Chidu uses Modi as decoy to take Nitish for a ride

Two passages in P Chidambaram’s budget speech on Thursday seemed to contain political messaging that has been widely commented upon. In one paragraph, he seemed to be dissing the Narendra Modi development model; in another, he seemed to be offering a coded come-hither invite to Bihar’s Nitish Kumar. As Nitish Kumar is widely seen to be inimical to Modi’s prime ministerial aspirations, these paragraphs have excited a lot of comment. There is also a debate over the flaw in Modi’s development model as against Kumar’s supposedly less flawed model. It is thus worth taking a closer look at the wordage, and decode what they really contain. And what they should mean. [caption id=“attachment_645290” align=“alignleft” width=“380”] Finance Minister P Chidambaram.[/caption] The FM said: “Growth is a necessary condition and we must unhesitatingly embrace growth as the highest goal. It is growth that will lead to inclusive development, without growth there will be neither development nor inclusiveness.” (Emphasis ours) So far, he seems to be on the same page as Modi, who is widely seen as a growth advocate. But then Chidambaram veers off course and says something quite different. “Owing to the plurality and diversity of India, and centuries of neglect, discrimination and deprivation, many sections of the people will be left behind if we do not pay special attention to them. As Joseph Stiglitz, Nobel prize-winning economist, said, ‘There is a compelling moral case for equity; but it is also necessary if there is to be sustained growth. A country’s most important resource is its people.’ We have examples of states growing at a fast rate, but leaving behind women, the scheduled castes, the scheduled tribes, the minorities, and some backward classes. The UPA does not accept that model.” (Emphasis ours) Chidambaram seems to be implying that when it comes to vote-banks, inclusiveness must precede growth. The political messaging lies in both the first part of the above statement, and the second. The first, in fact, is the Congress’ populist development model, where the state plays mai-baap to all those poor unfortunates who have to be paid “special attention” because they have been “left behind” by “centuries of neglect.” It is the essence of vote-bank politics. This has been the Congress party’s line for as long as one can remember. But has political inclusiveness yielded better results for the minorities? It is important to focus on minorities (or, rather, Muslims, since Christians, Jains or Parsis are not talking of discrimination in the matter of sharing the fruits of development. As for SC/STs, the policies of the Congress and the BJP are not significantly different in practice in the states where they matter). We know where the Muslims of India have reached after being the subject of the “special attention” of not only the Congress party, but the entire secular crowd – from Samajwadi in Uttar Pradesh to Lalu Prasad in Bihar and the Left in West Bengal. According to the 2001 census, the Muslim literacy rate is higher than or equal to the Hindu one in the following states: Andhra Pradesh, Kerala, Tamil Nadu, Madhya Pradesh, Karnataka, Gujarat, Jharkhand and Maharashtra. Barring, Andhra and Maharashtra, none can really be called Congress-ruled states. Kerala’s Muslim educational status relates to the progress made under the old enlightened kings of Travancore, not Congress or Left. The states where the opposite is true include West Bengal, Uttar Pradesh, Bihar, Assam, J&K. Almost none of these states (barring UP, for a brief while) were ruled by the BJP. These are the “secular” highlands of India and we know how well Muslims have fared in these states. These are precisely the states where the Sachar Committee thinks Muslims have fared the worst. This is not to say that Muslims in Modi’s Gujarat are having a great time. More than a decade after 2002, many of them still feel discriminated against, but some segments among them – especially the mercantile communities - are also progressing along with the Gujarat growth story. Clearly, culture and caste are helping some Muslims, but not the rest. That is the thing to focus on – and the focus should be internal to community. Muslims should be asking themselves: why is the community in the south not backward when they are so in the north and north-east? (Aakar Patel, who has strong views on the importance of caste , believes Muslims have lost out in Pakistan because they don’t have enough trading castes among them). The reasons why some Muslims are backward in India when others are not cannot be addressed by political intervention by the Congress or secular parties. Another question to ask is whether Muslims elsewhere in India are doing any better because they don’t have a BJP to deal with. If you were to ask Abusaleh Shariff, an economist and member of the Sachar committee, the answer is a clear no. In an interview to Governance Now given five years after Sachar, this is what he said: “The UPA government considers Muslims as fools. The government is fooling Muslims, promising that it would modernise the madarasas. We told the government that only three percent of the Muslim children go to madarasas, 97 percent of them need (regular) schools. The government has not taken the underlined message of the Sachar committee to make Muslims part of the mainstream.” (Italics ours) Contrast this with what Chidambaram said in his budget. His references are not intended to help those he believes need help, but to achieve the opposite - to stop Muslims from lifting themselves up by reducing them to supplicants for government largesse. As we shall show later, the same point comes up when he talks about giving Bihar special category status. But for now consider what Shariff said in the interview about how states have handled Muslim issues. “West Bengal is the worst – even the current government…Mamata Banerjee is following the same old policies of the Left. Others are Uttar Pradesh, Maharashtra, Gujarat and Bihar. In Bihar, under the Nitish Kumar government, we are seeing some positive signals but I am still not very much convinced. He is also toying along the same political lines – Urdu medium schools for Muslims, which only leads to identity politics. In Uttar Pradesh, the issue is in planning. The Muslims were not given space in the developmental activities.” His conclusion: “The UPA government is doing identity politics, which BJP also criticises. The Muslim community will never get any benefit from such identity politics.”  (Emphasis ours) Coming back to Chidambaram’s budget speech, it is obvious that the Congress party continues to be spooked by Modi’s rise. Far from disagreeing with the Modi development model, which the Congress party embraced in 1991 and which Chidambaram himself claimed he subscribed to in the early part of his budget speech, the oblique references to the Modi model tell their own story. Maybe, Chidambaram should read Jagdish Bhagwati and Arvind Panagariya’s book on India’s Tryst with Destiny, which debunks the growth versus inclusiveness debate conclusively (read the Firstpost story on this here ). Positing the Kerala human development model with Gujarat’s, the authors say: “It is ultimately the Gujarat model that has delivered in Kerala. Contrary to common claims, Kerala has been a rapidly growing state in the post-independence era, which is the reason it ranks fourth among the larger states, according to per-capita gross state domestic product and first according to per capita expenditure.” The co-authors, in fact, assert that Kerala “suffers from the highest level of inequality among the larger states. So growth, and not redistribution, largely explains low levels of poverty.” Now, let us come to the Nitish Kumar development model. Over the last decade, Bihar under Kumar has surprised one and all to top the growth charts, leading some to suspect that he has done something right. But look closer, and it seems likely that Bihar has taken off for two simple reasons: one is the restoration of law and order after the chaotic identity politics era of Lalu Yadav, and the second is the base effect of low growth earlier (and improved demography). In fact, there may be nothing unique to the Bihar model for the simple reason that many other states that were similarly placed are doing equally well. In the 11th plan, Bihar, Chhattisgarh, Punjab, Uttar Pradesh and Maharashtra were the only ones to exceed their targeted growth rates . And in the current plan, which started last year, the top performers are likely to be Bihar, Chhattisgarh, Uttarakhand, Maharashtra and Madhya Pradesh, according to the Planning Commission. If we take Maharashtra out, since it is a developed state, the growth states are all underdeveloped and far behind national averages on per capita income. Bihar, Chhattisgarh, Uttarakhand and Madhya Pradesh are benefiting from their earlier low status, and a positive shift in demography as more of their people come into the productive age groups. None of them has a unique development model like Gujarat – which is roughly the China model for manufacturing. Let’s then get back to what Chidambaram promised the likes of Bihar in his budget. This is what he said: “The Backward Regions Grant Fund (BRGF) is a vital source of gap funding. I propose to allocate Rs 11,500 crore in 2013-14…BRGF will include a state component for Bihar, the Bundelkand region, West Bengal, the KBK districts of Odisha and the 82 districts under the Integrated Action Plan. The present criteria for determining backwardness are based on terrain, density of population and length of international borders. It may be more relevant to use a measure like the distance of the State from the national average under criteria such as per capita income, literacy and other human development indicators. I propose to evolve new criteria and reflect them in future planning and devolution of funds.” Two points need to be made. First, that Nitish Kumar should be gushing about a small kitty like Rs 11,500 crore (and that, too, shared among so many states) hardly speaks much for his vision for Bihar. The Economic Times quoted him as saying: “I am glad that Chidambaram has said that he would revisit the criteria for special status. This is big victory for the people of Bihar.” So making a beggar state out of Bihar is a “victory” for the people of his state? Second, when Bihar has been growing so well for the last eight or nine years under a Janata Dal (U)-BJP government without additional central crutches, why does Nitish Kumar think he needs more doles? The history of growth all over the world shows that states that are least endowed with natural resources (Japan, Singapore, etc) fare the best on growth since they tend to become more open to trade, invest in improving the skills of their own people, and grab opportunities for improvements with both hands. Consider the reverse case of Jharkhand, which got the bulk of undivided Bihar’s mineral resources, and how badly it is faring. Gujarat, another state endowed with very little natural resources, uses entrepreneurship as its global calling card. Hence, the evolution of the Gujarat model, aided by Modi’s mantra of minimum government, maximum governance. The model is sure to have drawbacks on the human development side in the short run, but this can easily be remedied. A state which does not pretend to cater to citizens from cradle to grave will have the resources and fiscal space to intervene to correct historical inequities. Nitish Kumar’s best bet is to figure out a unique Bihar business model that draws on agriculture and knowledge (Nalanda was the centre of learning once, and even today, Biharis are among the biggest groups clearing the IAS exams). But he clearly has to abandon the Congress’ mai-baap model. Chidambaram’s offer will be the kiss of death for him. In the last listing of Indian states by economic freedom, Gujarat topped the list and Bihar was at the bottom . This is something Kumar needs to fix. Reason: whatever your economic model, if there’s no economic freedom, there will ultimately be no growth. No growth means no inclusiveness, not matter what the Congress may think.