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India’s Long Quest for Modernity360°ANALYSIS

In this special edition of The Interview, Fair Observer talks to Atul Singh, the founder, CEO and editor-in-chief of the organization.

India is well-known for its inefficient legal system with archaic laws that hobble its economy. While the country is trying to forge ahead by increasing its investment in infrastructure and curbing money laundering, far too many of its colonial-era laws do not make any sense.

While Prime Minister Narendra Modi has been started repealing out-of-date laws, he will need up the ante to keep his promise to axe 1,700 outmoded laws. Reforming a glacial-paced judicial system, along with improving enforcement of existing laws will improve rule of law, which is now a faint notion instead of daily reality. India needs new legislation that is drafted clearly and rigorously.

Although foreign investment has been flowing into India recently, more reforms will increase this inflow enormously at a time when much of the world is in economic turmoil. The current government has tried to push through new legislation to attract foreign investment.

Yet protests have erupted against the Goods and Services Tax bill (GST) and the Land Acquisition Bill. The Indian National Congress, the ruling party for many decades, has taken a populist position and is opposing Modi even on the policies it once proposed. All eyes are on Modi to see if he will have the will to push through the legal reforms that India desperately needs to give its economy a fillip. If the prime minister fails to push through these legal reforms, his standing will suffer a damaging blow.

Another mammoth task lying in wait for Modi, as per a PricewaterhouseCoopers report, is educational reform. Indians on an average get only seven years of schooling. The same report goes on to point out that India “has the highest illiteracy rate–33%–in the world.” Changing this requires will, reforms and resources. A mix of a scientific education based on experiments and a liberal arts education modeled on critical thinking is what India needs today.

In this special edition of The Interview, Fair Observer talks to Atul Singh, the founder, chief executive officer and editor-in-chief of the organization, about the state of the Indian economy and the reforms it needs.

Daniel Currie: India is a land of obsolete and old laws. Why do laws from the 1800s continue to dictate life to this day? Which laws need to be repealed to benefit the country both economically and socially?

Atul Singh: The question “why” has a simple answer. India has long been an exceedingly conservative and cowardly country; add to that the continuing hangover of the British colonization. Anyone who speaks English in the proper accent is deemed to be intelligent and educated, while anyone who speaks the vernacular is considered a country bumpkin. This is the Indian mindset.

Surprisingly, there is still veneration for the legacy of the empire, even though it reduced the Indian economy from 24% to 2% of the world GDP [gross domestic product]. This colonization of the mind ensures that Indians continue with the system the British bequeathed them even when it is clear that it no longer works.

Indians pride themselves on being practical. This is often code for accepting the status quo. So, there is little questioning about the roots of the Indian system, even less discourse on changing laws that do not work and hardly any vision for new laws or systems that India needs to become a modern nation. The lack of cultural confidence and bravery permeates all aspects of society.

However, I am hopeful things will change once a new generation comes of age and demands more rights and better services. This will happen in the next 50 years. In the near-term, I do not see much change.

The Interview - June 2015The answer to which laws must go is simple too. Too many old laws on the books were signed into promulgation when India was still a part of the British Empire. A 1998 report commissioned by the government itself recommended the repeal of over 1,300 outmoded laws. The country is still waiting with bated breath for its elected leaders to act on the recommendation of the report.

Specific examples of obsolete laws include the 1861 Police Act. Contemporary Indian society cannot use a law that was drafted four years after what the British called the Sepoy Mutiny of 1857. The Indian Penal Code of 1860 is ridiculously outdated, and it is frightening that no one talks about reforming it. This piece of legislation was drafted by none other than Lord Thomas Babington McCauley, a man who also created the Indian education system to train natives to be Englishmen in taste and serve the British Empire. Another vintage piece of legislation is the Indian Telegraph Act of 1885, which ridiculously governs satellite phones and radio today.

Truth be told, India needs a complete legal overhaul. Yet it is important that the new legislation is drafted thoughtfully and rigorously. Otherwise, the remedy will be worse than the disease.

An example of this is the crude piece of legislation called The Indian Companies Act 2013, which was passed by the previous Congress government. It is poorly drafted and even contradictory in places. The act adds to India’s infamous red tape. Starting a company is difficult and closing it even more so. The act creates barriers to entry and exit, stifling business activity. This is a shame because Indians are entrepreneurial by nature, and this ghastly legislation is shooting the country in both its knees.

Currie: India has struggled with the enforcement of laws and reforms. Why is it a problem to this day?

Singh: There are many reasons here. As I previously mentioned, there are plenty of crazy laws that no one in their right minds is going to obey. In fact, if all the laws were actually implemented, India would come to a standstill. Yet this means that rule of law suffers. If a country has terrible legislation, then a culture of disregarding laws develops.

Let’s assume for a moment that laws became less insane. Then, someone would need to impose those laws. Right now, there are hardly any institutions upholding rule of law. The police is understaffed and underpaid. It is little surprise that most policemen tend to be corrupt. The police in many ways are the biggest criminal gang in the country. There are no trained prosecutors or a prosecuting service. There are few regulatory agencies with teeth that can prosecute wrongdoers and penalize them.

Finally, the Indian judiciary is in shambles. In an effective democracy, decisions must be reached in a timely manner. Cases in India drag on for decades and decisions are reached at snail pace. Millions of cases are pending, and people end up going to bosses of criminal syndicates instead of courts because that is cheaper, quicker and more effective.

India needs to do the following if it wants any semblance of rule of law:

1) It must simplify and rationalize its outmoded and irrelevant laws.

2) It has to create an enforcement mechanism that works. This involves reforming the police as well as creating civil prosecuting agencies and regulatory authorities with teeth.

3) It has to take laws seriously and combat the pervasive culture of corruption.

4) It has to reform its judicial system as cases must be heard quickly and cheaply.

5) More transparency is essential. A very simple example would be the creation of an online national land registry system so that anyone can look up who owns the land along with its estimated market price.

6) Finally, recruit talented and skilled men and women into the government. Once they join, create a culture of competence at all levels.

Currie: What is the role of the private sector while the government is in the tumultuous phase of passing reforms?

Singh: The private sector has a pivotal role to play toward long-term reforms. Certain things will help everyone. A simple and transparent taxation regime would improve business climate by mitigating uncertainty and convoluted efforts at evasion. Better infrastructure would help everyone too.

Indian companies can often be very short-term. They cut corners, bribe and even intimidate. This might help them in the short-term, but it makes the business climate uncertain, hurting future potential. Indian companies have to realize that a reformed India would be in their interest as well. Otherwise, India’s demographic dividend will become a catastrophic curse. The environment in which these companies operate might become toxic and spill out into violence. So, being less selfish might actually help the private sector in more ways than one.

Currie: The National Democratic Alliance [NDA] government has struggled to pass bills such as the land and GST bill. What must be done for these bills to get passed as soon as possible?

Singh: There is a lot of drama in all realms of modern politics–even the US Congress is not immune to political spectacles. Each political party positions themselves as the one fighting for justice and against tyranny. The main problem with the NDA is that it does not have a majority in both houses of the parliament.

The NDA may be able to get the majority in the upper house of the parliament, but in the meantime, it will have to practice some quid pro quo to get the necessary votes. While the Congress Party is clearly trying to obstruct bills, the BJP [Bharatiya Janata Party] has been “playing politics” in the past as well. The BJP initially negotiated a nuclear deal with the US and then did a 180° to oppose it in parliament.

The BJP is new to power. It must find allies and spend more time to work on the legislative process. I am convinced the government is not focused enough on this process. Of course, it can try to keep winning elections and gain control of the upper house. Even then, it will have to spend time reading and drafting laws.

Now, let us look at bills. The GST is relatively straightforward, but the land bill is tricky as the latter can be used arbitrarily. If people are going to have their land taken away, then there better be a bona fide reason for it. So, safeguards along with accountability, transparency and a speedy judicial review are essential to ensure some sort of justice or at least prevent gross injustice.

The land acquisition bill is necessary for creating jobs in India. Hence, Modi and his team have to make a case for it. People have to be told that if they want better roads, then some of them will lose their land and houses in the process. The same holds true for any infrastructure project or even a defense one.

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Currie: What reforms can be passed to improve India’s shoddy “ease of doing business” ranking?

Singh: With colonial-era laws, rampant corruption and red tape, it is little surprise that India is a terrible place to do business. This year, India has dropped two places to 142 out of 189 countries in the “ease of doing business” ranking. The World Bank places India at 158 on “starting a business,” 184 on “dealing with construction permits,” 156 on “paying taxes,” and 186 on “enforcing contracts.”

I have already answered this question earlier. The six reforms I mention would go a long way to make India a better place for business. I would add one more suggestion. Let us get rid of the Indian Administrative Service [IAS] and Indian Police Service [IPS], and professionalize the civil services. It is a joke that the system created by Macaulay and Jowett survives. Let us get rid of generalists with little subject matter expertise and even less decision making ability. For instance, let us have people with experience in finance, an understanding of economics and familiarity with accounting sitting in the finance ministry instead of the bunch of jokers playing poker with India’s economy.

Currie: With the important Bihar elections coming up, there are many people complaining about the NDA’s pro-corporate stance. Is Modi pressured to pass more populist reforms to attain the votes in Bihar?

Singh: I would not like to use the term “pro-corporate.” Modi is under a lot of pressure to create jobs, and the expectations are sky-high. His bet is to try attract companies to “Make in India,” but foreign companies are scared of the retroactive taxation policies employed by President Pranab Mukherjee during his time as finance minister. The use of retroactive taxation is a spectacularly stupid idea, and Mukherjee can claim the credit for single-handedly deterring foreign investment into the country.

The government has to make it easier for small and medium enterprises to do business. India’s challenges are huge and there needs to be urgent reforms. Sadly, Modi has not been bold enough. His economic team is weak, and Arun Jaitley is proving to be a poor finance minister. The team around him is also a touch lightweight with a fixation for McKinsey-style presentations instead of hard headed major decisions.

For instance, Jaitley should get rid of Mukherjee’s idiotic retroactive tax law. Similarly, he could get rid of a number of outdated laws and regulations, many of which have been enumerated in numerous reports. The most terrible sections of the Companies Act of 2013 should be redrafted. As a lawyer, this is the least that Jaitley can do. But he has yet to even mention this issue. I have no choice but to give Jaitley a “C” grade for his performance as minister of finance. If Jaitley fails to outline a clear blueprint for the Indian economy, then all this talk about “Make in India” will remain little more than hot air.

Currie: As per a PricewaterhouseCoopers report, The Winning Leap, India is struggling with a lack of skilled workers in numerous fields. What reforms do you propose to increase the supply of skilled workers?

Singh: This is a long-term play and the problem is a lack of education. Rajiv Pratap Rudy, the new minister for entrepreneurship, is concerned about the dearth of skilled workers in India’s economy. As Rudy rightly points out, only 2% of the Indian population can be characterized as skilled labor. For Germany that figure is over 80%.

India needs a complete overhaul of the education system created by Macaulay. That system served the British Empire well. It fails independent India and condemns hundreds of millions to lives of illiteracy and poverty. India’s primary, vocational and higher education system has to change. To answer this question in detail would a lot of time. So, let me make some quick points.

Narendra Modi

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Primary education has to be more relevant to the daily lives of India’s teeming millions. For instance, village schools could impart knowledge about local crops, cattle and weather patterns. Similarly, a stress on working with one’s hands has to be an essential part of school. The Germans have a great tradition of crafts and so did India in the pre-British era. A new stress on crafts and a renewed respect for it is essential. Making a chair, learning to work on a car engine and practicing plumbing skills have to replace the mindless rote learning Indians venerate.

Higher education suffers from the heavy hand of bureaucrats. Even directors of the elite Indian Institutes of Technology have to kowtow to ignorant IAS officers who have no experience of teaching, research and running any educational institution. They decide budgets, make top appointments and dictate priorities for the Indian education system.

Smriti Irani, the minister who is the big boss of India’s education system, is weak. The IAS officers who surround her are incompetent. Hence, there is no hope in hell for any meaningful reform of India’s dysfunctional education system.

The only saving grace for India is that the previous government was worse. The Right to Education Act passed by the Congress Party is a complete and unmitigated disaster. It imposes conditions on schools that they cannot fulfil. It gives government far too much control of curricula, which is utterly unacceptable. Irani must repeal this law immediately, but I doubt she has the wisdom or will to do so.

In the long-term, education will decide whether India succeeds in an increasingly competitive world. Besides, you simply cannot have an effective democracy with an uninformed and uneducated electorate. Macaulay’s system has to go. India has ancient examples such as Nalanda to look up to and modern inspirations such as Rabindranath Tagore’s Shantiniketan to draw from. It has a culture of learning and an intellectual tradition that goes back millennia. Even a few tweaks will unleash incredible energy in the country.

Currie: What are these tweaks or reforms that you would like to see?

Singh: First, give India’s higher education institutions autonomy. Get rid of the empire of patronage in which Macaulay’s illegitimate children or, in other words, IAS officers wield power without responsibility. Decentralize!

Second, ensure that private universities are not simply a means for the rich to launder their black money or grab land from the poor.

Third, do not copy the US blindly. Too many private universities seem to have the ills of the American education system with none of its redeeming qualities.

Fourth, spend more on education, especially primary and vocational education.

Fifth, establish some kind of apprentice system like the Germans. In fact, invite them to run some schools for mechanics, carpenters and plumbers. Goddammit, this is a country that once built the Sanchi Stupa and the Taj Mahal! Let us create a culture where students start working with their hands again. That is how we eventually create an economy where people take pride in creating things instead of just consuming stuff.

Currie: Indian culture prizes those who learn and practice engineering, medicine and commerce, while it does not provide the same regard for subjects such as arts. Do you see this as a problem? Should this mentality change?

Singh: I think Indian culture might be starting to change. There are experiments taking place at the grassroots level that give me great hope for the future. The Agastya Foundation, which is led by Ramji Raghavan and supported by Desh Deshpande, is doing great work. They go around teaching science through experiments in villages. That is fantastic. There are many similar efforts going on.

Hopefully, such efforts at the grassroots will merge praxis and practice, and spur critical thinking. India has a history of speculative thinking and came up with the idea of the zero. Today, the country has to learn from the best principles in Finland, Germany, England and elsewhere.

You are right though that Indian culture is still fixated on engineering, medicine and commerce. Yet it is also true that most Indian engineers cannot fix a broken car or repair a door. Most Indian degrees are not worth the paper they are written on. Indians have to realize that skills are more important than certificates. It is better to be a competent electrician than being a useless engineer.

Yes, culture has to change. Indians have to realize that the education system they venerate is a fossil. Macaulay, the man who created it, declared that “a single shelf of a good European library was worth the whole native literature of India and Arabia.” This is bullshit. Yet Indians have internalized Macaulay.

What India needs is a reconnection with its own roots. It has to jettison Macaulay and learn from the best in the world. It has to rediscover the same spirit and desire that led Tagore to start his school in Santiniketan and Madhan Mohan Malaviya to create Banaras Hindu University.

Currie: India and China have made inroads to improve bilateral relations through the Asian Development Bank and other measures. What more can be done to strengthen ties with countries in the East?

Singh: A lot!

More business interactions between India and the countries of the East will foster better growth prospects. Greater interaction between students in India and China will create business opportunities and deepen networks.

At the moment, India’s diplomacy is handicapped. The Indian Foreign Service [IFS] officers, who represent India abroad, have to become more professional. Better recruiting and training would be a start. A higher number of diplomats would help. India’s diplomacy of 700 is the same size as Singapore and that is madness.

Promoting trade or an inability to do so is the Achilles heel for Indian diplomats. US diplomats work hard to expand American trade around the world. Britain, in particular, has a great tradition of promoting trade. After all, they fought the opium wars and got Hong Kong to promote trade. India has a bureaucracy that is still steeped in the Nehruvian tradition. India’s first prime minister was a Cambridge-trained socialist who cared about non-alignment and not trade. Non-alignment is now dead, but IFS officers still do not know how to promote the interests of Indian business.

The future of trade will be in Asia, and India can make a choice to be a big part of it. It can start with trading arrangements in the near neighborhood and expand to Southeast Asia. It has to give its educational institutions to establish relations across borders in the same way as Harvard University or INSEAD. It has to whip its diplomacy into shape.

Finally, Indian business leaders, entrepreneurs and diaspora have to be a part of the policy making apparatus so that fresh ideas and dynamism enters this cobweb-ridden Nehruvian bastion.

Currie: Lee Kuan Yew, the first prime minister of Singapore, eschewed some civil liberties in order to transition Singapore into the economic hub that it is today. Are there limits to the messy and chaotic democracy for India?

Singh: People have already voted for limits to the chaos by voting for Modi. He ran his campaign on the promise of growth. He marketed himself as the “development man.” I suspect Modi wants to be remembered as a Lee Kuan Yew figure for India, and he does centralize power.

Of course, there are limits to the chaotic caste-based coalition politics. People are trying to find some kind of strong leadership, which will allow Indians to feel more proud at a global level. Many Indians travel. They visit other parts of the world. They are starting to wonder why other countries can have clean roads. After visiting countries like Australia and Singapore, many ask themselves why India should lag behind.

Finally, I want to address this false dichotomy between democracy and growth. India’s problem is not democracy, but corruption, which in turn is largely because its structures are colonial. The point is Indians do want limits to messy chaos, but they still want democracy and liberty.

Currie: Modi has completed his first year as prime minister. What is the one good and bad point about his time at the helm?

Singh: I think Modi has been pretty decent at foreign policy. He has been bold in many ways. He has taken some big decisions and raised the profile of the country. People in the highest echelons of business, law and politics are taken in by Modi’s charisma. The international community is looking to India with expectation, and Modi deserves credit for raising India’s profile.

I am extremely disappointed by Modi’s timid economic reforms. He has not met expectations of his voters who put him in office because he promised them better lives. He is not repealing old laws. He is not even dismantling the maze of ghastly regulations left behind by the previous government. He has a weak team that talks big but acts small. He has invited the world to “Make in India,” but I do not see what economic vision he has for the country. That needs to change and change fast.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: Radiokafka / Shutterstock.com / Roberto Stuckert Filho / Republic of Korea


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