India’s punch

UN umbrella

But the Indian government may have set itself up for a rethink. The caveat in the official statement has not gone unnoticed abroad: That ‘‘were there to be an explicit UN mandate for the purpose, the Government of India could consider the deployment of our troops in Iraq.’’ The WASHINGTON POST reported this week on the Powell initiative. The US Secretary of State has begun discussions with UN Secretary General Kofi Annan, it said, on seeking a new Security Council mandate to provide more cover to states considering participation in peacekeeping in Iraq.

Britain’s GUARDIAN, for one, must be wondering what’s taking the Bush administration so long. It is in the US-British interest, its editorial reiterated impatiently, that a UN security mandate be created, ‘‘enabling the likes of France, India and Muslim countries to contribute peacekeepers (and thereby possibly reduce the attrition rate against coalition troops).’’ It advised Tony Blair to raise the issue and ‘‘tell it like it is’’ when he met George W. on his trip to Washington this week.

Debating diversity

In its Shimla Sankalp, the Congress party talks of ‘‘the start of a purposeful dialogue with private industry on how best India’s social diversity could be reflected in the private sector in different ways like reservations…’’ The Congress document marks a larger shift, perhaps, still underway in the discourse of empowerment in India: From ‘‘social justice’’ to ‘‘social diversity’’. The change in emphasis is inspired, it seems, from the American experience.

In June, the US Supreme Court’s ruling on affirmative action in the Michigan university case underlined what has become the accepted wisdom in that country: Affirmative action is justified as a programme that brings about racial diversity. But in THE NATION this week, columnist Eric Foner lamented the ‘‘single-minded focus’’ on diversity.

When first developed in the 1960s, affirmative action in the US formed part of a broader programme for attacking poverty and racial inequality, ‘‘including a domestic Marshall Plan to reverse urban decay and create jobs, and government action to end housing segregation and drastically improve public education’’. This programme has virtually vanished, complained Foner. Today, the diversity argument presents affirmative action not as a programme that primarily aids minorities but as one that improves the educational environment. It may be a more politically palatable case, conceded Foner. But it suggests that access for non-White students is desirable mainly because it enhances the educational experience of Whites by exposing them to classmates from different backgrounds. ‘‘Diversity is undoubtedly a worthy goal. But a singleminded focus on diversity deflects attention from the need to combat the numerous inequalities…’’

No to technocrats

He didn’t mention India by name. But in the GUARDIAN this week, Nobel laureate and professor of economics at Columbia University Joseph Stiglitz had some pretty unequivocal advice for developing countries. ‘‘Don’t trust technocrats’’, he said.

The professor outlined a familiar scenario: Developing countries are advised or instructed to carry out reforms, often IMF-backed, recommended by ‘‘experts’’ or ‘‘technocrats’’, usually US-trained; opposition to these reforms is dismissed as ‘‘populist’’; these countries are criticised for lacking political will abroad. But, argued Stiglitz, many of these ‘‘technocratic proposals’’ are in fact based more on ideology than economic science. Because economic policies, he said, are usually not technocratic in a crucial sense: ‘‘They involve trade-offs: some may lead to higher inflation but lower unemployment; some help investors, others workers’’.

Making a policy choice, therefore, does not just involve technical questions about which is ‘‘better’’ in some morally uncontroversial sense, argued the professor. It involves choices among values. These are political choices, not to be left to technocrats.

Stiglitz drove his point home with the example of the value added tax (VAT). He argued that the Legislature’s rejection of the proposal to adopt VAT in Mexico, for instance, wasn’t a display of ‘‘unbridled populism’’. There’s a fundamental difference, he pointed out, between developed European countries that use such a tax and emerging markets: the size of the informal sector from which VAT is not collected. ‘‘This vast ‘black economy’ makes the VAT inefficient in most developing countries… Developing countries that impose VAT perversely encourage production to remain in the informal sector.’’

Singing in the rain

Meanwhile, as Finance Minister Jaswant Singh claimed that the Indian economy is looking up, Britain’s FINANCIAL TIMES echoed his enthusiasm. India is ‘‘singing in the rain’’, said the paper. Despite the fact that the Indian government ‘‘appears to be doing all the wrong things, or at least postponing that which it ought to be doing’’.

India may achieve at least six per cent growth in gross domestic product this year, predicted the FT, and it is on track to be the ‘‘second-fastest-growing in the world after China this year’’. The reasons: the good monsoon, partly; Indian industry becoming more competitive because of a lower cost of capital and a better understanding of consumers after the first hectic flush of liberalisation; reduction in interest rates over the last year and a half. All in all, as Suman Bery of the National Council for Applied Economic Research told the FT, a business cycle ‘‘timed perfectly for the government’s electoral calendar’’.

But the FT couldn’t resist the question: Will this year’s higher economic growth be sustained?