A Major Setback in Kandahar

Things just got worse in South Afghanistan. The screenshot below taken from Long War Journal’s Mapping Taliban Control in Afghanistan project illustrates the significance. The areas marked in dark grey are under Taliban control. Those in red are contested districts. The uncoloured ones are controlled by the Government of Afghanistan. Kandahar city and surrounding districts immediately pop out as islands of government control in Southern Afghanistan. May be not for long anymore.

Image source: Mapping Taliban Control in Afghanistan, Long War Journal by Bill Roggio and Alexandra Gutowski

The reason is that Lt Gen Abdul Raziq, who was the police chief and the governor of the province was killed on 18 Oct 2018 supposedly by Taliban fighters who had infiltrated his inner circle. Gen Raziq was a major anti-Taliban leader in the South and his death makes Taliban’s complete control of the South imminent.

In many of our previous articles covering Afghanistan, we had mentioned how important Raziq’s role was. This is from 2015:

An unstated tenet of Afghan history is that the march for control of Kabul and the country is predicated on wresting control of Kandahar, the Taliban’s traditional base. In recent times though, ever since General Abdul Raziq was appointed police chief of the province, the Taliban have not tasted much success in Kandahar. Raziq has singularly been responsible for the relative peace in the province.

Raziq was no stranger to suicide attacks on his life. Various estimates say that there have been 30-40 attempts on his life before the fatal one. Only in May this year, there was an suicide bombing in front of his house. In his previous speeches, he had singled out the Haqqani Network and ISI for trying to wipe out the military leadership of the province.

It seems unlikely that such an attack could have been arranged without Pakistan’s support. It is also strange that this attack happened while the Taliban leadership is in talks with the US envoy. Moreover, the attack took place in the presence of the US Commander in Afghanistan. Some reports even claim that the main target of this attack were these US military leaders and not Lt Gen Raziq.

This is a big moment for Afghanistan. Even as elections take place on Saturday, the focus will be on what the US decides to do in response.

 

 

 

India’s Defence Production Optimisation Problem

The Caravan has an excellent in-depth story on the Rafale controversy. Beyond the specifics of the current controversy, the investigation throws light on the problems in defence production that continue to haunt India’s strategic ambitions.

On the face of it, defence production suffers from an acute case of what I had referred to earlier as hyper multi-objective optimisation. My argument was that the reason some government policies in India fail is because they try to optimise several objectives simultaneously, ultimately creating a solution that meets none of the objectives.

Now defence procurement is essentially an oligopsony i.e. it is a market where only a few buyers exists — only a few nation-states in the world have the financial muscle to buy 10 submarines or 100 multirole aircraft for example. My argument is that this oligopsony makes the optimisation problem even worse. The government believes that because it has more weight in the market, it has the luxury of optimising many more objectives in the process.

Let us look at what the government is optimising when it sets out to purchase defence equipment today.

  1. defence preparedness: primarily determined by the end users i.e. the armed forces
  2. costs: both explicit and opportunity costs
  3. strategic value: every defence purchase from foreign players raises the question that should we buy from existing trade partners or not
  4. creating an indigenous defence-industrial complex: this is further divided into two sub-goals. One is sustaining the ailing government-owned public sector companies. The second one is spurring investment from private Indian entities.

Now, even without any prior background, optimising all these objectives appears to be a herculean task. But even while India’s procurement processes were notoriously lethargic, new objectives were being added. The fourth objective was explicitly added  through an offset policy in 2005 and more recently through a strategic partnership model in 2016. And quite naturally, it is this fourth objective that has become the main sticking point in the Rafale controversy.

So with the government’s flagship reform failing, we are back to the starting point: what should be the mechanism to address India’s defence requirements? What principles should govern procurement and purchase?

One of the ways to resolve hyper multi-objective dilemmas is withdrawal. The government could let go of the aim to indigenise when it is looking to make a specific defence purchase. Get rid of the offsets policy altogether for a few years. The indigenisation problem should then be targeted at a later point of time. This is just one method. There could be other variations of choosing objectives that can work better but what is clear is that the current method needs a complete and urgent shakeup.

 

 

Employment Elasticity of Growth in India

Recently, there have been a spate of articles on employment elasticity of income in Indian newspapers and how important that is to job creation in India. The Hindustan Times has a series on India’s job challenge, Mint’s editorial discussed quality of jobs created, and the Economic Times cautions against India mimicking China’s strategy in creating jobs.

But what exactly is employment elasticity? And why is it important?

According to an RBI working paper by Sangita Misra and Anoop K. Suresh, employment elasticity is a measure of the percentage change in employment associated with a 1 percentage point change in economic growth. It indicates the ability of an economy to generate employment opportunities for its population as a per cent of its growth or developmentprocess.

An employment elasticity of 1 denotes that employment grows at the same rate as economic growth. Elasticity of 0 denotes that employment does not grow at all, regardless of economic growth. Negative employment elasticity denotes that employment shrinks as the economy grows.

This is crucial as it is commonly believed that economic growth alone will increase employment. However, as we examine the data, we see that despite India’s impressive economic growth, employment has not grown alongside. Ideally we would like to see an employment elasticity >=1, but, from the Misra and Suresh paper, we see that employment elasticity in India declined from 0.44 in the first half of the decade 1999–2000 to 2004–05, to as low as 0.01 during second half of the decade 2004–05 to 2009–10.

YearsEmployment Elasticity
1999-2000 to 2004-050.50
2004-05 to 2009-100.01
2009-10 to 2011-120.18

Similar trends have been witnessed at the sectoral level. In agriculture and manufacturing, employment elasticity between 2004-05 and 2009-10 has been negative.

Sector1999-2000 to 2004-052004-05 to 2009-102009-10 to 2011-122004-05 to 2011-121999-2000 to 2011-12
Agriculture1.09-0.39-0.44-0.41-0.08
Manufacturing0.80-0.271.740.100.33
Mining & quarrying0.870.20-1.76-0.140.34
Utilities0.67-0.277.601.421.17
Construction0.881.63-0.251.121.01
Trade, transport, hotels0.45-0.020.540.130.25
Finance, real estate1.400.34-2.32-0.450.06
Other services0.46-0.112.960.480.47
All sectors0.500.010.170.060.20

The negative employment elasticity in agriculture indicates movement of people out of agriculture to other sectors where wage rates are higher. This migration of surplus workers to other sectors for productive and gainful employment is necessary for inclusive growth. However, the negative employment elasticity in manufacturing sector was a cause of concern particularly when the sector has achieved 6.8 per cent growth in output during Eleventh Plan. It did bounce back during 2009-10 to 2011-12, but the average employment elasticity in manufacturing between 2004-05 and 2011-12 was still only 0.10.

 

References:

Misra, S., & Suresh, A. K. (2014). Estimating Employment Elasticity of Growth for the Indian Economy. Reserve Bank of India.

Planning Commission, India. (2013). Twelfth Five Year Plan, 2012-2017. Sage Publications, India.

The Opportunity Cost of Counter-terrorism

Today marks seventeen years since 9/11 happened. If terrorism is theatre, all its shows have been running full house since that fateful day in September 2001.

India has of course been dealing with the threat posed by terrorism long before 9/11. But that attack made the rest of the world take notice of the dangers posed by terrorism. In the US for example, new strategies were made, new intelligence organisations were setup, and armed forces were retrained for counter-terrorism in the aftermath of 9/11.

Similarly, India underwent a change to add teeth to its counter-terrorism strategy and the question that I want to focus on in this blog post is: at what cost have we achieved counter-terrorism effectiveness? Let me explain.

The cost of terrorism is a subject that’s been discussed in great detail. But lest we forget, a cost is incurred for countering terrorism as well. By cost here, I mean the economic cost and not merely the explicit accounting cost. Economic cost is the sum of accounting cos and opportunity cost. And the opportunity cost of a choice is the value of the opportunities lost (Cowen and Tabarrok). So, is the value of the opportunities lost by India in choosing to focus on counter-terrorism significant enough that we should lose our sleep on it?

To be sure, counter-terrorism requires spending money and deploying resources. At a macro-level, every resource spent by the government on counter-terrorism could’ve instead been used on something else. But because the threat of terrorism is so potent, it probably makes sense to incur the cost of letting other opportunities slip by. But is there any component of this opportunity cost that needs a relook?

I believe there is one component that needs some rethinking – the opportunity cost of getting R&AW involved in counter-terrorism. Because we probably will never have solid data to understand the resources diverted from R&AW to focus on counter-terrorism, my claim is only based on statements made by intelligence officers.

One such statement I came across was in a recently televised interview of two highly respected retired intelligence officers Tilak Devasher and Vikram Sood. At 10:25, Mr Devasher paraphrases from Mr Sood’s book The Unending Game, saying:

The focus is on terrorism and immediate actionable intelligence. What everybody is looking for is an instant coffee book report. So nobody is looking at the longer-term picture. What happens six months or six years down the road, where is that country headed, what are the vulnerabilities of that country which will affect us, those capabilities have been diminished.

Assuming this is how R&AW has actually transformed itself for countering terrorism, the opportunity cost is not at all trivial. This is because R&AW is a small organisation with limited resources at its disposal.  On the other hand its mandate is huge – it is perhaps the only Indian organisation that is tasked with collecting intelligence and conducting operations in other countries. If such an important organisation is disproportionately focused on counter-terrorism, it means that there is diminished focus on extremely critical questions such as: what will happen in China over the next six months? What should India’s stance be with respect to persecution in Xinjiang? How should India influence political events in Afghanistan? What will be the security implications of a water crisis in Pakistan?

This is a huge opportunity lost. Particularly so because terrorism is not just the only threat facing India. The conventional threats of an arrogant China and an irreconcilable Pakistani military-jihadi complex are just two others in a larger list of long-term threat vectors that India needs to be worried about. The US can afford to focus on counter-terrorism disproportionately because probably it really is the largest threat, given its geography and relative power. But India’s threat matrix looks very different and hence an assessment of opportunity costs of counter-terrorism is necessary.

PS: I suppose the same case of high opportunity cost applies to the Indian army. With its focus on countering terrorism in J&K, one needs to ask, what is the value of other opportunities being lost.

 

 

A Test with Imran Khan

If India wants to have a stable and constructive engagement with the Imran Khan government, it must temper its enthusiasm for a quick breaking of ice and totally avoid any attempt to secure a “big” breakthrough.

That’s because dealing with Pakistan is playing cricket simultaneously against two distinct teams on the other side, each of which has a different interest and expection from the game. The Imran Khan government might well have been helped to power by the Pakistan Army, but the military-jihadi complex is a distinct entity and has interests of its own. Based on historical experience, whenever there is an expectation of an upswing in bilateral relations, we should expect the complex to throw a spanner in the works. This usually takes the shape of a military adventure, cross-border terrorism or some other ugly rabbit out of the khaki beret. This creates an impasse and an inevitable downswing in relations.

The way to avoid this is for New Delhi not to demonstrate any eagerness for new beginnings. Don’t try for quick wins. Don’t create expectations. Don’t even fall for photo opportunities. Prime Minister Khan has made sensible statements on dialogue and trade. Let these be worked out at the staff level in the ministries concerned…not by high profile political leaders and government functionaries.

(As an aside, I do think the Pakistan Army will realise they got more than they bargained for by promoting Imran Khan. They don’t learn from their previous experience. From Junejo to Jamali, the army has found that once in office prime ministers develop backbones and don’t always yield to the generals’ diktats. If Junejo could stand up to Zia, imagine what a personality like Imran can do.)

What New Delhi does need to think about seriously is having an official outreach to the military establishment. Diplomatic protocal and normative policies are one thing, but if the Army calls the real shots and will do so for the foreseeable future, realism demands that we find a way to engage the generals directly. We should stop pretending that dealing with foreign ministers and foreign secretaries of Pakistan is an effective way to deal with that country on political and security issues.

As for how to deal with Imran Khan and his government, New Delhi should adopt the temperament of playing a test match. If you play with a Twenty20 or one-day international mindset, you’ll come to grief.

Disaster Relief and competitive advertising

Last weekend, following the Kerala floods, a long audio clip went viral on Whatapp groups across the nation. On two of my groups, each discussing the best way to contribute to disaster relief, this was thrown up as a counterpoint.

The speaker, who identified himself only as ‘Suresh’, says he “landed up in Kerala by accident” during the floods. The thrust of his advice:

  1. People in Kerala are rich. They don’t need your money.
  2. The only help they will need is by way of tradespeople – electricians and carpenters – to restore severely damaged homes.
  3. Oh, by the way, if you do decide to donate money, send it to Seva Bharti.
  4. And by the by the way, don’t donate it to the Chief Minister’s Relief Fund, since we have some evidence that all is not above aboard there.

What Suresh did not say was:

  1. His full name is Suresh Kochattil.
  2. His Twitter handle says “I hate Sickulars and Commies”.
  3. “Following requests from…Bharatiya Janata Party karyakarthas, I have decided to come back to India and go full steam into the campaign for the 2019 Lok Sabha elections”

Seva Bharati is an NGO affiliated with the RSS, and was founded by Balasaheb Deoras. I respect the work of RSS organisations in relief work, having observed them close at hand when I traveled in Garhwal after the Uttarkashi earthquake.

If Seva Bharti wants to campaign for donations, this is perfectly legitimate; if they want to say they will do a better job than the CM’s relief machinery, they need to present good reasons why.

But what I just can’t figure is why an organisation seeking funds would start off by saying funds are not required. Mr. Kochattil’s motivations remain a mystery to me.

 

New Perspectives for Independence Day

Last week, India celebrated more than seventy years of being independent. This is a fact that Indians should be proud of and we are, judging by the articles and news segments that are common during this time of the year. At the same time, it is useful to not look at the country’s independence and its progress in isolation. Taking a step back and looking at the experiences of other countries can provide an interesting perspective on our own journey and offer some lessons for the future. I thought of this as I came across some literature about Kenya over the past few weeks.

First was the novel A Grain of Wheat by Ngũgĩ wa Thiong’o, set during the time Kenya became independent in the sixties as well as the long period of emergency that preceded it. While the book illuminates much about how Kenya gained independence and how ordinary Kenyans approached it, what took me by surprise were the multiple references to India. India, by then, had already been an independent nation for the better part of two decades and was a model of resistance for people still struggling against colonialism elsewhere. One of the characters in the book makes repeated references to Gandhi and the spirit of non-violence that contributed to India’s liberation. There are also less charitable references to Indians vying with the Europeans to seize local markets at the cost of the indigenous population.

The second was about the prosecution service in Kenya which is, on paper, an excellent and well thought out mechanism. It provides for the Director of Public Prosecutions to be a Constitutional position answerable to the Parliament with adequate safeguards against executive interference. It is also a relatively recent system, with the current version of the Kenyan Constitution having been in force for less than ten years. It shows the advantage of learning from the mistakes of other countries. For instance, as was pointed out to me, it would be difficult for India, without a Presidential form of government and with the anti-defection rule in place, to adopt a similar model even if it guarantees to be an upgrade on our existing system.

So, to recap the lessons learnt: one, we should be mindful of our influence and our power in being role models for other countries. And two, wherever possible, we should take advantage of being late to the party by adopting systems and institutions that do not carry the heavy burden of legacy while being best-suited for our unique needs.

Australia and the Logic of Strategy

Edward Luttwak wrote presciently in 2012 that:

Other things being equal, when a state of China’s magnitude pursues rapid military growth, unless the resulting shift in the power balance passes the culminating point of resistance inducing the acceptance of some form of subjection, it causes a general realignment of forces against it, as former allies retreat into a watchful neutrality, former neutrals become adversaries, and adversaries old and new coalesce in formal or informal alliances against the excessively risen power.

Perhaps, this logic of strategy is most apparent in Australia’s recent foreign policy conduct. The setting up of a highly classified inquiry on Beijing’s clandestine influence over Australian politics by PM Malcom Turnbull in 2016 was the first sign that Australia is realigning its forces against China. This eventually resulted in a legislation in June 2018 that raises the costs for Australians found to be guilty of batting for foreign powers.

The second visible sign was Australia’s changed perception over the Quadrilateral Security Dialogue. Under Kevin Rudd’s leadership, Australia had withdrawn from discussions in 2008. In 2017, they were strongly back.

Signs three and four are specific to Australia’s engagement with India. Over the past couple of years, Australian federal and state governments have infused new vigour in their India connections. This multi-pronged approach has meant that Australia has even managed to create favourable stakeholders outside the Old New Delhi region. The frequency of visits by Australian state government legislators and policy experts to other cities in India has certainly increased. For example, Bengaluru alone is home to trade offices of Victoria and Queensland. New South Wales and Western Australia have trade offices in Mumbai. And the federal government’s Australian Trade and Investment Commission (Austrade) has its presence in 10 Indian cities.

The fourth and the latest sign is an India Economic Strategy 2035 document that was released by the Australian government earlier this month. Commissioned by the Turnbull government, the document identifies 90 specific recommendations for increasing Australian presence in India. Not only does it identify the priority sectors, it also identifies the ten states in India that Australian federal and state governments must focus on. The document illustrates both:  foresight of the Australian foreign policy establishment and Luttwak’s logic of strategy.

 

Of Football and Nationalism

One of the first classes in my public policy course is to help students distinguish between the concepts of nations, states and governments. These concepts are interesting simply because they play out in every other political discourse. Take Trevor Noah’s coverage of the French victory of the 2018 Fifa World Cup:

Noah congratulated the French team with a jubiliant cheer,

Africa won the world cup! Africa won the world cup!

The French Ambassador sent a letter to Noah, accusing him of racism to which Noah responded,

When I’m saying “African” I’m not saying it to exclude them from their French-ness, I’m saying it to include them in my African-ness.

Noah has come under criticism for his views. And while he is beholden to them, the fundamental problem is that the two nationalisms that we speak of are very different. As this article in the Quartz points out,

That’s where the difference between multiculturalist states like the US and assimilationist states like France really comes in. The Jacobin universalist definition of the French national identity promises to allow people freedom from differences; if everyone is French first, then everyone is equal. The “melting-pot,” multiculturalist American model allows people the freedom to be different, but still be American.

If you’ve read classics like the Scarlet Pimpernal or the Count of Monte Cristo, you will see how easily the French Revolution was dismissed as a crazy political project that professed to place reason above all else. So while, ban on the burkini is heavily criticised outside France, the French see it as a reflection of their nationalism.

Noah, who appreciates American multiculturalism professes admiration for a nationalism that accomodates and promotes (to a certain extent) differences. But it is also the French Revolution that provided the clarion call for liberal nationalism (Liberte! Egalite! Fraternite!) to which American, and even modern Indian nationalism can trace its roots back to.

The problem is not nationalism but the way the nation is built. India has attempted to assimilate minorities into a single Indian nation from the time of British India. Assimilation projects based on language have failed in the past but continue to dominate politics and identity. Over the last few years, fingers increasingly point to ‘anti-nationals’ who flout the perceived idea of the nation. As the French mull over what it is to be French, perhaps, it is a good time for us, as Indians, to revisit what ‘Indian-ness’ means as Independence Day draws closer.

Meanwhile, Mesut Ozil has resigned from the German foot ball team citing discrimination over his meeting with Turkish President Recep Erdogan — proving that nationalisms will always be at play in the sporting arena, long after stadium lights are dimmed. 

Quotable Quotes from Le Guin

Ursula K. Le Guin’s The Dispossessed is an intellectual tour de force. While there are enough ideas in the book to write a full-blown thesis, I will restrict this post to highlighting two quotes that are reflective of the state of the country today, in the light of the recent spate of mob lynching.

The first quote goes thus:

Coercion is the least efficient means of obtaining order.

And the second one:

You can’t crush ideas by suppressing them. You can only crush them by ignoring them.

What do these passages tell us about tackling mob lynching?

First, is a new law, as the Supreme Court recommended in its order last week, the best way forward? A law is a blunt instrument and is coercive more often than not. Amit Varma has already written about this in a recent post, where he mentions the lack of a rule of law as being of more concern than the absence of a legal provision.

Second, are there more subtle solutions for addressing the rumours that spark a lynching than restrictions on services like WhatsApp or a blanket shutdown of internet in a region? The second passage might hold the key here. However, I would argue that the ignoring that is mentioned there cannot be passive. This is a case where there might be merit in fighting fire with fire, instead of being a firefighter.

Why Bangladesh Matters: Yet Another Illustration

I have argued earlier that the vacillating nature of India’s neighbours need not overly worry Indian foreign policy makers.

beyond the security domain, there is very little that small states in India’s neighbourhood can do in India’s pursuit of prosperity for its citizens in the immediate future. As we enter a world economy that is getting increasingly protectionist in nature, international trade will become increasingly difficult. Fortunately, India’s big, relatively young, and diverse population means that greater domestic consumption alone can help us maintain high economic growth for the next 10 years or so. Barring Bangladesh, no other Indian neighbour has economic prowess that India cannot substitute domestically. So, in the short run, the economic benefits accruing from small states in the neighbourhood will continue to be marginal. [INI, April 7 2017]

A news report in Business Standard today gives an example for why Bangladesh is an exception.

The value of two-wheeler exports from India to Bangladesh jumped 50 per cent in FY18 to $277 million (Rs 19 billion), making it India’s biggest export market, ahead of Sri Lanka. The value of shipments to Bangladesh has more than doubled since FY16, when it was just $128 million…

Bangladesh is estimated to have exported readymade garments worth $29 billion in the calendar year of 2017. Riding on robust economic growth, the nation’s demand for motorcycles soared 50 per cent in 2017 to an estimated 360,000 units. The high double-digit growth continues in 2018 as well. [Business Standard, 20 Jul 2018]

In essence, India’s relationship with Bangladesh is strategic for multiple reasons. It can directly impact the peace and prosperity of a large number of Indians. The opportunity costs of not having Bangladesh on your side are far higher compared to our other neighbours.

Anticipating the Unintended Consequences of Regulating Cinema Halls

Movie-watching in Indian cinema halls has become a highly politicised commodity. First, a few state governments capped movie price tickets. An unintended yet easily anticipated consequence followed. The prices of complementary goods —  popcorns, soft-drinks, and snacks — rose.

And now, the Maharashtra government has gone one-step ahead. IT also wants to tackle the rise in prices of these complementary goods. The Food and Civil Supplies Minister said this on the floor of the Maharashtra Legislative Assembly:

There is no ban on patrons carrying outside food to multiplexes and if the multiplex authorities prohibit it, they could face action.

Not to be outdone, the Karnataka government has said that it will soon follow suit.

I’ll leave the discussion on entitlement and endowment effects for another post. For now, let’s anticipate the unintended consequence of this latest move.

  1. The movie-watching experience can be expected to be less than satisfactory. Movie halls will be littered with homemade food. There will be fights over dietary habits. If the governments go further and cap food and beverages prices as well, theatres will have even lesser avenues to run profitably.
  2. Demand for substitute goods will increase. At the margin, people will decide to choose something else over watching movies at cinema halls. This works well for the likes of Netflix, video pirates, and theatre plays.
  3. Prices of other complementary goods will rise. One can expect an increase in the parking charges at movie theatres or a charge (instead of a refundable return) for the 3D glasses.

In short, I’m not going near a cinema hall anytime soon.