Home' Trinidad and Tobago Guardian : October 23rd 2014 Contents BG20 | THE ECONOMIST
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 2014 • WEEK FOUR
Those who hoped that Narendra Modi would
prove a busy liberal reformer as prime minister
of India so far have been disappointed. But
that, according to Gurcharan Das, a writer and
former businessman who now advises the gov-
ernment, is to judge the man by the wrong
measure. Rather than being devoted to markets, he said, Modi
is a strong-willed moderniser, a man who thinks a capable
bureaucracy can fix much of what ails India. It is the lesson
of Modi s running of Gujarat, where he relied heavily on his
civil service and got public-sector firms to flourish.
The national bureaucracy is far from capable, however. Lant
Pritchett of Harvard University in Cambridge, Massachusetts,
has described India as a "flailing state" thanks to its rotten
administration. Bureaucrats are incompetent and corrupt when
they are not simply absent.
India struggles to implement even well-conceived policies.
India s head, in Pritchett s metaphor, is not reliably connected
to its limbs.
Modi appears bent on changing that. In office for only
five months, he spends a great deal of time with civil servants,
preferring to meet with them instead of with ministers. He
and they have been looking for fixes, such as shifting the
paperwork needed to open a business onto the Internet or
freeing firms from petty inspections. Meetings are said to
have a corporate air, with Modi as chief executive. Dates for
specific targets---the "deliverables" of corporate jargon---are
set.Resistant bureaucrats are transferred. On October 16 Modi
announced a big reshuffle, with a liberal reformer from
Rajasthan becoming the finance ministry s top bureaucrat.
Modi presses his civil servants to think big. In August he
called for 75 million more Indian households to have bank
accounts by February. The scheme, called Pradhan Mantri
Jan Dhan Yojana, involves state banks and could prove trans-
formational if households get in the habit of using their
accounts rather than keeping cash under the mattress. Officials
say that more than 55 million new accounts have been opened
and nearly US$700 million deposited. The aim is to increase
access to banking in a country where two-fifths of households
An obvious opportunity is for such new accounts to serve
as conduits for the government to distribute welfare as cash
rather than, as at present, to supply the needy with wasteful
subsidies in kind. It helps that Modi, though once a skeptic,
is now an enthusiast for India s most modernizing effort by
a mile: Aadhaar, the unique-identity scheme, in which bio-
metric data are to be recorded to create a digital identity for
every Indian. This now can be used, say, to open a bank
account or to get a passport.
Some 690 million people are enrolled in Aadhaar, the
world s biggest biometric database. The target for next year
is one billion out of India s 1.2 billion citizens.
The prime minister s chief civil servant for e-government,
Ram Sewak Sharma, spells out what might follow once
Indians have digital identities. Last year in Jharkhand state,
in eastern India, Sharma installed a system to track the daily
attendance of nearly 14,000 officials. Each day at the office,
they log in and out by scanning a fingerprint or iris. The
data is then published live, online. Taxpayers can even see
which civil servants are at work and which are not.
Modi has pressed Sharma to do the same for the central
government in Delhi. This month Sharma rolled out a Web
site, attendance.gov.in, for 149 departments and 51,000
national civil servants.
The effect may seem Big Brotherish, but truancy in the
civil service is appalling, and such monitoring is bound to
boost attendance and productivity. In time every hospital,
public school, court and government office could have the
Both Sharma and his boss think that technology can do
much to lessen rampant corruption. Much of it is in programs
for subsidised food and fuel, which cost the government
US$41 billion a year. Digital monitoring would certainly bring
Again, in a test in Jharkhand, ration shops and individuals
who get cheap wheat, rice, salt and oil are now being mon-
itored using Aadhaar identities. For example, each time some-
body picks up a 75-pound ration of rice, they digitally scan
their fingerprint and record the transaction. Better manage-
ment of stock and reduced theft should lower "leakage" rates
that reach 50 per cent in some places.
Measurably better performance is what excites Modi. He
said that a more welcoming bureaucracy---even, if you can
imagine it, in visa offices---will encourage investors. The
prime minister wants India to be among the top 50 in the
World Bank s "ease of doing business" index. It is currently
134th. The other obstacles, however, remain formidable and
include unreformed courts and land laws.
Next a commission will report on restructuring the huge
and lumbering Indian Railways. Another will look at how to
modernise the Food Corporation, which sits on much of
Reformers still call for more space for private actors, which
would entail a host of structural reforms and liberalisations.
Modi is more likely first to order state-run bodies to be run
better. Similarly he is reluctant to sell Air India, the national
carrier, hoping to turn it around under state control.
Can the modernising Modi become a more liberal economic
figure too? If the bureaucracy works better, implementing
market reforms later may prove easier. Perhaps, too, the
prime minister will prove to be bolder now that state elections
in Maharashtra and Haryana are over, with the results due
on October 19.
After long years in opposition in those states, Modi s
Bharatiya Janata Party looks set to win them. It currently
controls only five of 30 state governments, not enough for
the ambitions of either a moderniser or a reformer.
@2014 The Economist Newspaper Ltd. Distributed by
the New York Times Syndicate
Preparations for the first section of the Thi-
lawa Special Economic Zone in Myanmar
included clearing nearly 1,000 acres of land
and building roads to a nearby port. The indus-
trial park is scheduled to open in the middle
of next year, and some of the 22 companies
set to move in will begin building their factories
by the end of the month.
The most immediate beneficiary will not
be Myanmar s economy, however. Takashi
Yanai, head of the Burmese-Japanese joint
venture developing Thilawa, joked that the
monastery sitting in a finger of forest jutting
into the park has much to gain.
"You cannot touch a monastery in this coun-
try," Yanai said.
With every corporate groundbreaking, he
said, will come a donation to the monks that
may one day pay for a grand golden stupa, or
If the monks represent the country s past,
the tenants of Thilawa and the two other spe-
cial economic zones in the works are bets on
Thilawa, the furthest advanced of the three,
will employ 70,000 workers when running at
full tilt, turning out food, consumer products
and construction materials for the domestic
market, as well as export-oriented goods such
as shoes, car parts and garments.
President Thein Sein came to power in 2011
with the promise of reforms to reconnect
Myanmar to the global economy. Since then
the optimists have dreamed of supermarkets
and fast-food outlets on every street and of
mobile technology allowing the country to
"leapfrog" development stages to draw level
with Thailand or even Singapore.
However, its economic future depends on
low-skilled workers churning out labor-inten-
sive goods for export. Before it can aspire to
Thailand s level of industrial development, it
should aim to be a hub for low-cost manu-
facturing like its western neighbor, Bangladesh.
Investors are right to dream, though. Myan-
mar sits between the massive markets of China
and India, and also gives Thailand a quick
westward route to the sea.
According to the McKinsey Global Institute,
a think tank, by 2025 more than half the world s
consumers with incomes of more than US$10
a day will live within a five-hour flight of
Myanmar. It abounds in arable land, water
and natural resources, and is richly endowed
with oil, natural gas and precious stones such
as jade, rubies and sapphires.
Thailand s labor force is aging, shrinking
and getting more expensive. Myanmar s is
cheap and young, and is benefiting from the
return of some of the three million to five mil-
lion Burmese working abroad.
Jasmine Thazin Aung left in 2003 to study
Business in Myanmar: Let a million factories rise
Continued on Page 21
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