Saturday, February 13, 2010

Energy security and urban infrastructure - Part 1

As India inches her way towards becoming an industrialized nation, her energy demands keep growing by the day. Fuelling this demand for energy is the move from an agricultural economy to an economy more dependent on revenue from services and industries. Rapid industrialization has led to economic boom, with our GDP growing at a steady clip of more than 6-7% every year. While this has had the mostly pleasant after effect of increasing the lot of the middle class, it has also led to a fantastic increase of our energy demands - be it for our cars, the air-conditioners at work or that fancy slow cooker you bought last week. Government as usual is two steps behind (with due apologies to Def Leppard) in ensuring that our energy needs are met reliably and cheaply.

Fulfilling our near insatiable demand for energy is a massive challenge for the government (and they seem to be doing a crappy job of it, as usual). I am going to try and articulate in this series how shortsighted governments have created an atmosphere of stop-gap ad-hoc arrangements that are leading us towards energy insecurity. Being net importers of oil and with very little domestic production, we are extremely vulnerable to oil price shocks. The rise of oil prices to above US$145 in the weeks prior to the global financial crisis taking center-stage was a good reminder of just how little power we have on controlling our exposure to oil prices. The need of the hour is for us to reduce our exposure and dependence on imported energy sources and try and tap into domestically available energy resources.

Most of our domestic oil consumption is towards meeting our transportation needs, be it for air, rail, road or water transport. (Fortunately, we are a tropical country with very little energy requirement for indoor heating.)
Urban infrastructure is an amateur passion that I have and in this mini-series, I hope to write about how improving our urban transportation systems will reduce our dependency on imported energy sources, improve our economy, and most importantly; improve our quality of life. I do hope you will come back and keep reading.

Thursday, February 4, 2010

Sexual revolution in India? Epic Fail.

From the land that gave the world the Kama Sutra. Fail.

Monday, February 1, 2010

Save our cities (with due apologies to Jim)

Quality of life
What is it that makes urban India such a terrible place to live in? What marks that great urge for young, educated and successful Indians to emigrate to foreign shores in great numbers? What is the allure of the west that we are happy to leave the land of our forefathers and focus our energies upon the cultivation of prosperity elsewhere?

A simple (simplistic?) answer to the large scale migration of Indians elsewhere is the quality of life afforded elsewhere. As a hard-working and qualified professional in London, New York Tokyo or Sydney, one is able to secure a comfortable lifestyle. The suburban home, the Toyota Camry, the education of children, social security and simple urban comforts like having continuous electricity and running water are soon within reach. Why abandon that for the hell-hole of a city like Bangalore?

Dr. Manmohan Singh, India's Prime Minister recently called upon expatriate Indians to return home. A cursory look at the angry responses by expatriate Indians on the comments section of the article leaves little doubt as to why our talented and energetic youth prefer the West to India. Put simply, it boils down to three basic issues: urban infrastructure, reduction of bureaucratic red-tape and a culture of equal rights for all. In urban India, all 3 are a utopian dream. Yet, is it really that hard for directly elected governments in India to deliver something so basic? Tell me, Dr. Singh, if after 60 years of Independent India, after continuous economic boom for the past 15 odd years, why is it that elected governments have made little or no progress in bringing India's urban centres to comparable Western standards? Where is our version of New York, London or Tokyo?

There are many folks in middle class India who are asking the same question today. As usual, the rich in India continue to be unaffected by such problems as they can afford to pay for private services that the government so miserably fails to provide. As for the poor, they are too busy putting food on the table to be concerned with issues like reduced commute time or the reduction of carbon emissions. Which leaves a doughnut hole in the population that needs these government services but whose voices are not heard.

Electoral classes
Backtrack to why middle class India is politically under-represented. In spite of India's economic miracle over the last couple of decades, our approach to economic development is essentially top-down. We implement policies that economically benefit the rich and middle-class and hope that it will trickle down to the poor. For example, for every software job in Bangalore, there are a variety of other jobs created - the security guard, the maid servant, the car wash guy, the cab driver. It is a policy that has worked, but is far from being ideal. The cabbie will never be able to become an accountant. The policy of providing an equal platform for all from which to springboard to careers that are available based on merit does not yet exist.

The resultant output of such policies is that we still have a huge number of people who are indescribably poor, barely surviving on low-tech, low-income jobs like sharecropping. Rightly or wrongly, the political class is ostensibly most concerned about the welfare of the poor (apart from their own, of course). When the most basic of necessities - food, water, shelter and healthcare are uppermost in your mind - you listen to those who promise to provide succour. Considering that the latest figures suggest about 1/3 Indians living below the poverty line and that over 60% are directly or indirectly dependent on agriculture related income, it is hardly surprising that they form the largest voting block in our country.

For the manor born, it is a different world altogether. Unconcerned as they are with basic necessities, their focus is more on areas of government influence such as direct taxes levied, business policies, etc. Aware as they are of the government's hopeless inability to provide basic infrastructure they build their own. From private armies to personal power generating stations, they have the financial muscle to afford it all. To this class the government does cater, but in a fashion that is of mutual cooperation and is largely undetermined by electoral outcomes. In other words, regardless of who the political master is, this section of society is largely unaffected. After all, they are the smallest voting bloc but exert enormous influence by virtue of their capacity to contribute to economic progress. It is in every politician's interest to keep them happy.

This leaves the middle class, or as I like to call it - the doughnut hole people. Essential for a doughnut to be a doughnut, but serving no practical purpose. Similarly, they are essential to the country's economics but as far as the politicians are concerned they do not matter. The white collar job worker in private sector and the government. The small businessman. The tradesman. They are the burgeoning segment which contributes to a fairly large proportion of the number of direct tax assesses. Based on their consumption pattern, they are also responsible for a large proportion of indirect tax revenue collected. In an ideal world, it is their voice that should be heard the most. Yet, in India, they are the most ignored of the electorate. I'm going to try and understand as to why this is.

Statistically speaking
I am going to try and provide some statistics about the demographics of the middle class and the direct tax payers.

The middle class in India is essentially urban, living in her towns and cities. In spite of rapid urbanization, the number of people living in India's urban centres is only about a third of her total population. Of this a huge chunk of people are rural migrants in search of a better life. This means that we’ve only got about 20% or so of a population that’s really middle class.

Although the urban population is at about 30% across India the actual number of middle-class folks, those who fall under the direct tax paying bracket is 31.5 million (per an RTI application to FinMin, couldn't find the information on the FinMin website directly). 31.5 million, in a country of 1100 million. Which means, barely 3% of our population is in the direct tax bracket.

Both figures are good indicators of what population to define as middle class. If we consider the former, then taking into account the rural migrants that are 'drifters', we probably have only about 20% of the population as middle class. But with state governments holding power in a centralized fashion, the percentage of middle-class voters in a state election is only about 10%.

Consider Karnataka, a state with a population of 52 million. The number of registered voters in Karnataka is 41 million. However, the state's most important urban centre, Bangalore (also India's 3rd largest city by population) has only 10% strength of that as registered voters. (Of which less than half actually bothered to vote last time.) This means that the typical middle class demographic is not really a major ‘vote bank’.

Cut to direct tax payers, who in my opinion are a more upwardly mobile in the cities and hence more desirous of a better quality of life. 3%. Think of that figure. Only 3% of this country of a billion+ and counting actually pay direct taxes. If you translate that into a vote-bank, the number is hardly worth considering.

So what I am trying to say is this: the urban middle class in India are an electorate that is statistically less significant than the rural folks. As a result, we do not have politicians who pander to this category of voters. Typically, even the middle class voter is too apathetic to do anything about it anyway! They could not even be bothered to vote. Ha.

Now, given the fact that urban voters are insignificant to the politicians (except as a source of revenue), is it any wonder that our cities hardly function like any world class city should? Urban infrastructure is terrible; planning for new infrastructure is short-sighted and poorly executed; bureaucratic red-tape kills innovation and entrepreneurship. To get anything done, you need to 'know someone'. Coupled with a country-wide policy of affirmative action for 'underprivileged classes', is it such a wonder why people choose to seek their betterment elsewhere?

Of course, many armchair activists like I have discussed these issues before and have come to similar conclusions. This blog entry is hardly original and hardly revolutionary in its conclusion. Other than having provided a forum for me to vent my frustration in what I hope is a logical and eloquent fashion, what purpose has it served? I'd like to provide solutions on the ground, but for that I need to be an elected official. I considered contesting the local ward elections in Bangalore, but my ward is reserved for Scheduled Caste folks. WTF? So it has ruled me out anyway. I'd like to share my thoughts about what I see as a plan for improving our urban centres in India.

Revenue spend pattern
It is true that major urban centres in India like the metropolitan cities, Bangalore, Pune, etc. are huge engines or economic growth and by correlation as huge revenue centres. Unfortunately, they lie within the realm of the state government (except for Delhi). Due to the centralized nature of governance, it follows that there are no focused efforts for development of an urban centre. I'll try to use Bangalore as an example.

Karnataka contributes to a little over 5.3% of India's total GDP. Bangalore is by far Karnataka's largest revenue earner. The income realized by the state and central governments from Bangalore is more than any other region of the state. I am hard pressed to get exact data, but a conservative estimate indicates that Bangalore contributes to about 25% of Karnataka's economy. This means, 10% of the state’s population is responsible for 25% of its income. However, it is fair to say that not all of the revenue earned by Bangalore is re-invested in Bangalore. I’d love to get exact figures from somewhere, but I am unable to research it on the internet. An RTI query is something that I am working on to get these details. While I understand that the revenue collected by an urban centre needs to be diverted to other regions of the state, what I am trying to figure out is the proportion of that diversion. What would be a good percentage of urban income that needs to be reinvested in the source city/town and what percentage should be diverted to other purposes? If budgeted spend on improving urban infrastructure and improving the quality of life is an index of development, then we’ve obviously failed miserably. In India’s urban centres, I suspect that we spend too little and also spend it poorly; corruption is hardly one of the culprits here.

India prides itself on being one of the world’s top IT superpowers today. Unfortunately it is a fallacy that many politicians and (sadly) IT professionals are wallowing in. We’re mainly a source of cheap labour. High-end IT business is still a very small fraction of our total IT based revenue. We do not have the capability or the vision to transform ourself into the Silicon Valley of California. We will never have our own Google or Intel.

It is the same problem that has beset our political class. Apart from being uniformly corrupt (with the rare exception) and driven by caste-based, partisan politics; we do not see any visionaries who are implementing anything good. Of course, some exceptions are there to the rule. Narendra Modi springs to mind as the Gujarat CM, but he is not without his faults.

Cut to urban development. When was the last time we saw a political leader transforming a city? Ever! All it requires is for someone of political power and vision to transform the shit hole of Bangalore into a world class city. Unfortunately, political considerations do not allow it. Or simply a lack of vision. The citizens of Bangalore have started ABIDe, an initiative that will call for a revamp of Bangalore’s development. Although concerned and earnest citizens have contributed a lot to it, in typical political fashion, it has failed to take off. Why, you ask? Because one of the core draft recommendations was to have an independently elected mayor for the city of Bangalore. The mayor would be responsible for managing development of the city, which means that power would be divested from the ruling party. Can you imagine trying to push that through in the murky world of India’s politics? The current CM of Karnataka is hardly a visionary who will overcome partisan politics to let something like this sail through. At least the convenor of ABIDe has taken the moral high ground and quit as the proposal has stalled in the Assembly.

Decentralized governance
Allow me to continue to use Bangalore as an example of how decentralized governance is the need of the hour to transform urban development in today’s India. Bangalore is India’s IT hub, by far the largest IT investment destination and revenue earner in India. (As an aside, you’d be interested to know that IT in India has succeeded mainly because government has had a hands-off approach to it. Can you imagine what would have happened if a government babu had been appointed to ensure ‘growth’ of IT in India?) Bangalore is the city that has put India on the investment radar of every CIO from Moscow to Madagascar. It should be the city that has engineered its own social development because of its economic success. Sadly though, Bangalore is a hell hole for its citizens. It is beset by urban problems that make living there a nightmare. Unaffordable housing, poor quality public transport, nightmarish commute to work, lack of security, a sad social scene and rising communal disharmony make Bangalore a city where one prostitutes their quality of life for their few pieces of silver.

Now, you’d imagine that Bangalore would have enough money to make these problems go away, yeah? And so it does. But what it lacks is political will to make it happen. There is no ‘Minister for Bangalore’, no directly elected mayor. Compare this with cities like London and New York who have directly elected mayors and function with far more efficiency as compared to Bangalore in spite of having a larger population to cater to. (Don’t hide behind the old ‘population is huge’ mantra, my beloved elected official.) What these cities have is someone at the helm who is solely interested in looking after their city’s interests. They are empowered to enact city-specific laws, collect city-specific taxes, undertake city-specific development programs, and the like. But in Bangalore, the CM of Karnataka has no such power nor has shown the interest to divest it to someone. For example, there is not a single public works’ body that is responsible for the city’s infrastructure and development. So, in typical Indian fashion, a week after the roads’ body has finished laying roads, the sewerage body comes and digs it up. Accountability does not exist as far as contracted works are concerned.

Now, let me imagine for a minute that we have a directly elected mayor of Bangalore. What could he or she do? Remember, this person is accountable to no one but the citizens of Bangalore. The state of Karnataka will have no bearing on his or her ability to function, except in case of joint stakeholder interests like that of Center and State, or State and City.

Being accountable to only its own citizens, the mayor of Bangalore’s scorecard would depend on how much better they make the city of Bangalore, from all aspects. A simple, effective and long-term solution to its transport woes itself would be something worthy of a Bharat Ratna (although I personally feel that that award has been demeaned in the recent past).

Imagine something more radical. How would it be if it were declared that all cities in India with a population of say, 3 million or more, would become a city independent from its parent state. It would function like a state on its own, without the additional governmental overhead. How cool would that be? Folks like Raj Thackeray wouldn’t be pleased, but imagine the impetus for growth there.

Jim Morrison must have been unnatural prescient to have sung this so many years ago.