My response to UIDAI's R. S. Sharma

Here is my response to UIDAI Mission Director R. S. Sharma's "clarification" published in The Hindu. Sharma had written his clarification in reply to my earlier piece titled "Aadhaar: On a Platform of Myths" in The Hindu.

Response to UIDAI's clarification

R. Ramakumar

Read it here...

Lokpal, Corruption, the Left's struggles

One has, in the last few weeks, been asked this question often: "what prevented the Left parties from bringing in a Lokpal Bill earlier?" This was particularly after I sent across an interview with Prakash Karat on the subject. Some thoughts on that here.

Lokpal makes only a small, though important, difference to corruption in India. While the idea of Lokpal, and many versions of it, has been in circulation for many years, it has not been passed by the Parliament till today. If the passing of Lokpal is the only criterion chosen to judge the efforts to end corruption, then there is indeed a collective failure of the political system, that includes the Left. However, the choice of that criterion begins with the assumption that Lokpal is a complete, and adequate, answer to corruption in India. I dont think so. The Left also has never said that anywhere. It is Anna Hazare who says it now.

The core long-term political question I am interested in is not whether Lokpal was passed or not, and who made the shrillest noise about it, but who has made the best effort to fight corruption in its multiple varieties. Certainly from the 1980s, at least, when large-sum corruption started showing up in India, it is the Left that has fought it tooth and nail. Take Bofors, take the Jain diaries in the hawala case, take the JMM bribery case, take the St Kitts case, take the Sheila Kaul case, take the Shiv Shanker case...in all these cases, it was only the Left that fought the Congress and its corruption on the streets, as well as in the Parliament. Yes, many of these struggles did not acquire the stature of the Anna Hazare agitation. Partly, I believe, it was because the starkness of corruption had not, probably, stared at the Indian people (particularly the middle class) more before. An idea, ultimately, has to grip the masses!

But today, corruption has expanded most widely to many more spheres, has exceeded imaginations in scale and size, and the growing midde class has gotten restless about the frequency with which it has hit the stands. This was never the case before. This is why the idea of Jan Lokpal, put forward so dramatically by Anna Hazare, has become popular. I am sure that more than 95 per cent of the people with Anna have never read the Jan Lokpal Bill. They dont know the difference between the government's Lokpal Bill and Jan Lokpal Bill, other than that the Prime Minister is not included in the government's Lokpal Bill.At the same time, the credibility of the UPA-II government is so low that people are not ready to believe that they can ever bring in a genuine legislation on corruption. So, they believe that anything other than the government's bill has to be a "good" and "strong" bill. The media (eager to raise money and TRPs) is publicising only the Jan Lokpal Bill. They do not even discuss or publicise the alternatives put forward either by the CPI (M) or the NCPRI. So, people think that parties like the CPI (M) are sitting silent on the present Lokpal controversy.

Goign back to history, it was never thought in the Indian political discourse that a Lokpal can end corruption on its own. This was not just the Left's view. Reviewing the Lokpal Bill of 1986, L. C. Jain (noted Gandhian, economist and Magsaysay award winner) wrote in the Economic and Political Weekly (EPW) in 1986 that: "in any case, even with a vastly broadened scope, Lokpal will always be a moral censor and no more". In this short piece, Jain refers to the report of the Santhanam Committee on Prevention of Corruption of the 1960s, which had put much emphasis on "an example being set by the top" as crucial to end corruption. He quotes the Committee report thus: 
 

There is a large consensus of opinion that a new tradition of integrity can be established only if the example is set by those who have the ultimate responsibility for the governance of India.

Jain further wrote that:

The Committee also reported that "the public belief in the prevalence of corruption at high levels has been strengthened by the manner in which funds are collected by political parties, especially at the time of elections" and suggested that all political parties be required to publish audited accounts annually and "failure to conform to such obligation should debar a political party from recognition by the Election Commission".

Furthermore, the Committee held that to generate "a favourable social climate" against corruption, the integrity of not only Ministers at the Centre and the states but also the Members of Parliament and of the State Legislatures will be a great  factor and suggested that they should therefore submit an annual statement of assets to Parliament and the State Assemblies and disclose whether they were in the employ of any business firms.

The Santhanam Committee's recommendation "to set an example from the top" was to create a CVC, which was actually set up. MPs do submit asset returns to the Parliament now. And Santhanam's Committee's most fundamental recommendations regarding prevention of corruption were related to "administrative reforms". Thus, the first Administrative Reforms Commission was formed in 1966 (however, in a State like Kerala, the Left had instituted an Administrative Reforms Commission in 1957 itself; EMS Namboodiripad, the then Chief Minister of Kerala, was the Chairman himself). The point is that while the Santhanam Committee also saw the institution of Lokpal and Lokayuktas as important, it never stopped anywhere there. It went far beyond it to recommend wide-ranging and comprehensive measures to end corruption.

And Jain concludes thus:

Thus no matter what teeth we put into the Lokpal Bill or what coverage it is allowed in terms of the range of dignitaries who can be arraigned before the Lokpal, it would make little impact on cleansing public life of corruption if in the hearts of our public men it is inscribed: 'dharma does not live here any more'.

I refer to Jain's piece here only to make the point that Lokpal was never thought of in the Indian public and political discourse as a panacea to corruption, as Anna Hazare is making it out to be now. There were a series of measures that were discussed. Lokpal was just one of them. So, to say that the Left parties did not fight for Lokpal earlier is to look at history in a distorted manner, and to see political debates out of their historical context.

As I said, it was only in the 1990s that big ticket corruption, and that too in short frequencies, began to hit India. The long list of corruption cases that I mentioned in the beginning of this post is evidence. Even here, the Left parties did bring attention to the Lokpal, but they had a different view on it. I will draw attention to the Frontline article of EMS Namboodiripad dated May 18th, 1996. It was titled "VIPs and Prosecutions: An Alternative to Lokpal". Interesting title, is it not? Here, EMS is forthright in his view. He writes:

The appointment of a Lokpal and bringing the office of the Prime Minister within the jurisdiction of the Lokpal is no solution for the widespread corruption from which no VIP is free. The real solution is the equal application of the law to VIPs and others. Fear of the law, the fear that one may be caught by the investigating and prosecuting agencies, is the only deterrent that will prevent VIPs from doing what they are now doing...

After all, even if the Lokpal goes into the cases, the conclusion that he arrives at would only be the basis on which prosecutions will start. Why should, therefore, prosecutions wait for an enquiry by the Lokpal? Investigation and prosecution by the agencies concerned constitute the proper way to deal with VIPs as well as ordinary citizens...

This is the alternative that is proposed here to the Congress proposal for a Lokpal Bill...

The heart of the suggestion made here is that VIPs should not be placed on a high pedestal, enjoying exemption from investigation and prosecution. Fear of ordinary investigating and prosecuting agencies will alone deter VIPs from what they have been and are continuing to do.

As you can see, EMS did not put undue faith in the supposed infallibility of the Lokpal to end corruption. He, and the CPI (M), put much more emphasis on much more real, feasible and effective ways of tackling corruption. There was no magic bullet to end corruption; that happens to be Anna's view. Anna appears sure that Jan Lokpal Bill will end 65 per cent of corruption in India, neither 64 nor 66!

The above continues to be the CPI(M)'s view even today. That is why the opening statement of the note that the CPI (M) has released on Lokpal Bill, dated 2nd July, reads:

The battle against corruption, in order to be effective today, can be achieved only through a comprehensive reform of our political, legal, administrative and judicial systems and not through one-off or piece-meal measures. The establishment of an effective Lokpal institution is one such measure. This needs to be complemented by other measures.

I believe that the CPI (M)'s is a better, and more workable, version of the Bill than the 2 main versions of the Bill in circulation (so is the NCPRI version, which is closer to the position of the CPI (M)). It based on the following basic premise:

The separation of powers between legislature, executive and judiciary is a part of the basic structure of the Constitution. The institution of Lokpal should conform to this basic structure.

But who has the time to discuss all that? Everybody is behind magic bullets, which have "popular appeal"! Populism is the king!!

From today's The Hindu:

Aadhaar: on a platform of myths

R. Ramakumar

"It is said that the greatest enemy of truth is not the lie, but the myth. A democratic government should not undertake a project of the magnitude of Aadhaar from a platform of myths. The lesson from the U.K. experience is that myths perpetrated by governments can be exposed through consistent public campaigns. India direly needs a mass campaign that would expose the myths behind the Aadhaar project."

Read it at: http://www.thehindu.com/opinion/lead/article2236134.ece

Some thoughts on the decline of unemployment in Kerala

R. 

In the last post on this blog, we had looked at some data on the fall in unemployment rates in Kerala between 2004-05 and 2009-10. In this post, i would like to discuss some of the reasons as to why scholars thought unemployment rates were high in Kerala till 2004-05. Till then, Kerala had one of the highest unemployment rates in India. Let me make use of two important writings on the subject.

1) Mridul Eapen (1992), “Fertility and Female Labour Force Participation In Kerala”, Economic and Political Weekly, 27 (40), October 3, pp. 2179-2188.

2) T. M. Thomas Isaac (2000), “Women and Work”, in Studies on Status of Women, State Planning Board, July, pp.21-74 (in Malayalam).

First, it was argued that labour force participation rates (LFPRs) in Kerala are reduced by high levels of unemployment through a discouraged worker effect, especially for females. For beginners, LFPR denotes the share of the labour force (i.e., workers plus the unemployed; "unemployed" is defined as those looking for work, but could not find one) to the population, expressed in percentage. Work participation rate (WPR) is defined as the percentage of total workers to the total population. Typically, a high rate of unemployment discourages people who search for jobs through a rise in the job search costs. High job search costs eventually push people out of the "labour force" as they stop looking for jobs. This phenomenon is referred to in the labour economics literature as discouraged worker effect. Discouraged worker effect is thus defined as a situation where people who want a job, and are currently available for work, give up active job search because they believe they cannot find a job. 

Mridul Eapen argued that “high rates of unemployment have discouraged female entrants [into the labour force]…forcing them into economic inactivity or into marginal work or the type of work which escapes census enumeration”. Thomas Isaac argued that “unemployment rate among young women is high…Even after long waiting periods, majority of young women remain unemployed. Hence, they cease to be job seekers and confine themselves to their houses. As they cease to be job seekers, they are classified as to be out of the labour force by official surveys”

One way to check for discouragement in work seeking from secondary data is to look at the relationship between economy-wide unemployment rates and LFPRs. LFPR, unlike WPR, includes those who are currently working and those who are actively looking for work. If there is an inverse relationship between unemployment rates and LFPRs over time, then it gives an indication that increasing unemployment is associated with more number of people ceasing to search for jobs. It would lend support to the argument that absence of jobs in the locality is forcing work seekers to opt out of the labour force. An analysis that I tried with NSS data for rural Kerala showed that such an inverse relationship was evident for women, but not for men: that is, in the long run, between 1972-73 and 1999-00, as the unemployment rate went up in the economy, female LFPRs declined. 

The second important reason noted for low work participation rates is the lack of employment opportunities that match the educational achievements of a job seeker. A large proportion of unemployed persons in Kerala is educated, due to the spread of education across classes and castes in the post-1957 period. According to one estimate, 16.1 per cent of the educated unemployed in India belonged to Kerala in 1987-88. The most important effect of the spread of education on the labour market was the transformation of job expectations of the educated job seekers. As Chandan Mukherji and Thomas Isaac have noted in a study in 1991, the spread of education in Kerala created a definite preference for jobs in the formal service sector (see Chandan Mukherjee and T. M. Thomas Isaac (1991), “Study of Educated Unemployed in Kerala: Report of the Sample Survey of Restraints of Employment Exchange”, Planning Commission, New Delhi and Centre for Development Studies, Thiruvananthapuram). The restricted number of jobs available in the formal sector led to a fall in WPRs, especially for women.

Now, what appears to have happened in Kerala after 2004-05 is a reversal of both the above trends noted for earlier years. After 2004-05, the number of jobs created has risen and these new jobs appear to be those that were more compatible with the aspirations of the educated unemployed. The fact that both the labour force and the work force have expanded show that more people have entered the labour force, and not just that, they were able to get jobs and thus, enter the work force also. So, the impact of the discouraged worker effect has also diminished in the last 5-6 years. This was particularly so for women in both rural and urban areas.

How did this happen? We can have some preliminary arguments. There are three things that has happened in the last 5 years on the employment front in Kerala. And none of us can decompose it realistically to separate them and find individual effects.

First, there has been a major effort to protect employment in sectors where there historically was loss of employment, and thus a rise in unemployment rates. The two important examples here are the LDF's govt's efforts to protect employment in (a) the traditional industrial sector and (b) the public sector industries. These efforts made sure that employment does not fall in these sectors where it has always shown a tendency to fall. Let us call it a preventive step.

Secondly, there was an effort to raise employment through effective implementation of NREGS in specific regions and Kudumbashree. Both these are likely to have made a major impact on female employment. They are likely to have reduced the "discouraged worker effect" significantly and brought women in large numbers from outside the labour force into the labour force. This explains the rise in LFPRs and fall in unemployment rates. Let us call this a promotional step.

Thirdly, there is likely to have been an independent impact on jobs due to general economic growth. If we decompose economic growth after 2005, we see that growth has come from industries (manufacturing) and services (construction, transport, storage and communication, trade, hotels and restaurants, banking and insurance and real estate). This is a result of growth domestically and not due to remittances. There is enough evidence to show that it was only during two years (2008-09 and 2009-10) that remittances rose. In these 2 years, bank deposits have risen sharply, but it was largely because Non-Resident Keralites (NRKs) shifted deposits from foreign banks (that were crashing) into public sector domestic banks in India. It has already ended, and in 2010-11, deposits have already fallen. So, remittances have little to do with this. This form of growth is likely to have given rise to regular jobs, and it is here that the impact on educated unemployment is likely to have been highest.

There is some data to prove this point also. See the following table, that gives the share of employment by three categories, 1) self-employed (SE); 2) regular employment; and 3) casual employment, for 2004-05 and 2009-10.

Distribution of usually employed (principal+subsidiary) 

by category of employment, Kerala,2004-05 and 2009-10, in %

Source: NSS reports.

Here, we can clearly see that the share of regular employment has risen from 16% to 19% in rural areas and from 28.7% to 34.2% in urban areas. This is a sharp rise, and all this is likely to be educated/skilled employment. Look at the pattern that shows that this rise for women is more than for men. In particular, urban women (38% in 2004-05 to 48% in 2009-10). On the other hand, other processes at work (including NREGS, Kudumbashree and informal sector growth associated with growth in general) are likely to have contributed to the increase in the share of casual employment. This has risen for rural women and urban men. 

What happened in India during the same period? In India as a whole, and in rural and urban areas, what has happened is that the work force itself has shrunk. Between 2004-05 and 2009-10, the worker-population ratio in India as a whole fell from 38 per cent to 36.5 per cent. In rural India, it fell from 39.1 per cent to 37.4 per cent. In urban India, it fell from 34.6 per cent to 33.9 per cent. On the other hand, the worker-population ratio in Kerala (as shown in Table 2 of my last post) has increased between 2004-05 and 2009-10. This is the most important difference between India and Kerala, even though you see a small fall in unemployment rate for India as well.

So, the work force has not expanded in India at all in this period. It has expanded in Kerala; new people have entered the work force. Labour force (work force+unemployed) has also expanded, but work force has grown faster than labour force in Kerala. For those interested in the all-India picture, here is Professor C. P. Chandrasekhar's blog entry in The Hindu website:

http://www.thehindu.com/opinion/columns/Chandrasekhar/article2153082.ece

Does it mean that Kerala is entering a new phase in its development? Is Kerala's jobless growth a history? What really gets questioned here is a basic assumption in Kerala studies till now: that the growth effects of Kerala spill out to other States and thus, jobs are not domestically created. This appears to be passe! A particular focus on the nature of growth can make sure that jobs are domestically created. The second half of the 2000s in Kerala appears to be a success story on that front. Only more intensive studies can unravel this phenomenon fully.