from worst to near first

How India's most desperate state transformed itself to become a model for the rest of the country.

By Jason Overdorf | NEWSWEEK
From the magazine issue dated Feb 22, 2010

For centuries, it seems, the northern Indian state of Bihar has been plunging downhill. Once the seat of one of the world's most glorious empires, the state was first devastated by colonial policies that enshrined feudal landlords, then shunned by a succession of Indian governments, and finally riven and destroyed when the seeds of caste and class conflict matured into a small-scale civil war in the 1970s. As the militias of upper-caste landlords clashed with revolutionary guerrillas fighting for the oppressed, and caste-based political agitations threw up a series of incompetent and allegedly corrupt governments, state services ground to a halt, highways disintegrated, bridges crumbled, and career criminals ascended from the back rooms of party offices to take seats in the state legislative assembly, and even the Indian Parliament itself. By the 1990s, brazen and deadly highway robberies put an end to traveling after nightfall, and as business activity plummeted, kidnapping for ransom was declared the state's only growth industry. The so-called Republic of Bihar—viewed as a criminal fiefdom beyond the purview of the government of India—was effectively a failed state. "Institutions had collapsed," says Nand Kishore Singh, a member of the upper house of Parliament. "Law and order had come to a grinding halt."

This January, however, Bihar posted some stunning statistics that go a long way toward confirming that, since taking office in 2005, Chief Minister Nitish Kumar has done the impossible. Despite the economic crisis and three years of droughts and floods, Bihar posted 11 percent average annual economic growth over Kumar's five years in office, making it the second-fastest-growing state in India, the second-hottest major economy in the world after China. In what were once impassable badlands, the administration laid 6,800 kilometers of roads, built 1,600 bridges and culverts, and cut journey time in half in many areas. Car sales eclipsed kidnappings, as crimes by roving bandits fell steadily from 1,297 to 640 and kidnappings for ransom dropped from 411 to 66 between 2004 and 2008. In a state that many Delhi residents once feared to visit—despite its allure as home to Bodh Gaya, the site where the Buddha attained his enlightenment—the number of foreign tourists shot up from 95,000 to 356,000 over the past two years.

These figures were so astounding that critics lost no time in belittling them. How could backward Bihar be growing nearly as rapidly as booming Gujarat, a longstanding leader in industries ranging from textiles to pharmaceuticals? The economic growth in Bihar stems from state spending, not investment, many pointed out. All Indian states collect and report their own economic figures to the Central Statistical Organization, and Kumar must have cooked the books in Bihar, others alleged. Those charges are almost certainly wrong. There's a small margin for error. But large-scale reporting fraud is unlikely, and things have indeed changed dramatically in Bihar. "We never had a functioning state—neither before independence nor after independence," says economist Shaibal Gupta, who heads the Asian Development Research Institute in Patna, the state capital. "Under Nitish Kumar, for the first time the state started functioning marginally. And with the improved functioning of the state, things have dramatically improved."

Kumar's nascent success represents more than just the light at the end of the tunnel for one failed state. It could be a guide for other states that are struggling with many of the same issues. Almost 20 years ago, after a visit to a site in Bihar where a guerrilla army of untouchables had slaughtered a village of landlords with harvesting sickles, the travel writer William Dalrymple bemoaned the collapse of Bihar. But he also suggested that the state was not so much backward, as India's newspapers often described it, as it was forward: a trendsetter for the rest of India that presaged ballot-rigging, caste-based social upheaval, and the criminalization of politics as national phenomena. This dismal view appeared to be correct, as India's vaunted democracy descended into simple caste-based gerrymandering, knee-jerk -"anti--incumbency" made mockery of the accountability that free elections are meant to enshrine, and an ever-increasing number of alleged gangsters made their way into the national legislature. "In the '80s and '90s, there was a wave of caste-related politics, where development didn't seem to matter," says Baijayant "Jay" Panda, a member of Parliament from Orissa, a state that has faced similar problems. "But I think that was a phase. We have matured as a democracy. Voters today are going beyond those concerns and looking at issues like good governance and development and electoral promises being kept."

Like his main rivals, Kumar, 58, is a career politician, who served three terms as a minister in the central government since the late 1980s. A teetotaler known for his simple lifestyle, he has a reputation for probity that propelled him to the helm of Bihar's government in 2005. Because he did not appear to have amassed any fortune or to have used his position to bring any family members into the usually lucrative business of politics, voters perceived him as outside the established patronage system. In a state that had been dominated by politicians catering to an alliance of the Muslim and middle-caste Yadav vote, Kumar set out to build a "coalition of extremes" that includes the high-priest and warrior castes and voters from among the erstwhile untouchables. Even as he did so, however, he sent voters a message that he was more committed to developing the state than protecting his caste fellows, and that he would end the 15 years of increasingly hostile class war under Lalu Prasad Yadav, a charismatic demagogue who as chief minister exploited lower-caste hatred for the state's unreformed feudal landlords. With a brio worthy of Falstaff, Yadav had enshrined his relatives and caste fellows in positions of power, and observers blamed him for his cronies' excesses. His brothers-in-law, Sadhu Yadav and Subhash Yadav, for instance, have figured in police investigations of the alleged embezzlement of millions of dollars in flood-relief funds and the alleged abduction and torture of an official of one of India's state-owned banks. Neither has been convicted of any crime. Lalu himself was accused of complicity in the embezzlement of millions of dollars in state funds intended for fodder, livestock, and farm equipment, for which he was in and out of jail several times before he was acquitted of amassing "disproportionate assets" for a man of his position in 2006.

Kumar changed the rules. He reversed Bihar's plunge into chaos by doing something that was highly unusual in the state—and indeed in all of India: he focused on competence over patronage. To improve delivery of government services, Kumar broke the long trend of overcentralizing state powers, and delegated more financial and administrative powers to officials in the field. He updated archaic rules that made civil engineers seek minister-level approval to spend absurdly low amounts of money. These moves eliminated the huge backlogs of simple matters piled up on senior officials' desks. He also reestablished the cabinet meeting as a weekly event, held every Tuesday, where in years past the cabinet sometimes did not meet for months.
Kumar then redefined the basic functions of institutions, essentially requiring offices to do the work they'd been assigned. He ended the widespread "transfer industry," which sold coveted bureaucratic posts to the highest bidders, and handpicked bureaucrats known for their competence. He ensured them that he would honor the set three-year tenure of postings rather than shuffling them around before they could deliver. One such official built 259 bridges and turned around a loss-making state-owned infrastructure firm during his three-year watch; as a reward, he's been charged with building the state's new roads and hospitals. To speedily fill thousands of vacancies in the police force that had left the state at the mercy of criminals, he tapped already trained personnel from among the state's ex-soldiers—who in India retire in their 40s. He publicly supported the police after they made high-profile arrests of criminals who had previously enjoyed political protection. Those jailed included not only a member of Parliament from the state's main rival political faction (who had dared the state police chief to arrest him on live television) but also an assemblyman from Kumar's own party who had made his own TV spectacle, threatening to have a group of reporters killed for filming his drunken altercation with the staff of a local hotel. Kumar managed to redress the state courts' abysmal conviction rate by instituting fast-track courts and working with the judiciary to focus on career criminals' most easily prosecuted offenses to ensure that they swiftly found themselves behind bars. The moves resulted in nearly 39,000 convictions between 2006 and 2009, compared with an average of less than 10,000 in previous decades. Those convicted included a dozen state legislators and members of Parliament like Mohammad Shahabuddin, Pappu Yadav, and Munna Shukla, all three of whom are now serving life sentences for crimes including kidnapping, intended murder, and murder.

Rebuilding the police and courts has reaped clear economic benefits. Now rickshaw drivers say they earn more money because people are traveling after 8 p.m. Shopkeepers say their take has increased because they no longer have to bribe the police or pay off local thugs. By retooling the bureaucracy in charge of implementing state projects, Kumar has been able to boost spending on government programs. Bihar's outlays on projects ranging from building roads to training new primary-school teachers rose from $320 million in 2001 to $3.5 billion last year, significantly outpacing the growth in central government funding for Bihar. "Earlier, the funds were not even reaching to the district level," says Manoj Rai, Delhi director of the Society for Participatory Research in Asia. "If you take the old quote that out of one rupee, only 15 paise reaches to the people, in Bihar, it was not even reaching to the district [administrators] from the state." Among other things, that increase meant more -teachers—more than 100,000 added in the primary schools since Kumar took office—and better oversight of doctors and staff working at rural health centers. Primary-care centers that used to see 30 patients a month now see 3,600—because people have a reasonable expectation that the doctors have shown up for work.

Still, Bihar continues to rank dismally on every major social indicator, and there are few signs that the poorest of the poor have benefited much from the new economic growth. More than half of Bihar's 82 million people live below the poverty line, compared with about 40 percent for the rest of India; both the infant-mortality rate and -maternal-mortality rate are higher than the national average; and some 70 percent of the state's inhabited areas are not linked by motorable roads.

Bihar's course correction may well mark a watershed moment for India. At a time when coalition politics limits centralized control, the nation needs competent, accountable provincial governments to continue its emergence as a global power. There are similarly encouraging signs from other local and regional leaders. Delhi's Sheila Dikshit has staved off her opponents by successfully tackling pollution and improving city infrastructure; Gujarat's Narendra Modi has retained power by attracting investment and creating jobs, despite his alleged role in deadly Hindu-Muslim riots in 2002; and Orissa's Naveen Patnaik has won an unprecedented third term in one of India's laggard states by improving law and order, stimulating industry, and cracking down on corruption. The common thread is that political leaders are realizing that anti-incumbency and gerrymandering aren't insurmountable: they can win reelection by delivering economic development and ousting the corrupt or incompetent from their parties' dockets.

Because of his state's longstanding reputation as a basket case, Kumar, perhaps more than any other, has shown that even India's darkest corners can make progress against crime, corruption, and caste- and creed-based demagoguery. In recent days, Kumar faced a rebellion from within his own party that may illustrate one of the costs of dismantling the patronage system. But if he can hold onto power in the state elections this fall, and perhaps even if he can't, the trendsetter state will confirm that India's democracy and its voters have reached a new stage of evolution.

"Whether he wins or loses, the signal has gone out very clearly," says PRIA's Rai. Kumar's predecessor, Lalu Yadav, "used to say development does not help you to win elections. Now the same man has started using development jargon." Whoever takes office next term will have to do it on the promise of electricity, roads, and jobs, and they'll be accountable for their promises now that Kumar has broken the perception that all politicians are the same and change is impossible. "Politically, Kumar has won," says Rai. "Electorally, he may lose. But that's not important."

What's vital is that India's most backward state is now finally moving forward.

http://www.newsweek.com/id/233502
© 2010

singh's rural employment schemes lead to inflation

By Jason Overdorf
Newsweek (October 2, 2009)

Even as India's government pours $5 billion into a scheme to ease rural unemployment, its plan may be contributing to an inflationary spiral that's making the cost of living more burdensome for the country's poor. According to a new report from the National Council of Applied Economic Research, the rate of rural wage increases doubled to nearly 8 percent after 2006, when Prime Minister Manmohan Singh implemented his rural-employment guarantees. However, the rural poor didn't benefit as much as expected, because the price of basic commodities rose just as fast. Critics blame Singh's program for the bout of inflation, while proponents argue that the total outlay amounts to less than 1 percent of GDP─hardly enough to cause India's inflation woes. Either way, the plight suggests that the rural poor need not just more jobs but better ones. If they could produce more with the same amount of labor, that would increase the amount of basic goods available and bring down prices. But there's another sticking point: the government has amassed mammoth food reserves, which critics say has created an artificial shortage─and higher prices. Singh is eager to help India's poor, but good will doesn't guarantee good results.

Singh's 100-day plan to revolutionize India

He may be shy, but his 100-day plan for India is strikingly bold.

Jason Overdorf and Sudip Mazumdar
NEWSWEEK
From the magazine issue dated Jun 15, 2009
For much of the past 15 years, Indian politics were so chaotic that a prime minister would spend most of his first 100 days focused on a single objective: holding onto power. But Manmohan Singh's surprisingly decisive victory in last month's election—coupled with the global economic crisis—has suddenly put him on an American president's schedule: you have 100 days, now get to work fast.

Believing that the Congress Party's near-majority in Parliament will free Singh to slash red tape and spur growth, bankers, columnists, lobbyists and think tanks have spent the time since the poll results were announced on May 16 issuing a torrent of to-do lists for the prime minister. But probably the boldest and most innovative agenda has come from Singh himself. Conceived during the election campaign, at a time when nobody else had much faith in him, his 100-day plan is filled with specific, substantive measures that range from selling stakes in state-owned companies to restructuring rules on public-private partnerships to removing bottlenecks that have delayed some $15 billion worth of road projects to enacting a new food-security law. Together, the advances might just amount to the big-bang reforms that India has been awaiting for nearly a decade now. And having vanquished his foes on the left and the right and earned the unquestioning faith of Sonia and Rahul Gandhi, his party's leaders, Singh might even manage to get it all done.

Not everyone is happy with his plans. Despite being best-known as the architect of India's economic opening in 1991, today the prime minister's got other things on his mind. He, Sonia and Rahul are intent on reforming—or transforming—India, but not in a way prescribed by international moneymen or CEOs. Instead, under the shorthand "inclusive growth," they aim to carve out a new path that, if successful, could provide a road map for developing countries worldwide.

Central to their goal are measures some people might not consider reforms at all. First among them are a National Rural Employment Guarantee Scheme (NREGS) and a Right to Information Act (RTI). Decried by some economists as a populist sop, the NREGS is in fact designed to revolutionize India's leaky bureaucratic mechanism for dispersing money and to free the poor from exploitative middlemen by channeling an unprecedented level of funds (and decision-making power) to village-level elected officials. Singh believes that, like Franklin Roosevelt's New Deal, this stimulus plan will put money in the hands of the people most likely to spend it well and will create a social safety net that will help unleash their productive capacities. Meanwhile, Congress plans to expand the use of the RTI, which was enacted in 2005, and to pass a few new laws to make bureaucrats, politicians and judges more accountable by shining a bright light on their activities.

In a country where even the trash in a government wastebasket is frequently considered classified information, the RTI is groundbreaking. Under the law, ordinary people can for the first time get a look at the books of their local ration shops, say, or at government departments—and see what corrupt officials have been skimming off the top, delivering to fictitious beneficiaries, or just plain stealing. And because the information must be made available within 30 days or the official in charge will face immediate punishment, whistleblowers get results from RTI cases much faster than they would from India's progressive but slow-as-molasses legal system.

Still, until recently, no one has pushed RTI far enough to enjoy its full potential. Now Rahul is striving to do just that by urging youth to storm the barricades of the bureaucracy with an ever-expanding number of RTI cases. The effects could be revolutionary. In Uttar Pradesh—India's largest state and a place where the Congress Party made a huge and unexpected surge in the recent election—Shailendra Singh, a former police officer who now heads the party's RTI cell, became such an irritant in September that the state's chief minister, Mayawati, had him arrested. With the rise of Rahul's youth brigade, there could soon be thousands of other gadflies just as irritating.

This isn't to suggest that the prime minister's 100-day agenda is only aimed at the poor and destitute. It also includes controversial measures that bankers have been advocating for a long time, such as the sale of state-owned enterprises. Though Singh himself has only said that disinvestment of public-sector units "will be tackled by the finance minister in the budget," sales of shares in Oil India Ltd. and the hydropower firm NHPC Ltd.—which were approved for IPOs of 10 percent and 5 percent, respectively, in 2007 but then blocked by the left—are reported to top the agenda. Deregulation of the oil industry—another move the left opposed because it would mean higher prices at the pump—is now also expected to be put before the cabinet within six to eight weeks. Instead of a vague pledge to increase capacity, the Power ministry has promised to deliver 5,600 megawatts of new power by the end of August and to unveil three 4,000 megawatt projects in Tamil Nadu, Gujarat and Orissa within 100 days. Investors have already taken note, pumping more than $4 billion into Indian equity markets in May and sending the benchmark Sensex on a 28 percent climb.

It's no small irony that all these measures are being driven forward by such a humble, soft-spoken man. At public gatherings Singh often seems to step backward and offer the microphone to someone else. The modest prime minister was denigrated during the campaign as the weakest leader in India's history. But he has turned his apparent shortcomings as a politician—his poor oratorical skills and incapacity for court intrigue—into strengths. His reputation for honesty is unparalleled in a country where a fourth of the legislature faces criminal charges or investigations and politicians have come to be generally reviled. Singh's name has never been mentioned in association with any scandal. And his refusal to trumpet his achievements or play political games has endeared him to the public and given him a reputation for impartiality, which has allowed him to build consensus and should help him implement his agenda. "He's been a very good arbiter when two departments disagree, or there's a disagreement between ministers," said Transport Minister Kamal Nath, who was Commerce minister in charge of World Trade Organization negotiations during Singh's first term.

The prime minister has another big weapon helping him in his current campaign: he knows what he's talking about. The Oxford-educated economist has served as governor of India's central bank, head of its planning commission and as finance minister—a unique résumé for a world leader and an especially potent one during the current crisis. "Others have to depend on so many inputs, and have to be briefed and have to try to understand. He briefs the others. He's a man who understands the subject better than any world leader today," says Nath. In these economic times, it turns out, you can afford to speak softly—if you carry a big calculator.

Just as important as his own qualities, though, is the degree of support that Singh now enjoys from Sonia Gandhi and her son Rahul, the dynasty's emerging heir apparent. Singh today is not so much India's prime minister as the leader of its first triumvirate. Yet the clear division of responsibilities makes him more powerful, not less. With Sonia managing the internecine rivalries within the party and Rahul focused on rebuilding Congress's grassroots network, the prime minister can concentrate on policy, not the party's next campaign. It's a unique political formulation for India and, as the recent election showed, a formidable one. While the Bharatiya Janata Party (BJP) was derailed by divisions among its various leaders, Sonia and Rahul squashed internal efforts to undermine Singh's candidacy, performed the heavy lifting for him on the campaign trail and protected him from opposition attacks. Since concerns about her Italian birth forced Sonia to make Singh her surrogate in 2004, the two have developed a strong relationship built on mutual trust and respect. That good feeling facilitated Rahul's entry into their troika and should help when he someday assumes the top spot. "Singh needs Sonia as much as Sonia needs him. And they work very well in tandem," says a senior Congress leader who asked not to be identified.

Singh is far from Sonia's puppet, as some allege. This became especially clear during the negotiation of the nuclear pact with the U.S. last year. Though there was much domestic pressure to scrap the deal, Singh managed to convince Sonia that it would end India's isolation and make it a much larger player in world affairs, even offering his resignation if the pact were scuttled, according to one of his former aides. Since then, with the emergence of Rahul, the team has become more effective. Though outwardly very different, the three leaders have much in common. For example, all are sensitive to the plight of India's minorities: Singh because he is a Sikh, Sonia because she was born a Christian and Rahul because he is linked through his grandfather to the tiny Parsi community. All three share a loathing for the Hindu supremacist rhetoric of the rival BJP. And all three are courteous and humble, traits that have endeared them to an electorate accustomed to imperious behavior from its pols.

Now the triumvirate's big challenge is living up to expectations. They face a slothful political system that is a holdover of the colonial mindset and they must contend with a culture of bureaucratic obstructionism that has outlasted many previous would-be reformers. Entrenched interests within Congress itself will also no doubt seek to derail Singh's programs and the Gandhis' efforts to make the party more democratic and to allow fresh faces to emerge. But with his newly enhanced grip on the reins of government, Singh knows that his 100-day deadline is a nominal one intended to light a fire underneath his subordinates. He has a full five years to perform. That said, the stakes couldn't be higher. This is more than Congress's big chance; it is India's. Failing to capitalize on it would be costly indeed, for the party, the country, and most of all, for its citizens.

URL: http://www.newsweek.com/id/200866

the house in ill repute

New rules have exposed just how many thieves and murderers sit in India's Parliament.

Jason Overdorf
NEWSWEEK
March 16, 2009

Indian members of Parliament went home last week amid hoots and howls, derided as the sorriest lot ever to disgrace the halls of the world's largest democracy. The 14th Lok Sabha, or People's House, met for only 46 days in the past year—the fewest ever—because of disruptions caused by its many dubious members. One in 10 members didn't participate in a single debate. Eleven M.P.s were expelled for taking bribes. The coal minister was compelled to step down when he was convicted of murder (though he was later acquitted on appeal). And when the opposition called for a confidence vote, several members had to be transported to the People's House from the big house—where two of them are serving life sentences for murder—to participate. As the legislators adjourned last week, House Speaker Somnath Chatterjee wished them good riddance: "You do not deserve one paisa [cent] of public money," he scolded. "I hope all of you are defeated in the next election."

That's not likely. Parties in India have long used allies with shady pasts to influence voters. But as the power of the national parties waned—accelerating in the late 1990s—because of the rise of caste- and ethnicity-based regional players, alleged and convicted criminals began to play a broader role. No single party has won enough parliamentary seats to govern alone since the Congress party did so in 1984, and the number of seats won by India's six national parties—which include the Congress, the BJP and the Communist Party of India (Marxist)—fell from 477 in 1991 to 388 in 2004. Now, in many constituencies, there are four or five significant parties, and the share of the vote needed to win a seat has fallen as low as 15 percent. As a result, criminal strongmen no longer need to throw their support behind a leading politician, because the number of votes they need is small enough that they can win elected office themselves. With regional players well positioned for the next general election on April 16, there is some chance that a politician who has undergone a criminal investigation could become the prime minister.

The 14th Lok Sabha was the first in which it was crystal clear just how many members were alleged crooks. Thanks to new rules pushed into law by a group of fed-up college professors after years of resistance from dozens of political parties, candidates for the Lok Sabha for the first time had to disclose their assets and criminal records. The disclosures seemed to have little impact on the 2004 election: 128 of the 543 winners had faced criminal charges, including 84 cases of murder, 17 cases of robbery and 28 cases of theft and extortion. Many face multiple criminal counts—including one M.P. who faces 17 separate murder charges—and no major party is beyond reproach. Because the disclosure requirement is new, it's impossible to plot a trend line, but most experts say the situation is deteriorating. "The general opinion is that the influence of criminals in politics is steadily increasing," says Himanshu Jha of the National Social Watch Coalition.

Indian law bars convicted criminals, not alleged criminals, from running for office, but a loophole allows even convicts to continue in politics as long as the case is under appeal. In India, that can mean 25 or 30 years, the course of an entire career. And the problem goes well beyond alleged criminals who hold elected office.

Due to a fractured electorate and rampant flouting of campaign-spending limits, gangsters have muscled into positions of influence close to Parliament, and the problem is spreading. While the middle class protests, party workers distribute liquor and cash to woo voters in the slums. In lawless states like Bihar and Uttar Pradesh, thugs intimidate poor farmers into toeing the line. In riot-torn Gujarat and West Bengal, party cadres are alleged to harass and threaten nonsympathizers, sometimes confiscating their voter-registration cards. And elsewhere, aspirants like Raj Thackeray of the Maharashtra Navnirman Sena—known for beating up migrants coming to Mumbai to hunt for jobs—use vandalism masked as street demonstrations to raise their political profiles. "Whether you call them goons or you call them political activists," says Jha, "it is becoming a blurred line."

The havoc created by India's criminal politicians is wide-ranging. Criminals seek political office to enrich themselves and gain protection from prosecution, and they easily pervert the police and the administration to their private purposes. When police officers or magistrates attempt to enforce the law, a powerful M.P. can engineer their transfer; in 2005 M.P. and convicted murderer Mohammed Shahabuddin of Bihar arranged the transfer of a magistrate who had sought to bar Shahabuddin from the district as a threat to public order.

Even on a matter as vital as last year's nuclear pact with the U.S., the alleged criminality of key politicians is believed to have made a crucial difference in the path India chose. When Singh and the Congress party opted to go ahead with the pact, their allies from the left parties withdrew their support for the government, forcing a confidence vote. After some frenzied horse-trading, the legislators of the Samajwadi Party—whose leader, Mulayam Singh Yadav, was under scrutiny for corruption by the Central Bureau of Investigation—switched positions to support the nuclear pact and volunteered to replace the left parties in the coalition. The government survived, and the pact went through. But soon after, stories of mysterious briefcases full of cash traveling from party offices to the homes of M.P.s began to circulate. The CBI—often criticized for acting as a political tool of the ruling party—dropped its case against the Samajwadi Party leader. And the probe into the "cash for votes" scandal fizzled before it even started.

The major parties are not above all this. In the outgoing Parliament, 26 Congress M.P.s and 29 BJP M.P.s faced criminal charges. About a fifth of the representatives of the two major parties were under investigation. Nor has either party been shy about giving ministerial posts to politicians accused of serious crimes. For example, Congress installed Shibu Soren as coal minister even though he was at the time under trial for the alleged kidnapping and murder of his former personal secretary and the alleged massacre of 11 people in sectarian violence. (He was later acquitted in both cases.) "The sole criterion for a candidate has become what they call 'winnability,' not his character, not his performance, not his competence, not his ability to assess national issues," says Arun Shourie, a former journalist who is now a leading member of the BJP. "In this way, people you would not give a job to—in fact, you'd make sure that they don't come near your organization—have become part of the legislature."

Come April, experts agree, the list of candidates competing for office is likely once again to be significantly shorter than the list of criminal charges against them. Even the mainstream political parties have resisted change. When the college profs first mobilized as the Association for Democratic Reforms in 1999, filing suit to force candidates to disclose criminal records, it sailed through the Delhi courts. Then the BJP, the Congress and 20 other political parties united to stymie the new rules through legal technicalities, delaying implementation for years. ADR member Jagdish Chhokar says the official resistance proved two things: that "the political establishment can be united" on an issue they care about and "that the government can be efficient," at least in defense of thugs in office.

Standards have indeed fallen so low that neither the BJP nor the Congress have pledged to eliminate even violent offenders from their rosters and instead must rely on the argument that their criminals are cleaner on average than others'.

"Neither the Congress nor the BJP have people with serial, cognizable offenses," says BJP spokesman Rajiv Pratap Rudy, arguing for a distinction "between crimes of moral turpitude" and "heinous" crimes. Congress spokesman Satyavrat Chaturvedi says, "I can't say there's never been a case where a criminal has been given a ticket, [but] professional criminals, habitual criminals, those people will not get tickets."

It makes one wonder: How many murder charges are required before you're considered unfit to represent the good people of India?

With Sudip Mazumdar in Kolkata

URL: http://www.newsweek.com/id/188166

no fanning the flames

India avoids lashing out at Pakistan and its own Muslims after the Mumbai attacks.

Jason Overdorf and Sudip Mazumdar
NEWSWEEK
From the magazine issue dated Dec 15, 2008

Most people probably expected the Nov. 26 terrorist attacks on Mumbai to lead to another showdown between India and Pakistan. After all, the last time Islamic militants carried out such a major attack, on Delhi in 2001, the Indian government massed troops on the Pakistani border. Now as then, evidence suggests that the militants were trained and equipped by groups operating in Pakistan. And to dampen the flames, Washington has so far done little more than suggest that Islamabad cooperate with the Indian investigation and crack down on suspects.

Last week, when U.S. Secretary of State Condoleezza Rice visited the region, thousands of Indians did take to the streets of Mumbai, Delhi and other cities to protest. Yet while there were a few scattered chants of "Death to Pakistan," the marchers, who carried roses, candles and posters, directed most of the ire not at India's perennial enemy, the terrorists, or the ruling Congress party. Their anger was reserved for India's politicians in general. The protesters' slogan: "Enough is enough."

The marchers had plenty to be mad about. According to the University of Maryland's Global Terrorism Database, India has suffered more than 4,000 terrorist attacks since 1970, with an average of about one killing per day. But India's leaders have taken little action to protect the population, even while ensuring themselves heavy security. The government also appeared clueless in the face of the Mumbai attacks and took hours to respond.

Yet there's been remarkably little jingoism in the overall reaction. India's leaders, its media and its population—even the far right—have largely rejected the kind of anti-Pakistan and anti-Muslim rhetoric the terrorists must have hoped for. This forbearance won't last forever, especially if Pakistan fails to cooperate with India's demand for a crackdown on militants. But for the time being, India is surprising many Western observers—and even some Indian ones—by maintaining a resolute calm and refusing to rattle its saber.

Despite comparisons in the Indian media, the nation's reaction so far to "26/11" has differed profoundly from America's response to 9/11, Spain's to 3/11 or London's to 7/7. Indians have neither rallied round their leader and demanded he pull up the drawbridges, as Americans did to George W. Bush, nor rushed to throw out a bungling government, as the Spanish did to José María Aznar after he misled voters about the involvement of Basque separatists.

There have been no clashes between Indian Hindus and Muslims. Nor has there been a swing to embrace Hindu nationalism. Indeed, opposition politicians who have sought to capitalize on the mayhem have been roundly punished for it. For example, Narendra Modi, the BJP chief minister of Gujarat, rushed to Mumbai after the attacks to lionize the slain head of Maharashtra's Anti-Terrorism Squad. But Mumbai denizens greeted Modi with boos and accused him of political opportunism.

The official response, meanwhile, has been studiously measured. India's home minister and both the chief minister of Maharashtra and his deputy have resigned. A review of India's intelligence system has begun and New Delhi has called on Pakistan to extradite 20 suspects. Pranab Mukherjee, India's foreign minister, has sent mixed messages in recent speeches, first ruling out military action against Pakistan and then, during Rice's visit, reversing tack and warning that India will use "all the means at [its] disposal." But overall, the government's behavior has been anything but warlike.

The reason, says Mahesh Rangarajan of Delhi University, is that "India has learned that a hysterical response does not serve any purpose." Experience shows that rash action only makes things worse. Congress party sources point out that massing troops on the border, as the BJP-led government did following terror attack on India's Parliament in December 2001, accomplished nothing—except to ensure that the BJP was roundly criticized for raising tensions. Senior government sources also admit that India can't behave like America did after 9/11 because India is "not a superpower and does not have that kind of capability," says a senior government official.

Out of necessity, then, New Delhi has turned to realpolitik. That's taken the form of "maintaining the pressure, getting the U.S. and other allies to put equal pressure on Pakistan without actually ratcheting up tension and weakening [Pakistani President Asif Ali] Zardari's position too much," says a top official who asked to remain nameless because he wasn't authorized to speak to the press.

In eschewing militarism, India is placing tremendous faith in the United States and the international community. Pundits, for example, have called on India to make its case against Pakistan at the U.N. Security Council. But this strategy is risky, for India will feel betrayed if the international or U.S. response remains tepid. And so far, the signals from Washington haven't been promising. Rice, on her visit to New Delhi, said that "there has to be direct and tough action," but she seemed—at least to Indians—to water down that message when she visited Islamabad.

Indians are already frustrated with Pakistan's behavior and its rejection of India's call to extradite the suspects. "What is disquieting is that the Pakistanis are resorting to a technical response by saying, 'Give us evidence and we will respond'," says former foreign secretary Kanwal Sibal. "They're resorting to the old, stock responses, and that is sending a negative message and raising demands on the Indian side to hurt Pakistan."

Should this continue, domestic pressure will mount from the public, as well as the BJP and the radical Hindu nationalist right—especially with a national vote looming next year. The BJP will begin hammering Congress for its failure to stop terror, and if there is no action in Pakistan that, too, will come into play. "The BJP pitches its whole propaganda on that terrain," says Delhi-based political analyst Praful Bidwai.

For the time being, though, Indians are watching and waiting. The details of Rice's visit remain unclear. But unless she asked for and received quiet assurances that Islamabad intends to take some immediate, concrete steps, conditions could worsen for all parties, America included—after all, the terrorists who strike at India also work on Pakistan's western border with Afghanistan. As for India, if it feels that its forbearance has yielded nothing, this sense of betrayal could cause events to spiral out of control, bringing India and Pakistan—nuclear-armed nemeses—back to the brink once more.

URL: http://www.newsweek.com/id/172610

a jolt to the middle classes

Rage over the Mumbai attacks is changing the nation's politics.

Jason Overdorf
NEWSWEEK WEB EXCLUSIVE

When Adlai Stevenson remarked that in a democracy, people get the government they deserve, he could have been talking about India. This country's middle class is reknowned for its apathy at the polls. By ceding the electoral process to the uneducated, poverty-stricken masses, they have allowed opportunistic politicians—many of whom face criminal charges—to thrive by encouraging riots and distributing booze. The crisis in Mumbai may have jolted middle-class voters out of their torpor. As Condoleezza Rice made a lightning trip to the subcontinent this week to keep tensions between India and Pakistan from spiraling out of control, thousands of middle-class Indians in Mumbai, Delhi and other major Indian cities took to the streets to protest against India's politicians, regardless of the party they belong to or whether they were in or out of power. The movement was spontaneous and amorphous, but the anger was palpable. Milind Deora, who at 32 years old is among the youngest members of the Indian Parliament, was the only politician who dared show his face among the throng. He spoke with NEWSWEEK's Jason Overdorf about how the middle class anger against politicians—which included calls to vote "none of the above" in the next election and to stop paying taxes—could become a real force for change. Excerpts:

Newsweek: What do you think about the protests in Mumbai and other Indian cities against the country's politicians?

Milind Deora: In Mumbai, at least, it was a welcome step to see India's urban middle class out on the street protesting and demanding accountability from the government. I, too, took part in the protests at the Gateway of India. I went there as someone who has lived in the city, who was born in the city, and not as a member of Parliament or a politician. I think that anger and frustration and perhaps that feeling of being violated and let down by the government is definitely justified. But there has to be some solutions in place, and people have to be much more constructive. The kind of messages going around, which were all politicians are bad, and governments are bad, won't do anything to help the situation. If this is not channeled in the right way, we'll lose an opportunity.

Did the people there perceive you as the enemy, because you are a politician, or were you spared because of your youth?

There were some people who were saying, "You are a politician, and you guys have failed us." There was this anti-politician rage, for sure. But the majority of people were happy to see me. They were shaking my hand and saying, "Milind, get us out of this."

At some level, there are many things that only the government can do, and the government, by nature is made up of politicians. How do you think the protesters can take their enthusiasm for action and make it matter?

The solution is to have more powers given to local governances; a devolution of powers from the state government to Mumbai. This is an opportune moment to demand that. If there's one thing that people should demand of the government, it's that, because tomorrow this anger could be about a collapse in terms of civic infrastructure, not a terrorist attack necessarily. We need to fix the governance system and use this as an opportunity to do that.

Some politicians tried to use the attacks to gain political mileage, but they were greeted with disgust by the people. Is it possible that a politician who focuses on these administrative issues you're talking about could capitalize on this anger?

I think they could, and I'm trying to do that. But it is unfortunate. If people were disgusted by [the blatant political opportunism] then they should give these politicians and their parties a befitting reply in elections. The sad thing is, I think that once this is over and the dust settles, not only will politicians get back to their politics, but so will the electorate.

The kind of action that needs to be taken to improve security is complex, so it's difficult to sell as an election platform. Has there been talk about how to boil these complex reforms down into a campaign message?

Right now the focus is not on our communications strategy. Right now the aim is to focus on what the government is trying to do—to overhaul the entire system. The political communication part of this will come much, much later.

Your party, the Congress, sacked the home minister, as well as the chief minister and deputy chief minister of Maharashtra. Does that kind of action send a message that politicians will be held accountable, or is it just a game of musical chairs?

I think that removing chief ministers and home ministers who failed to reassure the people and failed to lead from the front can help. But 90 percent of the difference will come from re-looking at the security establishment, and that means much more than just the home minister. That means the entire bureaucracy, the intelligence agencies, the policing capability, all of that needs to be looked at and realigned.

Were you encouraged that this protest was directed at all politicians, rather than the ruling Congress party?

I didn't go there and think of it as what is the political mileage for the Congress and what is the political mileage for me. I still haven't got down to thinking of it in that sense. Even if I had not been an MP, I would have been there. I felt it was my duty to be there and show solidarity with what is happening. For me it was encouraging to see the middle class out on the street protesting, but it was also saddening to see their blind rage against politicians and the government.

URL: http://www.newsweek.com/id/172352

the rise of the hindu right

Jason Overdorf
NEWSWEEK
From the magazine issue dated Dec 1, 2008

It's election season in India, and that's bad news for the hapless Congress party. Six states go to the polls in the coming month, in what some experts are calling a bellwether for next year's general election. And though the races are too close to call, some pundits say Congress is likely to fare poorly. But that's not the worst of it. The slack in four of the contests may be taken up by the opposition Bharatiya Janata Party (BJP)—a Hindu nationalist organization that's surging in strength in a new, more aggressive form. In an especially worrisome twist, police say they recently uncovered possible links between BJP-associated Hindu nationalist organizations and suspected Hindu terrorists—a first for a mainstream Indian party.

The BJP's renewed appeal can be explained, at least in part, by timing. Under the leadership of Prime Minister Manmohan Singh, who is not known for his political acumen, Congress has lost the last eight state elections in a row. Now the worldwide financial crisis has sent inflation spiraling and slowed growth, further damaging the government's chances. The BJP hopes to capitalize on the bad economic conditions when voters head to the polls in Chhattisgarh, Delhi, Jammu and Kashmir, Madhya Pradesh, Mizoram and Rajasthan this month. While nothing's guaranteed, many observers expect Congress to get trounced. "Their machine is in tatters," says Mahesh Rangarajan, a Delhi University political analyst.

While that's bad for Congress, it wouldn't necessarily be a problem for India—but for two things. First, the state elections could well forecast the fate of the Congress-led ruling coalition, the United Progressive Alliance (UPA), in next nationwide poll, which must take place before May 2009. (The UPA's own rural-development minister recently said the state votes represented a "mini general election.") And second, the BJP has taken a nastier turn since it last led the country in 2004.

To get a sense of the shift, consider the BJP's candidate for prime minister this time around. Lal Krishna Advani is an aging rabble-rouser who in the mid-1990s helped gather a huge Hindu mob that tore down the 16th-century Babri Mosque, leading to riots that killed more than 2,000 people (Advani was later cleared of criminal charges). He is far more radical than his predecessor, Atal Behari Vajpayee, who served as prime minister from 1998 to 2004. And Advani's heir apparent is Gujarat's chief minister, Narendra Modi—who has been denied entry to the United States for his alleged role in the 2002 riots in Gujarat that killed more than 1,000. Not long after the riots, Modi warned a crowd that Muslims were trying to erode India's Hindu majority by having many children. "We have to teach a lesson to those who are increasing the population at an alarming rate," he said.

Then there's the alleged terror link. Since Oct. 24, the state of Maharashtra's Anti-Terrorism Squad has arrested 10 Hindu nationalists—including a lieutenant colonel in Army intelligence, a prominent Hindu spiritual leader and a former party worker from the BJP's student wing—for suspected involvement in a 2006 attack previously blamed on Muslim extremists. The case has yet to come to trial and the suspects maintain they are innocent. But the news, if true, would mark the first known terrorist bombing in India's history involving Hindu extremists—rather than Muslim radicals, separatists or Maoist revolutionaries—and the story has shocked the country. Rather than disown the suspects, however, BJP grandees have leapt to their defense. On Nov. 10, party president Rajnath Singh said that "whosoever believes in nationalism cannot be a terrorist," and on Nov. 12 he complained that "this government is targeting Hindu spiritual leaders without evidence … We find this investigation very suspicious."

The explanation for the BJP's rightward tilt lies with its increased reliance on its parent organization, the Rashtriya Swayamsevak Sangh (RSS). During the Vajpayee years and in the run-up to the 2004 national elections, the BJP generally tried to divorce itself from anti-Muslim vitriol and the RSS. But the debacle of that campaign—in which Congress won a stunning victory despite the consensus that the BJP had presided over an economic boom—gave nationalists the upper hand. The BJP's defeat reminded its leadership that it remains a cadre-based party united by its ideology, not a charismatic leader. And the bulk of those cadres come from the 4.5 million-member RSS. The RSS advocates a philosophy known as Hindutva and favors turning India into a Hindu state (the country's population is 80 percent Hindu) and designating religious minorities as second-class citizens. Without its nationalist ideology it wouldn't be clear what the BJP stood for. On most issues, the party's positions are actually very similar to Congress's (both parties advocate further economic reform and increased ties to the United States, for example).

The RSS is now suspected of connections to terrorism. Some of the current suspects belong to a heretofore-unknown group called the Abhinav Bharat, which is not officially linked to the RSS but espouses an identical Hindutva ideology. And the Anti-Terrorism Squad claims to have established links between the suspects and official RSS outfits. "You actually have for the first time evidence linking all kinds of front organizations of the [RSS family]," says political analyst Praful Bidwai. Since the '90s there have been several incidents of "accidental explosions at bomb-making operations run by [Hindu] fanatics," Bidwai says. "But this is the first time … the RSS has been linked to a conspiracy."

You might assume that such ties, unless repudiated, would hurt the RSS's popularity and the BJP's electoral chances in India, which is the world's largest democracy and a secular one at that. Unfortunately, that's not how things have transpired in the past. In fact, some of the BJP's prior electoral victories followed bouts of incendiary anti-Muslim hatred and actual violence. Vajpayee was first elected prime minister following the Babri Mosque riots, for example, and the mayhem in Gujarat in 2002 helped Modi win a thumping victory in that state, even though—or because—he was blamed for delaying police action to protect Muslims. Now, by casting the government's terror investigation as an anti-Hindu conspiracy, the BJP hopes to repeat this formula today and unite the faithful. "The various wings of the [RSS]—and it's a vast organization—will rally together," says Rangarajan.

If the electorate follows suit, it could lead to another big victory for the BJP—but a big step backward for India as a whole.

URL: http://www.newsweek.com/id/170301

the negotiator

Kamal Nath has become not only the voice of India in trade circles, but an advocate of the developing world.

Jason Overdorf
Newsweek Web Exclusive
April 5, 2008

Kamal Nath is India's Minister of Commerce & Industry, a position that due to India's rising prominence in global trade—both as a coveted market and a growing power in agricultural and industrial production—makes him an important figure in international affairs. Since assuming office as commerce minister in 2004, he's become the voice of the globe's developing countries in World Trade Organization negotiations. He brings the same perspective to the World Economic Forum meetings in Davos and similar high-powered international conferences. He spoke with NEWSWEEK 's Jason Overdorf. Excerpts:

NEWSWEEK: What differences have you seen in the world's power elite, as represented by the attendees at Davos, the WTO negotiations, and similar events?

Kamal Nath: The constituents at the head table have changed. Where the WTO is concerned, the most important thing is that the manner of negotiations has changed. In the last round of the WTO, there were just 10-to-12 countries who got together, and the other countries never had a voice. It was decided by 12 countries, and everybody else had to fall in line. Today, in the consensus building process, developing countries have not only a voice, but a loud voice.


Why do you think that is?

With the changing global economic architecture, the mass of economic activity is shifting. At Davos, twenty years ago or even ten years ago, the invitees were mainly from the US and Europe, and it was for interaction between them. Today, many of those who are coming from Europe or the United States are coming for interaction with those from the East.

Do you also find that government actors are losing prominence and private actors are becoming bigger players?

As the GDP of countries—the growth of GDP in developing countries—gets more and more driven by the private sector, obviously the private sector assumes a voice which is pretty loud.

From your own agenda, I know you represent India, so that's obviously your main focus, but what else do you see as your role in these forums?

In these forums, it's not only the concerns of India, but the concerns of other developing countries also, which helps keeps the coordination among developing countries so that fragmentation does not happen.

You've emerged as one of the main negotiators for developing countries. Do you find that in these forums, forming relationships with the other attendees becomes very important in pushing your agenda forward?

A personal relationship is an important ingredient in negotiations, and there's an element of trust and greater sensitivity to fairness. And it can be very frank.

Apart from negotiating for the interests of the developing world in trade negotiations...
That is one part of my job. The other part has been really the India story—the investment story and the credibility of India. WTO is only one part, a very small part. For example, I went to Chicago for a trade policy meeting, and there were people there from agriculture, commerce, treasury. I asked them, how do you see the agriculture position globally. I know you share many views. How do you see agriculture in the world? And they said, you know we are very worried, we are thinking of putting reserve land in the US into agriculture.... These are things that are very important.

Now private players are playing a much more important role in shaping international policy, aren't they?

The biggest example is that every president or prime minister that comes to India is coming with a business delegation. He's coming with his trade minister, his industries minister—that's why I'm so stressed, because I'm the one who has to deal with it. Same thing with our prime minister. When he goes to another country, he goes with a trade delegation. It's an understanding that the business communitY are the players. The government can be the facilitator, but the players in economic growth are different. The government is only a facilitator and an enabler.

Does it raise concerns that the perspective of the poor will be lost in our rush to create more capital?

I don't think so. I think that the level of those who are in power think beyond their own profit. They also recognize that the growth of their economies and their country is necessary for the growth of their own company.

URL: http://www.newsweek.com/id/130670

this rampart is rising

In many nations, class barriers to college are growing.
By Rana Foroohar
Newsweek International

Aug. 21-28, 2006 issue - When students take to the streets, they're usually united against something like war or racism. But when Indian students took to the streets last May they had a different cause. These were children of the wealthy upper castes out to stop a plan to reserve more university places for their peers from poor and lower-caste backgrounds. This was youth versus youth, and they were fighting for the status quo.

Resistance to social-leveling campaigns in higher education isn't limited to India. When a top French Grande Ecole—alma mater of presidents and prime ministers—began giving preferential treatment to poor students, there was an outcry from the upper classes. In Britain, there are fears that efforts by top-tier universities to recruit more students from state secondary schools will dumb down the ivory tower. These controversies say something important about the state of academia: for all the pious attacks on injustice that emanate from universities, the class gap is growing from the United States to Britain, parts of Continental Europe and Asia. The reasons are myriad: state-controlled systems that artificially limit the number of university places, admissions procedures that favor the privately educated, falling financial aid and failing public secondary schools.

The bottom line is that the worldwide boom in higher education is not, in many cases, broadening its reach among the poorest. The proportion of 25- to 34-year-olds who have university degrees is rising across the 30 member states of the Organization for Economic Cooperation and Development, and exceeds 20 percent in 18 of them. But in nations like Japan and the United States, where education costs are skyrocketing, the typical student comes from a much wealthier background than in the past. At Tokyo University, which has traditionally educated an economically diverse population, nearly half the parents of undergraduates now have incomes higher than $82,500 (well above the national average of about $57,500 for men in their 50s). In the United States, the percentage of students with families making more than $150,000 a year has been rising steadily for over a decade, to nearly 17 percent, while the proportion of those with a family income of $49,000 or less has been declining. A 2003 study of the 146 most selective U.S. colleges found that only 3 percent of students came from the poorest quartile of families, while 74 percent came from the richest.

By some accounts, the class divide is perhaps most pronounced in Europe. The slotting of children into vocational or university tracks continues to limit the upward mobility of many poor kids at an early age. Meanwhile, the relative lack of funding, particularly compared with the United States, means fewer new university slots to accommodate growth in demand. Today, only about a third of all secondary-school grads in the European Union go on to university, and working-class kids are highly underrepresented, especially at elite institutions. In the U.K., where Tony Blair's New Labour Party has made socioeconomic diversity in top schools a key priority, a recent survey found that the share of spots at Oxford that go to state schoolkids (in other words, not rich private-school grads) has fallen 5 percent since 2001.

Politicians and educators everywhere are looking for ways to fix the imbalance. But there's a lingering fear that easing the way for poor kids will bring down the quality of education and, thus, national competitiveness. "My honest opinion is that it is going to be a disaster," says P. V. Indiresan, former director of the prestigious Indian Institute of Technology (Madras), about the proposed quota system. "No. 1, it introduces a new social tension which we never had in the IIT system before. No. 2, you need certain institutions in a country where you are able to stream the very best talent available. Once you get students of a lower caliber, there will be enormous pressure to reduce to the standard of instruction."

Business leaders second this sentiment, and not only in India. Almost everywhere outside the United States, where affirmative action has long been the status quo, there is resistance to changing admissions to favor the less advantaged. When Richard Descoings, the head of France's prestigious Sciences Po Paris, began aggressively recruiting kids from lower-class backgrounds in 2001, critics lamented the end of blind égalité and privileged students worried that the degree would be devalued. "There were eternal debates on whether this program fit in with the principles of the French Republic," says Descoings, "but nobody asked whether or not it was effective."

In fact, it was; this past summer, the first class of 15 pioneers from poorer suburbs graduated from Sciences Po with respectable results, some near the top of the class. Elsewhere, there's also plenty of evidence that, given a chance, kids from lower-income backgrounds can do just as well or better than others. In the U.K., for example, Sir Peter Lampl, head of the Sutton Trust, an education nonprofit, says that if admissions were based purely on A-level test results, two thirds of students at Oxbridge would come from state rather than private secondary schools. In reality, only about half of them do. "Many poor kids don't have the confidence" to apply to top schools, particularly since graduating secondary school students must apply before they see their test results, says Lampl. And while private secondary academies advise students on how to maximize their chances of admission, even how to target specific departments at certain schools, state-school pupils are left to their own devices. The result, says Lampl, is that top-tier universities in Britain are excluding some 3,000 qualified state-school students every year.

That has major economic implications, given that the wage premium on a top-tier degree has never been higher. According to a number of studies, if going to college increases your earning power, then going to a top university increases it exponentially. Harvard economist Caroline Hoxby has shown that graduates of top schools in the United States typically earn hundreds of thousands of dollars more during their lives than similarly accomplished graduates of state universities. Depending on the country, a person with a university degree can command anywhere from 25 to 120 percent more than one without.

Finances are a further burden for the nonrich. As numbers of college applicants rise, costly prep classes, which can run $50 or more per hour, are becoming de rigueur. In the United States, while the absolute amount of aid to university students is up, financial aid is being replaced by merit aid, which favors the middle and upper classes. In Europe, where universities are still tax-supported and practically tuition-free for everyone, the poor get no leg up on the rich, who already have every advantage.

That something must be done is obvious to most nations. Basically, the combination of aging societies and rising demand for tech-savvy workers mean that most rich nations face an emerging shortage of educated labor, one that can't possibly be filled by the wealthy alone. Some solutions are, of course, country-specific. Europeans need to modernize and, to some extent, privatize their university systems so they can better respond to the needs of the market. More flexibility is key; while the United States and Scandinavia offer all kinds of two-year or associate's degree programs, in many parts of Europe and Asia four-year degree courses are the only option. But in Norway, for example, a modular system allows students to balance school with work or family commitments. They can finish courses in their own time, acquiring certificates for specific skills over a period of months, or a year, which can eventually be combined into a degree.

Perhaps the best way to equalize university education is to improve secondary schools in poor regions. In India, the rate of absenteeism in state schools is 25 percent—and that's for teachers. "Poor but talented kids tend to go to impoverished high schools, where parents, teachers and other students are just less interested in learning," says Richard Kahlenberg, a fellow at the Washington-based Century Foundation. "What they need is to be around peers who have big dreams—that will allow them to work up to their potential."

In Britain, educators are trying to cultivate those dreams with a new program in which top universities would help identify talented students as young as 11, and help them stay on track to reach elite colleges. The ethos is reflected in Oxford's new recruiting slogan: "It's not where you're from—it's where you want to go." As the need for knowledge workers grows, it will clearly be more and more important for poor kids, as well as rich ones, to go all the way to the top.

With Jason Overdorf in New Delhi, Tracy Mcnicoll in Paris and Akiko Kashiwagi in Tokyo
© 2006 Newsweek, Inc.

URL: http://msnbc.msn.com/id/14320419/
© 2006 MSNBC.com

conflicted commies

The force that could determine India's capitalist future is one of the world's strongest communist parties.

By Jason Overdorf

Newsweek International

Oct. 10, 2005 issue - As its name implies, the Communist Party of India-Marxist still employs the dated rhetoric of the left, down to calling its ruling body the Politburo, in old Soviet style. So it came as a surprise this summer when the national leadership endorsed "all the actions" of its maverick chief minister for West Bengal, a state of 100 million people and long a bastion of communist power. That came shortly after Buddhadeb Bhattacharjee wooed foreign investors in Singapore by saying Indian communists had to "reform or perish," and invited these capitalists to help build new infrastructure in West Bengal. The moment cemented Bhattacharjee's reputation as the Deng Xiaoping of India: a pragmatic communist reformer.

That doesn't mean, however, that India's communists have gone the way of comrades from Russia and China, tilting toward robber-baron capitalism. Just last Thursday the party's traditional allies in India's left-wing trade unions brought the country to a standstill with a daylong national strike that shut down railroads, airports and banks. In New Delhi, where the communists are critical partners in the coalition government, they have diluted free-market reforms and are hotly debating their proper role in a capitalist economy. The outcome of that debate is crucial: it could help determine whether India accelerates to China-style growth rates or stumbles yet again.

The Indian communists have more influence than all but one kindred party in a capitalist democracy, behind President Hugo Chavez's Movement for a Fifth Republic in Venezuela. (Third on the list: Portugal, where communists hold 12 of 230 seats in Parliament.) The CPM and two much smaller communist parties together control 60 of India's 545 parliamentary seats. Since the United Progressive Alliance led by Prime Minister Manmohan Singh's Congress party is 51 seats short of a majority, it depends on communists to stay in power. The CPM has used that clout to block or temper policies from the sale of state-owned companies to the liberalization of labor laws in special economic zones.

In Western Europe, the leading communists for much of the cold-war period were found in Italy, where their focus was internal: their big idea was worker ownership of factories in an otherwise capitalist market. Given the vast expansion in international trade since then, the Indian communists' focus is more global. Indeed, the country's population and growing economy make the party one of the world's most influential opponents of excessive globalization. Experts debate whether India's communists are emulating Chinese reformers or European social democrats. Bhattacharjee says neither: "We are debating among ourselves. What is reform? Reform means what? For whom?" Sitaram Yechury, a member of the CPM Politburo, says the party's overriding ambition is to shift the goal of market reform from promoting corporate profit to people's welfare.

The differences with China are stark. The Indians still cling to socialist ideals like worker protection and land reform, while China's leveling impulses seem to have been spent during the land reforms of the Mao era, when the rural bourgeoisie was all but destroyed. India, meanwhile, never made good on post-independence promises to wipe out a feudal caste system. That said, the Indian communists' ideas about economic sovereignty take a page from China's book, and mirror the Congress Party view of the early 1990s.

The CPM sets three rules for foreign investors: they must increase India's production capacity—build factories, rather than simply buying assets—help upgrade Indian technology, and create jobs. While Congress is now inclined to open doors further, the communists are more wary. Where Congress leaders praise a domestic automaker like Tata for rising to the challenge of foreign competition, the communists decry how Japanese giant Suzuki ultimately gained control of its Indian joint venture, Maruti Udyog. "It would be wrong for anybody to characterize us and say we have been opponents of capital flows into India," says Yechury. "We qualify those flows, rather than opposing them."

On battles over how India should comply with its obligations to the World Trade Organization, the CPM has prevented the government from giving away too much on issues like drug patents, which could have harmed consumers. And in some market reforms, the left has taken the lead. Bhattacharjee's Finance minister in West Bengal spearheaded the introduction of a value-added tax, as a way of eliminating tax evasion and replenishing government coffers, which some experts call the single most important economic advance in India in the last five years. "You can't just paint the left as anti-reform," says Ramesh Venkataraman, a partner with McKinsey & Co. in Mumbai. "The left is selective."

The CPM has been criticized in the Indian media as hypocritical for resisting a Congress plan to increase national limits on foreign investment in the telecommunications sector, while aggressively pursuing foreign investment for West Bengal. Once scorned for its obstructive policies and constant strikes, the state has been attracting investment from companies like IBM and Microsoft since Bhattacharjee took office in 1990, and now draws more investment from Japan than any other Indian state, including Karnataka, home to Bangalore's massive outsourcing industry. But the communists say the devil is in the details: the party opposed Congress's telecom plan because it would have allowed foreigners to provide phone service—making big profits but providing no new technology or manufacturing capacity in return. Yechury says the party has done nothing in West Bengal that it has rejected on the national level.

Still, the party remains conflicted about its most progressive members. When Bhattacharjee recently signed a deal with the Salim Group of Indonesia to build a 2,000-hectare commercial and housing development, party members accused him of favoring a company close to the former Suharto regime, which took power in an anti-communist coup. Soft-spoken and white-haired, he wears the large-framed spectacles typical of Bengali intellectuals, and embraces the word "capitalism" only with protections for workers and the poor. Yet he is pushing labor market reform to attract more outsourcing companies to West Bengal. He says workers must "share a concern" for productivity with management.

The CPM, in fact, reacted quietly to last week's union-led strikes, citing them as a warning to Singh not to push too hard on reform. Tellingly, the strikes hit hardest in West Bengal, where workers took complete control of the capital, Kolkata. They defied measures Bhattacharjee took to allow IT workers to get to work through blockaded streets. Only when Bhattacharjee personally confronted them did they meekly step aside. It remains to be seen whether his detractors in a party that still values its labor roots will ultimately do the same.

© 2005 Newsweek, Inc.

'the death of reform'

In India these days, don't believe everything you read.

By Jason Overdorf

Newsweek International

Sept. 5, 2005 issue - Prime Minister Manmohan Singh's yearlong reign has been a balancing act, as he endeavors to live up to his reputation as the father of India's economic reforms without alienating the left-wing parties that his coalition government needs to survive. But lately, as his Congress party wrangles with the communists, the balance has been tipping. One by one, bold reforms are getting killed or shelved. These days Singh talks of the need for politicians to compromise in order to survive in office.

The question is whether Singh has fallen from compromise to capitulation on reform, as the opposition Bharatiya Janata Party claims. Labor, pension and banking reforms are going nowhere. A new law creating special economic zones for foreign investors was so watered down by the left, it won't have much impact. The commission set up to do away with monopolies and restrictive trade practices is moribund. Last week Finance Minister Shri P. Chidambaram, widely seen as Singh's right-hand man in the reform cause, announced that the government was scrapping plans to sell its stakes in 13 state companies, including an oil refiner, an aluminum maker and a shipping firm. This latest move "is another nail in the coffin of reform," says Arun Shourie, BJP Disinvestment minister in the previous coalition government.

Certainly the story dominating headlines in India is the Death of Reform. But despite all the evidence, the declaration may be premature. The prognosis of most investors is much more optimistic: the Bombay Stock Exchange showed no reaction to Chidambaram's announcement on privatization. The following day the benchmark Sensex index closed at a record high on buying by foreign funds. Investors had expected the shelving of privatization, which was foreshadowed in a common platform released by the ruling coalition partners last year. Meanwhile, the government has achieved progress on other fronts, lifting a rule that limited the ability of foreign joint-venture partners to expand inside India, as well as a cap on foreign direct investment in telecommunications. "Arun Shourie is just being a politician," says Saumitra Chaudhuri, an economic adviser at Indian credit-rating agency ICRA Ltd. "Privatization is not all there is to reforms."

This is about the politics, not economics. Chidambaram's announcement came shortly after every major Indian news outlet carried graphic photographs of striking Honda workers being beaten by police in Gurgaon, Haryanaone of the hotbeds of outsourcing and foreign investment. It also comes a few months before state elections in Bihar, as well as Kerala and West Bengal, where communists have dominated the polls. When the elections are done, many analysts say, the reform effort will resume. "This is only a minor hiccup," says S. A. Chari, executive director of the credit-rating agency Onicra Ltd. "Everybody is seeing the results of the reforms. Even in places like Calcutta [in West Bengal] you can see things changing very dramatically."

The danger, however, is that by positioning itself for these state elections, Congress could be creating expectations that will be hard to live down. In southern states like West Bengal, the communists are so well entrenched that they can throw open the door to foreign investors even as they spout Marxist slogans on the national stage, in order to solidify their one base in the north: trade unions at state-owned companies. Meanwhile, Congress must make good on populist election promises to gain ground in the south if it is to restore itself as a dominant national party.

That explains why, rather than pushing free-market reform, Congress party legislators recently passed a bill that guarantees every rural household in India at least 100 days of paid employment each year. Though they are still bullish now, the markets eagerly expect Congress to lift the many barriers to foreign direct investment: India attracts less than 1 percent of global FDI, while China attracts 10 percent. "It's a generous interpretation to say that reforms are on hold for elections," says Chaudhuri. "If you wait for elections to be over, thinking you will have a little more freedom, then those political positions become written in stone." And that stone could mark the real death of reform.

© 2005 Newsweek, Inc.