Thursday, May 24, 2012

The austerity of the affluent... By P Sainath


Pranab Mukherjee's stirring call for austerity tugs at the national tear ducts. Prime Minister Manmohan Singh has pleaded for it in the past and watched his flock embrace it creatively. With the Finance Ministry even acting on Dr. Singh's call in 2009 (economy class air travel, spending cuts), we are now in the fourth year of our noble quest.
There are, of course, several kinds of austerity. My pick would be the variety practised by Planning Commission Deputy Chairman Montek Singh Ahluwalia. No one can challenge Dr. Ahluwalia's commitment to austerity. Look at the way he's stood up to the populist demand for a poverty line that makes sense. No pampering people here. Spend Rs. 29 a day in urban India or Rs. 23 in rural India and you are not poor. He's even asked the Supreme Court to uphold the imposition of such rigour on hundreds of millions of his fellow citizens. One affidavit filed by the Planning Commission defended a line of Rs. 32 (urban) and Rs. 26 (rural) a day. Since then, the Padma Vibhushan awardee and some of his colleagues have stuck their necks out to lower that further.
RTI queries
That Dr. Ahluwalia practises austerity himself is evident from two RTI queries. Both fine examples of RTI-based journalism, but failing to get the attention they deserved. Both exploring the anatomy of his austerity. One was a story in India Today (covering Dr. Ahluwalia's foreign trips between June 2004 and January 2011) by Shyamlal Yadav. This journalist (now with The Indian Express), has done outstanding RTI-based stories in the past as well.
The other, in February this year, came from The Statesman News Service (reporter unnamed). This one took out details on Dr. Ahluwalia's global forays between May and October 2011. In that period, he undertook “four trips covering 18 nights [which] cost the exchequer a sum of Rs. 36,40,140, an average cost of Rs 2.02 lakh a day,” says the SNS report.
At the time this happened, that Rs. 2.02 lakh would have been worth $4,000 a day. (Gee! Lucky for us Montek was into austerity. Imagine what his expenditure might have been otherwise). That is a daily spend almost 9,000 times greater than the 45 cents cut-off point at which rural Indians would be doing okay, in his view. Or over 7,000 times greater than the 55 cents cut-off point for urban Indians that Dr. Ahluwalia would find “normatively adequate.”
Now his spend of Rs. 3.6 million (or $72,000) in 18 days might well have been his personal stimulus to global tourism in that year. After all, the industry in 2010 was still recovering from the ravages of 2008-09, as the United Nations World Tourism Organisation points out. The U.N. agency found, on the other hand, that 2011 saw global travel revenues cross $1 trillion. The largest revenue increases were seen in the U.S. and Europe (where most of those 18 days were spent). The Indian public can rejoice over its money playing a humble part in that recovery even while scorched by austerity at home.
The stats from the Shyamlal Yadav's RTI are fascinating. To begin with, his findings show Dr. Ahluwalia made 42 official foreign trips and spent 274 days overseas during a seven-year tenure. That is “one in every nine days” abroad. And that's excluding travel days. The India Today story found that his excursions cost the exchequer Rs.2.34 crore. However, it points out that they received three different estimates of the costs of his trips and charitably went with the lowest. Also, said the India Today story, “it is not clear whether the figures include the expenses incurred by Indian embassies abroad on frills such as hiring limousines. The actual costs could be a lot higher.”
Since the post he holds does not require so much foreign travel — all of it done, though, with “the permission of the Prime Minister” — this is puzzling. That 23 of the 42 trips were to the U.S., which does not believe in planning (but then, perhaps, neither does Dr. Ahluwalia), is even more puzzling. What were these trips about? Spreading global awareness on austerity? If so, we'll have to spend more on his travel: look at those revolting Greeks killing the Cause on the streets of Athens. And even more on his trips to the U.S. where the austerity of the affluent is striking. CEOs in that country took home billions in bonuses even in 2008, the year Wall Street tanked the global economy. This year, even the media journals of the super-rich in the U.S. write about CEOs destroying their companies, jobs and more — and gaining personally from it. Millions of Americans, including many who suffered home mortgage foreclosures, saw a different kind of austerity. The kind the French increasingly fear and have voted against.
When Dr. Singh pleaded for austerity in 2009, his Cabinet rose handsomely to the call. Each member added a modest million rupees a month thereafter, on average, to his or her assets over the next 27 months. All the while, hard at work as Ministers. (“The Union Cabinet gets healthier,” The Hindu, September 21, 2011). Praful Patel excelled, adding on average, half-a-million rupees to his assets every 24 hours in that period. Workers in Air India, under a Ministry he headed much of that time, struggled to get their salaries for weeks on end. Now with Pranab cracking the whip, there'll be even more austerity going around.
Note the bipartisan spirit of this austerity: in the past few years, Praful Patel (UPA-NCP) and Nitin Gadkari (NDA-BJP) have hosted two of the costliest weddings ever, with far more guests than seen at any IPL final. Gender-balanced Spartanism, too. That was for Mr. Patel's daughter and Mr. Gadkari's son.
Their corporate counterparts take it further. Mukesh Ambani with his 27-floor (but higher than 50 storeys) costliest residence in living memory. And Vijay Mallya — whose employees in Kingfisher struggle for their salaries — who tweeted on May 5: “Having dinner at Atmosphere on the 123rd floor of the Burj Khalifa in Dubai. Never been so high up in my life. Awesome view.” That's probably higher than Kingfisher is flying right now. Both own teams in the IPL. Which body has received public subsidies (by way of entertainment tax waivers, for example). That is, until the matter went to the Bombay High Court. There are other public-funded austerities linked to the IPL — watch this space.
Wall Street model
The corporate world here generally follows the austerity model of Wall Street. There, nine banks including Citigroup and Merrill Lynch “paid $32.6 billion in bonuses in 2008, while receiving $175 billion in taxpayers funds,” reported Bloomberg in 2009. It quoted New York Attorney General Andrew Cuomo's report on the subject: “When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. When the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.”
Note that Pranab's austerity prayer last week saw the soothsayers of the super-rich raging on TV that the deficit was all due to “one populist measure after another.” That is, stupid things like trying to give people work, reduce hunger or send children to school. No mention of the Plutocrat Populism which saw about Rs. 5 lakh crore (roughly $100 billion at the time) being gifted mostly to the rich and the corporate classes by the same Pranab budget in concessions on Corporate Tax, Excise and Customs Duties. (See “To fix BPL, nix CPL,” The Hindu, March 26, 2012). Sitaram Yechury pointed out in Parliament that these write-offs for the super-rich exceeded the fiscal deficit by Rs. 8,000 crore. But it is the ‘populist measures' aimed at the poor that get panned.
Amartya Sen (The Hindu, Jan. 7, 2012) ruefully asks “why there is hardly any media discussion about other revenue-involving problems, such as the exemption of diamond and gold from customs duty, which, according to the Ministry of Finance, involves a loss of a much larger amount of revenue (Rs.50,000 crore per year) than the additional cost involved in the Food Security Bill (Rs.27,000 crore).”
Indians outside the charmed circle of the meritorious know a different austerity. Food inflation in double digits. Vegetable prices rising 60 per cent in a year. Child malnourishment double that of sub-Saharan Africa. Families cutting back sharply on milk and essentials. Massive increases in health costs bankrupting millions. Farmers unable to afford inputs or access credit. A drinking water scarcity for many, as more and more of that life-giving substance gets diverted for other purposes. How much nicer to practise the austerity of the elite.

'Foreign travel is expensive but necessary for the discharge of official duties'

Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, responds to P. Sainath:
The article “The austerity of the affluent” (The Hindu, May 21, 2012), is so misleadingly distortive on two points that I feel compelled to clarify the position. I have high regard for your newspaper, and subscribe to the notion that there should be full transparency in government. It is in this spirit that I hope these clarifications will be published by you, for the benefit of your readers.
The first error is comparing the daily cost of foreign trips undertaken by me with the Tendulkar poverty line, which incidentally is not on a daily basis, but on a monthly budget basis for a household. This comparison is intended to suggest gross extravagance. Air travel and hotels in major capitals are very expensive, and the class of air travel and the class of hotels are not determined by me, but by government rules applicable to all Ministers, Members of Parliament and senior officials. There is no denying that foreign travel is expensive, but it is often necessary for the discharge of official duties. I should add that each day spent abroad is filled with 14 hours of meetings, and is a day spent away from family and not exactly a holiday. We should, of course, attempt to reduce costs, but we need to consider whether and to what extent this would affect our ability to enter into negotiations immediately on arrival, or have delegation meetings in the hotel room. One needs to carefully weigh the costs and benefits before taking a considered decision, and in any event, this is a decision that would need to be taken by the appropriate authorities.
The second error in the article is to suggest that the frequency of my travels is unnecessary, as the functions of the Deputy Chairman do not require such foreign travel. I agree that the role of Deputy Chairman itself does not, per se, require extensive foreign travel. But the article omits to note that most of the foreign trips made by me were in the capacity of sherpa for the G-20, or as member of the Prime Minister's delegation. I am the co-chair of the Indo-U.S. Energy dialogue and the co-chair of the India-China economic dialogue. These are special assignments and not part of my duties as Deputy Chairman. The decision on who should undertake these tasks is not taken by me, but when chosen to perform these tasks, I consider it an honour, and do the best I can. As in the case of all persons of cabinet rank, each trip is cleared by the Ministry of External Affairs and the Prime Minister's Office.
I should add that G-20 meetings were especially frequent between 2008 and 2010, because of the global financial crisis. In fact, each summit was preceded by two or three preparatory meetings of sherpas. One could, of course, argue that India should not have been represented at these meetings. That would certainly have saved some money, but the question to ask is whether the country would be better served by not being represented. Finally, in the interest of full transparency on foreign travels I have decided to put all my foreign trips on the website of the Planning Commission so that all those interested can find out where I am going and why.

P. Sainath replies... to Montek


Dr. Ahluwalia does not contradict a single fact in the article:
(i) Rs.2.02 lakh daily average expenditure for trips between May and October 2011 (well after his “busy” G-20 period ending in 2010). No “gross extravagance”?
(ii) 274 days abroad, or one in every nine. Factor in travel days and it could be one in seven away from office.
(iii) 42 trips, half of them visits to the U.S. (several trips not connected with his duties as Deputy Chairman of the Planning Commission).
The link between the poverty line figures he supports (and defends in the Supreme Court) and his own expenditures is extremely relevant and pertinent. It is hypocrisy to impose one approach on an impoverished people while practising another — entirely different — for himself, with their money — public money. That too in a period where his government calls for more austerity. Dealing with abject poverty was central to the founding principles of the Planning Commission. But that, unlike Dr. Ahluwalia, is hobbled by “resource constraints.”
The travel period he cites as vital (2008-10) was one in which Dr. Manmohan Singh had ordered that government “severely curtail expenditure on air travel, particularly foreign travel,” except where deemed “absolutely necessary” (The Hindu, June 6, 2008).
Several ministers' foreign trips were cancelled and cuts announced in travel expenses. Two ministers lost their five-star hotel suites. The External Affairs Minister gave up his plane for overseas trips, and others flew economy class (The Hindu, September 13, 2009). Dr. Ahluwalia is silent on what class he actually travelled by, then or thereafter, or his expenses.
How much travel does he undertake within India — surely a priority for a Deputy Chairman of the Planning Commission? Put that up on the website?
Costs of $4,000 (daily average) are huge. And we don't know what the embassies and consulates spent on him locally. But spending curbs worry Dr. Ahluwalia, who asks “whether and to what extent this would affect our ability to enter into negotiations immediately on arrival…” Hope he spares a thought for how millions of Indian travellers, like migrant labourers, journey, and have to be productive on arrival. He plans for them, after all. G-20 meetings in 2008-10 were held in different countries, but his visits mostly took him to the U.S. His U.S. visits were prolific earlier, too, as the RTI data show.
Given the importance he claims for his sherpa work in G-20 and other forums, which he admits is unconnected to the Planning Commission, why remain in the Commission and paralyse its functioning by being absent so often? The first day of the 11th Plan was April 1, 2007. But the Plan document was ready only on June 25, 2008 — an entire year wasted that brought cascading disaster for many vital projects. The “mid-term” appraisal came in the fourth year of that Five-Year Plan! Now, we're into the first year of the 12th Plan and it is not even remotely ready.
It is good to know the Planning Commission's website will carry his travel details. But the RTI data was also about his expenses. Will he put those up, too? Better still, if other PC members' expenses go up as well, to allow us comparisons.
It is a measure of how disconnected Dr. Ahluwalia is that he does not sense how the public views his expenditures. Nor, worse, the further damage his clarification will do to their perceptions.

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