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Volume XXI Number 117

MUMBAI | MONDAY, 30 JANUARY 2017 prices — and commodity prices in general — is taper-
ing off, with severe implications for government

Budget report card resources and for real growth in India that has increas-
ingly been driven by cost-cutting rather than pro-
ductivity increases.
Good on legislative reforms, patchy on execution Meanwhile, the Budget exercise will take place
amid little or no clarity about several key ingredients.

ast year’s Union Budget was hailed for its commitment to fiscal prudence, First of all, actual growth is uncertain, since the Central
especially as the finance minister had to sew a Budget around the recom- Statistics Office’s Advance Estimates of GDP are based
mendations of the 14th Finance Commission, which allocated a significantly largely on numbers from the months before demon-
etisation. Secondly, actual revenue next year is a bit of
higher proportion of resources to the states. But the Budget also marked a
a mystery because of the effects of the introduction of
clear shift in the Narendra Modi-led government’s priorities — bijli, sadak, cooking gas GST. Even tax revenue this year has been a bit of a puz-
and rural housing received much attention. It was clear that the government was lin- zle, and it is not clear what may have caused some of
ing itself up for the elections in 2019 and focussing on welfare schemes that most affect- the large increases over last year, and whether they are
ed the poor, as against the so-called neo-middle class. The implementation of the key sustainable. Thirdly, the government’s numbers them-
Budget promises shows a clear trend. Barring a few exceptions, the government has per- selves will be the object of much confusion thanks to
the long-overdue phasing out of the Plan/non-Plan
formed better when it came to the promises that required legislative changes as against
distinction for expenditure.
those that required changes on the ground, where the central government had to Thus Mr Jaitley will have to resist many pressures
coordinate and work with the states. This is true despite the overwhelming sense that from various quarters. His boss may want larger and
legislative work has suffered immensely due to parliamentary logjams — for instance, more spectacular populist packages in the Budget,

Another clean-up job

the winter session was the worst performing session in the past six years. and Mr Jaitley will have to find the money for it.
Still, Finance Minister Arun Jaitley would be able to look back at the past year with Various large industries hit by demonetisation, par-
ticularly I suspect construction and real estate, will
some satisfaction when it comes to the proposals he announced as part of financial
have been demanding the Budget address their needs
sector reforms. Crucially, Parliament passed the Insolvency and Bankruptcy Code, — in the national interest, of course. He already has
which seeks to improve the ease of exiting a business, in May 2016. The government After demonetisation, Arun Jaitley’s fourth Budget must show Indian committed to tax rationalisation of various kinds, and
also passed the promised Enforcement of Security Interest and Recovery of Debts Laws a reduction in personal income tax rates is apparent-
and Miscellaneous Provisions (Amendment) Bill. Similarly, at long last, India managed economic policy decision-making can still be trusted ly his own dearest desire.
to pass the constitutional amendment to enable the transition to a goods and servic- So, you might ask, as is usual, why he should have
time to spare for what a bunch of arrogant and under-
es tax regime. And just a few days ago, the Cabinet Committee on Economic Affairs
ver the past month, it has become increas- slow and confused. But the last Budget quite effec- informed investors think. Why not dump fiscal con-
gave the go-ahead for the listing of shares of five general insurance companies. The oth-
er big achievement was the amendments in the Reserve Bank of India Act to usher in
a new monetary policy framework where a committee, with the representation of gov-
O ingly clear that there is a divide in how tively took the wind out of that narrative. Faced with
demonetisation is discussed inside India and a prime minister turning hard to the populist left, the
outside. In India, by and large, it is seen as a fait accom- finance minister in 2016 nevertheless produced a for-
solidation and focus on what makes domestic politi-
cal sense? After all, India’s government knows best
what India needs. And, sure, that argument can be
ernment nominees and the central bank, undertakes the monetary policy review. There pli; a political masterstroke; a painful and extreme, ward-looking Budget that attempted genuine move- made. However, the facts are sobering. The year 2017
have been other areas that only saw little movement, for instance, there is still no road even unnecessary step, but one that is essentially ment on such matters as tax reform and welfare deliv- might well see global capital turn further away from
comprehensible and understandable. Outside, no ery mechanisms. It appeared coherent and thought emerging markets, even “bright spots” like India, to
map for the consolidation of public sector banks. But, overall there are several changes such excuses are being made. Not only has it under- through, and helped to restore a certain optimism look again at how it could take advantage of develop-
that will improve the ease of doing business and boost growth. lined India’s inability to execute policy and left about the government’s policy choices. ments in mature markets such as the Trump phe-
However, the success with promises on the social and rural sectors or even the infra- Narendra Modi’s reputation for competence in tatters, Unfortunately, the year since then has not been nomenon. But such capital is essential to India’s devel-
structure sector has been rather patchy. There were some standout successes such as but it has been met with complete bewilderment. It kind. The departure of Raghuram Rajan was a blow to opment. The Indian private sector is still unwilling to
the Pradhan Mantri Ujjwala Yojana, which provides LPG connections to poor women. looks eccentric, even absurd, causing the notion that India was home to invest; many large companies have not been able to
It has already exceeded its target of 15 million households. Similarly, there has been con- people to question whether India’s well-functioning, independent insti- deal with their debt overhang; banks which have their
decision-makers have the slightest tutions. The troubled banking sector own well-known troubles are now being used, Indira
siderable success towards achieving the target of the soil health card scheme as well as idea of how to run an economy; and it remains essentially untouched — Gandhi-style, mainly as instruments for building a
the scheme to increase the area under organic farming. Yet, for the most part, the achieve- plays neatly into the existing stereo- indeed, there has been significant New India rather than as the arteries of the financial
ments have lagged behind — nowhere more so than in the Pradhan Mantri Awas Yojana. type of the Indian state as intrusive to backsliding on cleaning up bad lend- system. Investment is still stalled, although “policy
For instance, as against a target of 3.2 million rural houses, only 76 have been constructed. an unusual degree, and uncaring ing since Mr Rajan’s departure. The paralysis” headlines have vanished. So, like it or not,
A health insurance scheme with a cover up to ~1 lakh is yet to be launched. The road con- about the economic consequences of goods and services tax (GST) may foreign capital is still important.
its decisions. become a reality, but little was done And to keep that flowing in — correctly, to actual-
struction programme, which received the most generous outlay in the last Budget, too,
This is the context in which Arun over the year to suggest the govern- ly get it to start flowing into the sectors and projects
lags far behind the target. Several other changes proposed to boost investment in the Jaitley’s fourth Budget will be pre- ment is really prepared for its chal- that we need it to, since the nature of foreign capital
infrastructure sector have not yet been introduced. With the economic recovery being
halted by demonetisation, it is of critical importance that the next Budget makes up for
sented. Much has already been written
about how it will need to incorporate
POLICY RULES lenges of implementation. A sequence
of inexplicable anti-foreign capital acts
flows so far has not been helpful — the Budget will
have to take its expectations into account. India is
the slack in the on-field implementation of various schemes. Better coordination measures that restore confidence after MIHIR S SHARMA — the refusal to allow NTT DoCoMo to clinging on to an investment-grade credit rating, and
between the Centre and the states, notwithstanding the state elections and their results, the vast demand destruction that take money out of India, the cancella- its fiscal discipline has been a large part of that.
demonetisation has caused. But tion of bilateral investment treaties, Keeping that rating going is essential; the impact
would do India well.
equally important will be the degree to which the and so on — effectively undermined the PM’s ‘Make across the board of a downgrade, or even a change in
Budget restores confidence worldwide that grown- in India’ rhetoric. And then, to cap it all, there was the outlook, would be quite disastrous at this point in

Mr Trump moves quickly up policy decisions are being made in India. We may tragedy that was demonetisation.
not like to hear it, but our reputation as a destination Clearly, Mr Jaitley and his team have another repair
for investment has taken a terrible hit. We may feel the job to do. And this year, their constraints will be even
time. Mr Jaitley must hold the fiscal line. That’s the
one number everyone will look to see.
But the biggest task is to restore the narrative once
Opportunities for India in emerging DC worldview need to give a respectful hearing to messianic speech- tighter. Not only has the PM maintained his populist again. The Budget will have to be credible, reformist
es from various government functionaries about black line — as was clear from his New Year’s Eve address — and forward-looking. Its numbers will have to add

onald J Trump’s tumultuous first week as President of the United States money and the digital future; the rest of the world feels but we are closer to the crucial UP assembly election up, and its policy choices mature. If not, the damage
suggests that he has every intention of moving swiftly to implement the no such obligation. and also to the start of the central government’s re- to India’s reputation from demonetisation cannot
agenda that he had outlined — albeit sketchily — on the campaign trail. For Mr Jaitley, this will no doubt be a familiar posi- election campaign. The fiscal consolidation path will even begin to be repaired.
tion. By this time last year, expectations from the really begin to bite this coming year, when the deficit-
He has signed a series of executive orders aimed primarily at upending Narendra Modi government were at the lowest they to-GDP ratio is supposed to go down to three per cent.
his predecessor’s agenda; the first began to scale back parts of Barack Obama’s health had been. Its economic policy seemed incoherent, The long bonanza caused by the decline in crude oil Twitter: @mihirssharma
care legislation and others focused on trade and environmental decisions, such as the
order to withdraw from the Trans-Pacific Partnership. Protests erupted at major
American airports over the weekend after President Trump also essentially banned
immigration by Muslims from seven countries in West Asia and North Africa. Although
a federal court has provided a temporary stay on the ban on Saturday, it is clear that
Mr Trump intends a radical shift in the US’ outlook and approach, and his priorities
Jallikattu: Ecological roots cut
deserve to be taken seriously.
ow that the dust has settled on Marina beach, “bulls” from the list but the Supreme Court inter- plea has been that cruelty is not inherent in the sport

On international affairs in particular, it is possible to discern the outlines of a
Trump worldview. First, China is now seen as a strategic and economic rival above all where young protesters had camped to vened. In May 2014, the court ruled that jallikattu, and can be regulated. The proponents have never
demand that the ban on jallikattu — a tradi- bull-racing and other such activities were indeed ever articulated the ecological purpose of the sport as
else. It is not clear whether this means that security issues will be bargained away for
tional sport of bull jostling — be lifted, let’s discuss the cruel to animals and upheld the notification ban- this would require substantiation.
economic concessions or vice versa, but it is certain that the era in which the US did larger and more serious issue of culture, tradition ning the “sport”. Then look at the ground facts. Today, indigenous
not explicitly seek to control China’s rise is over. Second, Russia is no longer an ene- and their practice in the modern world. For a prac- But since then, each Pongal — the festival of har- domestic animals across the country stand close to
my. Whatever the reasons that may be given for this — some more lurid than others tising environmentalist (like me), this is a contentious vest when jallikattu is organised — the rumble of dis- extinction. There is a compelling reason to argue that
— it is clear that much of Mr Trump’s most hard-line supporters view Russia as a civil- and highly polarising issue. There is no doubt that tra- sension has been growing. The Union government has these species must be conserved, protected and bred.
isational ally, part of the West with common interests against political Islam and the ditional cultures had empathy with kept the fires burning by “promising” They are local and so, have the ability to cope with
ecology — people had learnt to live amendment to the PCA Act. This adverse ecological conditions. Today, Indian tradi-
rise of China. And thus the third pillar, which will be an increased rhetorical pitch about
with nature, optimise its resources year, all hell broke loose as thousands tional cattle breeds are the basis of economic pros-
the threat posed by radical Islamists. The immigration ban is the first part of this; but and rationalise its use during scarci- of youth — not illiterate and media- perity in other countries. Africa breeds our Sahiwal;
it is unclear what actual on-the-ground measures Mr Trump could possibly have in ty. This “sustainable use” was woven ignored farmers — plugged into Brazil our Nelore; even the American beef cattle comes
mind to, for example, “destroy ISIS”, as he has repeatedly promised. Alienating the Iraqi into rituals, practices and beliefs, and social media and spilled onto the from India’s Brahman. But we have taken fancy to
government, the primary ground force opposing ISIS, is not a promising first step in became part of cultures. But times beach in Chennai and roads in other foreign breeds like Jersey and Holstein Friesian.
that direction. Finally, there is trade. A Trump administration will move decisively away change, and so do the approaches cities of Tamil Nadu. The gathering The 19th Livestock Census released in 2012 shows
and sensibilities of society. How do was enough to push the state govern- this decline. Between 2007 and 2012, there was a 19
from multilateral and global trade negotiations towards bilateral trade deals where the
traditions live on? Should they? Or, ment to act. Overnight, it promulgat- per cent reduction in indigenous male cattle (bulls)
US’ weight in individual trading relationships can be more effectively deployed. should the focus be on the reasons ed an ordinance and enacted it into a and a parallel 20 per cent increase in exotic breeds of
For India, the most weighty consequence of Mr Trump’s apparent determination why we did what we did, and not on law to ensure that bulls are not barred male and female cattle. When compared to the pre-
to put his stated agenda into practice will be the effect on skilled immigration, such the ritual that has only become sym- DOWN TO EARTH from being used for rural sport. But vious census in 2003, the loss is 65 per cent in indige-
as of software engineers. While many of Mr Trump’s initial statements have focused bolic now? the moot question remains — is this nous milch cattle. The case is the same in Tamil
on migration from Central America or of lower-skilled migrants, his appointments — I ask this when the country is SUNITA NARAIN an ecologically important tradition Nadu. So, it would be fair to say there is absolutely no
learning (and definitely mispro- or just blood sport? evidence to show that jallikattu has aided in the con-
including the hardline anti-H-1B senator Jeff Sessions for Attorney General — and
nouncing) a new word, jallikattu. The Tamils practise Proponents say jallikattu is the only way to pre- servation of indigenous breeds, other than saying
the instincts of his advisors, including his chief advisor Steve Bannon, indicate that this tradition and say it is different from the bull- serve the state’s traditional Kangayam species of bull. that the species that could have gone extinct is sur-
H-1B reform is more than likely. Yet, for India, there are possibilities, too. A more stri- fighting of Spain. They do not kill the bull, only play They say through this sport, the stud bull’s powers are viving by the skin of its horns.
dent counter-terrorism perspective from the US will open up possibilities for coop- with it by removing bundles of gold and money tied demonstrated and it is selected for conservation. This is not to argue against jallikattu, but to argue
eration with India. A renewed focus on China’s rise means that security and to its horns. The skill is tested in how the man — it’s They go as far as saying that if the sport is banned, that if the tradition has to be kept alive in spirit, then
geostrategic engagement with the US can be stepped up — that was certainly the always a man — removes the money and, in the there will be no “value” in keeping the bull; it will be its proponents must muster courage to walk the talk.
process, tames the raging bull. This is why it is a slaughtered and the ratio of cow to bull will further Much more needs to be done to protect and ensure
implication of much of what new Defense Secretary James Mattis said during his
sport, say animal rights activists, who had success- decline. the continuation and use of indigenous breeds, which
confirmation hearings. While its priorities may be clear, the Trump administration fully taken the issue to the Union government. In The question is whether this ecological purpose are vital for the country’s livestock economy. This is
is nevertheless unburdened by specific policy proposals in many areas, such as 2011, the then environment minister, Jairam Ramesh, has been understood. The answer is a sad no. First, where the catch lies. This is the horn that matters.
counter-terrorism. This would be an opportune moment for New Delhi to reach out agreed to include “bull” in the list of animals that were let’s look at the arguments made in the Supreme
itself with ideas as to how cooperation can be stepped up, so it can help shape the banned for use in training or exhibition under the Court by the state government or even the Union The writer is at the Centre for Science and Environment
agenda in Washington. Prevention of Cruelty to Animals (PCA) Act, 1960. government. The only reason to seek continuation of
His successor, Prakash Javadekar, wanted to remove the sport has been “culture” or “tradition”, and the Twitter: @sunitanar

Geography made America great the turbulent change swirling about us

now, America was and remains the prod-
uct of an exceptional geography. North
America has more miles of navigable
(his italics), “fated to lead.” For a host of rea-
sons, ranging from geography to culture,
no other country can play the same role.
Mr Kaplan embraces America’s quasi-
world.” The best we can hope for is to
reduce disorder. Doing that requires pro-
jecting power, yes, but with a “light and
subtle footprint.” It won’t be easy.
sinister foreign government. Longstanding much longer. Every page brings a fresh inland waterways than much of the rest of imperial role but is no imperialist. His book Earning the Rockies was written before
global alliances are questioned, long- insight, a telling aperçu, a bracing reality the world combined. Better still, its rivers is most challenging, and most valuable, the 2016 election. The name “Trump”
standing political norms are trashed — and check. Mr Kaplan is one of America’s most run diagonally rather than (as in Russia) for the layers of paradox it mines. appears only a few times. Yet there is more
then the candidate with the three-million- distinguished writers on foreign affairs, north and south, forming an ideal network Geography and union make the United insight here into the Age of Trump than in
vote plurality loses. In what alternative uni- with 16 prior books to his name. Many will for internal communication and trade. States a hegemon whose auspices create bushels of political-horse-race journalism.
BOOK REVIEW verse does this make any sense? As Karl recall his 1994 Atlantic article (then book) Moreover, America’s continental span and the conditions for globalisation — but glob- Where are we now? In territory that is
Marx said, in a very different context: All “The Coming Anarchy,” which looks eeri- rich resource base shield it from external alisation diminishes America’s geograph- uncharted but not altogether unfamiliar.
JONATHAN RAUCH that is solid melts into air. ly prescient today. In his teens as a hitch- threat and dependency. Thus the United ical advantages and erodes American uni- President Trump may try to ignore the
Or maybe not. Maybe the political air is hiker and again in middle age as a jour- States is uniquely blessed by geography to ty. Meanwhile, as globalisation uproots paradoxes of geography and globalism, but
Just over half of America, having voted for turbulent but the country’s tectonic fun- nalist, Mr Kaplan trekked across the form and sustain a cohesive continental local economies and norms, the commu- he cannot escape them. In the long run,
Hillary Clinton, awoke the next morning to damentals remain solid. Maybe American continental United States. Today, per- union. Union is not the same as unity, but nications revolution spawns new tribal and Mr Kaplan reminds us, the shape of the riv-
a country that seems not only unfamiliar politics and geopolitics rest on a founda- plexed by America’s pivot against the suc- it’s a good start. ideological identities, everything from er constrains the pilot’s course. America
but upside-down. Populists embrace a tion as immovable as the rivers and plains cessful global order that Americans built, America’s geographical and hydrolog- jihadism to alt-right. “It isn’t the clash of will continue to lead, because it must.
celebrity billionaire, evangelicals welcome of the country itself. For those who feel he repeats the journey, “for the answers to ical blessings ramify not only inward but civilisations so much as the clash of artifi-
a foul-mouthed Lothario, conservatives disoriented, and also (perhaps especially) our dilemmas overseas lie within the con- also outward. “The United States is not a cially reconstructed civilisations that is ©2017 The New York Times News Service
accept an opportunist whose only ideolog- for those who feel triumphant, Robert D tinent itself.” normal country: Its geographic bounty taking place,” Kaplan writes. Finally, glob-
ical commitment is to himself. The Kaplan’s small but magisterial new book is He returns with a musing travelogue, gave it the possibility of becoming a world alisation, a product of American influence EARNING THE ROCKIES
Republican establishment proves helpless a tonic, because it brings fundamentals one that seeks, in words as carefully chosen power, and with that power it has devel- and a bulwark against chaos, erodes How Geography Shapes America’s Role
against the hijacking of the party, the main- back into view. as gemstones, to bring America’s geo- oped longstanding obligations, which, on American influence and births new dis- in the World
stream media prove ineffectual against the With only 180 uncrowded pages of text, graphic and geopolitical fundamentals account of its continued economic and ruptions. For all its unrivaled military and Robert D Kaplan
tide of fake news and the political system this is a book that can be read on a coast-to- back into the picture. social dynamism relative to other powers, economic power, the United States “now Random House
proves vulnerable to the machinations of a coast flight, but fully digesting it will take What do we learn along the way? For all it keeps,” Kaplan writes. “We are,” he says has no possibility of bringing order to the 201 pages; $27