Sanjay Negi's thoughts on Current Affairs and Information Technology Directions.

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Tuesday, May 30, 2006

Impending Water Crises in Indian Cities

Every Summer we see fierce debates errupting in the media over how municipal corporations are unable to cope with the growing demand for more water which in turn is a natural consequence of the unchecked migration from the rural hinterland. So we have low pressure in the distribution networks, erratic timings and unscheduled dry days. Residents store water in over head tanks and other smaller containers to help tide over the fluctuating supplies. Online booster pumps though illegal are the norm in most middle class colonies while many tap the ground water through bore wells. Regular tanker supplies are resorted to when all else fails.

It seems everyone is trying very hard to solve this problem in their own way but the gradual downhill slide year on year is quite perceptible. Is India's population really so high that nothing much can be done about it anyway?

How much water do we need per person per day to lead normal healthy lives. The citizens of Europe manage quite nicely with a daily provision of 130 litres of water for each resident. May be we being a developing society can learn to live more frugally with a 100 litres ration. It is also easier to do the math with 100 litres so let us take this logic further. A person would need 36,500 litres or 36.5 cubic metres of water in a whole year. If the annual precipitation is 800 millimetres, the needs of one person would be met by the annual rain falling on an area of 45 square meters. One square Km of city area gets enough rain to take care of 22,000 citizens whereas average population density of our highly crowded cities is much less than that. So why don't Municipalities solve their water woes permanently by generating water by building rain harvesting structures?

There are no logical reasons for them to make honest attempts. The State and Central Governments build large water storage facilities like dams and barrages and the coveyance channels free of cost to the municipalities and deliver the raw water at their Treatment Plant doorsteps. Municipalities only pay for treating the raw water and then distributing it. Harvesting rain water would be much more expensive for them, unless the Central and State governments come forward and foot most of the bill. Can Private households and institutions do it instead?

Harvested water seeps into the ground and becomes common property for whoever is able to drill and recover it. Therefore private households will not do it voluntarily and large institutions find it easier to dig deeper or lobby and manouvre the rules to reserve some part of the municipal supplies for themselves.

So it is apparent that there is no real shortage of water in this blessed land of ours. The struggle is all about how to get one's need without paying for it. As with a lot of other civic amenities we are willing to suffer considerably as long as we don't have to go out of our way to enhance the quality of our lives.

Medha Patkar and Saving the Narmada

Medha Patkar and other activists have been voicing their concerns regarding rehabilitation of people affected by the Narmada Project. In their view rehabilitation has not been just and therefore the project needs to be halted.What are the real issues here?

Well, dams store rain water which otherwise would have flowed down to the sea and this stored water can be used the year round to support more food production which in turn can support higher standards of living or overall growth in human population. In addition the water would also produce some electricity which would also contribute to growth. So why should Medha Patkar complain?

It is essentially a distribution issue. The people who would benefit from the stored water and electricity production would be different prom the people who would be displaced by the submerging of their lands in the river valleys.So the solution should be simple enough, plough back some of the enormous riches generated by these projects to the oustees to make their lives more meaningful than before.

Not so simple. People living tribal lives at the edge of subsistence cannot be catapulted suddenly to a somewhat contemporary daily routine without adequate preparation. If we take a nomadic family from their pastures and try to get them to lead a settled agrarian existence, they would first have to learn the skills of ploughing, sowing, weeding, harvesting and storing.

We face this paradox in all our big projects. When land is acquired for town and colony development, the villagers are given some compensation, but essentially we are appropriating the only means of making a living they know i.e. tilling the soil and living off the produce, and then we even prohibit them from making commercial use of their village residences as there is a conflict of interest with the developers' planned shopping complexes and malls.

So on the one hand through these development projects, we are improving the use of nature's resources thereby increasing society's over all wealth which should support more human population at a higher living standard, and on the other we are pushing marginal human settlements possibly below the level of subsistence existence. Is there no way out?

Today's competitive nature of human social organization on a global scale makes rapid development a fait accomplii. It is not beyond the means of our resources to give a few tribals a soft landing. All it requires is wisdom, commitment and persistence. Medha Patkar needs to understand that lowering the height of the Narmada Dams is not the solution, in fact raising the height even more may afford a better way out.
More water stored would mean more wealth available to mount an effort to softland more tribals into a relatively more modern way of life.

For this to happen Medha Patkar and her well intentioned friends must realize that the earlier ways of social organization have to make way for the new. Just as hunting gave way to agriculture which was replaced by industry which is making way for services and the post modern economy, there is no way that any one country can have sections of its populations clinging to a tribal existence. In the developed world 95% population lives in cities and we keep harping on our wonderful idyllic countryside and its rural romaticized life.

IIT and IIM Reservations

The HRD Minister has stirred a hornet's nest by announcing OBC reservations in the IITs, IIMs, NITs and all other professional educational institutions. As expected editorials across the media spectrum have advised restraint. Merit should not be sacrificed most seem to suggest. On the other hand politicians hail the move and say that it should have been done 20 years earlier as it is the law and we must all abide by it.So what is the issue.

Most Professional educational institutions are funded by the tax payer's money and there is merit in channelizing these funds towards creating a more egalitarian society. Government institutions fulfill that obligation. At the same time, Privately funded professional educational institutions are also required to ensure a similar balance in the student demographics. The main difference being that the students bear a lower proportion of cost of education in the Government colleges. So what is the whole commotion about?

The lower fees in the government colleges makes them more attractive and therefore admissions are extremely competitive. Thus only the brightest students make it past the enterance tests. This gets reflected several years later during the final years of the undergraduate courses when campus placements take place. Companies eager to mop up talent prefer the Government institutes to Private colleges by a huge margin, though it can be argued that the quality of education provided may actually be better in the private colleges, as the faculty is much more accountable, just as the private sector works much harder than the public sector.What then are the real issues?

As the proportion of reserved seats in Government colleges increases, some of the talent would be constrained to take admissions in the private institutes and the placement quality would correspondingly improve in the latter. The accountability in Government colleges would take a further slide as entitlement mentality would get further reinforced and quality of education would slide further reinforcing the reversal in placement trends.Why then are our opinion leaders from industry and education so agitated?

The reasons are not too far to seek. Private educational colleges are supposed to be funded by the fees that they collect. This fees is regulated by the Government. Simple math would prove that the fees collected is tiny when compared to the budgets of comparable Government colleges run on Tax payer's money. To maintain their standards and continuously improve their facilities, private colleges depend upon forced donations or capitation fees in exchange for which they compromise on the quality of the intake. This system of generating finances for legitimate operations is promptly dubbed as profiteering (and is not legal and therefore has stigma attached) and would therefore break down when a large proportion of seats are reserved and hence all the shadow boxing.

The solution stares us in the face. Private colleges must be allowed to charge fees according to the standards of their curriculum and placements which can be regulated by autonomous agencies. It is probably not in the interests of private colleges to charge unreasonable fees as they also need sufficient talent pools at the entry levels which they can then train and polish before unloading in the job markets. The models work reasonably well in the developed countries, where higher education is truly valued and largely funded through fees and sponsorships.

If society wants to bring more equality and make these colleges reserve seats, there is no issue except that the college revenue generation must not get affected. Thus reservation of seats must be accompanied by corresponding scholarships which definitely have to be funded by the society at large and not just by the general category students (it would become too steep for them) and would make it unaffordable to most deserving cases, which translates to funding by the government.In today's age of global beliefs and practices, it may not be too late before all this actually happens, but as we have always seen in the past, we take good decisions grudgingly and do not mind paying the price for lagging a few steps behind the rest of the world.

Government Revenues as GDP Percentage

The Finance Minister of India in his recent Budget Speech proudly says that this year Tax Revenues will be over 10% of GDP and next year it would be increased to 11% and so on.Why does an otherwise well meaning man think in such a convoluted manner. If we agree that the government's delivery of services is very inefficient and only 15% of expenditure incurred lands with the intended recepient, it means that 85% of all Government expense is absorbed by the Government's delivery channels comprising of bureaucracy etc. So what is required is a reduction in the Tax : GDP ratio and not the other way around.

At a broader level, we need to examine the premise that a large percentage of a country's GDP needs to be mobilized away from immediate consumption and directed towards infrastructure creation so that future benefits to human society are assured. Let us logically see where this strain of assumption leads to. A significant proportion of national income invested in long term infrastructure would generate correspondingly more output which in turn would lead to more infrastructure and more income in an upward spiral. No two ways about this. Sooner or later, especially if large sections of global populations including India and China do this, a stage would arrive where all roads, water works and electricity utilities would have been created (hopefully they would leave some forests untouched). Everybody would have secondary education and primary health care.

The definition of basic needs would then begin to change. Food and Sanitation may become part of infrastructure. Travel (which is already subsidised to some extent) to nearby locations may become free. Some forms of entertainment like having a colour TV at home with some free channels thrown in and indeed even home computers with free internet may get redefined as a basic need.

Where would would all this lead to? Hopefully, oil would vanish soon enough to put temporary brakes on this rush towards infrastructure creation for all. Governments and indeed Human society needs to wake up to the coldness of this mathematical logic.Capital formation and then targetted deployment for development projects would only accelerate the spiralling growth without objectives.

Are there no checks and balances in place? Not in largely market driven society where the devil takes the hindmost. Or may be there is some hope after all. If everyone has connectivity and unlimited bandwidth, where is the need to travel. If the human brain is supplementable with synthetic chips, where is the need for secondary education. If human behaviour can be modified or programmed, where is the need for competition. If life can be indefinitly prolonged, where is the need to accumulate property.

May be there are seeds of sustainable existence right at the heart of human quest for knowledge. Actually it could not be otherwise...God could not have been stupid after all...

Demolitions in Delhi

A truly hilarious and entertaining situation is evident in the Indian Capital nowadays. The bulk of the city does not conform to building regulations, but the Judiciary wants the illegal portions to be razed which would mean reconstructing the city all over again. Therefore the federal government hastily with the stroke of a magic pen as it were, changes the law to make legal what was for so many years patently illegal.Therein lies the comedy of Indian self governance. The Indian state loots the public through taxes and other levies and then pours this ill gotten wealth into the Capital so that the corrupt bureacratic and political cadres can enjoy a cocooned like of luxuries very unlike the masses they claim to serve. Of course they cannot prevent migration into this oasis of infrastructural bliss as it would appear too obvious an attempt to segregate themselves. Therefore opportunity starved masses start getting attracted to this haven which in turn creates pressure on the ill gotten services. This rapidly deteriorates into a chaotic scenario where laws meant to protect the comforts of the few are generally flouted and the city starts looking like a slum (which it would have been to start with if people's taxes had not been forcibly channelized to serve a chosen few). This is when the constitutionally revered pillar called the Judiciary wakes up. In India Judiciary does not have a distinct existance from the Bureacracy. They compete for the distribution of the tax spoils, much like the invaders from Central Asia did in mediaval times.The Judiciary has an interest in keeping Delhi's facilities from getting distributed to all and therefore enters into a ridiculous fight with the politicians and administrators who have in the melee found another way of using the situation to their benefit. Rules are deliberately made discretionary so that there is plenty of scope for collecting gratification through the resulting opacity in procedures. The Judiciary by and large gets left out in this day to day plunder and therefore may be resenting the whole process.

Is US Twin Deficit Sustainable

There are various schools of thought on this subject but the majority believes that this state of affairs cannot continue for ever. It is true that the US imports much more than it exports and the US government spends much more than what it collects as revenue. The government deficit is easily taken care of by printing more dollars but the trade deficit has to be additionally financed by capital flows. Why would the capital flow into an economy which is not competitive to begin with. Anyone with money to invest would look with expectations to the returns that are likely from this investment. If the productivity of US capital had been high the economy would have been more comeptitive and therefore the Trade Deficit would be a surplus instead. So where is the paradox. It is true that huge net Capital flows are happening from rest of the world to the US. It is also true that the money garnered from these capital flows is being spent on consumption by US citizens fuelling the current growth in the economy. But it is true also that the foreign capital is earning poor ROI. It is increasingly likely that the Dollar will depreciate and the foreign Capital sunk there will evaporate in value. It is likely that this may trigger withdrawl rush of capital which would further depreciate the Dollar in a downward spiral till the Trade Deficit corrects itself. But life would never be the same again. Dollar as the premier global currency would have lost that status for ever. Global economic center of gravity would have shifted elsewhere. American enterprises with surplus capital would in the meanwhile also shift their investments to more productive destinations leading to a hollowing out from within and strengthening the flow of capital away from US. It is unlikely that the Returns on these foreign investments by American Capital would adequately compensate for the Capital flight which would take place. In a free market economy driven world there are no permanent rents to be collected and returns on capital employed are a direct function of real value creation. If American capital finds better returns outside of US it underlines the fact that the state of US productivity and value creation is not competitive globally and therefore US capital has no choice but to become dependent upon external value creation. Some benefits would trickle down to some US investors no doubt but that will not lift the fortunes of a nation.