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Showing posts with label politics. Show all posts
Showing posts with label politics. Show all posts

Friday, February 11, 2022

Review of "The Rise of the BJP: The Making of the World's Largest Political Party" by Bhupender Yadav and Ila Patnaik

by Josh Felman.

In 2014, the BJP secured a remarkable victory. They won an absolute majority in the Lok Sabha elections, the first time any political party had done so in three decades. Then, five years later, they repeated this feat, increasing their majority. Now, they dominate the national landscape in a way not seen since the heyday of the Congress party, half a century ago.

How did this happen? Most analysts give a one-word answer: Modi. Others give a two-word answer: Modi-Shah. Without doubt, Narendra Modi and Amit Shah are exceptional politicians and strategists. But life is complicated, and great men cannot entirely determine the course of history.

One reason why the BJP won in a landslide in 2014 is that Congress completely mismanaged the economy. The party proved unable to deal with the fundamental problems that emerged after the Global Financial Crisis, such as the sizeable non-performing loans at the banks. Instead, they tried to resuscitate the economy through lax fiscal and monetary policy, a strategy which failed to revive growth, producing only double-digit inflation. Then came a spate of scandals, and the government became paralyzed, unable to do anything at all.

Even so, it is wrong think that the BJP was merely the accidental beneficiary of Congress' collapse. As this book stresses, the BJP has been rising for a long time.

Sometimes a picture is worth a thousand words. So consider the following chart. It shows that despite a notable dip in the 2000s, there has been a clear trend to the BJP's representation in the Lok Sabha. And that trend is upward. The BJP was formed in the 1980s, initially earning just a few seats. By the mid-1990s, it had become the largest party in Parliament.

How can we possibly explain this development? This book provides an answer. Not "the" answer, of course, but a particularly valuable answer, for the explanation comes from a BJP insider. Unlike most books written by politicians, this work avoids the intricacies of long-forgotten debates and refuses to engage in score-settling. Instead, this is a serious work, covering the entire sweep of independent India's history, documented with extensive footnotes -- exactly as one would expect from the co-author, who is a noted, non-political academic. (Full disclosure: I have also been a co-author with Ila Patnaik.)

The aim of the book is to explain how we have arrived at the current political pass. Of course, it does so from a BJP perspective. But that is exactly the need of the moment: we need to understand what the BJP believes, as these beliefs will translate into actions that affect all of us.

So, what explanation does the book provide? Essentially, it argues that the rise of the BJP stems from two factors: its organizational ability and its message. Of the first, the book makes a convincing case. Indeed, no reader – no matter what his or her political view – can finish this book without a sense of awe. It’s not just that the party has come up with one brilliant idea after another, such as "multiplying" their Prime Ministerial candidate by projecting 10-foot holograms of Modi in 200 cities across the country. Even more astounding is the BJP's ground game.

Consider the BJP's strategy for the 2014 election. The party developed a booth management strategy, under which leaders were assigned to every single one of the 1 million voting booths in the country. Each leader supervised around 50 individuals, whose job it was to meet with around 30 voters and convince 15 of them to vote for the BJP.

This arrangement required an incredible amount of effort, coordination – and manpower. Simple arithmetic shows that 50 leaders for 1 million booths required no less than 50 million party workers. For the 2019 election, the party mobilized 110 million members. How on earth did the BJP manage to convince so many people to work so hard for the party?

One strategy has been to convince members that they are part of a family. They even have a slogan for this: Mera Parivar, Bhajpa Parivar (My family is the BJP family.) In practice, this means that the life of a party worker is dominated by an endless calendar of events: campaigns, followed by political activities, interspersed with visits from seniors. Particularly strenuous efforts are made to nourish connexions amongst members from all strata of the party, with seniors being asked to share meals with workers on their visits to the regions.

Another strategy is to employ the highly motivated swayamsevaks (volunteers) of the RSS. The authors are unequivocal about the links between the RSS and the BJP. They emphasize that the predecessor of the BJP, the Jana Sangh, was founded with the explicit purpose of giving a political voice to the RSS' vision for India. And they note that the BJP was born when the leaders of the Jana Sangh were forced to choose between their commitment to the RSS philosophy and their political career in the Janata Party. They chose to stay true to their ideology.

The devotion to this ideology remains strong to this day. Prime Minister Modi has said, 'I am connected to the mission and not ambition. In my life, mission is everything, not ambition'.

So, what exactly is this mission? Put another way, if the second reason for the BJP’s success is that it has developed an attractive message, what exactly is that message?

In some areas, the book gives a clear answer. It says that right from the start the BJP has focused on the fight against corruption. Its first major success came in 1987 when it was able to pin the Bofors scandal on the Congress Party, accusing their senior officials of taking bribes in return for granting a large defence contract. In 2002, Venkaiah Naidu became BJP President partly on the strength of his credentials as convener of an anti-corruption movement in Andhra Pradesh. And of course corruption was a major theme of the 2014 election.

Another key element of the BJP mission, according to the book, is improving the standard of living of the poor, the people whom the Jana Sangh used to call the 'last man in line'. The Modi government came up with a particularly effective way of doing this, by providing the poor with tangible benefits such as LPG gas cylinders and toilets – and cash transfers, paid directly to newly created Jan Dhan bank accounts. These programs created a direct link between the party and the poor, earning in particular the loyalty of female voters.

In other areas, however, the book is much less precise. For example, we are told repeatedly that the BJP believes in "nationalism". But it is not clear what this means. After all, Congress is also a nationalist party; indeed, they led the independence movement against the British.

Some commentators claim that the BJP's nationalism is different because it is a communitarian vision, focusing on building a Hindu nation-state. The BJP strenuously denies this charge. Indeed, the word Hindutva is not to be found anywhere in this book. Instead, the BJP views itself as the party of true secularism, devoted to the principle that no group should be treated differently by the state. Accordingly, they oppose triple talak divorce and special status for Kashmir – because these policies treat different groups differently.

But this argument sits uneasily with the claim that the BJP believes in 'cultural nationalism'. The book takes great pains to stress that this phrase refers to an all-Indian culture, coming out of many traditions: Hindu, Muslim, even Western. But the only traditions the BJP has mobilized to defend – at least the only ones mentioned in the book are Hindu traditions.

Particularly striking is the framing of the dispute over whether to build a Ram temple on land where a mosque was standing. As the book puts it, for the BJP, Ayodhya was not a land dispute; "it was a mission to unite India with the thread of cultural nationalism". The argument seems to be that the country should have united behind this plan, since it honoured an important tradition, the place where Lord Ram was reputed to be born. But many people did not see things this way, and the dispute proved enormously divisive.

That said, the BJP's message of cultural nationalism does resonate with a significant section of the population, giving it a compelling message to go with its superb organization and millions of devoted members. That makes the BJP a formidable vote-getting machine. No wonder it has just risen and risen.

But history teaches that a relentless rise is often followed by a disastrous fall. Indeed, one doesn't have to look very far to see an example of this process at work. Right after independence the Congress Party bestrode the political landscape like a colossus, winning 364 out of the 489 contested seats in the first parliamentary election. But since the 1970s it has gradually decayed, to the point where it holds only 52 seats in the current Lok Sabha.

The BJP has thought long and hard about this example, concluding that Congress declined because it failed to nourish its roots during its long period in power. To make sure this doesn’t happen to them, the BJP not only pays considerable attention to sustaining morale amongst its party members (as already mentioned); it also takes great care to avoid the perils of dynastic leadership. The BJP offers a clear path for ambitious young supporters, who can start with party work, progress to a role in government, and then take up role of an elder statesman. To ensure that this career ladder is not blocked by elderly seniors, members are expected to step aside from active operational roles once they reach the age of 75. It will be interesting to see whether this practice continues, now that the party has a firm hold on power.

Beyond the constant need to replenish the party with new energy, the BJP faces another challenge, one that will be even more difficult to manage: it must meet the needs of the nation. Without doubt, the BJP has found a way to satisfy what we could call 'Cultural India'. But meeting the needs of Aspirational India, the hundreds of millions of young people looking to find good jobs and raise their living standards, will be a far more difficult task.

The current government is fully aware of this problem, having inherited an economy that was in shambles. Accordingly, it has implemented reform after reform, including Inflation Targeting, the Insolvency and Bankruptcy Code, and the Goods and Services Tax. But the economy has still failed to take off, as investment has remained stubbornly low.

So far, there have been no political consequences, as the public has accepted that it will take time to restore an economy that was in such bad shape when the current government arrived. But the BJP knows that at some point, the public will demand results.

Accordingly in 2020, the government decided to change tack, abandoning the post-1991 policy of opening up the economy in favour of a new approach, Atmanirbhar Bharat ('Self-Reliant India'), whereby tariffs are being increased to encourage import substitution while production subsidies are being given to firms selected by the government. It is still early days, but there is little in India’s history or that of Asia more generally that suggests this strategy is likely to work. In that case, trouble for the BJP may lie ahead.

For far too long, the nature of the BJP has remained a mystery to the English-reading public. Finally, we have an authoritative presentation of their point of view, one that allows us to understand better how the BJP has risen and what it believes. For anyone who wants to understand how India arrived at the current juncture – and where it is likely to go in the future – this book is a must read. Buy it and read it carefully.


 

Josh Felman is the principal at JH Consulting.

Thursday, January 20, 2022

Review of "The Rise of the BJP: The Making of the World's Largest Political Party" by Bhupender Yadav and Ila Patnaik

by Ajay Shah.

The INC emerged as the dominant party after independence. A similar phenomenon was seen in other countries, e.g. the PRI in Mexico. With the 2014 and 2019 Lok Sabha election results, the BJP emerged as a dominant force in Indian politics. For everyone interested in India, we need to learn more about the sources of this success, and about the nature of the BJP as a political party and as an organisation. Many books about the BJP have been written. I found the new book insightful and thought provoking; it has many new ideas, it made me think in new ways, it changed the way I see the world.

Many simple stories are told about the rise of the BJP, e.g. around nationalism. I have been skeptical about the extent to which these can be at work. After all, `National' is the middle name of the INC, and after winning the war in Bangladesh in December 1971, Indira Gandhi's INC rapidly collapsed into a political crisis in 1973-1975. Perhaps we underestimate voters, perhaps we are too ready to impute base passions upon voters. We need to think more about the forces at work.

An insightful path for thinking about the world is to see the role of organisations, of teams of humans that come together to achieve complex tasks. To understand an organisation, we must understand the mechanisms of information, incentives and power that bind the group of people together, and generate actions by each person that are adequately consistent with the objectives of the organisation. This way of thinking yields insights about for-profit firms, into the large magnitudes of resources that are used by Indian state organisations which fail to deliver on their organisational objectives, and also into political parties. It encourages us to think about deeper forces rather than concepts like popularity of individuals or the passions of the street. In the book, I found new insights into the BJP as an organisation.

In this organisation-oriented approach to the evolution of Indian party politics, we would tell a story where in 1947, the INC was the only game in town. It had built a complex organisation under highly adverse conditions, of British rule, of a low probability of personnel achieving personal benefits from political activism, and of limited resourcing owing to the fear of rich people. The organisation design of the INC, that worked 1919-1962, broke down thereafter. The arrangement of information, incentives and power, that worked for the freedom movement and for the early decades after independence, were no longer optimal for the later period. In parallel with this decline of the INC as an organisation, the book tells the story of how the BJP built a more effective organisation design.

A major theme of the book is political mobilisation of the masses. A hundred years ago, Gandhiji got people to get involved, to march on streets, to turn the other cheek when faced with state violence. In a lost age, people walked many kilometres to catch a tiny glimpse of Nehru and hear a raspy voice crackling in loudspeakers. The precise recipes for mobilisation change over the years. When the people lost interest in listening to politicians, there was not enough fundamental thinking; many organisation people tried to cover up for the loss of interest through manufactured crowds. When I have been in political rallies in India, I have often seen listless people.

The BJP innovated with an array of process methods for political mobilisation. Whether it is a yatra or a divas, they have developed clear names and process methods for a continuous heartbeat of political mobilisation that is now taking place all across the country. Regardless of the extent to which there is a base that is ideologically motivated, a lot of people are attracted by the drum beat of activity and a sense of belonging to a club. The massive scale of mobilisation activity all around the country helps pull in enough voters who would otherwise be non-ideological, to get to the 37% vote share.

There is an ironic link between INC welfarism and BJP mobilisation. The Indian left and the INC focused the union government towards welfare, and built the UIDAI system. The BJP has built a remarkable system for reminding the recipient of welfare, all around the country, that the subsidy has come from Mr. Modi. We marvel at the complexity of information processing, in getting precise and personalised facts out to millions of party workers who talk with hundreds of millions of voters. These were unintended consequences of the emphasis in the Indian state upon subsidies and not public goods.

In understanding India, we need to think more about the BJP. We have to look beyond the `crests of foam that the waves of history carry on their strong backs'. Bhupender Yadav and Ila Patnaik have written a valuable book which helps us understand the phenomenon and direct our curiosity into a new set of questions.

Thursday, February 27, 2020

Does synchronization of elections matter? Evidence from India

by Vimal Balasubramaniam, Apurav Yash Bhatiya and Sabyasachi Das.

Many countries across the world hold elections for multiple levels of the government on the same day. Examples include the United States, Brazil, Sweden, South Africa, Indonesia, among others. Importantly, there has been an increasing demand to synchronize elections across tiers of governance in both Europe and India. In India, the Law Commission, and other bodies, highlight that elections are expensive and find that "holding simultaneous elections would be ideal as well as desirable". The implicit assumption in these discussions is that the question of when voters make decisions about their national and state representatives may not affect how they make these choices and consequently, the election outcomes that emerge from them.

In our research, we examine whether synchronized elections in India lead to significant changes in voter behaviour. We refer to an election in India as synchronized if the national election (or general election, GE) and the state election (or, assembly election, AE) occur on the same day. Otherwise, we say that the elections are non-synchronized.

Specifically, we ask the question how the probability that the same political party wins a seat at the Lok Sabha and the Vidhan Sabha changes when elections are conducted on the same day as opposed to on different days. For this, we compare the same assembly constituency over time with synchronized elections against those that happened on different days. For non-synchronized elections, we pair a national election with state elections that occurred after it and before the next national election.

We find that synchronized elections increase the probability that the same political party wins a seat both at Lok Sabha and Vidhan Sabha by 0.089, which is about 21% of the base probability of 0.42. One concern about interpreting this estimate as an effect due to synchronization is that a long time gap between national and state elections for non-synchronized elections may confound our ability to pin down a plausible causal interpretation of this estimate. We vary the time gap between the elections in any given pair of national and state elections from 150 days to 270 days, and our estimates range from 0.15 (for 150 days) to 0.082 (for 270 days). The estimates are, however, not statistically significantly different from each other. Our preferred specification is the one that limits the time-gap to 180 days -- an estimate closer to the lower bound that we find -- to account for qualitative reasoning that provides plausible exogeneity in the scheduling of elections.

Figure 1 below highlights the approach we take to this study with heat maps for the probability of the same party winning both the parliamentary and state constituencies without (Case 1) and with (Case 2) synchronized elections. Synchronized elections increase the probability of a political party winning both the Lok Sabha and Rajya Sabha seats. We show this for the ten states that fall within our sample for our preferred estimate. With the exception of Odisha – which has an opposite pattern – all other states in our sample present an increase in the likelihood of electing the same party.



Case 1: Unsynchronized Elections


Case 2: Synchronized Elections
Figure 1: Prob (Same Party winning both PC and AC)

This significant consequence of synchronized elections may not occur in isolation. We characterize the voting environment and find that the winning margin in any given contest at a constituency is on average no different between synchronized and non-synchronized setup. However, there is an increase in turnout for national elections to level with the average turnout for state elections during non-synchronized elections. This suggests that the fraction that participates in state elections is in general much higher than in national polls.

We explore the potential channels that drive this significant effect of synchronization. We find that synchronized elections reduce split-ticket voting -- the Euclidean distance between the vector of vote shares of political parties in parliamentary and assembly constituencies is significantly lower in synchronized elections. This reduction in split-ticket voting could be both demand and supply-driven.

On the supply side, political parties could homogenize information sets and hold similar campaigns for the two elections when they happen on the same day. They could manage greater engagement with voters on the ground due to economies of scale with campaign resources during synchronized elections. Both these factors could align a voter to a single party. On the demand side, it may be that the cognitive demand to rationalize voting for two different parties in the two elections when they vote for them at the same time is high. This increase in decision complexity may give rise to voting for the same party when elections are synchronized. To explore these motives, we use national and state election survey data collected by CSDS for a representative sample of individuals compiled within two days after every election in India.



Panel A: Voters Decision


Panel B: Election Priorities


Panel C: Voting Consideration


Panel D: Election Issues
Figure 2: Micro-data Evidence

We present the evidence from micro-data in Figure 2. We find that voters spend more time deliberating on elections when they are synchronized (Panel A), voters are less clear about objective functions for electing their representative for the two governments (Panel B). Additionally, we find that voters reduce the dimensionality of their choice by looking at political parties more than individual candidates (Panel C). Lastly, we find that voters are more ambiguous about the issue that matter the most for their choice of the vote (Panel D). These observations strengthen our claim that the cognitive challenges of choosing two candidates at once may not be a trivial constraint, especially in a parliamentary democracy where the elected representative matters to how the citizens voice their concerns to the state. And the objective function for the voter for the two elections is compromised with synchronized elections. Thus, we observe a rise in a simple solution of voting for the same political party during synchronized elections.

A critical reason for support to synchronized elections is the cost of holding elections. Holding elections on different days does have high electoral costs both for the governments to organize the elections and for the political parties to participate in them. The most recent General Election in India in 2019 cost Rs.5,000 crore or about 700 million USD.

Recurring elections not just imply more monetary cost but also the loss of governance time as politicians focus their time on campaigning and bureaucrats remain occupied with election work as opposed to implementing policies and public projects. The deployment of security forces away from their primary objective for electoral purposes also imposes further costs on the state. Lastly, the model code of conduct, it is claimed, affects public policy-making.

Such costs may reduce by holding synchronized elections had there been no impact on voter choice and decisions or on the real economic outcomes in India. Our results imply that a direct consequence of synchronized elections is synchronized representation. A growing body of work on political alignment provides mixed effects on real economic outcomes. Political alignment could increase the transfer of resources from the national government to subnational governments in India (Rao and Singh, 2003; Khemani, 2003). However, more recent work highlights that patronage networks and rent-seeking by local politicians may strengthen in politically aligned areas, leading to inferior public service quality. The development consequences of synchronized elections, therefore, are far from straightforward.

Our paper documents that when voters choose their representatives for Lok Sabha and the Vidhan Sabha matter to election outcomes. The administrative gains from synchronized elections, therefore, need to be weighed against benefits from voters evaluating different tiers of government without any overlapping ambiguity.



Vimal Balasubramaniam is researcher at Queen Mary University, London; Apurav Yash Bhatiya is researcher at University of Warwick, UK; and Sabyasachi Das is researcher at Ashoka University. This paper was presented at the APU-NIPFP workshop Strengthening the Republic, January 11, 2020.

Friday, May 24, 2019

The EVM – VVPAT saga

by Abhay Bhatt and Rajeeva Karandikar.

There has been lot of grumbling in the Indian media about Electronic voting machines (EVM), esspecially over last 3 months, with opposition parties accusing the government of manipulating EVMs. This reached a crescendo recently when all the opposition parties joined hands and filed a petition in the Supreme Court seeking a directive to the Election Commission to cross verify the vote count reported by the EVM, with that of paper slips produced by the VVPAT (Voter verifiable paper audit trail), in 50% of the booths.

The Election Commission had consulted us about the sampling plan to be put in place to instill confidence about the sanctity of the election process. Here is our take on how to think about these questions.

The background


  1. EVMs were first used in the Paravur Assembly constituency in Ernakulam district in the 1982 Assembly poll in about 50 booths. The CPI candidate, Mr. Pillai, defeated the Congress candidate, Mr. Jose, by a thin margin of 123 votes. Mr. Jose went to the High Court with the contention that the Representation of the People Act, 1951, and the Conduct of Elections Rules, 1961, did not empower the Election Commission to use EVMs. While the High Court dismissed the petition, subsequently the Supreme Court upheld the contention and ordered a repoll in these 50 booths. Mr. Jose won the election after this repoll.
  2. Subsequently, the Representation of the People Act was amended, and S.61A was inserted, in December 1988, empowering the use of EVMs.
  3. These EVMs were designed by public sector undertakings, BEL (a Defence Ministry PSU) and ECIL (an Atomic Energy Ministry PSU), who also manufacture the same. They are subjected to a thorough testing process.
  4. The design and production are overseen by a technical expert committee consisting of senior professors in electronics and computer science from leading Indian Institutions.
  5. The EVMs do not have any networking hardware. There is no ethernet port, no wifi or bluetooth capability, and thus it is not possible to alter or tamper the memory remotely.
  6. The names of candidates on the EVM appear in an order that is determined by the same convention that had been followed since the sixties for the order on the ballot paper. First, the candidates of the national parties appear, in an alphabetical order of their names, then candidates of state parties (again in an alphabetical order of their names) and lastly the rest, again in an alphabetical order of their names. Thus, the order gets determined only after the last date of withdrawal of nomination.
  7. The EVMs are distributed across the constituencies via randomisation. The EVMs used in India consist of two units: BU, the balloting unit and CU, the control unit. The BUs and CUs are distributed independently and on the day of polling, the two are connected. If one of them has been tampered or replaced, the handshake between the two units will fail and the pair will have to be replaced.
  8. After the voting, the machine is locked by the presiding officer and then the EVM are physically sealed using the same techniques that were used to seal the ballot boxes of old.
  9. In the parliamentary elections in 1999, EVMs were used in some constituencies and from 2004, all the elections to the parliament and to the state legislatures are conducted using the EVMs. It should be noted that in several instances, including in 2 out of three parliamentary elections – 2004, 2009 and 2014, the ruling party has lost the election.
  10. The fact that there was no way to do a recount, even if a court ordered the same, was a reason for the Supreme Court to ask the EC to find a way of generating a paper trail. The Election Commission appointed a committee of experts, who came up with a design of the VVPAT machine and the Supreme Court ordered that the same be introduced as soon as possible for all elections.
  11. The Supreme Court had not ordered the Election Commission to routinely carry out any cross verification of EVM and VVPAT count. The purpose of VVPAT was to have the possibility of a recount if a court so ordered, as a result of an election petition.
  12. Since so many doubts had been raised about EVMs, the Election Commission decided that in every assembly constituency, one booth will be picked at random by a draw of lots and for the chosen booth, the VVPAT slips will be counted and cross checked with the count on the EVM. This done in order to increase public confidence in elections.

Our analysis of the recent debate


Over the last year, demands started coming up for verification of much larger number of EVMs. Various petitions were filed. The election commission engaged the two of us along with Mr. Onkar Prasad Ghosh to advise on an appropriate sample size, so if that many EVMs are randomly chosen and the machine count is verified with the VVPAT count and if no mismatches are found, then we can be confident that defective EVMs, if any, are in insignificant proportion.

We felt that given that the EVM's are assigned randomly to constituencies and that the order of names on the EVMs is determined at a late stage, only after the last date of withdrawal, it is not possible to manipulate or tamper the EVMs centrally.

Given that there is no networking component in EVM, tampering is possible only by getting physical access. If someone can get physical access to an EVM and tamper with the EVM, then the VVPAT slips can also be tampered and so validating EVM count by VVPAT count does not give any guarantee that EVM has not been tampered with. For this we must rely on the elaborate process that the Election Commission has about sealing the EVM in a bag, closing the same and storing in such a way that tampering can be detected. This was also the case with the paper ballot and ballot box method of earlier years. We are no worse with EVMs as compared with the old ways, in this regard.

Also, if some smart mind does figure out a way of changing the memory of EVMs remotely, he/she will not stop with doing so in one or two booths. Certainly, the effort will be to tamper with a larger number of constituencies so as to make an impact on the national level.

That is the reason that we took our objective to be to conclude with high degree of confidence that defective EVMs, if any, are less than a certain percentage of all EVMs in use nationwide. In our report we had taken this as 2%, but it can be 1% or 0.5%.

It is true that our suggested method does not give a guarantee at constituency level. But in our view, such a guarantee is not needed. Our sampling scheme can guarantee that the national picture has not been distorted by tampering or by a manufacturing defect. To those who have been insisting upon constituency level guarantees, we would ask: Why stop at the constituency? Should not every voter be assured that his or her vote has been counted correctly? The only way to do so without compromising privacy is to use cryptography. This is the subject of present research, with Prof. Bimal Roy, former director of ISI involved with one such initiative along with a team in UK. But when such a solution would become available, it can and will be attacked as opaque!

The Election Commission, in its affidavit to the Supreme Court, stated that in the last 2 years, over 1500 EVM counts have been matched with VVPAT counts and in all cases the matching has been perfect. Statistically, this alone is sufficient to conclude that EVM-VVAPT in use currently along with all the safeguards and practices in place are good.

We believe there is a lot of misinformation in the media. Various cases of EVM malfunction are being reported in the media and social media. These relate to local body elections or even college student union elections etc., which are outside the purview of the Election Commission. Other reports of EVM malfunction on the day of election are mostly about EVMs which fail the test before voting starts and are replaced.

While our recommendation was to draw a random sample from the population of all the EVMs in use, the EC decided to continue with their policy (for operational simplicity) to draw one booth per assembly segment, which translates to verifying 4125 EVMs by cross checking VVPAT counts. Based on the data about the number of booths across 4125 assembly segments, we were able to assert that if no defective is found in these 4125 chosen booths, we can say with 99.99999% confidence confidence that the proportion defective is less than 1%. This bound is true irrespective of the configuration of the defective EVMs. For example, a group of miscreants could have tried to tamper with EVMs selectively across a few constituencies. However, as long as the number of defective EVMs is 1% or more, the sampling procedure will catch this with a high probability.

The Supreme Court has ordered or suggested that instead of 1 per segment, 5 EVMs per assembly segment be drawn and VVPAT count and EVM count be cross verified. Based on our calculations, we conclude that if there are no defectives found in the 20625 randomly chosen booths (5 per assembly segment), then with 99.99999% confidence, the proportion of defectives, if any, are less than 0.25%, irrespective of the configuration of the defectives.


The authors are Professor, Indian Statistical Institute, Delhi and Director, Chennai Mathematical Institute, respectively.

Saturday, May 11, 2019

Coincidences in investment newsletters, fund managers and bellwether constituences

by Ajay Shah.

Burton Malkiel's design of a newsletter scam


In his famous book, Burton Malkiel offers the following idea.

  1. Start 16 newsletters. In 8 of them, scream for a year that Nifty will go up, and in 8 of them, do the opposite.
  2. At the end of year 1, you have 8 successful newsletters. Close down the losers. Now repeat this, with 4 forecasting up and 4 forecasting down.
  3. At the end of year 2, you have 4 successful newsletters, shut down the others.
  4. At the end of year 3, you have 2 successful newsletters.
  5. At the end of year 4, you are solid gold: you are holding one newsletter which correctly timed the market for 4 years in a row. Now make a lot of money selling subscriptions to this newsletter.

While this is a neat design of a scam, the world is actually, inadvertently, running something like this. A large number of newsletters are born every year. Some of them are lucky, they forecast the market correctly, and they stay alive. The losers tend to shut down.

At every point in time, you see a pool of successful newsletters. This need not imply that they have forecasting capabilities. It could just be survivorship bias at work.

Fund management


This same idea would work in fund management. You could start 16 funds, and at the end of 4 years, you would be holding 1 fund with a remarkable track record. This is possible even if you have no ability to forecast asset prices at all.

Once again, the world is actually running such a system. A large number of money managers spring up all the time. When the bets don't work out, the organisation collapses. The survivors stay in the game.

The world is initiating much more than 16 funds. Thousands of fund managers take a stab at the trade. It is not surprising that at any point in time, we see five or ten of them with five or ten years of a successful track record. While some ability may exist in the world, there is certainly a simple process of survivorship bias going on, which generates a few fund managers with a good track record.

Bellwether constituencies


Suppose you have 500 constituencies, and suppose all election outcomes are roughly 50/50. That is, there are exactly two parties and they each win about half the seats. Suppose that in truth, the outcome of each constituency is completely random and it is just like tossing a coin.

At the end of one election, you have 250 constituencies where the winner of the overall election won.

At the end of two elections, you will have 125 constituencies which were with the winner for two elections in a row.

At the end of three elections, there will be 62. At the end of four elections there will be 31.

This tells us that if we see about 30 constituencies in India, where the winner in each of these constituencies was the ruling coalition that came out of the Lok Sabha elections for 1999, 2004, 2009, and 2014, this might just be simple randomness at work. There may be nothing special about these `bellwether constituencies'.

Friday, September 14, 2018

Privacy, Aadhaar, Data Protection: Statist Liberalism and the Danger to Liberty

by Anirudh Burman.

Kings will be tyrants from policy when subjects are rebels from principle.

                                         - Edmund Burke, Reflections on the Revolution in France

Edmund Burke wrote these lines in a scathing critique of the demise of ancient traditions of allegiance, fealty and "dignified obedience" in the wake of the French Revolution. These lines today apply in a very different sense to the search for state-centred solutions to protecting privacy and personal data. The discourse over privacy, identification and data protection shows that liberal concerns with state power co-exists with a preference for state coercion in the name of furthering ostensibly liberal objectives. This discourse is marked by the absence of underlying liberal principles based on societal and associational freedom, and instead, repeatedly shows a preference for state coercion for achieving its ends.

This discourse and the policy responses to the same fail to address two fundamental questions: first, what does the right to privacy seek to protect? Privacy is treated as an end in itself, and this has significant ramifications on how we think about constituting liberty in our society. Second, what institutional and associational processes are necessary to protect privacy? Institutional and associational processes that rely overwhelmingly on state coercion are counter-intuitive and may ultimately harm individual privacy and autonomy.

I address three major strands of the privacy discourse that address different aspects of the right to privacy, but share a common problem: the discourse is framed in a manner that treats privacy as an end in itself. The result of the nature of this discourse is that state power to infringe on privacy seems to have strengthened rather than weakened. I begin with analysing the existing discourse on the debate over whether India's increasingly ubiquitous identification system, Aadhaar, violates privacy rights or not. I argue that by focusing on Aadhaar's constitutionality vis-a-vis the right to privacy and not examining the ends for which Aadhaar is being used, the existing debates fail to question the use of state power via Aadhaar and its implications for privacy and liberty.

The next major strand of the privacy debate, the judgement of the Indian Supreme Court in Justice K.S. Puttaswamy v. Union of India ("Privacy judgement") also treats privacy as an end, rather than a means to protect other ends. As I argue, the consequence of the judgement is to provide clarity for the use of state power with respect to privacy rights rather than to elucidate those aspects of social existence that need protection from the state through privacy rights. Data protection, and the Personal Data Protection Bill proposed by the Justice Srikrishna Committee is the third major strand of the privacy debate. The Bill also treats privacy as an end. In seeking to protect data as an end in itself, it confers a wide jurisdiction on the proposed Data Protection Authority. By doing so, the Bill gives the Authority the power to potentially surveil all data in India in order to, ironically, protect data privacy.

I argue that by treating privacy as a broad right and an end in itself, we have defined the role of privacy in society narrowly. Instead, privacy as a right has to be discussed in specific contexts such as marriage, sexuality, crime records and employment history. Each context reflects a different tension between a specific public interest and the privacy interests of specific individuals. Only such specific discussions on how privacy rights can help individuals protect their freedoms, can further the interests of liberty in our society.

Efficiency, Privacy and Aadhaar

In the decades since independence, Indian politicians and intellectuals by and large agreed on the need for a social welfare state. Specifically, a State that would strive to provide health, education, food, and infrastructure to its populace. Despite the mixed record of the State in achieving these objectives, the premise of what the Indian State should do has not been challenged to any substantial degree. While the State has withdrawn from running industries and fostered private markets over the past three decades, the assumption that welfare is a fundamental task of the Indian State has not been questioned. In fact, the welfare state character of the Indian State has been significantly expanded in the past two decades through initiatives such as NREGA and others addressing food security and debt relief.

A central task before a welfare state is identification, or what James C. Scott calls the quest for "legibility". The search for legibility is rooted in policy makers' inability to comprehend complex realities and their consequent search for symbols or markers that make society comprehensible or "legible" to them. For the purposes of the State, individuals must be defined primarily in terms of specific traits (e.g. age, education, residence, income, profession, ethnicity, caste, etc.) While this quest for legibility is not confined only to the state, no state can act on its welfare mandate without making individuals legible. Benefits are distributed to individuals based on how a state identifies them. Thus, if only "the poor" can avail of LPG subsidies, defining who is "poor" becomes of central importance. Aadhaar is the product of this search for better identification, required due to ever-increasing welfare and regulatory functions the Indian State has to perform.

In the decades before Aadhaar was implemented, the manner in which the state identified beneficiaries was critiqued as being deeply flawed. The systems were rife with documented instances of poor implementation and fraud. Additionally, many in need of what the welfare schemes sought to provide lacked the documents to prove their eligibility for the same. While concerted efforts were made to improve public distribution systems through initiatives like computerisation, significant exclusions continued to take place. These improvements were also unevenly distributed across state governments, and subject to sustained political commitment.

Any improvements in targeting/identification however, have remained subject to new political diversions and demands from the State. NREGA for example, was a new social welfare scheme that required the determination of eligibility on metrics that were different from say, traditional PDS schemes. It required the State to collect and maintain information about individuals based on metrics that the Indian State had not collected in a systematic manner prior to its introduction. Every new scheme that requires benefits to be conferred to individuals had and continues to have its own metrics for eligibility (Jan Dhan Yojana requires very different kinds of identification requirements than say, Start-up India).

The demand for better and different forms of identification therefore increase each time a new benefit has to be made available to individuals. If the state has to perform an ever-increasing number of welfare functions, it will require ever-increasing information about intended beneficiaries, as it needs to know whom to include and whom to exclude. Over time, therefore, the extent of information collected about individuals increases due to the numerous functions the state is required to perform.

This is not just confined to welfare measures. Any state action that intends to regulate individual conduct has to determine whom to regulate and on what basis. If, for example, persons with criminal backgrounds are to be excluded from contesting elections, the state needs to collect and analyse information about the criminal backgrounds of those contesting elections. If the state intends to regulate banking, it needs to collect information about banks and financial firms.

The increase in the collection of information for discharging the functions demanded from the state constitute the source of the concerns with privacy. The largest threat to individual privacy therefore comes not from the existence of Aadhaar, but from the ever increasing number of regulatory functions and welfare measures demanded of the Indian State. Problems of identification systems are downstream of these demands. State-centred solutions, and unprincipled welfarism pose a greater threat to individual privacy and liberty than any single identification system used by the Indian State.

This is borne out by a careful analysis of the main points of contention in the Aadhaar and data protection debate.

Aadhaar is a database that maintains bio-metric and other personal identification information about individuals. If a government or private agency wishes to verify the identity of an individual, the Unique Identification Authority of India (UIDAI), as the custodian of the Aadhaar database, enables such authentication through specified mechanisms. Aadhaar does not maintain records of what was authenticated. It retains a record only of when a person's identity was verified and by whom, not for what purpose.

Aadhaar is therefore more or less a value-neutral utility. In itself, it does not have a fixed use other than to identify individuals. It is up to the user (the government or private agencies) to use it as a means of identification for a specific purpose. Such use depends solely on its utility as an accurate system of identification. It does not pre-suppose what the system is going to be used for. Its raison d'etre is to enable the state to identify individuals accurately, if required. Its existence, in fact, promotes discourse on what it ought to be used for, and how it ought to be used.

When Aadhaar was conceptualised and being created, the state promised that the system would be used for identifying beneficiaries of social welfare schemes. This has however, not remained the case. From tax compliance to school admissions and new phone connections, the use of Aadhaar has extended well beyond social welfare purposes. It is, however, important to note that this growth is demand-led for the large part. Government departments and agencies, as well as private firms, are using Aadhaar because it is a largely accurate database compared to other mechanisms for verifying individual identity. State authorities and private agencies are mandating Aadhaar-based authentication because they see value in it, not because the UIDAI says they must. The alleged threat to privacy has therefore come about not because Aadhaar exists, but because the State chooses to use it for discharging the functions demanded of it.

Some detractors have argued that Aadhaar is unconstitutional as some individuals are unable to access social welfare benefits due to authentication failures. In many such cases, the implementation by these departments and agencies has been faulty. Aadhaar authentication requires a connection to the central Aadhaar database, and this becomes problematic in cases of poor internet connectivity. In such cases however, it is the user agencies that are at fault. Making Aadhaar authentication mandatory in remote areas with low internet connectivity is an example of poor planning and implementation. It is the use of Aadhaar that must be debated.

This and other issues have been brought up in a clutch of cases currently pending before the Supreme Court. The cases in the Supreme Court however lay the blame on the existence of Aadhaar rather than its uses. Additionally, of the many grounds of challenge, there are some that are simply not amenable to effective redress through judicial mechanisms. The first is the question of exclusions. Any system of identification is designed to exclude. The purpose of identification is to enable inclusion at the cost of exclusion. The danger is that of unintended exclusions. People should not be excluded from benefits that were intended to be made available to them. The detractors of Aadhaar claim that the implementation of Aadhaar is leading to arbitrary exclusions, with persons who were previously included now being excluded. However, one must distinguish between the role of Aadhaar in unintended exclusions, and the uses of Aadhaar leading to unintended exclusions. For example, if there were no scheme called NREGA being implemented, there would be no Aadhaar-related exclusions from NREGA. In such a case Aadhaar would continue to exist, but not be the cause of any exclusions in NREGA. Exclusions are occurring because there is a welfare function that the state is discharging.

Another point of detraction has been that of data security and data leakage. The claim is yet again, that because of its potential for misuse, the use of Aadhaar for seeding information about citizens creates a potential for misuse. However, any information that the state stores by aggregating data using some other central identification ID (PAN numbers, passport numbers, Voter ID cards, etc) is subject to the same potential issues. Any central identifier that could be used to link multiple databases is likely to suffer from similar issues. If PAN numbers or mobile phone numbers are used to aggregate data about individuals instead of Aadhaar, the same fear of profiling is still likely to exist. The problem is therefore not with Aadhaar, but with the process of profiling individuals. It is therefore necessary to problematise the issue of profiling, rather than the use of Aadhaar for profiling.

The discourse on these issues reflects undue focus on means rather than ends. It is important to distinguish between Aadhaar as an instrumentality of the state, and the purposes for which Aadhaar can be used. It is the latter that leads to privacy concerns, not the existence of the instrumentality itself. The same privacy concerns will remain tomorrow if Aadhaar is replaced by another system of identification. The Indian state will continue to violate individual privacy, liberty and dignity if the ends to which systems of identification are used are not carefully examined, questioned, and thought through.

Some of these issues require political solutions, others judicial ones. The judiciary can provide judicial answers to legal questions. It is not a forum that can provide answers to questions of efficiency. It cannot help society decide on what is the most effective method of identifying individuals while respecting individual privacy. This is a political decision that has to be reached through a political process. The judiciary can also not answer questions as to what are "good" methods of data aggregation and storage. These are technocratic decisions that also have to come from the political process.

This is due to the very nature of the judicial process which seeks blunt answers to blunt questions - "is Aadhaar constitutional or not?". Any path the Supreme Court takes to balance competing interests such as privacy versus efficiency will be, at most, a second-best alternative to what sustained political engagement could have created. The nature of judicial outcomes is to provide perfect legal certainty by ending political contestation with legal certainty. Judicial interpretations of constitutions have the effect of ending political and legal disputes, not to create space for further political negotiations.

Any future negotiation can only take place by treating the court's decision as a given. A good example is the spectrum allocation case, where the Supreme Court held that telecom licenses were arbitrarily allocated, and that future allocations can only happen through auctions (subsequently modified by the Supreme Court in another case). Any further discourse on the subject had to deal with the fact that spectrum had to be mandatorily auctioned, with no possibility of discussions over better methods of spectrum allocation. This is what happens in most cases that come before constitutional courts. In the judcialisation of Aadhaar, we may have lost a significant opportunity to negotiate politically and improve its functioning.

The nature of relief claimed from the Supreme Court in the Aadhaar case asks some legitimate questions that the Supreme Court is well placed to answer, particularly with respect to whether the law should have been passed as a money bill, and in which instances Aadhaar can be made mandatory. But it also asks many questions that do not help address the real concerns about privacy - if all identification systems lead to exclusion, in what circumstances is exclusion constitutionally impermissible? If all data aggregation systems are potentially vulnerable to leakage and theft, in what circumstances is data leakage unconstitutional? If all state welfare functions lead to some kind of profiling, what kinds of profiling are constitutionally impermissible? In short, what are the values that the right to privacy seeks to protect?

Privacy judgement: Clarifying the use of state power

If the expectation from the Supreme Court in the case of Justice K.S. Puttaswamy v. Union of India ("Privacy judgement") was that it would explain what underlying values the right to privacy seeks to protect, it was belied. While the Supreme Court bench that decided this case was constituted because the Aadhaar bench made a reference to it, this case itself did not decide on privacy rights vis-a-vis Aadhaar.

In a remarkable feat of judicial activism the Court not only declared that there is a fundamental right to privacy, but that this right is an end in itself. The leading judgement (given by 4 out of 9 judges) states that the purpose of the Court in writing the Privacy judgement is to expound upon the right to privacy by providing a "doctrinal formulation".

The judgement lists a series of Indian cases in which a right to privacy has been claimed. As the Court itself notes after discussing these cases, many past judgements have held that a right to privacy exists under the Indian Constitution. What then, one might ask, was the need for this nine-judge bench? The answer provided by the Court was,

"...The deficiency, however, is in regard to a doctrinal formulation of the basis on which it can be determined as to whether the right to privacy is constitutionally protected..."

The Court therefore intends to assert the existence of a right to privacy as an end in itself, rather than a means to an end. Unlike all previous cases the Privacy judgement itself notes, this judgement was written with no applicability to a specific dispute before the court.

A long line of jurisprudence listed in the Privacy judgement highlights the fact that privacy has always been used to protect a specific interest or value: In Kharak Singh's case, it was privacy in the context of night-time domiciliary visits. In RM Malkani v. State of Maharashtra and PUCL v. Union of India it was privacy in the context of telephone tapping. In Gobind v. State of MP, the discussion on privacy was in the context of history-sheeting under state police regulations. In Malak Singh v. State of Punjab it was a surveillance register of specified categories of convicts. In Rajagopal, the judgement on privacy centred around the question on whether the autobiography of a convicted prisoner, allegedly co-authored by someone else, could be published. In Mr. X v. Hospital Z the issue of unauthorised disclosure of a patient's HIV status was in question. In Sharda v. Dharmpal the question of privacy rights arose in the context of a court order forcing a person to undergo a medical examination as part of divorce proceedings. In District Registrar and Collector, Hyderabad v Canara Bank, the question of privacy was in the context of the confidentiality of documents submitted to a public official. In the US Supreme Court case of Griswold v Connecticut that the Privacy judgement cites as well, - the right to privacy was held to exist in order to address a specific concern, namely the right of a married couple to use contraceptives.

In fact, globally, one would be hard pressed to find a judgement that is totally divorced from a factual dispute, that does not treat the right to privacy as essential to protecting other specific rights. Why does this matter? It matters because in treating privacy as an end, the judgement and the detractors of Aadhaar fail to deal with the underlying issues that infringe upon privacy and liberty. This in turn leads the Court to formulate tests that on closer inspection, clarify the use of state power with respect to privacy rights, without adequately explaining what those privacy interests are.

The Court notes that privacy is essential for the protection of individual autonomy and dignity. But it does not elaborate on what aspects of autonomy are worthy of being protected by privacy. Other than illustrating some examples of how the right to privacy could be applied to specific situations such as sexual orientation and data security, it provides no guidance on how this right to privacy is expected to interact with situations where individual privacy is subjected to larger societal interests. For example, the Court talks about the protection of individual identity in the context of data protection, but provides no explanation of what specific harms the right to privacy seeks to protect in the context of the misuse of personal data.

This is important as there are situations when individual autonomy and privacy may legitimately be circumscribed by societal interests. These include the disclosure of health records for buying health insurance or seeking health benefits, and the disclosure of income related information for claiming subsidies, etc. The judgement offers no consideration of the tension between individual privacy, liberty and public interest; this could only have been done in light of a specific dispute where the Court would have been forced to balance real and conflicting tensions.

Faced with this lack of factual circumstances, the Court in the Privacy judgement instead justifies possible constraints on privacy rights through a vague necessity doctrine. The Court states that the right to privacy can only be constrained by a parliamentary law made for a legitimate state interest, with constraints proportional to the object the law seeks to achieve.

It is, however, explicit in stating that the question of legitimate state interests in violating privacy rights can only be reviewed on the grounds of arbitrariness. In addition to laying down this test in the absence of specific circumstances, the judgement provides broad illustrations of what could be considered legitimate state purposes - national security, promotion of innovation, conferring social welfare benefits, etc. Unlike previous cases where the facts of the dispute ground the doctrinal points made by courts, the doctrinal points here can be construed widely or narrowly depending on the specific predilections of future courts.

The question of legitimate state interests is the question that should have occupied the attention of the Court - what kinds of infringements of privacy are permissible when specific actions of the State are claimed to be in furtherance of legitimate state interests? As per the Court, the only basis on which such a claim can be challenged is that of being arbitrary and disproportional. As long as there is no arbitrariness or disproportionality, infringements of privacy are permissible. However, neither arbitrariness or disproportionality are tests related directly to liberty and privacy in themselves.

For example, it is one thing to question whether the law related to telephone tapping is arbitrary or disproportional to the legitimate objectives of national security. It is another to question whether telephone tapping violates privacy or not. As per the test laid down by the Supreme Court, the law would not be unconstitutional if it were not arbitrary or disproportional. The test limits the discussion on the tension between privacy and national security only to the grounds of arbitrariness and proportionality. In doing so, the Court arguably missed an opportunity to create tests for legitimate state interests in interfering with privacy rights. Instead, the judgement of the Court illustrates a broad range of legitimate state interests where the state can interfere with privacy rights.

The same conclusion can be reached regarding the applicability of this judgement to other issues. If combating marital rape is a legitimate state interest, the Privacy judgement takes us no further in thinking about how to enter the private sanctuary of a bedroom in a way that respects the privacy of the married couple. Any law can be made as long as it is not arbitrary or disproportionate to a widely construed notion of a legitimate state objective. This is arguably an incomplete test, since it does not seek to balance the legitimate privacy interests of the married couple with the objectives of the state. The only balancing factors are that such laws not be arbitrary or disproportional. These tests are however, not related to liberty interests. The US Supreme Court in Griswold v. Connecticut found liberty interests that were violated by state laws that interfered with the use of contraceptives. Had that law been judged on the basis of arbitrariness and disproportionality, the outcome in the case may have been different.

State power has therefore been arguably expanded by limiting the grounds of challenge to arbitrariness and proportionality. It is therefore debatable whether we are better off than earlier, having created clear limits on the right to privacy, without any clear, substantive limits on state power. Only the state seems better off.

Personal Data Protection Bill: Leviathan On Steroids and the End Of Privacy

A logical consequence of treating privacy as an end in itself is the Personal Data Protection Bill proposed by the Justice Srikrishna Committee. Because the Bill treats data protection as an end in itself, it focuses only on the protection of data rather than the protection of interests that would be harmed by the unscrupulous use of data. The Bill casts a wide net, and in the process proposes the creation of arguably the most powerful and draconian state regulator India may ever see.

First, the lack of clarity of underlying values - the purview of the Bill extends to all data (in electronic form or otherwise). "Processing" of data is defined to include "collection" of data as well. So, the kirana store down the street that provides credit to customers for buying groceries on the basis of their previous repayments, a record of which it maintains in physical registers, would be subject to state supervision for its data management practices. The Bill mercifully provides some small exemptions for such "small entities" in Section 48 for manual processing, but they still have to comply with other data protection requirements.

Further, any discussion on specific privacy interests should have to deal with multiple conflicting interests - if individual privacy is important for the sake of, say, protecting individuals from online sexual harassment, a data protection law would have to deal with the tension between the right to access and participate on the internet freely and visibly, with the genuine potential for online abuse and harm. The provisions enabling data processing after consent would have to be tailored for this specific issue. Similarly, in its broad application of data protection requirements to the entire economy, the Bill fails to balance the tension between the conflicting interests of economic growth and data protection.

An example of the possible problems that may arise due to the lack of clarity on the ends of the Bill are the requirements regarding discrimination. The Bill states that "any discriminatory treatment" is a harm, and creates penalties and offences for causing such harm. But, devoid of any grounding of what forms of discrimination are permissible, this becomes an impossible standard to adhere to. Legitimate forms of discrimination such as preferring to lend money to people who pay back on time, over those who do not are essential to society. However, if a prospective borrower is refused a loan based on his or her credit history, this could constitute "harm" under the Bill.

Similarly, if an online matrimonial site shows its user only high net-worth suitors from Bihar based on an analysis of the user's past preferences, such discrimination would be beneficial for the user, but would be construed as discriminatory, unless there is clarity on what the provisions regarding discrimination seek to protect us from. But, since there is no real clarity on such ends, the supposedly safe route the Bill takes is to create a regulator with vague powers and ask it to protect data.

Parts of the Bill have been taken from the EU's General Data Protection Regulation (GDPR). The GDPR however sits on a bedrock of privacy jurisprudence (example) in the EU that goes back decades. We have borrowed the legislation without borrowing the privacy jurisprudence and the overall institutional ecosystem within which the GDPR operates. When the Bill is enacted, it will be interpreted and implemented without the underlying benefit of this jurisprudence. There will therefore be substantially less guidance for the proposed Data Protection Authority (DPA), and fewer checks on how it will interpret its powers.

Second, the claim that the DPA proposed by the Bill is a Leviathan on steroids is not a light one. One look at the definitions of "data" and "processing" confirms the wide scope of the law. In Section 60, the first function of the DPA is an ambiguous "monitoring and enforcing application of the provisions of this Act". In Indian state parlance this translates to: Use state coercion to solve every real or imagined problem provided you have the resources to do so. Even if the DPA were to construe such language strictly, it would have to intrude into almost all systems of data collection, storage and processing within the country to perform this function effectively. In the name of protecting data, it would necessarily have to supervise all data.

If for example, the DPA is to monitor compliance with the codes of conduct it is required to write for data processing, it will have to monitor the way in which data processors implement such codes with respect to their consumers. This will have to be done an economy-wide scale. One may argue that this can be done through less intrusive methods, but that is missing the point. The substantive power is there, and the powerful choice of how to regulate remains with the state. We shall remain at the mercy of liberal men, not liberal laws.

This broad jurisdiction is almost unprecedented for India. This is a huge departure from sector-specific jurisdictions carved out for other state agencies. The Reserve Bank of India can only collect data about banking and some other financial firms. SEBI can only do so with respect to the securities market. TRAI can only collect information about those in the telecommunications industry. The DPA is a regulator of data across sectors and jurisdictions. It will have the power to impose significant compliance costs and penalties on all individuals and enterprises that may collect data, even for purely incidental purposes.

Third, failure to abide by data protection requirements could land persons in jail. The offences under the Bill are proposed to be non-bailable. When combined with vaguely drafted provisions, this would have significant negative effects on society if the law is effectively applied. The Srikrishna committee report does not explain why such draconian punishments are required for the protection of data. Even serious crimes like murder are bailable. The report does not show any evidence to prove that misuse of data is a crime worse than murder.

The net consequence of the Bill, if enacted, would be this - the enactment of arguably the most powerful and intrusive regulatory agency in India, the enactment of draconian offences with great potential for misuse, and a punch in the face of private enterprise. Command and control is back, this time the driving force being the ideology of statism.

Conclusion: Privacy through the state, not from it

The ongoing discourse on privacy, Aadhaar and data protection leaves us with the inescapable role of the state as a mediating entity. In the Aadhaar discourse, the uses of identification will continue to be decided by the state without any clear agreement on what such uses should be. The right to privacy elucidated by the Supreme Court will have to evolve on a case-by-case basis as more state action relevant to privacy emerges. The Personal Data Protection Bill empowers the state to protect our data with broad and vaguely defined powers.

The fight for privacy as a means to protect individual liberty has, in the forms it takes today, led us to a point where state power on the whole, has been arguably strengthened vis-a-vis society. Contradictory to its stated aims, the current outcomes of the privacy debate are predicated on state coercion as a tool for protecting liberty.

It is a grave error to presume that the state will act benignly to uphold liberal values of privacy and autonomy. One reason is that these privacy values have not been sufficiently articulated - the discourse is almost entirely around means and not the specific interests the right to privacy seeks to protect. This can only be done by discussing privacy in specific contexts - if land records are to be made publicly accessible for increased efficiency in land markets, what is a reasonable expectation of privacy in such a context? Or, if the state wishes to build a sex offenders registry, how do privacy interests militate against such a system? As stated earlier, problems of identification systems are downstream of these issues. By not questioning the ends of identification systems like Aadhaar, its detractors are attempting to have their cake and eat it too. Even if Aadhaar is struck down, it is doubtful if privacy interests will be served in the long run.

Second, a liberal state cannot be built in isolation from the larger state apparatus. A state that habitually violates the rule of law and relies on draconian laws cannot be trusted implicitly to uphold liberal values just because the law empowering it is for a seemingly benign purpose. The Right to Education Act, a seemingly benign law, provides everyone the right to free and compulsory education, but does so by seriously constraining the right of private educational providers to actually provide education. This is routine for the Indian state - the pursuit of seemingly liberal objectives through coercive mechanisms. A state that routinely treats dissenters as traitors, evicts helpless landowners, and uses torture as an investigative tool, cannot reasonably be expected to act liberally in the interest of liberal values, especially if it is given draconian powers with vague objectives. It is reasonable to presume that the data protection law will suffer from the same illiberalism that we see in the Indian state.

A lot has been said of the misuse of data by private firms. A reasonably responsive state acts as a bulwark against such misuse. There is no bulwark against the state. If it is determined to take a certain course of action, whether it is the imposition of an emergency or the demonetisation of currency, no system of checks and balances is sufficient. Additionally, in the case of the data protection Bill, there has been no evidence shown by its proponents that the scale of the proposed data protection requirements is in any way commensurate to the dangers posed by private data companies.

Perhaps the greatest threat to individual liberty, autonomy and dignity comes from the fact that state action crowds out non-state action. State regulation operates to the exclusion of self-regulation. If, for example, the State determines the prices of essential commodities, private persons cannot negotiate and agree on the prices of such commodities. Though it has its problems, civic-associational regulation is often capable of much greater nuance and compromise than state regulation. State regulation in contrast, operates largely within binaries - permission versus prohibition, legality versus illegality, all enforced with coercive power behind it.

Those arguing in favour of privacy must avoid resorting to similar binaries. The present discourse rests on absolute moral claims about privacy, where political arguments should be made. Escalating political arguments to moral ones hastens the end of democracy. Since the moral claims of one side are considered odious and abhorrent by the other, no middle ground can be reached because collaboration with the opposition is treasonous in a moral fight. This spells greater danger for the survival of democracy; the only beneficiary is the increasingly-powerful State, and the stakes for capturing power become higher and higher. The impulse to turn to state-centred solutions has to be checked if individual privacy and dignity are to be preserved.

 

The author works with the National Institute of Public Finance and Policy, and is extremely grateful to Suyash Rai and Vasudha Reddy for discussions and inputs.

Friday, July 21, 2017

Implementing loan waivers: Lessons from the 2008 All India Debt Waiver Scheme experience

by Renuka Sane and Amey Sapre.

This has been the season of farm loan waiver announcements. Starting with Uttar Pradesh, state governments of Maharashtra, Madhya Pradesh, Punjab and Karnataka have made similar announcements. Details regarding eligibility criteria for the loan waivers, and the delivery mechanisms have yet to emerge. The estimated fiscal burden of these schemes is likely to be INR 2 Lakh Crore, or close to 2% of GDP by 2019. These numbers have led to concerns regarding further deterioration of already weak state government finances, as well as the adverse impact on credit culture. Loan waivers have primarily been criticised as a bad policy decision.

In this article, we explore a less discussed aspect, that of implementation. Towards this end, we summarise key findings of the audit reports of the 2008 All India Debt Waiver Scheme. Past experience suggests that the ability of public administration in India to deliver the intended benefits is limited.

The audits of The All India Debt Waiver Scheme, 2008

The All India Agricultural Debt Waiver and Debt Relief Scheme was launched in February, 2008. The scheme was aimed at providing relief to farmers through a complete debt waiver to small and marginal farmers, and a partial relief to other farmers. The guidelines on the implementation of the scheme were issued by the Department of Financial Services (DFS) and also covered the details of the scheme such as eligibility conditions, categorisation of beneficiaries, cutoff dates for eligible amount, types of loans and the implementation structure to be followed by lending agencies.

Post implementation, the scheme was audited by the Comptroller and Auditor General of India and a report was presented to the Public Accounts Committee (PAC) of the Lok Sabha in March 2013. Based on the findings of the audit report and evidence from the DFS, the PAC submitted its report in January, 2014.

Audit findings

The CAG report pointed numerous irregularities in implementation and concluded that the scheme did not achieve its intended objectives. Irregularities in identification of beneficiaries and a cavalier approach of the nodal agencies led to the failure of the scheme. The audit was conducted in 715 bank branches covering over 90,000 accounts spread over 25 states. There were three main problems.

  1. Identification of beneficiaries: Errors in inclusion and exclusion of beneficiaries was one of the major problem in successful implementation of the 2008 loan waiver scheme. As per the audit report, inclusion of in-eligible beneficiaries and excess benefits given due to errors in identification costed nearly INR 270 crores. The Public Accounts Committee noted in its report that due to administrative indiscipline of the nodal agencies, errors in identification of beneficiaries led to problems of over payment, non-extension of benefits to eligible farmers and funds lying idle with banks. The problem was complicated further as reimbursements were given to several micro-finance institutions in violation of the guidelines of the scheme.

  2. Lack of proper documentation: For successful identification, banks were required to prepare lists of farmers eligible for loan waivers and partial relief. However, the audit report revealed that lists were prepared in a cavalier manner leading to major financial lapses in the scheme. In almost 32% of cases, nodal agencies were unable to obtain an acknowledgment from the beneficiaries on the issuance of loan waiver certificates.

  3. Lack of monitoring: The Public Accounts Committee (PAC) after taking evidence from the audits and representatives of the nodal agencies concluded that lack of monitoring and administrative indiscipline resulted in bad implementation of the scheme. In nearly 2800 cases, there was evidence of tampering of records, manipulations and forging of documents to claim benefits. Based on the CAG's audit report, the PAC ordered a re-examination of the claims in December 2012 and initiated disciplinary action against officials of nodal agencies and lending institutions. Cases were also filed against banks and recovery proceedings were initiated against NABARD and other lending institutions. In its report, the PAC states that disciplinary action was taken in over 5400 cases, and nearly 600 crores were recovered on account of financial lapses.

Conclusion

The findings of the audit suggest that any loan waiver scheme is likely to face at least three administrative challenges - a) of identifying and reaching beneficiaries; (b) verifying eligibility and subsequently receipts; (c) coordinating across budgets, treasuries and payment channels. State loan waivers might get more complicated as banks are not even subject to state government control, unlike the 2008 waiver which was a central government initiative. It is unclear what role (if any) the DFS will play in monitoring the banks. In addition, the audit of such schemes is time consuming, and additional resources will have to be spent on cleaning up the mess they create.

Against this background, it is useful to ask if this is the most optimal use of tax-payer funds. Leaving aside questions of credit culture, in the best of circumstances, every rupee of benefit to the farmers from the waiver, should not cost tax-payers more than a rupee. Put differently, when the government spends INR 2 lakh crore on farm waivers, the opportunity cost is the Rs.2 lakh crore plus the welfare cost in acquiring the funds. In the public finance literature, this is known as the Marginal Cost of Public Funds (MCPF). In India, the MCPF is expected to be very high. As an example, healthcare spending in India has been found to be highly inefficient. The leakages demonstrated in the 2008 debt waiver indicate that inefficiencies in administration will lead to the state waiver programs doing worse. The costs of loan waivers will outweigh the potential benefits.

 

Renuka Sane is a researcher at the National Institute of Public Finance and Policy. Amey Sapre is a PhD student at IIT Kanpur.

Tuesday, April 11, 2017

Replace voice votes

by Devendra Damle, Shefali Malhotra and Shubho Roy.

Turning a bill (legislative proposal) into an Act of Parliament (law of the land) is a multi-step process. It involves placing the bill before the legislature; readings of the bill; publication in the official gazette; possible reference to relevant committees of the legislature; debates; and concludes with present members voting on the bill. Voting can be done in multiple ways, one of which is a voice vote. In the voice vote system, the members verbally communicate their assent by shouting 'Aye', or dissent by shouting 'No'. Based on which answer is most audible, the Speaker (person chairing the legislature) decides the outcome of the Bill. The system of voice votes, is obsolete. It slows down legislatures, grants excessive discretion to the Speaker, reduces the ability of citizens to hold their legislators accountable. It is still used in India.

For example, recently, the Punjab Assembly passed the Vote-on-Account of more than INR 251,990 million for the first quarter of the 2017-18 fiscal, by a voice vote. In the winter session of Parliament, the Taxation Laws (2nd Amendment) Act 2016 was passed through a voice vote, amidst protests and demonstrations. In 2014, opposition parties in Maharashtra questioned the legitimacy of the government after a confidence motion was decided in the government's favour through a voice vote. In the same year, the Lok Sabha Speaker was criticised for passing the Telangana Bill through a voice vote (Note: In this blog, we use the term 'Speaker' generically, for the Speaker of the Lok Sabha, the Chairman of the Rajya Sabha, the Speakers of state legislative assemblies, and Chairman of state legislative councils).

Voice votes

The Constitution leaves it to each house of legislature to set the rules of functioning of that house. Articles 118 and 208 of the Constitution empowers the Houses of Parliament and state legislatures to make rules governing procedure, respectively. Lok Sabha and Rajya Sabha have made Rules of Procedure and Conduct of Business (Procedure Rules) for their respective houses.Voting in the Lok Sabha is governed by rules 367, 367A, 367AA and 367B of the Lok Sabha Procedure Rules.

On the conclusion of a debate, the Speaker asks the members present whether a bill or a motion is passed. The member respond through a voice vote, the Speaker decides whether the motion is accepted or rejected. If a member challenges the Speaker's decision, the Speaker repeats the voice vote process for a second time. Any member can challenge the second voice vote by requesting for a division. The Speaker has the discretion to reject or grant the request for a division. If the Speaker rejects the demand for division, parliament employees take a head-count of members voting 'Aye' and members voting 'No'. Based on this head-count, the Speaker announces whether the motion is accepted or rejected. This decision cannot be challenged.

If the Speaker accepts the demand for division, he orders for voting by any one of the following three methods, at his discretion:

  1. Automatic Vote Recorders: Members press a button to vote 'Aye' or 'No' from their allocated seats. The result appears on an electronic display, and the Speaker announces whether a motion is accepted or rejected.
  2. Paper Slips: Members write 'Aye' or 'No' on paper voting-slips. Parliament officers collect the slips and count the votes. The Speaker announces whether a motion is accepted or rejected.
  3. Division Lobbies: The Speaker directs members voting 'Aye' to go to the right lobby, and those voting 'No' to go to the left lobby. Parliament officers count members in each lobby. The Speaker then announces whether a motion is accepted or rejected.

The Rajya Sabha and state legislatures follow a similar process with minor variations. In no case are individual voting records maintained. Even when a division is carried out, only the total number of votes for and against the motion are recorded.

The system of voice votes suffers from two weaknesses: It grants excessive discretion to the Speaker, and it reduces accountability of legislators to the citizens.

Speakers' excessive discretion

The discretionary power vested with the Speakers in a voice vote system is prone to abuse. In the Indian system, Speakers are inclined to side with the ruling party or alliance. Speakers of Lok Sabha and State Legislative Assemblies are elected from among the members of their respective legislatures, usually from the ruling party or alliance. Unlike in the UK, they continue to be members of their parties even after being elected as the Speaker.

The Maharashtra Assembly no-confidence vote in 2014 is an example of alleged abuse of discretionary power by the speaker. The Maharashtra Assembly speaker approved the confidence motion in favour of the present ruling party. The motion was approved through a voice vote, amongst allegations that the demand for division by the opposition was ignored. Effectively, it cast doubt on whether the government truly had a majority in the house.

According to the Parliament's Statistical Handbook 2014, five incidents of no-confidence motions and three incidents of confidence motions have been decided through a voice vote in Lok Sabha. While there has been no allegation of abuse in these cases, a voice-vote system can be easily manipulated, especially when it is used to determine crucial issues like the legitimacy of the ruling party.

Accountability to citizens

The Voice vote system lacks transparency. In a voice vote system, it is impossible to record individual votes of legislators. In the absence of individual voting records, a citizen has no way of judging the actions of his representatives. He is clueless about which way his elected representative voted, or whether that representative voted at all. This makes it difficult for the public to hold their representatives responsible.

An example of accountability using public voting records is Obama's criticism of Hillary Clinton, in the 2008 Democratic Party Primaries. In 2002, the then Senator Hillary Clinton voted in favour of the resolution to invade Iraq. By the 2008 primaries, public opinion (especially in the Democratic Party) had turned against the invasion. Obama repeatedly pointed out that Clinton voted in favour of the Iraq war, signalling to the Democratic Party that he is a better candidate. Obama could do this because each Senator's vote on each resolution is recorded against their name and published.

Solution: electronic voting

In the past, recording votes for each motion would have been time-consuming and costly. So, recorded votes would be reserved only for contentious issues. If the support or dissent for a motion was evident, it was left to a quick decision of the speaker. The cost of this efficiency was wide discretion to the speaker. Today, with electronic systems, we can gain this efficiency with no costs.

Efficiency gains

As the following examples show, electronic voting is a time-tested, efficient and, cheap technology:

  • Time-tested: Machine vote recording systems are not new; Thomas Edison patented a system in 1869. The World e-Parliament Report 2016 states that 67% of parliaments have adopted some form of electronic voting. Out of the remainder that still vote manually, 72% are considering to introduce electronic systems. The US House of Representatives has been using electronic voting systems since 1973. Recently, the Korean National Assembly adopted an electronic voting system.
  • Efficient: A 2016 Australian Parliamentary report found that adopting electronic voting systems reduces the time spent on counting votes, minimises human error, and expedites publication of results. A 2010 report to the UK House of Commons found that electronic voting can make the process less time-consuming. In turn, allowing MPs to devote more time to discussion and debate, the real function of legislatures. A 2003 Australian Parliamentary report finds that conducting a division vote in the Mexican Legislature used to take upto one hour; with the electronic voting system it now takes two minutes.
  • Cheap: The Mexican Legislature, with more than 500 members, has been using biometric authenticated electronic voting since 1998. The 2003 Australian Parliamentary report finds that the Mexican Legislature's electronic voting system has an operating cost equivalent to INR 54 million per year (at 2016 prices). For perspective, that is 0.86% of the total budget of the Lok Sabha for 2016-17.

Electronic voting systems are not alien to the Indian Parliament (the one in Rajya Sabha was installed in 1957). However, they are only used in case of a division. This means going through the process of two voice votes, calling for division, granting division, and then conducting a division. Even then, the decision to use electronic voting is subject to the Speaker's discretion. He can choose other inefficient methods like paper slips or the lobby method to reach a conclusion.

Ushering in transparency

The first step towards recording individual legislators' votes is by replacing voice votes with electronic voting systems. Carey, 2005, finds that when countries adopt electronic voting systems, demand for recording individual votes grows. Once the usage of recorded vote starts, pressure to make these records visible increases. An EU Parliament study of EU countries, where individual votes are recorded, finds electronic voting to be the most popular method.

The Indian electorate has been criticised for voting on caste/communal lines. However, in the absence of information regarding legislators' actions in the legislature, there is no other parameter for the average citizen to decide who to vote for. Bovitz and Carson, 2006, conducted a study examining the electoral consequences of individual voting records of legislators in the US House of Representatives. They found that legislators who vote against their constituents' preferences on controversial and politically prominent issues get lower vote shares in subsequent elections. Conversely, when legislators vote according to their constituents' preferences, especially against the party-line, they get higher vote shares. Legislators tend to vote strategically on prominent issues as they worry about taking the 'wrong' position in the eyes of their constituents.

Unlike the US, Indian legislators are subject to anti-defection laws. An Indian legislator cannot ignore a 'party whip/instruction' without risking losing his seat. It may be argued that, in the Indian scenario, individual voting records are useless. This argument has two weaknesses, namely that it:

  1. Contradicts the general principle of governance, that greater transparency in the working of government brings greater efficiency. It does so without providing any evidence for it.
  2. Ignores that once votes are made public the equilibrium shifts and individual voting records may act as a counter-balance to the negative aspects of anti-defection law.

We should always strive for greater transparency in governance. India still follows the Westminster system with people voting for individual legislators to represent them. On one hand, even if this information is useless, it does not harm anyone. On the other hand, when citizens get more information about their legislators, they can make more informed decisions. For example, merely because some candidates with criminal backgrounds are elected, does not mean we should stop requiring candidates to declare their criminal records. In addition, there are situations where anti-defection laws do not apply. In such cases this information can help voters. Anti-defection laws do not affect legislators who do-not vote or when there is no formal party whip. In such cases, individual voting records will provide valuable information about a legislator's behaviour. Did your legislator actually vote on a bill that was important to you or was he absent? It forces legislators to at least participate in issues important to their electorate and turn up to vote. Carey, 2009 examines the Corruption Perceptions Index, calculated by Transparency International, for most countries in the world. He finds that perceptions of corruption tend to be lower in countries where legislative votes are visible.

It may act as a counterbalance to anti-defection. Anti-defection laws have been criticised for reducing the voice of legislators. It puts party interests above the interests of the electorate. However, today the costs on the legislators following the 'party whip' and consequently harming his electorate is nil. Individual voting records may act as a counterbalance to this problem. Just like anti-defection pressurises legislators to vote in favour of the 'party whip', some studies show that individual voting records pressurise legislators to vote in accordance with the wishes of the electorate. Canes-Wrone et al., 2002 examined, through a study of the US elections between 1956 and 1996, the relationship between legislators' electoral performance and support for their party inside the legislature. Their study shows that in each election, an incumbent received a lower vote share when he supported his party. It also decreases the probability of retaining office. Crespin, 2010 finds that where votes are more likely to be noticed by the public, members of the US Congress adjust their votes in line with the demands of their constituency.

It is simplistic to argue that bringing transparency in individual voting records will not change the incentives/behaviour of legislators. Once individual voting records are available, the legislator will have two choices. First, vote against the decision of the party and get disqualified but, on the other hand, gain sympathy of the electorate. This may translate into more votes in the next election/by-election. The legislator can run as an independent candidate or on another party ticket and gain sympathy votes. Second, vote in accordance with the party line and hold on to his seat. However, now the entire electorate is likely to know he voted against their interest. The next election may not be in his favour.

We need to overhaul the functioning of the Parliament. Adopting compulsory electronic voting in our legislative bodies is a low-hanging fruit. It requires a small change in the Parliamentary procedure rules and trivial technological additions. This small change can go a long way in increasing efficiency, accountability and transparency in the functioning of the legislature.

References

Inter-Parliamentary Union, World e-Parliament Report 2016, 2016.

The Parliament of the Commonwealth of Australia, Division required? Electronic Voting in the House of Representatives, May 2, 2016.

European Parliament, Democratic scrutiny, transparency, and modalities of vote in the National Parliaments of the Member and in the European Parliament , 2012.

The UK House of Commons, The Case for Parliamentary Reform, 2010.

Michael H. Crespin, Serving Two Masters: Redistricting and Voting in the U.S. House of Representatives, Political Research Quarterly, 2010.

John M.Carey, Legislative Voting and Accountability, Cambridge University Press, 2009.

Gregory L. Bovitz and Jamie L.Carson, Position-Taking and Electoral Accountability in the U.S. House of Representatives, Political Research Quarterly, June, 2006.

John M.Carey, Visible Votes: Recorded Voting and Legislative Accountability in the Americas, Campbell Public Affairs Institute, September 9, 2005.

Judith Middlebrook, Voting methods in Parliament, Constitutional & Parliamentary Information, 2003.

Brandice Canes-Wrone et al., Out of Step, Out of Office: Electoral Accountability and House Members' Voting, American Political Science Review, March, 2002.


The authors are researchers at the National Institute of Public Finance and Policy, New Delhi. They thank Sanhita Sapatnekar, Anirudh Burman and Pratik Datta for useful discussions.