Tuesday, July 14, 2015

Koan Partner Vivan Sharan on India joining the Shanghai Cooperation Organisation, CCTV News, July 07

Koan Partner Vivan Sharan on "The Greek Crisis And Indian Prime Time Journalism", Businessworld, July 04

Vivan Sharan on why the unfolding Greek drama has little appeal for Indian media

The week that was will be forever etched in European history but will have little recall value in India. In 2009, the Greeks first announced that they had been underestimating their fiscal deficits for many years.Without a sovereign currency that could be devalued, and lacking the structural underpinnings to address its deficits, the economy quickly became acasualty of the European experiment. A series of loans, at market rates, were offeredto Greece by the European Central Bank (ECB) and the International Monetary Fund (IMF). To the surprise of very few close observers of the Greek economy,it defaulted on a proportion (1.57 billion euros) of its debts owed to the IMF, on 30th June. With many more debt deadlines to follow, this was the first such default of an advanced country.

Simultaneously through the week, Indian Prime Time reportage and debates have centred on the excesses and pitfalls of ‘VIP culture’.

Admittedly, aside from some nominal historical association with Alexander the Great, known to mosttelevision watching middle class Indians as ‘Sikandar’, Greece has never really been of any particular interest. Unlike the Swiss Alps and their integral place in Bollywood history the Mykonos islands and the Parthenon have never quite managed to pique Indian curiosities. Superficial association aside, what is being scripted in Europe, is nothing short of a recalibration of Westphalian sovereignty. But does this demandPrime Timecoverage?

The ‘European’ decision not to restructure Greek debts early on itself was largely motivated by the imperative to preserve European banking assets as well as the erstwhile Greek Government’s own resistance to the ‘humiliating’ proposition.Instead of a long term solution, successive bailout packages were conceived by the ECB, IMF and the European Commission (EC), also known as the ‘Troika’,along with stringent ‘austerity’ measures. The assumption was that through a mix of tax increases, spending cuts and structural reforms, the Greek economy would be able to grow, and therefore repay its debts.And with incremental adjustments to Greek debt, Europe kicked the can down the road.

The Greek economy has lost 25 per cent of its GDP since such austerity measures were first prescribed. What is starker perhaps is that the country faces 60 per cent unemployment among youth. These rather sobering realities prompted the Greek people to vote out the establishment earlier this year. A ‘radical’ left of centre party, Syriza, was voted in. The leaders of Syriza in turn have been defiant in the face of successive negotiationdeadlines set by the Troika, for adopting more stringent measures in exchange for credit extension.

The stakes in Europe are high. Syriza has called for a referendum this Sunday. The outcome will decide whether or not Greece will accept the latest austerity package in exchange for credit. Martin Schulz, the President of the European Parliament, and Jean-Claude Juncker, the President of the European Commission have both made explicit public statements urging the Greek people to vote for more austerity and effectively for extending their current tribulations and staying in the Eurozone. To reiterate in simpler terms, the leaders of the primary institutions of European integration are attempting to influence the democratic process within one of their member states.

The short answer to whether this demands Prime Time coverage in India would be no. This is for a variety of reasons, some of which have been highlighted by the latest Socio-Economic and Caste Census released by the Government recently. Nearly half of the rural households surveyed meet one or more of the deprivation criteria specified by the survey – a rude shock for many.It would make ample sense then, for Prime Time news to focus on this and engage informed experts in non-partisan debates on India’sdevelopment cleavages. However, development debates do not beget television ratings. This is simply not what viewers want to watch.

India’s socio-economic realities seem to be immaterial compared to the ostentatiousness of its political leaders and their lack of civic sense. After all why should the ‘common’ man, who is (surprisingly) able to afford flight tickets, be inconvenienced by politicians? Let us not forget that all men are created equal at least when it comes to boarding flights.

This‘common’ Indian is easily impressed by shrill Prime Time anchors who have fire in their bellies and can openly challenge the new government on VIP culture, despite the ‘big brother’ type image ascribed to it by the intelligentsia. The Prime Minister is in turn worried. He has been repeatedly reprimanding his Ministers, demanding conduct that is befitting of their posts. The signal from the Prime Time coverage is clear. Politicians must refine their civic sensibilities, and apologize for any arrogance that may be caught on camera. Once this is achieved, their jobs are half done, chronic poverty, growing social inequities, and critical infrastructure deficits notwithstanding.

Perhaps it is not a crime for India to be insular. The country has problems that make Greece’s worries or larger political trends in Europe seem insignificant. But if it chooses to remain inward looking without a sense of what it should expect its politicians to deliver, India will be stuck in neutral gear. It will be up to the whims and fancies of politicians alone, rather than the broader society, to define the constituents of ‘national interest’. And this may conveniently continue to reflect the collective self-interests of those in power and those who benefit from it, including the Indian media which moonlights as the ‘voice of the people’. There are hard numbers to prove that the deadline for systemic change is already upon the countryand hopefully it does not need a Troika of its own to bully it into acceptance. Incremental and cosmetic changes will simply not cut it.

The author, Vivan Sharan, is Partner, Koan Advisory Group and Visiting Fellow, Observer Research Foundation
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Koan Partner Vivan Sharan on "Smart Cities: A Reality Check", Businessworld, June 27

To make smart cities a reality, what is needed is a framework that can harness low hanging fruits such as regular scrutiny by civil society, meaningful participation of the private sector and provision of technical support for instituting best practices within Urban Local Bodies, writes Vivan Sharan
The familiar adage that ‘India lives in its villages’ will stop holding true within a few decades. And this transition, represented by urbanisation on an unprecedented scale outside of China, is already changing domestic politics. Urban areas were given scant attention in the ‘gareebi hatao’ era, marked by an emphasis on social schemes catering to the rural poor. Today, they are veritable microcosms of India’s various challenges and opportunities. Urban areas arealso the drivers of production and consumption in the Indian economy; accounting for 60 per cent of GDP. 

Perhaps in recognition of such inexorable socio-economic realities, the NDA Government has taken it upon itself to create 100 ‘Smart Cities’ and renew another 500 as part of Atal Mission for Rejuvenation and Urban Transformation. The Cabinet has approved Central Government spending of about Rs 98,000 crore on these two initiatives over the next five years. These initiatives along with Housing for All (by 2022), were formally launched on June 25 by PM Modi. Even so, a number of outstanding concerns remain. 
The UPA Government too had an ambitious urban development programme called the Jawaharlal Nehru Urban Renewal Mission (JNNURM), not too different from the new initiatives on offer. The Comptroller and Auditor General (CAG) audited JNNURM in November 2012, to find that the implementation statistics left a lot to be desired. Among other glaring implementation failures, it found that only 253 of a total of 2815 projects were completed by March 31, 2011. The CAG attributed this failure to poor management, including deficiencies in the guidelines, delay in release of funds and so on. Have the right lessons have been learnt from this?
Unlike the JNNURM, the Smart Cities initiative will give more control to the states and place the onus of self-assessment on them. And consequently it is hoped that the States will compete with each other on performance to receive enhanced support from the Centre. TheCentral Government for its part will have to rise above political compulsions of giving preference to NDA ruled states. It would also have to adhere to transparent and objective methodologies for sanctioning monies on time (and not in the last quarter of each fiscal in a rush to match targets), utilisation of interest, monitoring of funds etc. 
Smart Cities & Governance
Another critical question is one of governance capacity. The CAG report found that the monitoring and assessment of JNNURM was poor, at all levels. Therefore devolution of monitoring and assessment duties to the states is not necessarily likely to be a panacea. And herein lays the importance of a robust conceptual framework. Any framework that presumes the existence of implementation, monitoring and assessment capacities of local governments, even to assess their own weaknesses, is likely to fail. Instead what is required is a framework that can harness low hanging fruits such as regular scrutiny by civil society, meaningful participation of the private sector and provision of technical support for instituting best practices within Urban Local Bodies (ULBs). 
Importantly, the financial data of ULBs must be comparable. A number of ULBs continue to follow single bookkeeping system of financial accounting, a primitive practice to put it mildly. The National Municipal Accounts Manual (NMAM) issued in 2004, endorsed by the CAG, prescribes a common accounting framework for ULBs. This serves as a good starting point. Among other things, it suggests the replacement of single entry cash basis of accounting by double entry accrual based system of accounting. It also encourages compliance with the ‘Generally Accepted Accounting Principles’;accounting Standards issued by the Institute of Chartered Accountants of India. There is also a clear opportunity here to learn from experiences in other countries. 
The corporatisation of ULBs can yield significant benefits in terms of reporting of financial data. Corporate bodies owned by ULBs have to adhere to the provisions of the Companies Act, 2013. Their books of accounts are open to inspection by relevant nodal authorities and they have to file copies of key financial documents such as balance sheets, profit and loss accounts with the Registrar of Companies. In addition the corporatisation of ULBs may help local governments address the fundamental challenge of inadequacy of finances to deliver on the Smart Cities and AMRUT mandates of creation of ‘smart’ infrastructure and efficient delivery of basic services. 
Under existing external commercial borrowing guidelines, ULBs are not eligible to directly raise debt funding from external lending agencies. On the other hand, a public company may borrow up to its share capital and free reserves. A publicly owned company can also raise capital in the form of share capital or by issuing debt. Under the Companies Actand the regulations prescribed by the Central Bank, companies can raise debt in the form of debentures and bonds as long as they follow the recently establishedguidelines by Securities and Exchange Board of India (SEBI). 
How To Build A Smart City
To meet their financing needs,only a fraction of which can be met by them Central Budget, corporatised ULBs can try to leverage a variety of financial instruments. Bonds issued by ULBs with good financial track records could become alternative investment avenues for conservative investors. In fact, various categories of bonds including General Obligation Bonds, Revenue Bonds and Green Bonds can also be looked upon by ULBs. They must look to capitalize on the fact that there is excess liquidity in the global financial system.
The bad news is that the Indian municipal bond market accounts foronly around 0.012 per cent of GDP at current prices compared to the United States where the aggregate principal amount outstanding by the fourth quarter of 2014 was about 21.7 percent of the country’s GDP.Financial inclusion and stable inflation will be prerequisites to the growth of the fixed income market in India. Indeed many of the challenges associated with urban development require a deeper introspection on the structural deficits of the Indian economy. 
Nevertheless given existing constraints, innovative financing models will have to form the backbone of urban development and eventual creation of  smart cities. Some possible alternatives could include user fees models, value capture models, tax increment financing and civic crowd funding. Each of these will require serious study and demand that the government adopt a multi-stakeholder approach for soliciting expert inputs. Indeed, the experiences of the Municipal Corporation of Delhi, which struggles to pay its workers, show that there is no guarantee that corporatisation of ULBs will make them financially viable. However, through appropriate process innovation and guiding policies, the central and state governments must ensure that this is the exception rather than the rule.
Vivan Sharan is a Partner at the Koan Advisory Group and a Visiting Fellow at the Observer Research Foundation 
- See more at: http://cdn.bwbusinessworld.com/economy-india-energy-infra/smart-cities-reality-check#sthash.bHzxwkFN.dpuf

Koan Partner Vivan Sharan moderating a panel on the Means of Financing of the New Development Bank for the Indian Government, 19 June