Thoughts on economics and liberty

Category: India

Mythical barriers to joining politics

Sanjeev Sabhlok

(This article was published in the March 2009 issue of Freedom First)

The February issue of Freedom First carried some of the best writings published in this magazine over the past fifty years. But most of these writings perhaps fell on deaf ears, for they advocated freedom at a time when few Indians cared about freedom. Indeed, Indians don’t seem to care much about freedom even today. Law and order has deteriorated, and corruption has become entrenched, but defenders of liberty are nowhere to be seen on the political stage.

Since the Swatantra Party wound up in 1974, virtually no liberal has bothered to contest elections. Yet the basic entry fee for contesting elections in India has remained low – merely a security deposit of Rs. 10,000. There is also no obvious shortage of people with liberal inclinations. And while many young liberals with families may be hard-pressed to contest elections, thousands of retired liberals can surely be mobilized for the defence of liberty.

So why aren’t liberals contesting elections regularly and in sufficient numbers? Are they scared of ‘dirty’ politics and electoral violence? Do they believe elections are too costly? I will show below that these barriers are not as bad as we make them out to be. In any case, the existence of such problems is all the more reason for us to join the fray and fight to change the system.

Myth 1: Indian elections are excessively violent
The belief that our elections are excessively violent is somewhat overdone. Of course, there is some electoral violence, but its magnitude is small in comparison to India’s size (we should avoid comparing India with developed countries at this early stage of our development). Of our six lakh villages, only a few hundred will experience violence, with possibly a few hundred people injured and a dozen or two killed. Booth-capturing is also the exception than the norm. Similarly, the Indian Police is particularly good at protecting candidates: virtually no candidate is assaulted or killed of the many thousands who contest. And so, while we should take due precautions, merely contesting elections won’t (generally speaking) kill us.

Myth 2: Money wins elections
The second myth relates to money. We know that many parties spend crores of rupees in elections. Accordingly I was recently told: “You require at least 2 crores to fight a parliament election.” True, most corrupt parties do such things but why should we copy these corrupt gangsters? Aren’t we different? We believe in integrity. We do not break the law, even though we disagree with it (I strongly disagree with limits on electoral expenses). We must therefore stick with the Rs. 25 lakhs expense limit prescribed for parliamentary elections. Raising this amount is far easier than raising Rs. 2 crores, particularly for outstanding liberals with good networks.

Then there is the belief that money buys electoral results. It is thought that basti wallahs sell their votes for “Rs.250/- cash, a packet of Biryani and a sachet of country arrack”. But the reality is that voters take money from whosoever gives it to them, but then vote (in the quiet secrecy the polling booth) for the candidate they actually believe in. I know of a politician who disbursed Rs.35 lakhs in slum areas in Mumbai in a single night but lost the election! In any event, bribing every voter can be astonishingly expensive, costing over Rs. 30 crores per constituency! No one spends that much in any election.

At the broader level, I question why even Rs. 25 lakhs is really necessary. Some reflection will show that electoral results depend primarily on the following four things.
a) The message. While the average voter is not interested in the details of policy, he wants to know what the proposed policies will mean for him. A well-tailored campaign can make a great difference, and that does not mean throwing money around.
b) Time spent talking to the electorate. Good candidates spend a lot of time in their constituencies to build networks of supporters.
c) Quality and commitment of the candidate. Good candidates speak coherently and demonstrate commitment to their constituents’ interests.
d) Credibility of the bid. The Indian voter is highly strategic and doesn’t waste his vote on independent candidates or on ill-prepared ‘one-man political parties’. He wants to know that the candidate he will vote for has a genuine chance of becoming a part of government.

While money can facilitate these things, it is not the key driver of success. If liberals do their homework and work as a team, then even Rs. 25 lakhs won’t be needed to win. Ask the Janata Party which trounced the corrupt Congress of 1977. Or ask the Telugu Desam of 1982, or Asom Gana Parishad of 1985. Many of these parties were formed weeks before elections and barely spent any money, but won huge majorities.

Time to stop making excuses!
If contesting elections is not that dangerous nor that expensive, then why do we find so many excuses? Highly successful organisational leaders tell us with a serious face that they “don’t have the leadership capability to lead India”. If even these excellent people think they can’t lead us politically, then who can? The local gangster?

Nandan M Nilekani of Infosys wrote in Imagining India that he is “quite unelectable” – thus conveniently washing his hands off politics. Apart from the fact that it is highly presumptuous for anyone to assume the response of the voter, all that the voter really wants is a demonstration of good citizenship, not some mythical glorious leadership. I therefore ask Mr Nilekani and others like him to stop making excuses and join politics as good citizens. Give our voters a chance to elect good people.

Maybe (I hope I’m wrong on this one!) some liberals have big egos which will receive a rude jolt if they lose elections. If the idea of losing elections prevents people from contesting elections, let me assure them that fighting elections honourably will be seen by every right thinking person as a sign of good citizenship. Indeed, the benchmark in politics is so low that any good person who enters politics will be highly regarded. Beyond that, the true liberal must never be bothered about victory or defeat. We are obliged to do the right thing irrespective of results. The fight for freedom is too important for us to make our fight contingent on future success. Let us first get out there and fight for our freedoms. Let the fight succeed whenever it will; that is not for us to worry about.

A good liberal platform needed
The real gap today is not of funds or potential leaders, but of a platform where good people can assemble and offer a viable alternative to the voter. That is what the Freedom Team of India (FTI) aims to become. FTI has now developed a professionally designed website ( and well-written brochure. Please take a look at these for yourself and ponder your future plans. Do you want to continue making excuses for the rest of your life or are ready to work as a team to start defending your liberties?

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When will I enter full-time politics in India?

(This post is work in progress). A member on FTI asked me about my political plans for India. This is the current situation.

Joint responsiblity
I have wanted to be in full time politics since 1998, but various constraints have prevented it. My family commitments must get first priority. The reform of India is a task for all of us – indeed, of all citizens – not mine alone by any means.

I do expect to come back when financially not significantly worse off (not just for one year or two, but for my entire life). Sharad Joshi gets a substantial UN pension for life – that has left him free to do politics full-time upon his return from Geneva. Therefore he is the only full-time Indian liberal politican today. I am not so blessed, and my attempts to seek funding so far have failed, though I remain hopeful

For instance, I had offered to work in 2000 with CCS for life for a relatively small amount – only $20K US per year indexed for life – but that was too high for CCS to afford at that stage. Now my financial situation is far more complex, and the amount needed to get me to India full-time may exceed $150K AUD pre-tax to pay my mortgage, etc. The fact that I didn’t stay on in India in 2000 has turned out be a good outcome. It forced me to gain experience in a developed country bureaucracy – and also forced me (as I started writing my book/s) to think more clearly about what I stood for. The importance of leadership became clearer to me thorugh experiences in Australia. These things wouldn’t have happened if I had continued in India as part of CCS.

In addition, I’ve been looking for appropriate jobs over the past 3 years that will take me to India but have not been successful on that front yet. If nothing comes up I expect to be able to return in 10 1/2 years at age 60 when I will get an old-age pension in Australia (provided I continue my citizenship) which will mean I could retire from work here and work in India with fewer financial constraints – but that will also mean I won’t be able to contest elections. Delaying for 10 1/2 years is not my preference.

One possibility is that once 1500 members join FTI, there will be sufficient momentum and funding for people like me who want to return and work for FTI and politics full time. Currently, working as a ‘full-time’ second, unpaid job is all I can afford.

Btw, I am aware that similar constraints may apply to a number of others on FTI as well. One thing I don’t want is for any of us to reduce focus on our primary responsiblity – towards our families – for the sake of our secondary (joint) responsibility (country). The liberal must know his priorities. No one is better placed to look after our families than us. If I hear of any liberal who has acted irresponsibly towards his family (and I’m guilty of that at least in part in terms of time I devote), I’d know the liberal has some work cut out for him.

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India need not live with poverty

By Sanjeev Sabhlok* (written in 2000; possibly published  in Agenda for Change by Bibek Debroy while at the Rajiv Gandhi Institute – he said he'd published it, but I don't have a copy)

This paper can't be converted into this blog because of its tables, etc. Hence the link: Click

Also related to this, a proposed pilot project to implement the NIT idea
Elimination of Poverty in Mylliem Block: Project Outline
available at

In brief, as I mention in detail in Breaking Free of Nehru, (BFN) the concept of Negative Income Tax derives from idea of a level playing field (reasonable equality of opportunity). It is radically different from socialist concepts (including welfare socialist concepts) of equality of outcomes. It is unrelated to economic equality at any level.

BFN explains this at length, – some material is in the 'Online Notes'. My second book, The Discovery of Freedom clarifies why this is compatible with reasonable equality of opportunity (equal freedom) and different from Rawlsian welfare socialism. The level of NIT is only the 'top-up' needed to achieve a FRUGAL level of existence, sufficient to allow a fully functioning body and mind. Much more important in terms of equalising opportunity for all is high quality school education for all children and emergency health care for all.

More later as I find time. This should do for now.

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India’s centralised approach to urbanization

The following article was published in Freedom First, November 2008.

Sanjeev Sabhlok

The Freedom Team of India is trying to bring together 1500 like-minded liberals willing to contest elections as a coherent group from 2014 onwards. The Team aims to ultimately offer the Indian people a choice both of good candidates and good policy. As the Team continues to grow, albeit slowly, I want to start discussing issues which could inform the policies offered by the Team. I begin by looking at urban policy.

Productivity gains from urbanisation

In 1776 Adam Smith wrote about division of labour as the major driver of productivity in free societies. While the assembly lines seen in factories are a good example of this division of labour, specialisation is now an even more widespread part of modern life. Another driver of productivity, highlighted by Alexis de Tocqueville in 1835, is social capital arising from the vibrant associations and networks of like-minded people. Both these drivers of productivity require people to live close together, and thus form the motivation for urbanisation. The average Indian, however, has not yet benefited from these productivity-enhancing features, with only 28 per cent of Indians living in urban areas today, compared with 44 per cent of the Chinese, 78 per cent of the Americans, and 86 per cent of the Australians.

Before we examine how urban areas can be managed to cope with increased urbanisation, we should ask whether it is feasible for a country like India to live predominantly in cities? How is it possible, we wonder, to feed a huge urban population?

The answer is that a relatively small population should be able to produce all the food we need after we reform our agricultural policies. Such reforms should lead to increased mechanisation and productivity. Since agricultural reforms will require a separate discussion, let us, for the moment, assume that it is possible to increase agricultural productivity to feed up to 600 million additional urban dwellers. In addition, let us assume the existence of good education and health policies with the result that rural migrants to urban areas stand a real chance of being productive. We also assume incremental and organic growth of urbanisation, not a forced approach.

Local governance at the heart of urban reform

We all know that today, even with our extremely low levels of urbanisation, our urban areas are in a bad shape. My sister owns an IT company in Delhi and travels all over the city daily. She was complaining the other day to me that it now takes her two hours to cover the distance which took her an hour ten years ago. Such congestion not only hurts businesses but also reduces social capital as it becomes increasingly difficult for people to associate with each other.

So how can we start improving our urban areas? We need to increase urban infrastructure and improve the urban environment while avoiding the congestion which can quickly reduce the gains from urbanisation. Three principles can inform the governance arrangements for urban reform: good incentives, accountability, and subsidiarity.

The principle of subsidiariaty says that ‘a central authority should have a subsidiary function, performing only those tasks which cannot be performed effectively at a more immediate or local level’. This tells us that state governments must stay out of urban management, which is a local matter. This should be in the hands of local councils that service, say, about two lakh people each. For instance, New York has 51 councils and Melbourne has 28. So Delhi should have 60 councils. Instead, we have mega-municipalities which have little or no local representation and are far removed from ground realities.

For the states to create the third tier of government at the urban or rural level it was not really necessary to amend the Constitution. But with the 74th amendment there can now be no excuse for the states to avoid creating such a third tier. Unfortunately, the states still refuse to do so. Instead, tenured generalist bureaucrats without the foggiest idea of good policy and without any accountability to anyone, are charged today with ‘managing’ our cities using their exaggerated notions of personal wisdom and perspicacity, with no participation from the citizens.

This needs to change. The state governments must create a framework of laws for the local councils to implement. This framework should link urban and rural councils and reduce the dichotomy between these two. The framework must delegate key functions like land planning and zoning, land acquisition, local (third tier) roads and parks, libraries, community halls, and waste disposal to the councils. Food and other inspections should also be dealt with by councils. The state can retain the role of coordinating the records of land use and ownership.

To fund these services, the councils should be empowered to raise land taxes and rates, and to recover unpaid dues from recalcitrant residents. Councils which want to attract wealthier residents will then provide better infrastructure by charging higher rates. Since all the infrastructure needs of urban areas cannot be funded through rates and taxes, the councils should be empowered to issue long-term bonds to fund these needs. Citizens will then be free to pick the council that best suits their budget and preferences. The competition between councils will generally keep the rates low and the services high.

It is important for the councils to have sufficient representation. The ratio of representatives to citizens must be in line with international best practice. For instance, Delhi should have 300-600 elected councillors including 60-odd mayors. Of course, these political representatives would need to be held to account through elections held every three years. In addition, the state government would need to retain a judiciously exercised power to dismiss corrupt councils and order new elections.

To ensure a clear line of sight of accountability, elected councillors would have to be fully empowered to hire the chief executives of their councils on a performance-based contract at market rates, and to fire them for non-performance. This contract should be based on an understanding of the principal-agent problem and the use of the right incentives. These chief executives, in turn, would need to be empowered to hire (and fire) the best professional land planners, environmental scientists and landscaping specialists. This approach, followed in many developed countries, achieves the best results for the community.

Coordination issues, and migration

How will the councils in large cities coordinate their diverse plans? The association of councils will be able to coordinate most issues, including long term plans for the relevant city. The state government can help if asked to. These professionally managed councils will also be able to manage the migrations from rural areas effectively. Since new migrants generate wealth, the councils will likely complete for new migrants by providing relevant infrastructure to make best use of the new migrants’ talents.

In brief, this model of responsive and accountable decentralised government, based on the principles of freedom, will lead India to dramatically better cities and ensure that it can meet the forthcoming challenge of mega-urbanisation and wealth creation.

* * *
As usual, before closing this write-up, I would like to urge you to consider leading
India. Consider joining the Freedom Team ( Write to me.

Contact Sanjeev at sabhlok AT yahoo DOT com

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