Interdependence of monetary, trade policy and inflation: time for prioritised policy decision making

News of depreciation of rupee against dollar has been hovering all around for some time. An exchange rate where 1 dollar has become equal to INR 54 has been raising concerns amongst the policy making fraternity. It is raising worries about the state of Indian economy. Depreciation can raise cost of importable items and add to the existing current account deficit of the country. This will therefore affect the balance of trade and can reduce the net earnings of the country from merchandise trade. Further, if many of these importable items are used in the production of domestic goods, then a depreciation of exchange rate can raise the cost of those goods and can further contribute to rising rate of domestic inflation. Rise in the price of domestic edible oils owing to depreciation and contributing to the increase in domestic inflation is an evidence of such a relationship.


Is our country ready to accept such a rise in the rate of inflation owing to the currency depreciation. Before pondering on this, let us try to find out certain causal facts behind this depreciation. According to some experts in the financial sector, this depreciation is happening owing to the rise in buying of dollars by investors following the Eurozone crisis. Increase in the exposure of the Indian economy to the global capital volatility through partial capital account convertibility, complemented by Eurozone crisis can therefore affect exchange rate and capital account with a subsequent impact on the trade balance. Such partial capital account convertibility regimes can also reduce the monetary independence of the country and cushioning of the economy against global capital volatilities.


However, the counterparts will say that capital account convertibility is required to increase capital investments and improve the balance of payments by creating healthy capital account balance.

But in a situation where the world has been witnessing financial and sovereign debt crisis, is it prudent enough to be exposed to such risks! These risks not only affect the trade balance, but can also affect domestic inflation of a country like India at this juncture. So on a priority basis, in the policy making front, certain actions are required. Some of them are listed below -

a) An integration of the monetary and trade policy

b) Reduction of the merchandise trade deficit of India by reducing imports


c) Reduction of the dependence of domestic goods production on importable items in order to delink domestic inflation from currency depreciation.

These measures will have to be taken through lot of coordination across the policy makers dealing with trade, monetary and macro policies. Different ministries and RBI have to be an integral part of this coordination process. In today's context, for an emerging economy like India, any global and national policy challenges have cross cutting influences on each other. So addressal of those challenges need more coordinated and integrated response of policy making to safeguard the country from global risks, continue the domestic growth path as well as maintain the balance of the economy by reducing challenge of inflation that hits pockets of every Indian. But the question is - Are the policy makers listening to this important call for coordinated action?

Is "Anna" - "Anna" because of popular Hindi films?

Since I read an article in "Social Change, December 2009: Vol.39, No.4, pgs 504 - 527", titled "Reviving Gandhi and the utopia of Hind Swaraj in popular Hindi films", an itching was happening to raise this question which has been chosen as the title of this blog piece.

The article in Social Change went through the minute facets of certain Hindi films like - a) Sardar, b) Veer Savarkar, c) The Making of Mahatma, d) Hey Ram, e) Maine Gandhi ko Nahin Mara, f) Lage Raho Munna Bhai (LRMB), g) Gandhi My Father and explains how each of these films have built a conscience of Indian masses about the ideologies, principles of Mahatma. The article also raised questions about how these Hindi films have contributed in building the conscience of Indians about Gandhi as a Mahatma and Gandhi as a human being.



Hindi films in India have a strong penetration effect on the imagination of Indian masses apart from the regional films. It builds the world of imagination of the Indians which also helps in constructing their consciousness. Popular films like LRMB contribute to a larger extent in reaching out to the people all around us. Precisely the article on social change explains how LRMB was made to demystify the notion of Gandhism for even a Chaiwallah when Raju Hirani discovered that a Chaiwallah he had interacted didnot know who was Mahatma .





It is over here, I give a pause and think for a while. Immediately what I feel is that popular Hindi films also therefore have made "Anna" - "Anna". You must be thinking why I am saying so. For the time being let us accept that popular hindi films like Lage Raho Munna Bhai builds the imagination, consciousness of common Indians about Mahatma and creates an innate wish inside them to live with the imagination of Mahatma. This conciousness and imagination strikes the proper emotional chord when in the present day people of India see the practice of Gandhism through another protagonist Anna.





So is it so that Anna helps the imagination and emotional chord related to Gandhism in the minds of the Indians to stay alive. However, this emotional chord of an image of Gandhism has been created by popular Hindi films which has a strong effect on the subconscious of common Indians. Hence can we say that if these Hindi films would not have been made, a particular sustaining popular image of Mahatma would not have been there with the present India. Does that mean with the absence of that popular imagination and conciousness within the present India, Anna would not have been able to hit the emotional chord of so many Indians all around us.



Does that mean - "Anna" is "Anna" because of popular Hindi films? I really donot know. However, it would be worthwhile to see how popular communication medium like Hindi films play a major role in building a belief and thought process across class segments of India by building a particular world of image, conciousness, imagination regarding a popular personality.

“AAP LOG HO TO ANDHERA NAHI RAHEGA” – A SCRATCH NOTE ON TRUST, COLLUSION

In the course of continuous travel through villages in Sualkuchi, Hajoe, Nalbadi, and few other places within Assam in one day, this above title line became the recollected quote of the day. This quote came from a villager in Nalbadi. It was directed to franchisee operations of a local NGO that has brought trust and hope in the life of villagers. The trust is that as long as the NGO and franchisee operations are there, life in the village will not be without light.

According to villagers, franchisee operations have ensured better electricity provision of services for them. Inspite of that, franchisee operations are also facing the problem of hooking, pilferage in the lines that provide electricity for these people. According to comments made by local people, this pilferage is often happening owing to collusion between local lineman, feeder maintenance engineer, certain officers and the police force. In some cases, meter damages are also happening in local circles. It is however not clear whether any other agent is also engaged in meter damages that is hampering the proper revenue collection and metering of electricity at the local circles of operation. There is a need for monitoring at the local circle to enhance the success of operations within these local circles.

Collusion between these people facilitates pilferage and villagers are often being deprived of timely, quality power supply. Now, the question is - Can we stop this collusive activity to sustain the trust of people on franchisees and in the power delivery systems which has developed over the years?

Incentives in the form of giving power to the agent engaged in the collusion to stop this activity can be thought of as one of the ways. Will information disclosure norms to stop bribe taking and collusive behavior be a way to reduce this activity ensuring better power supply for villagers? There is no definite answer to this because it is not clear why these agents will disclose the act of theft when it appears that implicit support from the existing agents of institutions exists. However, one should remember that there are honest, dishonest people on both sides and people who want faster provision of electricity to villagers are also fighting against this implicit support.

However, there is still a need for institutional reforms which can be the first step. Such reforms have to bring in effective monitoring and coordination at the local circles between all agencies engaged in the delivery of power to remote villages. All institutions have to join hands and work together giving each other space and showing faith on each other in the journey of providing electricity to villages through franchisee operations.
The contention is that policies should be enforced which in no ways should allow the trust of the people to go down from the system of power delivery through franchisee which has developed over a time of 5 years. Rent seeking, lapses in an institutional system would always try to hinder the infusion of efficiency in delivery of services. It will happen more when new mechanisms, operations will reduce rent seeking volumes of the agents (who were earlier reaping rents) from the system. However, policies should prioritise the welfare of villages/villagers who become the beneficiaries of these service provisions. This should be done by checking rent seeking activities. It might not be reduced immediately as bribes, collusive corruptions cannot be stopped overnight. It will continue to exist as long as human race exist because corruption is a form of living of human beings. However, policy pragmatism has to be there to check and reorient it in a way so that beneficiaries in the villages are not harassed in owing to the existences of these loopholes.

Sometimes that pragmatism for checking and reorientation can come in the form of legalization of information disclosure of collusive corrupt practices through provision of incentives. However, they have to always be supported by strong institutional and governance reforms at each level that deal with the implementation of any policies. These will be required for larger development of people in the villages through means of basics like power supply. Such provision will enhance the trust of people and then more people will quote in the way with which this scratch note started. At this juncture, when our country is marked by rifts between the have and have nots in the extreme rural areas, the decision and policy makers have no room for complacency to loose this trust that has developed and been developing amongst the villagers through some of the government schemes across India.

“Harassment Bribe” and “Inflation”: An Integration

Inflation can be caused by both demand and supply side factors. Monetarists often give a view that cutting demand driven expenditure through reduction of supply of money into an economy can curb inflation. However, inflation is not only being driven by demand side factors. Bottlenecks in the supply of goods can reduce the good availability and can lead to a price increase. Supply of goods can also go down with a rise in the cost of production of the goods. Some of the factors that hinder supply of goods are production shortfalls, enhancement in the cost of inputs used for producing goods. This can further translate a rippling effect on prices of goods. Goods supply into markets can also be hindered if the distribution networks between sources of supply to markets via mandis, wholesaler, and retailer are not working properly. It might not work properly, if hoarding happens and prices are hiked up artificially by hoarding. This hike in price of goods arising from artificial hoarding and inefficient distribution networks can contribute to inflation.

People and agents can be engaged in this artificial hoarding to earn bribes and premiums from wholesalers, retailers who finally channel the goods into the market from where common people buy. Agents can harass buyers at certain points of the value chain like in mandis, wholesaling outlets to give money and get the goods at a higher price premiums by artificially raising prices at every intermediary stage of the total value chain.

This kind of rent seeking through artificial hoarding can be seen as a corrupt practice. It can be viewed as a corrupt practice by a group of people who does not supply adequate agricultural goods at the right, real prices for mass consumption. They are doing this for satisfying their own money and profit making greed through artificial hoarding even though there is enough supply of goods at the ground by the farmer. Further, if they ask for bribes and money from buyers at certain points of the distribution network to streamline the goods supply to market, it can be seen as a form of harassment bribe demanded by these agents.

Agents who demand these bribes in the economy can further collude to increase rent seeking over a period of time. However, fall outs of this rent seeking can be felt in the inflation and in the burning pockets of common individual who goes to the market and buys essential agricultural food grains for daily consumption. Having said all these, let us now look onto the mainstreaming of the above said points into the context of the Indian economy.

If we see the high rate of inflation in the Indian economy, one fact which immediately comes out is the contribution of high price of agricultural goods (arising from supply side factors) in the overall inflation. Data suggests that such contribution is high and owing to such a supply side contribution demand side factors and monetary measures are not the right means to tackle inflation. Once we pause back and ask why the price of these goods are rising in the Indian economy, we get some inconvenient directions.

In the recent past, we did not have a large amount of production shortfalls in pulses, food grains, agricultural goods (like sugar) but still their prices have been soaring high facilitating a double digit inflation. Then, why these prices are rising. Here we come to face the fact that how in Indian economy, hoarding of agricultural goods have artificially raised the prices. These hoarding practices suffer many times from the type of harassment bribes we have mentioned above. We also see large amount of food grains which are rottening in warehouses while the prices of those food items are soaring high. Seeing all this we can realize that distribution networks, agent behaviours in such distribution networks fraught by collusive, corrupt practices of rent seeking can be some of the major contributory factors.

It is over here, we have to think whether legalization of such harassment bribe will also lead to a reduction of corrupt rent seeking practices finally leading to lessening of inflation in the economy.

Lets say, we bring a law in our country to disclose information of the amount of rent premium earned by agents within the value chain of agricultural goods through artificial hoarding, collusion and any harassment bribes. People who will disclose the information will be given an incentive to keep a certain amount of the value of agricultural good which was hoarded or related to which which the harassment bribe was exchanged.

Will this ensure that these agents will disclose the value of hoarded goods with respect to which harassment bribes were exchanged? Once they disclose such information, can it be ensured that some amount of harassment bribe reduction will happen in the economy which will thereby free the artificially hoarded goods leading to better distribution of goods. Such supply side inefficiency decline can then contribute to a reduction in inflation. In reality, the mechanism might not be so simple as it sounds over here in this write up.

For realization of translation of reduction of this inflation from disclosure of information, institutions, warehouses, transportation infrastructure and distribution agents have to function effectively to ensure that the goods reach the wholesalers, retailers at the right point of time to reduce any artificial supply shortfalls and price hikes. An independent supervisory body has to regulate this functioning.

However, the regulatory body might not be able to control the political economy of the bribe creation, rent seeking business in the agricultural value chain of the Indian economy. It might happen that existence of rent seeking, harassment bribes within value chain of an agricultural good can be beneficial for the financial kitty of a political party. Elections, political parties and the business of running a political organisation can be funded through the money that comes out of the rent seeking activities within the agricultural value chain. So political parties might want to maintain the bribes, rent seeking activities even though it hurts the common people through rising prices.

If now we ask that – “Has this been happening in any agricultural goods”? Well there are no such empirical evidences, but situation of some sectors sometimes raise a feeling inside us that many such things are happening under the carpet in select agricultural goods. If they are happening, will not a capture of the regulatory body by the political party take place? If such a capture happens, then in such case even if there are information disclosure norms of harassment bribes, defined roles of regulatory bodies, reduction of inflation won’t happen. Or we will require another “Fasting” by social reformers to reduce inflation in food grains by checking corrupt practices in the value chain of the agricultural sector. I think, India’s strong democracy supported by probable and needed new set of reforms in our institutions determining domestic governance will find an answer before any such second round of fasting happens. And this time those reforms will be brought by players of our governance systems viz. politicians, bureaucrats, leaders at each and every level.

When does a gardener teach us about development?

It was 19th September, 2011. The place was a tram station in Geneva. We (which included Nitya, George and myself ) were waiting for a tram to reach WTO (World Trade Organisation). All of us had reached Geneva on that day and had to reach WTO immediately for a session at WTO Public Forum. But, I didnot know on the way to WTO, I would understand the concept of development, the exact definition of which has always been unclear to me.

While we were waiting for a tram to come, suddenly like from nowhere a well built person with short head phones walked across and introduced himself to us. He was wearing a black leather jacket and looked smart in the outfit.

His sudden appearance in the station and his self initiated introduction to us was not very usual. I had a feeling that his appearance was something like the famous apple falling down incident which made Newton discover the concept of gravity. Well, here none of us discovered any concept related to physics. Neither was he an apple. But through the short introduction I came to know something. And that something was nothing short of Newton discovering gravity with the falling apple.

Here was a man who like an apple arrived suddenly and made me realise the concept of development. This person who was well above 60 was a gardener and is living a life with his grandchildren and following his aspirations to travel around the world. He suggested that he is very fond of India and thats why he introduced himself to us after realising that we might be from India. He has been enthralled with the travel to South and South East Asia, land of Buddha at an age of mid 60s (which emerged from the appearance though I didnot ask the age) and is happy to live the life this way.

Question which arose in my mind, is why he has been able to do so. How many gardeners in India will be able to do that! I guess, the answer to this question might not be too optimistic. So this man put us in front of a mirror where we could see what does development mean and how can we call a country developed!

Essentially, it is a state of a country, where every individual even the ones who are belonging to any job or working occupation (it can be blue, white, gardener or anybody) gets the freedom to follow his aspiration and live through his/her aspirations without facing challenges in a social system. The mirror to which I got exposed also taught me that there is a long history through which this state of affairs of development can be reached in a country. And in that journey, several factors like culture, institutions, policies, people, governance mechanisms and so many other unmentioned ones will play a major role.

Will every gardener at far off corners of our country be able to follow their aspirations in the same way as him? I was asking this question to myself. And the more I was asking, it was becoming clear - what development means to a human being and to a nation. I guess, this was till date, the best development economics training session that I have attended. And it was a session that was offered by a gardener in Geneva, Switzerland.

How does one define social innovation?

After the last piece that I had written on this blog platform on the issue of corruption, I got very insightful comments from friends and well wishers. One of my friends questioned the lense of social innovation that I was applying to see the range of activities that have been initiated around us in the recent past regarding the anti corruption movement in India. These questions brought me to the cross roads of thoughts dealing with how does one define a social innovation. In the last blog articles, I did not deal with the definitional aspects of social innovation.
Some continuous thinking on these definitional aspects brought out the following dimensions which I thought to share with readers. The first set of question that emerged is – a) What is an innovation?. Some possible answers to these questions will be - it is a set of techniques, activities, thought processes that generate something new and also has certain element of uncertainty associated with it. Essentially, what these set of techniques, activities will help is getting aware of the abilities and capabilities that are ingrained or which have stayed latent and have the scope to generate a new stream of possibilities. These possibilities happen or not is not sure and hence lies the uncertainty with the outcome. These outcomes will very much depend on the process of innovation. It will also link to the way the existing, latent capabilities are harnessed and converted to fruitful outcomes.
In a society, existence of corruption at various levels can create a hindrance towards this fruitful conversion and can create barriers in harnessing of capabilities and abilities. Abilities are the potential that one is capable of and has been proved through past. Whereas capabilities are the future potential which can regenerate towards fruitful outcomes only through better processes. Rampant corruption in the institutional systems, governance structures can hinder these abilities, capabilities of individuals and can create laggards in functioning of the society. It is over here an anti corruption campaign can trigger off debates, create systems, processes, movements which can thereby help in larger fruitful transformation of abilities and capabilities of individuals in a social system. Because of this reason an anti corruption campaign might be seen as a type of innovation process and since it deals with better effective translation of abilities, capabilities of individuals in a society, it can be thought to be an instrument of social innovation. Though the question still exists that how far these movements can be seen as a social innovation process.
In this aspect of the interconnections between social innovation, capability and corruption, I will like to share an incident which will lead to further objectivities in the science of linking social innovation, capability and corruption. The incident happened while crossing a traffic signal of South Delhi in an auto. The auto in which I was travelling was stuck in a signal. Suddenly then, a person with a snake arrived and asked me to give money. Being irritated, bored with the indifference that I showed to him, he moved away after a while.
But what struck me with this incident was why these people have to do these jobs of getting money easily from people by playing around with the fears of people. Is this way of getting money easily by using snakes in traffic signals is also a kind of corruption? I was not sure with the questions neither with the answers. But if there is an alternative to engage these people in some other activities where their capabilities can be harnessed to generate livelihoods for them, should not that be tried: Or else if institutions, policies and systems are brought in place which harness the skills of these people and nurture their capabilities and shift them away from this money earning procedure should not that be tried. One can also ask if those mechanisms of chanelling the capabilities of these people are implemented then isn’t it a social innovation! This is because it will help them to move away from this way of money earning which to many can be a form of corrupt practice of gathering and collecting money. If that happens then can we call it a social innovation after cross referring to the concept of social innovation that we highlighted at the beginning of the write up.
One thing is clear, that it is not only essential to create the systems, mechanisms of harnessing the capabilities of these people for tackling the corrupt behavior of earning money. But, what needs to be done first is to motivate and incentivize this people so that they stop this practice. This will depend a lot on each of the individual and their psychologies with which they get engaged in this type of money gathering process. If I assume, that the guy who came with the snake and tried to collect money from me is a lover of wild life species like snake, then can he be engaged in snake preservation activities. If we can create a system that can ensure that conversion to take place then we will harness capabilities, freedom, skill and will bring in social innovation as a result of which corruption might also reduce. But let me pose another instance; say this guy who came with the snake has no passion about snake or wildlife and is just engaged in this because it is an easy earning option for him in the absence of alternative employment and livelihoods. Then a social innovation which will counter the corruption will happen only when this guy is directed to an alternative stream of income earning where he feels happy and thinks that he is nurturing his abilities and capabilities through that alternative stream. Here the role of policies, institutions, incentives will be a key. All these have to be bonded together to find out what is the option for this guy in a prioritized gradual mode. Immediately after that, actions have to be designed and taken so that transfer of this guy carrying the snake happens towards a new set of activity from the existing one. In the process he has to be constantly motivated to do this shift. Here the role of public policy will become very crucial. Without active public policy making and its effective implementation this social innovation harnessing the capabilities of the individuals with an objective of stopping corruption will not happen. And the day when it happens, may be we will see the same guy who was holding the snake in some other corner of the city to be engaged in a shop or in an activity where his real interest and capabilities lies upon.

When does social reform follow the process of creative destruction?

Introduction to "Creative Destruction" term happened to me through some writings of Schumpeter during 2009. In terms of a student of "Social Science", once I got introduced to the logical reasoning process of "Creative Destruction", a realisation of noviceness creeped in. It was enhanced when I studied some other readings dealing with application of Schumpeterian thoughts in analysing innovation systems. Few readings are worth mentioning with this respect. Papers by Chris Freeman (studying the relationship between inequality, technology and economic growth), Bengt - Ake Lundvall (exploring the linkages between innovation systems and economic development) and Richard R. Nelson (assessing economic development using evolutionary economic theory) needs to be mentioned.

Now, the point is why I am mentioning about these papers. All these writers in their papers bring out a connection between innovation systems and economic development process. We all know that an economic development process is in many ways guided by social reforms and progress. Rather, these papers motivate us to think how the process of innovation systems, evolutionary economic theory (which counters neoclassical school) raises and pin points to several elements of innovation process that can be analysed to understand social reforms which underlines the development of a society around us. I will just take one activity as an indicator of social reform in this piece of write up.

Let us take the example of the entire set of activities that has been happening encircling around the anti corruption campaign of Anna Hazare. Now when I was reading about the innovation literature mainly following the writings of authors mentioned above, I thought even movements by Anna Hazare in today's context are a form of innovation in bringing changes in the processes by which social systems are operating.

These innovations are trying to constantly bring a change in the modes of operational structures of the institutions, rules that are guiding our day to day activities. Hence, I thought that why cant the integral components of innovation systems approach be applied in trying to understand these activities (Anti - Corruption Campaigns).

A major element of innovation is the presence of uncertainty associated with any activities which are integral components of innovation. Schumpeterian concept of uncertainty tells us that the actor who innovates cannot estimate the probability with which any new innovative action of his/her will bring the result for which the action was taken or originated. Here the concept of uncertainty in innovation is very similar to Frank Knight (Knight, F. {1921}, Risk, Uncertainty, and Profit (Boston:Houghton Mifflin)). Another important aspect of innovation is assimilation of new ideas leading to effective actions instead of only accumulation of new thoughts, ideas. Neoclassical school always talks of accumulation in explaining the behaviour of an economic system behaviour. But the evolutionary school of economics remind us of the importance of assimilation in changing an economy and towards the development of an economy. While reading about all these I was seeing that the anti corruption movement in India has most of these elements.

So, can we say an Anna Hazare campaign as an innovation to change the social systems as it closely follows the concept of uncertainty element of innovation as mentioned in the Schumpeterian way of explaining innovation. All these anti corruption campaign actors in many ways dont know the exact estimate of the probabilities of the success of their action. A large part of their success will also depend on how the social actors and systems assimilate these actions and implement it in their day to day actions. So it is not only about accumulation of more campaigns like these. But the success of these anti corruption campaigns as a social innovation process will depend on how much assimilation of these thoughts happen which will be measured by the effective translation of these ideas of social reforms towards implementable, practical, effective actions.

Another dimension of innovation systems is creative destruction. Schumpeter's writings on "Creative Destruction" suggests that any new innovation creates new markets where some firms loose out, become obsolete and new firms, market structure are born once they become obsolete. Technological innovation plays an important role in that dying out and birth of new firms leading to new market structures. But the question is whether a same mechanism of creative destruction will follow in the society. So analogically, a social innovation like anti corruption campaign has to destroy old corrupt institutional systems, processes and will have to give birth to new ones to maintain the analogy. The answer to these are very unknown to all of us in India at this stage. But that should not stop us from thinking about them.

So the anti corruption campaigns can be identified as a part of social innovation process as they have two traits of innovation - viz. a) role of uncertainty in innovation and b) role of assimilation in determining the success of innovation. Further they might or might not follow a process of "creative destruction" pattern of innovation systems depending on many other social, political and economic factors. It is not clear to me to what extent these anti corruption campaigns can be called as social innovation process. But after doing only little literature review on innovation systems and economic development, these overlapping areas of innovation systems in studying social systems was coming on mind. I am not yet clear about any definitive conclusion about whether anti corruption campaigns can be called as social innovation processes or not. But that doesnot stop any of us to think, write, debate and exchange more thoughts on these issues. These debates only will give a definite direction on whether we can call "Anti Corruption" campaigns or any social reform as a social innovation system process. And this will always raise one question in the minds of all those debate lovers. That question will be - "When does social reforms follow the process of creative destruction?"

Reference:
Freeman, C . (2011), "Technology, inequality and economic growth", Innovation and Development, Vol.1, No.1, April 2011, pgs 11 - 24
Lundvall, B. (2011), "Notes on innovation systems and economic development", Innovation and Development, Vol.1, No.1, April 2011, pgs 25 - 38
Nelson, R. (2011), "Economic development as an evolutionary process", Innovation and Development, Vol.1, No.1, April 2011, pgs 39 - 49

"Harassment Bribe" and "Institutions"

Since the upsurge in the news of corruption in the country, I have been trying to stay stoic to these news and continue doing the daily job of being insync with the project related research. But this stoicism to the loud news' of corruption didnot stay long. As a first step, I thought to read the latest article written by distinguished professor, author, thinker Kaushik Basu titled - ""Why for a class of bribes, the act of giving a bribe should be treated as legal" - Ministry of Finance, Government of India, New Delhi - 1.

The article has been uploaded on the web for wider public reading and invoking thoughts on the minds of every Indian regarding the issue of corruption.

Professor Basu discusses of a particular instrument called "harassment bribe" in this article. In short words he has defined what are "harassment bribe" and when do they arise in a system. Typically it is a bribe which has to be given to a bribe taker to enable the bribe giver to claim and get access to something to which he/she is entitled to. Thus this bribe helps the giver to avoid the harassment and have a claim on his/her right to something. This something can be an asset or any property or any good over which the bribe giver has a full right and is being harassed by the bribe taker towards getting this right to access the property/good/or something tangible.


The article discusses of the incentive structures of the bribe giver, taker and the regulatory, legal paradigms in which harassment bribes get enhanced in a system. These bribes are rampant in several blocks of the system and in our day to day life. We as common Indian have observed, sensed situations where giving little bribe induces the bribe taker to act fast and provide the giver the right or the facility to which he/she is legally entitled.

In many of our day to day scenarios, from the bribe giver point of view, the act of giving the bribe has an incentive as it fastens the procedure of claiming the right and reduces the transaction costs thereby bringing efficiency in the functioning of the institutional systems in which the bribe giver and taker is operating. The taker becomes happy with the illegal payment and does the job and stops harassing the bribe giver by reducing the transaction costs for him/her.

The article by Prof. Basu suggests that if we can create a system where infomation disclosure of giving harassment bribes are made legal and with larger punishments for the harassment bribe taker in comparison to the giver, incentives for the bribe giver to disclose information will increase. Further it will create threat for the taker to not indulge in harassing people and get engaged in taking "harassment bribe". This will reduce the chances of occurance of the act of "harassment bribes" and can diminish the level of corruption in a system.

But this can only happen unless and until the bribe taker and giver collude. The chance of collusion will depend on the discounting of expected costs and benefits of collusion/non collusion by the giver, taker while being involved in the act of "harassment bribes". The article highlights about all these possibilities. Valuation of the expected costs and benefits for both the giver and taker will depend on time horizon of each of them. This time horizon will further depend on the political economy of the institutions and mechanism of operations that decides the nitti grities of the functional mechanisms of the institutional system in which these two individuals operate.

It is here, I believe that even if there is a legalisation of the disclosure of information of the act of giving "harassment bribe" and creation of legal structures that penalises the giver more than the taker, the system can still be marked by the same level of corruption with its sustenance. To put it simply if we ask - "Why does one harass another in terms of exercising his or her claims on something to which he/she is legally entitled?". Is it not linked to the human behaviour, psychology and moreover on the nature of institutions that facilitates one form of human behaviour over the other. The issue of role of institutions to promote the right ethics of not harassing people from exercising and claiming their rights therefore becomes important. So ideally, morality and ethics of the human behaviour regarding corruption and bribe taking should be questioned, regulated and necessarily changed to stop harassment bribes. But in a practical scenario with various constraints it is not possible to change the morality and ethics of every people of a country because of their different backgrounds and socio- cultural routes, constraints. This brings out the question that in terms of policy prioritisation what should be the objective - a) Should it be reform of the institutions to regulate the human behaviour or b) Should it be creation of norms, legal processes to facilitate transparent information disclosure to reduce the level of corruption as some degree of corruption will always stay unless and until in an idealistic situation all human beings are driven by perfect ethics, morality and stop harassing people and taking harassment bribes.

In terms of pragmatism for policy prioritisation, I think to reduce the level of corruption in the economy and the system, the way ahead might be to first change the functional and non functional operational instruments of the institutions. Incentive structures should be first embedded within the institutions and be regulated for effective, efficient operation. Once institution systems with embedded incentives for promoting efficiency, transparency seeking behaviour of human beings within the systems are in place and implemented to some extent, only then instruments of legalising disclosure of information of "harassment bribe" should be brought in. This will further enhance the efficiency of the operational mechanisms towards reduction of corruption in the institutions. Legalisation of "harassment bribe" without the initial institutional reforms through policies and legislations might not be able to reduce the corruption levels. So may be , first institutional reforms have to be brought in followed by legalisation of the "harassment bribe" wherever and if required.

Operational structures of the institutions under different political regimes have to be questioned and modified wherever necessary followed by thought provoking new ways of reducing corruption within the economy. One of the ways of that could be transparent informal disclosure norms supported through effective legal and regulatory frameworks and instruments. In this regard, the suggestion of legalising the "harassment bribe" is a thought provoking idea. Debates, discussions and effective actions following such debates surrounding these types of thought provoking ideas will help in constructing a new India in the days to come. But definitely for a country like India, only legalisation of "harassment bribe" wont be able to reduce the corruption levels unless and until they are complemented with very strong institutional reforms at all levels of governance.

TINTIN IN NEW DELHI, WEST BENGAL

Since the results of the election in West Bengal are out, one cartoon character has been thwarting all around in the creative hemisphere of mind. The character is no other than our famous - "TINTIN "created by Belgian cartoonist Herge. An important question is why suddenly "TINTIN" is baffling and coming on the mind.

Reasoning to the answer of this question lies in the plots that were established in the stories of "TINTIN IN AMERICA", "TINTIN IN THE CONGO". As all TINTIN lovers know how TINTIN has played a major role in various social reforms. Be it against gangsterism during 1930s America or be it against the oil corporation lobby. Role of TINTIN as a social reformer has been amply depicted by Herge in several of the plot centric stories that has enthralled us.

Thus when the election results were out in West Bengal complemented by the anti corruption campaign of Anna Hazare, Baba Ramdev, I was thinking it would have been great if suddenly "TINTIN" could have arrived in India at this point of time.

Following TINTIN's arrival in India, several plots could have been born where TINTIN the social reformer who always fought for truth and exposed corruption will join hands with Anna Hazare and Baba Ramdev in exposing corruption of politicians in India. Perhaps, TINTIN, Snowy, Captain Haddock, Prof. Calculas could have been appointed by the CBI to find out all the culprits of the mega 2G scam in order to find out the people playing around with the public resources of India.

Snowy could have been the biggest information sniffer who would have more efficiently catch hold of the ruffians easily and avoid the institutional beauracracies that jack down the system of finding out corrupt people in this country. Our beloved Snowy would have just sniffed the people, understood them through his senses and would have grabbed their trousers. TINTIN could have then followed it up by putting in handcuffs. The police and the CBI could have been guided by Prof. Calculas in predicting all future plots indicating which minister is going to get engaged in a scam and to what extent. By this way the famous team of Herge could have reduced the existing level of corruption and would have prevented future scams to happen.

However to make the ministers honest and make confession about their corruption, Captain Haddock could have created local informal parties where they could have been intoxicated and Captain could have influenced them to speak the truth with the help of some potions.

In between, TINTIN could have attended some of the Dharnas with Anna and Baba Ramdev and distributed pamplets for common people with objective findings of his investigation exercise of the 2G scam. By this way, our close to heart boy TINTIN would have shown the youth of the nation a new dawn. In between, he could have met also Prof. Kaushik Basu in Ministry of Finance and also discussed his thoughts with Prof. Basu who has been proposing an idea of legalising corruption to check the mal effects of corruption by means of transparent information dissemination. The minutes of that meeting would have been a really nice plot for "Herge's" future plots.

At the end of a two month stint in New Delhi, TINTIN would have got a salute from all the people of this wonderful country in New Delhi and we all TINTIN lovers would have been reminded of the famous "ticker tape parade" that TINTIN had got in Chicago in "TINTIN IN AMERICA".

But if you all think, that TINTIN's stay in India would have ended over here, then you are completely wrong. Because after this he would travel to West Bengal where the state after 32 years of left regime saw Trinamool Congress coming to the ruling position.

The leader Mamata Banerjee would invite TINTIN to sort out one of the extremist problems in certain parts of West Bengal. TINTIN is informed that the extremist movement is largely being carried out by some of the Maoist groups.

TINTIN takes the case and goes to the field to explore the complex interplay of the state, grass root people, opposition politics and how the people belonging to Maoist groups are also expanding their reach through their bargaining with the down trodden people, politicians and corrupt officials. TINTIN also gets some hint that one group of politicians uses the extremist movements as a pawn to come to power. Media facilitates this game of power control amongst the people of the state through a series of manipulated information dissemination.

Industrialists also dont move back and they also see their incentives in supporting a group of politicians for shift of power. In this spider game of power control TINTIN finds out that everybody is maximising their gains. So he is intrigued by the fact that at the end of the day the loosers are people who are in the margin and who dont belong to any of these groups. For these people who live and struggle for their subsistence, the problem is not sorted out. They receive oppression sometimes through means of state, police, opposition party cadres, maoist groups. Their story of suffering continues. TINTIN could not provide a solution to the Chief Minister when he comes back to Kolkata from the field.

Our beloved cartoon hero is now more bewildered, perplexed and he doesnot get a "ticker tape parade" in Kolkata. Though he fails to resolve this case, he understands the need to do a lot and undo what has been undone at all levels of governance in the state. However, TINTIN goes back to New Delhi and from their to his own country. But before going back and waving from the plane in Subhash Chandra International Airport promises to come back soon to solve some of the unifinished tasks in the state.

We never read these stories of "TINTIN IN NEW DELHI, WEST BENGAL". But we read "TINTIN IN AMERICA", "TINTIN IN CONGO". But I always hope our future generation will also read or see some manifestations of plots like "TINTIN IN NEW DELHI", "TINTIN IN WEST BENGAL" and through these plots the imagination of future social reforms in this country will be born in the minds of all children as we used to have when we had first read - "TINTIN IN AMERICA", "TINTIN IN THE CONGO".

“DEHOTOTTER LALON – A”

PAGE 2 -

Poddolochoner gane laloner bhonitate dehotottoke khuje petei

Pari dilam ek onnyo deshe

Shekhane dekhte pelam kichu manush shorirer jomite notun bij bune khate ghumocche

Ar ekta ochin pakhi shorboda shei khater ashe pashe ghure beracche

Pakhitake dhorte giyeo dhorte paarchi na

Tar por hothat shei pakhita kisher ek lalona te niche neme eshe boshe porlo shorirer jomite Laloner lalona te lolona kokhon mishe gelo shei ochin pakhite

Bojhar agei ami bujhe fellam ekei hoito bole – “Dehototter Lalon –A”

POETRIES

PAGE 1 - “Jonaki”

Uro jahaje kore biman bondore obotoroner shomoy shohorer jonaki alogulo khub prokot bhabe jole othe

Mone hoi shoto alok borshodure jole thaka taragulo jonaki hoye bheshe beracche shara shohormoy

Ar tari majhe majhe nagorik raastagulo kichu miliye jawa krishno gohoborer moto jure dicche shei tarader, jonakider

Tumi, Aami, Aamra shokole majhe majhei miliye jai shei krishno gohobore

obotorener shomoy

Kichu torol alo amader sathe miliye jai shei krishno gohobore

Jar noishobdota majhe majhei beje othe guitar er tarer sporshe

Ar thik shei shomoy amar mone pore jai kichu robindranather pongti ar shobdo ja bole – “Shei Bhalo Shei Bhalo – Miliye Jawa Noishobder Torol Alo”

GENE, LANGUAGE TO MUSIC AND SUSTAINABILITY

Sustainability or sustainable development has to consider the indicators of society as one of the important pillars. Society dimension of sustainable development can be enriched through larger formation of social capital. Formation of networks between people lead to a formation of this social capital. For forming those networks people need to stay connected and bonded. For staying bonded through happiness, exchange of positive feelings and energy is important. Music plays a key role in creating this feeling. It is said that music plays a very important role in making bondage between people and creating networks that can form new domains and levels of social capital which can therefore add onto sustainability. Music controls and enhances the positive emotions between two people which can control the quality of the social capital formed through music. This improvement in the quality of social capital thereby enhances the quality of sustainability.
Research has been suggesting that music has its origin to genes and history of language. So if one traces back this origin, then can we say that genes, history of language, sound, rhythm which guides the course of the type of music also plays a role in creating social capital by building more human bondage, networks. This bondage thereafter also contributes to sustainability. So this raises the question whether genes, history of language also plays a role to sustainability.
So while writing this article, I thought to name it as – “GENE, LANGUAGE to MUSIC and SUSTAINABILITY”. However the idea of this association arrived only after reading a paper titled – “ Speak to me, melody, EMBO (European Molecular Biological Organisation) Reports, Science and Society, Vol, 10, No.12, 2009, Pgs. 1294 – 1297”. The paper was given to me for reading by my friend Kostuv Basu.
Association through music can happen between individuals who share like minded or overlapping interest in music. This sharing can help in creating the social capital thereby finally leading to an enhancement in the sustainability.
But the key question is what determines a like mindedness about a particular type of music between two individuals that can help in formation of the social capital and hence can address the sustainability dimension of sustainable development.
Does genetic component play a key role in our musical abilities? Studies on molecular biology has shown that genetic loci of individuals in certain families can have genes that can guide the musical aptitude of the members of the family. Such aptitudes thereafter also determines the taste and preference for music by any particular individual. Results from studies in molecular biology are showing that the creative abilities of individuals in a hereditary lineage are largely determined by the gene structures. These gene structures in turn also affect the behavior of the individuals regarding their music preferences, tastes and chances of bonding with other individuals through music.
So the behavior of attachment of people through a communicating medium of music which forms social capital is very much determined by some of the genetic secrets of neurobiology that are embedded in human beings.
But there is an alternate school also to this thought process. Many neurobiologists and scientists across the world donot believe in the fact that music can be only understood on the basis of genetics. According to this school of thought, vibration of vocal chords determine the tonal and music quality. The nature, degree of the vibration determines the quality of music that can create an association between two human beings. Further this vibration is actually generating a sound wave with a particular frequency. So the typicality of a sound wave, frequency determines the quality aspect of the music rather the gene. Hence any preference for music is embedded in the sense of sound structure that any human body creates.
So two human beings can associate with a particular form of music if they can understand and appreciate similar kind of sound structures that the human body creates. A similar logic can also hold between the sense of appreciation of a speech of one human being by another which further leads to a bonding and formation of a social capital. Many neurobiologists, scientists feel that music and language have similar overlapping cognitive systems. So music can be connected and seen as a form of speech having origins to sound structures. Further these sound structures are connected to origins of language. In some ways one can say that music is a form of speech. This brings forward the question whether music is related to language through a process of evolution. However this can only be known if one gets the answer that whether music when heard has a language and genetic component which gets dissociated in the brain. These facts will be important as then one can also bring in how an anthropological history in language origins and evolution of music plays a role towards formation of human bondings and hence social capital which is key to sustainability.
So one has to seek the answer to the question whether creative genes, sound structures operate simultaneously or separately to determine the preferences of music and hence selection of human beings for bonding leading to creation of social capital. Timing of rhythm can determine the cohesiveness of a cultural human bonding that can generate greater social capital and enhance sustainability.
Roots of language, genes will determine the behavior pattern of a child and will also affect the preferences of the human beings in applying music in forming social capital through bondage. The exact contribution of the language, evolution of anthropology, rhythm, sound structures is yet to be determined. Also it is not known how much separated gene, language and rhythm contents of a music and how the degree and nature of that separation guides a preference for music and hence attributes to the formation of social capital block of sustainability.

May be its not far, when we will find out active participation of anthropologists, neurobiologists, ethnomusicologists in the negotiation platforms of the global debates surrounding several issues of sustainability in the world arena.

ROAD TO SUSTAINABILITY: THROUGH INDICA INSTEAD OF A BULLOCK CART

Gandhian model of sustainability which emphasizes a lot on village based development and sustainability pathways provoked thoughts on me after completion of readings of some of the research literature on life and activities of Gandhi. Though many of his experimental practices can be criticized and not accepted by my inner self but it still intrigued a cherished desire of going and travelling to villages of India in a bullock cart. My left part of the mind was associating a journey to Indian villages through bullock cart as a metaphor of a road to sustainability. But the law of association was not completely implemented. The travel to the villages with the spirit of “Mera/Humhara Gao, Mera/Humhara Desh” happened. But it was not in a bullock cart but rather in a Tata Indica.
The travel itself taught so many principles of sustainability and like always opened the real institutional schooling for me. My colleague, friend Saswata and I used to start a day’s travel in an INDICA from 9.30 a.m. in the morning that ended in the evening. While going through the well maintained highways, we found out how natural compartments of boilers have been made by villagers on the roadside. In these boilers, agri residues are being burnt to provide the heat that is used for making gur, jaggeries on the road side. Three different levels of temperature blocks are maintained where the agri residues are used to provide different levels of heating. The raw sugarcane juice is going through these three sets of heating procedure after which edible colours are mixed to form “Gurs”. The colour of the juice was changing as the pure raw sugarcane juice was passing through the three sets of treatment process at different boiling temperatures. Saswata and I had the sugarcane juice as well as the “Gur”.
Saswata came up with an idea that if the emissions from this residue burning could be reduced by burning lesser amount of agri residues. Some of the heat source from agri residues can be replaced by solar and other forms of renewable energy. The road side “Desi” “Gur” unit was having a chimney too from which emissions were coming out. I was thinking whether solar energy potential for the place is enough to generate enough heat that is required in the entire process dealing with the conversion of juice to gur. Still, had a feeling that a part of the heat energy can come from solar energy.

May be the first step of juice to gur conversion using certain amount of heat from a certain temperature (which is the lower one in the three stage process – with each subsequent stage having a higher temperature than the earlier one) can be carried out with the energy provision from renewable energy sources like solar. This can reduce the use of agri residues and can help in subsequent fall in the amount of burning of agri residues. The principle used was so simple that it made me feel that science close to nature is smooth and appealing at the same time.
Daily proceedings of a production process is also guided by the streams and principles of science that are embedded in nature itself. Often, we from the city, through our cosmopolitan, speculative and interventionist nature make the working principles complicated which are simple in the lap of the gift of nature.
We met farmers with different levels of landholding starting from 2 acres to 20 acres of land. They told us what are the crops they are growing. Crops grown are mostly rice, wheat and also in some places people have moved towards mixed farming and growing potato, flowers, cauliflowers along with rice and wheat. Most of the farmers are well off and own consumer goods like freeze, car, motorcycle. They are living in their “Pacca” ancestral houses also and getting engaged in businesses and often managing their living through sale of milk and dairy products.
Farmers lease out land and also employ labourers in their fields at wages that are determined in the panchayat/gram sabhas. There is no intervention of the panchayat in the daily farming activities. Farmers have freedom in taking their own decisions and manage farming in their own ways. There is participation of female members as well as from Schedule Cast in the Panchayat though a sense of male domination in the decision making of households, farming was felt.
The reason why I am iterating these facts are because sustainability which has the domains of social, economic and governance were addressed in a mixed way as found through the field visits. These villages in Punjab are doing well in terms of their economic, governance indicators. Gender balance also started coming in the local level governance units because of government introduced policy of woman participation at the Panchayat. However in terms of land entitlements, there is a bias. Most of the land entitlements are in the name of the male members of the family. Women are married at an early age and so the land is always in the name of a male member which is passed on to them through an ancestral lineage. So there is a scope of gender empowerment in the village society of Punjab.
The best part of the villages is that they are well connected to highway through roads running in between the rice, wheat and farming fields. This reduces the transportation cost of taking the produce from the farmer field to the nearby mandis. Good road infrastructure immediately thereby has a curtailing effect on the dominance of middlemen between the farmers and mandis. Most of the farmers are taking their produce to the Mandis by themselves which reassured our above intuition. The farmers are also realizing good declared prices of the government for their agricultural produce that they are carrying to the Mandis.
The farmers also stated about their good health condition and satisfaction, happiness regarding the school and health care services that are very nearby to their houses. Many of the healthcare provisions are coming from private health care centres which are nearby to these villages.
However in one of the domains of sustainability viz. environment, some lacunae could be found. Most of the farmers expressed about the reduction in the water levels every year which is enhancing their motorized drilling costs. On an average there has been a drop of 2 feet water level every year. In some villages the water has gone down to 40 feet below the ground.
Some of the farmers with low land holding also suggested the expenses for motorized drilling have gone up substantially due to fall in the water level. Many times, they are not able to match this rise in expenses through the income from sale of agricultural crops and livestock products. This is a need of concern for future.
But there were brighter pictures that were offered to us in this “Road to Sustainability”of us through the Indica. We travelled as far as Wagah Border and went to a place called “Attari”. On way we stopped in the “Golden Temple” and “Jalianwalabagh”. What I liked about “Golden Temple” was the absence of any security checking in the religious place. In today’s violent terrorism stricken world, security checks often shout at us about lack of trust, faith that over the years we as human beings have bestowed on humanity. But an absence of it in the “Golden Temple” made me feel happy and enjoy a sense of freedom generated from the positive spirits of humanity. The “Sangeet” and the spirit added to the serenity in the mind and helped in an emotional upliftment while we visited “Golden Temple”. Just very near to this, Jalianwalabagh reminded us of brutal forces that jeopardized the social terrains of sustainability and humanity way back during our freedom struggle. We did not stop in the lanes of history for long and moved on towards the Wagah border where more facts addressing sustainability was waiting for us.
We saw the first international station of India viz. Attari where the train from Pakistan comes and enters the Indian territory. Luck was on our side and we actually saw a train with passengers from Pakistan. They waved hands to us and we also did that in return to that. Gradually we moved near the barricaded nomans land that doesnot belong to India and Pakistan. The flag of our neighbouring country was flying in front of me and I was not able to accept that some metres ahead it was a different country although it seemed to me the same in all respects. Trucks from Pakistan were unloading salt and the ones from India were unloading vegetables. I was convinced with the fact that this exchange is so crucial for the sustainability of both the nations. The emotional vibrations of the people waving hands from the train made the feelings stronger. Parallely, it raised the conflicts of the various identities within me. The self within me was not ready to accept that there is a different nation out there in the other side of the boundary which is so similar to the geographical features of this side of the boundary. Whereas the national, external identities, objects outside was continuously saying that another nation exists. I was thinking how a balance has to be created within the two even to bring in sustainability in the thinking process of the humanity. While I was lost in this, the conscious mind realized that we have to come back to Jalandhar to catch hold of our train. The travelogue pages ended over there.
This travel opened many doors, questions and brought in answers also in the working areas of sustainability. The only pinch of salt was that I got those answers through the mechanism of travelling in an exosomatic, mechanized transport – “Tata Indica” but not in a bullock cart. May be the answer for future sustainability models lie in this balancing of exosomatic, mechanized dependence of human race along with the essential gifts of nature.

Comprehensive Economic Partnership Agreement, Health Services and Sustainability

Most of the googled news item of 17th February, 2011 showed vigorously about the snippets of Comprehensive Economic Partnership Agreement (CEPA) between India and Japan that aims to reach a trade target of $25 billion by 2014. As a glancing reader of the news item, my eyes however got stuck in one detailing fact of the Comprehensive Economic Partnership Agreement. It mentioned that as a part of this CEPA, India and Japan would establish a social security agreement for Indian qualified nurses and Japanese certified care workers. The question sparkled – “Will that mean more Indian qualified nurses will go to Japan and serve them and more certified care workers from Japan will come here”? This did not stop here as the next question which arose was – “How qualification of the nurses are defined and recognized by Japan and how India recognizes the certification of Japanese careworkers”? Another question came and then it stopped – “Who gives these certifications and recognitions and how”?
Immediately the geek identity within me was searching for an essential linkage between this CEPA and sustainability. An important aspect of sustainability of any human race is the quality of health. Better quality of living should make people happy and it caters to the social dimensions of sustainability or sustainable development. A social security agreement as a part of CEPA should therefore have an overarching objective of addressing the health, quality of life dimensions of the people of the two countries who have signed the agreement. At this juncture, the important question to ask is does a social security agreement like the one I mentioned here allow a better and equitable type of health services between the two nations. If it does, all people in the two countries should get access to larger and better quality health service through this exchange of skills and human beings between the signing nations. This should therefore enhance the social living standards and can improve upon the societal indicators of sustainability and sustainable development in the two signing countries.
But in reality the connections as reflected above doesnot work so smoothly. So a signing of a security deal might not necessarily imply that all the people of India who really need the skilled service of Japanese care workers for a better quality of living would get an access to that. Different kinds of domestic regulatory barriers can hinder the access of the people to the skilled service of the care workers. A mere signing of a deal might not guarantee that the care workers can actually come and start working in the hospitals, health care centres of India. To do that, they might have to get some certificates through some exams that need to be recognized by the hospitals and health care centres of India. Mutual recognition between the two countries need to be put in place. So an absence of this mutual recognition can in reality lead to an absence of Japanese care workers in the hospitals, health care centres. So signing of a security agreement will not necessarily imply that care from skilled Japanese care workers is exchanged between India and Japan and provided to the people who need them in India. Typically, it has been seen that owing to strong domestic regulatory barriers in the health sector of U.K, exchange of nurses from Phillippines, doctors from developing countries have faced hindrances. The strong domestic regulatory and protectionist measures in the health service sector of U.K. have impeded smooth transfer of Phillippine nurses to hospitals in U.K. Often visa issuance, work permits, high cost of living have been a problem too. So even if a deal or agreement is signed a realization of the exchange of skill transfer from one country to another in health service might not happen. This thereby stops people to get access to a better quality health care skill that could have enhanced their quality of living and had enhanced the overall sustainability and development of the society at large.
Similar situation can arise between India and Japan also if the domestic regulations of India, Japan are not congenial to create an exchange of skills, health care in between the two nations through actual realization of the people working in the health sector of the signing countries. To ensure social sustainability of two signing countries through an improvement of health of the people by means of exchange of human skills, it is essential to also fine tune, modify the domestic regulations so that the people of the two countries finally get an access to better quality health care.
The next question is who in the two countries get access to the better quality health care once the smooth exchange of that starts happening out of this social security agreement. If the skill in health care segment that is exchanged is concentrated in certain hospitals, health care centres that are accessible only to the wealthy middle, upper middle and rich income classes then it still doesnot address the social sustainability dimensions of the two signing nations. The domestic health sector governance have to be adjusted and modified to ensure that the skills in health care which are exchanged are accessible to major sections of the society to improve the health standards and overall quality of living of the society. The equity question will become very important to the address social sustainability dimension once real trade, market access of health services start happening.
So there is a strong role of regulation, domestic governance that ensures first of all that after signing of the agreement an exchange of health care actually happens. Once that happens, governance mechanisms within the signing countries have to ensure that they are well distributed in all sections of the society to cater to the needs of social sustainability of the people of the two countries. Transparent, well governed, efficiently functioning domestic institutions will come into picture to ensure that distribution.

So in a nutshell, trade in services between two nations of CEPA through exchange of natural persons can play a major role in sustainability of two nations by raising the health and quality of living standards of the people of signing nations of a CEPA. But that can only happen with the able support of domestic regulations, institutions, governance mechanisms. The future ahead of us will raise more questions and also answer many questions arising from the confluence and convergent areas of trade in services between CEPA partners and social sustainability of the people of partnering countries.

South South Cooperation and Democracy, Development, Society: Some Generic Thoughts

Our time in the current years is already observing a shift in the dominance of nations towards countries of South like India and China. South South Cooperation has achieved a new meaning in the context of this shift in the dominance towards Southern Countries. Additionally, countries of Europe have been going through sovereign debt crisis. This has added to the woes of North North cooperation.

Growing protectionism in U.S driven by the financial crisis has acted as a barrier in determining a smooth transition to North South Cooperation. With this premise the importance of South South Cooperation has increased. This article would not however dwell on these dimensions of South South Cooperation. This short note would rather explore theoretical generic question of whether cooperation of South South nature is driven by the state and nature of democratization of the two states that get involved in cooperation.

So the basic question that we explore in this note is – Does the nature, state of democratization of two states in a South South cooperation guarantee or ascertain the degree, extent and sustainability of cooperation?

In order to get an answer to this question we have to first search through the extensive literature on democratization. Dahl (1998) suggests that democratization as a subject has been widely researched. Geddes (1999) provides extensive literature for Latin America on nature of democracy. However Collier, Levitsky (1997), Geddes (1999), Kitschelt (1992), Remmer (1996) provides us with literature on how and why democracies sustain and how quality of a democracy determines that longevity. Literature validates that quality and longevity of democracy of a country to a large extent is being determined by the level of economic development.

Economic development has also a considerable effect on the sustainability of democracy (Przeworski & Limongi, 1997). Sustainability of democracy is ensured by higher levels of economic development along with other factors like degree of socioeconomic equality. So two countries which can be at the same levels of development can forge a larger beneficial spillovers from cooperation. South South Cooperation between countries at similar levels of development thus might work if we try to bridge this theory of democracy to nature of South South Cooperation.

Additionally, two countries can be at different levels of democratization levels but still cooperation can emerge with a vision of complementary partnership. In terms of South South Cooperation the level of democratisation in two partnering countries might not always be a key factor.

However the level of democratization and stable political environment in two countries can help in forging of the cooperation measures. According to Fish (1998), Kopstein &Reilly (1999), economic reform is one of the best indicators of democratization. In this regard, one needs to see how various countries of South are performing in terms of sustainability, longevity of democracy.
Rich post socialist countries have performed better in terms of sustainability of democracy whereas countries like Albania, Kyrgyztan have been moving away. Sustainability of democratization is guaranteed by economic growth and reforms that can reduce the authoritarian structure of the ruling party. Also with higher economic growth often the accountability of people of the nation can increase with the implementation of necessary domestic reform measures. Public pressure for accountability of the government, larger civil society participation and increased levels of education are some of the outcomes that incur with the advent of economic reforms which leads to larger transparency and democratization on the path of increasing democratization. The moot question is whether occurrence of such conditions in two countries forging a South South Cooperation facilitate the chance and nature of longevity of the nature of cooperation.

Any cooperation measure which aims to promote development, can benefit the public at large by creating more transparent accountable structures that can sustain the degree of cooperation. The same principle will hold good for South South Cooperation measures.

If there is a chance of economic reform that can happen as a spillover of South South cooperation, then such cooperation measures could be used to create democratization in the countries that get engaged in those measures. Performance of south south cooperation in terms of its sustainability can actually increase if those measures create more stable democratization process as an outcome of cooperation.
If the two nations can discount the fact that such democratization process can start as an outcome of the cooperation, then there is a larger change that they will forge such cooperation provided that the two countries are not being guided by authoritarian government and governance principles.
However whether such democratization will happen or not also depends on the political leadership which is at the centre stage of South South cooperation measures. The value system instilled by the political leaders in the implementation measures of South South cooperation policies will guide the nature of democratization as an outcome of the South South Cooperation measures.
Democratization process can be understood through a short and long term view. The one which has emerged in southern Europe or in East of Africa is more of a long term nature whereas the one which has emerged in Latin America, Europe is of a short term nature (Di Palma, 1990).

The reason behind this different duration of democracy and its effect on economic reform can happen owing to a following reason. In a country which has achieved a new democracy, people are more sensitive and if they expect that there are chances of loosing out from economic reform process in the new democracy then the tensions can increase between a new democracy and economic reform. Precisely this then guides how long a democracy will stay in a country. Two countries in South South Cooperation on same levels of economic development can forge a stronger partnership. But the strength of the partnership will also depend on how internally the people of the countries are managing the tensions between the trade offs of economic reform, democracy and the fears of loosing out from such economic reform process. This can only happen if the domestic governance structures, institutions of the two countries are not able to give confidence to the people of the nation. The degree of confidence giving by the state to the people in turn also depends on the positioning of the democracy and at what point of democracy the two countries are standing out. If the democracy is well rooted to the social origins of the people then the fragility and negativity of the tensions between the people from loosening out from a growing democracy, economic reform process can go down. This can instill larger strength to the nature of democratic functioning of the nations, which thereby can also help in forging in South South Cooperation measures of the two partnering countries.
Historical dynamism and relationship guides this process that can also thereby act as a contributory factor in determining the South South Cooperation relationship of the two countries. The nature of the relationship within the countries and people of the countries also determine the cooperation relationship. One can find linkages between this proposition and Moores work on social origins of democracy . Social origins of democracy will also depend on how people, civil societies are functioning in a democratic state and whether the state is connected to the people through civil society groups. Such connection can go up through reduction in concentration of bureaucratic and aggregated forms of representation. Robust civil society participation, transparent institutional functioning, larger societal disaggregated linkages across the people of the society existing in the nations forging South South Cooperation can pave a way towards stronger social origins of democracy in partnering countries of South South Cooperation.

ETHNICITY AND NUMBER CRUNCHING: WHAT NUMBERS DONOT SAY!

The wish to write this article came while reading through a book titled “Islam in Religion and Politics: Perspectives from South Asia” edited by Asim Ray. The chapter on ethnicity issues in Pakistan and the corresponding repercussions on ethnic conflicts of Pakistan enthused me to think through the concept of ethnic fractionalization. A part of the reason behind this enthusiasm is from the drive to explore the causality that explains the mystery of human beings staying together or not staying together. This is one of the most mysterious aspects of life which are often not guided by any natural laws. As a human being I have most of the time felt confused, or dialectic about this mystery. Whenever that confusion has come I have tried to read something dealing with the anthropocentricity of human civilization.
It is from that state, I thought to start reading behavioural science, political science literature dealing with human conflicts, bondings and ethnicity one year back. Those readings have nurtured the growth of this write up the initiation of which happened with a preliminary googling that revealed an index called “Ethno Linguistic Fragmentation Index/ Ethno Nationalist Exclusion Index”.
This index is a simple extended version of market concentration index which shows the likelihood whether two people chosen at random will be from different ethnic groups. It is an extended form of simple Herfindahl concentration index.
The closer the value of the index to 1 the larger is ethnic fractionalization. The index value for some of the countries that suffered from conflicts generated from resource curse challenges is close to 1.

However, according to some literature[1] ethno linguistic fragmentation index is not able to capture the multidimensional aspects of ethnic fractionalisation. So a better way to address that is through an index of ethno nationalist exclusion which brings out state centric differences in ethnic fractionalization in a country.
This kind of index has been applied in studying the ethnic fractionalization in many resource rich countries where conflicts have arisen in resource abundant areas.
But the numbers do not reveal and get into the intricacies of several factors (including the cultural and emotional ones) that play a critical role in creating ethnic fractionalization and corresponding conflicts. Also often the numbers don’t talk about the human element that is very important in guiding the implications of ethnic fractionalization.

The next sections of this article entails some of the factors that explains ethnic fractionalization starting with some definitional aspects of ethnic fractionalization.
1 Ethnic fractionalization

In order to address the issue of ethnic fractionalization the concept of ethnic divide has to be pondered and understood first. An ethnic divide could originate between people and communities, groups due to their lineage to various religions, caste, culture, language and rule by which they are governed.
With respect to the definitional aspects of “Ethnic Fractionalization”, Horowitz[2] has defined ethnic fractionalization on the basis of indicators like appearance, religion, language and any combination of these ones.
Max Weber suggested that ethnicity is defined by belief structures in a community or in a group with a common descent that is demarcated by tribe, race, casts, religion, language, and[3] nationality. Different theories[4] exist that tries to explain how an ethnic fractionalization in a community could lead to conflicts. These theories include - the primordial sociality; clash of cultures; ethnic security dilemma ; mobilization of ethnic groups[5]. Each of these theories tries to explain how differences in ethnicity causes conflict in a particular situation.
According to primordial sociality theory[6], a human being sees any bondage with a particular ethnicity in a collective way and perceives the bondage to be given from outside in a coercive way. The clash of culture suggests that ethnic fractionalization emanates from belonging of human beings to different civilization origins[7]. Ethnic security dilemma arises when human beings from some ethnic groups suddenly are in a situation when they have to protect themselves for their own survival because of a certain adverse event say like an oil spillage affecting communities. In such a situation, human beings from one group of ethnic origin in the presence of other ethnic groups goes through a philosophical, introspecting discourse driving them to think that each community should protect themselves and their ethnic community first as they visualize the human beings from other groups, ethnicity in a competitive frame of mind.

Ethnic fractionalization is a kind of variable that arises out of social construction. Such social construction is often developed to push forward the political goals of institutions and other identities that could contribute to ethnic fractionalization for short term political gains. All these factors create differences in ethnicity and belief structures amongst people.
Governance of conflicts arising from such belief structures have to analyze how such costs can affect belief structures of the people of different ethnicities leading to conflicts. Political economy of governance institutions driven by people of different ethnicities could also exacerbate such feuds. Often religion also can also contribute in shaping up ethnicity.
1.1 Religion

Religion has played a prominent role in creating ethnic fractionalization in some select countries. Tensions and mistrust could often arise owing to a difference in the lineage of the people to different religions. Many intra community conflicts in countries have resulted owing to mistrust that has an origination in the different belief structures arising from belonging to various religions.

Many of these people have belonging to various religious institutions to which they belong before Christianity and Islam spread in these countries. In these countries the social process and the legal regimes did not facilitate a mix of the two different ethnic identities arising from different religious structures.

In addition to religion, institutions also play a role in the ethnic fractionalization.
1.2 Institutions
Strong government and political institutions with a welfare philosophy for people of all groups and an objective of ethnic fractionalization reduction might have been able to tackle problem. Powell (1982) shows that an association exists between ethnic fractionalization and instability of institutions. Powell suggests that in a region with an increase in ethnic fractionalization, the propensity of instability in the institution goes up.
Once that instability goes up, chances of reduction of ethnic fractionalization goes down. Also role of formal institutions play a key role towards enhancement of fractionalization.
But other than formal, informal institutions also have a strong role to play towards ethnic fractionalization. Informal institutional structures play a key role in binding and hindering the transmission of ethnic heterogeneity to potential conflicts. Such informal institutional structures have also helped in cross ethnic tie ups through a structure called “cousinage”. Cousinage has happened because of historical alliances of families between various ethnic groups through the basis of patronyms. This cousinage has facilitated social interactions between various ethnic groups and has played a key role in binding them together.
To illustrate cousinage, one could say that somebody in a community group in Mali, belonging to Keita surname could easily interact with another person with a surname of Coulibaly[8] even if they have not interacted earlier. Cross ethnic interactions bounded by informal institutional structures have prevailed in these countries and helped in maintaining strong bondage between human beings.
Also transethnicity play a key role towards determination of conflicts. Studies done by Easterly and Levine (1997)[9], Posner (2004)[10] suggest that the effects of these transethnicities on socio economic variables of the communities have been adverse leading to larger ethnic fractionalization.
Larger ethnic fractionalization could lead to a delay in creation of public goods dealing with health service, education and infrastructure[11] owing to large transaction cost that could arise due to ethnic fractionalization.
To eradicate this condition, larger effective institutional intervention for governance is required. In the presence of ethnic clouting and rent seeking in governance positions, quality of infrastructure service provision could go down.
However as a contrast, the picture has been very optimistic in some African countries. For example in countries like Malawi, Namibia institutions have worked well.
In Malawi, groups belonging to Chewa, Nyanja, and Tumbuka language are the largest. But inspite of that no dominance of groups has happened. Similarly in Namibia, although the ethnicity belonging to Ovambo is the dominant segment of the population, the other ethnic groups are given importance in terms of their representation in the institutions. Dominance of groups have been eradicated to bring in effective institutional intervention.
Some other explanatory factors

Inter community factors of fractionalization is frequently influenced by the nature of ethnic competition. According to Dion Douglas (1997)[12] ethnic competition gives rise to germination of ethnic conflicts. In a drive for competition, lower trust levels are developed that impinges communities of various ethnicities from forming social networks[13].
Such social networks could happen through larger inter ethnic cultural exchanges, frequent social gatherings and bondage between the groups. One of the essential requirements for such bondage requires creation of a value system of respect for each others ethnic customs, rights, rituals.
Often absence of such a value system hinders creation of a space for social networking. This is further facilitated by the drive of each ethnicity giving larger space to their own culture, customs without providing sufficient space to the other ethnic culture and customs. Such an action is also often incentivised by a drive to have monetary and control of power that could maximize the ethnic capital[14].
Therefore, each ethnic group in the process of maximizing ethnic capital becomes narrowed in their own ethnicity and reduces overall social capital that leads to a larger fractionalization.
Cultural factors[15] that create fractionalization amongst ethnic communities include the differences in language, living style, day to day actions[16] and their affinity to various ethnic cultural preferences by birth. Mostly between the ethnic tribes there is a pattern of sticking to the cultural heritages that any generation has imbibed from earlier generation by birth. This affinity to a lineage by birth could often act as a hindrance towards cultural homogenization of various ethnicities and can lead to fractionalization. It is felt that creation of platforms for cross cultural exchange at regular intervals across various ethnic community domains could be one of the ways to bridge the differences in the cultural attributes of the communities. This could therefore pave a long way towards reduction of ethnic fractionalization.
Demographic and institutional factors are also posed to contribute to ethnic fractionalization process. Failed institutions are being thought to be one of the key factors towards ethnic fractionalization.
According to Sambanis and Elbadawi, (2000)[17], too much of diversity in ethnic groups necessarily won’t allow to create conflict if the institutions are working well as they won’t allow groups to cohesively create a conflict.
According to them when an ethnic group has a larger dominance to the extent of 60% of the population then it has sufficient power to create conflicts. But below that extent, with the existence of many ethnicities if the institutions are functioning well then even with the presence of ethnic fractionalization, conflicts could be checked.
Conclusion
Ethnic fractionalization within and between communities could act as a mechanism to facilitate, enhance the distrust and could contribute towards larger distress and dissent which therefore raises the degree and chance of a conflict. Such distrust could arise because of various intra community and inter community sociological constructs. Additionally, historical, institutional, cultural factors would also play a critical role in the formation, extent and persistence of the distrust.

There is a critical role of governance oversights, efficient functioning of institutions, homogenous wellfaristic polity with a larger holistic accommodative social welfare goals that could reduce such distrust and conflict. Participatory decision making at the community level, effective and efficient democracy with equal weightage to all ethnicity are some of the ways by which these community conflicts could be addressed.

While doing that policies have to be streamlined and those policies have to consider how each of the indicators affecting ethnic fractionalization is influenced through policy actions. The formulation of such a policy would involve dedicated participation from all groups, ethnicities and stakeholders.
References

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[1] Institutional obstacles to African economic development: State, ethnicity, and customJournal of Economic Behavior & Organization, Volume 71, Issue 3, September 2009, Pages 669-689Jean-Philippe Platteau
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[3] Race, Ethnicity, and the Weberian Legacy, JOHN STONE, American Behavioral Scientist, Vol. 38, No. 3, 391-406 (1995)
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[5] Sambanis, Nicholas. 2001. “Do Ethnic and Nonethnic Civil Wars Have the Same Causes?” Journal of Conflict Resolution, 45:259-282.12 Anthony D. Smith, Contemporary Sociology, Vol. 16, No. 6 (Nov., 1987), pp. 774-775, Published by: American Sociological Association

[7] Ethnic Minorities and the Clash of Civilizations: A Quantitative Analysis of Huntington's Thesis, JONATHAN FOX , British Journal of Political Science (2002), 32:3:415-434 Cambridge University Press, Copyright © 2002 Cambridge University Press
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[14] Ethnic capital could be seen as a capital that gives returns to future generations of a particular ethnicity. Such ethnic capital is formed by investments made in an ethnic environment by parents for their future generation. Source - http://ideas.repec.org/a/tpr/qjecon/v107y1992i1p123-50.html last accessed on Dec 24, 2009
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