Wednesday, April 22, 2015

What Solar Scam reveals for Kerala society- The Entrepreneurial argument!!

By Dr. D. Dhanuraj*

In the recent times, the most sensational topic in Kerala politics has been that Solar Scam and how it has talked about Sarita Nair (said to be the chief culprit) in the whole scam. As the investigation and the daily media beats progress, it results in banality over what the reality reflects. This reality is nothing but the fundamentals of what led to the alleged scam. Why so many names are dragged to the controversy given their linkages to the scam?

According to Doing Business ranking by the World Bank, India is doing is poorly so that the present and past dispensations in New Delhi started crawling at how to improve the business climate and investment opportunities in India. In the ranking of Doing Business, India is ranked at 134 as per 2014 report. Comparing 'starting a business' in India vs BRIC rank in 2014, India is positioned at 179 well below their counter parts. In the case of Kerala, Kochi was the studying point for the index in 2009 and was ranked 16th out of 17 cities. Elections to the state legislature in 2011 and subsequent government formation led by Oommen Chandy focused more on changing the entrepreneurial and business climate in Kerala. Initiatives like Start Up Village and Smart City were projected towards the direction in which Government wanted to push forward the agenda. Even though there has not been any dramatic change in the business climate in Kerala over the years, it would be interesting to follow the alleged solar scam in this context.

It has been reported that Sarita Nair had approached Chief Minister, many in council of ministers, prominent MPs and MLAs. At the onset, the basic question arises why an entrepreneur should or any person interested in a major business ventureneed to approach CMs and MLAs for establishing the business in Kerala. In establishing a business enterprise, why one need to go to different offices of administration ? - for the proximity and closeness to the corridors of power so that the proposed business gets undue advantage or support from the government. How do we tackle cronyism of this kind?  The incident shows the lack of transparency and accountability from the part of the government to ease the doing business opportunities in Kerala.  It could be because of lack of information in the public domain regarding various licenses and procedures one has to follow in order to do legal business. This approach has not been the case in this incident as it evidently brackets many in the corridors of the power as the agents and cronies to legitimize the business that is unwarranted in a credible business environment. This incident shows that single window systems and the doing business environment in Kerala is still so putative and prosaic. If the investments expected from the Global Investors Meet (GIM) and Emerging Kerala Meet failed to convert the numbers to tangible business outcomes, the solar scam is the vindictive of the cudgels in the Government systems towards the very essence of entrepreneurship and business. 

It is also interesting to introspect Chief Minister’s mass contact program in this respect. Even though, it looks very exciting and of high demeanor, it indicates the failure of the Government administration of higher order. If someone else is complaining about the dominance of PMO in Delhi these days, it is true to the fact that CM’s office is trying to solve even the silliest of the matters that could have been resolved at the local government level. Arguments are also raised at the effectiveness of the administration in not solving many of the complaints nor are they addressing it. The idea of a big government or the government being paternal to every one in the society is dominant at least in the minds of the political leadership and bureaucracy. Instead of minimizing the size of the government and effectuate administrative restructuring ensuring transparency and accountability and decentralization to the local structures. What has been seen is the growth of government wings everywhere. Both, solar scam and the mass contact program reflects how the system works and how did it screw up the tax payers money.  In an educated society like that of Kerala, it is intriguing that size of the government is still growing.  The administration is still languishing  waywardly so that the systems encourages the solar scams and over dependence of the governance at the highest political offices providing avenues for the others to loot.

* The Author is Chairman of CPPR. His views are personal and does not in anyway represent the views of Centre for Public Policy Research.

Friday, April 17, 2015

Will markets bring social responsibility? Lessons from Fabindia Incident

By D Dhanuraj and Rahul V Kumar

Among the top garment retailers in India, Fabindia outlet in Goa was in the limelight when an alleged instance of voyeurism was exposed by the Union HRD Minister Smriti Irani. At least four employees of the store was arrested immediately following the expose. The Goa police allegedly cracked the case in less than a week and the accused was arrested.The Fabindia incident gained immediate attention of the public primarily because it involved a Union Minister.It is very likely to fade immediately more or less due to the same reasons. However, there were other important aspects of the case that remained less explored. In the forefront of these aspects is how ‘markets’ take up responsibility in tiding a crisis. Unlike the case fading suddenly, market responsibility is likely to have beneficial long term consequences.

A major lesson that could be learned from the Fabindia issue is that ‘markets could bargain social responsibility more quickly than state action.’ To highlight the lesson, it is important to look at what pressures prompted immediate response from the state. A Minister’s involvement was decisive. However, beyond that was the concern of the investors in Fabindia. Investors in Fabindia range from artisan collectives to private investors and equity holdings by employees.Hence for the market, the issue was not an isolated case of voyeurism but a possible disturbance to the brands market value which in turn have direct consequences on the investors. Concepts like trust, fairness, and responsibility which are accepted as given in a society does not grow in isolation. It arise in exchange and when voluntarily agreed as mutually beneficial. For an enterprise operating on a large scale these factors also sets in the immediate conditions for the growth of rules governing them. Fringe elements acting to violate trust find no acceptable place in these exchanges not because they are punished legally but because they are dis-incentivized by the system itself.

The Fabindia issue is a reflection of how such theoretical possibilities in the market are realised. The investors in the retail chain including I Capital and Premji Invest were compelled to step in and demand thorough investigation on the issue due to the same factors. When the investors accepted responsible behaviour it was but a natural course that the law took to arrest the accused. It thus became a case where the market and its various stakeholders had greater benefits in solving the problem it faced.Other issues remaining (on whether the accused are in fact responsible for the alleged incident), the market’s necessity to find a solution also helped to raise a platform to debate crucial questions. The ethical use of cameras in the stores was thought of in a more systematic manner following the incident. It is likely to lead to further innovations and models which could strengthen the current practices.

Such possibilities in the market are abundant. However, in most cases the State uses legislations to suppress rather than extract these possibilities. This is also a strong case to dissuade banning as a legal measure adopted by the State. There are more possibilities. State machinery faces constraints and difficulties. It is not easy for the police to check incidents like ‘camera tilt towards change rooms’. Police inspection is possible at times but not possible throughout the year. If the investors keep a tab on the enterprise and force them to adopt ethical practices and decent behaviour from the company where they invested that would be more effective than policing. Also, a brand like Fabindia can create flutters among all the players and they would be cautious and more transparent in adopting precautionary steps to avoid such incidents in their premises.The Fabindia episode highlights responsible behaviour as an inherent stabilizer in market action. The incident reached a natural solution because people valued their invested money and stood to protect its value. Free markets is an ideal ground to absorb negative externalities.


 * The authors are Chairman and Director (Research) of CPPR. Their views are personal and does not reflect that of Centre for Public Policy Research

Monday, April 13, 2015

How Wayanad and Palakkad shows the different side of Kerala's School education

By Rahul V Kumar*

Among State of Kerala’s many achievements, education at the school level has been emphasised as a major one. This in turn was reflected as having contributed much to the literacy rate as well as related achievements in the social indicators of the state. The institutional requirements for the same has been constantly nurtured by the state especially by providing financial supportfor a long period of time. The results have also been hailed. However, towards the pinnacle of the period in which the ‘Kerala Model of Development’ became a dominant conceptual framework to justify state intervention in social development, several researchers and activists pointed towards issues faced by the sector. Since the advent of the Sarva Shiksha Abhiyan (SSA) Kerala hence started focusing not on universalisation but on second generation problems faced by the educational sector. This involved addressing issues faced by minority communities, girl students or differently abled students. It also included several attempts to modify methods of teaching, introducing new tools and concepts and so on. These thoughts and ideas to modify the sector itself has been indicators that the state of Kerala is well ahead of others in understanding requirements beyond the established norms. Things seem all normal until this point. However, not all is fine.

As a fine example of the problems faced by the school students two representative districts can be considered. Palakkad and Wayanad districts of Kerala found mention is a recent survey highlighting a very high dropout rates among students belonging to the Scheduled Tribes. I and my colleagues at the Centre for Public Policy Research (CPPR) made several visits to these districts during the last few months. Observations and interactions at the school level revealed some bitter truth. Kerala is not a happy-go-lucky place as far as students in the primary, lower primary and secondary levels are concerned. Issues are abundant especially amongst financially and socially vulnerable groups in the society. In our enquiry spread across several schools we found that maladies facing the sector was more a fall out of the maladies that plagued the society. Students addicted to tobacco and alcohol, numerous instances of child labour and child marriages confronted us as stark realities. Many of the affected students found it way too taxing to spend time in formal education. So even while their names figured in the roll lists their physical presence was not there. However, these problems are always debated at the level of the student or the community he or she hails from. Teachers skulk from owning responsibility. A curious explanation that was provided by one of the several teachers we met was that the parents and grandparents were not aware of the importance of education and hence would not compel their children to go to school. The very idea of institutionalizing education is questioned given such explanations. Why then do we spend so much on training and qualifying staff and teachers for this job?

Amidst all these issues, it was seen that there was indeed a great demand for education in these districts. Unrecognized and single teacher schools survived because of this demand. Many of this insights on the educational sector might paint a picture of contradictions. For example how come demand for education can coexists with high dropouts? However the key issue is that these contradictions spring from a growing bureaucratic control over the sector and the several experiments conducted on it and not from several innovations by the people (like the unrecognized and single teacher schools) which has tried to meet this demand. The problem with education is that it is impossible to standardize practices and courses. This is because heterogeneity is a fact. The only response should be to unbridle and allow for new practices to evolve. What we observed from our visits was that students who don’t come to school are not a problem as it has been highlighted. They are exhibiting a clear choice. And that choice comes from many conditions that are spewed around them. Clearly social causes are not easily remedied and the more the state interferes in correcting them the more disruptive its tendencies would be. There are no ends that can predicted in education and knowledge. There are also no perfect routes. The very idea of predetermining social goals as an end result of education restricts its frontiers.

Kerala can achieve more from its initial success. The conditions are in place and needs a thrust which has to be evolutionary. As a priority policies in education should aim at limiting controls in the sector. At present these controls are strong. Teachers unions, political parties, bureaucrats and the entire state policy making apparatus actively participate in controlling the sector. The core of education should be creativity, and creativity cannot occur in bridles. The orientation of education should be to inject the idea of liberty. This liberty should be reflected in choosing professions and leading a life defined by each student’s level of comfort and interest.In return the respect for varied professions can emerge only when students are allowed to make free choices in the learning process. These choices should be made as the incentive for students to attend classes.

 * The author is the Director (Research) of CPPR. Views are personal