24 February 2018

Aadhaar: Privacy, National Security and Democracy

There is a view that the the recent deliberations on the Aadhaar case in the Supreme Court of India boils down to two broad issues - privacy and national security. It further makes a point that if the learned Judges are of the view that privacy is of paramount importance then the judgement will be in favour of Aadhaar and if they are of the view that National Security has an overriding concern then the judgement will be against Aadhaar. I will be making three-to-four submissions here.

First, Aadhaar can seriously compromise national security. This is so because all the potential defence and intelligence operatives (particularly, those who are to be hired for sensitive operations in the future) are likely to have their biometrics compromised.  

To wit, covert operations by these potential operatives are likely to be undermined. It is already being talked in hushed tones (not necessarily because of Aadhaar alone) that the entire security establishment is under close watch by our friends and foes. The fear that Aadhaar will compromise our national security is not unfounded.

Second, the articulation in favour of Aadhaar for facilitating national security is actually an argument in favour of state power. In particular, the arguments are that Aadhaar will facilitate surveillance and guard against wrong doings (an euphemism for corruption) through transparency and accountability. Doing away with wrongs is laudable, but to take a position that Aadhaar will help in this endeavour is to belittle the ingenuity of financial moguls/wizards. In fact, more often than not, they operate within the realms of law (what may be morally inappropriate need not be legally wrong). Neither the short arm, nor the long arm of law will have anything to do with them. 

The only time that the financial ingenuity become a botheration is when the market goes into a tizzy. Hear again, in the name of the economy it is the moguls that are to be bailed out. It is another matter that Aadhaar may create a perception that it is guarding against the moguls misdemeanour because each and every individual does experience it first hand that each and every step of theirs is under close watch and scrutiny. It is not for them to comprehend that the closed gates are for the ant and not for the elephant. 

Third, the clamour for state power (along with concerns for national security) is nothing specific to India. It is global. Furthermore, it questions the core of democracy by weakening the importance of separation of powers. It is beyond Arrow's impossibility. It may draw similarities from Kalecki's intermediate regimes (see KN Raj's take on intermediate regimes), but is also beyond that. It takes a form where the power of money (or market: note that the term market is not to provide space for exchange of goods and services through large number of players, but, rather one that talks of power through market share, and hence, implicitly does away with the large number of smaller players - small is no more beautiful) becomes pervasive.

Under such a scenario, the four pillars of democracy - the executive, the legislature and the judiciary as also a free press - could become subservient to money power. A possible outcome is that one of the pillars of democracy, while retaining its subservience to money power, gets an upper-hand over the other pillars. The global happenings indicate that it facilitates a supremacy of the executive over the other wings - a takeover by/for/of the executive. The over-empowering role of money calls for an emerging need for political economy and/or political theory to address these concerns.

As an aside, a fourth point is that the debate between privacy and security should not be seen in binary terms. No, I am not referring to the umpteen positions that came out in the deliberations in the Supreme Court and are undoubtedly important and could also impact the judgment. But, sticking to the two broad concerns there can also be the possibility of a middle-path between privacy and national security (nay, state power).

However, there can be pitfalls in the middle-path. There could be a judgment that supports the perception that allows the state to be vigilant against wrong-doers and at the same time gives space for privacy concerns for all those who can take recourse to the long-arm of law. Such a middle path could also lead to a tilt towards state power that gives supremacy to the state power through the executive. Only time will tell.

To conclude, Aadhaar, instead of facilitating national security, actually poses a serious problem against national security. Further, Aadhaar is not likely to have a major impact against so-called moral wrongs because, more often than not, these happen within the realms of law. Globally, one observes a trend where it is difficult to maintain separation of powers because of the overbearing role of money or market power. When it comes to the Aadhaar judgment, one can only anxiously wait.


Earlier blog posts on Aadhaar

Nir-Aadhaar

[The views expressed are that of the author and not that of the institutions/organisations that the author is associated with. Comments are welcome.]

04 February 2018

Chimera of MSP as Cost plus 50 percent

Introduction
The 2018-19 Budget for India presented on 1st February 2018 has, inter alia, mentioned about increasing the minimum support price (MSP) being given to farmers to cost plus 50 percent so as to ameliorate the distress of farmers' and facilitate an increase in farmers' income. This is a chimera. The decision-making authorities in the Government that decide the MSP represents the lioness-like head, the calculation of cost is the goat-like body, and crop production is the serpent-like tail.

Lioness-head
The budget speech conveying cost plus 50 percent was the head spitting fire to douse discontentment among farmers' (relying on the dictum that a product of two negatives will be positive). The idea for a cost plus 50 per cent is not new. This was indicated by the National Commission on Farmers(Chair: MS Swaminathan) that submitted its final report in October 2006, which has now been resurrected after more than a decade to address a rural constituency.

It needs to be mentioned that MSP is declared for only 23 crops, but effective for two crops - paddy and wheat. Even for these two crops, after allowing for double counting, a January 2015  Report of the High Level Committee on Reorienting the Role and Restructuring of Food Corporation of India (Chair: Shanta Kumar) using 70th round National Sample Survey data for July 2012-June 2013 indicates that less than 6 percent of agricultural households sold to procurement agencies who buy at MSP and these households sold only 27 percent of their produce to these procurement agencies. In short, cost plus 50 percent will have limited impact.

Goat-body
A calculation of the cost of production has many layers. First, it is an average of averages and that too from selected states. Under this, states that are major producers of the crop collect detailed data from sample farmers (the selection bias is likely to be there for those farmers who have some output and exclude those with no output and thereby underestimating costs). The data sent by states are again averaged at the all India level by the Commission for Agricultural Costs and Prices (CACP). Even if there is no selection bias, any average will have a distribution with some states and some farmers having a greater cost than the average. The greater costs are likely to be more for those whose output has been less for various agro-climatic and socio-economic reasons. Whatever may be the reason, a single cost will not have the same ameliorating effect across all farmers and across all states.

Second, and more importantly, to address the spirit of the recommendation by the National Commission on Farmers it is only appropriate that all costs (paid out and imputed) should be taken into consideration. This is complicated by the fact that there a number of variations, as per the terminology used by CACP. They are as indicated in Appendix 1. The contention being raised is that MSP is fixed based on A2+FL costs, which when one compared with C2 costs excludes interest on value of owned fixed capital assets (excluding land) and rental value of owned land (net of land revenue). Furthermore, C2 costs, when compared with C3 costs, is not adjusted for appropriate valuation of human labour and also excludes imputed value of management input. The MSP declared for Rabi 2018, as claimed by the Finance Minister's Budget speech of 2018, is already above cost plus 50 percent if one considers A2+FL costs. But, falls short if one takes C2 costs and far away from C3 costs.

Serpent-tail
Crop production is a risk-taking enterprise. This is particularly so in large parts of rainfed India that is exposed to the vagaries of weather as also market shocks (both for inputs as also produce).

In a recent exercise, one observed that the real income growth for farmers between 2002-03 and 2012-13 was only 1 percent. This was at a time when real income growth for the economy remained in the range of 7-8 percent. These does call for interventions in agriculture leading to reduction in costs, lowering of risks, increase in net returns, and assurance for better livelihood of farmers.

Concluding remarks
One wonders, which is the constituency that will be addressed even if cost plus 50 percent is effective. To be effective, efforts should not only be made to increase its reach. Furthermore, it should also not be a lip service by taking A2+FL costs; rather, C3 costs should be taken into consideration. What is more, these efforts should be part of a larger exercise in agriculture that reduce costs, lower risks, increase returns and assure better livelihood of farmers. In its current form, one is not sure whether the fire spat will douse discontent or add to the farmers' woes. In other words, two negatives when added becomes a greater negative force. Chimera is a chimera.

Appendix 1: Cost concepts and their components
Costs
Components
A1
Includes (i) value of hired human labour, (ii) value of hired bullock labour, (iii) value of owned bullock labour, (iv) value of owned machinery labour, (v) hired machinery charges, (vi) value of seed (both farm produced and purchased), (vii) value of insecticide and pesticide, (viii) value of manures (owned and purchased), (ix) value of fertilisers, (x) depreciation on implements and farm buildings, (xi) irrigation charges, (xii) land revenue, cesses and other taxes (xiii) interest on working capital, and (xiv) miscellaneous expenses (artisans et cetra).
A2
Includes  cost A1 plus rent paid for leased-in land.
A2+FL
Includes  cost A2 plus imputed value of family labour.
B1
Includes  cost A1 plus interest on value of owned fixed capital assets (excluding land).
B2
Includes  cost B1 plus rental value of owned land (net of land revenue) and rent paid for leased-in land.
C1
Includes  cost B1 plus imputed value of family labour.
C2
Includes cost B2 plus imputed value of family labour.
C2*
Includes cost C2 adjusted to take into account valuation of human labour at market rate or statutory minimum wage rate whichever is higher.
C3
Includes cost C2* plus value of management input at 10 percent of C2*.