EDITORIAL SERIES

Editorial Series – 1/17

DESIGNING THE BAD BANK OF INDIA
Source: By RohanChinchwadkar: Mint
To solve the problem of bad loans in India, the Reserve Bank of India (RBI) has
introduced multiple schemes over the last few years: Flexible Refinancing of
Infrastructure (5/25 scheme), Asset Reconstruction (ARC), Strategic Debt
Restructuring (SDR), Asset Quality Review (AQR) and Sustainable Structuring of
Stressed Assets (S4A).
However, the “twin balance sheet problem” persists. On the banking side, stressed
assets now stand at over 12% of the total loans in the banking system. Public sector
banks, which own almost 70% of banking assets, have a stressed-loan ratio of almost
16%. Banks are unwilling to take on fresh risks which have led to negative growth of real
credit, the lowest in over two decades. So, what now?
A new solution gaining popularity is the “bad bank”. The concept is simple: Divide a
bank’s assets into two categories, good and bad. By separating the two, a bank can avoid
the contamination of good assets by the bad. It also alleviates the concerns of investors and
helps the bank focus on future lending by improving health and transparency.
However, while the concept of a bad bank is simple, the implementation can be quite
complicated. A variety of organizational and financial choices are available while designing a
bad bank. When RBI deputy governor Viral Acharya was asked if setting up a bad bank
could be an effective solution to India’s problem of bad loans, he said that it could help “if
designed properly”. So, how to design the bad bank of India? A report by McKinsey & Co.,
“Understanding The Bad Bank”, proposes four organizational models for a bad bank based
on two decision factors.
First is to decide whether or not to keep the bad assets on the bank’s balance
sheet. Moving assets off the balance sheet is better for investors and counterparties and
provides more transparency into the bank’s core operations. But it is more complex and
expensive. Second, is to decide whether the bad-bank assets will be housed and managed
in a banking entity or a special purpose vehicle (SPV). Depending on the choices, the four
basic bad-bank models are: on-balance-sheet guarantee, internal restructuring unit,
special-purpose entity and bad-bank spin-off.
On-balance-sheet guarantee
In the on-balance-sheet guarantee structure, the bank gets a loss-guarantee from
the government for a part of its portfolio. The model is simple, less expensive and can be
implemented quickly. However, the transfer of risk is limited and bad assets continue to
remain on the bank’s balance sheet, clouding its core performance. This approach is
useful for stabilizing a bank in trouble.
Consider the case of the Indian Overseas Bank (IOB). As of the quarter ended
December 2016, the bank reported gross non-performing assets (NPAs) of 22.42%, net
NPAs of 14.32% and a net loss of Rs554 crore. Since May 2016, the stock price of IOB has
dropped more than 20%. An on-balance-sheet guarantee by the government can quickly
restore confidence in the bank.
Internal restructuring unit
An internal restructuring unit is like setting up an internal bad bank. The bank
places bad assets in a separate internal unit, assigns a separate management team and
gives them clear incentives. This works well as a signalling mechanism to the market and
increases the bank’s transparency, if the results are reported separately. It is clear that this
model relies on the existing management team to restructure assets. However, if the
existing management is looking to kick the can down the road, as is the case for many
banks in India, this is not an effective solution.
Special-purpose entity
1

In a special-purpose entity structure, bad assets are offloaded into a SPV,

Page

securitized and sold to a diverse set of investors. The model works best for a small,
homogeneous set of assets. The bad loan problem in India is concentrated in a few
EDITORIAL SERIES

sectors like infrastructure and basic metals. An effective solution would be to transfer
bad loans from these distressed sectors into sector-specific SPVs, securitize them and sell
them in an auction. If the pricing is determined by the market, PSU bankers will receive
less blame for losses to the exchequer.
Bad-bank spin-off
A bad-bank spin-off is the most familiar, thorough and effective bad-bank model. In
a spin-off, the bank shifts bad assets into a separate banking entity, which ensures
maximum risk transfer. But the model is complex and expensive because it requires setting
up a separate organization, equipped with a skilled management team, IT systems and a
regulatory compliance set-up. Also, the problem related to asset valuation and pricing will
be the most severe in this model. The Public Sector Asset Rehabilitation Agency
(PARA) proposed by the Economic Survey 2016-17 falls in this category. However, given the
complexity and cost of the model, it is recommended to be used as a last resort, after all
other initiatives fail.
Setting up a bad bank is a very complex process. It is not a silver bullet which will
solve all the problems in the Indian banking sector. More importantly, a one-size-fits-all
approach to designing a bad bank can be very expensive and less effective. Just setting up
one PARA will not be enough to get the banking sector back on track. The most efficient
approach would be to design solutions tailor-made for different parts of India’s bad loan
problem.
End of jobs
Source: By Govind Bhattacharjee: The Statesman
A friend, who was an office-head, once recounted a poignant story about his
stenographer. A vendor had come to his office to demonstrate the use of speech-
recognition software that would allow a note to be dictated directly to the computer. After
the vendor had left, the steno asked him, “Sir, does that mean my services are no longer
needed?” Stenographers are no longer recruited in any office.
In 2014, writing software called Quill was developed by an American company; it
could convert numerical data into a written story, accomplishing within seconds what it
took experienced analysts weeks of synthesis and analysis of huge volumes of financial
data. In 2014, Associated Press began publishing a large number of articles about US
corporate earnings most of which were written not by humans but by robot journalists.
These are increasingly getting better, sharper, and more analytical.
All work can be divided into four types -- routine jobs that require the same task
repeated over and over again as opposed to non-routine jobs, and cognitive jobs that
require the use of brains as opposed to manual jobs that mostly requires the use of our
bodies. Routine labour stagnated way back in 1990, having been replaced by technology,
and many manual jobs followed suit. In the 21st century, cognitive and non-routine jobs
are being automated at an increasing pace, with exponential progress in developing robots
that can learn by themselves.
The future world will be one in which machines can perform all the four types of
jobs at a fraction of the cost of human labour. It is creating the spectre of a jobless growth
for our youth. In a 2013 study on the impact of computerization upon jobs, Oxford scholars
Carl Frey and Michael Osborne found that algorithms for big data had started to penetrate
higher cognitive domains like pattern recognition and to substitute labour in a wide range
of non-routine cognitive tasks.
Computers have already started replacing jobs in easy-to-automate areas like
transportation, logistics, production, services, sales, and construction. Harder domains will
also be captured during the next wave of computerisation, putting at stake jobs in
management, science, engineering, and even arts. They have predicted that nearly half of
all American jobs will be lost to automation by 2033. It will probably be faster.
Advanced robots are now being produced with enhanced features, mobility and
dexterity, allowing them to perform a much broader range of tasks requiring superior
cognitive skills. Demands for industrial robots are increasing exponentially. Their worldwide
sales in 2015 touched 225,000 -- 27 per cent higher than in 2014. This is sending
shockwaves across industries and occupations, impacting wages and educational
requirements for jobs.
The periodic slump in the demand for skilled labour is nothing new in human
history. In the nineteenth century, manufacturing technologies substituted for skilled
2

labour through simplification of tasks by introducing the electricity-driven, partly-

Page

automated assembly-line production system. As a result, real wages stagnated while the
EDITORIAL SERIES

output per worker expanded due to increased efficiency. In response, the educational
system became highly specialised, imparting complex skill-sets that, aided by the
phenomenal expansion of transportation networks and the consequent increase in market
size for the products, increased productivity manifold. This in turn led to a rise in real
wages and improvement in the living standards in industrial societies after the middle of
the nineteenth century.
The computer and the internet revolution of the twentieth century again dented
middle-income jobs, requiring higher levels of education for recruits and giving an
unprecedented spurt to innovation and creativity. As productivity increased with the
replacement of labour by technology in some industries, attracting more companies to enter
those industries and in turn forcing more automation, job-contraction and lowering of
wages. Industries that could not be automated shifted to low cost low wage countries, like
Bangladesh and Vietnam.
But alas, tasks that were hitherto considered non-susceptible to computerisation
are now increasingly being taken over by the computers, e.g., textiles and footwear. German
sportswear firm Adidas opened its first automated factory last year and revealed the robot-
made Futurecraft shoes. As Nicholas Carr, author of The Glass Cage: Automation and Us
said, “Jobs, that used to be very complex, idiosyncratic and interesting, start to look more
like computer operator jobs, just putting in data and interpreting screen readouts.”
Computerisation is no longer confined to low-skill and low-wage occupations it once
used to be.
The emerging portends are truly ominous. Truck driving is a popular job in the
USA. It is easily available, pays decently and has so far remained immune to automation.
But no longer are Google, Uber and Tesla all working on self-driven vehicles, and once
operational, it will immediately send 3.5 million drivers and 5.2 million additional
personnel instantly out of employment. Uber is already testing self-driving cars on the roads
of San Francisco and so is Google (Self Driving Cars now known as Waymo -- way to
mobility). The ultimate goal is to replace all human drivers with robots threatening millions
of drivers’ jobs.
If this is not scary enough, consider the following: The e-commerce giant Amazon
now has 30,000 fulfillment robots working in its warehouses worldwide; it expects to
replace all employees who perform repetitive tasks with machines in the not-too-distant
future. The Shanghai-based Cambridge Industries Group, one of China’s leading
suppliers of telecom equipment, is replacing two-thirds of its 3,000-strong human
workforce with robots, and eventually creating energy efficient ‘dark factories’ where robots
would work in darkness to save power.
Hardware store Lowe’s has just deployed a series of autonomous retail service
robots called ‘Lowebots’ at 11 stores in the San Francisco Bay area; these multilingual
“bots” are performing customer service and inventory management functions. Pizza Hut has
just opened a concept store in Shanghai with robot waiters, which welcome customers,
show them to their seats, take orders and serve drinks.
Walmart is testing warehouse drones that fly around its distribution centres
monitoring inventory levels and flagging up low stock or missing items. Many of the world’s
major companies spanning practically all sectors, like Nestle, SNCF, Foxconn, Marriott
Hotels, ING, DHL, Nissan, Fidelity Investments, Zara etc., are transferring the bulk of their
workload to robots.
In January 2016, the World Economic Forum had brought out a report on “The
Future of Jobs”. It predicted that the Fourth Industrial Revolution, brought about by
artificial intelligence and machine-learning, robotics, nanotechnology, 3-D printing, genetics
and biotechnology, will cause widespread disruption to business models and labour
markets over the next five years, with enormous changes in the skill set requirement in the
new age, costing a net loss of five million jobs in 15 of the world’s largest economies. These
include Australia, Brazil, China, France, Germany, India, Italy, Japan, Mexico, South
Africa, Turkey, UK and USA, plus the ASEAN and GCC groups, which together account for
65 per cent of the global workforce.
These are conservative predictions and the disruptions caused will vary widely
across industries. It is only in this context that economists are arguing for decoupling
income from work for providing a universal basic income to all to immunize the human
workers from the negative effects of automation. Switzerland, Finland, the Netherlands, and
Canada and even India are toying with this idea, the costs and benefits of which are now
3

being assessed.
Page

As technology continues to invade the labour market, education and businesses

must get ready for upskilling, reskilling and collaborating rather than talent hunting.
EDITORIAL SERIES

Tools made us human, and the tools we now have, artificial intelligence and computers,
are the most powerful tools ever invented. In our networked age, innovation, adaptability
and speed would be essential for survival, to equip our youth with a new set of cognitive
skills combined with creative and social intelligence to work alongside robots. Mere
cognitive skills aren’t enough in the robot economy. As Geoff Colvin asserts in his book,
Humans Are Underrated, the new age industry needs empathy, people who can understand
what the client or customer really feels and wants. This will require social skills and
creativity which robots don’t have, not as yet at any rate.
And that requires a new curriculum and pedagogy for our schools, colleges and
universities. We may be the fastest growing economy, but the growth is going to be jobless
as it has been in recent years, and governments can’t do much. In the days to come, the
clamour for reservation in government and private sector jobs is only going to be louder and
more contagious, not only from Patels, Jats, Marathas and Ahoms, but from all
communities, backward or forward.
India, China growth stories
Source: By T C A Ranganathan: Deccan Herald
I recount a day dream experienced after reading the flood of tributes to Kenneth
Arrow, often described as the founding father of the modern 'Social Choice' theory. He is
best known for his 'Impossibility theorem'. He demonstrated that it was impossible to
formulate a social preference ordering or voting system that can consistently and sensibly
reflect the preferences of a set of individuals with diverse views.
Apparently, simple conditions of democracy or non-dictatorship, full individual
sovereignty, unanimity (if all individuals in a group, prefers choice 'a' over 'b', the group
should also so prefer 'a' to 'b'), freedom from irrelevant alternatives (if some alternative
choices have been ranked, removal of one of them should not change the ranks of other
choices) and uniqueness of group rank imposed together in a 'choice' situation result in
erratic behaviour.
This was in 1951. The Noble Prize came in 1972 making him the youngest winner.
The dream wandered from Arrow, to another work inspired by this lucidly simple proof.
This was the 'Theory of the second Best' of Richard Lipsey and Kevin Lancaster in 1956.
Simply put, it enunciates that in a sub-optimal equilibrium, resetting one condition to
optimality, without simultaneously resetting all other conditions optimality gets you worse-
off than originally. It is thus better to consciously strive for second best solutions rather
than optimal situations.
The dream drifted back to another work for which Arrow is famous - his work on
endogenous growth or 'Learning by Doing' or simply, in a very colloquial sense,
corporations and organisations get better and more efficient with time if they simply keep
focussing on what they are doing. The dream unaccountably wandered off to the differences
between the Indian and Chinese growth stories. In Mao's time, both countries were equally
deficient on most parameters compared to the advanced economies. Both had similar sized
economies.
India was, if anything slightly ahead on most parameters. Enter Deng Xiaoping in
the post-Mao era. He retained 'non democracy' by whatever name you call it but, together
with his successors, systematically reset all governance processes relating to 'matters
economic' towards 'optimality conditions as per suggestions of US trained advisors. Not at
once or equally in all provinces and they are admittedly still nowhere there, but
systematically and continuously.
Equally admittedly, China is facing all sorts of problems in these troubled times, but
which country isn't? It is equally true that sooner or later they will run into the challenge of
reconciling their politics of governance with their management of economics, but as off now
are already five times larger in size than India. Also, though a predominantly
manufacturing/export manufacturing-oriented economy, they have a service sector more
than twice the size of the entire Indian economy and a digital or e-economy larger even
than the US digital/e-economy.
What about us? We are undoubtedly a robust democracy. Also, notwithstanding
what one set of politicians say about the others, governance practices have mostly been well
intentioned. All governments have grappled with reform and growth problems. Development
and growth have both undoubtedly happened. All policies invariably focus on securing
'optimality'. All states are equally important for allocation of investment and infrastructure.
Manufacturing-based employment has always been offered to all states (backward area
4

development, freight equalisation etc).

Page
EDITORIAL SERIES

Similarly, provision of justice (each case equally important, no acceleration at any

cost), affirmative action (simultaneous and equal in all institutions) or citizenship/human
rights has been consistently given priority. In no specific case can any fair person accuse
the state for being consciously 'partial' unless it was to a minority or the disadvantaged. All
laws apply with equal rigour in metropolitan as also rural centres.
Ramshackle cities
The dream then flitted off to the sorry fact that despite all this, we all experience
ramshackle cities, educational and health systems, reservation riots and increasingly
ever higher levels of unemployment. The social stress levels have gone up. Any or every
event can set off riot like conditions-whether it is a bullock cart race or a college debate or
even a simple celebratory get-together over a meal.
If you ask any adult, they all express a strong desire for change, even if it implies
paying more. They are willing, to pay more for treatments at a government hospital. All they
want is due attention, with adequate equipment in hygienic conditions. None likes getting
fleeced at a private set up but all perforce go there. All say that the same hospitals/
cities/universities were outstandingly good in the 1960s/ 1970's but have deteriorated.
If you ask any doctor or bureaucrat, serving or retired, for ideas on how to restore quality,
each will give his/her personal opinion that granting fullest autonomy and corporate
governance thereby creating a 'public' institution which is neither 'private sector' or
'governmental' is now the best way forward. But then, the same ideas had occurred in the
previous and earlier decades. The word 'autonomous' is now often used to describe the
same institutions and yet 'autonomy' is still felt required? The dream wrestled with the
paradox before flitting off to another paradox.
India is among the most difficult countries on 'ease of doing business' index.
We apparently have the most stringent procedures for environmental clearance. It often
takes years to get clearances. Manufacturing is our smallest sector. Yet environmental
pollution is our biggest problem. Similarly, construction laws and rules are extremely
complex and time consuming. Even extending a balcony in a flat involves multiple
authorities/permissions. Yet though India has an official Urbanisation Index of about 30%,
the World Bank satellite 'night light' based assessment places it nearer 60%. How can
World Bank be so wrong?
The locked spirals of paradoxes woke me up wondering what on earth Indian day to
day problems have anything to do with Arrow's work or even other paradoxes like 'Fallacy
of Composition' and 'Money Illusion' much liked by theorists. Maybe the answers are
blowing in the wind as Bob Dylan, the current Noble literature prize winner, once crooned?
Racist Raj
Source: By Abhik Roy: The Statesman
The British colonial ideology was constructed on racist terms and the underlying
argument behind their racist ideology was that British rule conferred the benefits of a
superior civilization to Indians whose lives were mired in illiteracy, poverty,
superstition, and strife. So, all their accomplishments in the areas of government and law,
education, city planning and architecture, among others, primarily served to mark out the
British Raj as a “moral,” “civilized” and “civilizing” regime. The following quote from Tory
politician, Lord Randolph Churchill, captures not only the British imperial hubris but also
the overt racist beliefs behind the British colonial rule in India:
“Our rule in India, is, as it were, a sheet of oil spread out over a surface of, and
keeping calm and quiet and unruffled by storms, an immense and profound ocean of
humanity ... and it is our task, our most difficult business, to give peace, individual security
and general prosperity to the 250 millions of people ... to bind them and to weld them
by influence of our knowledge, our law, and our higher civilization, in process of time, into
one great, united people ... That is our task for India. That is our raison d’être in India. That
is our title to India.”
The British colonialists had to create a vision for the Raj for India’s past as well as
its future. Without such a grand vision they could not justify their rule to themselves, much
less shape an efficient bureaucratic system in a foreign land. One major category that
the British applied to define India was the notion of “Oriental despotism.” This overarching
term had major implications for the British colonizers for enacting laws for India because it
meant that India had no laws. Hence Indians had to be taught to be law-abiding people.
The other category the British used to define Indians was that they were corrupt and given
5

to extortion and mendacity. As Lord Cornwallis had boldly proclaimed, “Every native of
Page

Hindustan, I verily believe, is corrupt.” By establishing despotism, lying and chicanery as

the norm of Indian behaviour, the British reaffirmed their moral superiority over their
EDITORIAL SERIES

Indian subjects. Sir Francis Younghusband, who led the British force into Tibet in 1904,
explained the British colonial ideology thus: “No European can mix with non-Christian
races without feeling his moral superiority over them ... It is not because we are any
cleverer than the natives of India, because we have more brains or bigger heads than they
have, that we rule India; but because we are stronger morally than they are.”
In the realm of governance, many British legal scholars found ample justification for
Britain’s authoritarian rule over the Indian subcontinent, arguing that the exercise of rule
in India could not always be applied within the bounds of English law because Indians were
culturally and racially different. In GeorgiePorgie, Rudyard Kipling argued: “You will
concede that a civilised people who eat out of china ... have no rights to apply their
standard of right and wrong to an unsettled land.” For Kipling, “the men who run ahead of
the cars of Decency and Propriety, and make the jungle ways straight, cannot be judged in
the same manner as the stay-at-home folk.”
Thus, for Kipling, the British colonialists were men of a special breed who had the
divine responsibility to bring about civility, law and order in a nation marked by chaos,
lawlessness, and corruption, where normal standards of morality simply could not be
applied. Kipling and British colonialists of his ilk laid down the ideology of the British Raj,
which was racist, arbitrary, and amoral. It was based on expediency and designed to
create a permanent schism between the colonizer and the colonized.
While the British could not give Indians the substance of their English law, which
they deemed impractical for India, the British thought they could at least bring its
“spirit.” The underlying assumption was that by doing so the British could fulfill their
avowed civilizing mission in India. James Fitzjames Stephen, legal member of the Viceroy’s
Council from 1869 to 1872, summed up the notion of the moralization of English law in
colonial India:
“The establishment of a system of law which regulates the most important parts
of the daily life of the people constitutes in itself a moral conquest more striking, more
durable, and far more solid, than the physical conquest which rendered it possible. It
exercises an influence over the minds of the people in many ways comparable to that of a
new religion ... Our law is in fact the sum and substance of what we have to teach them. It
is, so to speak, a compulsory gospel, which admits of no dissent and no disobedience.”
In order to implement an imperialist ideology in India, the British focused with
unrelenting fervor on the education of Indian subjects. Indian students were taught not
only English literature but they were also persuaded into believing the inherent superiority
of the English race. GauriViswanathan’s seminal work, The Masks of Conquest: Literary
Study and British Rule in India, shows quite forcefully how the British education system in
India, whose ideas came from Thomas Babington Macaulay and William Bentinck, was
rampant with thoughts about inequality of races and cultures that were propagated in the
Indian classroom as part of the curriculum and pedagogy. Thomas R Metcalf indicates in
Ideologies of the Raj that while English literature was not a part of the English
curriculum, the British colonialists ensured that their Indian subjects got exposed to the
“high culture” that the English literature supposedly represented as part of their grand plan
to civilize the culturally inferior Indian subjects.
The British succeeded in propagating an imperialist ideology not only by direct
domination and physical force of their Indian subjects, but they also utilized other
persuasive means to maintain the hegemonic processes of British colonial power. Edward
Said reminds us in Culture and Imperialism that at the most visible level there was a
physical transformation of the imperial realm, which involved the “reshaping of the
physical environment, or administrative, architectural, and institutional feats such as the
building of colonial cities (Algiers, Delhi, Saigon)....” These massive projects, whether
designing and building new cities, museums or roads, were undertaken by British
colonialists solely for the purpose of leaving a lasting legacy of the “civilized” British
culture with their Indian subjects, which would subsequently become an integral part of
their colonized mind and collective memory.
So, in essence, British colonizers devised a system whose purpose was not only to
ensure the effective reinforcement of their racist ideology, which propagated the
superiority of their culture and race over Indians, but also maintained intellectual power to
dominate their Indian subjects and to deny them the same rights and privileges on the
basis of cultural and racial differences, which the British enjoyed in their own country.
The racist colonial discourse of the British Raj often described the seemingly
6

unbridgeable chasm between the colonizer and the colonized as a gap between the
Page

“civilized” and the “savage,” “logical adult” and the “irrational child,” and the “manly
Englishman” and the “effeminate Hindu.” This last stereotype became a justification of
EDITORIAL SERIES

British colonial rule in India. The British determined that since Indian men were weak,
lacking in both the physical and mental ability to defend their nation, the British were
justified in protecting India.
The popularity of the idea of Hindu men being effete in British colonial literature can
be traced back to the 18th century, with ill-founded theories of climatic influences in
which oppressive heat and humidity were considered to be the main reason for lack of
manliness, resolve and courage among Hindu men. Like many other British colonialists,
Robert Orme, British historian in the eighteenth century, concluded that along with the
inhospitable climate, the staple diet of rice, an “easily digestible” food obtained with
minimum labour, was “the only proper one for such an effeminate race.” In their efforts to
glorify the Raj, British imperialist rhetoric often constructed English colonialists as heroes
who, by defeating the natives, would create order out of chaos and disorder in India. From a
British standpoint,
Indian men, especially upper caste Hindus, were effeminate men who had been
vanquished and turned into British subjects. James Mill wrote in The History of British
India in the early 19th century that the Hindus were endowed with some unique
characteristics at the core of which lay effeminacy and dishonesty. According to Mill, since
Hindus could not deal with the “manliness and courage of our ancestors,” the vanquished
Hindus with their “slavish and dastardly spirit” were ready to use “deceit and perfidy” to
achieve their goals.
British colonial discourse was replete with images of Hindus as being weak and
ineffectual who were devoid of any form of masculinity. Thomas Babington Macaulay wrote
about the effeminacy of Hindus in blatantly racist terms: “The dark, slender, and timid
Hindoo [sic] shrank from a conflict with the strong muscle and resolute spirit of the fair
race, which dwelt beyond the passes.”
Sir George MacMunn, the author of The Martial Races of India, ridiculed Gandhi,
wondering how some Hindus, namely Rajputs, turned out to be brave Indian warriors when
Hindus in general were such weaklings: “Who and what are the martial races of India, how
do they come, and in what crucible, on what anvil’s [sic] hot with pain spring the soldiers of
India, whom surely Baba Ghandi [sic] never fathered?” MacMunn chastised Gandhi and the
“mass of (Indian) people (who) have neither martial aptitude nor physical courage, the
courage that we should talk of colloquially as ‘guts.’ ”
He blamed the “varying religions, early marriage, premature brides, and juvenile
eroticism” of Hindus for their lack of martial spirit. Similarly, among British colonial
representation of Hindus, the most common construction of the effeteness of Indians was
the Bengali babu who worked for the British bureaucracy. In fact, it was the Bengali babu
(often spelled as baboo to suggest a link with the primate) who was the butt of crude, vulgar
and blatant racist attacks by English men and women in their writings.
It was the Bengali man’s “extraordinary effeminacy” as displayed by his diminutive
physique, flowing dhoti that resembled a woman’s dress, and worship of goddesses that
best explained for the British colonialists why he, and by extension, India, needed to be
guided by the strong, assertive hand of the superior masculine English race. Rudyard
Kipling frequently depicted the Bengali civil servant as a fool who, when confronted with
crisis, would inevitably flee the scene and left the “real” men to salvage the situation.
Macaulay seems to have dwelt considerably on the effeteness of Bengali babus. In
one of his essays, he described a Bengali babu thus: “The physical organization of the
Bengalee [sic] is feeble even to effeminacy. He lives in a constant vapour bath. His pursuits
are sedentary, his limbs delicate, his movements languid. During many ages he has been
trampled upon by men of bolder and hardier breeds. Courage, independence, veracity, is
qualities to which his constitution and his situation are equally unfavorable. . . . [He] would
see his country overrun, his house laid in ashes, his children murdered or dishonoured,
without having the spirit to strike one blow.”
In another essay, Macaulay described the Bengalis in the most denigrating ways:
“Whatever the Bengali does he does languidly. His favourite pursuits are sedentary. He
shrinks from bodily exertion; and though voluble in dispute and singularly pertinacious in
the war of chicane, he seldom engages in personal conflict, and scarcely ever enlists as a
7

soldier. There never perhaps existed a people so thoroughly fitted by habit for a foreign
Page

yoke.”
EDITORIAL SERIES

Very much akin to Macaulay, George Warrington Steevens’ depiction of the Bengali
is not only overtly racist but also dehumanizing: “By his legs you shall know the Bengali …
The Bengali’s leg is either skin and bone, the same size all the way down, with knobs for
knees, or else it is very fat and globular, also turning in at the knees, with round thighs like
a woman’s.
The Bengali’s leg is a leg of a slave.” British colonialists did not spare the Hindus
from South India, who were also portrayed as non-martial by them. General Frederick
Sleigh Roberts, for example, writing about South Indian Hindus, concluded that the
“ancient military spirit had died in them, as it had died in the ordinary Hindustani of
Bengal and Mahratta of Bombay, and that they could no longer with safety be pitted against
warlike races, or employed outside the limits of South India.”
Similarly, Sir O’MooreCreah considered South Indian Hindus to be “timid both by
religion and habit, servile to their superiors and tyrannical to their inferiors, and quite
unwarlike.” Within these examples that are overtly racist, one can see the emergence of a
common narrative form.
The British colonial discourse begins with the establishment of the Hindu male as a
weak, lazy, cowardly, slave. But not only does the colonial discourse establish a negative
construction of Indian males’ character and physicality, it also links this negative
construction to military inaction thus, providing a justification for the British colonial rule
as the able protector of India. While the British racist ideology endeavoured to construct the
Hindu men as effeminate, we must not forget that this ideology was ably challenged by
several Indians, notably Bankimchandra, Swami Vivekananda, and Tilak, among others.
The warrior monks in Bankimchandra’s famous nationalist novel Anandamath
embodied military valour while Swami Vivekananda sought to construct a Hindu manhood
that was a unique combination of Christian manliness and Hindu ideals of spiritual power.
Tilak, on the other hand, used Shivaji, who was known for his indomitable courage and
military prowess, for his political mobilization.

Practice 1. Discuss the concept of bad bank scheme. What are the challenges to
questions for implement this scheme.
Main’s:
2. What do you understand by the jobless growth? Evaluate it in the
context of Fourth industrial revolution.
3. It is impossible to formulate a social preference ordering that can
consistently and sensibly reflect the preferences of a set of individuals
with diverse views. Elucidate.
4. In British colonial era, The British applied to define India as the notion
of “Oriental despotism and it had major implications for the British
colonizers for enacting laws for India. Discuss.

8
Page