Monday, October 29, 2018

Hurting freedom of press will hurt India


I wrote in June 2017 after attack on NDTV

A free press constitutes an instrument of development in the same way as education or investment

Nation builders build institutions – independent and robust institutions. A free press is one such institutions which has been nurtured and cherished in democracies world over. It not only informs citizens, a prerequisite for the society to be responsible and powerful, it acts as a watchdog of democracy, alerting people in time to possible wrongdoing or misuse of power by the government of the day.

Thomas Jefferson, one of the founding fathers of America, put the relation between free press and democratic government in perspective: “The basis of our government being the opinion of the people, the very first object should be to keep that right…And were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter…” (Emphasis added)

But the import of a free press goes far beyond this. Free press is a powerful tool of development too. A multinational study covering more than 150 countries, published by UNESCO in 2008 (Press Freedom and Development), examined the co-relation between the free press and different dimensions of development (including GDP, health and education), poverty, governance and conflict/violence by using econometrics and concluded that there indeed existed a “good co-relation” and a “positive influence”.

The study said, among other things: Countries with higher per capita GDP had freer press, barring some exceptions; where there is no press freedom, the share of GDP spent on health is low; countries with press freedom have high rates of primary and secondary enrolment; countries that do not have press freedom suffer from governance problems; free press is positively co-related with low level of military expenditure and military personnel; free press creates a business-enabling environment and so forth.

It rests its case with a compelling observation: “A free press constitutes an instrument of development as such, in the same way as education or investment.” (Emphasis added)

What a free press seems to be doing is, the study observes, to expand participation in the political decision-making process, provide access to a whole variety of different ideas, opinions and information, make governments more accountable and allow policy implementation and the practices of those in power (corruption, for example) to be monitored.

The co-relation between free press and corruption is well known. A 2004 study of 97 countries (for period 1995-2002), found that reduction in free press restrictions by 1% led to a 5.1% improvement in the Corruption Perception Index (CPI). There have been many other studies showing evidence of a catalytic role played by free press in influencing opinion leading to social change.

Free press, thus, plays a dual role – a source of information about people’s need for the government and also force the government to intervene by arousing public opinion. Amartya Sen had famously observed that there had never been a famine in a democratic society, or even in India since independence. He thought that famine was not even possible when the press is free because it would expose any shortage in time for the corrective measures to be taken.

After analysing data for 50 countries, a study (Press Freedom and Jump in Stock Market, 2016) found that stock markets in countries with free press saw higher volatility, higher jump risk, and lesser information asymmetry. With a free press, those countries were better at processing economic information and suppression of bad news was less, and hence markets were fair and transparent giving better price discovery.

It is in these lights that the egregious attack on NDTV has to be seen. Not only because the justification issued by CBI is specious – a presumptuous loss of interest to a private bank which didn’t even complain – the raid and the events prior to that lead one to belief of an assault on press freedom the way NDTV was singled out for being critical of the government.
Apart from the media, the raid has sent a danger signal to the beleaguered banking sector too, which is fighting to survive a humongous NPA mess, for it makes even a haircut in interest (as in the case of NDTV), not the principal amount, a criminal activity. Banks do make sacrifices in the case of stressed assets to salvage whatever they can.

There are more reasons to worry. The news of the raid on NDTV has been splashed all over the world – from BBC and New York Times to Al Jazeera. A headline like ‘Raids in India Target Founders of News Outlet Critical of Government’ in the New York Times for example, does not go unnoticed or do any good to the investors’ sentiments as sentiments play a key role in determining investment destination.

Suppression of the press indicates poor governance and low transparency. In the composition of AT Kearney’s FDI Index, transparency of government in regulations is a key factor and any decline in that affects our ability to consistently draw overseas investment. For a government that claims to go by the dictum of “minimum government and maximum governance”, freedom of press is a necessary oversight and safety mechanism. Hurting that freedom will hurt India’s development, both economic and social, as well as democracy. That is a price we wouldn’t like to pay.

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