Book Review: Sapiens - A Brief History of Humankind

Why do species like ants or bees – which have been found to have orderly societies just like humans - don’t have lawyers?

That’s a bizarre question to ask, certainly not something you would have ever even thought of before. But if Yuval Noah Harari is to be believed, there’s a reason.

Of course, this book is neither about ants or bees, nor about lawyers.

"Sapiens", as the name suggests, is the story of origin of our species - the Homo Sapiens on planet Earth, and its journey to the present.

It’s a gripping story - racy and fast paced, at times shocking and controversial - narrated in brilliant style as Harari takes his readers on a tour that starts in the heavily infested forests of East Africa some 70,000 years ago and ends in the modern day laboratories where scientists are busy creating fluorescent rabbits and synthetic humans. In the process, Harari covers most of the important milestones in the history of mankind, such as the birth of language and “culture”, domestication of animals, the origins of God and religion, the spread of Empires, the origin and spread of money and the rise of agriculture, industry, science, wars and conquests.

The book is divided into 4 main parts, arranged chronologically. The first part - “The Cognitive Revolution” is the period starting roughly from 70,000 years ago when humans came out of the barbaric age and began to live like humans (so to speak!). This is the period when language was born, humans spread out of Africa and “history began”. The second part starts around 10,000 BC, when humans began to domesticate plants & animals, and formed permanent settlements. The first kingdoms began to emerge, as also written scripts and some form of money. The author calls this “The Agricultural Revolution”. The third part – “The Unification of Mankind” – is the period starting around the first millennium B.C. when large changes swept mankind. Universal money such as Gold coins were born, several large Empires established and Religion originated.

The last chapter, the longest of all – called “The Scientific Revolution” is the history of the last 500 years of the World. It’s a fascinating story – of European conquests to their East and West, of the rise of Capitalism, the Industrial Revolution, giant strides in Science and Technology, and how all of it has impacted the life on earth. This is the part I enjoyed the most.

But Harari’s book is more than just history.

In the present day world, we have become hostage to a particular way of thinking. We view our world as a logical outcome of the progress and prosperity we have achieved over the generations. Our views and opinions are shaped by the prevalent notions of what is right and what is wrong, and we all view history with the same perspective. For example, our faith in principles of justice, peace, freedom, equality, environment, democracy and several such ideologies has become unshakable. We believe in them because we think that is how things are supposed to be, that is how nature has created the world.  And anything that is in conflict with our notions is an aberration - a result of a deviant upbringing, lack of education or other such deficiencies. But is that how the world was meant to be? Are we really the homo sapiens (“Wise Man”) that we call ourselves or are we just fooling ourselves into delusion?

In Sapeins, Harari shakes up the very foundations of our thinking, busting the myths of what we think of ourselves and the way we see the world. He finds a discrepancy between our evolutionary success and individual suffering. Mankind has made progress, but has that made us happy, asks Harari. As he says, “Most history books focus on the ideas of great thinkers, the bravery of warriors, the charity of saints and the creativity of artists. They have much to tell about the weaving and unravelling of social structures, about the rise and fall of empires, about the discovery and spread of technologies. Yet, they say nothing about how all this influenced the happiness and suffering of individuals. This is the biggest lacuna in our understanding of history. We had better start filling it.”

And that is what the book does, raising more questions than it answers. Did we really benefit out of the growth of agriculture, or was it – as Harari calls it – History’s Biggest Fraud? Have the modern day luxuries made us happy, or have they left us craving for more? Are all humans really equal, or is it a myth we propagate because it makes us more politically correct? Is history working for the benefit of mankind, or had we been better off had the dice rolled differently at some point in the past? Harari leaves us with many provocative questions that we will be at pains to answer. 

One may not agree with everything he says, but Harari certainly makes one think. For that reason alone, this book is worth a read.

The Aadhaar Card and our "Identity" crisis

Archana works for an organization that has recently introduced a new device to track employee attendance. At the time of entry and exit, members of the staff press their fingers against a biometric sensor installed in the office. The sensor matches the fingerprints with those in its database, identifies the employee and marks them present. But there is a problem. Female employees have learnt the hard way that on days when they have mehendi on their fingers – a very common occurrence in India, especially during festivals and family events like weddings – the sensor fails to recognize the employee, marking them absent.

Professor Chari is a retired professor who spends his time doing research and freelance journalism. He is a regular visitor at the local Public Library, which has a large collection of rare books that help him in his research. The University has recently ‘upgraded’ its systems, and introduced a biometric reader that scans the borrower’s fingerprints when membership is granted. However, there is a problem. The biometric reader fails to ‘read’ the Professor’s fingerprints, making it impossible for him to enrol. The Librarian says this is a very common occurrence with senior citizens, for which he has no solution.

These two incidents (names changed, stories true) that I came across recently drove me to attend an event organized by Moneylife Foundation earlier this year, on the recently introduced “Aadhaar” card by the Government of India. The event was addressed by Col (retd.) Mathew Thomas, a former missile scientist cum civic activist, and Mr. Jude D’Souza, a forensic expert. At the event, Mr. D’souza gave a demonstration of how fingerprints can be faked, and claimed even Iris scans can be easily tampered with. Col Thomas, in his speech, came down heavily on the Aadhaar project and explained how the project is being pushed ahead despite its lack of Parliamentary sanction, extraordinary high cost and innumerable flaws in conception, execution and  implementation. 

Since then, I have tracked the Aadhaar project closely. The critics of Aadhaar are many, and its flaws are there for all to see - the project has no Parliamentary sanction, its cost benefit analysis has not been done, it uses questionable methods to collect its data, the accountability for breach of data secrecy is vague and unidentified, the card itself is unnecessary and adds no value, and it exposes citizens to a grave risk of identity theft. (Read this, this or this) The card is being mischievously linked to government schemes like subsidy payments, for which simpler solutions such as Electronic Transfers (e.g. RBI's ECS) already exist. It's marketing campaign makes the deceptive claim of being “every citizen’s right”, creating a perception of value and benefit. One can understand a right to vote, a right to free speech, or even a right to subsidies and scholarships (if eligible). But a "right" to an identity card is a laughable statement! And yet, the citizen’s have lapped up the card, as if there was no tomorrow (around 38 crore enrolled at the time of writing!). I am amazed at this craving for another “identity” proof, without giving a second thought to what constitutes an "identity", and why identity cards exist. So let us ponder over it...

Aadhaar - A "right" to get a card that tells you who you are!

My dictionary defines Identity as “the fact of being who or what a person or thing is”. A person’s name and face, appearance and physical features give him his identity. His character, reputation, image give him his identity. His achievements, his work, his thoughts and actions – all give him his identity. "Cogito ergo sum”, Rene Descartes famously said in the 17^th Century. I think, therefore I am. That gives me my identity. People would still have their identities even if there were no identity cards.

Identity Cards exist not because people need identities, but because organizations need to identify people they want to deal with. The Election Commission issues an Identity Card, because it needs to identify voters who are authorised to vote. National governments issue passports because they need to identify people who enter and exit their country. A school or college issues an Identity card because it needs to identify students who have been granted admission. Why the UIDAI needs to identify anybody is beyond my understanding. It is probably the only organization in the world whose sole purpose is to issue Identity Cards!

Going far beyond its blatant illegality and reckless implementation, the Aadhaar project raises serious issues of citizen’s freedom, liberty and privacy that are little understood by a majority of Indians. The government exists for the sole purpose of ensuring law & order, defending the country from external aggression and providing a dispute resolution framework. People are unaware that nobody – not even the government – needs to know more about its citizens than what is necessary. For example, the Motor Vehicles Department seeks information about a person’s age, physical fitness & blood group in its ‘normal’ course of business. The Income Tax Authority does not ask for your physical fitness and blood group, but may seek information about income and assets, because that is in its normal course of functions. The Election Commission seeks information about age & residential address, but not income & assets! But the UIDAI wants to know everything about everybody, and for no specific purpose! 

It should be noted that opposition to Aadhaar is not opposition to technology. From Stone Age to this day, mankind has progressed only because of advancements in technology. The benefits of technology in areas such as bank computerization or railway reservation systems have been there for all to see. In recent times, government departments like the Income Tax or Passport Offices have computerized their operations, bringing immense improvement in the quality of their service delivery. However, Aadhaar seeks to create an integrated database that will hold everything from a person’s name and date of birth, to fingerprints and iris scans, and address to bank account numbers. It  would expose citizens to a grave risk of identity theft, and is a blatant encroachment on the citizen’s right to privacy and liberty. It would grant immense power to anybody who lays his hands on this data, and would be open to misuse (see this, esp. the last para). This includes unscrupulous employees from the related offices, data collection agencies, people with political power, and by consequence their relatives, associates, business partners or anyone else who is interested in obtaining this data for a consideration. 

The UIDAI claims the data is encrypted at the point of collection. But we know that adding a layer of encryption does little to deter a determined hacker. Everything from bank websites to email accounts, defence networks to even nuclear establishments have been hacked. No wonder UIDAI doesn’t even reveal whether the country’s top politicians own an Aadhaar Card!

To me, Aadhaar is nothing but part of a grand scheme to create a Surveillance State. Its other elements includes the Central Monitoring System (CMS), the National Population Register (NPR), the National Intelligence Grid (NATGRID), countless CCTVs at every nook and corner of the country, and every other instrument of state oppression that is used to track every step a citizen takes. Much of this is often justified on the grounds of 'national security' – in other words, the government’s own administrative failure of securing our borders and making the country safe. Governments exist to serve its people, not to control them. Unfortunately, schemes such as these do not face popular resistance, because a majority of the people feel they have nothing to hide. But once such an infrastructure is created, it can be misused to intimidate and subjugate people, and create a regime of oppression and injustice.

No wonder the government is desperate to give you an Aadhaar card. Why are you desperate to take it?

Beyond the obvious

Is allowing FDI in multi-brand Retail good for the country? What is the true impact of raising diesel prices or restricting LPG subsidy on the people? Should telecom spectrum and coal mines be auctioned to the highest bidder, or should they be allocated cheaply so that the price paid by the ultimate consumer (for telephone services and electricity) is kept low? Should rail fares be raised? Should the Central Bank reduce interest rates to stimulate industry and make loans cheaper? Should the government act against airlines who fleece passengers by charging exorbitant fares during peak season? Should the government explicitly promote export oriented industries that earn precious foreign exchange? Should cheap imports from countries like China be banned to protect domestic industry? Is the government right in spending thousands of crores on welfare schemes like MGNREGA? Questions such as these are debated daily, and are of interest not only to politicians and bureaucrats who decide on these, but also to citizens whose lives are affected.

How does one take a stand on all these? How does one decide what is right and what is wrong? How does one assess the impact of these decisions – beyond the immediate fallout that we can see (such as, for example, that one would pay more for diesel if diesel prices are raised)? Do these decisions have implications that are beyond the obvious? How do we know what will work out best for us in the long run?

“Economics in One Lesson” by Henry Hazlitt is a remarkable book by any means. Written in such a simple language that even a layman can understand, Hazlitt unravels the mysteries of economic decisions and their long run effects on the health of the economy and welfare in general. Hazlitt explains how markets work, how people behave, how governments decide and what they do to the very people they seek to assist. Hazlitt gives a framework that enables the reader to analyze the long run impact of such decisions, including that  which is not so obvious but nevertheless very important.

Hazlitt's remarkable book should
be compulsory reading for all

The book is divided into twenty five chapters, each dealing with a distinct topic such as taxation, effects of mechanization, import tariffs, export promotion, government price fixing, inflation, and so on. Hazlitt explains the basic principles underlying these actions and the impact of these on the economic activity as a result. Hazlitt uncovers not only that which is seen, but also that which is not seen. In Hazlitt’s own words, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely on one group but for all groups”

It is amazing how much ignorance about economic issues is prevalent even among the policymakers today. Take the following paragraph from the chapter on government price fixing, for example. You might want to read it in the context of the current mess in India’s Oil & Gas sector, but keep in mind that Hazlitt’s small book was written in 1946!

Hazlitt writes, and I quote, “We cannot hold the price of any commodity below its market level without in time bringing about two consequences. The first is to increase the demand for that commodity. Because the commodity is cheaper, people are both tempted to buy, and can afford to buy more of it. The second is to reduce supply of that commodity. Because people buy more, the accumulated supply is more quickly taken from the shelves of merchants. In addition to this, production of that commodity is discouraged. Profit margins are reduced or wiped out. Marginal producers are driven out of business….if we did nothing else, therefore, the consequence of fixing a maximum price of a particular commodity would be to bring about a shortage of that commodity. But this is precisely opposite of what the government regulators originally wanted to do…. Some of these consequences in time become apparent to the regulators, who then adopt various other devices and controls in an attempt to avert them. Among these devices are rationing, cost-control, subsidies and universal price fixing.” Hazlitt then goes on to systematically demolish each of these.

As we all know, relying on the promise of deregulation, billions of dollars were spent on all stages of the oil & gas value chain in India, from exploration to refining to pipelines to storage & distribution. But the country still doesn’t have enough of what it needs. Most of the capacity in the private sector has been shut or is on the verge of closure, the public sector survives on huge doles of support from tax payer’s money. People don't have enough of what they want and the private producers have all but fled, all because of faulty price fixing.

It is remarkable that such a storehouse of knowledge can be crunched in such a small book and explained so lucidly. This book should be compulsory reading for all the lawmakers who decide our future, and for all of us who choose them.

Buddham Sharanam Gachhami !

Long before India started exporting spices or software, Ideas, Thought Leadership and Spirituality were the earliest exports from India to the world. The zero and the decimal system, which forms basis of the numbering system that the world uses today, was invented in India. Kautilya’s Arthashastra, written in the 4^th Century BC, laid down the principles of governance, public administration and taxation several centuries before modern-day economics or political science was born. Wonders of modern science, from aircrafts to surgeries have all been mentioned in ancient Indian texts. Ayurveda holds the secrets of good health which modern day researchers are trying to discover and patent. Sushruta’s Sushruta Samhita, written in 800 BC mentions more than 300 surgeries, including the likes of plastic surgery, cataract and caesarian section. The techniques of Yoga and Meditation as key to a healthy body and a healthy mind are seeing resurgence in the West.

Grand Buddha statue at the pagoda

One of the ideas that India gave birth to, and were embraced by the world, were the teachings of Gautam Buddha. From Mongolia in the North to Sri Lanka in the South, and from South East Asia to Japan, Buddhism is today the fourth largest religion in the World. Close to half a million people in the world follow Buddha and his teachings as their principal religious order.

Buddha taught that suffering is an ingrained part of existence, but it is possible to end it by following the right path. The right path, he said is the eight – fold noble path of right view, right intention, right speech, right action, right livelihood, right effort, right mindfulness and right concentration. Buddha said no teachings should be accepted unless they are borne out by our experience and are praised by the wise. Buddha held that two qualities are rare among humans: Katannuta that is, Gratitude and Pubbakarita, which is, initiative to help others without expecting anything in return. These two qualities are the true measure of progress.

A grand Pagoda, styled along traditional Burmese architecture, has come up in Mumbai recently.  The pagoda, built by the Global Vipassana Foundation seeks to spread the true teachings of Buddha and  promotes the practice of Vipassana Meditation that was said to have been practiced by Buddha himself.

The Pagoda claims to contain the largest pillar-less dome structure in the World, 90 feet in height and 280 feet in diameter. Built using 2.5 million tonnes of stone and 3,000 truckloads of sand, the pagoda towers to a height of a 30-storey building. Underneath it is a huge meditation hall which can accommodate 8,000 people at a time. It has been designed as a replica of Shwe Dagon Pagoda of Myanmar. Relics of Gautam Buddha are enshrined at the site. The entire complex, apart from the main pagoda, contains several other structures such as an art gallery, a library, two other smaller pagodas, an auditorium, a food court etc. Exquisite samples of traditional Burmese architecture can be seen throughout the campus. The art gallery contains stunning paintings depicting the life of Gautam Buddha from birth to death. An excellent facility, to listen to the story of each painting as you move along the gallery, using a tape and earphones is available. This makes the visit to the gallery worthwhile and meaningful, as it enhances our understanding of the life of Gautam Buddha and his teachings. The pagoda is located off the coast of Gorai, in Mumbai. Take a look some day.

MCGM Election Results: NOTAP beats AOPPT

I know this is a trifle late, but I was away and could not find time to write. Here I am putting down some thoughts on the results of the just concluded MCGM elections.

Firstly, that even before the counting had begun, the real results of the elections were clear. More people opted for the “NOTA Party” (None Of The Above Party) than “AOPPT” (All Other Parties Put Together). The city recorded average voter turnout of around 45 % with the highest voting percentage in any constituency at  49.50 %. Not a single constituency had more than 50 % people going out to vote.

This has been interpreted by many as “voter apathy”. “……Mumbaikars have lost the right to complain……”, “…….Mumbaikars just don’t care……” and so on. Some also commented on the turnout  being lower in the affluent areas of the city than the less affluent. I even heard one “expert" say on T.V. that Mumbaikars have so much money that they spend half their time abroad, and so it doesn’t matter to them who governs MCGM.  Nothing can be farther from truth! 

There should be no mistaking the fact that the real reason for low voter turnout was that there were no  worthwhile candidates to vote for! It is an outright rejection of all candidates who contested the elections. This should be an eye opener for all the parties contesting the polls, and especially for whoever is in the opposition. If you want to dislodge a ruling party, you need to provide a worthy alternative. If you cannot even create a glimmer of hope in the minds of the voter, he is not going to waste his holiday! This is the message from the Mumbai elections. I am not justifying this approach, in fact I believe everyone must vote (see the previous blogpost here), but there is no doubt that this is the message the people have given.

I also find the “affluent people don’t care” theory a little difficult to digest. True, voter turnout in areas such as Malabar Hill, Peddar Road and Juhu have been shown to be lower than some of the slums and lower income areas. But using the same statistics, one can say that voting percentage was lower in the educated sections of the society, than the less educated. Liquor bottles and chicken biryani cannot be used to bring the Juhu voter out of his home, though it may work in the slums of Cheetah Camp or Kanjurmarg.

Some have observed that the Marathi dominated areas have shown higher voter turnouts than non-Marathi speaking areas. This once again shows the importance of having an “alternative”. The disgruntled (with the present governance) Marathi manoos perhaps found hope in Raj Thackeray’s MNS but the non-Maharashtrians had no one to look up to. Interestingly, the Congress propped up MNS in its early years in the hope that it (MNS) will finish the Shiv Sena, but the MNS seemed to have gained at the cost of Congress itself. While the MNS gained substantially in the elections, the Sena did not lose much. It is the Congress whose strength has come down from 71 to 51.

This is the real story of Mumbai elections - a fit case for Rule 49 – O! (Right to Reject all candidates).

Voting rules for the elections

It is election time in Mumbai, so I am framing some guiding principles that I plan to follow in this, and all the subsequent elections. You too can do the same!

1. I will ensure that I cast my vote. It is not only my right & duty; it is also a privilege to vote. How much ever imperfect our democracy may be, democracy it is, and I am lucky to be born in one. Almost half the people in this world do not have the privilege to vote. Remember the adage: “Bad governments are elected by good citizens who do not vote”. If we do not exercise our franchise, we may lose it one day. 

2. I will research candidates in my constituency. With the advent of technology and increased transparency in recent years, citizens have better access to information about the parties and their candidates than before. I will use it. If I can spend three hours watching a movie, I might as well spend some time researching who will maintain the roads I walk on, supply the water I drink or decide what to do with the tax I pay from my hard earned salary.

3. The person is more important than the party. The simple rule here is that a good person in a bad party is better than a bad person in a good party. So I will vote for the candidate, not for the party.

4. I will not vote for the known devil. I will not vote for a candidate who was elected in the past  but did nothing for the people, or has a corrupt or criminal background, or reveals wealth that does not justify his known professional or educational status.

5. I will not presume that everyone is bad. If the major parties do not put up candidates who are good enough, there are always fringe political parties or even unknown independents whom I can vote for. I don’t see any harm in voting for the unknown ones when the known ones are failing my test. If nothing else, I can use education as a criterion to decide whom to vote for. Not that it is a fool-proof criterion, but atleast it is better than voting on the basis of religion, caste, language, fame or good looks.

6. I will not worry about how others vote. Whether the candidate I vote for can win or not, or whether his party can form the government or not, is irrelevant to my decision of whom to vote. Remember that we not only elect our government, but also our opposition! In a democracy, having a good and effective opposition is as important as having a good government. 

I hope these rules will help me in choosing the right candidates, or atleast prevent me from choosing the wrong ones. If everyone does the same, we will have Ram Rajya one day.

The Jarawa debate: Is backwardness "culture"?

The Jarawa tribals of the Andaman were in the news this week. A news video put out by The Guardian showing Jarawa women and children dancing in front of the camera for the benefit of tourists caused uproar in the country. Local media picked up the story and the Government has now ordered an enquiry.

The Jarawa are one of the four Negrito aboriginal tribes inhabiting the Andaman Islands. Their total population is said to be just around 250 or so. These tribes are said to be among the direct descendants of man’s earliest ancestors who migrated from Africa around 65,000 – 70,000 years ago. As late as till the 1990s, the Jarawa were said to be living in their forests in complete isolation and had resisted all contact with outsiders. But in the last fifteen years, the Jarawa have gradually shed their isolation.

I first heard of the Jarawa during my recent visit to the Andaman Islands. On our way to the Limestone Caves in North Andaman, our bus passed through the dense tropical rain forests of Middle Andaman, home of the Jarawa tribes. We passed through these forests escorted by a police convoy. The vehicles were not allowed to stop for a stretch of about 50 kilometers till we reached the other end of the forest. On a couple of occasions during our journey, the Jarawa came close to the passing vehicles, providing a glimpse to the shocked tourists. Their faces were painted yellow and they wore nothing.

This notice pasted in our bus said it all. Though unscrupulous tour operators need to be dealt with severely, there is no reason to deny Jarawa the benefits of modern development 

The construction of the 300-odd kilometer long Great Andaman Trunk Road that runs north – south through the length of Andaman and through the heart of the Jarawa inhabited forest has opened up an opportunity to integrate the Jarawa into the national mainstream. In fact, the Jarawa have now started to venture out of their forests, initiating contact with human civilization. Though extremely hostile initially, the Jarawa are reported to have turned friendly in recent years, asking for food or even medical aid with villagers and farmers living on the fringes of the forests.

But it is unfortunate that some NGOs and environmental groups have been fighting for the closure of the Road, demanding the Jarawa not be ‘disturbed’ or ‘their territory’ not encroached upon. Terms such as ‘human safaris’ used liberally in the media have unnecessarily sensationalized the issue. The Jarawa deserve the benefits of progress and development as much as any other people. Keeping them backward and in isolation in the name of ‘preserving their culture’ is clearly not the way to go.

Property Prices - Part II

(This is the concluding part of a two-part series on property prices. The first part is available here. We continue from where we left off……)

The Central Government has proposed to set up a Real Estate sector Regulator ‘to ensure transparency and ensure fair practices’ (see here). The draft Real Estate (Regulation & Development Bill, 2011) proposes steps such as compulsory registration of projects with the Regulator, deposit of money collected from home buyers into an Escrow account to avoid diversion, setting up of an Appellate Authority to address complaints and grievances and stiff penalties including jail terms for guilty developers. Though the provisions of the Bill are welcome, the Bill will do nothing to increase supply and bring down prices.

Can the demand come down? In a country like ours, it seems impossible unless we are talking about a calamity of such massive proportions that buying property will be the last thing on anyone’s mind at that time.

My belief is that normal economic cycles such as an industrial slowdown and high interest rates are just not enough to cause a sustainable price correction in property prices. What are needed are sweeping legal reforms with far reaching implications. Some suggestions that come to mind: 

1. Eviction of an uncooperative tenant needs to be made easier. Then a big chunk of supply (click here) currently locked up empty will come into the market. The ‘stay order’ culture has to end. 

2. Transaction costs are just too high. Stamp duty, registration, service tax, VAT etc. add to almost 10% of the cost of the flat for the buyer. What the seller sells for Rs.50 lacs costs the buyer Rs.55 lacs. Atleast the first flat for every buyer should be made tax free. Getting a decent place to stay is a basic necessity of life, a Right as much as Right to Education or Food or Freedom of Speech. 

3. Stamp duty based on the value of the agreement provides a strong incentive to under report the transaction value. Today, it is almost impossible to complete a transaction without the ‘cash’ component. This reduces government revenues, which ultimately is compensated by higher taxes from those who pay. Stamp duty should be made payable based on the area of the flat or the ‘ready reckoner’ rate alone, not on the value of the transaction. 

4. Technological solutions that allow mass production of houses in some kind of CKD (Completely Knocked Down) form should be promoted. Such technologies exist, such as pre-fabricated buildings (click here) but need to gain wider acceptability. The governments have to drive this. This is the only way supply can be increased dramatically.

It is too much to expect innovative solutions that genuinely help the people from our present crop of politicians, who are actually beneficiaries of high property prices. A large chunk of their legitimate and illegitimate wealth is invested in property. From time to time, populist announcements such as increase in FSI or redevelopment of old buildings or mill land are made to pacify a gullible population. But such steps can never change the demand – supply imbalance and bring down prices. The batch of college students who is passing out today is not going to ever be able to buy a decent house in Mumbai.

In the long run, this will feed into social unrest. Social unrest can manifest itself in any manner, not necessarily into a demand for cheaper homes. One day, a benevolent dictator may decide that legislative fiat is the only way to alter the situation and dictate ‘all tenants become owners from tomorrow’ (or something similar). Such instances are not unknown to history.  This may seem far fetched today, perhaps it is, but we are heading in that direction only.

Until that happens, do not expect a correction in property prices. Getting a decent accommodation in the city of work will remain a pipe dream for a major part of the Mumbai’s population. “Affordable housing” is just a slogan, unless you believe that staying in Boisar and working in Mumbai is a life.

Why property prices did not fall, and will not. Unless....

(This is the first of a two part series on this subject)

The Reserve Bank of India (RBI) seems to have completed one full series of interest rate hikes with its pronouncements in the latest monetary policy announced this week (full text here). But despite almost two years of continuous interest rate hikes, industrial slowdown, scams and what not, and the prognosis of some experts, property prices have remained stubbornly high. With the talk now turning to when the RBI will reduce rates, you can discount any chance of a price correction. In this two-part article, I pen down some thoughts on Mumbai's property market, based on my observation of the business.

I. Demand:

1. India has 17% of the world’s population (see here), but just 2.3 % of the world’s land mass (see here). From this, if you reduce the land occupied by its water bodies, deserts, forests, hills & mountains and agricultural land, the land available for civil habitation reduces even further. It is only natural that India should have one of the most expensive land rates in the world. Reports such as this should not take you by surprise. 

2.  Considering the population growth rate around 30 years ago, demand today might be growing at 1.1 % p.a. or around 75 lac houses per year for the country as a whole. (Here I have assumed that a person enters the property market at the age of around 30 and two births create a demand for one house 30 years later)  

3.  To this, you can add demand caused due to migration from rural to urban areas, and move from smaller homes to bigger homes due to rising prosperity, and it is clear that the actual demand growth is much higher  than 1.1 % in cities like Mumbai. The economy just cannot build enough houses to keep pace with it. 

4. Property is also bought as an investment. People don’t mind buying a flat and simply locking it up. This absorbs supply without meeting demand of those who want a place to stay.

II. Supply: 

You cannot manufacture buildings on an assembly line

1. You just cannot mass produce houses, as if on an assembly line. Construction is a highly labour-intensive manual process. My observation is, even for a medium sized project involving a few buildings, a few hundred apartments which will accommodate a couple of thousand families, it takes anywhere upto 4 years from the time a project is announced to the time the last of flat is built and families can move in. By that time, demand would have gone up manifold!  Does the economy have so many project managers, architects, civil engineers, labourers, plumbers, electricians, carpenters, etc. who can work cohesively and dramatically increase supply? The truth is - supply can only increase inch by inch, while demand is increasing by leaps and bounds. In my opinion, this is the single biggest factor that drives prices in a country like India.

2. A builder may need as many as fifty different approvals from various government departments to get a project cleared. At each stage, he either faces red tape or bribery. This either reduces supply or increases the cost to the ultimate buyer.

3. Builders ‘release’ only a few flats for sale at a time, usually the least saleable ones first. They have enough supply of money, formal as well as informal, to enable them to hold on to their inventory. If they find themselves in trouble, banks restructure loans to protect their own NPAs. So there is no urgency for the builder to sell. This happened in 2009. 

4. There are thousands of flats lying empty and unused in Mumbai and elsewhere, just because the owners don’t want to risk renting them out. This supply is permanently out of the market. 

5.     At a systemic level, the leveraging among buyers is just not high enough to force distress selling due to a marginal interest rate hikes, such as what we have seen: 3 to 4 per cent increase over a two year period.

In other words, the supply - demand gap is just too much to allow normal economic cycles to induce a price correction. Even the hint of a correction will bring in a hoard of buyers at support the market.

(to be continued)

Ay dil hai mushkil jeena yahaan…

A recent survey by The Economist ranks Mumbai among the "world’s worst cities to live". 

In a global ranking of 140 cities, Mumbai has finished at 116. The city’s poor ranking has evoked hardly any reaction from its political leadership, or even its people, who seem to have resigned themselves to their poor fate. Are things really this bad, or aren’t they? After twenty years of economic reforms, the financial capital of one of the world’s fastest growing economies (all the things the ‘experts’ on CNBC or elsewhere tell us) ranks 116^th on “livability”. What is it that the world looks at, that we are missing out on?

The Economist’s survey gauged cities on five categories - political and social stability, healthcare, culture and environment, education and infrastructure. Here is my take on the topic.

1. Stability: Prevalence of crime, threat of terror / military conflict or civil unrest:

Look at the numbers. More than 5,000 cases of petty crime and violence, such as chain snatching, rape, dacoity, theft etc. were reported in Mumbai in the first four months of 2011 alone. This excludes white collar crime, corruption and the like.

The city has seen 8 terror attacks in the last 10 years, killing nearly 500 people and injuring many more, not to mention the communal riots of 1992-93 or the serial bomb blasts of 1993 that killed more than 250. The world gives no marks for the “spirit of Mumbai” which springs back to its feet the next day after every bomb blast. Against this, I have visited countries where I was told there is no need to lock your home while going out – “nobody will take anything”.

2. Healthcare: Availability of private and public healthcare, drugs and general health indicators:

This is something that India itself scores very poorly on, and Mumbai is no exception. The United Nations’ Human Development Index ranks India at 119 out of 169 countries. The HDI measures life expectancy, literacy, education and standards of living for countries worldwide. It is a standard means of measuring well-being.

In Mumbai, public healthcare is the responsibility of the Brihan Mumbai Municipal Corporation. But for a city of more than 1 crore people, the BMC provides just 4 ‘teaching’ hospitals, 5 specialized hospitals, 16 peripheral hospitals, 28 municipal maternity homes and 14 maternity wards. Most of the residents (80 % plus) rely on expensive private medical care. The result? 32 per cent of the reported ailments in the city remained untreated. Even today, seven to eight per cent of all deliveries in Mumbai happen at home.

3. Culture and Environment: This covers factors such as climate, culture and environment.

Air pollution levels are five times higher than acceptable levels and a quarter of water the city drinks is actually  unfit for consumption.

Noise pollution is high, rising and during festivals reaches alarming levels.

4. Education: This covers availability and quality of public and private education.

Mumbai has literally thousands of schools, colleges and educational institutions. Clearly, no shortage of quantity here, but when it comes to quality, like the rest of the education system in India, there is still a lot to be desired. The education system is actually an ‘examination system’ and churns out graduates who are skilled at nothing. As per an Assocham study, India was at the last position in terms of quality of secondary education in seven emerging market economies.

Goldman Sachs says the lack of quality education was one of the 10 factors holding India back from rapid economic growth.

5. Infrastructure: Quality of road network, public transport, international links, availability of good quality housing, energy, water etc.

Ah! The less said about this the better! Mumbai’s transport system is one of the most congested in the world. More than 1.5 million vehicles cram the city’s potholed roads with utter disregard to traffic discipline. Even the smallest of rains are enough to clog the streets with water. Trains of 1700 passenger capacity ferry more than 4500 passengers each during peak hours. More than 60 % of the city’s population lives in slums, where even  shanties cost more than a couple of million rupees. 

For water, the city still looks to the Rain Gods every year. According to a World Bank study, of the 27 Asian cities with populations of over 1,000,000, Mumbai is ranked as second worst performer in terms of hours of water availability per day. And despite this, 700 million liters of water, or 20 % of its daily supply, is lost daily due to theft, illegal connections and leakages.

Basically, nobody cares.

Building sky-scrapers and flyovers does not constitute development; there is a lot more to making a place ‘livable’ than the city’s leadership would like to believe. But is anybody listening?

The 'unwanted'

The discrimination against the girl child knows no bounds. The Times of India reports that in a shocking incident, the District Health Administration in Satara District of Maharashtra has identified 222 girls in the age group of 0 – 16 with names “Nakoshi” (meaning ‘Unwanted”, in Marathi) who will be rechristened and given ‘regular’ names so that they are able to carry out their lives normally.

Many of the developed countries have laws which permit or prohibit what name a child can be given. For example, New Zealand has a list of 102 names, which include “Adolf Hitler” which are banned. Portugal bans ‘Mona Lisa’, while in Norway, there is a ban on ‘swear and sex words, illnesses and negative names’. In Australia, Registrars can refuse to register a name which is considered ‘obscene, offensive, too long, consists of symbols without phonetic significance or is contrary to public interest’. In the USA, ‘numbers are not allowed’, while in Denmark, prohibited names include ‘monkey’ and Japan bans ‘Akuma’ (which means Devil).

India’s problem is however, different and no such law is likely to solve it. As parents of these 222 children would vouch, a girl child simply is ‘nakoshi’, whatever name she may be called with. The latest census data shows that the child sex ratio in India has deteriorated over the last 10 years. ‘Progressive’ and prosperous states like Maharashtra fare significantly worse than the National average and sit at the bottom of the National rankings.

Child population in the age group of 0 – 6 years:

Females per 1000 males	2001	2011	Decline
All India	927	914	1.4 %
Maharashtra	913	883	3.3 %

(Source: Census of India, 2011)

A recent paper predicted that India would have 20% more men than women in the next two decades due to sex-selective abortion and craze for male child. Clearly, hundreds of girls are being in killed our country even before, or soon after they are born. This is mass murder at the highest scale. It is estimated 8 million female fetuses may have been aborted in India in the past one decade alone.

Little is being done to arrest this trend. The Pre-Conception and Pre-Natal Diagnostic Techniques (PC & PNDT) Act was passed in 1994, which makes sex determination of the child before birth illegal. But there is overwhelming evidence to suggest that abortion of the female fetus continues with impunity. The number of convictions under the PC & PNDT Act are minimal, with only 13 convictions across the entire country in 2010 and only 2 in Maharashtra.

Ironically, the rapid rise in the number of Sonography Centres in recent years might have contributed to this disturbing trend. For example, in 2004, there were 4,345 such centres in Maharashtra, a number that has swelled to 7,939 by 2010-11. A study conducted in 2004 observes that higher the number of Sonography centres in a region; poorer is the sex ratio. Selective sex abortion is now a Rs.1000 crore industry. The Maharashtra Government is now working on a system of compulsory online registration of every sonography conducted by a Sonography centre in the state. But it is doubtful how successful the experiment will be.

Policing can only do this much. What is needed is for attitudes to change. And until that happens, hundreds of Nakoshis will continue to be killed even before they are born. And many of those who are lucky enough to be born will be left to suffer a lifetime of discrimination and injustice. 

Hum Do, Hamare Do

A friend, who has a 7 year old child, is in a dilemma – whether to plan for a second child or not. As a father of two kids aged 8 and 3, I have rather strong (and some of you may find, surprising) views on the subject. I am putting them down here, and hope they trigger a chain of thought in you as well.

Of late, there has been a growing (and disturbing, in my opinion) trend among the educated, urban elite to go for only one child. A random check among more than 50 of my friends who are a parent show more than 60 % of them have only one child. This is in sharp contrast to the trend a generation back. Most of these friends themselves have atleast one sibling, but now when it is their turn to ‘deliver’ (literally!), they have stopped at one, giving no such privilege (of having a sibling) to their own child.

 I have heard people give all sorts of reasons on why they don’t want to plan for a second child. “Raising one child itself is too much for me! Look at my kid, she never listens to anyone! I can’t even think of having two!” is a common refrain.  Others want to “give their best” to their child, and so don’t want to have two, thinking that their energies will get divided if they have two kids, and leave deficiencies in their parental responsibilities. Or perhaps, it sounds “hep” and fashionable to have only one child, does it? Does it make a statement that you have “arrived”? Mind you, I am talking about the well educated, double income (often), urban middle and upper class, the well heeled, who have no financial constraints in raising a second child, and yet opt for only one. Why should they not give their child a privilege that their own parents were kind enough to give them?

What happens if you have two kids at home instead of one? Sure, there are some sacrifices involved, especially in the first couple of years of child birth. The would-be mother has to undergo nine months of pregnancy again, and after the child is born, you have to take some extra precautions and restrict your movements around for some time.  The housework goes up, and you might need an extra maid for a couple of years till the child is in its infancy. But these are minor inconveniences, when you consider the benefits that last a lifetime.

When the kids are young and growing, having a sibling at home brings immense benefits. They play with each other, learn to share, compete, even quarrel and then play again. They take care of each other, provide each other company, leaving the parents free to do their own thing. My elder daughter, who is eight years old, readies her younger one for school.  When they grow up, having an extended family only adds to one’s universe of love and affection. Think about it.

Two little emperors better than one!

What are the effects of a child being single on the child’s personality and emotional development? Researchers have studied this for decades, and the subject has attracted widespread attention and debate, especially in China where it is known as the “Little Emperor Syndrome”. A whole generation of Chinese “singletons”, born after the one-child norm was introduced for urban adults in 1979, are now in their youth. Some researchers have reported extreme pressure on these “Little Emperors” (typically, single child of well-to-do parents) to excel in education and elsewhere, and extreme pampering resulting in “stunting of social and emotional growth”. Some have reported these children are “....being over-indulged, lacking self discipline and having no adaptive capabilities”. In March 2007, some 30 delegates in the Chinese People's Political Consultative Conference (CPPCC) called on the government to abolish the one-child rule, attributing their beliefs to "social problems and personality disorders in young people". But some other researchers have reported “no reliable differences between only children and those with siblings”. Some in the West claim single kids “mature early” and are “more achievement oriented”, pressured as they are from their parents for fulfilling their own unfulfilled dreams. (Information in this paragraph sourced from Wikipedia)

Whatever the truth, I do not see ‘single’ children benefiting in any significant way from the so-called ‘extra’ care and attention given to them as a result of their being the only child of their parent. Clearly, love and affection does not reduce if you divide it into two! Benefits of having a sibling thus appear to far outweigh the disadvantages (if any at all) of having one. I see no reason why today’s well educated, double income, upper class, urban elite should deprive their child of a brother or a sister.