once we look at a longer period. Turns out that rural electrification under the UPA in 2006-07, for instance, proceeded at four times the NDA’s rate. Cherrypick much?

Furthermore an investigation by The Hindu‘s Samarth Bansal shows even this 7,000 number to be exaggerated, and “that unelectrified villages have been counted as electrified”. To be fair the UPA’s numbers could be considered similarly suspect, but the fact is that the UPA vastly outperformed the Modi government in this arena.

One could go on, but it seems clear that Panagariya, like so many others in the Modi government, is guilty of cherry-picking or distorting data to make the government’s case. Not only is this futile, it obscures and even undermines the government’s genuine achievements. But in the interpretive dance that is the Modi Sarkar, facts don’t seem to count for much.

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The use and abuse of President’s Rule

After the furore over the Modi government imposing President’s Rule in Congress-ruled Arunachal Pradesh and Uttarakhand  — in seeming defiance of the Supreme Court’s 1994 Bommai judgement — supporters have pointed out that previous governments have used Article 356 more frequently to remove state governments:

There are two obvious problems with this line of argument:

  1. Legitimacy. It fails to distinguish between the use and abuse of President’s Rule. To take the most recent examples, the Modi government had little choice but to impose President’s Rule in Maharashtra (2014) and Jammu and Kashmir (2014, 2016), but arguably used state power for partisan ends in the cases of Arunachal Pradesh (2016) and Uttarakhand (2016).
  2. Propensity. There is no attempt to control for the length of time a government might have been in office. In the chart above (drawn from here), Prime Ministers Chandrashekhar and Atal Bihari Vajpayee invoked Article 356 five times each, but the former did so over an eight month period while the latter did it over six long years. There is clearly a difference.

So how to evaluate Modi’s record?

Here we look at 113 cases of President’s Rule since 1950 (drawn from a very useful data set put together by The Hindu’s Rukmini S and Samarth Bansal), and divide them into three categories: routine, controversial and for reasons of law and order. Note that the “controversial” category casts a wide net, and includes many instances that the 1988 Sarkaria Commission (PDF) report disapproved of on procedural grounds, even where no injustice was apparent (viz. categories A, B and C from Chapter 6).

And we find:

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President’s Rule was most frequently invoked between the late 1960s and early 1980s, a period of political churn. The leader of the pack turns out to be the Janata Party government, which in only three years racked up the same tally as Indira Gandhi did in her first 11 years in office (1966-77). The most egregious misuse of Article 356 occurred on 30 Apr 1977 when the Janata Party dismissed nine Congress state governments, well, just — because. This fact should give pause to those who think that strong central parties are mostly to blame for the abuse of Article 356. Indira Gandhi paid her opponents back in the same coin when she returned to power and dismissed nine opposition-ruled states on 17 Feb 1980.

The misuse of Article 356 declined considerably after that, averaging between zero and three “controversial” invocations per prime ministerial term. One reason was the Bommai judgement, which laid down the conditions under which Article 356 could be invoked, such as requiring a governor to carry out a floor test to ascertain the support of a state government.

That said, a crude count gives us limited information. Remember that the 1977-80 Janata government equalled Indira Gandhi’s record in about a quarter of the time she had taken. Controlling for the length of a government’s tenure, we find a starker pattern:

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Turns out that shorter, less secure governments have a greater propensity to misuse President’s Rule. Atal Bihari Vajpayee, Manmohan Singh and PV Narasimha Rao were most cautious, at least in part because of the restraining effect of the Bommai judgement: Rao never invoked Article 356 after that.

It’s too soon to make a definitive evaluation of Modi, since he has completed less than two of his five years in office, but his absolute count is already ahead of both Vajpayee’s and Singh’s. Modi’s relative count is a fairly high 1.1 — about the same as HD Deve Gowda and ten times Singh’s — owing to his still-brief tenure. This number could decline to a more reasonable 0.4 if Modi stops here — the same level as Rao and a tad above Nehru’s. But if he continues along this path, placing states like Manipur under President’s Rule, then all bets will be off.

Next, let’s look at the subset of controversial cases in which a governor controlled by a ruling party is making decisions that could result in a different political party either retaining or losing power, as is currently the case in Arunachal Pradesh and Uttarakhand. While the Sarkaria Commission frowned on the tendency of governments to use Article 356 to bring their own state parties into line, it seems more problematic to use it to remove opposition parties.

And how do various governments fare in this regard?

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Modi is now doing even worse than Indira Gandhi did in her first stretch in power. This is also an artefact of his brief tenure so far in office, and Modi’s score could drop to a more reassuring 0.4 — the same as Rao’s — if no more opposition state governments are destabilised using Article 356.

Now it’s entirely possible that you consider the analysis presented here to be bunkum, or an effort to tar Modi or to bolster the opposition. The good news, dear reader, is that you can simply ignore my categorisations and focus on the pooled President’s Rule data. And this is what we find:

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Doesn’t look good for Modi — he is now the leading imposer of Article 356 in two decades, and within striking range of both of Indira Gandhi’s terms. Once again, this holds true of this first two years, and could drop to 1.0 if he stops here. The nation is watching Modiji.

Data notes

If you’re still a sceptic, here’s the raw data used (let me know if you have any constructive suggestions):

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Note that court judgements are treated here as definitive: this means that some controversial instances of President’s Rule, such as the removal of BJP governments in Himachal Pradesh, Madhya Pradesh and Rajasthan in the wake of the 1993 Babri Masjid demolition, are coded under “law and order”. Conversely, cases like Bihar (2005), found by the courts to be unconstitutional, are coded as “controversial” even if it was seems unlikely that a stable government would have emerged out of a floor test.

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Nitin Gadkari’s highway jumla

Roads and Shipping Minister Nitin Gadkari likes to present himself as the singlehanded builder of Indian highways. He has repeatedly claimed — most recently at the 2016 India Today Conclave — that the pace of highway construction has increased by close to ten times under his watch:

This would be brag-worthy if it were true, but it isn’t. Check the table below:

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There has been an increase of 30% in the pace of highway construction between 2014-15 and 2015-16, from about 12 to just under 16 km/day. While that’s commendable, it is the same pace of highway building that the policy-paralysed United Progressive Alliance (UPA) achieved in 2012-13.

Mr Gadkari has a penchant — like others in his government — for exaggeration. Perhaps he should hold the boasts for when the pace of highway construction actually exceeds the (did I mention demotivated and paralysed?) UPA’s.

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A tax too far

The Bharatiya Janata Party (BJP)’s minority status in the Rajya Sabha has proven to be a big impediment to its legislative goals, and the long-delayed Goods and Services Tax (GST) — which needs a 2/3rds majority in the Rajya Sabha to pass — seems as distant as ever.

In the Rajya Sabha elections held for 12 seats this week in Assam, Kerala, Nagaland, Punjab and Tripura, the Indian National Congress (INC) dipped from 66 to 63 seats (in the 245-seat upper house), while the BJP was flat at 48. The INC might drop another seat in the Rajya Sabha in the coming 4-5 months while the BJP could gain another three, but the ruling coalition is unlikely to make any meaningful gains in the upper house until 2018, close to the end of its term.

This is what the Rajya Sabha could look like by August:

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Clearly, the BJP will need the support of several uncommitted regional parties to pass bills through the upper house until at least 2018, and probably beyond.

And what of the GST? In a recent investor note, Morgan Stanley argued that:

The key to the bill’s passage is a reduction in the number of Upper House members opposing the bill. That number currently stands at 91 and it needs to fall to 82 for the bill to clear – we forecast that to happen by July 2016.

Not so fast.  It seems as if the Morgan Stanley analysts are treating the Janata Dal (United) as a GST supporter and placing the AIADMK — a vocal GST opponent — into the “opposing” column. But that’s overly optimistic: the JD(U) has a coalition in Bihar with the INC and is unlikely to vote for the GST bill. Neither are the two Left parties that control nine seats between them.

The conclusion: this round of Rajya Sabha elections changes nothing for the BJP, it’ll still need INC support to pass the GST.

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Sugar-coating urea

At a 21 Feb 2015 rally in Bargarh, Odisha, Prime Minister Narendra Modi accused an array of “unscrupulous forces” of trying to bring down his government. In the rogues’ gallery he included the owners of chemical factories who he said were angry at his government’s distribution of neem-coated urea, which had ended the profitable diversion of subsidised urea — meant for farmers — to their factories.

Compared with standard urea, neem-coated urea is said to improve productivity and reduce the diversion of subsidised fertiliser to those who can afford to pay market prices. It doesn’t make a meaningful dent in the country’s gigantic fertiliser subsidy bill (see below), but there are some savings.

So what’s the problem? As usual, Modi’s tendency to hog credit for initiatives that his predecessors have substantially contributed to. For once, Modi managed to acknowledge previous governments in his 15 August 2015 Independence Day speech, in which he identified urea pilferage as an issue. Modi admitted that neem-coating was “an idea propounded by scientists and this idea has not only been brought before my government, it has come before previous governments as well.” But he went on to imply that those governments had done little, and stated that “pilferage of urea cannot be stopped unless we go for cent per cent neem-coating of urea”. Modi has since taken “cent per cent” credit for the scheme (here and here).

So what are the facts?

One is that state-owned firms like National Fertilizers Limited have been making neem-coated urea for the past decade:

Another is that the UPA in 2011 raised the ceiling on neem-coated urea production from 20% to 35%, which led to sales of 63 lakh tonnes in 2013-14, about 28% of total urea production in the country. This represents genuine momentum.

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The figure for 2014-15 isn’t available yet, but neem-coated urea sales for National Fertilizers Limited and KRIBHCO were up 8% and 25% respectively, which appears to be in line with this trend.

The next big push came from the government’s 25 May 2015 decision to make all domestically-produced urea neem-coated, which should lead to a big jump in its output in 2015-16. A recent Department of Fertilizers presentation stated that 77% of domestic urea production already consists of neem-coated urea. If so, Modi should genuinely be able to take credit for a substantial jump in neemification.

That said, all this rhetoric about neem-coated urea distracts from the government’s failure to raise the highly subsidised price of urea, unchanged for six years at Rs 5,360/tonne — about a third of what it costs to make. The urea subsidy not only adds Rs 50,000 crore to the fiscal deficit but contributes to the rampant overuse of urea (neem-coated or otherwise), harming soil productivity and poisoning our food chain. If the “weak” UPA was able in February 2010 to decontrol non-urea fertilisers and increase the urea price (by an admittedly token 10%), what’s holding back Modi’s “strong” majority government?

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