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The Edit PageTHEECONOMICTIMES

The governments move to set up a Seventh Pay Commission

for central government employees will cheer the hearts of

eight million civil servants and pensioners. The report will be

implemented in 2016, and thats well-timed as it will not lead to

bunching of arrear payments and distort the fisc. But the com-

mission must work out not just the pay revision, but link it to

promoting efficiency and productivity. The vast majority on

the governments rolls are low-skilled employees, waiting to

be made redundant by the march of technology. Retraining

them in areas that face an acute staff shortage is a good idea.

The commission should look at structural reorganisation, in-

cluding a leaner bureaucracy at the higher levels, liberal later-

al entry and market-referenced salaries.

It makes sense to restrict the number of

posts, joint secretarys and higher, rather

than create more posts to promote every

junior officer who gets on in years. In the

army, promotion does not depend on se-niority alone, merit and availability of

posts kick in. So many retire not rising

above colonel. It should be the same in the civil service. Pro-

motion based solely on performance-based evaluation, and

not on seniority, will foster efficiency and an incentive to deliv-

er. Civil servants who do not make the cut should be allowed to

retire early with the benefits of a full pension. It could also

give them the chance of a second innings outside government.

Right now, there is no incentive for good performance and no

penalty for non-performance. This must change.

The Seventh Pay Commission should, again, propose policy

of no transfers before full expiry of the normal term except on

grounds to be approved and recorded by an apex committee

and moving from periodic pay commissions to a permanent

one. And the government of the day should act on them.

Pay Babus Well butMake them Work

Blinkers Off Salam

Yes, youre my conscience keeper

Why have you started working

overtime these days?

Global ad spends will cross $517 billion in 2013, up a mere 2.8%from 2012 levels, says eMarketer. While the west dominates adrevenue share, emerging markets are clocking higher growth rates

Advertising: Going Digital?

Matt GroeningCreator ofThe Simpsons

God oftengives nutsto toothlesspeople.

Total Media Ad Spend Per Person* ($) Digital Ad Spend Per Internet User** ($)

$4.5 $2.67India*** India***

*Includes digital, print, directories,outdoor, radio and TV; **Includesadvertising on PCs and mobile devices;excludes SMS, MMS and P2P advertising***Based on Ficci-KPMG Media andEntertainment report, 2013; $1 = `60

Digital advertising will drivehigher ad spends worldwide, andwill remain the fastest-growingcategory between now and 2017

Norway

US

Australia

Sweden

Canada

Denmark

UK

Finland

Japan

Germany

Worldwide

Australia

UK

Norway

US

Denmark

Canada

Sweden

Netherlands

Germany

Japan

Worldwide

582

540

535

404

397

393

347

328

320

319

73

209

201

191

174

163

119

118

104

97

91

46

12THE ECONOMIC TIMES | MUMBA I | FRIDAY | 27 SEPTEMBER 2013

Kant, Cant and theNon-Lethal GunPhilosophers are often called people who are famous with-

out most people knowing just what they are famous for. Take

the case of Immanuel Kant. This 18th-century German

thinker continues to provide gray hairs to students. What,

after all, can you say about a man who himself called his fa-

mous The Critique of Pure Reasondry, obscure and prolix.

Obviously, making sense of it might be tough. But that sort

of frustration doesnt just affect hair. It can lead to physical

attacks. Witness the recent incident in a Russian city where

two young men, out to buy some beer, started talking about

Kant. Things, predictably, got a bit convoluted. Which situat-

ion one of the men apparently attempted to bring to a speedy

resolution by way of taking out a gun and shooting the other.

Kant should be happy. This proves something called the

subject-object problem, though in somewhat modified

form. The shooting itself, well, could be termed a categori-cal imperative. One isnt sure, though, what Kant would

have made of the fact that the gun in question was non-leth-

al, a sort of rubber-bullet one. But, overall, one agrees with

the gentleman who, legend has it, returned a manuscript of

The CritiqueKant had sent him saying he was sure hed go

mad if he read it to the end. Investigations must focus on

whether the shooter had done so.

Philosophy continues to be a grim,quarrelsome, life-and-death affair

Can you Stopthe Blaming?This refers to Why Army RuleFails (ET, Sep 25). A soldier isnot an automaton who jumpsin front of a bullet on com-mand, but a human bein g. Yes,were happy to live in a demo-cracy and not a dictatorship,but to suggest otherwise is todo disservice to the millions ofmen whove served the nationin uniform. The article propo-ses this to be the case. Unlike alot of people working theeconomy, out of narrow self-interest, the army looks afterthe interests of all its person-nel and guards the nation.

PARVEEN CHHIBBER

Bhopal

Netas of a BadBrotherhoodIt is a sad moment for ourdemocracy when the UnionCabinet clears an Ordinanceto neutralise the SupremeCourts order mandating im-mediate disqualification ofMPs and MLAs convicted foroffences carrying a sentenceof two years or more. This is a

case of mock-ery of democ-racy and jus-tice. All poli-ticians havejoined handsclaiming theSC does nothave the pow-

er to frame laws and regulate

elections. Are the politicianstrying to suggest that convict-ed legislators are entitled toparticipate in the exercise offormulating laws? How canlawbreakers make the law?Our electoral laws are defec-tive and must be amended.

MAHESH KAPASI

New Delhi

Just a UselessPack of CardsThis refers to Dont Deny Ben-efits to Those Without Aadha-ar: SC to Govt (ET, Sep 24). Iwent and gave my fingerprin-ts and completed all the form-alities for this card, which, ofcourse, I am yet to rece ive. Butit was just politicaldadagarito compel me to get myself onemore useless card. I alreadyhave an Election Card, Senior

Citizen Card, PAN card, andnow, to add to the collection,one more card that still leavesme niraadhaar. I also have aliquor permit card (with mymugshot) that no one cares tosee when I buy the stuff.

BEHRAM AGA

By email

Letters

The RBI has done immense disservice to industrial

growth in the short term by asking banks not to offer pop-

ular financing schemes for consumer durables dressed

up as zero-interest equated monthly instalment (EMI)

schemes. Industrial growth has been extremely weak foran extended period and the forthcoming festival season

is an opportunity for assorted consumer durable compa-

nies to step up their sales. The zero-down-payment, zero-

processing-fee, zero-interest EMI schemes an increasing

number of companies offer on a variety of products are

good for both consumers and for companies. The RBIs

move scuppers this opportunity to a large extent.

It is not the case that consumers are unaware that these

financing schemes entail real costs on account of inter-

est and documentation. They are aware that credit card-

issuing banks charge a financing cost that product com-

panies bear, to tempt consumers with zero offers. But

this is not their concern. Nor should it be the RBIs. If the

RBI is worried about the rates banks

offer, it is welcome to examine the

banks books and ascertain if any rule

is being violated. Why should the

bank regulator interfere with the be-

havioural economics at work when

consumers prefer zero finance op-tions on a higher price that bundles

financing cost with the product price to the transparen-

cy of a lower product price and an explicit overlay of fi-

nancing cost? Nor are consumers irrational. The cost

would be lower, when borne by the company for multiple

transactions all together, than when financing is offered

to individual consumers.

The only beneficiary from the RBIs move is the buyer

with sufficient purchasing power to not need a financing

scheme, now that the product would be priced lower,

taking out the financing cost by which price had been

marked up earlier. Product sales and industrial growth

would suffer, for the benefit of a tiny elite. This is a fetish

for transparency that benefits no one except bean coun-

ters at the RBI. The RBI should withdraw these strictures

gracefully and wish the economy a Happy Diwali.

Let Zero SchemesFinance Growth, RBIThis transparencyfetishserves littlepurpose

VITHAL C NADKARNI

Call it artistic licence or fatal-ly-flawed premise,The Lunch-boxhas given us an unlikely vi-llain: the rogue dabbawala! Henevertheless fosters a March-December romance with hismindless switch of lunch pails.Now, you might ask why a God-fearing-bhajan-singing dabba-walawould make the samemistake more than once.

Doesnt that oft-repeated mis-take then become a consciousdecision, as the anonymouswag said? To make that seemprobable, one looks upon thedabbawala as Cupid in disgui-se. For, if we dont put wingsand haloes on these poor chapsin Gandhi caps, they are stuckwith an image problem: by aconservative estimate, the cha-nces of a wrong delivery are as

low as one ineight million!So, the chanc-es of the wro-ngdabbagoi-ng to the samewrong add-ress day after

day ought tobe virtually zero. This is the pr-ovince of artistic licence: any-thing can happen in reel life,especially things that dontnormally happen in real life.

The fact that the same mista-ke gets repeated over and overagain with only mouthwater-ing change of menus also sug-gests that this is a cosmic coin-cidence. By stuffing himselfup with stuffed bitter gourdmade by a stranger, the dead-pan Bandra boy opens a verita-ble Pandoras box.

In its mythic connotation,Pandoras box supposedly con-tained all the evils of the wor-ld. But in our spiritually athe-istic/sceptical times, the phra-se merely means to perform anaction seemingly small, inno-cent and insignificant, but thatnonetheless leads to large, far-reaching consequences, suchas finding love in lifes twi-

light. Salute that!

Lunch atTiffinys

Spiritual Atheist

If India is pockets of California in themiddle of sub-Saharan Africa, as Am-artya Sen puts it, then Muzaffarnagar

is decidedly the latter. And, like mach-ete-wielding sub-Saharan tribes, Hin-du and Muslim mobs looted and killedeach other in a politically engineeredriot that left nearly 50 dead and 40,000displaced earlier this month.

This was a riot foretold: analysts hadwarned that the BJP and SamajwadiParty were colluding to polarise votes,extrapolating from their success inthe early 1990s. In the absence of out-rage from Indias Californians, the po-litical players retain the incentive tofurther divide voters, making this oneof Indias most violent elections ever,and completely wrecking the invest-ment climate in the country. This isnot alarmist: the dangers arising outof Muzaffarnagar are real and muchcloser than we think. Heres why.

First, history shows us that Indias fi-nancial capital suffers the major after-shock of sectarian violence in UttarPradesh. The Mumbai stock exchangewas the main target of Muslim extre-mists in 1993, after the Babri Masjiddemolition and the ensuing riots in

the city. It takes only a handful of riotsurvivors to turn radical and seek re-venge against a country that let themdown. Very likely, they would choose ahigh-profile, urban target.

Even if we avoid this dire scenario,the breakdown of trust between com-munities, as we see in Uttar Pradesh,has a deeply ne gative impact on busi-ness. Trust is the foundation of free

enterprise: trust in each other as mar-ket participants, in the fairness of thelaw and in the states monopoly overviolence. Trust and negation of viole-nce were running themes in the moralphilosophy of Adam Smith, the found-ing father of modern capitalism.

[A market society] cannot subsistamong those who are at all timesready to hurt and injure one anothe r,wrote Smith in The Theory of MoralSentiments(1759), the moment thatinjury begins, the moment that mu-

tual resentment and animosity takeplace, all the bands of it are brokeasunder. In Smiths view, when trustis shaken, individuals pull out in fearand the system contracts.

In a developing society like India,trust is made fragile by a corrupt stateand the citizens competition for scar-ce resources. Political demagoguesuse our human frailties to sow furthermistrust, in order to capture and abu-se state power: Indira Gandhi used theelites mistrust of the poor to imposethe Emergency; the BJP and Samaj-wadi Party have used sectarian mis-trust to their own political ends in theMuzaffarnagar riots.

In both cases, the silence of Indian

corporates was conspicuous: the lureof a strong leader during an econo-mic downturn bought their silence. Itis somewhat natural in a country thatis still struggling to come out of its sta-tist past business leaders get easilyco-opted by charismatic politicians ra-ther than speak their mind. The stro-ng leader fetish also betrays IndiaIncs lack of self-confidence to developa diverse society into a prosperousmarket. But companies will be big los-ers if they meekly allow politicians to

sow sectarian mistrust and violence.The decade after the 2002 Gujarat

riots was the most peaceful in inde-pendent India in terms of sectarianviolence. Not surprisingly, it was alsothe most prosperous. But now, India isseemingly falling victim to what someChina experts call the 5% rule: thatsocial tensions will rise if GDPgrowth falls below 5%.

In India, growth has already fallenbelow 5%, and sectarian strife hascropped up in Assam, J&K and UttarPradesh in the last year. Yes, electionseason has triggered the latest riots,but the groundwork was laid by in-creased competition over a shrinkingeconomic pie. In that way, the curre ntconditions are similar to the 1990s.

But Muzaffarnagar broke the pat-tern of largely urban riots in India this happened in villages. Its a signthat economic activity and competi-tion among rural communities has in-creased over the last few years. Thiscan cut two ways; in a peaceful envi-ronment, Muzaffarnagar can join the

next high-growth frontier of the Indi-an economy. On the other hand, if di-visive politicians have their way, it canbecome the hateful hinterland, a ter-rorism incubator.

Either way, India Inc can ignore Mu-zaffarnagar at its own peril.

The writer is Fulbright scholar andafreelance journalist

Why India Inc should CareAbout Muzaffarnagar

SOCIAL STRIFE

Sambuddha Mitra Mustafi

As elections approach andthe campaign gets shriller,the UPA and opposition pa-rties are in the market fortalking points to pin each

other down. The BJP gloats that itcreated more jobs in its five yearsthan UPA-I managed to create be-tween 2004 and 2009.

This is correct: between 1999-2000and 2004-05 when the BJP was in pow-er, the total number of jobs went upby a little more than 60 million. Bet-ween 2004-05 and 2009-10, the rise wasa paltry 2.76 million. The differencelooks dramatic, but some of the dra-ma is based on a statistical error.

Since nobody has the time and te-chnology to go around and ask 1.2 bil-lion Indians what they do for a living,economy-wide job numbers are com-piled after sampling a fairly large

number of people around 4,57,000 and then projecting what they dofor the entire population. Populationnumbers are measured by the censu-ses, where every Indian is counted.Unfortunately, the censuses take pla-ce once every 10 years.

So, we know what Indias popula-tion was in 2001 and what it was in2011, two census years. But between2001 and 2011, the government tookwhat it thought is the average pop-ulation growth rate and added thatto the next year, to get an approxima-tion of the population. Well, thoseestimates of the population were

wrong by a biggish amount.Indias population in 2011 was un-

derestimated by a little more than 18million. Thats a bit more than all thefolks in the Netherlands.

The lower the population num-bers, the lower will be the number ofjobs projected on to it. On July 27,Abhishek Shaw showed in The Econ-omic and Political Weekly (EPW) thatwith correct population numbers,the 2009-10 job numbers would actu-ally go up by more than four million.The UPA-I, therefore, added aroundseven million jobs in its tenure, notthe less-than-three-million numberestimated earlier.

The pace of job creation has sincepicked up: in 2011-12, more than ninemillion new jobs were added.

Office Chair to School BenchAway from banal TV debates, thequestion is whats causing the slow-down in the job market? Numbersshow an interesting thing: over time,more and more Indians especiallywomen are opting out of jobs. Isthis the result of discrimination, oris it because more and more girls,who would otherwise have startedworking, are opting to study, instead?

Writing in the EPW on August 3,

economist Vinoj Abraham foundthat it was a bit of both.

With all the women streaming inand out of offices and data centres,youd imagine that the proportion ofurban working women would haveshot up in the last 40 years.

But, no, Abraham finds that in ci-ties, the proportion of working wom-en has actually fallen, from a littlemore than 14% in 1972-73 to a littlemore than 13% in 2011-12. But thereal drama is in our villages, wherethe proportion of women at work hasshrunk from 32% to 18% in the sametime, a near-halving. Why?

He finds that as rural incomes in-crease, women are taken out of theworkforce. In families that are land-less or have tiny slivers of land, be-tween 40% and 19% of women work.Only 3.3% of women work in fam-ilies that have more than 4 hectaresof land. So, the richer you are, thebetter you can afford the prejudices

of caste and patriarchy that frown onworking women.

But there is a hugely positive storytoo, one for which the Congress canclaim all credit. Today, thanks to effo-rts like the Sarva Shiksha Abhiyaanand the Anganwadi system, moreand more girls in our villages aregoing to school and opting to studylonger years.

Sfor StudyIn 1983, around 29% of village girlsbetween 5 and 15 years old were inschool. By the time they turned 16,this dropped dramatically to 4%.Only 0.6% of village women contin-ued into colleges and higher studiesbetween the age of 21 and 25.

By 2009-10, the beginning of theUPAs second term in office, thesenumbers had changed dramaticallyfor the better.

That year, 85% of village girls aged5 to 15 went to primary school, 35%went to high school, and more than4% of girls between 21-25 years ofage continued with higher studies.

Writing on the BlackboardThis is an amazing achievement, onethat India can boast of to the rest of

the world, but that, str angely, has sli-pped below the radar of public disco-urse. Thats not all. Abrahams studyshows that this near-universal edu-cation for village girls cuts across allincome groups. In 1983, 38% of thegirls from the wealthiest familiesand only 9.2% of the poorest familieswent to primary school.

In 2009-10, more than 63% of bet-ter-off village girls were in school.And even from families that were thepoorest tenth of the village populati-on, a staggering 52% of girls were inprimary school. Much of this musthave been made possible by the floorunder rural wages that the NREGAhelped to set.

Today, I cant wait for the moment-ous social, economic and institution-al changes that this bunch of educat-ed young ladies will force on India inthe next years and decades.

School for Revolution

Abheek Barman

Today, thanks to the Sarva Shiksha Abhiyaan and theAnganwadi system, more girls in our villages aregoing to school and opting to study longer years

ARINDAM

Thereare severalreasons forlowjobgrowthandone ofthemcouldbehugelyempowering

RICHARD THALER

A choice architect has the res-ponsibility for organising thecontext in which people makedecisions. If you design the ba-llot voters use to choose candi-dates, youre a choice archite-ct. If youre a doctor and mustdescribe the alternative treat-ments to a patient, youre a ch-oice architect. If youre a pare-nt, describing possible educat-ional options to your son or da-ughter, youre a choice archi-tect. If youre a salesperson,youre a choice architect

The libertarian aspect of ourstrategies lies in the straight-forward insistence that, in ge-neral, people should be free todo what they like and to optout of undesirable arrange-ments if they want to do so

When we use the term libert-arian to modify the word pat-ernalism, we simply mean lib-erty-preserving. Libertarianpaternalists want to make iteasy for people to go their ownway; they do not want to burd-en those who want to exercisetheir freedom.

The paternalistic aspect liesin the claim that it is legitima-te for choice architects to tryto influence peoples behavio-ur in order to make th eir liveslonger, healthier and better.

In other words, we argue forself-conscious efforts, by insti-tutions in the private sectorand by government, to steerpeoples choices in directions

that will improve their lives.In our understanding, a policyis paternalistic if it tries toinfluence choices in a way thatwill make choosers better off,as judged by themselves.

From Nudge: Improving

Decisions About Health,

Wealth and Happiness

On PolicyDesign

Citings