When should the government subsidise training filmmakers?

There is no case for government to subsidise FTII (and, for that matter, IITs and IIMs too)

One of the numerous controversies surrounding the Modi government’s appointments in the education sector revolves around a minor television actor being appointed the chairman of a government-run institute on the basis of his party, and perhaps ideological, affiliation. Students, alumni and many public commentators have opposed the appointment of Gajendra Chauhan on account of his weak acting credentials and lack of stature in the industry.

Mr Chauhan’s critics might be right. His defence — that he is being judged ahead of his performance — can also be taken at face value, not least in a country where “officially certified” graduates are unemployable, and great actors and film-makers need not necessarily be good administrators.It is not as if having great personalities running the film institute has prevented the Indian film industry from distinguishing itself through sheer mediocrity. Mr Chauhan does deserve a chance.

The Film and Television Institute of India is a government run institution. The elected government has the prerogative to appoint whoever it likes. If students and faculty do not like it, they can voice their protests, which the government ought to listen to. But if the government does not, or does not accept the criticism, then that should be the end of the matter. Students and faculty who cannot accept Mr Chauhan’s leadership can decide to quit. Whatever your politics, this is the right conduct in a republic. With apologies to John Roberts, the Chief Justice of the US Supreme Court, it is not the purpose of democracy to protect the people from the consequences of their electoral decisions.

However, the bigger issue is why is the Union government running a film institute and training actors and filmmakers with public funds? The economic argument is that the government can subsidise education that has large externalities, if there is an undersupply of such education. In other words, the reason to subsidise medical education (whether or not through government medical colleges) is that a doctor benefits society even when making money for herself. If there are too few doctors, there is a case for subsidising medical education. If there are too many of them, it doesn’t.

So do actors and filmmakers have large positive externalities? To the extent that entertainment is necessary for the well being of individuals and society, then it is possible to make a case that filmmaking ought to be supported with public funds. But are there too few actors? Are there insufficient incentives for the private sector to invest in filmmaking institutes? You could argue that a few decades ago, there was a need for government to subsidise Indian actors and filmmaking. It is difficult to argue that is the case today: the film industry was worth over $2 billion last year and almost produces more films than the United States, China and Japan (the next three biggest producers) combined. There are too many films. There are too many television channels. There is an oversupply of films, television programmes, actors and filmmakers. It makes no sense to subsidise film-making in this situation. Privatising the Film and Television Institute of India is a good idea, especially if it can use the autonomy to improve industry standards.

In a twitter conversation, a fimmaker retorted saying if government can run IITs and IIMs, then why not FTII? The answer really is that just like FTII, the government should get out of running IITs and IIMs too. Where there is need for government is in the running of 665 universities where around 30 million students are enrolled. All the IITs and IIMs together account for a mere 15000 students. The poorest student who secures admission to IITs or IIMs is likely to secure grants, scholarships or loans to pay her fees. On the other hand, the pure sciences, social sciences and arts need greater public funding because of the dismal state these disciplines are in. Universities represent education in its broadest sense, and has the broadest externalities — an educated population is in the public interest.

The debate on a few elite institutions is misplaced. The government ought to get out of running film, engineering, management and law institutes. There is no case for pouring scarce public funds in areas where there is a glut and where there are enough incentives for private provision.

To escape the tyranny of the ignorant

Why education must outpace population growth

How do societies become enlightened? If they are under authoritarian rule, a small elite can impose values of the broader population. Sometimes authoritarians—or leaders with personal charisma and political power—promote enlightenment values: Peter the Great and Kemal Ataturk, for instance, used political power to push liberal values into their societies. Indian nationalists like Gokhale, Gandhi, Nehru and Ambedkar did the same, although they took a more democratic approach and constitutional methods to do so. The Constitution of India was an elite enterprise and was (is?) far ahead of its time in terms of the values it sought to enshrine in the genetic code of the new republic. Whether in Russia, Turkey or India, what we can see is that while it is relatively easy for the state to inject enlightenment values into society, it is by no means a given that society will completely adopt the package.

The challenge of promoting enlightenment values becomes much harder in a democratic societies that are under the grip of tradition, orthodoxy, orthopraxy, ignorance or lack of education. Here the principal channel for promoting enlightenment is education (again, in the sense of open-mindedness and critical reasoning). Yet it is not uncommon for the education system to be controlled by the very sections of society that oppose enlightenment values. Democracy empowers everyone alike—the liberal and the bigot, the enlightened and the ignorant, the reasoner and the dogmatist. Ignorant majorities can democratically decide to expunge Reason. In the absence of an educated population, democracy ends up as the tyranny of the ignorant. [See this post on dogma, reason and democracy]

For democratic societies to become enlightened the pace of education (E) must be higher than the rate of population growth (P). If E > P long enough for a majority of the population to be educated, then enlightenment is likely to prevail in a democratic society. If E < P, then that society is likely to ultimately reject enlightenment. It becomes impossible to endogenously and democratically reform the education system (in the broadest sense of the term) once it crosses a point of no return. The existence of countries like this in the contemporary world should serve as a signal warning against complacence on the E/P ratio. One important argument that contests reaching the conclusion we have arrived at concerns the role of institutions. Institutions where they exist, the argument goes, will defend enlightenment values. Well, yes, but institutions are comprised of mortal individuals. The individuals that constitute institutions are prisoners of the same narratives as the rest of society. The 'doctrine of necessity' will cause them to side with the popular. No institution can escape the hard social arithmetic of the E/P ration. The strongest constitutional institution, the most influential liberal social institutions are subject to education prevailing over ignorance. Tamasoma jyotirgamaya.

Tailpiece: The term “education” is used here not in the narrow technical sense of literacy rates, graduation rates and so on. It is possible to acquire post-graduate degrees while remaining uneducated. Similarly, it is possible to be well-educated without ever having to go to school. Education is the ability to acquire and use knowledge and most importantly, employ reason in decision-making.

Return and reforms

Will Manmohan Singh’s return to the finance ministry result in some reforms?

Pranab Mukherjee, an over-rated, over-respected and over-portfolioed cabinet minister presided over the finance ministry at a time when the results of UPA government’s gross mismanagement of the Indian economy began to show. His remedies worsened the malaise—not only has the economy slowed down, domestic and foreign investors have been given reason to believe that India’s economic managers are not only unserious, but also nearly banana. Retrospective taxation—Mr Mukherjee’s gift to economic policymaking—is an abomination and exemplifies how awfully perverted the UPA government’s thinking has been.

So, with Mr Mukherjee out of the cabinet (and undeservingly heading for Rashtrapati Bhavan) and Manmohan Singh taking over the finance portfolio, what are the prospects for reforms? None at all, argues the astute Swaminathan Anklesaria-Aiyar. Quite a lot, contends Sanjaya Baru. The truth may be in the middle, but despite Mr Baru’s valiant cheerleading, the odds are stacked up in favour of Mr Aiyar’s prognosis.

Samanth Subramanian sought my views for his report in The National. Here is my full response to his questions:

Q. Do you think the PM has the political capital he needs to make bold changes? Do you think, for that matter, that the government will risk making possibly unpopulist changes with the elections less than two years away?

Whether or not there will be any reforms depends on how much Manmohan Singh is willing to face down the Congress party establishment in order to secure his own place in history. It’s not so much about political capital but as he said in his 1991 speech “Sarfaroshi ki tamanna ab hamare dil mein hai/Dekhna hai zor kitna baazu-e-qatil mein hai.” Does he have Sarfaroshi ki tamanna?

Q. How much can any possible economic reforms redeem Manmohan Singh’s otherwise awful leadership of this UPA government?

What Manmohan Singh can do at this stage is revive the narrative of reforms, by setting out a long-term road map and by implementing the ones he can. The signal this will send will help set the economy back on track and hopefully redeem his own record.

Q. If you had to make a short, three-item wish list of reforms you hope he could enact, what would that list be?

Liberalise education, liberalise labour laws and start fixing land acquisition. Toying with fuel subsidies, reversing GAAR etc is mere signaling…the fundamental strengths of the economy can be reinforced only by liberalising education, labour and land acquisition. Playing around with financial markets and FIIs is mere tinkering. He must do what is necessary to revive direct investment, both domestic and foreign.

Why levy a Cess for education?

A question of priorities and an excuse for extravagance

Taxpayers and restaurant-goers in India will find a cess (2%) and a higher education cess (1%) added to their taxes and bills. The cesses are earmarked taxes collected to ostensibly finance education and higher education.

Like with most of the budget, few ask why this must be so.

The fundamental purpose of government revenue—the reason it collects all sorts of taxes on income, sales, excise—is to fund development expenditure. What could be more important for our country than spending on basic education, public health and basic infrastructure? Whatever the government spends on these heads must be fully financed from its primary revenues. In other words, these subjects should have the first claim on the government’s resources. Whatever might be our politics or ideology, no one can deny that these should be our priorities, and after we have adequately provided for these, we should spend on other things.

Why then does the government charge a cess for education and another cess on higher education? This seems to suggest that the fundamental priorities of the government are not concerned with improving the lot of the poor, the needy and the citizenry as a whole, but something else. The message is “Ladies and gentlemen, since we’ve allowed other things to have the first claim on the government’s revenues, we don’t really have money for the most important priority, so we’re raising earmarked funds for education.” Beyond the technicalities of the economic effect of the cess, and without regard to ideological positions on how education ought to be delivered, the fundamental signal here is that the government’s priorities are wrong. The government is like an irresponsible husband wasting the family income on useless things and then seeking help to support his children’s school fees.

The cess is what is known as an earmarked tax. In terms of its economic effects, it has been found that “earmarking can be beneficial, but the conditions for this are quite strong and are rarely met in practice. The earmarked tax (which may be a separate tax or a fixed proportion of a broad tax) needs to be kept separate from other revenue, be applied exclusively to the expenditure programme for which it is identified, and fully fund (but not over-fund) that programme rather than being mixed with general revenue.”

Money is fungible. If you give 100 rupees to a college student to buy his books, and he uses 100 rupees of his own pocket money to buy cigarettes, it’s tantamount to your money being used for cigarettes. This is the gimmick involved in the education & higher education cess. People who might object if the government had charged a “Moon Mission cess”, a “Nuclear Arsenal cess” or a “Petrol Subsidy for the Middle Class cess” are less likely to do so if the cess were collected for a “good cause”. That does not change the fact that every rupee collected in the name of an education cess is a rupee being spent on the most wasteful, most extravagant and most unnecessary items.

The finance minister needs to explain why a cess is necessary when tax revenues have been growing steadily over the last two decades. If the government has the money to subsidise unwarranted tablet computers for college students, why does it burden with cesses?

Cheap tablet, unaffordable mistake

The macabre antics of the India’s human resources development ministry over Aakash are the equivalent of Marie Antoinette’s “let them have cake” attitude

The matter is so serious that mincing words is the irresponsible thing to do. There is a demographic bulge on the horizon and two crucial areas will determine whether that bulge will result in a demographic dividend or severe demographic discount. The first is whether the 30 million children born every year will be educated and skilled enough to be productive members of modern society. The second is whether the Indian economy will generate enough jobs to provide them with adequate livelihoods. The median age in India is around 26 today, which means half the population is under that age. The general shortage of skilled manpower in everything from the armed forces to IT companies to cafe chains indicates that a substantial fraction of this population is not employable—because of the failure of India’s education system.

Unless something is done ten years ago, the demographic dividend will be diluted. Unless something is done now, the demographic dividend will be wiped away, leaving India with a demographic discount. As before, people will call it the “problem of overpopulation” instead of calling it by its real name—the problem of under- and misgovernance. Government exists to ensure the well-being of all its people. It is perverse to contend that population must be controlled because the government is incapable of serving it. It is the government that must boost its competence to ensure that it can perform its functions satisfactorily regardless of how big or small the population is.

In India’s case, the traditional and massively failed approach is to treat both education and jobs as if they were contagious diseases: insulated behind high walls, preventing ordinary people from having easy access to them. The government has failed to deliver education and jobs. So after over sixty years of failure, it’s time to try a different approach. Liberalise education (and labour) and let the solution begin to scale at the same pace as the problem. (See Ajay Shah’s article in this month’s Pragati)

The UPA government’s right to education act is not the answer, although some may claim it’s an improvement over the past. Instead of liberalising education so that the private sector can deliver education at prices and qualities that the people want, the UPA government has placed the entire education sector under the thrall of the Delhi Straitjacket. Disguising a bad policy—which is bound to increase corruption in society—in the language of “rights” may be increase the feel-good factor among sections of the public, but we are still moving in the wrong direction.

Why is all this relevant to a discussion on a cheap tablet computer? To show how deeply wrong Kapil Sibal’s priorities are. First, instead of working on a war-footing to work out how to strengthen the delivery of primary and secondary education, Mr Sibal is focused on the higher education sector. The clever excuse might be that primary education is a state subject. That still doesn’t mean that he should be tilting at the windmills of higher education at the expense of the taxpayer. The education cess imposed on transactions is grotesque—what does the government do with its ordinary tax revenues that it has to collect more money, ostensibly to improve education, but then subsidise fast depreciating assets solving a non-existent problem?

Second, as Atanu Dey has extensively written in the context of the One Laptop Per Child project, what Indian education needs is good teachers and good schools—not gadgets. Once you have good teachers and good schools you might want to supplement it with gadgets. But go look at any central or state government university, college or polytechnic—look the quality of the teachers, their pay scales, their morale, their working conditions and their work culture. No gadget, however cheap or indigenous, can help when campuses are decrepit shells of what they ought to be. How can anyone with a conscience accept that providing college students with a cheap, indigenous computer will even begin to provide them with education and skills they need to be productive members of society?

Third, let’s say—for the sake of argument—that some college students do need computers. Let’s further assume that they cannot afford the Rs 10,000 that can purchase a decent netbook. Should this mean that the Government of India must immediately procure these from a vendor (while lying to the public that the product is “indigenous”)? That’s what Mr Sibal announced initially when trying to create international headlines with the news of a $35 ‘indigenous’ tablet.

Clearly something—most likely reality—didn’t work out. So Mr Sibal has another announcement. “There have been some problems with DataWind (the company the government had contracted with) I must confess,” he admitted. “Therefore, I have got into the act. The IT ministry has got C-DAC and (state-run) ITI Ltd into the act, and I am going to ensure that this product is fully indigenous and truly an Indian product.” Mint, quoting unnamed government sources reports that the “..government is now planning to launch an upgraded version of the tablet as a completely indigenous product under the supervision of a high-powered committee comprising members from the Centre for Development of Advanced Computing (C-DAC), department of information technology, the IITs at Kanpur, Mumbai, Chennai and Jodhpur, and some public sector units.” (Aside: The message to investors is beware of contracts you sign with the Indian government.)

So a bureaucracy will design a gadget and a public-sector unit will produce it, before a subsidised product is ‘sold’ at Rs 2,276. What is the justification for the implicit and explicit subsidies that are being thrown at a gadget, especially in the computer market where the brutal forces of Moore’s Law relentlessly lower prices faster than the speed at which two Indian government departments can organise meetings?

Here’s a simpler, cheaper solution: why not get the government give vouchers (of say, Rs 10,000) to every student it intends to reach. Let the student use it to buy the computer of his or her choice from the open market, paying the difference in case the choice is more expensive. This is still an unnecessary expense but may be a far more efficient way to go about putting computers in the hands of college students. There is no need for Datawinds, C-DACs, IITs, ITIs or any public sector units at all.

Finally, it should shame every thinking Indian that a cabinet minister—ironically, one in charge of education—can get away with lies that every educated person knows are lies. Can anyone, anywhere in the computer industry claim a product is indigenous without being laughed at? After claiming that Datawind’s gadget was indigenous, Mr Sibal now says the new government-produced gadget will be really indigenous. These are lies. Should the national motto be so cheaply sacrificed at the altar of an inferiority complex? When it comes to educating our kids, maintaining our health or defending our country, the right approach is to procure the best that the money can buy, whether foreign or indigenous. Indigenousness is not a virtue, even when it is practical.

In the economic history of India, the UPA government will be held singularly responsible for squandering an excellent decade—of high growth, healthy revenues and a strong fiscal position that it had inherited from its predecessor. It has wasted eight years pushing dogmatic approaches to education and resisting labour reforms. Mr Sibal’s antics—there’s no more civilised way to describe his championing of the cheap tablet—show just how frivolous the UPA government is on a matter intimately concerning our future. “No schools, eh? Let them have a cheap tablet then.”

Takshashila’s Graduate Certificate in Public Policy Programme

A distance education programme on Indian public policy for dynamic individuals

“As economic growth propels India towards becoming a middle-income country over the next decade, it is imperative that its structures, processes and ideas of governance keep pace. Closing the governance gap requires talented individuals to be equipped with the right ideas, competencies and networks.

Takshashila’s Graduate Certificate in Public Policy (GCPP) programme aims to equip dynamic Indians with knowledge, skills and exposure to public policy.

The 12 week course provides a firm understanding of the fundamentals of public policy and governance and enable participants to apply them in their professional lives and political discourse. The programme is designed to prepare participants to better engage in the public arena, as analysts, public officials, leaders or indeed, as active citizens.” Classes start in January 2012. More details and online application over at the Takshashila website.

Me too madrassa

The rational school operators of Uttar Pradesh

Just like over nine out of ten families in Karnataka, many school operators in Uttar Pradesh demonstrated that they are rational actors. If the Indian government has announced that it will give Rs 325 crores over the five years to madrassas (which, among others, means "an honorarium of Rs 6,000 per month to graduate teachers and Rs 12,000 per month to post-graduate teachers") then it is perfectly rational for private non-religious schools into madrassas. Perhaps private schools operated by Muslims are taking a lead in this—but it should not surprise anyone if people from all faiths jumped in to get a share of the pie.

Of course, the Ministry of Human Resources Development officially doesn’t get it. It has called upon the Uttar Pradesh state government to conduct an enquiry into why people are behaving rationally, and responding to incentives.

The UPA government has been schizophrenic in its understanding and application of incentives (see this post on Acquired Incentivo Deficiency Syndrome, by The Rational Fool). It seems to understand them at a political level where it has extinguished equality of opportunity for an entitlement economy. But it has repeatedly failed to understand them at a policy level, where it has pretended that nice sounding intentions can replace sound incentive structures.

Pragati August 2008: Should India send troops to Afghanistan?

Issue 17 - Aug 2008
Issue Contents


Making a leader
Excerpts from a lecture on leadership and discipline
Sam HFJ Manekshaw

Our voice in our history
Academic freedom, private funding and historical research
Jayakrishnan Nair

On whether or not India has a coherent foreign policy

A survey of think-tanks
On China policy; Fixing the FATA; An Indo-Israeli alliance?
Vijay Vikram

Hold steady in Afghanistan
India is on the right track and it should stay that way
Shanthie Mariet D’Souza

A bigger military presence is essential
…if India is to shape Afghanistan’s future
Sushant K Singh

The myth of Taliban tribalism
The folly of trying to set tribes against each other
Joshua Foust

Monsoon Session 2008—What’s in store
Legislative brief
Sarita Vanka

When it’s good to slow down
The why and what next about rising inflation
V Anantha Nageswaran

The historical roots of the services sector
…calls for a strategy that plays to India’s strengths
Stephen Broadberry and Bishnupriya Gupta

Profiting from education
Resistance against commercialisation is fruitless
Atanu Dey

Four books about Pakistan
On nuclear proliferation, military politics and society
Nitin Pai

My essay in The Friday Times: The little revolutions in India’s military affairs

Making India’s defence policy consistent with its emergence as a significant global player.

Here’s a version of my essay that appeared in Pakistan’s The Friday Times July 11-17, 2008 | (Vol. XX, No. 21):

India’s armed forces, according to K Subrahmanyam, have “not modernised their decision-making process ever since Lord Ismay prescribed it in 1947. Command and control have not changed since the Second World War. We are now thinking about buying modern equipment when the force structure and philosophy of it go back to the desert campaign of Rommel and Southeast Asia Command of Mountbatten.”

Mr Subrahmanyam’s words highlight a much broader point—that India’s external and domestic contexts have radically changed, especially since 1991, and a wide-ranging rethink of its defence policy has become an urgent necessity. A comprehensive policy review, however, is yet to take place.

That’s because the country’s leaders—even those with an interest and expertise in defence matters—have been constrained by the diktats of coalition politics, repulsed by the vested interests of the civilian and military bureaucracies, and not least, deterred by the popular media’s enthusiasm for blowing up corruption scandals.

The central challenge is to make India’s defence policy—encompassing doctrine, equipment and manpower—consistent with its emergence as a significant global player. The process of economic liberalisation first initiated by the P V Narasimha Rao government in the early 1990s not only turned India into a trillion dollar economy by early 2008, but also made it an important stakeholder in global economic and strategic affairs. Even as this is placing new demands on the armed forces, the mix of resources available for defence has changed. Budget constraints, for instance, have eased. Manpower constraints, on the other hand, have become tighter. Mindsets and policies, though, hark back to the days when the reverse was true.
Continue reading My essay in The Friday Times: The little revolutions in India’s military affairs

Pragati June 2008: The New Jihadis

Issue 15 - Jun 2008
Issue Contents


The New Jihadis
Local manifestations of a global pattern
Nitin Pai

Getting human rights right
Are human rights activists playing into the hands of
Sandeep Balakrishna, Salil Tripathi & Rohit Pradhan

Towards a cultural liberalism
Governments must stop siding with intolerant mobs
Jayakrishnan Nair


A survey of think-tanks
Feline counter-terrorism; Measuring up against international human rights standards; On what makes foreign policy tick; Assessing energy security policies


Look before you hop

A discussion on strategic affairs with Stephen P Cohen
Nitin Pai & Aruna Urs


A review of Budget Session 2008
Kaushiki Sanyal


Where is the financial superhighway?
Two reports later, there is still no movement on reforms
Aadisht Khanna

Improving economic literacy
Effective delivery of public services requires sound public policy education
Mukul G Asher & Amarendu Nandy

A food credit card scheme
How microfinance and the public distribution scheme can work together
Ankit Rawal


History is in the writing
The changing fashions of recording history
Sunil Laxman

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