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22 October 2014
No endgame in Hong Kong
Beijing is likely to restore order in the short term. But does it have a long-term solution to the crisis of governability?
The most sensible way of ending the stalemate would be offering face-saving but mainly symbolic concessions to the protesters. Technically, such concessions are not impossible.
The pro-democracy demonstrations organised by students in Hong Kong seem to have peaked. But the crisis of governability in Asia’s vital commercial hub is far from over. When tens of thousands of protesters were blockading Hong Kong’s government offices and main shopping districts in the beginning of October, the question on most people’s minds was whether the Chinese government would sanction the use of force, Tiananmen-style, to disperse the protesters. Today, in the middle of a stalemate, the right question to ask is what the endgame is.
At the moment, nobody seems to know the answer. The negotiations between the Hong Kong government and the protesters have been cancelled because of deep mutual distrust. The protesters, fearing the loss of their bargaining power, have refused to call off their dwindling protest that is still causing traffic disruptions in the city’s commercial centre. They also believe that the Hong Kong government is merely acting as Beijing’s puppet and lacks the necessary authority to strike a meaningful deal.
For the Hong Kong government, its priority is to get the protesters off the street and restore the city’s life to normalcy — without promising anything in return.
This stalemate, of course, cannot last forever. The protesters have no desire to return home empty-handed. The demonstrations were sparked by Beijing’s refusal to honour its pledge of universal suffrage and allow Hong Kong’s voters to choose the city’s chief executive in 2017. The pro-democracy forces are demanding that Beijing retreat from its uncompromising position. If the protesters are unable to gain any meaningful concessions, they may be motivated to escalate their protests or, alternatively, they may decide to concede defeat and fold their short-lived movement.
The Hong Kong government also faces a dilemma. The longer the stalemate lasts, the more the erosion of its authority and the greater the impact on the city’s image and economy. While it has no real power to make any concessions to the students, it also has no desire to create an everlasting impression of political impotence and illegitimacy.
So for now, China’s short-term plan to deal with the protesters’ demand is to let the pro-democracy movement self- destruct. Chinese leaders believe that the student-led movement is not sustainable because of its lack of organisation and enduring mass support. They also assume that, given the generational split in Hong Kong’s society (the younger generation is much less identified with the mainland than the older generation), the pro-democracy movement will alienate a sizeable segment of Hong Kong’s public because of the disruptions to traffic and commerce the protests have caused. Finally, Beijing hopes that fissures will emerge inside the pro-democracy camp because of the differences in tactics and objectives among the diverse groups that form the protest movement.
Should Beijing’s cold calculations be borne out, we could expect the size of the protest to dwindle and public ire against the protesters to rise, thus making it both tactically and politically less costly for the Hong Kong authorities to clear out the protesters at a convenient time. Under normal circumstances, Beijing would not have allowed the protests to drag on for so long. But this time, because of the coincidence of the annual plenum of the Communist Party of China’s (CPC) Central Committee (October 20-23) and the Apec summit in Beijing (November 6-11), Chinese leaders obviously have little desire to spoil the two parties with a crackdown that could produce ugly pictures and cause international outrage. In all likelihood, the most politically convenient time for Beijing to end the street protests in Hong Kong would be shortly after the conclusion of the Beijing Apec summit. After foreign leaders, including US President Barack Obama and Indian Prime Minister Narendra Modi, leave Beijing, China will have a much freer hand in dealing with the problem in Hong Kong. The most sensible way of ending the stalemate would be offering face-saving, but mainly symbolic, concessions to the protesters so they could claim victory and go home. Technically, such concessions are not impossible. For example, the moderates among the pro-democracy forces are floating the idea of changing the rule that elects the committee that will screen the nominees for the chief executive (Beijing insists that only two or three candidates who have received more than half of the votes from this committee can run, thus effectively giving the pro-Beijing committee the power to disqualify candidates considered unfriendly to Beijing). However, even a minor concession would be a bitter pill for the CPC to swallow. Ever since the Tiananmen massacre in 1989, the party’s rule has been based on effective deterrence. It has painstakingly cultivated the impression that it will suppress any anti-regime movement regardless of costs or consequences. Therefore, making even the least substa ntive concessions risks undermining the party’s image of toughness. If this is the case, even the short-term solution to Hong Kong’s stalemate could be quite ugly. We should expect to see — and, indeed, have seen — the use of anti-riot police, mass arrests and forcible clearing of the protesters. Such operations will be followed by the announcement of strict regulations that would make similar protests illegal or very difficult to stage in future. But this pyrrhic victory for Beijing by no means ends the crisis of governability in Hong Kong. The protests have fundamentally altered the politics in the former British colony. The “one country, two systems” model that has governed Hong Kong is now all but dead. The leadership hand-picked by Beijing has lost credibility and significant public support. A very large section of Hong Kong society, most importantly its young people, is demanding their democratic rights and revolting against the CPC. Beijing may have a clever plan to restore order in the short term, but it is doubtful that it has any long-term plan for ending the political revolt in Hong Kong. -
An exit that shows the way
A new generation of Indian entrepreneurs is looking to leaders like Murthy, Nilekani and Gopalakrishnan on how to do it right.
When Infosys executive chairman Narayana Murthy declared in June this year that he was relinquishing his job and hanging up his Infosys boots and that the last of the founders would exit executive roles, this newspaper launched a frantic hunt for a photo. A vintage snapshot of all the founders at the iconic firm’s naissance 33 years ago would have been most appropriate for the feature in the Sunday pages.
For Murthy and his cohort, there could have been no more opportune a moment to make a graceful exit.
Many grainy images of the founders in the early days were available. One had a couple of founders and wives at what looked like a birthday cake-cutting. Another showed a few founders in geeky glasses squatting on a flight of steps. Yet another sepia-toned photo showed two founders and their wives at a picnic. However, not a single photo was available of the founders together in 1981, the year Infosys was founded, or even just after.
So it was more than ironic that earlier this month, six formally dressed men offered a variety of “photo ops” on what was their farewell as the founders of Infosys. The final day line-up was complete. There was Murthy himself, alongside N.S. Raghavan, Nandan Nilekani, K. Dinesh, Kris Gopalakrishnan and S.D. Shibulal. The only missing face was of Ashok Arora, who quit the startup team early on. It was an emotional moment for the firm and its founders, though they laughed and joked their way through the day.
Soon, the founders will turn into ordinary shareholders of Infosys, a move that is beneficial not just to the firm but to themselves as well. In turning into regular shareholders, the founders’ (and their families’) total shareholding of almost 16 per cent in the company will be considered to be free-floating shares and enhance its appeal to investors. Their new status as public shareholders will give them the freedom to sell their shares when they choose, without board sanction.
For Murthy and his cohort, there could have been no more opportune a moment to make a graceful exit. A new CEO is in place and seems to have gotten off to a good start by presenting better than expected profits in his first quarter of taking over — a 28.6 per cent rise in net profit for the quarter ended September 30 and a 2.9 per cent growth in revenues. Making a clean break at this juncture will give the firm’s new professional leadership a chance to shape and steer the company’s future from here on.
At the farewell meeting, Murthy talked about his decision not to keep the ceremonial title of “chairman emeritus” at Infosys in order to avoid any perceived conflict. Murthy was the epitome of Infosys values when he said he wants to be a “Regular Joe” instead. There is nothing average or regular, however, about Murthy and his cohort, who built not just the Infosys brand but, in parallel, also helped grow India’s brand as a globalising, forward-looking country with an enormous talent pool. Infosys’s listing on Nasdaq in 1999, the first Indian company to list on an American stock exchange, was a landmark event. Since then, the Rs 28 crore firm has grown to Rs 2,00,000 crore in market capitalisation. Infosys has had its share of challenges. It was not until the company ran out of founders to fill the chief executive position that an outsider was finally brought in earlier this year, much to the disappointment of its investors, who watched its performance slide during the last few years. Again, last year, it faced censure when Murthy jumped out of retirement and was back in the thick of things — trying to resurrect the flailing firm with his son Rohan as his executive assistant. Despite these transgressions, though, no company has influenced India’s corporate landscape as much as Infosys, with its clean governance principles and adherence to high ethical standards. In their graceful and absolute exit, too, Infosys’s founders showed the way to corporate India, where even the biggest firms are fond of parachuting sons, daughters and assorted relatives into executive and board positions. The founders will no longer associate with the company or exercise any control over its affairs. It will be a clean break. They may have departed from Infosys but in their wake, a new generation of Indian entrepreneurs is looking to leaders like Murthy, Nilekani and Gopalakrishnan on how to do it right in India. Many Average Joe Indians will watch them to see how they employ their enormous personal wealth to doing work with a social conscience. In other words, the founders may have left Infosys, but they can never really stray from the public eye. -
Centre, state, Modi,new equation for federation
As the BJP acquires political dominance in more states, a question arises: will there be a transformation in the nature of federalism in India? In a conventional narrative, states had progressively become more significant as a result of three developments. The rise of regional parties, often on a local power base, was seen as a bulwark against a dominant Centre. Second, liberalisation meant that the states had, in theory, more room to compete with each other. Third, coalition politics gave the states a lot of leverage, and some states that were critical partners got undue leverage. How will this dialectic of centralisation and decentralisation change?
The conventional narrative was often misleading because it did not sufficiently distinguish between different vectors of centralisation. To see how this plays out, we need to make a distinction between several kinds of centralisation. All these different forms do not track each other. Indeed, some political centralisation may create the conditions for forms of decentralisation.
The first is political centralisation where chief ministers don’t just belong to the same party that is in power at the Centre, they often depend on the Central leadership for their power. Single-party dominance at the Centre always increases this tendency. The Congress adopted it with aplomb, by and large reducing the power of regional leaders. This was not just under Indira Gandhi. Even under Nehru, chief ministers like K.N. Katju could practically be imposed on states. At the current conjuncture, this risk exists: the BJP will be riding to power in several states on the coat tails of the Centre. So, much will depend on the practices and conventions it evolves for selecting chief ministers and giving them free rein. But the risk that they will be seen to be depending on the pleasure of the central high command is higher with one-party dominance.
The second dimension is what you might call identity decentralisation. This is where states acquired an “ethnic” political identity that defined the basis of politics: the DMK in Tamil Nadu, the Shiv Sena in Maharashtra, arguably even the CPM and Trinamool Congress in West Bengal occupied that space. This politics has run its course. First, it was actually successful in pushing back what many feared would be the Centre’s cultural dominance. And, notwithstanding some exaggerated fears about “north Indian” dominance (allegedly and somewhat ironically created by a state in western India), any half-smart political party will recognise that the agenda of linguistic and regional domination will not fly. Second, ethnicity based political movements also have to transcend into issues of governance at some point. Third, in some states, including Maharashtra, the dynamics of sub-regionalism are going to be increasingly prominent. The BJP’s expansion into Maharashtra, Tamil Nadu and West Bengal rides on these conjunctures. Identity politics in states will not disappear, but the time is ripe for a fundamental mutation in its form. The third dimension is constitutional centralisation, where the Centre uses or abuses constitutional instruments to keep states in check. Here, the story is complex and likely to remain so. Thanks to the Supreme Court, it is not that easy to abuse constitutional instruments: the power of the Centre to dismiss state governments has been disciplined after the Bommai judgment. The courts check Central exercise of power: arguably, even the coal judgment has a strong dose of federalism in it. But this will be tested, as the case of Delhi is demonstrating. Elections are long overdue in Delhi. Yet, even during decentralisation, more items were moved to the concurrent list. But in an era of globalisation, it needs to be asked whether the distinction between the state and Central lists, as conventionally understood, even makes sense. For example, if India were to make some commitments on agriculture at the WTO, it would be using the Centre’s treaty-making powers to impinge on federalism. Legal globalisation may have an impact on the nature of our federalism. The fourth dimension is administrative decentralisation. One of the great ironies of political centralisation was that it was often accompanied by greater administrative decentralisation. The Planning Commission had usurped the states’ right. The design of centrally sponsored schemes, even though implemented by the states, was dictated by the Centre. So one interesting development to watch will be the degree to which states now get administrative flexibility and exercise it. The government made some promising moves in this regard, but with schemes like the Adarsh Gram Yojana, signals are now more mixed. It is likely that in this incarnation, political centralisation might be accompanied by more administrative decentralisation. The fifth dimension is fiscal decentralisation. This will partly depend on two developments: what the next Finance Commission report recommends and whether the tendency to increase allocations that were not Finance Commission-based is checked. The second is the shape of the eventual compromise on the GST and the states’ share in it. The good news is that more funds will be allocated to states as block grants. But the other dimension of fiscal decentralisation is the state’s own capacity. We forget that what we think of as the “rise” of the states was facilitated by Central restructuring of states’ debt in the late 1990s, which allowed them some fiscal space. The issue has always been that states don’t use their existing powers or put in enough of a resource effort. The condition of state electricity utilities is a case in point. How much power a state has is a function of whether it chooses to beg or be creative. The sixth dimension is competition. It is a myth that states could compete with each other only during the last two decades. Even in -the 1960s, Kerala had a different social-sector model, and Partap Singh Kairon would always tout the Punjab model. How much states innovate is a function of their capacity, fiscal space and political creativity. The one thing hugely disappointing about the phase of political decentralisation was, apart from a few exceptions, how little the states innovated on their own. Variation in implementation is not the same thing as genuine creativity. The final dimension is more participatory and multilayered governance. The real test of inclusive governance will be whether structures become more participatory: in cases like Uttar Pradesh, by creating more states; in other cases, by having more meaningful city-level politics; in others still, by strengthening panchayati raj. This decentralisation has been largely incremental, and may remain so. But the story of the multiple dialectics of centralisation and decentralisation is about to get interesting. -
Getting real about rankings
Creating a grading mechanism for Indian universities from scratch, particularly in a large, complex, and a disorganised system, is a massive challenge
Human Resources Development Minister Smriti Irani has announced that India will develop a national rankings system for its universities. In principle, this is a good idea. International rankings do not entirely suit Indian realities, and India has done abysmally in them. Further, providing benchmarks to measure the productivity of Indian universities and creating a sense of movement and competition among them is laudable.
An optimistic exercise
The challenge of actually creating rankings that will be based on real and relevant data is immense. It is worth thinking about the problems before plunging into uncharted territory. The experience of some other countries is not especially favourable. A few years ago, the Russians, stung by the poor showing of their universities in international rankings, created an international ranking system of their own. Unsurprisingly, Russian universities did quite well. However, no one, even in Russia, believed the results of this ranking and the project disappeared. The Bertelsmann Foundation in Germany has been working for almost a decade on a non-ranking compilation of German institutions that has been widely praised. But it has taken a long time. Even the influential U.S. News and World Report ranking in the U.S., now in its 30th year, is regularly criticised for methodological and other failings. The goal of creating and implementing an Indian ranking, for release in December 2015, seems overly optimistic.
It is crucial to “get it right” the first time. If the Indian ranking system is seriously flawed in its design, methodology, data, or interpretation, it will be picked apart and immediately lose credibility. Creating a ranking from scratch — particularly for an academic system as large, complex, and in many ways as disorganised as India — is a massive challenge.
The challenges
Reports indicate that the main responsibility for developing the ranking, scope and methodology will be in the hands of the Indian Institutes of Technology (IITs). While they are distinguished, they are not universities but rather specialised technology institutions, and are unfamiliar with the broader university context. Further, they have no special expertise on higher education — a requirement to develop a good ranking system. A very substantial problem in India is the lack of data on many aspects of higher education. Even basic up-to-date statistical information is often lacking. Without reliable data on all of the aspects of ranking from all of the universities included, the rankings will have limited value.
Will the rankings include India’s 35,000 colleges? The vast majority of students attend these institutions. Almost all are affiliated to a university, but there are significant variations in quality, focus, and orientation among the colleges affiliated to any single university. Many will lack good data. It is impossible to generalise about more than one hundred colleges affiliated to a university. If the rankings include only universities, they will be of limited relevance to much of the public.
Some of the metrics that are proposed for measurement (such as ranking of social roles of universities) are impossible to measure. How will social roles be defined? Further, there is no data available, regardless of the definitions. Other global and national rankings have struggled with measuring teaching quality; no one has solved this dilemma. Some of the rankings use such proxies as the teacher/student ratio and similar relatively easy factors, but these do not measure actual quality.
All of the global rankings include publications and research funding as key productivity factors for universities. Most rankings count articles in internationally respected journals, included in the Science Citation Index or their humanities or social science equivalents. They then include citation rates and other criteria of actual use of the publications. The problem is that few Indian journals are included in the international indexes and there are no Indian equivalents that can be easily included. It would be possible to create such indices, but this will take both time and money. At present, there is no accurate way of evaluating either the scope or the influence of the publications of Indian academics.
Similarly, there are not easily available data sources for research funding or patent development, although these would be easier for universities to develop if careful criteria are put into place. The data collection challenges for universities will be quite substantial — there is only limited information currently available. In many countries, most universities have institutional research offices that are responsible for data collection and analysis and are able to provide information on a range of topics required by ranking agencies, quality assurance authorities, and the government. India does not have a tradition of institutional research — although building such offices is a key requirement of professionalising the work of universities. Internationalisation will be one of the criteria for excellence in the rankings. Indian universities are just now recognising the importance of internationalisation and will score poorly, at least in the short run. Few have a strategy to engage with the rest of the world, and the numbers of international students and staff in most institutions are quite small.
Will the private higher education sector be included in the rankings? A few of the private institutions are innovative and may score well, although most will not. These universities may have less data available than their public counterparts, and some may be reluctant to report accurate statistics.
A lost cause?
The idea of rankings is a good one. Rankings will stimulate the further professionalisation of Indian academe. Rankings will create a sense of competitiveness in the system; they will help build a differentiated academic system with a few internationally recognised research-intensive universities and a much larger number of institutions that will focus mainly on teaching. But implementation will not be easy. Those involved must be realistic about what is involved, what the costs will be, and how much time and energy will be required. If published reports and public statements are any guidelines, realism is not part of current thinking or planning.
A balancing of interests
The range of measures Prime Minister Narendra Modi passionately spelt out at the Pandit Deendayal Upadhyay Shramev Jayate programme on labour reforms reads like a road map to his Independence Day invitation to multinational corporations to ‘Make in India.’ The most significant of them all is the move to simplify the cumbrous current inspection processes, including by allowing enterprises the convenience of self-certification of documents. The random inspection process that is to be set in motion is expected at one stroke to cut through administrative red tape involving some 1,800 labour inspectors. Indeed, the removal of arcane procedural hurdles could curb rampant corruption and improve overall efficiency. But this is a bold policy shift for a country where a culture of industrial safety is woefully lacking. The system of inspections should be effective and should ensure that the protection of thousands of human lives is not compromised in any manner. The 2007 Minneapolis bridge collapse in the United States, the fires at Bangladesh’s garment units and the December 1984 gas leakage in Bhopal were all linked to a greater or lesser degree to the lack of proper inspections.
The digitisation of data on thousands of firms to facilitate a single-window system of compliance with various labour and social security laws is a laudable initiative. In particular, the friendly provident fund facility to unfreeze a whopping Rs. 27,000 crore of hard-earned savings and the portability of PFaccount numbers across employers is a reform long overdue. These conveniences are consistent with the welcome increase in the Employees’ Pension Scheme (EPS-95) up to Rs.1,000 — from the earlier Rs.300 — announced in the Union Budget. It is another matter that the Bharatiya Janata Party had canvassed for an enhancement of the pension to Rs.3,000 prior to the last Lok Sabha election. Evidently, the politically sensitive nature of these labour reform measures — even within the BJP-affiliated trade union bodies — was not lost on Mr. Modi. Only a few months ago, the Bharatiya Mazdoor Sangh opposed the Rajasthan Government’s amendments to the Contract Labour Act that sought to create flexibility for employers. Thus, Mr. Modi’s announcements were carefully couched in a conciliatory and accommodating tone that the new measures would be no less beneficial to workers. If protracted delays of the past to obtain clearances hurt productivity, they also caused an adverse impact on the interests of the workforce. Mr. Modi’s plan to draft a band of technology ambassadors to showcase the quality of existing vocational training programmes in India is well-conceived. There is no gainsaying the need for more such institutions.
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