I’m a Liberal and I’m Angry With You, India

Iam a liberal and I am alarmed at your choices, India. I cannot recognise you anymore. You have ushered in the dark days of democracy. Why did you vote for Modi?

A vote for Narendra Modi is a vote for hate. A vote for Modi is a vote for a Hindu Rashtra. A vote for Modi is a vote for a regressive and backward India.

A vote for the Trinamool is not a vote for a dictatorial Mamata Banerjee. A vote for the Congress is not a vote for a riot-accused Kamal Nath. A vote for the Samajwadi Party is not a vote for dynasty. A vote for the BSP is not a vote for a corrupt Mayawati. But every single vote for BJP, regardless of the candidate or the rationale behind the vote, is a vote for Pragya Thakur.

The poor in the village might have voted for the BJP because he probably got access to electricity, water, or toilets. The urban youth might have voted for BJP in the hope that he might get a job. Maybe those living in Naxal-affected Chhattisgarh voted for the BJP because their lives are slightly more secure now. But no, elections are about black and white binaries and I will decide that binary for the entire country.

If I didn’t have water to drink and food to eat, would I care if we bombed some terrorists in Pakistan? Of course not. But what do poor people know? Modi spoke about Balakot strikes in a speech, so they voted for him. I am educated and intelligent, so I would never do that, but let me insult the intelligence and wisdom of the masses by claiming they are naive and gullible.

One in two people has voted for the BJP, and each of the 22.6 odd-crore people are wrong. They are evil, poisonous to the core, and bigoted. The majority, comprising people from vastly different economic levels, social backgrounds, religions, castes, languages and cultures, who have somehow gotten together in this fabulous exercise to give us a decisive mandate that points in one direction; they are all wrong. All the infinite wisdom in the world resides in me and only I know what the world should be like.

And today, I am angry with you, India.

The mandate you have given is not one that I like, so I have lost my faith in the system and country itself. I may have lost touch with millions of you, but that is your fault, not mine. So I will label all of you, whom I have never met or know nothing about, as fascists, minority haters, and hate-mongers.

Why did you have to vote for Modi, India?

In a country where over 200 million people live in absolute poverty, I kept warning you that the biggest thing under threat was this abstract “idea of India” that I still can’t explain or define. On the other hand, Modi kept promising electricity, toilets, and security, so you voted for him. Why don’t you, the poor farmer in Madhya Pradesh, have the exact same concerns, as I, a keyboard warrior from Mumbai? Sometimes, you are so heartless, selfish, and narrow-minded, India. And I am livid today.

What was wrong with the Opposition? Maybe they didn’t have any shared ideology except “anyone but Modi”. Maybe they all kept fighting among themselves and kept crossing each other all the time. Maybe they didn’t have a leader that you could look up to. Maybe you couldn’t visualise what that khichdi government would look like if you didn’t vote for Modi. So what?

The subjective and abstract “idea of India” that I have in my head, which means different things for different people, was at stake, and you have disappointed. Your vote has taken the country backward today, into the dark ages. Of course, I am the sole authority that decides which vote takes India forward and vice-versa. What were you thinking?

I hope you feel extremely guilty about what you have done. I may label you ignorant, illiterate, and a terror sympathiser, but remember that I need you by my side in the next election. But today, I am angry with you India.

Yes, I am a liberal but I have no tolerance for this mandate.

Loan-Waiver Schemes Got 99 Problems. And Implementation is One

Earlier this year, over one lakh farmers from across India reached Delhi in March, demanding a special session of Parliament to address the agrarian crisis. The protesting farmers, showing incredible grace and dignity, spent the night at Ramlila Maidan before marching towards Parliament on Friday. Describing it as “one of the largest congregation of farmers” in the capital in recent times, the All India Kisan Sangharsh Coordination Committee (AIKSCC) pressed on its demands for loan waiver and remunerative prices for their produce. 

Waivers are par for the course in our country. The Madhya Pradesh CM Kamal Nath, after winning a hotly contested election, announced loan waivers in his state. We give them more often than Duterte hands out the death penalty. In the last year alone, Uttar Pradesh announced a debt waiver of ₹36,400 crore, Punjab of ₹10,000 crore, Maharashtra of ₹30,500 crore, Rajasthan of ₹8,000 crore and HD Kumaraswamy’s Karnataka government waived off ₹34,000 crore.

It is easy to see just how far loan waivers have solved the problems of our farmers, the most disenfranchised of Indians. The protests across the country are a result of our systemic failure to address concerns in the agriculture sector, pushing farmers to a corner. Organised protests are one way of registering their distress, an attempt to stake a claim to their basic rights of existence and dignity. On the extreme end, of course, the only solution left to them is suicide.

As one state granted waivers, protests erupted in other states, hoping to reap similar benefits. As state after state goes to polls, the demand for farm-loan waivers is only expected to get louder. With the fear of paying for it with a political defeat, governments cave in.

But what makes good political sense, rarely makes for good moral and economic sense.

When we’re ill, we listen to medical opinion by doctors because they’re specialists in the field. When it comes to economics, we need to pay attention to what the experts have to say. “The culture of loan waivers must end,” said former RBI Governor and media darling, Raghuram Rajan in 2014. It was a sentiment that was later echoed by his successor Urjit Patel last year. Even the World Bank commented on the issue in January earlier this year, claiming, “Debt waiver is not a good way of supporting farmers.”

These recommendations, however, seem to have fallen on deaf ears.

It’s the fashion of the times to negate any achievements of the previous government, but at least we can learn from their failures. Not only did a loan-waiver scheme implemented by the Manmohan Singh government in 2008 fail in its long-term objectives, but it also failed to provide short-term relief to farmers. It only marginally affected the number of suicides. The reason is simple: Loan-waiver schemes suffer from 99 problems and implementation is one.

There is difficulty in identifying the beneficiaries and distributing the amount. Seldom do the benefits of a debt waiver reach the right people at the right time, in the right manner. According to the 2008 Comptroller and Auditor General report, many eligible accounts weren’t considered. In other cases, beneficiaries who were not eligible were granted waivers. There are also fundamental question marks over coverage, how many people actually qualify, and can benefit from these schemes.

And then there is the problem that loan waivers only look at institutional credit – but the government is easy to deal with, private loan sharks are not. According to the 2012-13 NSS-SAS report, about 39 per cent indebted households acquired credit from non-institutional sources like moneylenders who charge exorbitant rates, which are outside the purview of debt-waiver schemes. Loans are taken from multiple sources, they are taken for multiple reasons, including non-farm activities.

But those are only the surface problems, the issues with loan waivers are much deeper.

Loan waivers create moral hazards; they discredit farmers who were able to repay their loans fairly on time. It’s a little like telling students after an exam that they could have copied and passed. It is unfair on the students who worked hard and attempted it fairly. Secondly, whenever loan-waiver schemes have been announced in the past, we’ve seen rich farmers default on repayment despite being in a financially viable position to do so.

What we fail to grasp is that when a loan is waived, it is not erased from the face of the Earth. It’s just that the burden of repaying the money shifts from the farmers to state governments. And with the time it it takes the government to pay back the principal loan amounts, the burden shifts to the bank. See what’s happening here? The good old game of relay.

For a system that’s already struggling with huge NPAs and stressed assets, this only makes things worse. When banks don’t get back their money on time, not only does it affect their capacity to lend money to others and fund various large-scale projects, they become selective in their lending of money to the agriculture sector in the future, knowing it’s a possible red flag. If I know that lending money to someone could result in a potential loss, I might just do away with it and save myself the headache. It affects the overall long-term credit culture of the banking system.

As money goes out from state budgets to pay these loans, it goes from a kitty that was supposed to fund some other project. As dads told us, “Money doesn’t grow on trees,” and a sum that was allocated to fund a highway, college, or hospital will now be used to waive off loans, crippling infrastructure demands of the state.

Again, all of this trouble would be completely acceptable if the waiver did indeed solve the problem forever. It would be acceptable even if at least improved conditions for farmers so there are no more suicides. But is that really happening?

The government is only able to waive off the farmers’ current loans instead of empowering them to be able to pay their future loans. What happens if we face the same problem again next year? Another drought? What if farmers borrow and default again? Will there be another protest? Another loan waiver?

Loan waivers are a short-term remedy, and – unpopular opinion alert – a quick-fix with the aim of political gain rather than an attempt to fix deeper structural problems that engulf the agriculture sector. Instead of waiving off their debts and sending the economy into a spiral, it is infinitely better to ensure farmers become capable of repaying the loans themselves. When this happens, farmers do well, and the economy does well. Instead of adopting this paternalistic attitude, we need to push for their self-sufficiency and profit. It is a goal towards which all efforts need to be made.

The tougher but more tenable solution to this is to strive toward increasing agricultural income. It includes attempting to tackle long-term and difficult problems related to supply chain, trade cartels, land reforms, modernised farming, irrigation, wastage, crop productivity, insurance, and warehousing among others. In his Union Budget speech, Finance Minister Arun Jaitley announced a remuneration price 1.5 times higher than MSP, which turned out to be an empty promise on closer examination.

We have known these problems for a long time. We have also known the solutions to them for a long time as well.

My guess however, is that loan waivers will continue to be the story. The problem with these structural long-term reforms is, they don’t help you win the immediate election. The effects will be seen in a decade from now, when a government may or may not be in power.  

Loan waivers have been carried out by the Congress, by the BJP. The only thing they help in solving, is the problem of voting a party to power and soothing a protest. But these short-term fixes will never be able to solve the acute agrarian crisis we are staring in the face right now. To really bail out the folks who put the food on our plates, will require a more humane rethink.

Who Pays for These Financial Frauds?

Everyone has the footage from the 26/11 terror attacks in Mumbai imprinted on their mind – Ajmal Kasab strutting around CST station with an automatic weapon, bodies strewn all around. One of the most iconic buildings in Mumbai, the Taj Mahal Hotel, up in flames. Quite similarly, terrifying were the visuals of the earthquake that struck Bhuj in 2001 and the floods that ravaged Uttarakhand in 2013. Physical property in absolute shreds, distress and pain on people’s faces, their livelihood shattered.

After every such instance of mass mayhem, there are committees set up to look into the matter, questions raised over disaster management. We have Arnab Goswami shouting at the top of his voice for two weeks; international and diplomatic pressure is mounted if it’s a conflict that extends beyond our borders. After all, we can relate to what it is like to be in such a situation.

Injury, destruction, violence, trauma, blood, misery, pain, and death are emotions we all relate to at a very personal and humane level. You can see the calamity, and because you can see it, you can feel the pain. One can objectively determine the number of people who suffer, the extent of the suffering, and how their lives change overnight.

A financial crime is very different. It’s almost a victimless crime. You don’t see the damage, you don’t feel the pain even though it is an event that could potentially destabilise the economic system and the global market. After all, only a few numbers have been wiped off from some computer or a database somewhere in Dubai, haven’t they? “How bad can it be? It has not affected my life in any way. I’m sure we can trace the money trail, catch the crooks, put them behind bars, and it solves the problem.” That’s how punishment works, we learnt it in school. Well, not quite.

Who then pays for financial frauds?

On the exterior, it seems that a few individuals managed to scam their companies or banks of huge volumes of money. Surely, it must be the banks and companies who are losing the money? Unfortunately, or perhaps fortunately, we now live in a world that is truly connected (in the way that Nokia dreamed of) and nothing has effects in isolation. When a company goes down, people who invested their money in that company go down with it. But, wait for it, sadly, there’s more.

When banks keep on accumulating bad loans, eventually governments have to kick in and bail them out. Why can’t banks just fail and fall down? We seem to be doing it with farmers all the time. It’s because everyone has money deposited in banks – the rich, the middle class, the poor; the young and the old. Many deposit their life’s savings in those tiny bank lockers. And for them, such a loss would be humongous. And so, banks are treated with kid gloves, a lot like millennials in school: They are not allowed to fail. Often governments show up at the last minute like Bruce Wayne with arrogant confidence and a huge suitcase stuffed with cash.

Where does government get the money from? Yes, the tax money that you and I pay. The ₹29 GST that you paid on the latte at Starbucks so that the government could use it to build a metro station, is actually used by it to bail out a bank because some asshole at Morgan Stanley scammed the system and is now partying in the Caribbean Islands in his million-dollar home. You paid the government, the government paid the bank, he took the money from the bank. So in essence, you paid your hard-earned money for his party. Not only does your money facilitate someone’s greed, it gets diverted from the function it is supposed to serve – development.

I hate to say it, but there’s more. Economic disasters have knock-on effects that can last years, and sometimes decades. The 2008 financial crisis cost the US taxpayer $700 billion (take two minutes to process that number and count the digits), and while the crisis originated in and was funded by America, the entire world paid for it, and in more than just monetary terms. Barack Obama’s hair turned grey, trying to overturn the situation he inherited.

When banks become weaker, their lending is affected. When banks don’t lend enough money to businesses, growth of corporations deteriorates; they can’t build new factories and take up expansive projects. When corporations aren’t growing, they start firing people. When people don’t have jobs, you see a spike in the unemployment rate. When the unemployment rate rises, one sees an increase in crime and other social problems. When crime increases, people pay with life.

Add a layer of globalisation to it, and you see how catastrophic the situation becomes. If a bank isn’t lending to Reliance in India, it would affect how much money will flow into their foreign operations in Africa. When people start making less money and get fired in factories in Africa, it affects the employment rate and financial stability of those countries. Scale up the situation to every company and every country in the world, and you realise the magnanimity of it all.

One may not be able to exactly pinpoint the number deaths or the period of tragedy, but there’s very little debate on the fact that it affects everyone, and has disastrous consequences when things go out of hand. To add insult to injury, the law works quite differently for powerful people than it does with the rest of us. Men in the middle of these financial storms (yes, they’re invariably all men) mostly tend to walk away untouched, because they have huge political clout and influence. We’ve seen that in India time and again, over decades. When poor farmers default on loans, it’s a crime. When rich millionaires do it, it’s called “negotiating the terms of payment”.

It has far often been the case that regulators and auditors, who are meant to stop the party, were also in on the frauds, dancing to the music, so they could make a few million as well. All of it at the cost of your and my tax money. While physical harm and impact of violence is instant, the effects of financial fraud are long term. To quote Miranda Tate from The Dark Knight Rises, “You see, it’s the slow knife, the knife that takes it’s time, the knife that waits years without forgetting, then slips quietly between the bones, that’s the knife that cuts deepest.”