Making China great again: Xi grabs power to resolve current contradictions, but could trigger new ones

“The superior man,” says the Analects of Confucius, “cannot be known in little matters but may be entrusted with great concerns.” As an ardent scholar of Confucianism, it appears that President Xi Jinping has taken this advice to heart. In March, Xi orchestrated the abolition of constitutional term limits for assuming presidency effectively making him the “chairman of everything” for life and entrusting him with the great concerns of party, military and state.

Xi’s consolidation of power likely has two objectives. The first is personal – Xi seeks to cement his legacy. Since Mao, no other Chinese leader has crafted such a cult personality. Having christened himself “Core Leader” at the 18th Party Congress in 2016, he has now firmly entrenched “Xi Jinping Thought” in the constitution, placing him on par with Mao Zedong and Deng Xiaoping.

The second is great power ambitions. Xi has set very clear timelines for achieving the “China dream”; otherwise known as the “two centenaries” – “moderately well-off society” by 2021, and a “democratic, civilised, harmonious, and modern socialist country” by 2049. By mid-century, Xi intends for China to become a “a mighty force” that would be an active “constructor of global peace, contributor to the development of global governance, and protector of international order.”

Xi is aware that China is at a critical juncture. He believes the time is right for China to reclaim its place in the world; and to supplant Western powers – especially America – as the leader of the international system. To view Xi’s power play as selfish dictatorial ambition, then, is superficial. Instead, it has more nuanced implications for China and the world.

First, Xi understands that the Communist Party requires a new social contract with its citizens. Over the past 30 years, China’s trailblazing economic growth has created a prosperous middle class and skilled professionals – many of whom now demand a better quality of life over high growth rates alone. Secure with his own position, Xi might be in a position to experiment with political reforms that could address this contradiction, and advance his “better life” agenda – including improving “deliberative democracy” by politically empowering local officials and creating new channels for public accountability.

Second, the pace of institutional reform will increase exponentially. As China becomes a global power, Xi understands that “going out” will require new standards for transparency, governance and performance in the economy if he is to sell “socialism with Chinese characteristics” to the rest of the world. Already, the National People’s Congress is assembling to consider enacting such reforms this year. Perfecting a unique blend of state control over industry and free markets will require painful and complex restructuring of administrative and economic institutions – and Xi wants an uninterrupted stint to see these reforms through.

Third, Xi has staked his legacy on the Belt and Road Initiative – the key instrument for his ambition of integrating Asia into a governance architecture that is more politically and economically cohesive than its sub-regions. The BRI must overcome several regional competitors to achieve its ultimate goal: creating new markets for high end Chinese goods in Europe. And Xi has made it clear that he is willing to use coercive statecraft to achieve this objective: ranging from Doklam-esque standoffs with India to “debt trap diplomacy” with smaller neighbours. With Xi at the helm, Asia must brace for a forcible attempt to reconstitute its geographical, political and cultural borders.

Fourth, Xi sees the reunification of democratic Taiwan with the mainland as a critical pre-condition towards achieving the “great rejuvenation of the Chinese nation.” Already, Taiwan is a souring flashpoint between the incumbent super power – America, which recently voted to increase government and civil society interaction with Taipei – and China’s rising ambition. Xi’s consolidation of political power, coupled with his agenda for institutional and functional modernisation of the army, and militarisation of the South China Sea point towards rising tensions on this front.

Finally, Xi faces the Putin paradox: massive concentration of power creates political losers; many of whom will often seek to exact violent revenge. Xi’s expansive anti-corruption drive, renewed political interference in companies, and rigid ideological control over public spaces have not all gone down well with China’s elites. At the same time, Xi will now also be seen as singularly responsible for policy failures – ranging from the economy to foreign affairs. Having amassed enormous power he must somehow craft a successful model for political transition when he does step down; or else face dire consequences for himself and for China’s stability.

Xi’s power grab will likely be a turning point in history. It brings stability at a time when China’s comprehensive national power is at its highest since ancient times; even as America and other Western democracies struggle to manage the international order they created. Simultaneously, China is a state and society in flux – high economic growth has created new political expectations and demands; and China must now shed its export led manufacturing strategy to embrace a new investment led model for the economy.

“Our mission is a call to action,” declared Xi at the 19th Party Congress, “let us get behind the strong leadership of the party and engage in a tenacious struggle.” If Xi can carry out his mission, he will not only oversee the arrival of China as a great power, but will also emerge as arguably the greatest leader China has ever known in modern history.

Source: Times of India, March 30, 2018. 

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Columns/Op-Eds, Politics / Globalisation

Six Silent Sins

When the family loyalist was summoned to the sanctum sanctorum by the “High Command” there must have been trepidation and unease in his mind. The organisation after all had just been humbled, humiliated and vanquished at the hustings. As Madam Gandhi asked A.K Antony to introspect and dig deep to find the causes of the Congress Party’s crushing defeat in the 2014 general elections, he must have recalled the string of fallen angels who preceded him, like Azazel and Lucifer. These angels were, as Milton describes them in Paradise Lost, “brighter once amidst the host of Angels, than the sun amidst the stars”. Their fault however was stepping out of line and questioning and defying god.

Clearly then, one implicit parameter for Saint Anthony (if he knows what’s good for him) was to avoid Lèse-majesté when talking of the Holy Trinity – Mother, Son and Daughter. While one has access to his report outside of the usual gossip one hears, it doesn’t exactly take a genius to figure out who and what was left out under the garb of “collective responsibility”. With a great deal of certainty, one may assume that the following seven reasons never made it into the “introspection” report.

The first reason for the loss has to be the undue influence, in party matters, of people like Mr Anthony himself. Some of them clearly irrelevant to contemporary Indian politics, many just sycophants whose raison-d-etre’ were the favourable whims of 10 Janpath, most lacking organisational credibility and legitimacy, and all, so far divorced from ground reality that their influence on party strategy was recipe for failure. Party politics was managed by the extended household of the former first family, not by those with personal political weight and credibility among the people.

By the end of his second term in office, the former Prime Minister was the second reason for what unfolded. He broke his own promises though he never broke his silence. He sold India the hope of reforms and inclusive growth – of a market oriented liberal democracy. By the end of 2009 India was back to the 80s’. All corporates were once again thieves, market based reforms were passé, licence raj had been replaced by regulator raj and corruption was rampant. The Prime Minister who reformed India in 1991 as its Finance Minister presided over a period that destroyed the country’s entrepreneurial spirit and scarred its enterprising soul.

Following from this a dated approach in responding to contemporary needs was the third reason for failure. The infatuation with ‘doles’ to the poor, as against offering ‘agency’ to them, represented a re-institutionalisation of feudal thought. India of 2014 is not the India of 2004. It is younger, low-income and seeking opportunities. What was on offer was continued state patronage and welfare schemes, which may have appealed to a poorer and older demography of the past. India today, is young and aspirational and has dreams that transcend promises of lifeline existence. The poor were the target vote-bank and the approach seemed to imply that the party would thrive because of incessant poverty.

The mediocre branding of the protagonist-in-chief, Rahul Gandhi was to be the next reason. He could not relate to the people, and his moral renunciation and episodic political participation was disingenuous. His contrived anger against corruption, his feeble remorse for the riot victims of 1984, his convoluted commitment to a progressive India and his role as an ‘outsider’ was poorly thought through and badly executed. There were limited takers for the “RaGa” proposition.

The fifth, reason would have implicated ‘Madam’ herself. Democracy seldom allows power without responsibility and even when it does, it remains a fundamentally bad equation. Maybe the Philippines could accept an Imelda Marcos, Egypt a Suzanne Mubarak and Argentina an Eva Peron, but India persistently rejected quasi-democratic authoritarian regimes that those three were. The leadership may very well have been benign. The leader may not have hoarded shoes like Imelda; or stolen money like Eva; or adopted a “country be damned, my son first” attitude like Suzanne. Yet ‘Madam’ was ultimately responsible for everything and refused to accept that this comes attached to the immense power that she enjoyed. India was fooled once, by the buffer that the Prime Minister offered, but they were not willing to be fooled a second time round.

The communication and engagement with the electorate has to be the sixth reason. Spokespersons were patronising and arrogant, hectoring and often aggressive, even as they justified by the unjustifiable. They were masters of phrase and prose and so proud of their glib talk they forgot political communication is a dialogue. They said what they wanted to, and were willing to hear only their own voices. They criticised the feedback from Social Media as being sentiments of enemies and irrelevances. Well-meaning advice was rejected as coming from those who had made a pact with the devil. The cries, the pleas and the anger were ignored. The government spoke to itself even that was with discordant voices.

The last and most important reason for the defeat is that the preceding six paragraphs will not find their way into the report. To win one needs to accept the truth – no matter how bitter. If one cannot or deliberately refuses to understand what really went wrong, one cannot fix things – expect superficially. But the fact remains that that the “high command” wishes to guard its position and that of its progeny. The fact remains that everyone in the Congress core committee wish to hide their de-facto irrelevance and that spokespersons like bad singers do not want to hear that they are bad at what they do.

So what would St Anthony’s concluding paragraph be? Presumably that the incumbent too would be “led astray” by those who surround him and their lust for power. Ultimately his conclusion would be that nobody in the congress was wrong, and all they need to do for the next ‘sonrise’ is for the current dispensation to falter, and inevitably it will.



Munk School of Global Affairs, University of Toronto, November 4, 2014

Original link is here 


Nehruvian strong handed centralization coupled with bureaucratic despotism will be the future of India under the newly elected Indian Prime Minister, Narendra Modi. Despite being, what many would say, the antithesis of a secular Jawaharlal Nehru, Modi has demonstrated several tendencies of Nehru-like micromanagement during his first hundred days in office. These thoughts were expressed by Sameer Saran, Vice President and Senior Research fellow at the Observer Research Foundation, while delivering an emphatic talk on ‘Narendra Modi and his Foreign Policy Objectives’, hosted by the Centre of South Asian Studies at the Munk School of Global Affairs onOctober 2, 2014.

Restoration of a strong executive space and empowering of the bureaucracy, characteristic of Nehru’s India, will mark the return of the Babu – a metaphor for technocrats that historically constituted India’s bureaucratic steel framework. Saran holds the belief that Modi’s superstar persona (as seen in his recent drawing of several thousand members of the Indian Diaspora at the Madison Square Gardens), will suffice to press the ‘reset button’ on the prevailing negative investor confidence surrounding India. This can be largely accredited to Modi’s approach towards ensuring neo-liberal economic space, creating market access and ensuring a creation of jobs – a far cry from the garland of communal Hindu nationalism he adorned during his time as the Chief Minister of the Indian State of Gujarat.

A larger section of Mr. Saran’s lecture centred around India’s Foreign Policy aspirations given its role as an emerging regional and global power. Modi’s drift towards realpolitikin internal governance is also manifested in his external relations strategy. The policy of ‘India First’ – implying a clean up the internal mess first – however has not curtailed India’s global ambitions. A recent visit by the Chinese premier opened several new avenues of cooperation. Moreover, India has begun to see its neighbourhood in an extended sense. Enhancing investment in the ASEAN region; conceding to Bangladesh in an old water dispute; recent visits to Nepal and Bhutan; and newfound enthusiasm in interacting with Japan and Australia, are all parts of Modi’s efforts to have India assert itself regionally. India, under Modi, has also demonstrated flexibility in dealing with the BRICS, by understanding the value of accepting Shanghai as the economic headquarters. Modi’s Pakistan policy however remained ill-defined, with a seemingly unchanged plan to maintain the status quo. Some of the greatest anti-Pakistan vitriol emanates from his own party, and if Modi is to challenge the bilateral stalemate with Pakistan, a shift in opinion within his own ranks is necessitated.

Mr. Saran’s lecture portrayed Narendra Modi as the provider of much needed salvation for India. While Modi’s dynamism and pro-business and anti-corruption attitude may provide India some impetus after nearly half a decade of stagnation, transforming a country of 1.3 billion people may not be a task as easy as making populist electoral promises. With just over a hundred days in office, whether Narendra Modi can make a Nehru out of himself is yet to be seen.

-written by  S. Taha H. Shah, a third year student in the Contemporary Asian Studies Program

This article is part of  a series of articles written by undergraduate students affiliated with the Asian Institute about events hosted by the Asian Institute.  


Reimagining Indian economic planning: Planning Commission 2.0

16 December 2014, Observer Research Foundation, Analysis

Original link is here
This summer, Prime Minister Modi proposed a radical change to Government of India’s economic bureaucracy by announcing the decision to close down the Planning Commission as it existed. Any new organization of Indian economic leadership, however, must learn from the failures and successes of the erstwhile Planning Commission, continuing its best aspects while reforming all that is irrelevant. There are at least five changes that should be considered vital to the new ’avatar’ that the Prime Minister seeks to fashion.

The Planning Commission was a key part of Indian Centre-State fiscal relations, disbursing ’planned’ funds from the ’Centre’ to ’State’ governments. It once served a valuable role in keeping economic policy coordinated in the nation’s early years. Yet this important aspect of federalism had been overwhelmed by developments (the Indian economic liberalisation that made the distinction between ’planned’ and ’unplanned’ expenditure increasingly anachronistic) and political machinations (the tendency of ruling parties at New Delhi to view Planning Commission expenditure as a political tool to influence the State(s)). The new government must recognize the value of national coordination, while leveraging its constitutionally guaranteed pole position within federal processes that empower the provinces. Changing the Planning Commission should entail neither the continued rigid centralisation nor chaotic and wholesale devolution, but a nuanced combination that respects divided economic responsibilities, with the intention of shaping a system where those best placed to deliver results are entrusted with the responsibility — communities, states, the Centre or the private sector.

India’s economic growth has been hampered by excessive governmental management of resources and assets; the new government should use Planning Commission reorganisation as an opportunity for economic reform that will replace inefficient central planning with better arbitration from the market. Prime examples of the problems with the current system is manifested in gas pricing, coal and telecom spectrum allocation among other resources. Audits by the Auditor General and verdicts from the Supreme Court have indicted the systems of government allocation of coal blocks as well as telecom spectrum as being flawed. Government control in many sectors has led to mismanagement, corruption, rent-seeking, and missed opportunities for private investment. A renewed push for reform is needed to overcome the political barriers encountered in relinquishing government control over resources. A key job for the new ’Commission’ should be designing workable market-based solutions for coal, telecom, and other resources.

The Planning Commission at its best was composed of domain experts and academics that provided pertinent advice and economic leadership to the Prime Minister’s Office; at its worst, it was filled with non-specialist bureaucrats and political appointees. Any new body must not only reform this duality of participation, but expand it to include inputs from all relevant economic stakeholders—professionals from the private sector and civil society can give shape and form to pragmatic recommendations for the economy. Of course, any such involvement from stakeholders invested in various sectors of the economy comes with the danger of conflicts of interest, and preventing this remains important. Care should also be taken to have a creative and flexible salary and renumeration structure that can attract private sector experts, so the Indian government receives the best competitive economic advice and is not simply choosing from those unable to succeed at the highest levels of the private sector economy. The private sector is not the enemy of economic development and in fact it is the engine; with the proper incentives and protection against rent-seeking, private sector expertise can be an ally of government policy.

Under the old system, the Planning Commission’s mandate was restricted solely to domestic concerns and some of the more prominent multi-lateral issues. Indeed, it could not take overseas economic interests into account, even as the Indian Diaspora grew and globalisation became a major driver of economic growth. Today, when remittances are the second largest sector in the Indian economy, and Indian corporations are invested globally, Indian economic policy will be suboptimal without strategic thinking on utilisation of international resources. The Centre’s role in ameliorating inter-state and regional disparities will also be hindered without accounting for the differential levels of international access available to different States, for instance Kerala and Madhya Pradesh. In a globalising world with an increasingly internationally engaged India, the government’s economic planning must take into account the world as well as the nation.

Finally, the Planning Commission has had another, perhaps even larger blind spot that if solved could revolutionise governance. The promise of big data analytics, collating information from across India into easily accessible data at the Centre, could allow an unprecedented level of evidence-based policymaking. With the reform of the Planning Commission, bureaucratic opposition to the use of data analytics can now be overcome. Knowledge of how economies actually behave in real time and in granular detail brings governmental planning from earlier eras of often wishful thinking to pragmatic, adjustable action. Government’s own household surveys could be recalibrated and reviewed and then used for policy purposes. These could be triangulated with other data sources including from the public and private sector and used for developing precise policy formulations.

Despite its challenges, federal governmental economic planning remains necessary. The importance of State autonomy should not obscure that this is particularly true for a largely ’unitary’ India , where the ’centre’ draws the big picture by encompassing state-level interests and others beyond national borders. Though the Planning Commission in its old form may have made itself progressively more irrelevant, it is certainly not redundant to have a body of this kind. Should it adopt nuanced federalism, relinquish control of resources to the market, expand its talent pool to the private sector and civil society, acknowledge India’s international economy, and use data analytics for evidence-based policy, Indian economic planning can serve the cause of delivering prosperity to all citizens more effectively.

(The writer is vice president at Observer Research Foundation)


India First: Modi’s Approach to Foreign Policy



During Prime Minister Modi’s first 100 days in office, the words muscular, nimble, imperious and obdurate have all been used by commentators to describe his foreign policy. Prime Minister Modi’s special emphasis on India’s neighborhood, whole-hearted embrace of Japan, and successful performance at the BRICS summit are beginning to recast some of the old assumptions and positions that have defined India’s recent engagement with the world. While the prime minister has been able to instill a certain energy and purpose in Delhi, some key domestic imperatives and his own personal preferences are beginning to define India’s global play.

Samir Saran discussed the how the prime minister’s preferences, legacy imperatives, and ambitious agenda to transform the Indian economy could finally define a new and pragmatic approach to the region and the world. Original link is here 

Columns/Op-Eds, Politics / Globalisation

Ignore the Benaam Aadmi, there are middle class nightmares to fix

PUBLISHED:22:35 GMT, 14 January 2014| UPDATED:00:38 GMT, 15 January 2014

Original link is here

Through much of the Nineties and the Naughties (2000s), the Indian Middle class was the toast of the world.

They were imagined as educated, liberal, modern millions and celebrated as the ambassadors of a ‘new’ India.

This imagery has faded at the end of the first decade of the 21st century. Corruption, brutal gender abuse, policy lethargy and ill-liberalisms of various kinds are redefining the India story.

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The Indian “middle class” has been subsumed within a negative portrayal of the nation, and therefore seeks to reinvent and recreate its brand to offer a new appeal.

Two avatars have begun to dominate contemporary discourse in the public space; the Aam Aadmi (ordinary man) and the Khaas Aadmi (special man).


A would-be Income Tax Commissioner, a Supreme Court lawyer, a TV anchor and India’s foremost psephologist, among others, have defined themselves as the Aam Aadmi.

In doing so, they have raised the income bracket of the Indian middle class to the standards of developed countries.

It seems this same middle class is set to jump into an even higher income bracket as the former India CEO of the Royal Bank of Scotland, a board member of Infosys, and the founder of India’s first budget airline also join the ranks of the ordinary man.

For a few years now the Khaas Aadmis have been self-categorising into three typologies; the foreign-educated Indian, the Indian who has lived abroad and returned home, and lastly the Indians settled abroad who are still engaged in writing the country’s script.

The first category, the foreign-educated Indians, bear the burden of being smarter. They, after all, got through the excruciating process of getting a student visa and of convincing the outside world that their intelligence was outstanding enough for the finest institutions to nurture them.

These Indians get rewarded with posts in the Prime Minister’s Office, Planning Commission, and various ministries, usually in advisory or consultative roles commensurate with their intelligence and institutional affiliation.

The second kind, Indians who lived abroad and came back to build and improve their country, have the burden of being better. They have all the virtues of a foreign education – an education they acquired without resorting to affirmative action.

They, after all, proved themselves (and India) in a highly competitive, cut-throat work environment. They triumphed in truly meritocratic set-ups and in addition to taught knowledge, they are the repositories of the kind of work ethic and ‘professionalism’ we in India must aspire to.

Lastly, there are the Indians who have emigrated abroad and project the loudest voice. These Indians have to be even shriller than those they give their advice to.

They lead a life of contemporary ethicality, and have moved beyond their colonial past. Invariably these are the Indians that the West sees as their own since they have no attachment to the antagonism of the past, and take Western normative discourse at face value. The truly perfect Indians.

Now going by the English press, we can arrive at this very simple mathematical formula; INDIA’S SALVATION = AAM AADMI + KHAAS AADMI. In effect these are India’s new age messiahs. In the optimal world the “Aam Aadmi” should be running the country based on surveys conducted exclusively of the “Khaas Aadmi”.

Arvind Kejriwal should have Khaas Aadmi categories 1, 2 and 3 pre-programmed into his mobile phone and should conduct SMS polls of them before every major decision.

Why indeed should our parliament function given that these three categories of Indians have the answers to everything? How dare Parliament abrogate to itself the right to pass a nuclear liability law, when these categories of grandees have opposed this awkward legislation?

Why in the world cannot the Ministry of External Affairs (MEA) understand the subtle nuances of the American legal processes which these three Indians have been trying to hammer into our backward consciousness?

Why does the government not see how paying an Indian maid a wage in the US that most PhD holders cannot get in India constitutes grave abuse?

Why can’t India just go along with the narratives of the “moral majority” constituted by the three categories of Indians? Since they are our voice abroad, why do we even need the MEA – it’s superfluous – let’s shut it down!

Nowhere in this new narrative should we consider those left out. There are after all, a billion of them from whom sociological space has been appropriated by the middle class. These real ‘Aam Aadmi’ are now the ‘Benaam Aadmi’ (the nameless Indian).


The Benaam Aadmi is worried about unsophisticated problems, like access to food, water, electricity and shelter. These 800 million footnotes of demographic excess, living below 2 dollars a day, crowd our public spaces, dirty our landscape, and make our beautiful cities ugly.

They must never occupy Lutyens Delhi, nor indeed ride the Delhi metro built by the Aam Aadmi and designed by the Khaas Aadmi. It is because of these Benaam Aadmi(s) that ridiculous legislations like the Food Security Bill have been enacted.

Our negotiating positions in the WTO and on international climate change discussions are dictated by these same villains and have made us the butt of derision in all major newspapers.

Justly they are not and should not be welcome in the public discourse, now dominated by the Aam Aadmi and the Khaas Aadmi. It is they after all, who chose to emigrate to the Gulf, to blue collar jobs, under allegedly racist, allegedly exploitative and abusive conditions.

Indeed these allegations must be doubted since they chose to send US$20-25 billion back home every year – especially in the aftermath of the global financial crisis.

They certainly do not have the education, the refined world view, or indeed the legitimacy of the Aam and Khaas Aadmi(s) to understand or appreciate the nuances of the Khobragade imbroglio.

Indeed how would the country run if instead of discussing the ‘Maid in Manhattan’ travesty of human rights at the dinner table, we were to start discussing the revolting existence of the Benaam Aadmi?

Such conversations would truly be a characteristic of a country in decline.

Columns/Op-Eds, In the News, Politics / Globalisation, Uncategorized

Less corporate, more social

Published: August 10, 2013 01:08 IST | Updated: August 10, 2013 16:55 IST

New Pic.jpeg

CSR principles enshrined in the Companies Bill 2012 offer businesses a chance to transform their poor record in community participation and development

Original link is here

Finally we are seeing some signs of life in the business of legislation. Not surprisingly, one of the early beneficiaries is the Companies Bill (2012) which shall replace a six decade-old antiquated law after Presidential assent. The Bill, which was passed in the Upper House this week, was earlier approved by the Lok Sabha in December 2012 and reflects a number of amendments to the Companies Bill, 2011, based on the recommendations of the Parliamentary Standing Committee on Finance. It encompasses important areas for the effective governance of companies including clauses on mergers, audit and auditors, appointment of company directors, aside from providing for constitution of a National Company Law Tribunal and a National Company Law Appellate Tribunal to fast-track company law cases and corporate structuring.
Perhaps, the most important new element introduced in Clause 135 of the Bill is the notion of mandatory Corporate Social Responsibility (CSR). Colloquially referred to as the “2 per cent clause,” it has the potential to transform the landscape of CSR in India. Indian businesses have been loath to go beyond the “glorified worker towns” syndrome or providing employee services and benefits passed off as social interventions. Indeed, “Corporate India” has fared rather poorly when it comes to affirmative action in employment, environmental responsibility and in resource efficiency and revitalisation over the years. Therefore, a scheme that potentially transfers profits towards social causes, environmental management and inclusive development could be the much needed medicine for a nation with such deep socio-economic cleavages. This provision in the new bill must be welcomed and its efficient implementation must be ensured.
It is important that Clause 135 is complemented and supplemented with regulatory and institutional mechanisms to ensure that it actually results in a new paradigm of “stakeholder responsibility” and does not become another scheme where a paternalistic government is able to create another framework of patronage that the politician-businessperson nexus finds favourable for its dealings. This hypothesis needs to be carefully examined, particularly in the context of the upcoming general election, when political masters are at once beholden to corporates for election funding, and where constituency-level CSR commitments could be politically useful.
However, beyond the “profit for patronage” issue, there are some other aspects that must be discussed. The new law will make it incumbent for companies having a net worth of Rs.500 crore or more, or a turnover of Rs.1,000 crore or more or a net profit of Rs.5 crore or more, during any financial year, to spend at least two per cent of net profits towards CSR activities. While this seems uncomplicated, the efficacy in implementation may be in doubt for more than one reason.
The whole concept of CSR must, by its very definition, be a product of the fundamental need to price services, infrastructure and resources that societies provide businesses located in their proximity. By mandating a plain vanilla formula for allocation of two per cent of net profits towards CSR, the law will create a locational distortion, delinking CSR from community responsibility. Businesses must be responsible for proximate communities first, rather than being able to choose the destination of this commitment to society.
There is also a temporal distortion in the construct of CSR as spelt out by the Bill. Paragraph 5 of Clause 135 states that two per cent of the average net profit over three immediately preceding years must be allocated for CSR activities. In the case of most large companies of the sort that would be mandated to allocate net profits, business operations would have had a run-off effect on societies and would have fed off communities for more than three years. Therefore, must not the commitment to these communities and geographies reflect the impact of these businesses over their operation periods? And is there not a case for ensuring sustained “plough back” by the company in these geographies before diverting their commitments elsewhere?
Even as we begin to debate how best to address these “time-place” distortions, it is certain that the CSR mandate must be made more robust, ensuring that at the very least it stands up to some simple tests of reasonableness and fairness. There are a number of ways to achieve this baseline objective.
First, voluntary policies that ensure a stakeholder approach to CSR is followed by corporates already exist and must be strengthened. The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) suggest nine core principles which businesses should follow. Principle 8 for instance, directly alludes to coherent, social impact measures and assuring “appropriate resettlement and rehabilitation of communities who have been displaced owing to their business operations.” Integration of NVGs, initiated by the Ministry of Corporate Affairs, in the form of more constructive guidelines for deploying corporate CSR policies, is a viable option.
Second, CSR policies must be determined organically, through demand-driven consensus. Instead of being the mandate of high-level committees, company specific CSR policies should flow from a transparent interface between community stakeholders and corporates. The process must be devolved below the level of the corporation, to the level of the business unit. Corporate leaders and civil servants in the national capital must not determine community engagement strategies. Community stakeholders and the business units concerned must. Allocations must also be made on the basis of how much different stakeholders can absorb.
Employee benefits
Concomitantly, employee benefits must not be passed off as CSR. Such tricks are already used by the banking sector, wherein mandated priority sector lending targets are often met through incredibly convoluted means, including issuance of no-frills/general credit cards for their own contracted workers. A “tick-the-box” approach is simply not legitimate.
The third suggestion also follows from this. A demand-driven process for articulating company specific CSR policies must be instituted at the district level. Consultations can be steered by public officials such as district magistrates, involving village and town leaders and representatives. Decisions could be made through majority outcomes, and the process must be recorded and filed. This sort of a process has the potential to create a public accountability framework for delivery of CSR far superior to legal provisions that we fail to enforce.
Fourth, as this culture evolves over time, CSR allocations must not remain consigned to bottom line (profits) commitments. Obligations to community stakeholders must be placed alongside the top line (receivables and debt) and must be considered seriously as the next step as CSR must not be an afterthought to profit accumulation. It must be embedded within the very fabric of large businesses.
Finally, there are multiple concerns around the audit of CSR and a discomfort with the lack of audit and oversight required for CSR activities. “Comply or explain” simply has not worked in the case of other existing regulatory frameworks that deal with corporate governance issues. It is time to realise that in India, only a few are in a position to ask, while nobody is in any hurry to explain.

(Samir Saran is vice-president and Vivan Sharan, an associate fellow at the Observer Research Foundation, a New Delhi-based public policy think tank.)

Books / Papers, Water / Climate

Re-imagining the Indus: Mapping Media Reportage in India and Pakistan

Published 2012, Observer Research Foundation, New Delhi

Water shortage has become a subject of intense public debate in the present political narrative on resource management and riparian rights. In an attempt to discern the divergence on core issues and mainstream media reporting, Re-imagining the Indus is a methodological study based on Media Content Analysis of the reporting on water issues related to the Indus, in the leading dailies of both India and Pakistan. This monograph seeks to capture the existing discourse and stimulate policy dialogue on the subject.

In Detail
What is the general discourse on water scarcity and related crises in the Indian and Pakistani media? The study conducted by Samir Saran (ORF) and Hans Rasmussen Theting, scrutinised the media coverage on water on three specific themes – the political discourse, water governance and people, practice and environment.

Titled ‘Reimagining the INDUS: Mapping media reportage in India and Pakistan’, the study found that the Indus Water Treaty (IWT) does not dominate the reportage in Pakistan, indicating a low level of discontentment or critique.

It also found that it is only in the months of winter, when the water flow is low, that inter-country dispute between India and Pakistan, and significant negative sentiment against India, gets attention in Pakistan. But in the Indian media, Pakistan only appears during spring months.

The study, now published in the form of a book, found that agricultural concerns and inter-provincial disputes dominate media reportage in Pakistan while in India media lays greater emphasis on urban water concerns and interventions, including ground water and domestic consumption.

The study also showed that media reports in both the countries, Pakistan more than India, recognise the need for the two countries to cooperate on water issues. From the study, it was also clear that in both India and Pakistan, there is equal emphasis on the aspects of water governance and infrastructure.