Mopping up the remaining free agents – the 6th pay commission
Unless you are living in a cave – you cant help notice the full page ads from every Union Ministry tom-tomming its achievements. Yes, we are in “poll mode” – where economic sense is thrown into garbage. What use is “economic sense” if it cannot help retain power ?
Mr Manmohan Singh yesterday announced that his government (UPA led by the Congress party) has approved a “windfall pay revision” for central government employees. In fact, the UPA (led by the Congress party) has gone over and beyond the recommendations.
The windfall pay revision, announced on the eve of the country’s 62nd Independence Day, would be implemented from September 1, this year and the government employees would get 32 months’ arrears, that too with significant improvements over the Sixth Pay Commission recommendations.
Even the 6th pay panel led by Jus (Retd) BN Srikrishna is stumped.
With an eye on the next general election, the UPA government gifted its 55 lakh employees an Independence Day pay bonanza of Rs22,131 crore – a move that left even the authors of the Sixth Pay Commission stumped.
With the Union budget already reeling under the combined burdens of oil subsidies, farm loan waivers and high interest costs, the cabinet decided to add to its fiscal woes by approving an average increase of 21% in the salaries of civil and defence staff, a figure that’s even higher than what the Pay Commission headed by Justice (Retd) BN Srikrishna recommended. “We had long discussions on facts and figures with the finance department and economists to see how much elbow room the government had and suggested the best possible increase. Now the government has decided to exceed that. All the best to them,” Justice Srikrishna remarked to DNA.
Source : DNA
If you are lucky enough to be a government employee : please use this calculator to compute your official salary gains http://6pc.in/
So, where does this fit in with our behaviour theory of Indian politics ?
Prima facie, it would appear that political gains from such an exercise are minimal. Will a heftier pay packet make a Yadav vote for the Congress when there is an alternative exclusively for his group in the form of Laloo and Mulayam ? Will a Dalit Jatav not vote for Mayawati because of a pay hike ? Will Tamil upper castes (maybe officially backward) vote for the Congress when the DMK and indeed the entire Dravidian movement is available for them. The answer is a big no ! These community leaders expect to be rewarded at the hustings for shielding their constituent beneficiaries from analysis.
The only catch is this : You see Desi people forget to say thanks ! Voters will mobilize for new benefits or to protect existing benefits under threat. They need prodding and constant reminders (and vote marshals) when they begin to take their benefits for granted. Enter the vote marshals. Vote marshals are the guys who knock on your doors – arrange free autorickshaws to the polling booths. They are the most understudied aspect of our political system. They do not mobilize for thanksgiving.
So whats the deal, if it wont dent group behaviour ?
Despite Mandal, it is true that the Central government and many state governments especially in the north have significant free agents (voters without a narrower choice for their own group). Government employees of all kinds also have a tremendously greater fan-out in terms of organization (think about the dozens of Railways employees unions and associations, Posts pensioners associations). They also have extensive forward links with the rest of the economy – procurements / commissions from private vendors, a large and hopeful temp worker population (eg Neyveli Lignite, Railways, temp teachers,etc). Many media personalities today have a privileged past of high government access.
This is an exercise at mopping them up. Will it work ? Absolutely !!
To summarize in a few words :
The Congress party is an expert in creating RIVAL economic resources and extending benefits in exchange for association or affiliation. To access a resource, you need to be someone or know someone. It is the new feudal order after the British left on their own. This is the real class divide. This is why the really backward still break stones – they do not “know” anyone and they are certainly not “someone”. See Barbarindians post on a topic.
The BJP at least during the limited time we got to know it, attempted to create NON-RIVAL resources like the highways. Perhaps more significantly, it appeared to cap the policy of creating rival resources by “showing a bottom”. Remember the same DMK / PMK was clamouring for a no-data-based extension of rival benefits for their communities. The BJP was able to counter that, while it would have been dead easy to give in like the Congress. We also are aware that if the ecosystem is designed to encourage the creation of rival resources, the BJP and the Left also have to play that game. Otherwise, they will will face the same fate as any mutant.
This is really the choice in front of us. Rival or non-Rival economic goods.
Thoughts on some posts in the Indian blogosphere
Barbarindians is on roll lately. I challenge you to find a comparable blog on Indian politics and society (post a link in the comments section). Seriously, I would like more reading options.
Some recent posts from his blog:
It is hard to find an example of a country where after the imperialistic/oppressive forces left, the whole bureaucracy, academia and armed forces establishment (also business) was kept intact. We are not saying this is bad per se. This is also just, if you really want to go ballistic on a part of your population just because they “cooperated” with the colonials, you ought to give them prior notice. But this warning was not given and it was well accepted that India would not erupt into a xenophobic violence against every supposed “collaborator”. But this is not a silly notion at all.
On Crony Capitalism –
On the face of it, it would appear that crony-capitalism sometimes leads to great success. The Japanese success story, the relative success of South Korea, Taiwan or even Indonesia/Malaysia lends credence to this observation. Even the United States had their robber baron era. In the South-East Asian nations, crony capitalism was used as an exit route to realize economic gains while the Government maintained a populist front.
I enjoyed this post, because there has been very little debate on this subject. Can we do a Japan (Mitsubishi) or Korea (Daewoo, Hyundai) ? Will this model work here ? Who cares if illegal billionaires are created if millions can come out of poverty ?
Let us step down a couple of levels from Japan, Korea, and the robber-barons of the USA.
Now, let us try to analyze bottom up (always works in India)
Consider the “Roving Bandit / Stationary Bandit” theory as a starting point. (Google for it)
I just googled the names of some books and these links came up pointing to Google Books. I am not sure they contain all pages.
The concept of stationary bandit nicely explains why many among the warring factions in Zaire in 1996 actually seemed to prefer the return of the kleptocrat Mobutu Sese Seko to life in his absence….
These books written by westerners seriously fall short of analyzing the Indian situation. Why should they, Indians should take up the task ?
So the questions :
Reality Check asserts that the Indian system is a legislature dominated by group interests propped up by a submissive judiciary. Is this true ?
Is our system creating stationary or roving bandits ? What is the trend since independence ? Are the stationary bandits of the Congress era converting themselves into roving bandits today ?
Are our state level politicians acquiring inter-state family interests ?
Are our politicians developing significant family interests in other countries ? (Are they settling their families abroad)
Can they leave for extended periods on very short notice ?
In the Indian scenario, we to break it down. We may have hundreds of stationary bandits – with interlinked interests – each with a limited geographical influence. A simple test whether this works will depend on how these revenue maximizing bandits are invested in their OWN area.
A crony capitalist with political connections from Tamilnadu acquiring coffee estates in Coorg or Rubber plantations in Wayanad or orchards in Hyderabad would be an example of a roving bandit.
A crony capitalist from Tamilnadu setting up a factory in his own district in an example of a stationary bandit. Vastly preferable.
Of course, the truth will lie in between. A crony roving bandit would siphon off significant insurance outside his zone and also maximize revenue from his own sphere.
So do I think crony capitalism will work here ?
I think crony capitalism will not work in India because of the limited area of influence of each player. Within a short period of time these actors will invest significantly outside their own areas of influence. They will also create insurance investments in estates, livable communities, and resources like granite and sand mining. This will in turn dampen their enthusiasm to maximize revenue from their own area.