Accommodative Politics, A Key To Reduce Fiscal Strains

K.T. Jagannathan & Dr. S.K.Prakash 

Abstract

Does fiscal federalism require a accommodative re-jig with the emerging reality in India? The
answer is a suggestive `Yes’ if one were to take into account the unfolding political dynamics
in the country. Whenever a general election is held in any state, one gets an education on the
advantage of a double-engine government. What do we make of this? Well, even a casual dip
into the usual construct of fiscal federalism will give one a clue or two to the fissures in the
existing arrangement. The attempt here is to mirror the ground situation arising out of the
vastly-changed political landscape in the country.
Key words: Fiscal, Federalism, Imbalance, Centre, States, Social, Policies
Introduction
What is fiscal federalism? Simply put, it is all about putting in place an institutional
mechanism that facilitates decision-making that involves and pertains to both the Centre and
the States. Typically, these decisions relate to demarcation of powers between them for
taxation, spending, regulations and the like.
Fiscal federalism is a broad-spectrum subject. It encompasses a host of issues. Who levies
taxes? Who spends the money? Who collects money? Who distributes money? How these
functions are divided between the Centre and the States? What falls under whose domain and
responsibility? It encompasses a host of issues related to revenue and expenditure
assignments in a federal system.
Correcting imbalances
Also, it has to address vertical and horizontal imbalances in finances of a federal system
comprising various member-states. What is vertical imbalance? Well, this happens when
own revenues and expenditures of various states within a federal system are unequal. What is
horizontal imbalance? It occurs when fiscal capacities of various States of the same level
differ. How are these imbalances removed? This is sought to be erased through a variety of
transfer and borrowing mechanisms. The objective is simple: to let the States do their
assigned tasks in conformity with the national policy framework.
“The vertical fiscal gap is generated by the expenditure and revenue assignments. However,
individual policy choices also play a significant role in determining the resulting ex-post
vertical gap. If a lower level of government chooses to increase spending or not raise
assigned taxes, the vertical gap would increase. Thus, if transfers were designed solely to
close the vertical gap, there would be little incentive for the lower levels of government to
raise own account revenues or restrict or manage expenditures efficiently. Unless there are
objective criteria for the determination of transfers, “gap filling” to finance sub-national
deficits is likely to lead to macro-economic difficulties as well as indeterminate “bargaining”
between the centre and lower levels,”according to a paper presented by Ehtisham to IMF e-
LIBRAY in September 1992.
All these are sought to be addressed by creating a robust constitutional mechanism which
defines every facet of the aforementioned aspects in a federal system. Ipso facto, such a
mechanism should also be in a position to provide conflict resolution solutions.
Cause of friction
The moot point is: how effective or how practical is the existing mechanism? The question
here is not about the mechanism per se. The concern is more about the propensity or
willingness of the political system to fairly use the available mechanism for conflict
resolution. That is is largely absent, triggering quite a convulsion in the fiscal federalism. The
political system as whole does not hesitate to play spoilsport in fiscal federalism. There are a
dime a dozen political parties in a federal system like ours. Not just that. Many states are
ruled by regional parties whose policies and priorities are very much tuned to the needs and
aspirations of people in their respective regions. As opposed to this, a Central government has
to look at the larger national picture and care for all the regions – developed, not-so-
developed and under-developed. Fiscal federalism is all about understanding these different
objectives and managing multiplicities in terms of aspirations and requirements of different
regions, nay states. More often than not, conflict situations arise in a federal system like the
one in India more due to deep politics, in general, and positioning strategies of parties (both
at the Centre and in States), in particular. With the political system as a whole turning out to
be not-so accommodative, the conflict situation gets exaggerated and turns uglier at times. Is
the existing fiscal federalism mechanism capable of fixing a solution to problems in a
constantly metamorphosing relationship between the Centre and the States?
Role of States
Why do conflicts occur in a federal system? To understand the why of them, it is imperative
to recognise the responsibility of States in providing local public services. Willy-nilly, this
pre-supposes a certain amount of freedom for the States to spend. This can happen only if
they are allowed the leeway to raise funds through tax and other means. What does it mean?
Simply put, it means that the ability to raise funds – either through taxation or other means – is 
a sine quo non for States to roll out adequate local public services. The fiscal federalism
mechanism has a crucial role to play here. It should support the states’ fund needs. At the
same time, it should ensure that they don’t turn profligate. Understandably, the fiscal
federalism mechanism has built some checks and balances to avoid such situations. Can the
Centre keep away in matters related to provision of local public services? Yes and no,
depending on the kind of local public service. There are instances where a strictly local public
service will have a larger national import or scale implications. In such cases, the Centre has
to get associated (let us say like in the case of Chennai Metro Rail).
“Modern governments provide many services that by virtue of their technologies are
essentially private goods, for example, health, education, and social insurance. Public
provision of these private services is justified on grounds of equity. Since benefits accrue
mainly to residents of separate jurisdictions, such services would be better provided by sub-
national governments. A central government’s involvement is, nevertheless, justified to
ensure horizontal and minimum standards of service in all jurisdictions—such standards for
most services encourage the free flow of goods and services in the nation as a whole,”
according to a theme paper “Emerging Issues in Fiscal Federalism” authored by Anwar
Shah Indira Rajaraman Fernando Rezende.
Status in India
Where does fiscal federalism stand at the moment in India? Well, it has moved to the edge of
an avoidable friction point. The fiscal divide appears to revolve around a few contentious
areas – GST (goods and services tax), welfare spend of States, central schemes and the like.
Though GST has long come into force, it still remains a divisive factor in the Centre-States
relationship. There are differences galore over the GST rate structure, inclusion and exclusion
of commodities in GST, revenue sharing from GST, associated compensation and the like
issues. These differences haven’t done much to bridge the chasm in the federal relationship. 
While GST replaced state-level sales taxes, it has given the Centre a significant control. With
the Centre holding one-third of the voting rights, the structure
of the GST Council effectively grants it the veto power, undermining the promised co-
operative federalism. The federal friction is further precipitated by the interpretation of the
constitution of India. While some call it “union of states”, still others are interpreting it as
“federation of states”. This has obviously led to a constant face-off between the centre and
the states. This interpretation itself is the consequence of nuanced posterings by parties to
assert their regional rights and perhaps automony. The Inter-state council was formed in 1990
to promote a robust institutional framework to usher in and strengthen the co-operative
federalism in the country. Somewhere along, however, this hasn’t got the intended focus. This
has further accentuated the chasm between the Centre and the States. A reading of the ground
situation suggests that these avoidable face-offs are the creation of growing trust deficit and
evaporation of accommodative spirit in a political environment, which has increasingly
turned messier by the day.
Dominating Centre
In the unfolding political environment, tension in fiscal federalism happens when the Centre
dominates. The centrally-sponsored schemes – though intended to bring a lot of good – have
sort of perceived to be a clever ploy to restrict the autonomy of the States. No doubt, they are
jointly funded. Yet, these are seen to limit the leeway of the States in articulating their own
developmental agenda. The funding pattern in a centrally-sponsored scheme is as follows:
60:40 (Centre:State) and 90:10 for 8 North-Eastern and 2 Himalayan States  The initiatives
such as Swachh Bharat Mission, Pradhan Mantri Awas Yojana, Jan Dhan Yojana, Ujjwala
Yojana and the like are seen to give States a subordinate recognition.
This expansionary role of the Centre has a twin fall-out. For one, it crowds out investment
funds for the States. For another, it curtails their flexibility to pursue their own development
agenda. Also, it has given rise to an avoidable parallel policy resulting in duplication of
spending.
Conclusion
What is the inference? Simply put, the rising tension in the federal system appears to be the
consequence of a growing sense of mistrust. This mistrust must be viewed in the context of
intensely competitive politics that is being played out now where the game of one-upmanship
in populism is increasing relied upon. This surely hinders political dialogue and consensus-
building which are crucial for a health co-operative federalism. A consistently polarised
political ecosystem only weakens the presence of institutions such as the Inter-State Council,
GST Council, NITI Aayog, and the like.
Read against this overall scenario, the big push for the `double engine’ theory (where the
governments at the Centre and the State will be by the same party) has injected a lot more
suspicion and, naturally, the trust deficit is only widening.
No doubt, a robust institutional mechanism is critical for a healthy federal ecosystem. That
itself isn’t sufficient, it appears. What is of urgent importance is for the entire political clan in
the country usher in an accommodative spirit to foster a federal system that is beneficial for
all. That, of course, calls for a re-jig in the outlook of the entire political system to align itself
with the emerging compulsions in fiscal federalism.
References
1.. A  paper presented by Ehtisham to IMF eLIBRARY in September
1992. (https://www.elibrary.imf.org/display/book/9781557756633/ch004.xml?tabs=abstract
2. Emerging Issues in Fiscal Federalism” authored by Anwar Shah Indira Rajaraman
Fernando Rezende.
https://www.elibrary.imf.org/display/book/9781557756633/ch004.xml?tabs=abstract
3. Media reports on the Centre-state issues.

 Cementing Consolidation

It was inevitable. When it finally happened, however, it has thrown up a number of questions and possibilities in running a business in India. When a gusty and aging N. Srinivasan called it quits and sold his dear India Cements to the Birla-owned UltraTech, it exposed the limitations of a man who dominated the cement field in the south like nobody else's business. Why did he give up? Notwithstanding the business and economic reasons, the typical constraints of a family-run business did not help him either. The propensity of the generation next to carry forward is critical for a family business to live long. Family businesses of well-known kinds are dime a dozen in this part of the world.

 What's in a name? What's in a brand? How does history matter? Time can just reduce all these to inconsequential things. As the saying goes, change is the only constant in a dynamic business environment. Nevertheless, it requires enormous courage to let go of something you hold very dear. No doubt, Srinivasan was caught in a compelling situation. Yet, he proved wiser in calling it quits. Srinivasan and his ilk have indeed been compensated well for getting out of India Cements. Did UltraTech get India Cements at the best price? Time alone can answer this.

Going back in time

What does this deal signify? Are we going back in time? It appears so. Small is beautiful, it is often said. Not surprisingly, rulers of the past - both at the Centre and States - assiduously encouraged SMEs (small and medium enterprises). They had been particularly conscious that production should not be concentrated in a few hands. The MRTP (Monopolies and Restrictive Trade Practices) Act was in play to check-mate such concentration of production.

Toward consolidation

 As things pan out - especially in the cement business - the emerging competition of the intense kind is sort of pointing to a reorganisation of an unexpected kind in the cement industry. A consolidation is clearly in evidence and is happening at a hectic pace, especially in the southern cement market. The two dominant players in the country - Adanis and UltraTech - have been on a prowl to expand their cement base. In April, Ambuja Cement, an Adani Group company, had entered into an agreement to acquire My Home Group’s 1.5 million tonne per annum cement grinding unit at Tuticorin in Tamil Nadu. Later, on June 13, Ambuja Cement signed an agreement to acquire Penna Cement Industries (PCIL). The deal is signed ostensibly to help the group expand its presence not only in south India but also gain access to the Sri Lankan market. Shree Cement had announced capacity expansion in Karnataka. Dalmia Bharat was in the process of setting up a cement mill at Ariyalur, Tamil Nadu.

South focus

 Why is South India in focus? The reasons are not hard to find. For one, South India is where much of the country's limestone deposit - critical input for the production of limestone - resides. For another, the industry in the South is largely fragmented with myriad players. Also, the cement demand is much more up North. In the modern context, the southern cement companies - going by their capacities - pale into insignificance when compared to the big players such as UltraTech and Adanis. A player like India Cements can easily fall into the realm of SSIs when pitched against these biggies, who have deep pockets. All these factors have now conspired to make the southern cement industry scene a lot more exciting. The name of the game, all of a sudden, is getting re-defined. Surely, the focus is firmly on being big. If scale defines the new focus, the big consolidation under way points to the return of 'dominant production' ways, a far cry from the diversified cement manufacturing. The fragmented nature of the cement business in the South is an easy facilitation for the biggies to get in. The industry in the south is already abuzz with such talks. A sense of urgency is making the big boys fidgety, and is reportedly forcing them to hasten their action plan in the south. Coming events cast their shadows before them, it is often said. Are we returning to former times where a few dominated production? Well, the cement industry, especially in the South, is set for a lot of action ahead

(This was published in The Hindu BusinessLine on August 8, 2024)

Where Media Becomes Commerce ...

 Where Media Becomes Commerce ...

Trust deficit of a gigantic proportion is sweeping this once revered industry

By K.T. Jagannathan

Long before the entry of billionaire businessman Gautam Adani into popular news channel NDTV (New Delhi Television), the news media has turned into a commerce and journalism a mere job. The way news is disseminated and consumed has undergone a tremendous metamorphosis. So much so, the media world is full of market jargon now. With the advent of the Internet and, consequent, spread of social media, the Fourth Estate of the conventional kind appears to have gone into the pages of history.  No doubt, the corporatisation of the media has been happening at a faster pace for a long while now. The Adani entry into NDTV, however, has pushed yet again the troubled times of the media into a serious national focus. Perhaps, the current hyper attention is largely due to the stature of the acquirer (Adani) and the promoter of NDTV (Pranoy Roy and his wife). Predictably, the issue has set off a series of debate across platforms on the dangers facing the media business.

Down memory lane

Before dwelling on the NDTV imbroglio, a trip down memory lane will give a clue or two to the media world of the past and the times it is in today. In early 90s, just as India opened up its economy to the world at large under the daring initiative of former prime minister late P.V. Narashimha Rao, Afternoon Courier, a daily tabloid in the then Bombay, came out with an issue with almost a blank open page. At the centre of the front page, there was a tiny info box which said something like `News can wait’ and asked readers to flip the page. It was an innovative Nestle advertisement. It elicited quite condemnation. The editor of the paper (who was the author of the popular column Busy Bee) had to publicly apologise for that ad, and promised the readers that he would never ever allow it again!

 Advent of commercialism

Much water has flown under the river since then. There are creeping ads (protruding into the news articles), sponsored articles and what not. They are dime a dozen these days. And, these have effectively blurred the dividing line between news and advertisement. In a sense, commercialisation has crept in simultaneously with the liberalisation of the economy.  Post-liberalisation, the support system for media organisations (which have now become media enterprises!) has slowly and steadily started changing. Conventionally, the media organisations drew their sustenance from the advertisement support that governments – both centre and states – extended to accredited publications. Post-1991, the corporate world, too, stepped in and provided a resourceful alternative assistance for the news publications, in general. After all, the corporate world saw in the media a winning platform to reach – nay market – their products to the masses. When this was quietly happening, the conflict of interest was coming for sure. Somewhere down the line, this has resulted in the merger of interests. Not surprisingly, the publications have also begun to speak the corporate language – bottom line, top line and things like that.

Modified object clause

Time was when owning news publications gave its owners a sense of pride and a feeling of service to the society. Many are now in the media business for the entitlements and power that come along with it. When the `object clause’ is completely modified, pride easily yields place to commerce. In former times, publications would hesitate to take unverified and unsubstantiated advertisement materials. A peep into the past – into the mid-90s - would clearly establish how media organisations of assorted kind jostled with one another to publish advertisements from finance companies of unincorporated kinds who offered unbelievably high interest rates on deposits. This virtually saw the reputation of many non-banking finance companies come crashing down in the southern part of India. Not just that, many unsuspecting depositors lost their life earnings by following these ads!

The rise of PR industry

Since the 90s, India has seen the slow emergence of a new class of public relationship (PR) professionals. The PR industry has become a strong fulcrum around which the entire lobbying - be it for corporates, industries, political parties et al – has come to be identified. Originally, they sought to play the facilitator role by trying to be a bridge between different interest groups. As time went by, they have come to play a far more dominant role, and are seen as agenda-pushers. They are now an integral part of the news dissemination ecosystem across the globe. The emergence of this class of intermediary has virtually pushed the traditional information sourcing methodologies to disuse. It is well-nigh foolhardy to dismiss the correlation between liberalisation and arrival of the PR industry on the Indian scene. Today, the industry has grown substantially with many PR enterprises sprouting at regular intervals. In this new normal environment, the traditional objectives of news publication stand altered substantially.

Publications galore

This change must also be read in the context of proliferation of publications. This reconfiguration of priority has further accentuated especially in the wake of a boom in television channels. The game of one-upmanship indulged in by the television channels – which has already spread to the print media - tells a tale of the degeneration in the way information is articulated by the media. It is doubtful if the kind of a competition that one is seeing in the media world is doing any good for society at large. One is also not sure if the competition of unbridled and ugly kind we are seeing today is doing any good to the media industry as a whole.  In this digital era, fast gaining social media settings has further pushed the status of the media enterprises – be it print or television – topsy-turvy.  The world is witnessing an information explosion thanks to the Internet-induced digital revolution. Technology is at forefront, spearheading its transmission in real time. In a way a raid of a not-so-definable kind has already engulfed the media world.

Somnath Chatterji panel report

What is happening today was foreseen many summers ago by the law-makers in India when a debate on letting foreign investment into the print media was raging.  A report of the Parliamentary Standing Committee headed by late Somnath Chatterji, released in March 2002, dwelt elaborately on the dangers of letting foreign investment or control in Indian print media. “Dissemination of information being a part of the fundamental right of freedom of expression, the press in India enjoys fundamental rights enshrined in the Constitution. However, the fundamental right to freedom of expression is available to Indian citizens only. This means a foreigner who comes to acquire control of the Indian newspaper through whatever means cannot enjoy the freedom of expression and thus cannot run the newspaper in the country,” the report said.

Security angle

The Committee indeed gave serious consideration to the possible impact of liberalization in the print media on the security situation in the country. “The Home Ministry official stated before the Committee that as people tend to rely more on printed versions of facts an attempt at disinformation will have tremendous impact on the people and it will be more difficult to control it. The Committee feels that the perception of the Ministry of Home Affairs about the security implication of allowing foreigners to operate in the print media is based on a realistic understanding of the ground reality,” the report said.

Mind influencers

The Committee was convinced that newspapers had a significant impact on the minds of the people. “It influences the political beliefs, the social mores and the basic cultural impulse of the people. The foreign print media owners or the foreign investors with their superior technology and managerial skill and unlimited resources can neutralize any statutory restrictions which may be imposed and become crucial players in the domestic print media sector. Further, the hostile countries through their intelligence agencies can use front organisations to enter the Print Media sector through the foreign investment route and undermine the unity of the country. They can do incalculable harm to the fragile social harmony by purveying slanted and mischievous news and views. Thus, print media can be used by them as an instrument of subversion. This adverse possibility has been brought to the notice of the Committee by some witnesses. This only underscores the fact that there is a consensus on the point that control of the management of a newspaper in the hands of the foreigners is not in the interest of the country,” the report said.

Serious upheaval

The Chatterji committee also studied as to who had greater influence on the public – the print or the television (where foreign investment was allowed then). Today, the television media – both English and regional – are under the control of big corporations. It will be incorrect if one were to classify them free press in the conventional sense. From being information disseminators, they have become influencers and agenda-setters. With the arrival of social media on a big scale, the definition of media has undergone a major metamorphosis. The content controllers have largely gone invisible, and this is causing a serious upheaval across the canvass cutting across borders.

Indirect control

The Adani incursion into NDTV is a hard reflection of a media world that is at the cross-roads at this point of time. Is it right to view the Adani-NDTV face-off purely from the prism of media freedom? To be sure, NDTV is a listed corporate entity accountable to its shareholders and other stakeholders. As a company, it is also bound by the rules of assorted regulatory undertakings.  Mergers and acquisitions (M&As) are quite normal in the corporate world. There are rules and regulations to guide M&As. In this instance, an Adani group company has acquired an entity which has given a huge loan to NDTV. The loan has a conversion option into equity at any point of time during its pendency.  Upon acquisition, the Adani outfit has chosen to exercise the conversion option. In line with the SEBI (Securities and Exchange Board of India) regulations on takeovers, it has announced an open offer to acquire additional 25 per cent shares from the public. Should this be just seen from a corporate M&A angle? Or, should this be viewed as an assault on media freedom? In this debate, can one wish away the fact that NDTV has not paid back the huge interest-free loan very many years ago? Why would anybody – especially a corporate – give NDTV – for that matter anyone at all – interest-free long-tenor money without any quid pro quo? Given the political overtones this entire imbroglio has taken, this debate will go on till the cows come home.

In fact, this line of possibility was discussed by the Chatterji committee in its report in 2002 when the question of foreign investment in the print media was dissected in detail. The indirect control of a media enterprise found extensive references in the report.

The Adani-NDTV fracas is indeed the culmination of the metamorphosis that the media world is witnessing for quite some time now.  If change is for the good as Karl Marx said elsewhere, this change is causing havoc across the media organisations world over. Trust deficit of a gigantic proportion is sweeping this once revered industry. How to regain the trust? How to do it by keeping the head above the water? What is required is a new institutional arrangement which fosters a fair, fearless and sustainable information-dissemination system that is ethical and trustworthy.

 

 

 

GDP number & ground reality

You may love it. You may hate it. But you can’t ignore it. Perhaps, this sums up the position of India in the global stage. More than anything else, its sheer size – in terms of people – has compelled many to convince themselves to take a positive view on India. Indeed, India has edged out the U.K. to become the world's fifth largest economy.

Well, the growth numbers – as dished out by the government and predicted by assorted global and local agencies – can be dissected widely, depending on which side of the table one is standing. Numbers are indeed important. But do they really reflect the ground situation? A single number – GDP figure – alone cannot assure a sense of comfort and calmness for people at the bottom of the pyramid, whose number is quite large indeed. When read with other numbers – which are even more critical for ground level happiness, the excitement over the GDP figure just evaporates.  A common man pictured by the legendary cartoonist late R.K. Laxman doesn’t comprehend the esoteric terms such as GDP, inflation and the like a bit. But when he goes to the vegetable market in the street corner, he finds that his 100 rupees fetch far less than what he was getting earlier.

Rising numbers & different emotions

 Retail inflation hit a 5-month high of 7.41% in September, disconcertingly above the upper tolerance limit of 6% fixed by the Reserve Bank of India. Food inflation – which has political implications - was 8.6%, even higher than the 7.62% in August. The two numbers – GDP and inflation – are higher. One brings cheer and the other agony. As the famous ad lines of English daily Indian Express said, “The truth lies somewhere in between.” Rising prices hurts a common man more than anything else. We have seen a government fall because of escalating onion prices!  

Two unconnected headlines – rather numbers -- over the past week should give India's economy watchers fresh room for concern. As one of the commentators mentioned, Inflation, like Alladin's genie, is difficult to put back into the bottle. It is rather simplistic to assume that answers to the problem – especially of inflation - lie at the Mumbai headquarters of the Reserve Bank of India (RBI), and not the North Block, where the finance minister sits. Look at the other disconcerting number. India's rank on the Global Hunger Index (GHI) went down to 107 from 101 in 2021 last week out of 123 countries surveyed by two European NGOs—Concern Worldwide and Welthungerhilfe. These two numbers tell a significant tale. Indeed, as the proverb goes, one swallow doesn't make a summer. A single GDP number does not tantamount to all round happiness at the ground level.

Price rise & hole in the purse

In a rising inflation situation, the RBI has little option but to increase interest rates further. This will have a cascading impact. We are in a situation where middle-class home loan and vehicle loan EMIs go up.  The poorer sections – at the bottom of the pyramid -fret about increasing prices of food items. The net impact is that there is considerable erosion in their disposable incomes and this will have a negative fall-out on the demand for industrial goods.

Read in the context of surging food inflation, the drop in India’s rank in Global Hunger Index (GHI) requires one to ponder over. And, it is indeed a serious matter of concern for any administrator. In a situation like this, what leeway does the government have to cool the price rise? But numbers on food grain stock do not seem to provide elbow-room. The central stockpile has 44.1 million tonnes of food grains September 30, 2022 — 20.9 million tonnes of rice and 23.2 million tonnes of wheat, according to the Union Ministry of Consumer Affairs, Food and Public Distribution.  The stock was 49.28 million tonnes before September 1, 2022, with 27.95 million tonnes of rice and 24.82 million tonnes of wheat.  The depleting food grain stock has indeed raised concerns. The Goods and Services Tax (GST) was slapped on a slew of everyday food items - even packaged parathas are confirmed to carry 18% GST. 

Regressive tax

Of all taxes, indirect tax is the most regressive. Everybody knows that such tax force-collects (in an unseen way) from even the poorest of the poor! Let's look at a few basics. Inflation is a number that needs to be managed, argue economists and others. For a common man, however, price rise hurts badly not just their very livelihood but their way of life as well. In the new unfolding global dynamics, the rising fuel price is a significant factor of pain for the common man. The visible impact aside, the invisible cost of fuel hike is also loaded on common citizens as it is passed on across their purchases, resulting in the prices of consuming items escalating considerably.

Robert Kennedy on GDP

Is GDP an all-encompassing unit to signify a nation’s development, combining its economic prosperity and societal well-being? Not really. GDP is one significant number among many others. It just measures production capacity and economic growth. GDP, by definition, is an aggregate measure that includes the value of goods and services produced in an economy over a certain period of time. To be sure, it does not give a clue or two to the positive or negative effects created in the process of production and development. Robert Kennedy in his famous election speech in 1968 said, “GDP measures everything in short, except that which makes life worthwhile.”

“GDP takes a positive count of the cars we produce but does not account for the emissions they generate; it adds the value of the sugar-laced beverages we sell but fails to subtract the health problems they cause; it includes the value of building new cities but does not discount for the vital forests they replace,” wrote Amit Kapoor and Bibek Debroy in Harvard Business Review in an article on October 4. 2019. India is on the growth path. Yes indeed. Yet, Delhi’s winters are increasingly filled with smog and Chennai’s streets are inundated with water during the rainy season. GDP numbers cannot explain these. GDP cannot capture the distribution of income across society. The rising number of contract jobs in the modern context, reflects a tale of its own.

Tail piece

GDP is a flashy term that a common man may find it hard to comprehend. What a common citizen wants is a sense of happiness and a feeling of comfort. It requires a more than a robust GDP number to get him that privilege.

 

 

 

Smart talent wins India game against Pakistan in WC 2022

Virat Kohli plucked a stunning win from the jaws of defeat. And, the extraordinary triumph over arch-rival Pakistan at the iconic MCG in a World Cup could not have come at a better time, just on the eve of Diwali. In the frenzy that followed thereafter, a crucial aspect of the last few balls of the game appears to have been drowned in the noisy scene.  The last over saw three senior Indian players on show. All three are 30 plus years old. In a crunch pressure-cooker kind of a situation, the three brought to bear their immense experience and exhibited a rare knowledge. All three are talented. There is no doubt about that. Is talent enough to carry the day? Talent sans intelligence is no use. In this instance, their show transcended talent and bordered on intelligence. A no-ball followed by a wide and a free-hit saw Kohli bowled. Kohli ran. So did Dinesh Karthik. These two senior batsmen acted intelligently and impulsively to scamper for runs. If they aren’t aware of the rules at that tense moment, the match would have gone the other way. With one ball to go and two runs to get, Ashwin acted calmly to earn a wide. The rest is history.  Smart talent is what makes the difference. 

Who cares for public good?

Who cares for public good?

Fame, name and money don't matter. When life itself is under threat, these don't really count. Indeed, a virus of an unknown and invisible kind has completely pushed everything else aside as mankind, as a whole, is struggling to hold on to dear life.

Covid-19 has redefined the meaning of relationship. In the new normal world, immediate neighbours have become close relatives, and family members living afar have become a regular digital contact. This is a new experience. Reconciling to this new order is going to take a long time to come. But one has very little option in an unfolding environment which has worsened the ability to get over the hard punch Covid-19 has delivered to people's confidence. 

“Some known faces seem to have suddenly disappeared,” said an electrician who was doing a household errand in the midst of an escalating Covid virus. "It looks like we will go away without seeing our relatives,’’ quipped a ranking executive in a private firm. These tongue-in-cheek observations picture the enormity of the problem facing mankind at the moment. A sense of fear is spreading fast. And, this feeling of resignation has virtually immobilised everybody. A kind of helplessness – physically, psychologically and financially – has engulfed all without exception. Covid-19 doesn’t recognize colour, caste, creed, community, gender, geography et al. It embraces everybody sans discrimination. Covid-19 is classification-agnostic. This is evident in the way it collects its victims.

Poor communication

As the nation is reeling under a fresh wave of virus with far more severe fall-outs, we seem to be running helter-skelter in multi-directions. At an individual level, an avoidable defiance is widely seen. A nonchalant attitude with contemptuous disregard to the enormity of the problem is passed without anybody even raising an issue of it. For many, walking without wearing a mask and giving a go by to distancing norms are quite a normal behaviour! But Covid-19 has rendered most normal things abnormal. And, it has pushed a perfectly normal person out of the picture. It appears that the seriousness of the evolving situation has not really percolated down to the bottom of the pyramid level.

 One thing is very clear, however. The communication to this class is either missing or inadequate. The blame for this failure must be apportioned across different layers in the system. Educating everybody on what should be done and what not to be done is the single biggest challenge at the moment if the country has to succeed in check-mating Covid-19.  If this hurdle is not crossed, other livelihood-hurting measures such as lock-down and the like will yield very little result in terms of arresting the spreading virus. Even for the vaccination mission to realise its objective, it is crucial to bring on board people at the bottom of the pyramid. Somewhere along, the message is not articulated properly to reach the masses.

Game of one-upmanship

The Covid-19 crisis appears to have triggered a game of one-upmanship. Everybody – common man, educated, religion leaders, community heads and political bosses – is now in a free-for-all play in diverse social media platforms, either pontificating or deriding the actions of the ruling class on the Covid front. What is particularly evident in all these cross-shouting is the complete absence of not just responsibility but civility as well. Unfortunately, our response to the Covid-19 crisis appears to be a collective irresponsibility. As individuals and also as a collection, we seem happy settling scores with one another. Governments may come and governments may go. But, as a class, we need to be responsible across all layers.  The issue is not about who is right or who is wrong. The issue is about us (individually and collectively) being right. If we have to see off Covid-19, this thought process must percolate across all individuals.

Politicians as a community have not been a good example during these Covid times. They deliberately chose to be oblivious to Covid as they addressed election rallies when some of the States went to polls recently. Covid-induced standard operating procedures (SOP) were all observed only in breach. Since elections are over, they are now seeking to discipline people with stricter lock-downs! Nothing could be more farcical than this. If only leaders of political parties – big and small alike– have at least prevailed upon their cadres to wear masks, maintain social distance and get vaccinated, they would have done yeoman service to mankind. Win or loss aside, they would have contributed immensely to the well-being of at least their party men. Alas, the winning and losing politicians have collectively led down their cadres in these crucial times.

The role of influencers 

 The quest for power seems to have consumed them fully. They don’t mind if Covid consumes their cadres! Unfortunately, this is the sense an objective watcher gets.  Religious leaders and community heads across all hues, too, could have prevailed upon their followers to enforce Covid protocols. After all, they all held quite an influence at least among their followers. Unfortunately, Covid now has turned out to be a convenient stick for everybody to hit at each other. Collectively, we have got into a narrow street. And, the escape route is naturally choked. The blame game is not ending anytime soon at least.

There is something called public good and public bad. If we don’t care for public good, we end up promoting public bad. The responsibility to foster public good, however, lies on all of us. Of course, it starts right up from the top. It must percolate down to the bottom. The onus squarely rests with the political class – the ruling as well the Opposition. Collectively, they owe to the people of this country. After all, they are rulers in some states and Opposition in some others. As such, they have a principal role in navigating the nation to safety, out of the Corona clutch.

This war against Corona has to be fought both at individual and collective levels. There are no two views on this. Bringing everybody onto a single page, however, is easier said than done. It has to be done.

 Who cares?  We must. But are we?

  Business journalism in India

By V Balasubramanian & K T Jagannathan
We have ventured to write this article on Business and Financial Journalism utilising our leisure time during Covid, drawing on our over three decades of experience in the field. We do realise that Covid has made the job of a business journalist a lot more difficult. News generation has become complicated in times like these when face-to-face meetings are avoided. We are indeed hoping that this phase too shall pass sooner than later. The emerging new economic order in the post-Corona phase, to be sure, will make the role of business journalists more relevant. Nevertheless, the new order will mean more challenges.

With the proliferation of communication channels (especially social media) in the Internet age, readers and viewers are looking for credible business news. The mainstream business media, including leading business dailies and TV channels apart from established newspapers, are better placed to serve
the need. We do hope this article will serve as a useful guide and reference material for all those stakeholders in the field of business journalism.

 

A peep into the past
Business and financial journalism has grown and sailed smoothly along Free India and its planned economic growth through Five-Year Plans. Since 2014 when the NDA Government led by the BJP returned to power, the Central Planning Commission has been replaced by a Think Tank called Niti Aayog. Over the past few decades, Business and financial journalism has consistently gained momentum in the country. Indeed, mainstream political publications sensed the potential for business news long ago. That gave birth to full-fledged financial newspapers in the country. Financial Express and The Economic Times were launched in 1961. Then came Business Standard, which was launched from Calcutta in 1970. The Hindu Business Line came into being in 1994 and the HT Mint came much later. Business and Political Observer, originally launched by the undivided Ambani Group, and Financial Chronicle, published by Deccan 

Chronicle, had since moved into the pages of history after being in the field for some years.

About the authors

 V. Balasubramanian served Financial Express in Mumbai and Chennai from 1979 to 1989 and ET Chennai from December 1989 till retirement in March 2013. He was heading the Chennai Bureau of The Economic Times. He scored first class in MA Economic from Kumbakonam Government Arts College. He was Assistant Resident Editor of ET Chennai.

K T Jagannathan worked in various publications - Financial Express, The Economic Times, The Indian Post, Free Press Journal, Business Standard, Business India, Indian Express and The Hindu. Jagannathan now writes for The Wire, Telangana Today and the like. And, he held the position of Associate Editor at The Hindu.

The change
Business journalism has seen a big metamorphosis over the years. In a controlled economy with plan models and a lot of centralisation, the focus was on reporting and writing articles on Central Government, Five-Year plans, Union Budget, and public sector undertakings, which, once upon a time, dominated the national economy. As it was a control and licence raj till 1991, private sector could enter only limited areas with licence and capacity limits. Capital markets, both primary and secondary ones, had limited roles, and not much funding was raised through public issues and other instruments. Along with Mumbai Stock Exchange, we had regional stock exchanges in Calcutta, Delhi and Chennai which had some listings by some local companies.

During former times (much before the onset of liberalisation and globalisation), the job of a business journalist was to inform the readers (mostly business and industry) the policy actions of the governments and provide key inputs for stakeholders of all kinds to arrive at an informed decision. Mostly, the job of a business journalist was one of a facilitator (of information). He/she provided a useful link or tool in the decision-making process. After all, information on critical numbers at that point of time was hard to access by all and sundry. Given this backdrop, business/financial journalists did serve as the bridge in those times between the establishment and the industry. Much water has flown under the bridge since those pre-liberalisation days.

From our long experience, we can say that the profession of business journalism is challenging and demanding. While it is exciting, it now calls for a more creative mind, alertness, patience and perseverance. We have very discerning readers. Business journalists have to be watchdogs. There is vast scope for specialisation. There are so many beats now available to cover.

Liberal era
Things really changed in India when Prime Minister P.V. Narasimha Rao combined eloquently with his Finance Minister Dr. Manmohan Singh to push India into a hitherto unknown path. The country has come a long way since then. Thanks to this duo, liberalisation started sweeping the Indian shores. De-control, de-licensing, liberal foreign direct investment/joint ventures and easy rules for raising funds from the capital market, the country had been witness to unthinkable changes.  There was a big shift from a mixed economy model of having PSUs (public sector undertakings) and private sector units to opening up of several sectors to private corporate sector, MNCs (multinational companies) and foreign players. Capital markets developed manifold with a plethora of instruments such as public issues, mutual funds, debentures, GDRs (global depository receipts), FRNs (floating rate notes), PNs (participatory notes) et al. Sweeping changes and amendments have been made in the Companies Act, laws relating to starting a business, operating a business, industrial relations, human resource management, CSR (corporate social responsibility), service providers. The SEBI (Securities and Exchange Board of India) has come to play an increasingly critical role as a watchdog to monitor the stock markets, corporate governance and disclosures. Also, new generation entrepreneurs have entered and grown fast in a number of fields with the

scope for raising funds from private equity and venture capital. Similarly, the role of RBI (Reserve Bank of India) and other regulators, statutory bodies, courts, company law-related institutions and others, too, has undergone an incredible transformation.

Content mix
We have seen a big change in the content of business papers in the last 30 years. No doubt, they continue to cover news relating to government policies, corporate sector developments and stock and commodity markets. However, business papers, business TV channels, online media and content writers have realised the need to insulate the circulation, readership and viewership from the vagaries of ups and downs in stock market, business and economic slow-down. They have started diversifying the content with more stories and analysis on lifestyle, healthcare, business life, leisure, education and careers, HR, consumerism, brands, advertising and marketing apart from covering political developments at
the national and state levels.

Business journalism
For a long time, a career in business journalism, either in reporting or editing, was pursued only by those who studied Economics and Commerce or English and by those who had a flair for writing. Over the years, dedicated journalism schools have started offering courses. As time went by, the profession also started attracting specialists such as bankers, CAs, MBAs, engineers and techies.

Importance of Economics

After the global financial crisis and melt-down, Economics as a subject has gained importance. It governs the life of individuals, society and modern States. Knowledge of Economics helps in solving many problems, and the study has practical advantages. Increased importance is also given to studying Business Economics, which is defined as the integration of economic theory with business practices for the purpose of facilitating decision-making and forward planning by management. It is also known as Managerial Economics.

Joy in breaking news
More than the salary and positions, we would say there is more joy for business journalists in breaking a big story ahead of competitors. This is called the power of prior knowledge. It is acquired based on the solid contacts they have developed over the years, trust they have built with their contacts and the passion and knowledge with which they followed up a news development. The way in which a newsbreak is presented to readers has changed a lot over the years. There is a sea change in the style of reporting and the way in which a news break is presented in TV channels, online media and print editions.

Today, news breaks are about delivering a “distributed information’’ first! In our times, news break was about delivering exclusive information (not available to competing-journalists). In an era when there was no Internet, no Google and poor phone connection, news breaks often gave us enormous satisfaction and immense pride. More than the monetary compensation, we cherished a word of appreciation from our boss. Such words were enough to make good for all troubles and tribulations we had to encounter as business/financial journalists in those days.
In news reporting, there is a big shift from B to B to B to C. That is, the news is reported not just to cater to a specific industry or enterprise. Today, we have to keep in mind the interest of a wide range of readers who are like customers for business media. Business journalists have a lot of responsibility in writing a report without bias. They have to look beyond news releases and press meets and package their reports with wealth of information about the news development. Their perception should reflect the market. They should discern emerging trends and write reports and articles (disseminate information) in a simple language and in an easy-to-comprehend manner. The objective must be to educate them and enable readers across canvas in their decision-making process. They should don the role of a catalyst - a change agent - for public good.

Regional media
Of late, business dailies and business TV channels have been facing competition from general newspapers and TV channels. Also, foreign media such as Wall Street Journal, Financial Times, Bloomberg and Reuters (whose contents have been sourced) have turned the turf tough. Regional newspapers in different languages, TV channels, online media and the like have also started tracking and reporting business news. Global melt-down and financial crisis in 2008, big ticket economic reforms and demonetisation have all created a big awareness among the readers and viewers about economic and business news.More than a decade ago, in a pioneering move, The EconomicTimes and Daily Thanthi, the number one Tamil Daily, forged a tie-up with one page of ET published in Daily Thanthi. It proved a big hit, helping Thanthi readers understand the business developments. Later, other publications tried to copy the model with limited success. Exclusive business journals were also launched in some regional languages. Along with business TV channels, regional  TV channels, too, started covering business news.

Globalised environment

We see increasing scope for business news and, in turn, career prospects for the business journalists with India coming to play an important role in the global economy and contributing a lot to global growth. After reforms and liberalisation, India has moved to the centre-stage in the economic space. As it had weathered several internal and external shocks in the past, it is sure to weather this Covid storm as well. It is set to become a vibrant economy seeing good growth in manufacturing, infrastructure, housing, agri-related fields and service sectors such as IT, financial services, healthcare, education etc. It is also set to emerge as a major exporter of goods and services. India has seen the emergence of a new class of entrepreneurs. Every business is becoming organised. Public expenditure by the Centre and States will play a
major role in stimulating growth in the economy. Alongside our growth story, the job market will be expanding. Every year, the organised sector alone is estimated to be generating a million new jobs by over 1,000 companies across 11 industry segments- banking and financial services, education, energy, hospitality & travel, IT, ITES, real estate & construction, trade, transport and manufacturing.
Following are major developments that will increase the scope for generating business news.
1. India has moved to the centre-stage in the global economy and is on the threshold of becoming an economic super power. Clearly, India pride stories are very in order.

2. More global players\MNCs, NRIs and people of Indian origin have entered the Indian market directly or through joint ventures (for marketing, manufacturing & outsourcing. With increasing privatisation, corporatisation and big ticket investments in infra projects, the opportunities are plenty.

3. States are vying with one another to be a part of the India growth story. Good politics has come to drive good
economics (in terms of better governance, ease of doing business, transparency and quick decision-making). Again, these throw up a host of writing assignments for a journalist.
4. With the increasing size of India Inc, more billion dollar companies, more number of Indian companies going global and M&As, there is a lot to learn and report.
5. Youth power, aspiring middle class, consumerism, increasing disposable income, wealth distribution, growing investor population – all these have the potential to excite a business journalist. Indeed, there is immense scope for dipping deep and doing quite a research to come out with lovely reports.
6. New class of first generation entrepreneurs are entering the
manufacturing and service sectors, and they are open to raising funds from the market and private capital. This provides an entirely new knowledge space for business journalists to explore and disseminate.
7. India-born and educated professionals are shining as business leaders, CEOs in MNCs and global organisations.
8. Every business is becoming organised - be it retailing, recreation, tourism, facility management, film making.
9. Agri and rural India is joining the India growth story. Better price for farm produce, investment in farm gate
infrastructure and the like are exciting subjects to probe and write.
10. Structural change in the economy is still on. Service sector is contributing maximum to the country’s GDP and job creation. Indian manufacturing sector has stood the test of time, riding on the Make in India policy.

11. The emerging new business models post-Covid, increasing work from home and work from anywhere practices, relocation of work places, decongestion of metro cities, development of tier-two and three cities – all these present a host of opportunities for business journalists to explore.

Role of stakeholders
Everyone should understand the changing dynamics of business journalism. They should treat journalists as partners in their progress. In turn, journalists should have a dream to excel in their career path. Unlike their colleagues in general papers, they have tremendous learning opportunities. They can utilise the opportunity by participating in meetings conducted by industry bodies and professional institutes and listening to CEOs, experts, resource persons and business achievers. This will help them in networking and building their contacts. Developing contacts and sources is an art - it can be built by way of courtesy, trust, honesty, integrity, fostering long-term relationships and humility. Seniors should share their experience, knowledge and contacts and groom their colleagues without any hesitation in the interest of the media. PR managers and corporate communication heads should be equally knowledgeable, understand the changing dynamics of news content – the shift from B to C, and share what is of interest to readers instead of only their clients and educating their staff on the business of clients.

Finishing school 
Business media journalists have to constantly upgrade their knowledge and sharpen their writing style, copy editing and page-making. Like in other professions, there is a need for finishing schools for running orientation and training sessions for them with the help of seniors, business leaders, professionals and resource persons.

Challenges aplenty
Market is opening up to more players. A platform or brand pull will no longer fetch them exclusive stories. Whoever is alert will get it first. The trend of companies getting delisted and becoming privately-held means less disclosure by MNCs compared to Indian companies. The SEBI has widened disclosure norms for listed companies. It will be increasingly difficult to spot the news ahead and break it before others. But, with contacts and domain knowledge, it is possible to give more value addition in the reports.

Career opportunities
After a formal degree in journalism and communication, the candidates can look for working in the mainstream media world consisting of newspapers, magazines, TV channels, online, FM Radio, or take up a job as communication executives for corporates, governments, public sector firms, NGO, research bodies, credit rating agencies, institutions et al. Depending on the educational background (science, arts, commerce), one can pursue career in general fields or specialise in business or economic journalism. It is essential to have knowledge of Economics
and business terms even for general journalism.

Roles & responsibilities 

 Business media should not become another mass media that is seen growing without masses. Instead of reporting on trivial things, it should highlight legitimate causes of national pride, good work being done in every nook and corner of the country - be it by an individual, department, agency, organisation, NGO or a corporate. It should become a vehicle for spreading good messages and soft stories. Business media has a big role to play in nation building. When the media begins to identify and deal with development issues on a sustained basis, they will generate public discussion and help governments and the people like to arrive at well informed opinions. We want to transform India into a developed nation. That means achieving complete freedom from poverty, illiteracy, unemployment and regional and social disparities. Therefore, development journalism should move to the centre stage. If the media has the power to shape and mould public opinion, it has to be done within a framework of fairness and impartiality. We need to move “from freedom of information to free flow of information, from the free flow of information to the free and balanced flow of information” as a UNESCO report said.