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TheIndian EXPRESS
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l TUESDAY l JANUARY 29 l 2013

The Indian EXPRESS

BECAUSE THE TRUTH INVOLVES US ALL

HEN Rajnath Singh and Narendra Modi announced that they had talked about the 2014 polls in their Sunday meeting, they were publicly confirming, for the first time, what has been widely suspected for long. So far, the Gujarat chief ministers impending national role has mostly been read between the lines. Not much was left to the imagination, however,afterhislatestcampaignin the state. In the assembly polls he won handsomely in December for the third time, Modi preened and postured for the national audience, ignoring state-level rivals, pointedly targeting the Congresss national leaders.Nowthatithasbeensaid,almost in so many words, all that wouldappeartobeleftisfortheBJP to prepare a road map for Modis inevitable transition. But that may be an incomplete picture. In fact, the near-coronations in both the Congress and the BJP in the last few days lift the curtain on new uncertainties and curiosities even as they appear to bring an end to the suspense. Both the Congresss new vice-president, Rahul Gandhi, and the BJPs national leader-to-be are likely to find that the flattering neatness and inflatedness of the much talked about Modi versus Rahul contest does not travel very well to a ground teem-

The Gujarat chief minister throws his claim in the ring. But the Modi vs Rahul hype is misleading
ing with regional players, parties and interests. For Rahul and the Congress, the realisation that is waiting round the corner may be this: notwithstanding the Gandhi at the helm, the Congress cannot go backtoitsdominanceofthepolityin an earlier time. Today, it can only hope to grow by taking modest steps, simultaneously reaching out to other players and doing business with them, while the Gandhi family keeps the house in order. In the foreseeable future, the first familys primary role and responsibility may arguably be that of housekeeping within the party, rather than of mascot or as battle cry. For Modi, too, there will be new realities to be adapted to once he stepsoutsideGujarat.Thepersonality cult that has stood him in such goodsteadinastatedividedbetween a dominant majority community and a small and subdued minority may even help him silence his rivals in the national BJP But it could be a . double-edged sword. To fulfil his ambitions in a national political landscapecriss-crossedbycleavages of various kinds, Modi will need bothhisownpartymachineryand,in fact,otherpartiestoo,asallies.More clarity on the roles that Modi and Rahul will play in 2014, therefore, onlyinauguratesthebattlerun-up.It says little about the outcome.

Modi said it

Simmer, stir and wait

ALK is cheap when it comes to Telangana. Union Home Minister Sushilkumar Shinde said on December 28 that a decision on separate statehood would be made in a months time. On Sunday, the government put off that decision again, saying consultations with all three regions of Andhra Pradesh were needed before a final call. The Congress has perfected the routine now making a promise and then jerking away at the last moment, intensifying the regions resentments. It appears to weigh the Telangana question exclusively in terms of its own immediate interests, its electoral calculations in Andhra Pradesh or its showing in the next parliament session. The Congress is primarily responsible for bringing a slow-burning movement of several decades to this juncture. The slide began in 2009, when it thoughtlessly committed to a separateTelanganainresponsetoahunger strike by the Telangana Rashtra Samithi (TRS) leadership. Then it stalled for a couple of years, setting up the Srikrishna committee to examine the matter, including Telanganas long-held grievances about itseconomicdisadvantagesandcultural slights, the case for a united AndhraPradesh,theproblemofHy-

The Centre promises a decision on Telangana, then puts it off. Again

derabads future and the possibility of setting off similar agitations in Rayalaseema. The committee provided a set of options, and recommended keeping Andhra Pradesh united,withconstitutional/statutory measures to provide special redress for Telangana. However, the agitation could not be contained anymore.TheTelanganaissuehasriven the state, divided political parties, and sparked strikes, boycotts and street violence. Now, after all the recent hints that a resolution may be close, the Congresss deferral has led to more doubts. Is it because it wants to get the timing right, and ensure that it, rather than the TRS, gets credit for creating a separate Telangana? Or is it still unconvinced, at a deeper level, about the wisdom of dividing Andhra Pradesh and unprepared for the repercussions? The problem is that this wait-and-see strategy has already stretched the limits of credibility. After holding all-party meetings and internal talks, the Centre cannotclaimthatmorediscussionis needed. Now, it is time for it to decide one way or another and live with the results. It will doubtless alienate one or the other section in Andhra Pradesh, but then again, thisambivalencedoesnotserveanyone any better.

F ONE is to believe the official press of the Chinese government, it is easy to have the impression that the new leadership under Xi Jinping is getting serious about official corruption. Recently, Xi vowed that a new campaign against graft would swat flies and kill tigers, using a colourful Chinese proverb that refers to punishing both junior and senior officials tainted by corruption. In the two months since he assumed the top position in the Communist Party of Chinas hierarchy, Xi has indeed put dozens of venal officials behind bars. His anti-corruption trophies so far include a deputy provincial party boss in Sichuan and a dozen midlevel local officials, who may not exactly be tigers but are certainly more substantial than flies. The real test for Xi is, of course, whether in the coming months (anti-corruption campaigns dont last years) his government will actually fell some real tigers very high-ranking officials such as ministers, provincial governors and members of the partys central committee or even politburo. For the average Chinese, campaigns against official greed have become too frequent to get excited about. Xi himself is certainly not the first one to venture out to hunt tigers. His predecessors made the same pledges when they came into power, only to see their war on corruption fizzle out quickly. To be sure, anti-corruption campaigns in the past have typically started with much political fanfare and brought down a large number of venal officials. It was no coincidence that in the first year after a new leader came to power, the number of officials sent to jail for corruption would double but then fall in the second year. This indicates that a substantial part of an anti-corruption campaign is connected to settling political scores, not weeding out official miscreants. Incidentally, there was a significant increase in capital flight out of China last year as officials

Swatting flies, killing tigers

Can Xis high-profile anticorruption campaign really dent Chinas kleptocracy?
MINXIN PEI
worried about getting caught in the impending anti-graft net sent their ill-gotten wealth abroad. Of course, Xis fight against corruption may be a genuine effort to improve governance in China, simply because failing to rein in Chinas newly emerged kleptocracy could spell the end of the partys rule. The scope and severity of corruption have grown so much in the last ten years that official graft is now widely believed to be the principal cause of many of the countrys political, economic and social ills, such as the abuse of power, wasteful investment and incilities, and housing. Half of such investments are made by the government, allowing officials to demand kickbacks from contractors. If 10 per cent of the contract goes towards paying off officials, as that is the average rate of kickbacks around the world, it is reasonable to hazard that Chinese officials can steal about 2.25 per cent of the GDP from fixed investments alone per annum. If we add non-investment purchases by the Chinese government (which spends 35 per cent of the GDP) and petty thievery and extortion from private entrepreneurs by low-level of-

LETTER OF THE WEEK AWARD

To encourage quality reader intervention The Indian Express offers the Letter of the Week Award. The letter adjudged the best for the week is published every Saturday. Letters may be e-mailed to editpage @expressindia.com or sent to The Indian Express, 9&10, Bahadur Shah Zafar Marg, New Delhi -110002. Letter writers should mention their postal address and phone number. The winner receives books worth Rs 1,000.

Corruption is rooted in a countrys political economy. Typically, states that have more direct control over the economy are more corrupt because officials in these states use such control to line their own pockets. For China, one of the most effective solutions to its corruption problem is drastically reducing the role of the state in the economy. But making the state smaller economically will undermine the foundations of the one-party state because the ruling CPC needs to control a significant portion of the economy.
equality. Even though it is impossible to measure precisely the cost of corruption in China, a rough estimate, based on the international experience that kickbacks and bribes typically account for 10 per cent of a contract, would suggest that the total amount of bribes paid to government officials in China is about 3-5 per cent of the GDP (or $210-350billion).Thetwoprincipal sources of corruption in China are fixed asset investments and government procurement. Today, China invests about 45 per cent of its GDP in fixed assets, primarily infrastructure, manufacturing faficials, it would not be an exaggeration to claim that another 1-2 per cent of the GDP is lost to corruption every year. This back-of-the-envelope calculation gives you some idea why the new Chinese leadership is so worried about corruption. The question is whether it can actually wage a more effective battle against this long-standing scourge of the Chinese political system. Unfortunately, Xi and his colleagues, even if we assume they are truly committed to cleansing a rotten system, have a tough job to do. Academic research and interna-

tional experience suggest that corruption is rooted in a countrys political economy. Typically, states that have more direct control over the economy are more corrupt because officials in these states use such control to line their own pockets. For China, one of the most effective solutions to its corruption problem is not just launching periodic high-profile campaigns (which treat the symptoms, not the cause),butalsodrasticallyreducing the role of the state in the economy. But making the state smaller economically will undermine the foundations of the one-party state because the ruling CPC needs to control a significant portion of the economy through state-owned enterprises and fixed investments to maintain a huge patronage system that rewards its loyalists. If the party takes away their privileges and perks, these followers would no longer do its bidding. Another proven tool against corruption is the mobilisation of the press and civil society. Without vigilant monitoring by journalists and social activists, few governments can keep their officials honest. But again, in the context of a one-party system, such a cure appears worse than the disease because freeing up the media and civil society will threaten the partys hold on power. Xi and his colleagues are smart individuals who must understand the political dilemma of fighting official corruption in China: corruption will doom the country, but fighting corruption will destroy the party. So in an important sense, Chinas new leadership is on an impossible mission. Yet, at this stage, we should give it the benefit of doubt and wait to see whether the carcasses of the proverbial flies and tigers are going to pile upinBeijinginthecomingmonths. The writer is a professor of government and non-resident senior fellow at the German Marshall Fund of the US
express@expressindia.com

Letters to the

EDITOR

Let artists speak

in (IE, January 28). Political parties seem to have perfected the art of pandering to various vote banks over a period of time. At the slightest provocation, books, films and songs are banned because they may hurt the sentiments of someone a particular social group. We tend to be sensitive to too many issues rather than allowing the freedom of speech and expression. We ban Salman Rushdie and M.F. Husain, but are unable to address the real issues that threaten our democracy, like corruption or poverty. Ashok Goswami Mumbai
IT IS disheartening that

THIS refers to As chill sets

UNTY chor, con man extraordinaire, high priest of the heist, master of the ruse, has been netted again. It took the combined efforts of the police from three states to put him in jail, and it might take more to keep him there. With over 500 cases against him, Bunty has been in and out of jail since the early 1990s, and is not above swallowing the odd bit of broken glass to land himself in hospital in order to escape. Other thieves might steal for mundane reasons like money or survival. Not Bunty. Having inspired the 2008 film Oye Lucky! Lucky Oye!, he has a reputation to keep. There will be tales about Bunty for years his fleet of cars, his penchant for luxury hotels, the family who cast him off, the girl hewouldhavereformedforbutwho broke his heart. A journalist who met him in Tihar in 2009 reported that Bunty was already tired.

If Bunty chor is feeling the pressure, he could consider a career change

Few can resist the romance of a super thief, which explains why he steals into our movies so often. There was the Night Fox, jumping through laser beams to get to the Faberge egg in Oceans Twelve, Thomas Crown, who steals a paintingoutofsheerennui,FranceRobie, the agile rooftop walker from To Catch A Thief. Like Bunty, some are based on real life characters Public Enemies was a tribute to the swashbuckling John Dillinger and Catch Me If You Can was based on the exploits of Frank Abagnale. Who would want to quit such a glamorous line of work? But life in the searchlight can be taxing, though addictive. After spending five years in prison, Abagnale decided to cross over to the other side and became a security consultantfortheFBI.IfBuntyisstartingto feel the pressure, perhaps the CBI here could make use of his skills?

To catch a thief

HERE is a need to develop different kinds of institutions that would involve farmers as stakeholders in the growth process. The potential and problems of co-operatives and self-help groups, not to mention recent attempts to reform those institutions, are well known. Now, there seem to be problems arising from the way in which producer companies are dealt with in the new Companies Bill, 2011, which was passed in the winter session by the Lok Sabha. A producer company is one composed of 10 or more individuals, each of whom is a producer in any two or more producer institutions. As the bill earlier indicated, the governments position on the second amendment to the Companies (Amendment) Act, 2002, which introduced the concept of producer companies, was that the norms under the existing legislation would continue to regulate producer companies until it was replaced. This introduced needless uncertainty into an institution that had been performing reasonably well. Now, it appears that even this provision has been dropped from the bill, which is pending in the Rajya Sabha. I must declare a vested interest in this issue, because the producer company amendment to the Companies Act, 2002, was designed by a committee I chaired. A few years ago, based on recommendations of the Irani com-

YOGINDER K. ALAGH

The new companies bill dilutes the progressive intent of the producer company
mittee on company law, the chambers of commerce had suggested that the provision for producer companies be dropped. A number of industrial and nongovernmental organisations that had set up producer companies were uneasy about the proposal and had approached me. I had written to the prime minister, and he was kind enough to send me a sympathetic letter that said he would write to the then minister of corporate affairs to examine closely the provision for producer companies. Subsequently, the ministry of corporate affairs confirmed this position. The different groups that supinclude the Hariyali project run by DCM Shriram, which is a Harvard Business School case, and the business plans of companies in agro-based industries like Rallis and Tata Chemicals as shown, for example, by their public presentations on the i-Shakti pulses project. The plans for the revisioning of the National Bank for Agriculture and Rural Development (NABARD), designed by the Boston Consulting Group, include a section on producer companies and provide a mechanism for including newer financial products in different agro-climatic regions. The National Dairy Development their accounts audited, their decisions are not subject to political interference. I asked the chief of one of the major chambers of commerce, otherwise friendly to dynamic policies for agricultural and rural development, why they were lobbying so vigorously against this pro-farm institution. He said it was on account of the fact that producer companies were not corporate entities. Given the uncharacteristic vehemence with which he stated this, I suspect he thought I would object to his understanding. I did not, because in my mind he was stating an important ideological principle. The one-vote-one-share principle distinguishes the norms of operation of producer companies from the modus operandi of classical capitalism. In that sense, producer companies are, indeed, not corporate companies. However, it is shortsighted, in a labour-surplus economy, to scoff at such institutions, which integrate peasants with growth by giving them access to technology and markets in a fast-growing economy, even if such methods prove to be difficult to accommodate in a purely capitalist ideology. The writer is chancellor, Central University of Gujarat and vice chairman, Sardar Patel Institute of Economics and Social Research
express@expressindia.com

Capitalist error

whenever someone expresses a view that seems to be against a particular group of people, the affected political party threatens to go on a rampage if the speaker does not apologise or is not arrested by the government. It is a tragedy that an individuals freedom of expression is frequently challenged without reason. As the government repeatedly gives in to outrage, it appears to be pandering to votebank politics. R.K. Kapoor Chandigarh

Voice of youth

APROPOS the editorial

Producer companies give farmers a way to enter business negotiations in a fair manner.
port this legislation had called a meeting, which they had invited me to chair. I tabled the aforementioned letter from the PM to give them the assurance that it contained. That meeting led to the setting up of a civil society committee under Nitin Desai, a former undersecretary general of the United Nations, to monitor this and submit a report on the legislation. The committees report made a number of useful suggestions on strengthening producer companies, particularly by streamlining the process of registration by the registrar of companies at the state level. A number of corporate entities have now used this model. These Plan states that producer companies and self-help groups are the right institutions to operationalise the plan. Earlier attempts at linking the corporate or parastatal large sectors with the farm sector failed because atomistic peasants could not successfully negotiate terms with large entities. This is important, as food inflation is now holding back Indias growth. Producer companies give farmers a way to enter business negotiations in a fair manner. Essentially, they operate on a one-share-one-vote basis. Farmers are also not left at the mercy of the registrar of cooperatives, and as long as they have regular elections and get

Future of us (IE, January 26), the government should listen to the presidents warning that the protests after the Delhi gangrape indicate that the aspirations of young India are not being taken seriously. The protests point to a young, socially mobile population that wants to emerge from poverty, illiteracy. The political classes do not seem to have met their demands for economic and educational reforms, or addressed issues like youth unemployment or the security of women. M.K. Mahapatra Pune

Above politics

THIS refers to Whose tax-

WORDLY WISE
Tacitus

The more corrupt the state, the more numerous the laws.

URING his confirmation hearing Thursday, Senator John Kerry, PresidentObamaspicktobethenextsecretaryofstate,saidthathe intendstopressChinaonclimatechange...Large,developingcountries, particularly China and India, are projected to be responsibleforasignificantamountofthegrowthinglobalemissionsover coming decades. These nations rapid economic expansion, whichispullingmillionsoutofpoverty,requirescheapenergy.Its little surprise, then, that China gets roughly 70 per cent of its energy from abundant, dirty coal and has continued to build coal-firedpowerplants. Thesefactshaveledsometoarguenotonlythatclimatechangeisanissueforthesecretaryofstateasmuchasitisforthehead oftheEnvironmentalProtectionAgencybutalsothattheUSshouldnotact

The US should pass national climate legislation to encourage others to cut pollution
until it has ironclad assurances that other big emitters will move with comparable ambition... Passing national climate legislation would remove one ofthemostpotentexcusestheChinesehavenottodomore.Americandiplomats such as Kerry would be able to apply pressure without remaining open to charges of American hypocrisy. Sticks as well as carrots would be available. If Congress enacted a carbon tax, lawmakers could include a border adjustment on imports from countries that lack comparable policy. Chinas growing emissionsareabigproblem.Buttheyshouldnotbeanotherexcuse for congressional inaction. From a leader in The Washington Post

Targeting climate change at home

man (IE, January 26). Politicians and citizens alike are familiar with how institutions like the CBI and the income tax department, which used to evoke admiration, are now seen as tools of manipulation and harassment. While a low or medium salaried officer who is honest and has integrity is punished for slight lapses, those on the higher rungs of the bureaucratic ladder appear to do as they please with impunity. The government must take swift action to reform these institutions and ensure that their officers do not yield to political pressure. Ganapathi Bhat Akola
NITIN GADKARIS threat

PRINTLINE

strengthens the belief that the CBI and IT department seem to act on the behest of ruling party (Whose taxman, IE, January 26). These agencies must become independent and act in the larger interests of the country. Bal Govind Noida