09.09.11

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Editorial

month september 09, edition 000832 , collected & managed by durgesh kumar mishra, published by – manish manjul

 

Editorial is syndication of all daily- published newspaper Editorial at one place.

For ENGLISH  EDITORIAL  http://editorialsamarth.blogspot.com

THE TIMES OF INDIA

1. A DECADE AFTER
2. WHY ADJOURN?
3. NO MORE CHASING SHADOWS
4. 'A VAST MAJORITY OF MUSLIMS WERE NOT WITH THE MUSLIM LEAGUE'
5. PRIVILEGED CLASS - JUG SURAIYA

HINDUSTAN TIMES

1. ALL SHOOK UP
2. ROADBLOCKS TO RECOVERY
3. WEAVING A WEB OF TERROR - SUBIMAL BHATTACHARJEE
4. A RIVER CALLED TEESTA - N CHANDRA MOHAN
5. FORCE-FEEDING INDIA - RAJDEEP SARDESAI

THE INDIAN EXPRESS

1. LAW OF THE LAND
2. FLYING BACKWARDS
3. ROUGH PATCH
4. THE MORE THINGS CHANGE - C. RAJA MOHAN
5. STORMS IN THE EAST - HARSH V. PANT
6. A MONSOON AWAKENING - DILIP BOBB
7. M/S REDDY BROTHERS AND OTHERS - SARITHA RAI
8. THE SECOND DRAFT OF LAND HISTORY - SANDIP DAS
9. LOOKING FOR HOPE IN LIBYA - NICHOLAS D. KRISTOF

THE FINANCIAL EXPRESS

1. NO ONE KILLED AIR INDIA
2. CHANGE IN TONE
3. PUBLIC PURPOSE OF THE LAND BILL - RITA SINHA
4. TARGET 9% GROWTH. RIDERS APLENTY - MK VENU

THE HINDU

1. ULFA COMES AROUND
2. THE SIXTH, IN FIVE YEARS
3. PEACEKEEPERS' SEX SCANDALS LINGER - NEIL MACFARQUHAR
4. MISSILES MISSING FROM LIBYAN STOCKPILE - C.J. CHIVERS & ROD NORDLAND
5. WORKING TOWARDS A GREENER INDIA - THOMAS MATUSSEK
6. CULTURE WARS OVER LONDON RIOTS - HASAN SUROOR

ASIAN AGE

1. GENERAL CONDUCT - S.K. SINHA
2. BEING SALMAN - SHIV VISVANATHAN
3. GOOD BEGINNING MADE IN DHAKA

DAILY EXCELSIOR

1. ANOTHER BLAST
2. BROADENING RELATIONSHIP
3. DELHI BELLY IS SHAKEN - BY SUDHANSU R DAS
4. TACKLING BLACK MONEY - BY JOGINDER SINGH
5. FALL OF A FIXER - BY TAVLEEN SINGH

THE TRIBUNE

1. TERROR STRIKES DELHI
2. DELHI-DHAKA PACTS
3. AN EXERCISE IN FUTILITY
4. THE CHANGE IN LIBYA - BY ANITA INDER SINGH
5. DATE WITH DESTINY - BY MAJ-GEN G G DWIVEDI (RETD)
6. POOR SPENDING ON FARM RESEARCH - JOGINDER SINGH
7. GENERATING FUNDS FOR FARM UNIVERSITIES

MUMBAI MIRROR

1. THE NAC'S MINORITY REPORT

BUSINESS STANDARD

2. A COSTLY VICTORY
3. GOOD, NOT HISTORIC
4. IS THE US SLIPPING INTO ANOTHER RECESSION? - AKASH PRAKASH
5. MAKING HEDGING MARKETS MORE EFFECTIVE - JAMAL MECKLAI
6. IN SEARCH OF GOD PARTICLE - DEVANGSHU DATTA
7. TWELFTH PLAN APPROACH - SHANKAR ACHARYA

THE ECONOMIC TIMES

1. SYSTEMIC LESSONS
2. PRIVATISE TO FLY
3. KEEP IT SYMBOL
4. GROWTH BEYOND ECONOMIC FREEDOM
5. WITH HISTORY AS GUIDE, RISING FEARS OF RECESSION  - DAVID LEONHARDT
6. WHY THE WEST FEARS GLOBALISATION  - SANJEEV SANYAL

BUSINESS LINE

1. THE CHIMERA OF 'INDEPENDENT' DIRECTORS - S. BALAKRISHNAN
2. RACE TO THE BOTTOM
3. LEARNING FROM THE LIVES OF JUDGES - G. SRINIVASAN
4. GETTING THE BEST OUT OF INDIA-JAPAN CEPA - B.S.RAGHAVAN
5. A LEAP IN THE DARK? - A. SESHAN
6. CHECKS AND BALANCES FOR PVT BANKS - S.S. TARAPORE
7. 'THE DOHA ROUND NOW IS ABOUT TRADE POLITICS - ARUN S

DECCAN CHRONICAL

1. GOOD BEGINNING MADE IN DHAKA
2. GATSBY'S INDIAN TOUCH
3. DEBATING WITH THE STARS
4. FINDING HOPE IN LIBYA
5. HUMBLED BY KNOWLEDGE

THE STATESMAN

1. QUIRK OF HISTORY
2. TERROR THRIVES
3. SCHOOL OF SCANDAL
4. COMING HOME - BY BIBEKANANDA RAY
5. DROPPING THE GUARD - SEEMA MUSTAFA
6. A TIME TO LIVE  - FIROZ BAKHT AHMED

THE TELEGRAPH

1. LOST POST
2. FAMILIAR PATTERN
3. NIX TO BOTH TEAMS
4. THINGS FALLING APART  - BONAFIDE: MALVIKA SINGH

DECCAN HERALD

1. HISTORIC TREATIES
2. GRAVE IMPLICATIONS
3. GOVT'S DUBIOUS MOVES KULDIP NAYAR

OHERALDO

1. DELHI TREMOR, A WAKE UP CALL
2. VOICE OF THE PEOPLE - PETER FERNANDES 

HAARETZ

1. A TASTE OF HUMILIATION
2. IN THE NAME OF GOD, GO!  - BY YOEL MARCUS
3. A MATTER OF CHARACTER  - BY NEHEMIA SHTRASLER
4. THE ISRAELIS ARE HOSTAGES  - BY YOSSI SARID
5. SEPTEMBER - THE TIME HAS ARRIVED FOR A TRIAL  - BY ITAMAR MANN

THE NEWYORK TIMES

1. THE JOBS SPEECH
2. LOST IN THE FOG
3. DAMAGE FROM BRAIN STENTS
4. STIMULUS FOR SKEPTICS - BY DAVID BROOKS
5. SETTING THEIR HAIR ON FIRE - BY PAUL KRUGMAN
6. THE LINGERING INJUSTICE OF ATTICA - BY HEATHER ANN THOMPSON

HURRIYET DAILY NEWS

1. DANGEROUS ESCALATION IN TURKISH-ISRAELI TENSIONS
2. NOT SO BLACK AND WHITE
3. ÖZEL'S SUCCESS REQUIRES NO GOV'T INTERFERENCE IN PROMOTIONS
4. ZERO PROBLEMS, A HUNDRED TROUBLES – REVISITED
5. THE MODEL IMPOSED ON TÜBA CONTRADICTS INTERNATIONAL CONSENSUS
6. THE EASTERN MEDITERRANEAN: BACK TO POWER POLITICS
7. TIT FOR TAT AT THE AIRPORT
8. UNTAXING THE RICH

I.THE NEWS

1. KEEPING SECRETS
2. TERROR IN DELHI
3. AIR SAFETY
4. A WOE SELF-CREATED  - AYAZ AMIR
5. THE INTERMINABLE WAR  - DR MUZAFFAR IQBAL
6. THE BLACK HOLES OF PAKISTAN  - ABID HASAN
7. WHY FAILURE IS NOT AN OPTION  - AYAZ AHMAD
8. KARACHI'S CAN OF WORMS  - SHAFQAT MAHMOOD
9. SIDE-EFFECT  - HARRIS KHALIQUE

PAKISTAN OBSERVER

1. QUETTA BLAST: SIR THEY ARE NOT TALIBAN
2. COMPARING KARACHI WITH WAZIRISTAN
3. HIKE IN TARIFF BUT NO ELECTRICITY
4. CONGRESS PARALYSED WITHOUT SONIA - M D NALAPAT
5. HOW TO CUT ELECTRICITY COST - ATIF NOOR KHAN
6. FIVE PILLARS OF ISLAM - MOHAMMAD JAMIL
7. THE 'HOSTAGE' SUPERPOWER - ALYA ALVI
8. AMERICA'S SELECTIVE VIGILANTISM - TARIQ ALI

THE AUSTRALIYAN

1. ABC LAUGHS AT PM'S EXPENSE
2. UNION FUNDS NOT TO BE MISUSED
3. THE CONVERSATION ABOUT IR THE NATION HAD TO HAVE

THE SYDNEY MORNING HERALD

1. BOAT POLICY MAKES WAY FOR GAMES
2. A RADICAL ALTERNATIVE THAT JUST MIGHT WORK
3. SCHOOL WELFARE OFFERS BETTER BALANCE

THE GUARDIAN

1. FOREIGN POLICY: OUR MAN IN HAVANA
2. THE EURO: PEERING OVER THE BRINK
3. IN PRAISE OF … SUPERNOVAE

THE JAPAN TIMES

1. JAPAN RULES THE SENKAKUS
2. THREAT OF NUCLEAR TESTS HASN'T DIED - BY TIBOR TÓTH
3. BEATING THE MIDLIFE BLUES - BY EDWARD HOFFMAN

THE JAKARTA POST

1. HEAL THE WORLD
2. THE KING AND UI - JAJANG JAHRONI
3. A LESSON FROM IDUL FITRI CONTROVERSY - MAHMUDI ASYARI AND MUIZZUDIN
4. COMMON SENSE AND RELIGIOSITY - KHAIRIL AZHAR

 

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THE TIMES OF INDIA

 COMMENT

A DECADE AFTER

 

In terms of global geopolitics, the new century began with the 9/11 attacks that felled the World Trade Centre in New York and damaged the Pentagon building near Washington DC. Ten years after that world-changing event how has America fared in relation to militant Islam, and how has the struggle between them impacted India's neighbourhood?

The fight to destroy al-Qaida has largely been successful, capped by the US Navy Seals strike that killed Osama bin Laden at his hideout in Abbottabad. America is much safer than before. But the same cannot be said for South Asia, as the terror problem has metastasised. That was rudely brought home in Delhi day before yesterday, as a sophisticated IED blast created mayhem at Delhi high court's reception counter. Harkat-ul-Jihad-al-Islami (HuJI), one of al-Qaida`s affiliates at its inception, has claimed the blast.

The Americans committed a cardinal mistake when they widened the war in Afghanistan, where al-Qaida was sheltered, to Iraq. The cumulative wars cost America 6,000 of its soldiers, an estimated $4 trillion in treasure and enormous goodwill across the world. The Taliban was ousted from Afghanistan in 2001. However, a decade later it looks as if they are managing to snatch victory from the jaws of defeat. During the Bush era the Americans focussed on Iraq and partially outsourced Afghan security to Pakistan, which saw the Taliban as a strategic asset. By the time the Americans realised their mistake, it was too late. It's extremely doubtful whether the current Afghan government, corrupt and incompetent in many respects, can survive the impending departure of American troops in 2014.

Pakistan, too, has paid a heavy price as it continues to play a dangerous double game with militants. It classifies some variants as nefarious terrorists and others as useful assets, without recognising the degree of interconnectedness between them. In a recent counter-blast US defence secretary Leon Panetta told Islamabad that it cannot cherry-pick which terror groups to go after. But until that message sinks home and Islamabad puts its house in order, South Asia is likely to remain in turmoil. Meanwhile, people across the Arab world have expressed their yearning for democracy, in a movement that resembles the one that toppled communism across Eastern Europe a couple of decades earlier. The Arab spring serves to dispel bin Laden`s harmful legacy as well as the notion of a clash of civilisations that provides oxygen to western radicals. Hopefully, it will transform the world by the end of another decade.

 

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THE TIMES OF INDIA

 COMMENT

WHY ADJOURN?

 

It was counterproductive for the Speaker and the government to comply with the opposition's demand to adjourn Parliament on a day Delhi was struck by a deadly bomb blast that killed 12 people and injured around 70. Parliament is the most potent symbol of a functioning democracy. Did it then play into the hands of anti-national forces, since paralysing the administration is usually the terrorist's main motivation? Has Parliament ever stalled post-attack in the past that it needed to do so now? This was the moment for it to show its resolve. Condemning Wednesday's attack, paying homage to the victims, or even passing a resolution of significance to the nation - all this could have been part of a full day's work. The political leadership should have seized the opportunity to send out two messages. One, those found guilty would face severe punishment. Two, terrorists would always fail to prevent the country from going about its business.

The home minister and other ministers overseeing security could justifiably excuse themselves to focus on investigations. But all other MPs should have put legislative time to good use. According to estimates, the cost to the nation of stalling Parliament stood at roughly Rs 20,000 per minute in 2006. In 2011, the figure's likely to be double that, if not more. That makes it all the more inexplicable that Lok Sabha and Rajya Sabha MPs felt they needed to get away from a House in session, after an adjournment was proposed. Clearly, parliamentarians still don't seem to comprehend that citizens want action against terror, not symbolic gestures. It's hardly surprising that politicians who landed up at hospitals on Wednesday weren't welcomed by the family members of the blast victims. It's about time the political establishment got its priorities right, and introspected on the manner in which it should respond to calamities.

 

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THE TIMES OF INDIA

                                                                                                                                                TOP STORY

NO MORE CHASING SHADOWS

 

The blast at the Delhi high court suggests that Harkat-ul-Jihad-al-Islami (HuJI), which had been on the defensive since the reported death of its commander Ilyas Kashmiri in Waziristan in June 2011, has managed to reorganise in just three months. Intelligence agencies had been receiving inputs for the last month that Bangladesh-based HuJI had recruited about 200 people in West Bengal to set up sleeper cells.

The National Investigating Agency has done well to trace the emails sent from the web-based address harkatuljihadi2011@ gmail.com, allegedly by HuJI to various media houses claiming responsibility, to a cybercafe in Kishtwar in Jammu and Kashmir. The authenticity of the email is yet to be ascertained, and it is to be determined whether the IP (Internet Protocol) addresses were spoofed or anonymyzers were used. The utilisation of a proxy server in South Africa indicates that the senders were experts in computers and communications technologies.

The profile of the new Indian Islamic terrorist is in stark contrast to the public stereotype of a desperately poor, illiterate, uneducated, rural-based or ghetto-based, religious fanatic, a single young man in his late teens or early twenties. In contrast to the recruits of the Lashkar-e-Taiba who are madrassa students from poor families, the present set of terror activists of the Students Islamic Movement of India (SIMI) and HuJI have no prior criminal records; are usually highly educated professionals such as engineers, doctors and architects; are usually married men with children; and have never displayed any religious extremism.

They come from upper middle class families and exhibit only moderate religious behaviour. A feeling of being discriminated against in their professional careers because of their religion is the major reason which turns them towards jihad. Also, a perception that they are being denied entry to social circles commensurate with their education and financial standing is a major cause for their seeking refuge in jihadi terrorism. Most of them had joined SIMI or HuJI only a few weeks earlier, and their families, colleagues and close friends had detected no indications of their having done so. The act of terror is often the first illegal or even immoral act which they have ever committed.

This profile of the upper class Indian jihadi terrorist is in line with the findings of Marc Sageman, a forensic psychiatrist who worked for the CIA in Pakistan and Afghanistan for several years. Sageman found of terrorists in Pakistan and Afghanistan that: "Three quarters were from upper-class families, two-thirds were professionals with Masters degrees - engineers, physicians, architects or scientists. The average age for making an active commitment to violent jihad was 26. Three-quarters were married, most of them with children. They came from moderately religious, caring families. They spoke at least three languagesa¦Unlike the lone serial killer, these men functioned well in groups."

Sageman emphasised: "Those persons who are least likely to cause harm individually are most likely to do so collectively." Many studies among the Pakistani diaspora in Europe, especially UK, found that it required only three to four weeks for a person nurturing a mild grudge of discrimination to graduate into a person who would carry out a terror attack.

Unlike Khalistani terrorism which was crushed by excellent human intelligence, it is much more difficult for Indian security agencies as they are set up at present to penetrate HuJI or SIMI cells and plant moles or informants. They are immune to being enticed by security agencies with the lure of money, sex, drink or drugs. Even their families and close friends would have no inkling of their having been recruited by SIMI or HuJI.

A pointer could come from the brilliant manner in which the Indian government used Jat Sikhs in the police and armed forces to work on the Jat Sikhs in the Khalistani secessionist organisations. It is high time that intelligence agencies and the police recruited large numbers of Muslims of various sects in middle to senior positions, and built bridges with imams in mosques all over the country. In the UK, police have asked imams to report instances of people who were earlier only nominally religious suddenly showing increased religious fervour, or of people developing deeper friendships with members of the congregation with whom they were earlier only on nodding terms. These are thought to be the first signs of an impending inclination towards terrorism.

Sageman calls this the 'Band of Boys' theory of jihad - one person recounts how he was insulted or discriminated against for being a Muslim, and a small group sympathises. Soon, by a process of 'group think', each member adopts a much more ra-dical position than he otherwise would while alone in order to project himself as more loyal to this small group than his peers. Within three weeks, this small group is ready to carry out a terror attack to avenge the perceived discrimination. Not wanting to appear disloyal to this small group of peers, every member goes along even if he has inner qualms.

This is what was supposed to have happened with the doctors originating from Bangalore in Glasgow. Dealing with such types of jihadi terrorists requires original innovative thinking on the part of India's intelligence agencies, and a great appreciation of the psychology of urban Indian Muslim professionals.

The writer heads a group on C4ISRT (Command, Control, Communications and Computers Intelligence, Surveillance, Reconnaissance and Targeting) in South Asia.

 

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THE TIMES OF INDIA

                                                                                                                                                                        Q&A

'A VAST MAJORITY OF MUSLIMS WERE NOT WITH THE MUSLIM LEAGUE'

 

Rizwan Qaiser teaches history at Delhi's Jamia Millia Islamia. In his new book, Resisting Colonialism and Communal Politics, he explores nationalist leader Maulana Azad's role in building an idea of India. Qaiser spoke with Kim Arora about Azad's political foresight - and his continuing significance:

How relevant is a leader like Maulana Azad today?

Very relevant in India and across the globe. His foremost concern was to create an ideolo-gical framework wherein it was possible for all communities to coalesce into a nation. His idea was that everyone, irrespective of one's religious affiliation or cultural loyalty, belongs to the country - as the country belongs to them. Communities can coalesce into a nation, provided each community gets to enjoy autonomy in religion, culture and identity, yet be a part of the larger polity that is India.

Speaking of polities, Azad opposed Partition. How did the Muslim League react?

Since they adopted the two-nation theory in the 1940s, the Muslim League had been extremely hostile towards Azad. You'd be surprised - they anticipated some of the vocabulary that's been used in recent years, like the term 'pseudo-secularist'. The Muslim League used to describe Azad and people belonging to the Azad Mus-lim Conference as "half-hearted pseudo-nationalists". What's important is that a vast majority of Muslims were not with the Muslim League in 1940-41. That's the most interesting part of my book...¦at the end of April 1940, about one lakh Muslims gathered in Delhi to say they're not a distinct nation and the Muslim League does not represent their interests.

When Jinnah called Azad a 'show boy' of the Congress, it was rebuffed by many Muslims in Delhi and other places.

With such political cross-currents, what position did the British take?

I have read records of the transfer of power where they describe nationalist Muslims as "so-called nationalists". There was this subtle attempt on the part of the British government to foment and exacerbate communal tension. This was repeatedly pointed out by Gandhi, Nehru and Azad.

In the 1937 elections, the Muslim League did not have more than 4% of the average Muslim vote. Their false claims of representing the Muslims were given undue recognition by the British.

Interestingly, Azad's predictions about Pakistan's future have been spot on. Did he foresee more?

In one interview given to Shorish Kashmiri, who edited a paper called Chattaan, Azad predicted how Bangladesh would break away and what would happen in Pakistan. One thing he said was that barring the early years of Islam, it could not keep people united. Pakistan came into existence in the name of Islam but again, in the name of Islam, it is disintegrating...¦in Pakistan today, what is happening in the name of Islam is self-destruction. Forget about Islam holding people together globally, it's not able to hold Muslims together even in Pakistan.

To hold people together, we have to look for other markers, other parameters, which unfortunately haven't happened in the case of Pakistan. Many people will find these statements controversial. But Azad's larger logic is coming true.

How does Azad's secularism compare with Jawaharlal Nehru's?

In terms of conviction, it's just the same but in terms of drawing upon resources, different. Pandit Nehru was drawing on his European experiences of the separation of religion and state. Even in India, his understanding was that religion should be kept away from state agencies. Azad thought we should have a better understanding of religion in order to appreciate each other's world view.

 

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THE TIMES OF INDIA

                                                                                                                                                JUGULAR VEIN

PRIVILEGED CLASS

JUG SURAIYA

 

Following reports that some MPs were thinking of bringing a breach of privilege motion against Kiran Bedi and other Anna followers, JV sought out an MP.

JV : Could you please tell me what exactly a privilege motion is?

MP : Privilege motion? Very simple. See that revolving phoo-phaa red light on top of my car? When my phoo-phaa car passes, all other traffic must come to a standstill to ensure that my car remains in motion without any obstacles in its way. If that's not a privilege in motion, i don't know what is.

JV : Er, that's most illuminating. Particularly the phoo-phaa revolving light. But doesn't breach of privilege mean that people can't say critical things about you? And if people can't say critical things about you, isn't that a curtailment of their freedom of expression, which is a fundamental right?

MP : Right-shite. The only fundamental right is our fundamental right of freedom of repression.

JV : But isn't it true to say that a number of your colleagues - though not necessarily your esteemed self, of course - are history-sheeters?

MP : Don't talk to me about that bogus subject called history! These nalayak teachers in school always gave me zero in History. Come to think of it, they also gave me zero in Maths, Physics, Chemistry, Geography and Moral Science, the so-and-sos.

JV : So basically what you're saying is that no one can make laws apart from you, which could be another way of saying that you're a law unto yourself. But surely there are certain natural laws that even you must be subject to. Like Newton's law of gravity.

MP : Newton? Who's this kambakht Newton who has been going around making laws behind our backs? Must be some chamcha of that Hazare fellow. How dare he make laws in defiance of us? Throw the bugger into prison!

JV : That might be a bit difficult to do, considering he's been dead for over 400 years.

MP : Dead? How dare he die before we could arrest him! Never mind. Throw his corpse into prison.

JV : Can you put a corpse into prison?

MP : You bet we can. What do you think habeas corpus means?

JV : Look, there are certain laws of nature which are beyond your control. Like if it's night you can't say it's day, and if it's day you can't say it's night. Like it's day right now, right?

MP : Wrong. It's night right now. In America, and Iceland, and other places i don't know the names of. Don't forget that zero in Geography. The point is if it's day here, it's got to be night somewhere else. You've got to see the bigger picture, like all we MPs are trained to do. Therefore, day is night and night is day. QED. How's that from someone who also got zero in Logic?

JV : Very impressive. It's been very instructive talking to you. I've never spoken with an MP, a member of Parliament before.

MP (laughing loudly): Member of Parliament? That's a good one! I'm not a member of Parliament MP; i'm the other kind of MP: a member of India's Mafia Party.

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HINDUSTAN TIMES

ALL SHOOK UP

Everybody loves a safe quake. And we don't mean it with any irony.

Life is ordinary and a good tectonic shake-up can always stir things up — as long it's just a rattling of the bed, tilting of the fan, a scramble to the door.

But when Delhi and its adjoining areas felt the shockwaves of a quake that had its epicentre in Sonepat in Haryana, it couldn't have come at a more uninviting time. The day had seen a bomb attack in the city and many feared the worst.

But after the comfort of realising that this was an earthquake that posed no danger, Delhiites spent the wee hours of the night comparing notes about how rattled they were.

The quake also exposed a shaky aspect of the television media, which unlike us static folks in print, not only had to ascertain how big the intensity was but also had to keep the chatter alive.

Initially we were told that the quake measured 6.6 on the Richter scale and we duly felt the jolt with wide-eyed nervousness and pride. Then we learnt that it was a measly 4.2, which we thought was surely a misreading by the met guys.

Undeterred, television — and pardon the mixed metaphor — tried hard to milk the 10 seconds-long disruption and sought out experts who would tell them how dire it was and how close we had been from apocalypse. Alas, there was nothing dire to say.

So panic, a partner of TRPs, dropped and everyone had their fun midnight get-together at the car park.

The truth is that a quake that doesn't damage provides the luxury of talking about it while leaving us unaffected.

Nature has a strange way of shaking us up even after we've been truly shaken.

But Wednesday night's rumble provided folks something to talk about for a short while, making most of us temporarily forget the genuine tragedy that had taken place earlier in the day.

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HINDUSTAN TIMES

THE PUNDIT

ROADBLOCKS TO RECOVERY

Racing to the scene of a tragedy, as many of our political worthies, starting from Prime Minister Manmohan Singh himself, did on Wednesday, would have made sense if their visits had helped the victims in any manner.

As it happens, the aftermath of the horrific bomb blast in the capital called for medical attention for the suffering and forensic evidence gathering rather than the impediments created by VIP visits to the hospitals.

Anger at the visits of several top politicians including health minister Ghulam Nabi Azad, home minister P Chidambaram and Congress leader Rahul Gandhi among relatives of the victims was palpable. These visits could have been best avoided on a day like Wednesday when this created hindrances to the help that the victims were getting.

In such a fraught atmosphere, there is bound to be suspicion that these are just political photo-ops and will serve to bring no real succour to anyone. It all boils down to an issue of priorities and purpose. In some events, a VIP visit to a scene of a tragedy can actually help.

But this must be carefully calibrated.

To airdash, that favourite word of our netas, to the scene of a drought or a famine could ensure that timely help and supplies reach the needy. Indeed, this has happened before.

When West Bengal chief minister Mamata Banerjee went to the hospital where there had been an uncommonly high rate of deaths of babies in Kolkata, the administration moved very quickly to set things right.

But, in a situation where speed is of the essence in getting help to the needy and ensuring smooth passage for medical personnel and the family members is a priority, VIP traffic tends to hold up things. The practice of VIPs going to hospitals announcing ex-gratia payments is also to buck the institutional system where such things should be done after proper verification of the matter.

We have seen that a visit by the prime minister necessarily means tight security on the premises.

It is unlikely that he will be able to make an appropriate assessment of the needs of the victims or undertake anything meaningful in easing their trauma or pain. To some extent, we can understand the compulsions of leaders in going to such places.

They are damned if they do and damned if they don't. So in order to obviate unproductive criticism, it would be better to issue a statement on the reason why they would prefer to stay away in a situation such as that on Wednesday.

The symbolism of the highest in the land visiting victims may not be lost on people. But at times, substance has to take precedence over hollow symbolism.

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HINDUSTAN TIMES

WEAVING A WEB OF TERROR

SUBIMAL BHATTACHARJEE

The bomb blast outside the Delhi high court on Wednesday has once again shown the involvement of cyberspace in terrorism. An internet cafe in Kishtwar, Jammu and Kashmir, was used to send an email to two media houses, notifying the motives behind the blast.

An email was sent from harkatuljihadi2011@gmail.com from the Global Internet Café, thereby identifying the militant group: Harkat-ul-Jihad-al-Islami (HuJI).

The police have detained the owner of the cyber café and his brother and the records of the users are being analysed. A second email came from the Indian Mujahideen on Thursday.

Hopefully, the digital trace of these emails and the physical chase would help in nabbing the culprits.

The issue remains that terrorists strike and use technology to support the strikes despite the stringent rules laid down by the government for monitoring cyberspace and internet cafes.

In the blasts preceding the 26/11 Mumbai incident, particularly the one in the Samjhauta Express in 2007 and in Mumbai in July 2006, cyber cafés were used by terrorists and their sympathisers. After these strikes, the law enforcement agencies started keeping a watch over them.

These efforts got a boost when in April this year the department of information technology notified the rules for cyber cafes on April 11. According to these rules, all cyber cafes were asked to register with a state-level registration agency.

Unfortunately, this move is yet to be implemented. Likewise, there are clearly defined steps for the identification of users like keeping an identification proof of the users.

However, most café owners still don't follow this. Further, the cyber cafes are supposed to keep a record of the identification document in either a digital or physical form for at least one year. The identity of anyone accompanying a user must also be verified. But none of these are being followed.

The rules also require the creation of a logbook for records of the users to be maintained on a monthly basis. These records should be stored and backups must be maintained for all the websites visited by a user and also the logs of proxy servers installed at a cyber café.

The provision for regular and surprise inspection was also mentioned.

In other words, the rules to operate cyber cafés are quite stringent. But the fact remains that cyber café owners, despite the threat of punishment, don't follow these rules as it impacts their business.

Now the issue is how the situation can be addressed and whether tough cyber laws and rules can really deter terrorists and criminals from using the internet.

Also, should cyber cafés be blamed? In this particular case, even the email address should have raised an alarm with the service provider when it was being registered as HuJI.

The Delhi blasts only prove that there needs to be much more coordination among law enforcement agencies and service providers on a daily basis.

(Subimal Bhattacharjee heads a defence multinational in India and writes on cyberspace and security issues. The views expressed by the author are personal)

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HINDUSTAN TIMES

A RIVER CALLED TEESTA

N CHANDRA MOHAN

A river named Teesta scuppered what would have been truly a historic visit by Prime Minister Manmohan Singh to Bangladesh.

The intransigence of Paschimbanga chief minister Mamata Banerjee in supporting a more equitable sharing of the waters of this river meant that India failed to deliver on a key takeaway for Bangladesh.

India, in turn, failed to secure a takeaway in terms of connectivity to its Northeast. India's trade concessions may have salvaged the visit but, overall, both countries have mixed feelings about it.

An accord on the sharing of Teesta's waters — including that of Feni, Manu, Muhuri, Khowai, Gumti, Dharla and Dudhkumar among other common rivers — was indeed critical as the lower riparian Bangladesh needs a guaranteed flow of water throughout the year for its agricultural operations.

To ensure such a regular flow of the Ganga, both countries concluded a historic 30-year Ganges Water Treaty in 1996. A similar agreement was needed for the Teesta, especially for sharing during the lean season.

Banerjee's hardline stance was obviously dictated by politics, as she felt that what was being negotiated was detrimental for farmers in North Bengal districts.

In any negotiation between two countries, there is always a delicate balancing act between micro pain and macro gains or between long-term benefits from freer trade with short-term costs that could inflict pain on its farmers and other stakeholders.

In her zeal to uphold the interests of the state, the big picture was lost sight of.

What is the big picture? Singh's trip was intended to be a game-changer for two related but distinct ideas: the formation of a larger Bay of Bengal grouping, and South Asian integration with a neighbour that would acquire a greater stake in the rise of India as a global power.

Unless the member countries of the Bay are connected through road, rail, air and shipping services, the former idea fails to take off. The latter requires accepting asymmetrical responsibilities like unilateral trade liberalisation.

Thanks to the standoff over Teesta, the formation of a Bay of Bengal grouping is blowing in the wind. India won't have better access to the Northeast and to Mongla and Chittagong in Bangladesh.

Out of 38.9 tonnes of cargo movement, 18 million tonnes could have been diverted if transit through Bangladesh were allowed. This formation cannot come into being unless Bangladesh provides seamless connectivity between India and the Northeast and extends it to Myanmar and the others rimming the Bay of Bengal.

South Asian integration, too, is unlikely to see the light of day. Bangladesh has been resentful that it has registered a massive and growing deficit vis-à-vis India that amounted to $3 billion in 2010-11. For a country that is one-fifteenth the economic size of India, it has been demanding unrestricted and duty-free access to the latter's market.

India has now agreed to provide freer access for Bangladesh's garments in which it has become a global player.

But given the disappointment on the Teesta front, a truly big bang initiative could have been to provide unrestricted duty-free access for all Bangladesh's goods.

If India could do so for readymade garments that accounts for 80% of Bangladesh's total exports, would freeing up the remainder pose any problems?

For a country that enjoys a $3 billion trade surplus, the revenue forgone if it dropped its sensitive list was pegged at $5 million for 2008 by the Bangladeshi think-tank, Centre for Policy Dialogue.

India could thus have enabled Bangladesh to acquire a greater stake in its economic progress.

But all of this has to await a more propitious moment. To be sure, there were a number of positives at the summit like the landmark deal to demarcate boundaries; making cross border supply of power a reality and helping build infrastructure.

But the river ran through it all.

(N Chandra Mohan is an economic and business commentator based in Delhi. The views expressed by the author are personal)

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HINDUSTAN TIMES

FORCE-FEEDING INDIA

RAJDEEP SARDESAI

'Why don't you cover Irom Sharmila's decade-old fast with the same intensity as you did Anna Hazare's 12-day fast?' asked Binalakshmi Nepram, the founder of the Manipur Women Gun Survivors Network with characteristic passion.

On stage in a live programme, there was no escape. "Perhaps, it's because Ramlila Maidan is closer to television studios than Imphal," was my feeble response.

The 'tyranny of distance' can only be a part-explanation for why a 39-year-old Manipuri woman's fast that began in November 2000 for the repeal of the Armed Forces Special Powers Act (AFSPA) has not resonated across TV channels and the nation in the manner that Anna Hazare's did.

Yes, it did take a nude street protest by Manipuri women for the national media to wake up momentarily to an unfolding tragedy.

But to see this only from the prism of the traditional 'neglect' of the Northeast would be to ignore the contemporary reality of what constitutes 'democratic' protest in the eyes of the media and enlightened citizenry.

Forget Irom's brave struggle for a moment. Look at Medha Patkar instead. In May, Patkar went on a nine-day fast to protest against slum demolitions in Mumbai.

While the fast attracted some attention in the local newspapers, no large crowds or TV cameras could be spotted. Slum demolition is an issue that discomfits the urban middle classes, for whom Patkar is seen as a quintessential troublemaker, be it when seeking rehabilitation for those affected by the Narmada dam or in driving out the Tata Nano plant from Singur.

And yet, the moment the same Medha Patkar waves the Tricolour and shares a platform with Team Anna on the Jan Lokpal Bill, she becomes an embodiment of courage and idealism.

Or take the case of Prashant Bhushan, a 'core' member of  Team Anna. Only a few months ago, when the lawyer-activist was fighting cases for alleged Maoists or defending author Arundhati Roy's right to free speech on Kashmir, he was dubbed 'anti-national' in a section of the media.

Today, the same individual is embraced by the very same media as an anti-corruption crusader. When Bhushan and Patkar challenged the status quo they were targeted, even reviled. The moment they chose to swim with the tide, they were transformed into heroes by identical groups.

The fact is that 'anti-corruption' is an easy to market brand, which consumes everyone who vouches for it. The success of Anna's movement lies in its simple, inclusive character.

It's a movement that could co-opt a Medha Patkar, a Sri Sri Ravi Shankar and an Om Puri on the same platform along with millions of anonymous Indians. Why even a Baba Ramdev would have been a star performer of the Anna brigade till such time as he made the cardinal mistake of allowing Sadhvi Ritambhara to share a platform with him.

Suddenly, the divisiveness of Hindutva politics was seen to undermine the universality of the core anti-corruption message.

Therein also lies the fundamental difference between Anna's fast on the Jan Lokpal Bill and Irom Sharmila's battle for revoking AFSPA: one is seen to unite, the other is seen to divide.

In the end, Anna's fast wasn't even really about the details of the Bill but more about being a potent symbol of  popular anger against corruption. Many of those who gathered at the Ramlila Maidan and elsewhere couldn't really care whether the anti-corruption wing of the Central Bureau of Investigation (CBI) is brought under a lokpal.

What they really wanted was some outlet to express their outrage against corruption. Anna, aided by a willing media, happily provided it. For the middle class in particular, Anna's asceticism was in sharp contrast to their own lifestyle of conspicuous consumption: wearing an Anna cap could redress the balance, if only for a while.

It also enabled the economically privileged to suddenly feel politically empowered.

By contrast, Irom Sharmila presents a more complex choice before the average citizen. For Manipuris, she is a homegrown heroine who symbolises the fight against human rights violations by the army.

But for those outside Manipur, she is just as likely to be seen as someone who is questioning the majesty of the Indian State. Manipuris, and many right-thinking Indians, may see AFSPA as a violation of fundamental freedoms, but there are enough others who will see it as a necessity in a militancy-prone region.

To that extent, Irom Sharmila's fast will be viewed by hyper-nationalists as a challenge to the Indian State much in the manner that any popular movement in Jammu and Kashmir is seen as a threat to national sovereignty.

The irony is that both Anna and Irom Sharmila should have more in common than one might imagine. For both of them, using the fast as a peaceful protest weapon is essentially questioning the abuse of State power.

And at the root of this misuse of power is bad governance. Corruption flourishes where governance fails. The imposition of a draconian law like AFSPA, be it in Manipur or Jammu and Kashmir, reveals a crisis of governance.

Indeed, both Manipur and Kashmir have suffered because of corrupt politics as much as they have from violence.

Which is why anyone who calls for a strong Lokpal Bill as an antidote to corruption should also support the repeal of  AFSPA as a necessary condition for a more humane and honest State.

Which is also why Anna Hazare should seriously consider Irom Sharmila's request to visit Manipur and express solidarity with her struggle.

It may be a purely symbolic visit, but it will ensure that television cameras are forced to turn their lenses to Manipur's trauma, if only for a day.

(Rajdeep Sardesai is editor-in-chief, IBN 18. The views expressed by the author are personal)

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T tion c wo Indian scientists -- Ajay Anil Gurjar and Siddhartha A. Ladhake -- are wielding sophisticated mathematics to dissect and analyse the traditional medita- chanting sound `Om'. The `Om team' has published six tion chanting sound `Om'. The `Om team' has published six monographs in academic journals, which plumb certain acoustic subtlety of Om that they say is "the divine sound".

Om has many variations. In a study published in the Inter- national Journal of Computer Science and Network Security, the researchers explain: "It may be very fast, several cycles per second. Or it may be slower, several seconds for each cycling of [the] Om mantra. Or it might become extremely slow, with the mmmmmm sound continuing in the mind for much longer periods but still pulsing at that slow rate." The important technical fact is that no matter what form of Om one chants at whatever speed, there's always a basic `Omness' to it. Both Gurjar, principal at Amravati's Sipna College of Engineering and Technology, and Ladhake, an assistant professor in the same institution, specialise in electronic signal processing. They now sub-specialise in analysing the one very special signal. In the introductoy paper, Gurjar and Ladhake explain that, "Om is a spiritual mantra, out- standing to fetch peace and calm."

No one has explained the biophysi- cal processes that underlie the `fetch- ing of calm' and taking away of thoughts. Gurjar and Ladhake's time-fre- quency analysis is a tiny step along that hitherto little-taken branch of the path of enlightenment. They apply a mathematical tool called wavelet transforms to a digital recording of a person chanting `Om'. Even people with no mathematical back- ground can appreciate, on some level, one of the blue-on- white graphs included in the monograph. This graph, the authors say, "depicts the chanting of `Om' by a normal per- son after some days of chanting". The image looks like a pile of nearly identical, slightly lopsided pancakes held together with a skewer, the whole stack lying sideways on a table. To behold it is to see, if nothing else, repetition.

Much as people chant the sound `Om' over and over again, Gurjar and Ladhake repeat much of the same analy- sis in their other five studies, managing each time to chip away at some slightly different mathematico-acoustical fine point. The Guardian

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THE INDIAN EXPRESS

EDITORIAL

LAW OF THE LAND

 

At long last, Parliament confronts one of the most vexed issues of our time, as a new and much-improved Land Acquisition, Resettlement and Rehabilitation Bill was tabled in Lok Sabha. Many of its clauses can be quibbled with, and probably will be, but there is no denying the need for this legislation. A fair and coherent land acquisition act is most needed now, at a time of intense struggle and negotiation over this valuable resource. Whatever final shape the bill takes, it must address the rising expectations of land-owners and, equally, the rational requirements of industries and cities. As many of the recent agitations reveal, the friction is usually over fair compensation and stakes — farmers do not want to be confined to the land for ever, but do not want to be exploited and left out of the large gains of changed land-use. Efficient land use will be crucial to growth, and any meaningful policy must make sure we build sensibly and extract the maximum value from it.

The definition of public purpose is the crux of the issue, and has been treated with some care — while making a break with coercive takeovers of the past, the draft bill recognises the legitimate demands of "infrastructure development, industrialisation and urbanisation" as part of public purpose. One of the central debates is about the extent of government's role — should deals be largely transacted between private developers and land-owners, or should the state step in to acquire land on their behalf? The draft bill suggests the government should acquire land if 80 per cent of the stakeholders are agreed. Relief and rehabilitation schemes have been beefed up and made actionable, as part of the law. The other question that must be addressed is that of those who actually work the land — agricultural labourers and share-croppers whose interests may not mesh with that of land-owners, but must be accommodated in the new policy, whatever shape it takes. There are other areas of strong contention, like the issue of multi-cropped irrigated land, which must be thrashed out by various stakeholders. Why should these lands not be used for non-agricultural purposes, if the returns are worth it to the owner? And would not such restrictions cramp certain regions?

The fierce contestations we have witnessed across the country have made it clear that a comprehensive land acquisition law cannot be put off any longer. The process of giving final shape to the law will be critical.

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THE INDIAN EXPRESS

EDITORIAL

FLYING BACKWARDS

 

Air India has dug itself into a financial hole, one so deep that even a well-run, profit-maximising organisation would find it difficult to escape. Its accumulated losses till 2010-11 total Rs 20,320 crore; its debt burden — including working capital loans — has risen steadily for the past years, and is now around Rs 40,000 crore. Why is Air India so buried in debt, and what lessons should its owners — India's taxpayers — draw from its troubles?

A new report from the Comptroller and Auditor General, as reported by this newspaper, reveals the nature of the problem. A large component of Air India's debt comes from the decision to buy 111 new aircraft in 2005, the interest burdens of which purchase have been crippling. The report will at least allow, once tabled, an open examination of how this error in management came to be made. Whether the decision was made in good faith or not, the larger problem is clear already: government unwillingness to allow the company's management to properly estimate its needs and abilities, or to imagine a future without that outdated, socialist-era construct, a "national carrier".

The aircraft purchase is emblematic of the errors of judgement inescapable when a company like Air India is managed by the government. Financially unviable decisions are made; accountability is hard to pin down; and empire-building substitutes for hard-headed management of the bottomline. A clear accounting of where and how decisions were made should convince India's citizens and their representatives — to whom the CAG reports — of the lack of good sense in the state's attitude to Air India. There are more than enough competing airlines now that consumers need not be supported through state intervention; instead, a cash-strapped Centre is faced with endless demands to bail out its dysfunctional airline. Expectations that Air India would turn around, such as informed the aircraft purchase, are largely responsible for getting us here. They should no longer rule decisions about the airline's future.

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THE INDIAN EXPRESS

COLUMN

ROUGH PATCH

 

That the Turkish military cannot make any noise over the suspension of all defence ties with Israel is the surest sign of what has changed within Turkey under Prime Minister Recep Tayyip Erdogan — namely, the consolidation of civilian rule. Last Friday, Ankara expelled the Israeli ambassador and now has put a full-stop to all military cooperation. This might have come as a shock had the cooling off not begun right after the Israeli raid on the Gaza-bound flotilla last year. Turkey had already withdrawn its ambassador from Tel Aviv, and cut down defence engagements. The latest developments just formally seal the freeze, which the US had been trying to stave off.

Turkey's pretext is Israel's refusal to apologise for the raid which killed nine Turks, Ankara's anger aggravated by the Palmer-Uribe UN report which blames Israel for the use of excessive force but finds its naval blockade of the Gaza Strip legitimate. While the report also takes Turkey to task for implicitly supporting the flotilla, Ankara wants to drag Israel to the International Court of Justice to challenge the blockade. Erdogan's conservative constituency had been demanding a toughness with Israel that, with his public criticisms earlier and the suspension of ties now, the Turkish PM has delivered. Turkish diplomats say that Turkey doesn't need Israel as much as it used to. Meanwhile, the Israeli government, which had almost worked out a mutually acceptable statement with Ankara, succumbed in the end to the hawks in its ranks.

The fate of ties between these two close US allies may depend on their domestic politics, but even Erdogan knows he can't push Israel too far. Turkey isn't likely to end up at the ICJ because, as per rules, the case can't be heard without Israeli consent. Above all, Turkey and Israel need each other to deal with a post-Arab Spring Middle East.

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THE INDIAN EXPRESS

COLUMN

THE MORE THINGS CHANGE

C. RAJA MOHAN

 

Wednesday's bomb attack on the Delhi high court is a painful reminder that a decade after 9/11, New Delhi is nowhere near gaining an upper hand over those planning and executing terror attacks against the nation. India was indeed one of the biggest victims of international terrorism before 9/11. It is likely to remain so a decade after 9/11.

Throughout the last decade, there have been a series of terror attacks, punctuated by brief intervals of calm. These include the one on Parliament on December 13, 2001, on the Sarojini Nagar Market in Delhi in October 2005, on Mumbai in July 2006, the Indian embassy in Kabul in July 2008, and Mumbai again in November 2008 and July 2011, to name just a few.

Matters could get a lot worse in the coming years, as the United States begins to draw down its forces in Afghanistan, the Taliban gains ground there, and the Pakistan army seeks to expand its influence in Kabul and establish the much vaunted "strategic depth" despite the deepening internal chaos.

A decade ago, when al-Qaeda attacked the World Trade Centre in New York killing nearly 3,000 people, India offered its full support to the US as Washington prepared to retaliate.

This extraordinary offer reportedly included access arrangements to facilitate the US war on terror in our neighbourhood. India's offer was based on the hope that following the shock and awe of the 9/11 attacks, Washington would focus on "draining the swamps" of international terrorism that had taken root in the north-western parts of the subcontinent during the 1980s and 1990s.

In the immediate aftermath of 9/11, India expected that the inevitable and furious American response would help compensate for the terrible US strategy in the 1980s, which saw Washington use the Pakistan army to promote an international jihad against the Soviet troops in Afghanistan.

This US strategy neatly dovetailed with the domestic political agenda of General Zia-ul-Haq to inject radical Islam into Pakistan's body-politic. Together, they contributed to making the Pakistan-Afghan borderlands an attractive home to violent religious extremism and international terrorism.

Al-Qaeda, Lashkar-e-Toiba and many other extremist organisations were among the consequences — both intended and unintended. So were the nuclear weapons of Pakistan which were built with Chinese support and American acquiescence in the 1980s.

Once the Russians were ousted from Afghanistan at the end of the 1980s, the US turned its back on the region. The Pakistan army, which had successfully deployed the jihad as an instrument of its foreign policy in Afghanistan, started applying the same technique towards India.

Armed with a nuclear shield that prevented India from credibly exercising the conventional military options, the Pakistan army was now free to pursue extremism as an instrument of state policy, with utter impunity.

Within a few days after 9/11, the US politely turned down the Indian offer of support and chose the Pakistan army as the principal partner in the war against terror. It is not difficult to understand the logic behind the US decision — the need to access Pakistan's territory and win the support of the Pakistan army and the ISI to conduct US operations in Afghanistan after 9/11.

Once it made the Pakistan army the main supportive instrument of its war against terror after 9/11, there was little prospect that the US would be able to compel the Pakistan army to act against anti-India terror groups.

US-India relations did indeed expand rapidly in the decade after 9/11 and were showcased by the civil nuclear initiative and the new defence engagement. The US and India also steadily expanded their cooperation on counter-terrorism, but they could never overcome the obstacle of the Pakistan army, which continued to orchestrate the terror campaign against India after 9/11.

That the US became a hostage to Pakistan was bad news for India; it was equally tragic for Pakistan. As Bruce Riedel, a former CIA official, who served many American presidents and has advised Barack Obama on Afghanistan, recently summed up the US blunder.

"Trusting Pervez Musharraf, then Pakistan's president, to fight on our side against bin Laden and the Taliban," Riedel says, was a "strategic failure". "Our man in Islamabad turned out to be helping the Taliban regroup while bin Laden hid out in his front yard, living in plain sight of Pakistan's most elite military academy for years."

Quickly sensing the US inability to change the Pakistan army's behaviour towards India after 9/11, Delhi tried negotiating with Rawalpindi directly on the question of terrorism. India offered to resolve the Kashmir question and normalise bilateral relations, if Musharraf eliminated the sources of anti-India terrorism in Pakistan.

As Musharraf turned on and off the terror tap, Delhi and Rawalpindi did negotiate during 2005-07 a broad framework to settle the Kashmir question. Once General Ashfaq Kayani succeeded Musharraf as the Pakistan army chief, it did not take long for the fragile peace process to break down.

Prime Minister Manmohan Singh might have revived the talks with Pakistan, but there are few expectations in Delhi that the Pakistan army will provide India satisfaction on the question of terrorism. The civilian leaders — both in government and outside — in Pakistan are well-meaning but have no control over the army or the ISI.

If the US could not buy the Pakistan army's support against terrorism after nearly $20 billion of aid since 9/11, or coerce it through relentless drone attacks in recent years, there is little hope that India can negotiate away the threat of terrorism from Pakistan.

That takes us back to square one or worse. In the coming years, India will have to develop a set of means, different from the ones it employed through the last decade, to alter the Pakistan army's calculus in supporting anti-India terrorism. These must necessarily involve expanding India's political role in Afghanistan and promoting internal change in Pakistan.

The writer is a senior fellow at the Centre for Policy Research, Delhi
express@expressindia.com

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THE INDIAN EXPRESS

OPED

STORMS IN THE EAST

HARSH V. PANT

 

As reported by London's Financial Times, an unidentified Chinese warship had demanded that the INS Airavat, an amphibious assault vessel, identify itself and explain its presence in the South China Sea after the vessel left Vietnamese waters in late July. Though the Indian navy promptly denied that a Chinese warship had confronted its assault vessel, it did not completely deny the factual basis of the report.

The India-China strategic relationship is rapidly evolving and tensions are building up. China's military growth over the last decade has exceeded most forecasts, with the Chinese military fielding an operational anti-ship ballistic missile, completing a prototype of its first stealth fighter jet and launching its first aircraft carrier for a maiden run over the course of the last one year itself. Chinese capabilities are rapidly growing to an extent where it can challenge the status quo in the Pacific. The latest Pentagon report on the modernisation of the Chinese military warns India about the rapid advances Beijing is making in improving infrastructure near the border areas with India but also strengthening its deterrence posture by replacing liquid-fuelled nuclear capable CSS-2 IRBMs with more advanced and survivable solid-fuelled CSS-5 MRBM systems. The PLA navy will be building several additional aircraft carriers so as to enhance its naval fleet in addition to the Kuznetsov-class carrier (Varyag). It is likely Beijing will have its first indigenous carrier achieving "operational capability" as early as 2015. The US has also suggested China's aircraft-carrier-killing ballistic missile, the DF-21D, has reached initial operational capability.

In response to the latest India-China naval incident, the US called for a collaborative diplomatic process on resolving the disputes related to the South China Sea underlining its desire to recognise the right of passage to international waters in the South China Sea. Last year, US Secretary of State Hillary Clinton had suggested the South China Sea was of strategic importance to the US and offered to act as a mediator.

India too is within its rights to transit through the international waters of South China Sea and Beijing has no right to question the passage though these waters. Of course, China claims the South China Sea in its entirety but its confrontationist posture and rhetoric can easily escalate to a major conflict. The South China Sea is now one of Asia's critical strategic flashpoints with some even suggesting that it will be the "military front line" of China in the coming years.

Fears have been rising in Asia that China is seeking to use its growing maritime might to dominate not only the hydrocarbon-rich waters of the South China Sea but also its crucial shipping lanes, the lifeline of regional economies. Clinton used her visit to Asia last year to signal unequivocally that the US was unwilling to accept China's push for regional hegemony. When Beijing claimed that it now considers its ownership of the Spratly Islands in the South China Sea as a "core interest", Clinton retorted by proposing the US help establish an international mechanism to mediate the overlapping claims of sovereignty between China, Taiwan, the Philippines, Vietnam, Indonesia and Malaysia that now exist in the South China Sea.

This new US assertiveness vis-à-vis Beijing has been widely welcomed in the region. The other members of the Association of Southeast Asian Nations (ASEAN) strongly endorsed Clinton's call for multilateral commitment to a code of conduct for the South China Sea rather than China's preferred bilateral approach. China has collided with Vietnam and the Philippines in recent months over issues related to the exploitation of the South China Sea for its mineral resources and oil. It was under the US guardianship of common interests for the last several decades that China has emerged as the economic powerhouse it is today. Now it wants a new system — a system that only works for Beijing and does not deal with the provision of public goods or common resources.

India too has an interest in protecting the sea lanes of communication that cross the South China Sea to Northeast Asia and the US. As India's profile rises in East and Southeast Asia, it will have to assert its legitimate interests in the East Asian waters. As China expands its presence in South Asia and the Indian Ocean region, India needs to stake its own claims in East Asia. India has now decided to work with Vietnam to establish a regular Indian presence in the region as part of a larger Delhi-Hanoi security partnership. Vietnam has given India the right to use its port of Nha Trang.

The US remains distracted by its own economic woes and the challenges unleashed by the Arab Spring. Meanwhile, Japan is proving unable to tackle its political inertia and emerge as a credible balancer in the region. As such, the regional environment is conducive for Beijing to assert itself.

India is right to forcefully reject Chinese claims of sovereignty over the entire South China Sea. It should now build credible strategic partnerships with other regional states so as to prevent a Chinese regional dominance that will undermine Indian and regional security interests.

The writer teaches at King's College, London
express@expressindia.com

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THE INDIAN EXPRESS

OPED

A MONSOON AWAKENING

DILIP BOBB

 

Rarely does the Indian middle class abandon its material comforts and studied sense of complacency to take to the streets — literally getting their feet wet — as they did last month. The innumerable talking heads we were subjected to 24/7 over those 12 days of drama and suspense were of one view: enough was enough, corruption had gotten out of hand and that was the sole collective motivation for the middle classes to have bought the t-shirt, topi and tricolour and abandoned the nearest air-conditioned mall in favour of the slushy, sweaty crush of a massive public rally.

In retrospect, however, the reasons could well be far more complex and deeper than a spontaneous anti-corruption outburst. Or, for that matter, an act of redemption for its earlier apathy towards politics and electoral participation.

For the Indian middle class, Gandhi — the original — is not someone they easily identify with except in an attempt to claim an enlightened legacy. The Ramlila Gandhi may have been a rallying point but not the main motivation. Corruption, at one level, is an issue that has been partly fuelled by the middle class; their growing affluence gave them the resources to afford short-cuts to special services and privileges. For most of them, it was a small but necessary price to pay, indeed, almost a status symbol to flaunt hard-to-get products and services. So what really brought them out onto the streets in such surprisingly large numbers?

Here's a theory worth considering: Life has suddenly become very insecure for the middle classes, from professionals to entrepreneurs, who have been the main beneficiaries of economic liberalisation over the last 20 years. The economic slowdown is real, and hits where it hurts: their pockets. Incomes have stayed static or barely risen for most salaried professionals, and so too for entrepreneurs in key sectors of the economy — mainly export-oriented — during the post-2008 period. And with the global recession carrying on its relentless slide, the future looks decidedly scary. Job security, in many export-focussed sectors focused — from manufacturing to IT and BPOs, from steel to autos and gems and jewellery — has become an area of serious concern. For the middle-class professional, it's a dramatic change from the boom years when the sky looked the only limit.

Here's the clincher: Prices have shot up across the board simultaneously. Inflation has climbed steadily over the past 20 months, eating into incomes and savings. Structural food price issues and strong demand pressures have pushed inflation in India well above the norm for Asia, according to Richard Iley, the chief economist for Asia at BNP Paribas. Food accounts for about a quarter of the Wholesale Price Index, and the fact that the average food inflation rate in the last four years has been close to 9 per cent (last decade it was around 4-5 per cent), has had a huge impact on middle-class lifestyles, expenditure and savings.

There has been a sharp and parallel price rise in other areas of middle-class consumption, from petrol and diesel to LPG to other consumer items. Fuel prices alone have risen 400 per cent in the last decade. The ones who have been hardest hit by wage deflation and high inflation have been salaried professionals. All this, coupled with no real visible push to the economy or attempts by the government to rein in prices has added to middle-class anger. The irony is that it's now directed at the man who they admired the most for being the architect of India's reforms, and its remarkable GDP growth rate: Manmohan Singh.

There is a clear connection between the dramatic curbing of lifestyles and ambitions through rising prices and dips in earnings to growing insecurity and coming out on the streets in anger at the threat to the Great Middle Class Dream. The anger is directed at the government headed by Manmohan Singh for letting them down after giving them so much hope.

It symbolised the breaking of an implicit contract between the middle class and the UPA government under Manmohan: allow us to rule and we'll make you rich. When functional turned dysfunctional in UPA 2, and the middle class dream died, the relationship died with it.

India's middle class will account for almost 40 per cent of the country's population in 15 years, according to a projection from the National Council for Applied Economic Research. They are now poised to be agents of change. Across the world, it's the middle class that is the driving force behind growth and prosperity. It should be no surprise that the Indian bourgeoise now want a bigger say in the future of their country now that their own future is coming under threat. The poor have always faced that prospect, and the rich can rise above it; it's the rest that are, literally, trapped in the middle.

Unlike the Arab Spring, it is not an emotional call for democracy or a new government or even an instant-noodle end to corruption. It is instead, the stirrings of a deeper change in the middle-class psyche and its tolerance for what they see as an arrogant and unresponsive leadership. The lifestyle revolution they experienced in the past two decades gave the false hope that they could expect a higher quality of governance, a tide of rising expectation which is now threatened.

The final straw has been that they imagine their money, as taxpayers, is either being wasted due to corruption or invested in grandiose but revenue-draining schemes for the poor, and no longer invested in infrastructure and growth-oriented reforms. The new middle class has also realised that, at 200 million and growing fast, their votes and opinions can no longer be taken for granted. Their taking to the streets may have been spontaneous and inspired by a single event, but it represents a social and political churning of considerable import.

The tipping point has been reached and a contract has been broken. They now want a bigger say in seeing their hard-earned money being put to better use, even if means getting down and dirty.

dilip.bobb@expressindia.com

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THE INDIAN EXPRESS

OPED

M/S REDDY BROTHERS AND OTHERS

SARITHA RAI

 

During its raid on the Karnataka-Andhra politician trio, the Reddy Brothers, the CBI found over 30 kg of gold, heaps of silver and some crores of cold cash. Bangalore was the brothers' playground, a base for their "seven-star" lifestyle as they hopped between cities to keep lunch and dinner appointments in their private helicopter. So, rather than incredulity, news of the Reddys' stash has evoked an utterly-Bangalore retort, "Ashtena?" ("Is that all?")

The jaded response to the CBI find is quite understandable, considering the Reddys' reputation. During their heyday, visitors to their Bellary fiefdom were transported back in time to an era of feudal maharajas and servile serfs. The Lokayukta, in its investigation of the mining scam, tracked the bonanza of the Reddy brothers from their Obulapuram Mining Company to various foreign tax havens. So, the CBI inventory of items like gilded cutlery, a Rolls-Royce Phantom and a heap of men's jewellery looked like an abbreviated summary of the Reddys' real assets.

Bangalore's passage to globalisation and its increasing economic fortune has been underscored by the rising affluence of its politicians. While businessmen-turned-politicians are few, the ranks of politicians-turned-businessmen are swelling. Bangalore's new-age companies like Infosys and Wipro took decades to grow into billion-dollar enterprises. But politicians of the three major parties, all of which have ruled the state in the last two decades, have multiplied their fortunes in the shortest possible spans of time.

Owing to a Supreme Court ruling in 2002, those contesting an election are required to file a list of their assets. In a sense, it has become easier to track the rise of the declared assets (not benami or salted away offshore) of politicians in India. But there is no mechanism to verify the declarations. If the actual wealth of India's top politicians is computed accurately, the list of richest Indians could look vastly different.

The infamous Reddy brothers' benefactors include the former Andhra Pradesh chief minister, Y.S. Rajasekar Reddy, whose son Jaganmohan Reddy's declared assets were Rs 363 crore, and his wife's assets an additional Rs 77.5 crore. Solely based on declared assets, Jagan, as he is called, is among India's richest politicians.

His wealth trajectory looks like this: in 2004, his declared assets were Rs 9.19 lakh; in 2009, after his father became chief minister, his declared assets zoomed to Rs 77 crore, and then to the staggering Rs 363 crore as last declared, a multiplication effect that would shame even Warren Buffett.

Some politicians are born wealthy; others are legitimately rich; but politics has largely become a profitable business today. In Karnataka, that is amply illustrated by the roster of former chief ministers and ministers roaming the courts in corruption cases. Last month, former chief minister B.S. Yeddyurappa first pleaded a "temporary loss of memory" and then checked himself into a hospital for fever, hypertension and diabetes to get a waiver from appearing before the special court of the Karnataka Lokayukta in a case related to alleged irregularities in denotifying government land.

Meanwhile, the Karnataka high court dismissed Yeddyurappa's anticipatory bail plea in another graft case. That makes the ex-chief minister's arrest a distinct possibility.

Ironically, Yeddyurappa's political adversary, former chief minister H.D. Kumaraswamy found himself in a parallel predicament simultaneously, in cases involving a housing society and a mining licence. The Karnataka high court refused to stay the corruption proceedings against Kumaraswamy and his wife, Anitha. Meanwhile, the Lokayukta special court turned down the couple's anticipatory bail plea in the same case. The couple asked to be exempt from court appearances, citing poor health — Kumaraswamy with diabetes and a heart ailment and his wife with a slipped disc — but have been turned down so far.

Even as Jagan from neighbouring Andhra Pradesh is being investigated on multiple fronts and by various federal government agencies, the chief minister from nearby Tamil Nadu has been ordered by the Supreme Court to appear at a Bangalore trial court in a case pertaining to her disproportionate assets.

Some years ago, when a national magazine that generally lists India's best colleges, India's hottest careers and so on, attempted to track the country's wealthiest politicians, one reader wrote in: "Very interesting article. Going by the financial success of the profession, your next Hot Careers survey should list politics at Number One."

saritha.rai@expressindia.com

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THE INDIAN EXPRESS

OPED

THE SECOND DRAFT OF LAND HISTORY

SANDIP DAS

 

The national Land Acquisition and Rehabilitation and Resettlement bill (LARR), 2011, which was introduced in the Lok Sabha on Wednesday, has been now referred to a Parliamentary standing committee chaired by BJP MP Sumitra Mahajan. Rural Development minister Jairam Ramesh said that if the parliamentary committee gives its report prior to the winter session, it could be passed in both Houses. The bill seeks to replace the 117-year-old Land Acquisition Act. Its underlining principle was that land acquisition and rehabilitation and resettlement (R&R) need to be "seen necessarily as two sides of the same coin... R&R must always, in each instance, necessarily follow upon acquisition of land. Not combining the two within one law, risks neglect of R&R." The proposed act is to come into effect retrospectively, to include those projects where compensation has not been made under the existing act, and where possession has not been taken. Sandip Das explains.

* What previous laws govern acquisition? What attempts to formulate a fresh law have been made?

In its earlier attempt to replace the 1894 Act, the UPA passed two separate bills — the Land Acquisition (Amendment) Bill and the Resettlement and Rehabilitation Bill — in February 2009, after which both the bills lapsed following the Rajya Sabha's inability to pass them. However, the LARR law will not supersede 16 other Central laws for land acquisition. Sections 97 and 98 of LARR say that it "shall be in addition to" and "shall not apply" to existing Central laws governing acquisition for specific sectors like mining, SEZs, etc.

* How does the draft impact state-level laws?

The bill allows all states to enact any related law or policy, provided they do not contradict or reduce the LARR bill's entitlements. Thus any state can offer higher compensation, or make provisions for rehabilitation and resettlement which go beyond those provided for under the bill.

Additionally, the proportion in which states can acquire land for private parties has been left entirely to their discretion. The only condition is that the land acquisition provisions of LARR 2011 will apply to that part of the land that is acquired by the state government, and its R&R provisions will apply to all of the land already purchased by the private party — as well as the remaining part of the land to be acquired by the state government.

* When would the new rules be triggered?

Both acquisition and R&R provisions will be triggered when the government acquires land for its own use, hold and control. This includes land acquired for projects developed by the private sector for "stated public purpose," including PPP projects — other than for highway projects. However the land purchase can take place only if 80 per cent of project-affected families give prior informed consent.

The R&R provisions will apply also when private companies buy land for a project of over 100 acres in rural areas, or over 50 acres in urban areas.

* What are the provisions for compensation? What is the minimum R&R package?

Minimum compensation would be four times the market value. An earlier draft proposed six times of market value as demanded by the National Advisory Council. Jairam Ramesh has said that the cost of acquiring land would rise significantly if that provision is implemented.

For landowners, the bill has provided for a subsistence allowance of Rs 3,000 per month per family for 12 months. Affected families will be entitled to a job for one family member; or Rs 5 lakh per family; or Rs 2,000 per month for 20 years, indexed to inflation. The bill also provides for awarding one acre of land to each family in the command area, if the land is being acquired for an irrigation project.

* Are there special provisions for multi-cropped land, and for SCs/STs?

The draft allows the acquisition of only 5 per cent land of a district's multi-cropped land, and only as a "last resort"; an equal area of wasteland within the district will have to be developed. The earlier version did not allow the acquisition of any multi-cropped land.

Land-losing SC and ST families will be offered 2.5 acres of alternative land; the earlier version had set aside 5 acres.

* What safeguards exist for land already acquired?

As suggested by West Bengal Chief Minister Mamata Banerjee, the bill says that, if the land acquired is not used for the stated purpose within 10 years, it will not be returned to the original owner, but become part of that state's land bank. The bill further stipulates that "no change from the purposes specified in the land use plan submitted at the time of land acquisition" will be allowed. No change of ownership without specific permission of the appropriate government authority will be allowed, either.

sandip.das@expressindia.com

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THE INDIAN EXPRESS

OPED

LOOKING FOR HOPE IN LIBYA

NICHOLAS D. KRISTOF

When I was entering Libya last week from Tunisia, a rebel soldier named Ayman objected that I didn't have a visa. I pointed out that his force had overthrown the government that issued visas. But, in this kind of a stalemate, the guy with the gun wins. And that was Ayman.

Eventually, he came up with a solution. I would give him a ride to his hometown, Zawarah, and the visa requirement would disappear. I gritted my teeth and told him to jump in.

That incident points to a fear that many Americans have of the Libyan rebels. Are they just goons who will create their own tyranny or chaos? Particularly after we embraced Hamid Karzai in Afghanistan, only to see him engulfed by corruption, it's fair to ask whether the Libyan rebels will do any better. The uncertainties are real. But, after my recent visit to Libya, I'm guardedly optimistic.

What's particularly impressive is the paucity of revenge killings and looting in Tripoli, the capital. There have been a few incidents in which rebel soldiers apparently executed prisoners, and black Africans have been treated abysmally (they are accused of being mercenaries for Gaddafi). But the Libyans who served in that hated regime mostly have not been molested.

I saw many Libyans fleeing for Tunisia, and, presumably, many of them were Gaddafi loyalists. But rebels did not hinder them at checkpoints or pilfer their belongings. And, as far as I could tell, the homes and luxury vehicles the loyalists left behind have been mostly untouched by neighbours and rebels alike. In addition, I went through dozens of armed rebel checkpoints and was never once asked for baksheesh.

What we know of the top rebel leadership is also reasonably encouraging. Mahmoud Jibril, the acting prime minister of the rebels' Transitional National Council, earned his doctorate from the University of Pittsburgh and taught there, too. As for Mustafa Abdel-Jalil, the acting chairman of the council, he is a former justice minister who challenged Colonel Gaddafi by calling for the release of political prisoners. Ali Tarhouni, the finance minister, is a former economist at the University of Washington.

Some Americans have fretted that Islamic extremists will take over Libya, but very few of the rebel leaders have been associated with Islamic fundamentalism. One exception is Abdel Hakim Belhaj, a military commander in Tripoli, who says he was tortured by the CIA in 2004. Yet he told my Times colleague Rod Nordland that all is forgiven and that he appreciates the American role in the Libyan revolution.

Frankly, any representative Libyan government needs to include fundamentalists like Belhaj, who were particularly brave in standing up to the Gaddafi regime. The mood in Libya is both pro-Islam and pro-Western.

Occasionally, I ran into Libyan-Americans who travelled to Libya to join the revolution; I called one rebel outside my hotel "Texas," because that's where he learned his drawl.

Then there's Dr Rida Mazagri, a neurosurgeon from West Virginia who returned to his native Libya to care for patients in rebel-held areas. Dr Mazagri was seized by Gaddafi forces, and nothing was heard of him for five months. Many of us assumed that he was dead, but then rebels freed him from a prison in Tripoli and he has just returned to a hero's welcome in West Virginia.

The mood in Tripoli seems largely tolerant and forgiving, and exuberant about the prospect of democracy. "We are free now," an engineer named Belgassim Ali told me. "Make a newspaper to support Gaddafi; I don't mind. But no dictatorship!"

It's true that the rebels are atomised in small armed groups, and some roll their eyes at the rebel council. Most have little experience in governing, and they squabble among themselves. Then again, the rebels have coordinated disparate fighting units and have tried to arrange the surrender of holdout towns like Surt, Colonel Gaddafi's hometown, rather than just marching in with guns blazing. Libya's new government will also have the advantage of access to tens of billions of dollars in frozen funds and to the oil that makes Libya one of the richest countries in the region.

I'm a believer in humanitarian intervention to avert genocide or mass atrocities — when the stars align, as I believe they did in Libya — so maybe I'm deluding myself to justify our bombing campaign. Yet it seems to me that the NATO military intervention prevented a massacre in Benghazi, saved countless Libyan lives and has put the country on a track of hope.

Countries like the United States, France, Britain and Qatar did something historic in supporting a military operation that was largely about preserving lives, not national interests. While plenty can still go wrong, my sense is that Libya is muddling along toward a future far better than its oppressive past.

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THE FINANCIAL EXPRESS

EDITORIAL

NO ONE KILLED AIR INDIA

The broader question regarding Air India is what are the reasons that have brought the company to this stage of terminal illness. Going by the audit report of the Comptroller and Auditor General, it was because of the collective impact of a humongous purchase order for 111 aircraft, the failure to push through a full merger with Indian Airlines and a poor performance vis-à-vis its private sector competitors. Allied with this is the frittering away of the bilateral rights by the aviation ministry that should rightfully have gone to Air India. This is more or less the same set of arguments advanced by Arvind Jadhav to explain the problems in the public sector company. In that case, it is difficult to figure out why the current dispensation in the civil aviation ministry has brought in a new management in the airline. Unless, of course, the ministry feels there is a separate set of factors that could explain the mess in the public sector company.

From a proposed disinvestment in the NDA years, the carrier has suffered every possible policy twist and the latest CAG report will not make any improvement to that scenario as the new management is unlikely to take ownership of previous gaffes. So, recommendations like cutting back incentives to pilots and even a merger of staff may not be attempted. What could have helped in retrospect is if the ministry, at the stage of putting in the order for aircraft in 2005, had agreed for a concurrent audit. That it would have delayed the eventual placing of the order to beyond 15 months is obvious, but it would have given one less reason to feel hopeless about the future of the airline.

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THE FINANCIAL EXPRESS

EDITORIAL

CHANGE IN TONE

The final report of the Comptroller and Auditor General on the production sharing contract in the oil & gas sector has moved away from quantifying losses made by the government and benefits reaped by companies like RIL, to more general observations on how to improve the contractual terms for the sector. The change in the tone of the report tabled in Parliament, instead, asks for more remedial action in future. Possibly, that is the reason why the shares of RIL moved up by 2.88% on the National Stock Exchange at the end of the day's trade, after the report became public. The performance audit of the hydrocarbon production sharing contracts, instead, takes the government to task for not exercising adequate oversight on deviations from the contract rather than point out corporate malfeasance. The most critical comment is about RIL entering the second and third exploration phases without relinquishing 25% each of the total contract area from the earlier phase. But, as the ministry of petroleum and natural gas has pointed out, the time limit for the relinquishment of the areas was July 2011 and so the deviation is marginal. This leads to the questions about the investment multiple formula. Broadly, the higher the capital intensity, the lower is the investment multiple and, correspondingly, the government share in the profits. So, the CAG says the operators had an incentive to show a higher capital intensity through mechanisms like single bids and doing exploration over larger areas. In its defence, the ministry has said the investment multiples are accepted at the time of the bids and so the question of revisiting the formula is impossible. However, the correctives can be built in for future contracts. In any case, whether because of selective leaks or the new climate of transparency within the government, most of the concerns flagged by the CAG had already become public before the report was tabled.

There are other aspects flagged in the audit report, but a key issue is how the hydrocarbon sector has performed since the 1970s, when public sector ONGC discovered Bombay High. The KG-D6 basin of RIL and the Rajasthan block of Cairn are the only two major discoveries in the oil & gas sector since then. Both developed in the incentive structure provided by the production sharing contract regime under the New Exploration Licensing Policy. The audit of the PSCs show there is room for improvement, but the role played by these policy initiatives has to be taken into account for any assessment of the sector.

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THE FINANCIAL EXPRESS

COLUMN

PUBLIC PURPOSE OF THE LAND BILL
RITA SINHA

Article 300A of the Constitution provides that "no person shall be deprived of his property save by authority of law". The law, which has enabled the state to acquire private property, is the antiquated Land Acquisition Act, 1894, which the Land Acquisition, Rehabilitation and Resettlement Bill, 2011, is seeking to replace (referred to, hereafter, as the Bill 2011).

The power of the state to acquire private land stems from the concept of 'eminent domain', a major element of which is that land must be taken only for a public purpose and should not merely involve the transfer of private property from one individual owner to another. In the existing Act, no procedure has been prescribed by which the government, which is the deciding authority, arrives at the conclusion that land is indeed being acquired for a 'public purpose'.

The Bill 2011 attempts to remedy this lacuna by providing for pre-notification examination of the purported public purpose. For larger acquisitions, the first examination would be done through a social impact assessment (SIA) study and after that by an independent expert group that would examine SIA. A committee set up under the chief secretary would examine all acquisition proposals. The findings of SIA, and of the chief secretary's committee, would be placed electronically in the public domain and would thus be available for public scrutiny prior to the issue of any notification.

Defining 'public purpose', although very crucial, is extremely difficult because of the sheer vastness of its scope, the varying needs of differently evolved economies across the country, and because the concept is a dynamic one, changing with the needs of a changing society. It is critical because it is the starting point of all land acquisitions; a justified public purpose legitimises land acquisition as the benevolent exercise of eminent domain. The Supreme Court has interpreted public purpose to mean the general interest of the community as opposed to the interest of an individual. The use to which acquired property is put should, thus, benefit a large segment of society. The existing Act includes multiple activities and entities within the ambit of 'public purpose', large segments of which are outdated.

The Bill 2011 has made the acquisition law applicable to the acquisition of land for private companies and acquisition of land with ultimate intent to transfer to companies, which are engaged in a public purpose. Such an inclusion acknowledges that such acquisitions have become an integral part of the developmental process, as more and more private sector funding is taking place for public projects.

The rub lies in the profit motive of the private sector, acquisitions for which, to displaced landowners, appears to be a breach of the fundamental principle of eminent domain, i.e., transferring private property from one individual to another for private gain. To off-set the unacceptability of such transfers and acquisitions, the Bill 2011 has added the rider that, in such cases, at least 80% of the 'affected' families must give their consent to the proposed acquisition.

Although reservations have been expressed on the practicality of the rider, it is worthwhile to try it out, as the studies of some of the most successful land acquisitions for large private sector companies have shown that social consent to such acquisitions is not only achievable but is also pivotal for the successful operation of the private project. In fact, the provision will ensure that there is indeed some 'public' content in the private project to merit land acquisition. After all, if the local community gets a win-win package, it would, in all likelihood, welcome such a project. This provision will herald the era of 'consensual' exercise of eminent domain.

The applicability clause also has the provision that the government can acquire land for its "own use, to hold and to control". The government should not exempt itself from acquiring land for public purpose only. This will open the way for misuse by governments.

The Bill 2011 has attempted to narrow down the description of 'public purpose' but, in the process, has opened up its own can of worms. It has included the acquisition of land for "infrastructure, industrialisation and urbanisation projects" without defining the nature of the two latter terms. This will leave a vast canvas for interpretation of 'public purpose' available to acquisition-happy governments.

One of the most abused provisions in the existing Act is the section on 'urgency' acquisitions, which empowers the government to bypass the hearing of objections to the acquisition and to take possession of the land almost immediately after the issue of the declaration. Nearly all the land acquisitions taking place today are under this draconian provision. The Bill 2011 proposes restricting the powers of the government to use the 'urgency' clause only for the defence of India, national security and for emergencies arising out of natural calamities, that too in the rarest of cases.

Governments have also been known to bypass the 'public purpose' requirement of acquisition by changing the land use after acquiring the land. The Bill 2011 seeks to cap this loophole by not permitting a change in the declared public purpose, at least reportedly for some length of time. However, even in the subsequent disposal of such land, the restriction of 'public purpose' should apply.

Overall, the Bill 2011 is a giant leap in the right direction. But, ultimately, it is the way statutes are executed that determine their successes and failures.

The author is former secretary, department of land resources, ministry of rural development

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THE FINANCIAL EXPRESS

COLUMN

TARGET 9% GROWTH. RIDERS APLENTY
MK VENU

The draft approach paper to the Twelfth Five Year Plan does well to recognise some hard realities that face India's political economy in the 12th plan period (2012-17). The well-crafted chapter on 'Macroeconomic Framework' admits at the very outset that the global crisis of 2008-09, and its aftershocks, has created conditions which are less benign and more uncertain than the macroeconomic environment that prevailed during the Eleventh Five Year Plan.

Rather than being gung ho about achieving 9%-plus growth over the 12th plan period, the approach paper carefully examines the feasibility of accelerating GDP growth beyond what was achieved in the 11th plan period—about 8.2%. Given the uncertain global economic environment, India cannot take consistently high growth for granted, even though we did get over 8% GDP growth in 2009-10 when the developed world experienced near negative growth rates.

However, this should not create a delusion that India could continue growing at 9%-plus even as the OECD economies (the US, the EU and Japan) fall into a long-term low-growth trap, a prospect that seems real today. Still, the approach paper does give hope of getting a GDP growth of 9% if key sectoral constraints are overcome. There are domestic drivers of growth that need to be nurtured to keep India's growth chugging even if the global environment remains unhelpful.

The Planning Commission document warns of certain conditions that could act as a constraint on higher growth. There are the growing aspirations of a young population to improve its economic condition. These aspirations, if not adequately fulfilled, could lead to "frustration and cynicism". A major challenge, therefore, is to ensure that the performance of the economy remains ahead of the rising aspirations of the youth. It is perhaps this class that also rallied behind Anna Hazare. The campaign against corruption is partly a proxy for India's youth seeking a better life.

The Planning Commission has identified critical constraints arising on the supply side that might come in the way of achieving 9%-plus growth during the 12th plan period. These are (a) availability of energy, (b) growing evidence of a problem with water availability, (c) difficulties relating to land acquisition for industry and infrastructure development, and (d) the lack of a credible and fair system of exploitation of mineral resources. One may recall that even RBI had pointed to some of these constraints, especially the lack of a consistent policy for mineral exploitation, as a reason for the slowing down of foreign investment in 2010.

Well, all these problems are in the realm of political economy and involve the active participation of state governments, as land and minerals are state subjects. The minister for rural development Jairam Ramesh made a telling comment on TV after releasing the new draft land acquisition Bill. He said there was no point aiming at 9% GDP growth without social and ecological sustainability. The approach paper also recognises this reality and seeks a credible policy to overcome critical supply constraints with regard to land, minerals, energy and water supply.

The Planning Commission has, therefore, prepared models for two alternative GDP growth targets—one for 9% and another for 9.5% average—during the 12th plan period. Both models assume a substantial pick-up in growth in manufacturing, electricity, gas and water supply, and construction. The average manufacturing growth in the 11th plan period was 7.7% and the 12th plan projects this category to grow by 11% to produce an overall GDP growth of 9.5%.

Similarly, the most critical supply constraints—electricity, gas and water supply—grew at 6.4 % in the 11th plan. This is assumed to grow at 9% in the 12th plan period to achieve a projected 9.5% GDP growth. Mining and quarrying, another big supply constraint, is projected to grow at over 8% in the 12th plan period, compared with just 4.7% in the 11th plan. However, it is difficult to imagine how growth in mining will double when the political economy is currently grappling with a massive backlash against illegal mining, whether in Bellary, Orissa or Jharkhand.

There is a massive churn in the political economy over lack of governance and corruption in these areas. The 12th plan target, linked to the supply constraints with regard to mining, electricity and gas supply, can be achieved only if new institutions of governance emerge from the political churn that is currently going on. There is no knowing how long this political churn will continue. If there is disruptive politics until the next Lok Sabha elections in 2014, then two years of the 12th plan period would already have been lost. The ongoing Lokpal debate can also be seen as an attempt to come up with new institutional structures of governance to ensure a fair and equitable growth process.

So, the 12th plan target of 9-9.5% GDP growth has too many critical assumptions built into it. In the face of an uncertain global economic environment, the only chance India has is to get its domestic reforms on track through a broader political consensus among national and regional parties at the state level. Removing domestic supply bottlenecks, especially with regard to inputs such as land, minerals, energy etc, is the key to achieving higher growth. The approach paper also suggests that the sustained inflationary pressures seen at the end of the 11th plan period could become a risk to growth if domestic supply bottlenecks are not eased in the medium term. Fixing this requires a broad consensus among various political parties and other stakeholders (civil society) in the country. The current atmosphere of confrontation at various levels does not bode well for creating the right conditions for growth in the medium term.

mk.venu@expressindia.com

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THE HINDU

EDITORIAL

ULFA COMES AROUND

The winding down of a 32-year-long low-grade armed struggle in Assam is on course. Following the declaration of a unilateral ceasefire by United Liberation Front of Asom chairman Arabinda Rajkhowa, the central government and the Assam government have signed a 'suspension of operations' agreement with ULFA — what has been termed a "gentleman's agreement." This is the first time ULFA has signed an agreement with any government and the expectation is that a substantive political dialogue will follow soon. ULFA's pragmatic approach, especially with regard to its longstanding but clearly untenable demand for "sovereignty" for Assam, has to be appreciated — even if it is clear that a combination of circumstances seemed to give it little choice. The central government's calibrated approach over the past few years was aided in no small measure by the tenacity, patience, and resolve shown by Chief Minister Tarun Gogoi, who has led the State imaginatively over the past decade. The talking process took off once Mr. Rajkhowa and his associates landed in Indian custody, after being apprehended by the Bangladesh security forces: for this, Prime Minister Sheikh Hasina needs to be given full credit.

Nevertheless, the peace process remains under the shadow of an unrelenting Paresh Barua, ULFA's 'commander-in-chief' who is believed to be based, along with some cadres, in the unruly international border between Myanmar and China. However insignificant the threat they hold out may seem at this point, these elements will need to be brought round, or overcome. Trans-border linkages have aided and abetted militancy in the region for too long. The government also needs to be wary of a host of other insurgent groups in Assam and elsewhere in the region who may be biding their time; this calls for vigilance against opportunistic terror but also the avoidance of overreaction. Genuine reconciliation will require a far-sighted strategy of taking everyone along by ensuring the region's development, more effective legal protection for Assam's indigenous people, and generous leeway over issues of land and resources. The early efforts at rehabilitating some 600 ULFA cadre in special camps known as "Nabanirman Kendras" augur well for the process — although the militants' refusal to turn in their weapons does pose a problem. The agenda for the talks between ULFA and the central and State governments needs to be worked out meticulously — with due weight given to the popular perception that persistent under-development in the face of the region's rich resources is the outcome of a policy of discrimination and facilitating exploitation by outsiders. The best chance yet for enduring peace in Assam must not be squandered.

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THE HINDU

EDITORIAL

THE SIXTH, IN FIVE YEARS

The first question about Prime Minister Yoshihiko Noda is: how long will he last? He is Japan's sixth Prime Minister in five years, and the third to assume the office since the historic victory of the Democratic Party of Japan in 2009. The promise of clean politics and good governance that came with the ousting of the Liberal Democratic Party — and with it a sleazy back-room style of functioning — appears to have all but faded from public memory. Instead, there is the uncertain economy, sharpened by the world's recession woes. Japan is burdened by a public debt of 225 per cent of the gross domestic product, high social security and pension costs due to an ageing population, and a shrinking work force. A strong yen threatens to hit exports. On top of it all, there is the daunting task of the nuclear clean-up and rebuilding after the devastating March 11 earthquake and tsunami. Prime Minister Noda's predecessor, Naoto Kan, had to step down following searing criticism of his handling of the disaster and the accompanying catastrophe at the Fukushima nuclear plant. Not surprisingly, the DPJ fared poorly in the April local elections. Mr. Kan survived a no-confidence vote in June, but promised to quit after seeing three pieces of legislation through the Diet in August.

Mr. Noda held the finance portfolio in the Kan cabinet, and advocated a tax hike to meet Japan's post-disaster public spending — a move opposed by his own party. One of the biggest challenges facing him is the task of playing the conciliator between the bitterly opposed factions within the DPJ. His election as Prime Minister showed how deep factionalism runs — Mr. Noda had to wrestle four other candidates off the mat, and he won only in a second round run-off. The DPJ's woes are compounded by the opposition LDP's control over the upper house of parliament, from where it has opposed all government policies. Prime Minister Noda has emphasised Japan's relations with the United States as "its greatest asset," signalling his intention to strengthen the ties. The two previous Prime Ministers walked a tightrope between the perceived Japanese need for the U.S. as a guarantor of regional peace, and the growing desire to cut dependence on the superpower and improve ties with China and other regional neighbours. As for Tokyo's reservations about a civilian nuclear deal with New Delhi, these could have only got strengthened. Post-Fukushima, the Japanese want to reduce their dependence on nuclear energy. The new man in the job has to prove himself on many fronts before the next elections, due in 2013. That is, if he lasts until then.

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THE HINDU

PEACEKEEPERS' SEX SCANDALS LINGER

NEIL MACFARQUHAR

On screen, two senior U.N. officials in Bosnia are arguing about firing Kathy Bolkovac, an American police officer battling to stop peacekeepers from both trafficking in young women and frequenting the brothels where they became indentured prostitutes.

"It is a point of honour for me that the U.N. is not remembered for raping the very people we must protect," says Madeleine Rees, a spirited human rights advocate played by Vanessa Redgrave.

"Those girls are whores of war," growls the male bureaucrat heading the U.N. mission. "It happens; I will not dictate for morality."

Ms Rees, the director of the human rights office in Sarajevo from 1998 to 2006, said that dispute in the movie The Whistleblower , recently released in the U.S., was lifted almost verbatim from a running argument she had around 2001.

A decade later, a string of sex scandals from Bosnia to the Democratic Republic of Congo to Haiti involving peacekeeping missions has forced the U.N. to change the way it handles accusations of trafficking, rape and related crimes. But the issue still bedevils the institution — a point underscored by the skirmishing among senior U.N. officials over whether to embrace the movie or try to ignore it.

The issue has certainly not gone away. This week, hundreds of Haitians protested in support of an 18-year-old who said he was sexually assaulted by peacekeepers from Uruguay on a U.N. base, eliciting a furious rebuke from Haiti's President and an apology from Uruguay.

The U.N. has focused serious attention on addressing sexual crimes among the more than 120,000 personnel it has deployed in 16 peacekeeping missions globally, including widespread training. But the question that diplomats, advocates and even some U.N. officials ask is why the efforts still lag in terms of investigating accusations and, most important, making sure those who send troops and contractors abroad hold them accountable.

Human rights experts and some member states fault the U.N. for leaving too much of the job of enforcing its "zero tolerance" policy announced in 2003 to the countries contributing troops. Individual cases and any disciplinary action are rarely made public.

"They never come up with actual facts; they never come up with actual cases," Ms Bolkovac said.

U.N. officials brandish the statistics published on the organisation's peacekeeping website as evidence of transparency. The numbers, the source of which is somewhat vague, indicate that cases dropped from 108 substantiated accusations of sexual exploitation and abuse in 2007 to 85 in 2008, then to 63 in 2009, 33 last year and just five so far in 2011.

But more than 200 such accusations remain unresolved, and the U.N. annual report on such crimes for 2010 noted that sexual activity with minors and non-consensual sex represented more than half of reported accusations little changed since 2008. Cases have come to light where peacekeepers paid children $1 or with candy to make a rape seem like prostitution.

Activists and some diplomats condemn the U.N. as timid, with internal policing particularly weak under Secretary-General Ban Ki-moon. Mr. Ban waged an extended feud over hiring with the head of internal oversight before she left in 2010, leaving dozens of investigator jobs empty. Senior officials admit that its investigators have the mandate to do more to track sexual abuse cases.

The U.N. pays $1,024 a month per soldier, making peacekeeping a profitable venture for many poorer nations. In June, member states voted themselves a roughly $100 bonus per soldier per month for the coming year. The U.N. lost an opportunity by not hinging the bonuses on better cooperation, advocates contend.

"Member states are not reliable enough to do a good job on their own, especially in the early stages of a military investigation," said Prince Zeid Raad Zeid al-Hussein, the Jordanian ambassador and the author of a damning study of sexual exploitation in peacekeeping in 2005 as special adviser on the issue under the previous Secretary-General. Mr. Ban never filled the post.

Member states rejected the study's recommendations to establish a coordinated, nimble investigation and discipline process. Soldiers serving the U.N. are subject to their own countries' military justice. The only wrist slap often faced by contractors is being sent home, because they enjoy immunity as U.N. employees.

Soldiers linked to crimes are often repatriated. In April, 16 peacekeepers from Benin were sent home from Ivory Coast more than a year after Save the Children U.K. found that the soldiers traded food for sex with poor, underage girls. More than 100 troops from Sri Lanka were sent home from Haiti in 2007 because of widespread accusations of sex with minors.

In many cases, however, the final outcome remains a mystery.

"The U.N. is not even a player in the investigation, doesn't know the evidence and has no way to follow up with the way the military decides to deal with this issue," Mr. Zeid said. "We, the member states, have by and large failed to do what I had hoped we would do."

The U.S. State Department's 2010 report on human trafficking criticised the U.N., saying, "No comprehensive information is available on the number of cases of disciplinary action."

A leaked memo from the U.N. human rights office in New York reflected the divisions over openness. In a lengthy discussion about how to address The Whistleblower , Kiyotaka Akasaka, the head of public information, and Patricia O'Brien, the top lawyer, argued for playing down the movie and certainly not screening it at the U.N. headquarters, the memo said. But the executive director of the newly created agency U.N. Women, Michelle Bachelet, the former President of Chile, argued for a more open approach, it said, along with several others.

Mr. Ban wrote to the film's director, Larysa Kondracki, saying he had watched the movie with his senior advisers and was "pained" by it. "Your film points to one area where our work left questions behind," he said.

A public screening will be held at the U.N. soon, he told her. — New York Times News Service

The episodes have changed the way the U.N. handles accusations of trafficking and rape, but the issue still bedevils the institution.

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THE HINDU

MISSILES MISSING FROM LIBYAN STOCKPILE

C.J. CHIVERS & ROD NORDLAND

The sign on the wall reads "Schoolbook Printing and Storage Warehouse," but the fact that the double gates in the wall have been crudely ripped off suggests that something more interesting might be inside.

It turns out that the only books to be found in any of the three large buildings in the walled compound are manuals how to fire rocket launchers and wire-guided missiles, among others. The buildings are actually disguised warehouses full of munitions mortar shells, artillery rounds, antitank missiles and more — thousands of pieces of military ordnance that are completely unguarded more than two weeks after the fall of the capital.

Perhaps most interesting of all is what is no longer there, but until recent days apparently was: shoulder-fired heat-seeking missiles of the type that could be used by terrorists to shoot down civilian airliners. U.S. authorities have long been concerned that Libyan missiles could easily find their way onto the black market.

These missiles, mostly SA-7b Grails, as NATO refers to them, have been spotted in Libya before and are well known to have been sold to the government of Muammar Qadhafi by former Eastern bloc countries. The evidence at the schoolbook warehouse confirms just how large those quantities were. It also raises questions about how many of them may have been purloined by rebels, criminals or smugglers.

In Washington, President Barack Obama's top counterterrorism official, John O. Brennan, said that the spread of shoulder-fired missiles and other weapons from Libya's arsenal posed "a lot of concerns," and that the United States had pressed the rebel government to secure weapons stockpiles.

A senior U.S. military officer who follows Libya closely said it was puzzling that there had been so few documented instances in which Libyan loyalist troops launched shoulder-fired missiles at NATO aircraft.

"I'm not sure what that means," the officer said. "Fewer systems than we thought? Systems are inoperable? Few in Libya know how to operate them?"

The officer said it was also unclear whether the al-Qaeda or other extremist groups had acquired the missiles, although he said intelligence analysts were assuming they had.

"But if they do, why haven't they used or threatened to use?" the officer said. "It's all very murky right now."

Wednesday, a reporter for The New York Times as well as a researcher for Human Rights Watch and other reporters who visited the scene found 10 crates that had held two missiles each lying opened and empty. The crates were clearly labelled as coming from Russia.

"Other countries know these weapons are on the loose, and they will be trying to get their hands on them," said a researcher for Human Rights Watch, Peter Bouckaert.

He was particularly concerned with one crate, labelled "9M342," the Russian designation for the SA-24 heat-seeking missile.

"These were some of the most advanced weaponry the Russians made," Mr. Bouckaert said. Referring to the former rebels who have taken control of Tripoli and to the international community, he added, "They need to get people here to secure some of this."

The SA-24 can be mounted on vehicle-based launchers or fired from a person's shoulder via a much smaller launcher known as a grip stock. The latter configuration, of the same class of weapon as the U.S.-made Stinger, is considered the gravest potential danger to civilian aircraft because the weapon is readily portable and relatively simple to conceal and use.

No grip stocks for SA-24s have yet been found in Libya, and the Russian manufacturer of the SA-24 has previously said that it did not sell any grip stocks to Qadhafi's military. The SA-24s, it said, were sold only with vehicle-mounted launchers. The SA-7, however, is a shoulder-fired missile. A Soviet-era weapon dating to the 1960s that remains in wide use and circulation, it has been implicated in several attacks on airliners over the years, including a failed attack on an Israeli charter plane

Former Eastern bloc nations call it Strela, for the Russian word for arrow. Nine of the freshly emptied crates found Wednesday were marked with the Eastern bloc designation for the Strela: 9M32M.

Libyan rebels have occasionally been spotted carrying SA-7s, although the weapon has no evident practical use to them, given that the Qadhafi air force was grounded by NATO months ago and that the only military aircraft confirmed in the Libyan skies have been the NATO planes supporting the rebels' advances.

— New York Times News Service

Including shoulder-fired heat-seeking missiles that could be used by terrorists to shoot down civilian airliners.

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THE HINDU

WORKING TOWARDS A GREENER INDIA

THOMAS MATUSSEK

The world's largest solar photovoltaic plant will start delivering up to 125 megawatt (MW) of clean, sustainable solar energy in Maharashtra in March 2012. Germany is proud to play a role in this important project by supporting the financial investment. Only recently, Germany's state-owned KfW Development Bank and India's Ministry of Finance signed a reduced-interest loan of €250 million for the construction of this solar plant at Shivajinagar, Sakri.

This is just one example of the flourishing Indo-German partnership in the energy sector, aiming to strengthen energy efficiency and the use of renewable energies. The objective is to develop an Indian energy system that is sustainable not only in economic but also in ecological terms.

Energy is a priority issue for India. Currently, the power situation in India is one of the major bottlenecks in its growth story. Even though India's total installed power capacity rose to 170 gigawatt (GW) by December 2010, the challenges lying ahead are critical. About 400 million people are still without a power connection. According to a rough estimate, the total demand for electricity in India is expected to cross 950 GW by 2030.

This is a huge challenge, especially against the backdrop of climate change. In absolute terms, India has already become one of the largest emitters of greenhouse gases in the world. Between 1994 and 2007 its annual greenhouse gas emissions increased by 58 per cent as an effect of rapid economic growth, higher industrial activity and consequent increase in energy production, consumption and transportation.

However, throughout its history, India has shown that it is able to deal with challenging situations. Likewise, one can sense a strong political will in India today to reduce the ecological costs of economic growth; for e.g., by employing a low-carbon strategy. Important steps in this direction have already been taken. In June 2008, India launched the National Action Plan for Climate Change (NAPCC), which envisions creating a self-sustaining economy. Under the NAPCC, India has outlined present and future policies to control the growth of emissions in eight different sectors. In the framework of the Jawaharlal Nehru National Solar Mission, it has set an ambitious goal of achieving 20 GW of solar capacity by 2022.

India offers a conducive atmosphere for the growth and application of renewable energies. When utilised in the right manner and with the right technology, India can become a world leader in the field of renewable energy. For example, most parts of India have 300 to 330 sunny days in a year, which is equivalent to over 5,000 trillion kilowatt hour (kWh) per year — much more than India's total energy consumption per year.

India is also endowed with a large, viable and economically exploitable wind power potential. By June 2009, a wind power capacity of 10,386 MW had been established in India, making it the fifth largest wind power producer in the world. India's hydro power potential is estimated to be 150,000 MW, the current installed capacity being 35,000 MW. Thus there are many opportunities and Germany is happy to be one of India's main partners in harnessing renewable energies and moving towards a greener future.

Our expertise and technological edge can help India tap its vast resources efficiently and competitively. Consider this: Germany is a world leader in renewable energy. Currently, Germany produces 17 per cent of its electricity by using renewable resources. Out of its total production of 600 billion kWh in 2010, wind turbines, hydroelectric plants, solar cells and biogas digesters together contributed 100 billion kWh and this is set to grow. With our new energy policy in place, we are looking at achieving 35 per cent production from renewable energies by 2020, expanding this sector even further.

Some of Germany's companies with interest in renewables have already made their way to India or are taking this step. Largest among them is perhaps Siemens, which is planning the production of 2.3-MW wind turbines in Gujarat by 2013. Also among them is Juwi, a well-known German developer, who set up shop in Bangalore in 2010 to serve the Indian market in developing solar power plants. Also, the world's largest solar fair — the Intersolar fair in Munich — already has an Indian sister, the yearly Intersolar India, which will be held for the third time this December in Mumbai.

Given India's needs and Germany's expertise, it is then no surprise that energy is a top priority in Indo-German economic cooperation. In 2010 the German government committed about €330 million exclusively for energy efficiency and renewables.

To give just a few examples of our ongoing cooperation — We promote investments in renewable energy by providing sustainable financing through the Indian Renewable Energy Development Agency (IREDA). Through KfW, we have committed credit lines to primarily finance project types that are relatively new in India in terms of technology, institutional set-up or financing structure. In Anta, Rajasthan, we are involved in financing a 15-MW concentrated solar thermal power station in collaboration with the National Thermal Power Corporation (NTPC).

As important as our financial cooperation is the technical cooperation (TC) through our implementing agency, GIZ. As a special component under the Indo-German Energy Programme (IGEN), a coordination office with German and Indian experts has been set up on the premises of India's Ministry of New and Renewable Energy in New Delhi to foster TC activities in renewable energy.

Over and above this, there are a number of other projects addressing various issues in the field of renewable energy. For example, the GIZ project 'Solar Mapping and Monitoring' aims at mapping India's potential for solar power generation with precise on-the-ground-data, rather than the rough satellite data available so far, and thus further the production of renewable energies. Through COMSolar (Commercialisation of solar energy), we are focusing on developing partnerships with private companies in order to promote commercialisation of solar energy in the urban and industrial sectors. The project implementation partner, GIZ, also organises training programmes, including seminars, study trips and special courses for capacity building and enhancing local expertise in the relevant field.

Since 2009, Germany and India have been organising a 'Carbon Bazaar' every year. This event provides a platform for entrepreneurs to establish direct contact with various stakeholders in the energy sector, with the sole purpose of reducing the carbon footprint of economic activities.

Last but not the least, the Indo-German Energy Forum, established by Chancellor Angela Merkel and Prime Minister Manmohan Singh in 2006, focuses on promoting cooperation in energy security, energy efficiency, renewable energy, investment in energy projects, and collaborative research and development in the energy sector. This has proved to be an important tool in our bilateral relationship.

Germany considers India a key partner. A combination of India's positive outlook on renewable energy and Germany's expertise and technology will help us in achieving a sustainable, climate friendly energy mix of the future.

(Thomas Matussek is Germany's

Ambassador to India.)

The country has much to gain by joining hands with Germany in expanding the renewable energy sector.

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THE HINDU

CULTURE WARS OVER LONDON RIOTS

HASAN SUROOR

An American-style culture war has broken out among British academics and opinion-makers over the underlying causes of the recent riots in London and other cities. While the political class, despite attempting to sound "different," is broadly on the same sheet, the intellectuals are deeply divided with those on the Right suggesting that there was a racial dimension to Britain's worst street violence since the 1980s because most of the rioters came from a particular ethnic group.

Some have blamed elements of Afro-Caribbean culture such as rap music for contributing to a streak of violence and "nihilism" among black youth. A "collapse of family values" and a "lack of work ethic" are some of the other factors cited by right-wing commentators for "restlessness" among the young of Afro-Caribbean descent.

Those on the Left reject this racial stereotyping of a whole community arguing that many of these problems are also prevalent among other groups, including white working class families. Instead of looking for glib explanations in race and ethnicity the debate should be about "difficult" social and economic issues — racial discrimination and a neglect of inner-city working class communities — facing Britain's black community.

Both sides acknowledge that there is a dearth of enough role models for black youth to look up to and this has resulted in a lack of aspiration among them. But they differ on why there is such a scarcity of high-profile public figures of Afro-Caribbean origin. The Right puts it down to an "inherent aspiration-deficit" among blacks while the liberal view is that it is a lack of opportunities — a "racial glass ceiling" that prevents black people from getting a break in the first place; and, even if they do, hinders further progress up the professional ladder. They are grossly under-represented in nearly every area of public life from politics to media, academia, and arts and culture.

The most controversial intervention on the Right came from historian and broadcaster, David Starkey, a colourful figure and a favourite of television producers. His attempt to import race into the debate has been likened to the behaviour of a "blustering old fogey" gatecrashing into a party where until he arrived everyone has been at their best etiquette.

Before Dr. Starkey's provocative intervention, the causes of the August riots had been discussed in the context of social and economic deprivation in the Afro-Caribbean community, with even the Tories avoiding a direct reference to race. Prime Minister David Cameron, who has been attacked for some of his shrill post-riots rhetoric, was careful not to be seen to be singling out and "criminalising" an entire community for the actions of a few. Suddenly, Dr Starkey popped up on the BBC to launch an attack on "a violent, destructive and nihilistic" black culture. The contagion, he warned, was spreading with members of the white working class embracing this culture.

"The whites have become black," he declared with his trademark dramatic flourish.

In what one critic dubbed his "career-ending moment," the former Cambridge academic approvingly quoted the late Tory politician Enoch Powell's 1968 speech warning that unchecked immigration would unleash "rivers of blood" in Britain. He said he had reread the speech in the light of the riots and found that Powell had been "absolutely right."

"His prophecy was absolutely right in one sense. The Tiber didn't foam with blood but flames lambent. They wrapped around Tottenham and around Clapham," he said. Gesturing towards his co-panelist Owen Jones, author of Chavs: the Demonisation of the Working Classes , he said: "What has happened is that a substantial section of the chavs that you wrote about have become black."

"The whites have become black. A particular sort of violent, destructive, nihilistic, gangster culture has become the fashion. And black and white, boy and girl, operate in this language together, this language which is wholly false, which is this Jamaican patois that's been intruded in England, and this is why so many of us have this sense of literally a foreign country," he said.

Undeterred by Mr. Jones's protest that he was "equating black culture with criminality and anti-social behaviour," Dr. Starkey went on to argue that "an archetypal successful black man" was more likely to sound like a white person. Referring to the Afro-Caribbean Labour MP for Tottenham, David Lammy, he said: "Listen to David Lammy, an archetypal successful black man. If you turn the screen off so that you are listening to him on radio you would think he was white."

Well-known black writer and education adviser Dreda Sally Mitchell, a guest on the programme, told him to "stop talking about them and us."

"You keep talking David about black culture. Black communities are not homogenous. So there are black cultures. Lots of different black cultures. What we need to be doing is ... thinking about ourselves not as individual communities ... as one community. We need to stop talking about them and us."

The big backlash, however, came from his own professional community. More than 100 academics and graduate students signed an open letter in The Times Higher Education Magazine denouncing his comments as "evidentially insupportable and factually wrong." Dr. Starkey was guilty of "crass generalisations about black culture and white culture as oppositional, monolithic entities" and his remarks demonstrated a failure "to grasp the subtleties of race and class that would disgrace a first-year history undergraduate."

At the street level and in the media, some of the reaction to Dr. Starkey's outburst shows that old racial prejudices still lurk under the veneer of multiculturalism and Britain remains a deeply divided society in its attitude to race. There is no dearth of those who believe that he spoke for them and said what they couldn't for fear of being labelled as racist.

Writing in the Sunday Telegraph , writer and broadcaster James Delingpole claimed that Dr. Starkey's argument was "indisputable."

"Listen to how many white kids (and Asian kids) choose to speak in black street patois; note the extent to which hip hop and grime garage and their offshoots have penetrated the white mainstream; check out how many white kids like to roll …with their Calvins pulled up to their midriffs and their jean waistbands sagging …," he wrote.

Not done yet, Mr. Delingpole concluded: "To pillory a man for pointing out such a glaringly obvious cultural fact just because he's white and Right-wing would have been quite wrong even before the riots. Post riots it is positively obscene."

Outside the more doctrinaire Left-Right divide, there's the view that too many sensitivities around issues such as race, religions and immigration often hinder a rational debate on genuine problems of ethnic groups. Dr. Starkey's views may have been distasteful but in a free and open society there should be no "no-go" areas or "forbidden" territories. The Economist pointed out that the "density" of rioters from one ethnic group suggested that "the race played some part even if few politicians are keen to contemplate it."

"Just what that role was is a matter of great concern to thoughtful black Britons."

Libby Purves, a respected cultural commentator, wrote that Dr. Starkey's comments were, no doubt, "clumsy," but "it would be a pity if his detractors, in their stumbling panic to announce their own non-racism, closed down all discussion of the animating lawless rhetoric of top rappers."

Free speech campaigners such as John Kampfner, chief executive of Index on Censorship, complained that Britons were "too easily offended" and called for greater tolerance of "contrarian" viewpoints.

"At the risk of sounding old-fashioned, I suggest we dust off a phrase that probably hasn't seen the light of day since the 1950s: 'I beg to differ.' That should suffice the next time someone sees Starkey talk about blacks on TV or reads (Jan) Moir (a right-wing journalist) in the Mail ," he wrote in The Independent .

The most charitable interpretation of Dr. Starkey's outburst came from the Booker-winner Howard Jacobson arguing that he was a victim of the "foolish vanity of a public intellectual." Given a chance to pontificate, he got carried away by his own vanity and the more he was challenged by his co-panelists the "more he blustered."

That, to some, sounded like giving too much benefit of the doubt to someone who has form on such matters.

While the political class is broadly on the same sheet, the intellectuals are deeply divided with those on the Right suggesting that there was a racial dimension.

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ASIAN AGE

GENERAL CONDUCT

S.K. SINHA

General V.K. Singh is an officer of high repute. I have interacted with him when he was a major general in Kashmir and have great regard for him. Documentary evidence of his date of birth fully supports his claim. Year after year the annual List issued by the military secretary's office for nearly three

decades and more and readily available to all officers, unlike the adjutant-general's Branch Record, showed the wrong date. No attempt to correct the date was made when he was a junior officer. Had this been done in the early years, the issue could have been easily resolved between the two branches by Army Headquarter. When it was raised after his attaining very senior rank, it got linked with the succession plan of the top leadership of the Army. Today the issue boils down to whether Gen. Singh as Chief will have a two- or three-year tenure.
In 1947, a committee of three senior secretaries in the Government of India — R.N. Banerjee, Vishnu Sahay and H.M. Patel — recommended that as in other ministries, the defence secretary should have a status higher than the three Service Chiefs, who were only departmental heads. In 1947-48, we still had British Service Chiefs. They took up the matter with Lord Louis Mountbatten, saying it was ridiculous to equate Service Chiefs with department heads. Being key players in ensuring national security, in all democracies they have the right of direct access to the Prime Minister or the head of the government. At the instance of Mountbatten, Jawaharlal Nehru decided that the Chiefs would have a status higher than the defence secretary. This continues to be so even now. In view of the exalted position of a Chief, a public controversy involving him is most unfortunate. For the first time, a Chief has filed a statutory complaint on a personal matter. This is being examined by the defence secretary and his staff to obtain the decision of the minister. This lowers the dignity of the high office, which must take precedence over personal interest.

We have had many eminent generals who have been Army Chiefs. Gen. Cariappa, the seniormost Indian officer, was expected to become the first Indian Chief in 1949. A hitch arose. He was perceived as being too friendly with officers of the undivided Indian Army serving in Pakistan. In early 1948, he attended the Lahore Horse Show at the invitation of Gen. Iftikar Ahmed. In those days a passport was not required for travel to Pakistan, nor was prior government approval. Gen. Raza, the adjutant-general of the Pakistan Army who had served under Cariappa for many years in the Rajput Regiment, came to Delhi in 1947 for a meeting on division of assets. He stayed with Cariappa. Col. Nasar Ali Khan was a havildar clerk in the early Thirties, working under Cariappa, then the adjutant of the Rajput Regimental Centre. He later became an officer and, in 1947, was the military adviser in the Pakistan high commission. He often met Cariappa. Gen. Rajendrasinhji Jadeja, the next senior officer, had a distinguished war record in North Africa. As Southern Army Commander, he conducted the Hyderabad operations. He was the brother of the Jam Saheb of Nawanagar. As Chancellor, Chamber of Princes, the latter had worked closely with Sardar Patel to integrate the Princely States with the Indian Union. There were rumours that Rajendrasinhji would be made Chief. He is reported to have met Nehru and told him that he would resign if appointed Chief by superseding Cariappa. That would set a wrong precedent and may lead to politicising the Army. Rajendrasinhji set a shining example. After Cariappa completed his term, he succeeded him. Cariappa was the right man at the right time. A strong disciplinarian with a high sense of values, he held the Army together at a critical time when all combat units had undergone a surgical operation in the wake of Partition and units were being commanded by Indian officers with only seven years' service. He had led the Army successfully during the one-year war in Kashmir.
Gen. Thimayya was a charismatic leader, a true soldiers' general. During the Second World War, he was the only Indian to command a brigade in battle. His combat record in command of a division in Kashmir was outstanding, particularly during the Battle of Zoji-la. As chairman of the Neutral Nation Commission in Korea, he had won international acclaim and added lustre to the office of the Army Chief. He fell out with defence minister V.K. Krishna Menon on a matter of principle and tendered his resignation. That shook the country. Nehru appealed to his patriotism and assured him he would resolve his problem with Krishna Menon. Gen. Thimayya withdrew his resignation. The next day Nehru castigated him in Parliament for immaturity. Despite that, he continued to serve as a lame duck Army Chief for the rest of his tenure. This did immense harm to his reputation, and to the Army. The bureaucratic stranglehold over the Army increased and the Army got increasingly marginalised in decision-making. This contributed to the humiliating debacle of 1962.
J.N. Chaudhri and Sam Manekshaw were brilliant generals who successfully led the Army in the 1965 and 1971 wars respectively. They had established personal equations with the then Prime Ministers, working directly with them during the wars. In my own case, after commanding the Western Army, I was posted to Delhi as vice-chief and officially told to understudy the Chief as I would be taking over from him shortly on his retirement. I was suddenly told one day that the government had decided to supersede me and appoint Gen. Vaidya as the Chief. I resigned. There was a furore in Parliament and in the press. Venkatraman, the then defence minister, told the press, "Both Gen. Sinha and Gen. Vaidya are good generals but the government has chosen to appoint Gen. Vaidya as Chief." He sent the defence PRO, Brig. Ram Mohan Rao, currently editor-in-chief of ANI, to me, desiring that I speak to the media. I told the press that "I do not question the decision of the government. I accept it. I have decided to fade away from the Army. Gen. Vaidya is a good friend of mine and an able general. I am confident that the Army will flourish under his leadership." I never thought of exercising the option of submitting a statutory complaint or going to court.

I have recounted the above vignettes in the earnest hope that the present unseemly controversy be given an instant burial. The dignity of the high office of the Chief must not be compromised.

The author, a retired lieutenant-general, was Vice-Chief of Army Staff and has served as governor of Assam and Jammu and Kashmir.

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ASIAN AGE

BEING SALMAN

SHIV VISVANATHAN

Bollywood is today ruled by a triumvirate of Khans. Each name summons an army of fans ready to debate the prowess of their particular hero. This essay is about Salman, the Khan who is different because he does not seek to be different.

Consider the other two first. Aamir Khan thinks he is decidedly intellectual, even political. His Rang De Basanti, Lagaan, 3 Idiots are all political statements. He is self-consciously intellectual and seeks a certain distance from Bollywood and its rituals, especially awards. He sees himself as part of the folklore of inspiration that triggered the Anna Hazare movement.
Shah Rukh Khan is thoughtful in a different way. There is reflexivity about his films, whether it is Om Shanti Om or My Name Is Khan. He avoids politics but can engage with courage, as when he told the Thackerays off. He has a sense of humour, is more playful about his status, ready to join quirky Fair and Handsome advertisements, which Aamir is too correct to do.
Being correct is not a problem for the third Khan. Salman Khan just is, the others strive to be. About the only thing he can manipulate are his muscles. He is a muscular presence if not a muscular intelligence, a combination of boy next door and noble savage. The sense of being boy next door makes him familiar, almost domestic presence. His ability to get into trouble with black bucks and women endears him. His mistakes make him human. The audience almost makes him feel that to err is divine.
There is nothing intellectual about Salman but he exudes an animal vitality which substitutes violence for foreplay. He can be crude, boisterous, corrupt, obscene, gambol like an animal and the audience loves it all.
The other two Khans make a dramatic entrance but Salman explodes and drives the crowds to ecstasy. His relation to heroines is predictably simple; their conversation is brief and more in the form of signals. He speaks through his body, language almost becomes secondary. His sense of plot is simple. He reacts and a sequence of his reflexes constitutes the movie. Nuance eludes him.
If the plot is tricky he is the first casualty. In Bodyguard, he marries the wrong girl and still looks immovably the same. The other two Khans would not be caught in such a situation, except as a pretext for some comedy. The expectations are different. One expects high drama from the other two. With Salman, it is the lowest common denominator. He is low brow and loveable. When he enters the room the average IQ falls by a hundred, but the fun quotient increases a hundred-fold.
He is marked by two kinds of events. First is violence; he exudes it like breathing. Problem solving is not an intellectual act but a narrative involving guns and fists. For Salman, the shortest distance between two points is a bullet or a blow. Yet there is nothing wicked or sinister about him. He is simple and his simplicity is sheer joy. He flexes his muscles like a toy. It is him. Yet what mellows his violence is the sense of comedy, of playfulness. The jokes are simple, even crude, but he maintains values of duty and patriarchy.
Beyond violence, what marks him is his body. His body is his brand name. For Shah Rukh a six-pack body was a later addition, an add-on. For Salman, his body is him. There cannot be a movie of his where he does not discard his shirt to make a point. While others might delight in the sharp repartee or a rapier like wit, Salman displays his muscles with equal effect. His message is simple, almost endearing: love me, love my muscles. It is his being and his becoming.
Salman's recent movies are an interesting bundle. Dabangg excited not merely for its cameo dances. It was Bollywood imitating a Bhojpuri film, tired of its own convolutions. It celebrates language at the lowest level. Ready is time pass, but what beautiful time pass. Bodyguard is even simpler, it has almost no pretensions of a plot until the last five
minutes. It is a collage
of dance and fights
alternating at animal speed. There is Salman and nothing else. It is what I call the first "mass movie".
Earlier, Bollywood was a part of popular culture but with a large amount of folk and myth in it. Bodyguard is the first mass movie. It needs no geneology. It does not have to refer back. It is utterly literal.
Salman is the first mass hero of the Hindi screen. He is his own mythology. He needs no other referent, no other presence. His machismo is self-explanatory. He is populist, he has to be the one with the maximum following. Hunger, love, hate, loyalty are not ideas but mere reflexes. One does not have to think, just react.
Often his personal life, his inability to retain girlfriends, his encounters with the law are cited as obstacles to his career. They appear to make him complex and add a sense of mystique and excitement. For the public, the myth of the man is adequate. He will always be the critics' despair and the audiences' delight. One guarantees the other when he enters. We admire a man without inhibitions. He has no inside. He cannot play Hamlet. The warm-hearted hulk is all he is and as far as the audience is concerned that is all he needs to be — Dhinka chika dhinka chika till the coffers keep filling.

Shiv Visvanathan is a social science nomad

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ASIAN AGE

GOOD BEGINNING MADE IN DHAKA

The agreements reached during the just-ended two-day visit of Prime Minister Manmohan Singh to Bangladesh, and the overall sentiment regarding Indian intentions that Dr Singh left behind, provide both sides the base for setting up a scaffolding of good-neighbourly relations in a subcontinent riven by

suspicion, hostility, political instability, and economic uncertainties in spite of India, and Bangladesh, being on a reasonably secure wicket in this regard.
Too much of India's time has been taken up in recent decades in reassuring Pakistan and simultaneously contesting its revanchism, calming Nepal's nerves over big-brother bossism, and coping with China's clever games aimed at confining India to the region between the Himalayas and the Indian Ocean; way too little in cementing ties with our eastern neighbour in whose struggle for independence there was a place for India. Indeed, Bangladesh becoming a free country did not especially lead to the easing of ties and the lessening of worries. The old problems remained — settling the land boundary, offering a fair settlement of river waters to a lower riparian when some 50 common rivers have to be reckoned with, devising transportation and transit links that will foster people-to-people contact, concretely assisting through tariff assistance Bangladesh's textiles that happily go all over the world.
The inability to find the right formulae to match the mood in Dhaka bred anxiety and suspicion. This state of affairs was made worse by the rise in sectarian temperatures and extremist constituencies in Bangladesh from time to time, impinging on India's legitimate security concerns. The Prime Minister's visit has laid the ground to put the old fears behind us in significant ways, taking advantage of relative political and economic stability in that country, and a desire in India to build constructive relations with a neighbour with whom ties can be expanded to cover a wider regional configuration, or even going beyond the region into Southeast Asia.
The time has arrived to build on what has just been achieved, thanks to the maturity of leadership and temperament shown by both sides. But this will require a further show of two-way perseverance and checkmating of bureaucratic ineptness. But most of all, it needs to be remembered that the Teesta waters issue must be revisited at the earliest. A prepared agreement was jettisoned on account of last-minute objections by West Bengal chief minister Mamata Banerjee that were not explicated. The ground is required to be recovered without ado. New Delhi has to re-connect with Kolkata and then move to Dhaka to complete the circle of agreements that can launch a relationship of value. If we succeed, we may provide the psychological opening to settle nagging issues with other neighbours.

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DAILY EXCELSIOR

EDITORIAL

ANOTHER BLAST

 

On Wednesday, Delhi met with anther terrorist bomb blast, this time again outside the Delhi High Court at Gate Number 5. Eleven persons have been killed and 76 wounded some grievously, in an RDX blast put in a suitcase. This is the 19th attack of the terrorists in Delhi during past 15 years. Home Minister said in the Parliament that Delhi had become a target of the terrorists. In May last, an explosion had occurred almost around the same place following which the Delhi police claimed it had obtained some clues about the culprits. But the Government never disclosed who the culprits were, to which organization they belonged and whether they were prosecuted formally or not. However, the Congress spokesperson Digvijay Singh had quipped at that time his usual rhetoric that he did not rule out the hand of Hindu extremists behind the explosion. No Congress leader or the Government contradicted him. But according to an email received by two TV Channels, the Harakatu'l-Jihad-e Islami has owned the responsibility of Wednesday's blast.
Many questions are asked about the explosion. After May explosion, the security authorities had said that more CCTVs would be installed at the High Court premises as it was a very sensitive place. But this remained on paper or on the lips of authorities. The security apparatus like hand screen etc. at the gate is reported to be dysfunctional. The entire security performance at the sensitive place is reported to be of lackadaisical nature without any semblance of seriousness in performing the duty assigned to security personnel. The day of explosion, meaning Wednesday was specifically chosen to make the blast because this is the day fixed by Delhi High Court for admission of PIL application and hence a large number of people would be exposed to the fatal explosion. This is precisely what happened.
The Wednesday explosion is a message to the Government that consequences of hanging Afzal Guru can be much more disastrous than what it might imagine. Sending a message through exploding RDX is a classical method of terrorist to terrorize a democratic state. This is the result of half-hearted handling of terrorist cases in this country; this is the result of dragging on the justice in cases of acute criminality. We have now the Tamilnadu assembly asking for amnesty to the killers of Rajiv Gandhi and J&K Government almost asking same thing in the case of Afzal Guru. Trying to draw political mileage out of terrorism and criminality is what helps terror spread its tentacles deep in this country. We have never heard of the punishment given to any of the indicted persons in 19 cases of bomb blasts in Delhi during past 15 years even if the court verdict holds them responsible for terrorist act.
This is not the way how our country can counter terrorist attacks on civilians and soft targets. A vacillating Government is no answer to determined terrorism. An elected government is answerable to the people and if the security of the people is left to intentional jeopardy, the Government loses the right to govern. Ouster of the Home Minister or any other senior functionary in security chapters on account of this or that terrorist attack is a meaningless exercise. Government should not focus on persons but on institutions. The institution of vote bank is the greatest threat to the very survival of our democracy because it is the biggest hindrance to the Government in dispensing quick justice. For ensuring their vote banks, political parties can go to any length of compromising with any and all including elements patently inimical to the state. That is what has been reported in the matter of Naxalism and Maoism. The Government has to make introspection because the cancer is spreading in ranks within. After every terrorist blast, the Home Minster and others concerned with security arrangements make bold speeches of upgrading security measures, inducting more sophisticated weaponry and communication system in police and things like that. No leader, much less the Prime Minister or the Home Minister speaks of reforming our political culture, breaking vote-bank jinx, universalizing secularism by suppressing reservation concept, sensitizing the nation to the dangers of compromising and national security. How can the state control terrorism when the ruling coalition loses no time in projecting the opposition as the bastion of communalism? This is a divisive strategy and the result is self evident, terrorist attacks, sabotage, disruption of law and order and destabilization of the state.

 

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DAILY EXCELSIOR

EDITORIAL

BROADENING RELATIONSHIP

 

Universities in modern times are not just study and research institutions but something more than that. They are required to widen the vision of youth community by interacting with like-minded counterparts all over the world with the view of universalizing human relationship and values. The recently organized interactive session on "Indo-US Cultural Relations" by the Business School (TBS) and the Department of Political Science of Jammu University at TBS Conference Hall, with the American Centre, New Delhi, is a manifestation of the new vision. Usually we are under an impression that foreign missions in our country or our missions in foreign countries are supposed to work only within the boundaries of politics and diplomacy. The world of art, culture, economy, human relationship etc. are not projected as the realms of equal if not of more importance to the nations of the world. In regard to Indo-US relations, the foremost important aspect is of two biggest democracies of the world trying to accommodate views and aspirations of a multi-cultural, multi-ethnic and multi-religious society. This is a great experiment in inter-societal relationship aimed at raising human life to higher levels through viable peaceful means. Once, a sadist said in lighter mood that "the US has no past and India has no future." This perverted thinking did persist for some time with certain circles, but what is obtaining now falsifies all derogatory cliché like these. India and the US have voluntarily taken upon themselves the task of exemplifying the positive and constructive vision of the future of mankind. Jammu University has made a small but commendable contribution in its own way to that end.

 

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DAILY EXCELSIOR

EDITORIAL

DELHI BELLY IS SHAKEN

BY SUDHANSU R DAS

 

Fresh terrror attack on India's political capital after a gap of three months has shaken the country again. Everything was fine in the morning and people still had the festival hang up. Suddenly, the high intensity bomb tore apart the morning calm of Delhi and took nine innocent lives and injured 47 innocent people in front of the gate No.5 of the Delhi High court at 10.14 AM. TV journalists leaped into action as they repeatedly said the Delhi police was informed about the terror attack and there was also intelligence input supplied well in advance. The media had promptly reported people have reported to police.about the abandoned bag well in advance. The question is whether the life of innocent people in Delhi are in safe hand. It is not known whether such negligence is due to sheer inefficiency, lethargy or fatigue. A few weeks back terrorist attack on India's financial capital Mumbai took 21 lives, injured 141 people and left behind many orphans, widows and helpless people.
India cannot percolate its growth benefit unless it nips terrorism in the bud. It is not only the loss of lives and livelihood but terrorism has created huge trust deficit in the society. For a developing nation like India the cost of security checks, man power and loss of productivity hours is too much a burden on this country. US long war against terrorism is one of the reasons for its economic slowdown which causes ripples in other economies also. Though there has been no authentic survey to estimate the damage due to terrorism across India, the loss will run into billions of dollar if we take into account the damage to economic assets, relief and rehabilitation packages, various forms of compensations, death of elite security personnel, cost of deployment of forces, huge productivity loss, burden of orphans and widows on families, loss due to closure of small business, damage to property, loss due to bandh, migration of people, cost of acquisition of sophisticated anti terrorist weapons and upgradation of surveillance technology etc. Mr V K Saraswat, the Scientific Advisor to the Defense Minister reportedly said India should include unmanned battle field, single command center, unmanned ground aerial and underwater vehicles, unmanned tank and gun mounted robots, high powered laser, microwaves, particle beams and anti satellite weapons. All these futuristic weapons will not hide India's inability to collect grass root level human intelligence on terrorist network across the country. In a span of five years from August 2003 to November 2008 more than 21 terrorist attacks in India took nearly 2000 lives and injured three times more than the number of death. The terror attacks on India's fiancial capital was meticulously planned in Pakistan to damage India's financial capital which fetches 40% of foreign trade, collects 60% of custom duty, 40% of income tax, 20% of central excise and generates $ 10 billion corporate tax. Terror attacks on Mumbai has already triggered migration of Mumbai residents to nearby Pune, Nashik, Solapur and Kolhapur cities.
Similarly, maoist violence has affected lives and livelihood in 182 out of India's 626 districts. The productivity loss in those districts is huge as violence affects small economic activities, tourism, trade, banking, academic session, infrastructure and collection of minor forest products etc. Over the years maoist leaders have successfully channeled the tribal reaction to poor governance and corruption in back ward districts into violent guerrilla activities. The maoist leaders can also offer an alternate economic model for tribal development and win election with the support of the tribal. Bihar Chief Minister who is known for his anti hero image has made visible change in his state. He has attached palatial mansions of corrupt officials and converted them into schools and nurshing homes. Orissa's bachelor Chief Minister Naveen Pattnaik follwed suit by attaching buildings of one corrupt official recently. There are so many buglows which can be attached for development of schools and hospitals. If politicians undergo a transformation from bad to good they can do wonder because a nail can easily remove a nail. In order to consolidate the gain from economic growth, the Union government has to strengthen its internal security. The first step should be to dismantle the present recruitment procedure and evolve some new mechanism to pick up quality people on the basis of merit only. Safety of the innocent citizens should get the priority over religion, caste and language.

 

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DAILY EXCELSIOR

EDITORIAL

TACKLING BLACK MONEY

BY JOGINDER SINGH

 

A young politician, from Andhra, who was hoping, to become the Chief Minister of Andhra Pradesh, to succeed his late father, has been ordered to be investigated for his assets by Andhra Pradesh High Court by the CBI for allegedly amassing of huge wealth and money laundering Delivering its verdict on the writ petitions filed by Congress minister P Shankar Rao and TDP leader K Yerrannaidu, the Andhra Pradesh High court said financial misdeeds involved huge government largesse and corporate dealings including huge investments as part of the quid pro quo arrangement for the largesse and benefit received by the investors from the state government. Rao alleged that Jagan's income which was only Rs.11 lakh in March 2004, had now gone up to Rs.43,000 crore.
It directed the CBI to register a case under various sections of the Indian Penal Code, Prevention of Corruption Act and Prevention of Money Laundering Act. It gave liberty to CBI to bring under the scanner even those who are not a party to this writ petition, thus enabling the the CBI a free hand to probe the alleged role played by public servants and bureaucrats as well in this quid pro quo arrangement.
From May 2004 onwards, Jagan floated a number of companies "wherein quid pro quo investments have been made out of the benefits received by the investors/beneficiaries from the decisions of the state government in various forms like SEZs, irrigation contracts, relaxation/permission for real estate ventures, mines etc, besides payment of huge premium amounts in the shares and invested in the companies by such beneficiaries.," the order said.
The Bench held that "the money so paid is nothing but corrupt money attracting Section 3 of the Prevention of Money Laundering Act, 2002. The investigation by the income tax authorities with respect to assessment orders of Jagathi Publications (publishers of Sakshi newspaper) for the year 2008- 09 shows huge unexplained cash credit.
Stating that the face value of the shares of some companies were escalated by as much as 35 times, the Bench said Jagan is "directly or indirectly connected with some of the companies which are showing phenomenal growth" and that it is necessary to ascertain the "role of individuals/ firms/public servants" in his group companies.
Stating that the material available supports a thorough probe into all aspects of the financial misdeeds on charges of corruption and moneylaundering, the division Bench said there are also "criminal conspiracies and commission of other related offences involving huge investments by local and foreign companies" including some located in tax-haven countries like Mauritius.
Former chief minister Y S Rajasekhara Reddy extended huge benefits in the form of allotment of lands, mineral rights, licences, SEZ rights to develop ports all along the eastern coast, permission for star hotels and complexes in and around Hyderabad and other major cities the state Corporates and individuals who benefited from these favours were made to invest kickback amounts into individual and corporate businesses of Jaganmohan. On account of the quid pro quo arrangement, Jagan's income rose from Rs 11 lakh in 2004 to Rs 43,000 crore by the time of YSR's demise.
The young politician had approached the Supreme Court against the probe ordered by the High Court. The Supreme Court has rejected the same, saying that the High Court order is a reasonable one.
"I came to know that some DMK men said they were not bothered by it as it was like little water spilling out of a pot full of water," she said.
The Supreme Court has more than once pulled up the government for withholding information on black money stashed in foreign banks, saying it is not just limited to tax evasion but a "mind boggling crime" amounting to "theft" and "plunder" of national wealth having security ramifications. Does the approach of the Government mean that any powerful politician, suspected of store his ill gotten wealth,, can do so by keeping it in a Foreign Bank, as has been happening so far.
Corruption and black money are the two sides of the same coin, co-existing side by side. Most micro and macro socio-economic problems faced by our nation have the same deep, underlying inter-connection.
The way, the things are going on, and the wealth of the politicians has been increasing proves only what Truman once said that " YOU cannot get rich in politics,unless you are a crook, further adding, that I never give them hell. I tell them the truth and they think that it is hell.
The problem in our country, is that treat economic crime, and looting of the public and people' money, as something not very serious. We do not look down on economic thieves, as we do, in so far, as bulrgalrs are concerned.
In a first of its kind move, the Swiss government has agreed to tax black money held by UK citizens in Swiss bank accounts for the first time, while still hiding their identity.According to a a report, the deal could see between 3 billion pounds and 6 billion pounds a year being handed to British Government.
The agreement is a part of the British Government's latest efforts to track down and tax money hidden in offshore bank accounts.
It follows a similar deal agreed earlier between Germany and the Swiss authorities. No doubt, it is a land mark deal . The world has obviously changed for tax evaders, as a few years ago, nobody would anticipate such an agreement, to tackle tax evasion.
The world has changed for Brish Tax Evaders, Meanwhile, David Gauke, the Exchequer Secretary to the Treasury, said, "The historic agreement will enable us to collect billions of pounds from those who have for too long evaded their responsibility to pay UK tax by abusing Swiss banking secrecy."
For decades, Swiss banking laws have provided complete secrecy to foreigners operating bank accounts there.
The account holders have been able to use the accounts to hide money from the own tax authorities, without even having to pay any Swiss tax.
From 2013, the Swiss will tax the bank accounts of UK citizens and transfer the money directly to the Treasury, but without revealing the identity of the account holders.
The least that Government of India, can do to tackle the menace of Black Money is to negotiate with the Swiss a similar agreement, so that more than on third of the Indian Black money could be got to India, in the beginning.

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DAILY EXCELSIOR

EDITORIAL

FALL OF A FIXER

ON THE SPOT

BY TAVLEEN SINGH

 

On a Jet Airways flight from Mumbai to Delhi not long ago I happened to be seated next to Amar Singh. We met after more than three years. In this time he had become estranged from his political mentor, Mulayam Singh, and suffered such severe kidney problems that a transplant had become necessary. These misfortunes appeared to have resulted in his rich and powerful friends falling away so it did not surprise me that he looked subdued and gloomy compared to the old, ebullient Amar Singh I had once known well. He sat down silently in the seat next to mine with a nod of acknowledgement by way of greeting. I assumed that, like me, he was one of those travelers who likes to sleep and read on flights so I went back to reading my book while he flicked silently through a newspaper. It was only when the meal service began that he initiated a conversation. I asked about his health and he said that the kidney transplant had worked well but he had to be very careful not to eat or drink the wrong sort of things. When I looked pointedly down at his plate of spicy kebabs he smiled wanly and said that he would have to go home and take a whole lot of pills to compensate.
Once we got talking he talked about lots of things. I gathered that he was bitter about the manner in which he had been ousted from the Samajwadi Party. He hinted that his only crime was his closeness and loyalty to Mulayam Singh. This had made his family jealous now that his brother and son are both in politics. He reminded me that it was really because he had been able to interpret Mulayam Singh's political ideas to important people in the drawing rooms of Delhi and the glamorous parties of Bollywood that Mulayam had achieved the status of being recognized as a national leader. I agreed that this had indeed been the case and reminded him that I had been witness to the transformation.
When I first met Mulayam Singh (through Amar Singh) he was no more than a small time politician with some very odd ideas about the world. He told me during that first meeting that he believed India was a poor country only because Narasimha Rao's Government (in power then) had taken loans from the World Bank and the International Monetary Fund. His ideas on politics and foreign policy were equally bizarre and it was Amar Singh who later explained that he was a simple man who did not always understand complex issues.
Amar Singh translated Mulayam's ideas not just for me but for so many important people in Delhi and Mumbai that it was not long before famous movie stars and rich industrialists started flocking to Lucknow to share in Mulayam's 'political vision'. Among them were Godrejs, Ambanis and most notably Amitabh Bachchan himself. Unfortunately, Amar Singh's huge social and political skills changed him as a person. When I first met him he was a small time power broker operating on the outer edges of political Delhi. He was humble, helpful and full of jokes. This changed when he became Amitabh Bachchan's confidante and constant companion. After he went on to become a permanent star on page 3 I saw him less and less. Once when I ran into him at a Bollywood party, in a garden by the sea, I noticed that he was the centre of attention despite the presence of major movie stars and glamorous socialites. Everyone paid court to him and everyone seemed to want to be seen as a close friend of his. In Delhi he took to meeting only people who were politically important and rich and although he never stopped sneering at the 'cocktail party crowd' he was always at the parties he sneered at. He was fawned over and feted and his style of living changed dramatically.
Now whenever I saw him he traveled in expensive foreign cars and wore expensive foreign things. He spent so much money on 'renovating' his Government bungalow in Delhi that people started to gossip about how he had suddenly come into so much money. He attributed it, whenever he was directly asked, to his businesses doing very well but this did not end the gossip and his reputation changed from being a powerbroker to a 'wheeler-dealer'. His growing arrogance with journalists who asked difficult questions and his patent desire to always be seen only in the company of rich and powerful people lost him many of his old friends. When his rich and famous friends fell away after his rift with Mulayam Singh he seemed to disappear entirely from page 3 and public life. On the flight to Delhi he did not speak much about personal matters but hinted that he was hurt by the distances that had grown between him and his most famous friend, Amitabh Bachchan. When it came to his political future he said he was often in Uttar Pradesh holding meetings and rallies which he said were well attended. I gathered that he was eager to hitch his small bandwagon to a larger one and that he was already negotiating with different political leaders.
Amar Singh's problem was that he forgot, somewhere along the way, that he derived his celebrity from Mulayam Singh's political power and that on his own he was seen not so much as a political leader but a fixer. In Delhi's political circles fixers are tolerated but rarely respected so it should have surprised nobody that when they took him off to Tihar jail last Tuesday there were few tears shed for him. Even the BJP, whose MPs he allegedly bought to save Dr. Manmohan Singh's first government, seemed more interested in nailing the beneficiaries of his largesse than in what happened to him. As for friends from happier days there seemed to be no sign of them. Television reporters who waited outside Tihar Jail to record every moment of his incarceration said the only people who had come with him were members of his immediate family. As someone who knew Amar Singh in the old days before he became drunk with political power and celebrity it made me sad to see him so alone in his time of trouble. But, when a fixer bites the dust in political Delhi there are, alas, never many mourners around. That is how it has always been.

 

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EDITORIAL

TERROR STRIKES DELHI

STILL A LONG WAY FROM FOOLPROOF SECURITY

 

THE powerful bomb packed in a small briefcase that exploded near Gate Number 5 of the Delhi High Court on Wednesday morning, killing 12 people and injuring scores of others, shows the continuing fragility of our systems in preventing terror attacks. That barely four months ago a low-intensity bomb had gone off in the same court's parking lot near Gate Number 7 and much action was intended to stave off any future attack but little was actually done is testimony to the lackadaisical approach that characterizes our reaction to terror. There was neither any CCTV camera at the gate to record the goings-on nor any metal detector to check entry. Both these devices were in the pipeline but not yet in operation. With Delhi not having seen a major terror attack for nearly three years, there was evidently a sense of complacency and a smug confidence that the striking power of terrorists was much reduced as mistakenly surmised from the failed attempt at the High Court in May.

 

There is, of course, the inevitable question of who did it. A large number of terror outfits have emerged in recent years, many of which are fronts for larger ones. If an E-mail message by one Harkat-ul-Jihad member is to be believed, it was this outfit that perpetrated the attack. There is much talk of strengthening the intelligence network but it is a moot question as to how much our intelligence has been able to penetrate and unmask such outfits. Crucially, in 2009, Home Minister Chidambaram had announced an imaginative security architecture. This included NATGRID, a networked intelligence database, the National Counter-Terrorism Centre which was slated to be a nodal agency for all counter-terror efforts, and a National Investigative Agency. While the NIA is looking into the High Court blast, the other two are yet to take off.

 

What also needs to be looked into is whether we have adequate deterrent in our law to keep terrorists at bay. Considering that it takes years, nay decades, for conviction, the death penalty handed out in the rarest of rare cases to the likes of the killers of Rajiv Gandhi and the kingpin in the attack on Parliament, Afzal Guru, is still in question. What message that sends out is clear as crystal.

 

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THE TRIBUNE

EDITORIAL

DELHI-DHAKA PACTS

DAWN OF A NEW ERA IN TIES WITH B'DESH

 

Prime Minister Manmohan Singh's just concluded two-day visit to Bangladesh will be remembered for giving a new direction to India's relations with Bangladesh. The last minute jolt given by West Bengal Chief Minister Mamta Banerjee's withdrawal from his entourage over the Teesta river water issue did affect the outcome of the visit but only to a limited extent. The agreement that could have been signed over the sharing of river waters was put on hold. This led to Dhaka refusing to grant transit rights to India through Bangladeshi territory. But the two sides agreed to go ahead on the rest of the issues. It has been agreed upon that no country would allow the use of its territory to spread terrorism on either side of the border. This may lead to an extradition treaty between India and Bangladesh in the near future to work as a deterrent for extremists even when there is a change in political dispensation.

 

The two countries will now have a clearly demarcated land boundary with an agreement on some undemarcated areas, territories under adverse possession and the exchange of 162 enclaves (51 in Bangladesh and 111 in India). No country was able to properly administer these areas, where the residents would find themselves in virtually a "no-man's land".

 

Despite the mood of despondency in Dhaka, Bangladesh has found an opportunity to improve its balance of trade, which has always been in favour of India. A major trade concession has been granted to Bangladesh by India allowing duty-free access to 61 items from the other side. As many as 46 of these items belong to the textiles sector and these have a ready market in India because of their cost-effectiveness. India has also allowed 24-hour access to Bangladeshis through the Tin Bigha corridor. The policy of give and take adopted by the two countries may encourage other countries in South Asia to think on these lines for promoting peace, progress and stability in the region. 

 

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THE TRIBUNE

COLUMN

AN EXERCISE IN FUTILITY

NEITHER POLLUTION NOR CORRUPTION UNDER CONTROL

 

WHEN the system is corrupt, even a well-meaning scheme can become a money-making racket. A classic example of this malady has come to light in Punjab. The Pollution Control Board has found that 70 per cent vehicle pollution checking centres in the state are not equipped with the requisite testing instruments and have been merrily issuing fake pollution under control (PUC) certificates to vehicle owners. The scheme was inaugurated some years ago with a lot of fanfare following the havoc played by smoke-spewing vehicles which had made lives of other road users and those living in nearby areas hell. Only those vehicles which carried certificates that their emission was within permitted limits were to be allowed to ply on roads.

 

The scheme worked properly for some time and then the legendary corruption set in. Policemen virtually stopped checking the certificates – unless they wanted to make an extra buck on the sly. At the same time, the checking centres started issuing fake certificates in a perfunctory manner. Pollution remained; corruption became worse. Vehicle owners had to shell out up to Rs 50 for a service which was never provided to them.

 

Unfortunately, the story is not peculiar to Punjab. The same thing has been happening all over the country — barring a few metropolitan cities. In Punjab, air quality is not up to national standards, particularly in Ludhiana, Gobindgarh, Jalandhar and Amritsar. The pollution board has said that it will ask the district transport officers to cancel the authorisation of defaulting vehicular pollution checking centres and file an FIR against the centres which were found issuing fake certificates. But what about the officials who allowed these centres to run with impunity for so long? It is they who are actually responsible for all this mess.

 

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THE TRIBUNE

ARTICLE

THE CHANGE IN LIBYA

INDIA HAS TAKEN A PRAGMATIC STAND

BY ANITA INDER SINGH

 

THE military success of the Libyan rebels and the establishment of the Transitional National Council (TNC) throw a question mark at the decision of India — and Russia, China and Brazil — to abstain from voting for UN Security Council resolution 1973, which, on March 17, authorised Western military intervention in the Libyan civil war and the imposition of a no-fly zone over Libya.

 

Along with India, the opposition by Russia and China, permanent members of the Security Council, to the resolution, was tempered by their refraining from using their veto powers against the Western-sponsored resolution. That implied that they did not want to break with the West over Libya. The question now is whether the fall of Gaddafi will lead them to rethink their approach towards other autocratic Arab leaders.

 

The overthrow of a dictator is always applauded by those who welcome democracy. But as the toppling of Gaddafi by Libyan rebels is being hailed, especially by Britain and France, who engineered NATO's intervention in what was essentially a civil war, one can see in it a fight for Western interests and the triumph of Western values.

 

India, Russia and China were right to be cautiouspartly because the UN Security resolution was unclear about how the measures it outlined would improve the situation in Libya. Also, the idea that the West can overthrow any ruler it dislikes in the name of humanitarianism flouts international norms and helps imperialism, not humanitarian ideals. Britain and France ignored calls by the African Union, which certainly has a stronger interest in Libya, and the Arab world, for a ceasefire, giving the impression that might is right.

 

In any case, China, India and Russia had little reason to get involved in Libya. Indian oil companies have interests in Libyan oil, but India evacuated most of its 18, 000 citizens in Libya. China relied last year on Libya for only 3 per cent of its crude imports. But it did have to evacuate more than 30,000 workers employed by mostly state-owned Chinese companies earlier this year.

 

The US itself stayed out of the Anglo-French initiative to begin with, and made clear that it would make no troop commitments. The US only called on Gaddafi to quit when there seemed a reasonable chance that the rebels might win. Still recovering from the mess of Iraq, and bogged down in Afghanistan, the US is reluctant to get militarily embroiled in more Muslim-majority countries. Generally, Washington's calculations in West Asia have been no less pragmatic than those of India, Russia and China. The US initially supported the governments of Presidents Hosni Mubarak of Egypt and President Bashar at Assad of Syria; and it only turned against them when it became clear that they were too weak to hold out against the growing tide of popular unrest.

 

Gaddafi's opponents now face the formidable task of assembling a government forging stability in a country riven by tribal rifts. Gaddafi's overthrow does not ensure the stability or democracy in Libya; the rebels are too divided to promise that.

 

Miffed at the lack of support from India, Russia and China to their cause, the rebels might be reluctant to do business as usual with them. But Western countries, especially France, are keen to have India on board, and President Nicolas Sarkozy invited India along with China and Russia to the Paris conference on Libya on September 1 to discuss support for the TNC. That could serve two purposes. Having them on board would dispel any impression in the Arab world that the Anglo-French action an act of Western imperialism (The Syrian rebels do not want Western aid).

 

The Libyan rebels have to build a new state. They must bring about reconciliation between warring factions; deliver essential services, including water, electricity, food and fuel. They must forge a united leadership that serves as a government-in-waiting. The TNC has to move from the rebel capital of Benghazi in eastern Libya to the national capital in Tripoli to establish control of the country and to give it political leadership and direction.

 

The fight for greater political freedom and economic choice is likely to be protracted and bloody, and the transition towards more open societies messy. In a region in which the struggle to get rid of the yoke of dictatorship faces the constant threat of sectarian and tribal strife, the question is whether and what India, with its myriad ethnic and religious groups cohabiting in a democracy and its long-standing ties to parts of West Asia. can offer.

 

That is certainly true in Libya where 42 years of Gaddafi's rule blocked the emergence of institutions that could question or challenge his authority. The TNC and its elected successor will need vision and substantial popular support to build a more open, transparent society from scratch. Iraq, which was torn by sectarian violence and fratricide after Saddam Hussein's fall in 2003, was an example of how not to unite a warring country.

 

The TNC seems to have learned the lessons. With the help of the United Nations, it plans the political transition to democracy. The idea seems to be that the UN could support the establishment of an inclusive and legitimate interim government, and help it prepare for the election of a provisional national congress to draft a constitution in the next six to nine months, as well as procedures to ensure that the process is transparent.

 

India's cautious stance on Libya has been well considered. The UN-backed process should make it easier for India to come to terms with the new political dispensation in Libya, which offers India an opportunity to demonstrate that it is on the side of democracy. At the same India, China and Russia — like the US — have shown that each issue involving support to those who want an end to Arab dictatorships must be judged on its merits.

 

The writer is Visiting Professor, Centre for Peace and
 Conflict Resolution, New Delhi.

 

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THE TRIBUNE

OPED

DATE WITH DESTINY

BY MAJ-GEN G G DWIVEDI (RETD)

 

Geographically, the crow flight distance between South Block and NDMC's concave-spherical building on Sansad Marg, which housed CWG Organising Committee, may have been merely 3 km, yet the two stood poles apart. During my last assignment in the Army, I sat on the second floor of the South Block.  Most of the office-bearers in this part of the building were in the Twilight Zone of their careers.  The environment was rather officious and bureaucratic.  On one occasion, compliments by a budding scribe, comparing our wing to an old age home, had to be swallowed with a pinch of salt.

 

A few months before the D Day, some senior officers were inducted to fast track the Games preparations and  I happened to be one among them.  On a bright sunny afternoon, as I entered the colourful building of the CWG, it felt as if one was amidst an annual college fete.  There were hundreds of young people, median age under 25.  Most were fresh graduates, techno-savvy, bright with a quick uptake.  They appeared highly motivated and proud to be part of the great sporting event.

 

Despite the lack of 'games time experience' coupled with hazy higher direction, these fertile minds innovated and improvised to formulate sound operational plans, which later proved vital for the efficient conduct of the Games.  They toiled hard during the test events, learning the tricks of trade, hands on.  The greenhorns showed remarkable patience and fortitude when ridiculed and scoffed by self-proclaimed sports pundits.

 

When the charges of corruption and mismanagement made headlines on the eve of the Games, the Young Brigade was deeply disillusioned.  Displaying immense maturity, they insulated themselves to remain focussed on the mission.  Closer to the mega event, as cohesive teams along with volunteers, they moved into the venues to finetune last-minute preparations, while defying the constraints of poor logistics backup, including substandard meals.

 

Come Games time, the  Young  Turks were off to a flying start, surprising their detractors.  The Spartans were at the respective stadiums at the crack of dawn and remained on their toes till late into the night, providing excellent services with a smile. Their spirited motto was "not to ask reason why, but to just do and die".  This phenomenon continued through the fortnight and the young pioneers stood their ground with a degree of professionalism and elan, earning appreciation from one and all.

 

 Some 20,000 youth who came from all corners of the country were the true face of the resurging India.  These were the unsung heroes of successful CWG 2010 and part of the positive story.   'No nonsense, plain speaking lot', they were impatient to make best of the day.  Once the job was done, they went their ways, without seeking any recognition or credit, leaving behind a rich legacy of intense nationalism and patriotism.

 

Today, the young India has once again pitched in, but for a different mission; to rid the prevailing system of the deadly virus of corruption.  Their screams echo the same familiar sentiments: 'Come what may, we will rise to the occasion so that India keeps its date with destiny'.

 

 

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THE TRIBUNE

OPED

POOR SPENDING ON FARM RESEARCH

CRITICS OFTEN QUESTION THE RATIONALE OF FUNDING AGRICULTURAL RESEARCH ON THE GROUND THAT THE OUTCOME IS SLOW AND LIMITED. THE IMPORTANCE OF AGRICULTURAL RESEARCH SHOULD BE SEEN IN A BROADER PERSPECTIVE. THE NET GAIN OF ONLY ONE TECHNOLOGY DURING THE DECADE AFTER ITS INCEPTION WAS GOOD ENOUGH TO OFFSET THE PAU BUDGET FOR FOUR DECADES

JOGINDER SINGH

 

Kotri is a mid-sized village in Desuri block (Pali district, Rajasthan), about 15 kilometres away from the nearest large bus stand and market place. We walked to the dusty outskirts of the village to meet an old man on our list of sample households. His blind wife squatted outside their hut, emaciated, worried and in a state of constant confusion. In the background their young son peered out from a picture on their wall, with a withered garland around his neck. Looking at this skeletal couple, living off their old age pensions and monthly supply of government-subsidised grain, you got the impression of a tenuous hold on life.

 

The landscape is expectedly dry and arid, dotted with neem and prickly babool trees. The main occupation is agriculture and animal husbandry, but among the people we met, the few who owned some agricultural land shrugged when asked about their reliance on it. It was 'saawan-khet', dependent on the recalcitrant monsoon, and therefore unreliable.

 

Previous reports on the PDS in Rajasthan provided a pretty dismal report card, like the 2009 report of the Justice Wadhwa committee, which pointed to large-scale diversion of PDS grain and serious bottlenecks in the delivery system. So we were pleasantly surprised to see how well the state welfare programmes were working in Pali.

 

Most families we met had worked for a hundred days at MGNREGA worksites, and almost all Below Poverty Line (BPL) cardholders were receiving their 'full quota' of 25 kilos of wheat, at Rs.2 per kg, every month from the PDS.

 

The changes in the PDS are primarily because of significant reforms introduced in May 2010. Under the "Chief Minister's Anna Suraksha Yojana", the price of grain was reduced to Rs.2 per kg, and Fair Price Shops were directed to stay open for a fixed period of seven days every month, from the 15th to the 21st. Importantly, the commissions for PDS dealers were increased from Rs.8 to Rs.20 per quintal, substantially reducing incentives to cheat. Earlier, the low commissions meant that there was enormous pressure to cheat just to recover costs, and this was also used as a convenient excuse to justify any amount of cheating.

 

Problems persist

 

There are still problems in the system: the quality of PDS grain left much to be desired, with many respondents complaining that their monthly wheat ration came with 2-3 kilos of stones and chaff. The availability of items other than wheat (e.g. rice and sugar) was uncertain and irregular. Although the Rajasthan state government was supposed to distribute sugar, it frequently failed to even lift the entire sugar quota released from the Centre. So, despite being entitled to half a kilo per member at subsidised rates, BPL families could not count on getting this every month. The same applied to the occasional apportionment of cooking oil and rice, when these commodities were supposed to be given.

 

This irregularity also indicated the power of information: because these 'additional' PDS entitlements were not clear to the recipients or even to the dealers, and allocations were subject to vagaries down the supply chain. Some dealers even said that they were asked to pay bribes to godown officials to get any 'extra' quota of rice or sugar.

 

Other lacunae include missed opportunities to modernise the system for increased efficiency and transparency. Although we saw fairly well maintained sales and stock registers at the Fair Price Shops, no one was checking the sales register and there was minimal checking of stock registers. No electronic weighing scales had been provided anywhere. It was also unclear what recourse people had for genuine grievances.

 

While the PDS was of great help to vulnerable households in meeting their food requirements, this support was restricted to those fortunate enough to be on the BPL list. There have been problems with the BPL list both at the policy and implementation levels. In 2002 a new 'scoring' approach was used to identify BPL families, with scores given on thirteen socio-economic criteria. This replaced a previous identification system based on income and expenditure, used in the 1997 
BPL survey.

 

The BPL list is a dubious way of ensuring that the entitlements of the most vulnerable are met, especially in areas where disparities in standard of living are relatively small. Getting onto the list often requires some clout, defeating the purpose of the exercise. This is particularly so since the centre caps the number of BPL households for each state, and the state has to adjust its 'poor' into this figure. This leads to situations where limited BPL cards are used as a means of reward and punishment. For instance, we heard of cases where BPL cards had been arbitrarily taken away from some families and given to political supporters of the village sarpanch.

 

Another significant reason for preferring food was the thought of having to cope with the all-too-likely possibility of a drought. Pali district, although slightly better off than the drier regions west of the Aravallis, expects a drought every three to five years. Reliance on the government increases drastically during a drought, and the government often releases larger amounts of food grain through the PDS at such times. One respondent, a 50 year old woman from the Meena tribe, pointed out that in such a situation, money is of little help as the cost of food spirals upwards and the availability of food grains dwindles.

 

All these reasons led to an overwhelming preference for the known, functional and simple option: food. For most women it was an obvious choice - one simply pointed at her alcoholic husband, while another laughed when we gave her the alternatives, and said "Kya mein paisa khaa sakti hoon?"

 

It is clear from the gains made over the last few years that the PDS system in Rajasthan is not, as is commonly

believed, a failing and ailing animal. It is showing clear signs of revival, and has to a large extent been made more efficient and leakage-proof. It has evolved to play an important role in people's lives. This has been achieved by the state government realising that fixing the PDS system can lead to significant political gains.

 

Cash transfers

 

A crucial question we posed to our respondents was how they would feel if the PDS were replaced with an equivalent system of direct cash transfers. Their experience with money transfers is, for example, the Indira Awas Yojana, a scheme wherein the government gives eligible rural families money to build a house. It has wizened them to sarkari calculations, and taught them to think in 'percentages' which have to be paid as bribe to different levels of the administration to get their money.

 

People aired their misgivings over fluctuating market prices (misgivings about how the state would index cash transfers), the high risk of delays in payments (commonly experienced in MGNREGA payments, and hard to cope with when it was the question of day-to-day sustenance), how much money they would spend going to the bank (which were often far away), how many days' wages would be wasted withdrawing the money and then buying their rations (markets too, were often not in the same village), and so on. The concern with transaction costs is particularly relevant in Rajasthan where the PDS system reinforces a tenuous market infrastructure.

 

The writer is a Law student in Delhi University

THE Green Revolution in Punjab was the outcome of a variety of factors. Obviously, the basic research innovation emerged from new strains of wheat and rice followed by a higher use of fertilizers, pesticides and water; standardisation of agronomic practices; and need-based mechanisation for uniformity of farm operations.

As a consequence of such efforts, a spectacular increase in crop yields, expansion of cultivated area, rising cropping intensity, shift in the crop pattern etc together led to an exemplary rise in production, particularly food grains in Punjab. The small state, apart from feeding the ever-growing population, generated a mountain of food grain surpluses by contributing 30 per cent rice and 60 per cent of wheat to the national pool.

In other words, with just 1.5 per cent of the geographical area and 2.3 per cent of the population of the nation, it is contributing about 12 per cent to the national output of food grains. From these facts, one can safely infer that but for such progress in this high-potential state, at least 10 per cent of the population of other states would have either faced a serious hunger situation or we would have to search for food with a heavy import bill.

However, the implication of such a fast agricultural growth was that the state was engulfed in a number of environmental problems. Heavy drain on water resources, rapidly exhausting soil health in terms of major and micro-nutrients, increasing pest resistance, falling bio-diversity, problems of crop residue management, a fast influx of labour from other states and declining work culture with the local population and over-investment in farm machinery have created doubts about the sustainability of the existing agricultural production system. Even the 33.5 per cent (10469 KWH) of the electricity consumption in Punjab diverted for agriculture free of cost in 2009-10 is a heavy drain on the public exchequer.

Govt levies heavy taxes on farm produce

In the absence of large-scale industry and lack of a strong tertiary set-up, the economy of the state continues to remain mainly agrarian. Thus about 40 per cent of the population is directly dependent on agriculture contributing 34% of the state income. To improve the state's financial health, the government imposed high mandi taxes made to be borne by the buyers of farm produce. It includes 5% of VAT, 2 % as market fee, 2% as the rural development cess and 3% as the infrastructure cess. Another 2.5% commission ad valorem is borne by the procurement agencies. This commission increased with every successive change of state government i.e. from 1.5% to 2% in 2002 and then to 2.5% in 2007.

Thus the commission agents thrived on three counts viz. increase in production and still faster increase in marketed surpluses, increase in market prices of farm products and commission on value of produce. Similarly, the earnings of the state government touched Rs 3,840 crore due to mandi taxes and commission agents' earnings are estimated at Rs 600 crore from wheat and paddy marketing only. The evidence of substantial economic gains of the Green Revolution to farmers has been authenticated by various studies.

Numerous agro-industrial and commercial concerns are some other direct beneficiaries of such development. For instance, cotton-based industries, rice shellers, flour mills, dal mills, fruit and vegetable processing units, cold storage, milk plants, sugar processing and alcoholic industry, oil mills etc have progressed on availability of raw materials. The increased demand for farm inputs led to the expansion of business concerns dealing with fertilizers, seed, feed, farm machinery, pesticides etc. A number of export houses also thrived on agricultural surpluses. Let us not forget the contribution of research and development for such a gigantic economic uplift of all sections of society.

Green Revolution wonders can't be repeated

Now, that the state agricultural universities are facing a serious financial crisis, carping critics, sour skeptics and professional pessimists commonly argue with the comment that the pace of agricultural research output has slowed down and is not coming up to the expectations. The expectation is that every year wonders of the type of the Green Revolution should be generated. Such comments are uncalled for because the incremental output of subsequent research diminishes as the ecological concerns are getting stronger hurdles to cross.

 

Notwithstanding these facts, severe questions about the rationale of funding of research are raised. To educate the general public, especially to those who are at the helm of affairs, there is perhaps need to have a strong socio-economic cell to examine the return to research in respect of cost involved to bring out the innovations and rapid adoption on one hand and spell out their contribution to society on the other. To quote an example, an analysis of PBW343 variety released in 1995 by Punjab Agricultural University was traced in terms of direct farm-level benefits from enhanced yield over the replaced HD2329 variety in Punjab and its neighbouring states without going in for secondary and tertiary impacts. It is startling to note that the net gain of only this one technology during the first decade of its inception was estimated at Rs 3350 crore, which was good enough to offset the entire budget of Punjab Agricultural University for four decades. The net indirect impact to other sections of the population, if traced, may be a multiple of this figure. There are a number of such glaring instances of technological innovation due to which significant benefits have percolated to society.

 

Therefore, we must not lose sight of the fact that human factor is of immense importance for the long-term socio-economic growth of the country. During the past couple of years, even the national expenditure on research and development (R&D) has continued to be 0.85 per cent of the gross domestic product, out of which almost 13% goes to the agricultural sector. In the event of fast-rising demand for basic necessary farm products, agricultural research is a vital input for planned growth and sustainable development of agriculture in the country.

 

Poor budgetary allocations for research

 

The Indian Council of Agricultural Research, being an apex scientific organisation at the national level, plays a crucial role in promoting and accelerating the use of science and technology relating to agricultural research and education. There are 43 state agricultural universities in India. The mandate of these institutions revolves around providing research, teaching and extension services. The broad break-up of the budget allocation is that about 63% is allocated for research, 19% for teaching, 10% for extension and 8% for administrative and miscellaneous activities. The pitiable situation of these institutions can be viewed from heads of expenditure which state that about 88% of the budget goes to salaries and allowances while only 11.3% goes to contingencies and wages and less than 0.5% goes to traveling allowances.

 

A cursory look at the overall expenditure budget of the five universities — Punjab Agricultural University and Guru Angad Dev Veterinary and Animal Sciences University in Punjab, Haryana Agricultural University and GSK Himachal Pradesh Krishi Vishav Vidyalya and Dr Y.S. Parmar University of Horticulture & Forestry for the year 2009-10 was Rs 608.4 crore as against Rs 415.8 crore in 2005-06, showing an increase of 46% in four years, almost matching the rate of inflation, which means no real increase. Of this, almost three-fourth is contributed by state governments, 18% comes from the ICAR and the rest 8% from other sources.

 

The writer is a former Professor & Head, Department of Economics & Sociology, PAU, Ludhiana

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THE TRIBUNE

OPED

GENERATING FUNDS FOR FARM UNIVERSITIES

 

IT is high time we realised the importance of agricultural research in broader and long-term perspective. The state governments, commission agents, agro-processing industry, traders particularly exporters and farmers are the major beneficiaries of such institutional research. The earnings of the state government from the mandi taxes should partly be diverted for funding research and development.

 

A part of the escalated income of commission agents must also be allocated to research. A small cut on farmers' income at the market level is desirable. A small tax on the export of basmati and other farm products is also justified. Liberal project-based funding by agro-industries as a part of corporate social responsibility can further ease the funding position of agricultural universities.

 

The scope of commercially raising funds for agricultural universities is limited. We do not have a system of patenting of agricultural research, charging high fees from students and suitably pricing services to various other stakeholders

 

An analysis of the allocation of funds at the state level shows that funding for agricultural universities by the states of Punjab, Haryana and Himachal Pradesh was only 0.4%, 0.3% and 1.2% of the gross state domestic product respectively whereas the contribution of the farm sector to the state income amounted to 34, 21 and 18 per cent

 

The rational management of such scarce funds is no less important. State agricultural universities must develop effective linkages with national and international research institutions. The institutional reforms in the universities are also needed to encourage and facilitate research workers to submit feasible research proposals for funding by international and national organisations and the projects handled as well as feedback from research partners should be a major component of system of accountability of researchers. The bureaucratic procedural and ritual hurdles in the use of sanctioned funds also need to be revamped. — J.S 

 

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MUMBAI MIRROR

EDITORIAL

THE NAC'S MINORITY REPORT

THE ANSWER TO COMMUNALISM IS NOT TO HAVE ONE MORE LAW, BUT TO STRENGTHEN ENFORCEMENT OF LAWS THAT ALREADY EXIST

Of all the opening words of the Preamble to our Constitution, the most difficult is one that wasn't even originally there. Till 1977, we were a sovereign democratic republic, recently turned gloomy with Mrs G in the middle of her run up to pole-vaulting us into bananadom. In that year, we became both socialist and secular; and, as the Aston Martins and Bentleys on our potholed roads, and repeated outbreaks of sectarian violence show, we have honoured both ideals.

 

Secularism, in the context of governance and law, speaks of the separation of religion from government. The word's absence in the original Constitution is curious; very likely it was felt unnecessary, for the entire Constitution is a profoundly secular charter. In India, we have learned to recognise secularism only by reference to what it is not: communalism as we understand it in India, meaning religious and ethnic sectarianism, frequently associated with violence.

 

The National Advisory Council is a sort of super-Cabinet given to us by the UPA. It sits outside government and has no discernible legal standing. Yet it seems to direct government, and Sonia Gandhi is its chairperson, indirectly inheriting Mummy's mantle. One of NAC's latest offerings is the lugubriously titled "Prevention of Communal and Targeted Violence (Access to Justice and Reparations) Bill, 2011", awaiting Parliamentary benediction.

 

There are actually two drafts: the official government version, which typically says little and does less; and the latest iteration of the NAC version which says far too much and goes much too far.

The problem starts very early on with the definition of a "group", one that is central to the bill. A "group", in the NAC's thinking, is a religious or linguistic minority or a Scheduled Caste or Scheduled Tribe; and it is only a group, so defined, that can be the target or victim of sectarian violence. It seems not to matter that issues of sectarian violence also involve incidents of retaliation or perhaps even provocation. Axiomatically, this definition does not cover Shia-Sunni conflicts, or attacks by one minority on another – remember, it was a Muslim radical group that chopped off the hand of a Christian professor in Kerala. Offensive words like kafir, heathen and pagan are not understood to be hate speech, though these words are commonly used as pejoratives. It is naïve to pretend that these words are confined to their doctrinaire meaning. That is not how they are used in the real world; and communal violence does not occur in sacred texts. These are matters impossible to legislate. A narrow definition like this can only create greater divisiveness in an already fractured society.

Imprudence then leads to absurdity. A person is guilty of sexual assault if, among other things, he or she is guilty of 'exposing one's sexual organs in front of any person' who belongs to aforementioned 'group'. The draftsmen of this Bill have quite clearly never taken an early morning local train in Mumbai.

Then there's the matter of the appointment of a worthy 'The Human Rights Defender for Justice and Reparations', a person with 'expertise in relation to law or human rights' and who also has 'a record of preserving communal harmony'. How does an individual 'preserve communal harmony' and how exactly does he cut a record of it? The Bill also proposes National and State Authorities to be stuffed with people with a 'record of promoting communal harmony', which sounds very like an imbecilic neighbour's karaoke birthday party. The National Authority must receive quarterly reports from the State Authorities on communal violence – suggesting that, by law, we must have at least one riot every three months.

 

Communal riots are abdications of state responsibility. They are also potent social forces that alter the fabric, form and functioning of human settlements. Areas that have seen communal rioting never fully recover; the mere possibility of recurrence is enough to make that change, and the displacement caused by rioting extends beyond individuals to entire communities. It isn't possible to reverse this displacement or its likelihood by law; it requires political will with social backing.

 

In assessing compensation, the NAC bill borrows from the 1985 Bhopal Claims Act. That was in the context of an industrial disaster and demanded compensation from the corporation responsible. How is that relevant here? Litigation, government, administrative and other expenses (including environmental damage) are to be recovered –but from whom?

 

We have more than enough laws, even to deal with communal riots. The government chooses not to enforce them. The answer is not, as the NAC suggests, to have one more law and do nothing to strengthen enforcement of laws that already exist.

 

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COLUMN

A COSTLY VICTORY

TERRORISM REMAINS A THREAT A DECADE AFTER 9/11

Ten years after the Twin Towers of the World Trade Centre came down in New York, the world is taking stock. In the ensuing "war on terror", though the Al Qaeda has been defeated, it hasn't been destroyed. The terrorist organisation's key calculation, that a furious United States homing in on targets in West Asia would provoke a general Arab uprising, has been belied. Osama bin Laden and many of his key aides are dead, and no Arab nation wants to have anything to do with the organisation. If anything, the "Arab Spring" is a negation of Al Qaeda-style terrorism and a vote for representative democracy (different from bin Laden's dream of a unifying caliphate). No one can rule out fresh outrages by motivated groups in isolated cells, but in a decade when there have been Al Qaeda-inspired attacks in Britain, Spain, Indonesia and elsewhere, there have been none in the US, or none that have been successful. This could be a matter of luck (the New York car bomber was simply incompetent), but that is part of any war. Though the endgame is still being played out in both Iraq and Afghanistan, the US could possibly claim a victory of sorts.

But it has been a costly victory. Estimates vary on what the "war" has cost the US; the lowest is by the Congressional Budget Office — it puts the figure at $1.3 trillion (about nine per cent of US GDP). Other estimates go as high as $3 trillion, and even $6 trillion. The cost in terms of lives (not just American ones, but even Iraqi and Afghan) has also been steep. Inevitable questions arise on the mistakes that have been made, the war that need not have been fought (in Iraq), and even the choice of "ally", Pakistan, a country whose strategic interests fundamentally differ from those of the US, and which may emerge as the world's Headache No. 1. Critics will also quote historian Paul Kennedy on imperial over-reach: empires collapse when they seek military objectives that their economies cannot sustain. But then, the US might well have afforded the war were it not for other mistakes (the Bush-era tax cuts and the financial sector running amok) that have blighted the country's economy. Meanwhile, conspiracy theorists have argued that an undeclared US objective has been to gain control of oil — hence the permanent posting of US troops in Saudi Arabia after the Gulf War in 1990-91, the unprovoked attack on Iraq, and now on Libya. But oil production has fallen in both Iraq and Libya, and oil prices have reached record levels — a clear negative for the US, which imports oil.

Finally, the fact is that religious extremism and terrorism remain threats to democratic countries around the world. The US may have prevented a second 9/11-type attack, but it remains as vulnerable as India or Indonesia to the anger of religious extremists and the diabolical agenda of non-state actors from across the borders. In the long run, the real answer to such ideology-inspired terrorism has to be the strong assertion of the ideology of freedom, pluralism, secularism and tolerance. An eye for an eye, Gandhiji said, makes the whole world blind! However, no government can afford to neglect immediate administrative responses. Some feel the US has gone too far with "homeland security", using modern technology to invade citizens' privacy. In India, many believe the Indian security authorities have not done enough on this front — a view that will gain currency in the aftermath of the latest terror attack in New Delhi.

Clearly, India has to "walk on two legs": pursuing a longer-term agenda of a politics and economics of inclusion and an immediate agenda of creating a more effective and intelligent internal security machinery. The US was able to pursue external enemies to seek retribution for 9/11; India cannot afford such adventurism. It needs a more nuanced, though firm, strategy to deal with the threat at home and from across the border.

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BUSINESS STANDARD

EDITORIAL

GOOD, NOT HISTORIC

MYOPIC MAMATA SABOTAGED THE WIN-WIN DEAL WITH DHAKA

On balance, Prime Minister Manmohan Singh's visit to Bangladesh has been good and useful, with several important agreements that will strengthen the bilateral relationship. However, it hasn't turned out to be the much-anticipated "historic" visit envisioned originally. The author of this sorry chapter was West Bengal Chief Minister Mamata Banerjee. The Teesta and Feni river waters agreement was, of course, not as important as the trade concessions that India has offered and the land transfers and border agreements on which both countries have agreed. It took the Indian government a considerable effort to make the concessions on textile trade, and Bangladesh has appreciated this fact. But by sabotaging the river waters agreement, not only has Ms Banerjee helped Bangladesh withdraw its offer on transit corridor but, more importantly, it has robbed the visit of the one element that was uppermost in the mind of both heads of government, namely the need to build trust between both countries. While the central government, especially the Prime Minister's Office, and the Congress party must share part of the responsibility for not ensuring that Ms Banerjee was fully on board (and for not addressing some of her more reasonable demands on both of them), the fact is that Ms Banerjee acted in narrow self and political interest, sacrificing the larger interest of the nation and the neighbourhood. She deserves outright condemnation for such partisan behaviour.

Prime Minister Singh has held out the prospect that both countries will quickly address the new issues that have cropped up and complete the process. He must no longer leave this to his officials or colleagues and must take charge of the process. Bangladesh and India have been doing well on the economic front, unlike Pakistan and Nepal, and must keep the momentum of growth going. A lot is at stake for both countries and they will benefit from economic integration, both bilateral and regional. Hopefully, the two prime ministers will be able to limit the damage inflicted by Ms Banerjee and recover lost ground sooner rather than later. In diplomacy, as in economic reform, the bicycle metaphor is relevant. Unless there is constant pedalling and movement forward, the danger of things falling apart remains.

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BUSINESS STANDARD

IS THE US SLIPPING INTO ANOTHER RECESSION?

A STEEP DECLINE IS UNLIKELY, BUT THE RISKS TO ECONOMIC GROWTH CANNOT BE IGNORED

AKASH PRAKASH

Whether the US can avoid slipping into another serious recession is a subject of considerable debate among market participants. Along with Europe's sovereign debt problems, the risk of a serious renewed recession in the US is one of the major clouds hanging over global equity markets.

Gross domestic product (GDP) growth in the first half of this year has already been subdued, running below one per cent. Though the hard data over the past month have been stable, with retail sales increasing by 0.5 per cent in July, personal consumption expenditure increasing by 0.8 per cent and industrial production rising by 0.9 per cent, all these data points are backward-looking.

The more forward-looking survey data show significant deterioration. The Philadelphia Fed Index has dropped to -30.7, a level only observed previously during or on the cusp of a recession. The National Federation of Independent Business survey for small businesses has also weakened, with an increasing number of firms now expecting a decline in sales over the coming quarter. The biggest shocker has been the collapse in the University of Michigan Consumer Sentiment Index. It hit a 30-year low in August, even lower than levels in November 2008.

Bond markets are clearly signalling economic weakness, with US 10-year rates slipping below two per cent.

Though the US economy may possibly slip into a shallow technical recession, two quarters of slightly negative growth, it is important to ensure that this does not turn into a deep downturn. The fears about a sharp downturn arise from the lack of ammunition with the authorities to tackle such an event (limited room on both fiscal and monetary front), and the savage effect it will have on corporate earnings in the US, the stock market and household wealth.

Though the lack of room for policy action is well known, few people realise just how elevated corporate earnings are in the US.

The profit share of GDP in the US is at an all-time high (nearly double its long-term average). This is driven by several factors: the effective tax rate has fallen to 25 per cent from 40 per cent in the year 2000; interest costs have dropped to less than 1.5 per cent of sales from four per cent in 2000; and real unit labour costs are at 60-year lows, with wage share of GDP at a 50-year low. The final factor in the elevated profitability of corporate America is the weak dollar, and the translation effect of converting overseas earnings streams into the dollar.

A deep recession will lead to at least a 20 per cent drop in earnings in the US, which is easily possible, given high earnings today. Thus, the market will no longer look as cheap as the bulls would have you believe.

This is the big risk that investors are worried about. The US economy double dips, the authorities cannot do much to address another sharp downturn, earnings decline 20 per cent-plus, and the markets have one more leg down, dragging everybody down once again.

But to come to the main point, will the US have another steep decline? To answer this question, one must understand why growth in the US slowed sharply to just 0.7 per cent in the first half of 2011. Growth in real final sales (GDP growth minus the inventory contribution) declined from 2.9 per cent in the second half of 2010 to just 0.7 per cent in the first half of 2011. The slowdown in personal consumption expenditure accounted for 1.3 percentage points (57 per cent) of this growth downshift and a slowdown in government spending accounted for 0.5 percentage points (23 per cent). Looking at the data in more detail, it becomes clear that about half the decline in consumption was owing to a drop in auto sales and another 10 per cent owing to a reduction in gasoline purchases. It is clear that the earthquake and tsunami in Japan, which had a significant impact on the global auto supply chain, and the surge in fuel prices led to a reduction in auto and fuel sales in the US in the first half of 2011. Looking ahead, prices for most agricultural and industrial commodities, along with fuel costs, are likely to be lower in the second half of 2011. Also, the supply disturbances out of Japan are now mostly over. Motor vehicle production increased by 5.2 per cent in July, while both orders and shipments increased by 12 per cent. A reversal in commodity inflation and auto supply disruptions should provide some stability and support to consumption in the second half of 2011, and enable the US to avoid a sharp slowdown.

If we assume that consumption in the US will stabilise, then the bigger risk to growth is fiscal restraint. The question is: how much of a headwind on growth will it end up being? Fiscal tightening probably cut growth in the first half of 2011 by 0.75 to one per cent, and if current policy settings remain, this drag on growth will increase to between 1.5 and two per cent in 2012. The political environment in the US today is such that fiscal policy has become a major election issue along with jobs. The tea party movement, and its influence on the Republicans, has severely constrained the room for policy flexibility in this area. The Republicans were seemingly willing to even risk default to ensure spending cuts. The increase in fiscal drag in 2012 is largely owing to the scheduled expiry of the payroll tax cut at the end of 2011. If this is not extended, it will raise the tax burden on US households by $110 billion annually (0.7 per cent of GDP). If US President Barack Obama is able to convince the Republicans to extend this payroll tax relief and, hopefully, introduce some other job creation-related fiscal sops, than the fiscal drag on growth in 2012 will be no worse than in the first half of 2011. It will be critical for investors to track progress on this front over the coming months.

The single biggest risk that could push the US into another deep downturn is that of significant fiscal tightening, hitting an already weak economy. With Federal Reserve Chairman Ben Bernanke having fully understood the risks of premature fiscal tightening, US policy makers will hopefully pay heed to his advice and avoid rigid ideology-based policy positions. As for Europe pushing the US over the edge, direct US exposure is limited, since exports to the European Union (EU) only account for about two per cent of US GDP and cross-border exposure of most US banks is quite limited. However, a blow-up of any large EU financial institution will have unexpected consequences in the US.

As for other issues that could push the US into a deep downturn, there seems to be a reasonable amount of pent up demand in the US economy. The stock of capital goods has declined sharply as a share of GDP. On a flow basis, spending on these cyclical sectors is about 19 per cent of GDP, more than five percentage points below the post-1970 average. It would be a break from history for the US to go into another deep downturn, with cyclical spending already depressed.

Hopefully, the US can avoid another sharp leg down in its economy. Consumption seems stable, fiscal restraints can be eased, and most cyclically sensitive sectors are already depressed. A technical and shallow recession may still hit, but in the absence of a sharp renewed downturn, earnings should hold up, and markets don't look that expensive.

The author is fund manager and CEO of Amansa Capital

 

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BUSINESS STANDARD

COLUMN

MAKING HEDGING MARKETS MORE EFFECTIVE

JAMAL MECKLAI

Among other things, banking regulations should seek to create adequate competition in the field of banking services so that the end customer of banks has to pay reasonable charges at each bank interface. This will increase return on savings for customers as well as, importantly, help companies – particularly those from the small and medium enterprises (SME) sector – maintain and improve their business competitiveness.

My area of experience is corporate foreign exchange, and though there has certainly been progress compared to some decades ago, substantial constraints on competition remain, as a result of which many, many companies end up paying exorbitant margins to banks for foreign exchange hedging transactions. I have a client with Rs 100 crore of exports who banks with three public sector banks and pays, on average, 40 paise (from interbank) for buying a forward contract; not only is this usurious – larger, strong companies pay as little as 0.5 or even 0.25 paise per dollar – it often leads to the company not buying the hedge since he feels the price is so bad.

Smaller companies in small towns are probably hit even worse; given that the SME sector is so important in terms of both employment and exports, this is a critical issue.

To create meaningful competition, it needs to be easier for companies to buy foreign exchange hedges from any bank it chooses. While banks are required to provide a No Objection Certificate to customers who wish to buy foreign exchange hedges from another bank, there are several practical, operational and regulatory constraints:

* Unlike large companies with multiple banking arrangements, most SME borrowers have an implicit agreement with their regular banker/consortium not to divert their foreign exchange business to other banks as part of the price for availing other credit facilities.

* In any case, the Reserve Bank of India (RBI) does not allow banks to set up limits for "non-constituent" borrowers — a constituent borrower is one with funded limits. Thus, setting up standalone foreign exchange limits for clients is not encouraged in the present RBI framework.

* RBI requires banks to monitor underlyings by making notings on the physical underlying. While banks do not do this in all cases, the rule makes it that much more difficult to take an foreign exchange hedge with a bank different than the one that has custody of the underlying, effectively locking the customer out of a potentially better foreign exchange rate.

* All banks would require security/cash margin to set up foreign exchange limits; this would render the foreign exchange hedge, even at a much better rate, too costly, unless the borrower could convince his existing banker to release some part of the collateral to the new bank.

Clearly, operational rules are stacked in favour of existing bankers with no real incentive for them to provide finer rates to their clients. To enable companies to more efficiently access the foreign exchange market for hedges, RBI should amend the regulations as follows:

(i) The regular banker/consortium should only have first right of refusal, and the borrower should be free to avail the facility from any other bank offering better quotes — without any restrictive clauses.

(ii) Working capital and other loan agreements should always have clauses that offer pari passu charge on the securities provided by the creditor bank to other banks for bona fide hedging purposes; some European Central Bank agreements already build this in

A broader point is, while there is no question about the need for stringent Know Your Customer norms, the documentation issues mentioned earlier, which often severely constrain hedging efficiency, one often wonders whether RBI should be monitoring underlying exposures at all. This should really be an issue for company managements to determine whether they have sufficient risk capital to cover hedges in excess of their actual underlying exposures. Importantly, newly set up companies and special purpose vehicles are not able to hedge any risk at all since they have no past exposures, even though the management may have very clear visibility of exposures and risk.

RBI should only be concerned with systemic issues, which could be addressed by putting an overall ceiling on derivatives outstanding at any point of time — say, not exceeding 1.5 times of the balance sheet size (assets plus liabilities), provided the company had a board-approved risk management policy. Each bank could, at its own discretion, lay down additional restrictions on limits based on its perception of the risk capital available to the company.

These are minor tweaks and well within the ethos of current regulation. Additionally, RBI should make it clear through senior level speeches, etc. that reasonable foreign exchange pricing is a "must have" for improving market efficiency and sustaining export growth.

jamal@mecklai.com

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BUSINESS STANDARD

COLUMN

IN SEARCH OF GOD PARTICLE

MUCH HINGES ON FINDING THIS ELUSIVE EXPLANATION FOR MASS

DEVANGSHU DATTA

In scientific terminology, a hypothesis transmutes into theory only after it has been verified. In the next year or so, the "God Particle Hypothesis" will either become a theory, or be discarded along with curiosities like ether and geo-centrism.

Whatever happens will lead to a deeper understanding of the so-called Standard Model (SM), which attempts to explain ways in which electromagnetic and nuclear forces interact at sub-atomic levels. Our understanding of how stars are formed and generate energy, and of cosmology – the origin and possible end of the universe – depends on the SM. (The SM ignores gravity).

Since 1964, the SM has revolved around the search for an elusive particle that could explain various puzzling details. Variously known as the God Particle or the Higgs Boson, this hypothetical particle is thought to have imparted mass to elementary particles, just after the Big Bang.

Its existence was postulated simultaneously in three separate papers, by six different physicists, including Peter Higgs (working alone), Francois Englert & Robert Brout (in collaboration), Gerald Gulanik, Carl Hagen & Tom Kibble (in collaboration). If it exists, it would be the simplest explanation for mass.

It's common to infer the existence of particles and quantum theory largely developed through searches for particles that "should" exist. Apart from the Higgs, every particle hypothesised in the SM has been found.

Elementary particles are very small. They appear and vanish through decay in complicated interactions that last just fractions of a second. The general method of discovery consists of accelerating particles and smashing them together at very high speeds in controlled environments.

The break ups lead to the appearance of elementary particles that can be detected by fluctuations in energy patterns even as they decay. Mass and energy are equivalent at sub-atomic level and the mass of elementary particles is often indicated in energy units.

When it came to the possible mass of the Higgs Boson, there were huge differences in predictions. Further modifications arose in the 1970s after work done by, among others, Steven Weinberg and Abdus Salam. Some hypotheses suggest entire families of Higgs may exist. There are over 100,000 possible ranges where the Higgs may be found. There are also versions of the SM, including one championed by Stephen Hawking, which assume the Higgs doesn't exist.

The biggest atom-smasher is the Large Hadron Collider (LHC) located inside 27 kms of circular tunnels under the mountains of the Swiss-French border. Beams of particles are fired at each other inside these tunnels, which are tightly insulated from external influences. Detectors collect data from those high-energy collisions, seeking new particles and other information.

The LHC collects huge amounts of data. But it takes months or even years to process and make sense of it. There are two teams, Atlas and CMS, tasked to specifically search for the possible presence of the Higgs Boson.

In July, there was much excitement when scientists announced the LHC had discovered "excess events" at one of the ranges where the Higgs Boson was predicted to possibly exist. The excess could have meant the Higgs had been nailed down. But since then the data gathered at that range, has more than doubled and the excess has diminished. So that's a damp squib.

According to Sergio Bertolucci, director, research and computing, European Organisation for Nuclear Research (CERN), the search is proceeding on the following lines: "Rather than dropping a hook in a pond, we are fishing with a new technique. We remove all the water from the pond. If there is no fish, we will conclude that the Higgs doesn't exist."

The LHC data will gradually exclude various mass-ranges where the Higgs cannot exist. However, with over 100,000 possible ranges, this will take lots of data. The experimental data presented at the XXVth Lepton-Photon Symposium in August at the TIFR in Mumbai, now rules out the existence of the Higgs Boson inside the 145 GeV (giga-eletron-volt) to 466 GeV range with 95 per cent certainty. There are a couple of "islands" in this 145-466 zone that could still harbour the Higgs. But chances are, the Higgs, if it exists, is either a light particle (less than 145 Gev) or heavy (above 466 Gev).

Based on the current rate of data acquisition, LHC researchers predict they will either have found the Higgs by end-2012. Or, they will have confirmed that it does not exist. Either way, that will mean modifications to the SM and confirmation or rejections of various subsidiary hypotheses.

If the Higgs doesn't exist, the range of the unknown expands. The Higgs would be the simplest possible explanation for mass, which is a fundamental quality. So if it doesn't exist, another explanation for mass has to be found. That may involve the holy grail of physics — a unification of electromagnetic and nuclear forces with the effect of gravity.

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BUSINESS STANDARD

COLUMN

TWELFTH PLAN APPROACH

GROWTH PROJECTIONS OUTLINED IN THE APPROACH PAPER MAY BE OVERLY OPTIMISTIC

SHANKAR ACHARYA

The operational relevance of the Planning Commission has declined over several decades. Certainly, in my 15 years in the finance ministry up to 2001, we did not pay much attention to the Planning Commission, except for the squabble over the scale of "gross budget support to the plan" in each year's Budget. Nevertheless, it is the only organisation within the government charged with crafting a medium- and long-term vision of India's economic and social development and securing some degree of semi-formal co-ordination, or at least acceptance, of that view. If the Planning Commission didn't exist, we would have to invent it, though probably not in its present form.

Last week the Planning Commission put its draft Approach to the 12th Plan (henceforth A12P) on its website for comment. So here goes. To begin with compliments, it's a fairly well-written document (especially the Overview chapter), which recognises most of the major challenges that India has to grapple with to sustain high growth over the next five years: uncertain global economic conditions, high energy prices, "limited energy supplies, increase in water scarcity, shortages in infrastructure, problems of land acquisition for industrial development and infrastructure, … the complex problem of managing the urban transition … greater efforts in agriculture, health and education", governance weaknesses in public service delivery and so on. The A12P is forthright in proposing serious policy efforts and reforms in most of these areas.

Nevertheless, there are some clear weaknesses. Here I will focus on just four of them: the context and realism of the overall nine per cent economic growth target, the downplaying of the enormous employment challenge ahead, an inadequate appreciation of the policy impediments to manufacturing and a disappointingly old-fashioned approach towards the social sectors.

Broadly, A12P's approach to setting the nine per cent growth target is to say that the country has achieved 8.2 per cent growth in the 11th Plan (assuming, optimistically, eight per cent in 2011-12) and, therefore, nine per cent seems a reasonable target if we make serious efforts to deal with the various identified challenges. This approach hides more than it reveals. The truth is that the Indian economy already grew at nine (8.9 to be precise) per cent for the five consecutive years, 2003-04 to 2007-08. Since then (and the global crisis) average growth has dropped below eight per cent. What were the ingredients of the 2003-08 growth acceleration and can they be recreated? I suggest they included: a buoyant world economy expanding at four per cent (at market exchange rates), with advanced economies growing at nearly three per cent; moderately benign energy and food prices; the cumulative impact of fairly strong economic reforms undertaken (in spurts) between 1991 and 2003; a surge in gross savings and investment by around 10 percentage points of GDP between 2002-03 and 2007-08, led by a boom in corporate investment, profits and savings and a major improvement in government savings; a serious reduction in the combined fiscal deficit (from over eight per cent of GDP to four per cent), which ushered in low nominal and real interest rates; and a reasonably competitive exchange rate policy.

Recreating these growth-supporting ingredients looks difficult. The advanced economies of America, Europe and Japan (accounting for over half of world GDP) are teetering on the edge of a "second dip" recession. Even if they don't tip over (and that unfortunate outcome appears increasingly likely), most respected analysts expect a prolonged period of slow and halting expansion. Energy and food prices are much higher now and not expected to decline appreciably. In India, the last seven years have seen very little reform to spur competition and productivity. Instead, impediments to land acquisition, environmental clearances and mining access have increased, as have corruption and crony capitalism. Aggregate savings and investment are still fairly high but they have dropped significantly from their 2007-08 peak. The combined fiscal deficit is still around seven to eight per cent of GDP, helping to buttress high interest rates. Exchange rate policy has become conspicuously inactive. Adding these unfavourable "initial conditions" to the challenges outlined by the A12P makes the nine per cent growth target look a lot tougher and perhaps unrealistic.

In fairness, the overview chapter does devote a page to employment/livelihood issues. It recognises that despite the very low increase in total employment (only 18 million in five years on the current daily status basis) between the NSSO large sample surveys of 2004-05 and 2009-10, the unemployment rate dropped a bit because of an unusually low increase in labour force due to a substantial rise in working-age youth enrolled in education. It also appreciates that labour force growth will revert to much larger increases in the 12th Plan and beyond, posing huge challenges for job creation. However, this early attention does not resonate in the chapters on the "Macroeconomic Framework" and "Education and Skill Development". Surprisingly, there is no separate chapter on this crucially important subject, which could have profound effects on the nation's society and polity.

The chapter on "Manufacturing" mentions the enormous importance of this sector for generating job opportunities: "Unless manufacturing becomes an engine of growth providing 100 million additional decent jobs (in the next 15 years), it will be difficult for India's growth to be inclusive". If by "decent" jobs the reference is to those in the organised sector, the chapter sheds little light on how the present total of organised manufacturing jobs of a paltry 6 million (out of a labour force of about 500 million) is to be increased 17-fold in the next 15 years! There is only a brief and muted discussion of the critical constraint of our current job-destroying labour laws. The chapter advances "a new policy paradigm" for manufacturing growth, which seems to boil down to an unconvincing plea for "improving processes for consultation and coordination". A sort of "industrial policy lite"? Regrettably, there is no discussion on important issues such as an appropriate exchange rate policy and fiscal/monetary policies which nurture low interest rates, without which rapid industrial growth will remain a chimera.

Finally, the chapters on the social sectors seem to be rather along traditional lines. They do not outline compelling remedies to the well-known failings of pervasive inefficiency, poor quality, rampant "leakages", lack of accountability and voice (to and of the beneficiaries). In particular, I missed a serious discussion of possible synergies between the roll out of the unique identification programme (Aadhar) and reform of social programmes.

I trust these comments on the approach will not arouse grave reproach from friends in the Planning Commission.

The author is honorary professor at Indian Council for Research on International Economic Relations and former chief economic adviser to the Government of India

The views expressed are personal

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THE ECONOMIC TIMES

EDITORIAL

SYSTEMIC LESSONS

THE CAG REPORT ON OIL AND GAS IS USEFUL FOR SYSTEMIC REVIEW, NOT SPECIFIC OBJECTIONS

 The CAG report of its special audit of operations in four oil and gas blocks, including that in the KG basin operated by RIL, raises both specific and systemic issues that do need to be addressed and followed up on. Specifically, the observations pertain to field activities in the KG field on items of additional project expenditure that were initiated well before the addendum costs were approved: the project expenditure did go up from $2.4 billion to $5.2 billion. Also in the KG field, questions have been raised about the award of a $1.1 billion 10-year contract for an offshore production vessel, on the basis of a single financial bid. As for systemic matters, the report avers that the extant profit sharing formula between the government and private contractors based on investment multiple offers an incentive to inflate capital costs. Instead, it recommends a single biddable profit sharing percentage, so as to discourage 'front-ending' or skewing of capital costs. This is worth considering for future bids. What is also called for is revamp of sectoral oversight, so that the regulator is at an 'arm's length relationship' with the government, to avoid conflict of interest. The suggestion to deepen the DGH's skill-set is welcome too. We need greater transparency across the board in oil & gas. The audit remark about the technical flaw in the operator undertaking items of additional expenditure even before the added project costs were formally okayed underscores the need for procedural revamp in the hugely capital-intensive upstream hydrocarbon sector. But it cannot also be gainsaid that it makes sense to plan operations and tie up specialised capital equipment well in advance. The critical observation about the single bid and $1.1 billion contract suffers from its failure to amplify how tight the supply constraints were. Similarly, on the charge of non-relinquishment of field acreage in subsequent exploration phases in the KG field, the CAG report seems to be erring on the side of caution, given the cited technical grounds for 'continuity of discovery' and the practical futility of putting up small relinquished areas for bidding by third parties of repute who have not exactly been flocking to India.

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THE ECONOMIC TIMES

EDITORIAL

PRIVATISE TO FLY

THE CAG REPORT ON AVIATION IS A STRONG INDICTMENT OF STATE OWNERSHIP OF AIRLINES

Discussion of the Comptroller and Auditor General's report on civil aviation has tended to focus on the putative wrongs of the ministry in granting liberal bilateral rights to foreign airlines. This is entirely misconceived. In fact, public attention needs to focus on the running critique of public ownership of airlines provided by the CAG report, albeit unintentionally. As is typical of much of audit by the CAG, the focus of the present report is confined to the sector under review, when it criticises the liberal granting of bilateral rights to foreign carriers, endangering the national carrier, Air India, and suggests that grant of such rights could have been held in abeyance till 2010 when Air India's fleet acquisition plans would have given it some tangible capacity. In making this argument, the CAG forgets the elementary fact that people fly in and out of India to pursue their own businesses, not with the objective of protecting Air India's bottom line. If Indians and others had not been allowed to fly in and out of India freely and at low cost through a liberal policy on bilateral rights, it would have aborted India's vaunted growth of 8.9% in the four years prior to the crisis year of 2008. India's growth was globalised growth, in which foreign markets, foreign capital, foreign experts, foreign acquisitions and foreign remittances played a huge role. Foreign travel underlay all these elements of growth. If, instead of looking at the bottom line of an idiotically-run airline, the CAG had examined whether aviation policy served the wider economy, it would have given a seven-gun salute to the liberal grant of 6th freedom rights to foreign airlines (the right of a carrier to fly passengers to and from two foreign countries with a stop in its own country).
The CAG glosses over excess staffing and mismanagement of the national airlines before and after their merger. These and an overall debt burden nearly 40 times the equity derive from state ownership and swamp the airline. The long delay and the factoring in of geopolitical considerations in fleet acquisition also stem from state ownership. The clear lesson: privatise, to make it fly.

 

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THE ECONOMIC TIMES

EDITORIAL

KEEP IT SYMBOL

IF MEMBERS OF TIHAR GET TOGETHER, IT MAY BE A NO-HOLDS-BARRED PARTY

Politics has been known to make strange bedfellows, but never has Tihar Jail boasted a 'guest' roster that rivals the list of a party at one of the Capital's five star hotels during peak season, with its heady mix of the rich, brash and powerful. So Jammu & Kashmir chief minister Omar Abdullah can be forgiven for yet another irreverent tweet, as he took the same line that a thousand wags must have already contemplated: "If Tihar Jail inmates set up their own political party, I wonder what the symbol would be…" Even if the disparate political players currently cooling their heels behind bars do decide they can bury their differences, make common cause and float their own political formation (recognised or otherwise), symbols reserved for the national parties will naturally be out of bounds. A scrutiny of the list of 75 'free symbols' available with the Election Commission would be the first recourse.

Some of the objects listed there could be quite appropriate.The axe would send out a message to their detractors about hatchet jobs, while a bungalow, brief case, envelope or even toffee would do nicely as a promise for votes rendered. A ladies handbag could convey the same offer, barring a copyright veto from a certain chief minister and rival party boss, of course. Even a frying pan would be a cooler alternative to the fire they are currently in, while a diesel pump or gas cylinder would be ideal to fuel popular anger over price rise. But they may want to avoid symbols such as the television and the lock & key, for their uncomfortable allusions. Of course, they could always invent their own handy symbol like the Indian National Congress has. Opinion may be divided, though, whether they would prefer a mobile phone — for instant connect — or maybe a bee.

 

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THE ECONOMIC TIMES

GROWTH BEYOND ECONOMIC FREEDOM

INFRASTRUCTURE, ACCOUNTABILITY AND HUMAN DEVELOPMENT MATTER FOR GROWTH, BESIDES ECONOMIC FREEDOM

Ahigh correlation between the expansion of economic freedom and accelerated growth in GDP is well-established in India since the early 1990s when economic reforms were introduced. But there are interstate variations in this correlation depending on the differences in the initial levels of infrastructure development and the governance patterns. A recent publication Economic freedom of the states in India 2011* throws new light on such relationships by using 20 indicators classified broadly under three parameters, viz., size of the government; legal structure and protection of property rights; and regulation of credit, labour and business, for ranking the states.

Swaminathan Aiyar rates Andhra Pradesh as the fastest improver in economic freedom, faring exceptionally well in regulation of labour and business, over 2004-09 when Y S Rajashekhara Reddy was the chief minister. Improved business climate saw the state pushed the state's gross state domestic product (GSDP) growth above the national average. Aiyar also demonstrates, from the Andhra experience, the compatibility of high growth with programmes for poverty alleviation and social justice. High growth yields revenues and subsidies decline when the share of agriculture in GSDP and poverty decline. Thus, growth is a necessary condition for achieving inclusiveness, and inclusiveness in turn becomes necessary for sustaining growth politically, as demonstrated by Reddy by returning to power in 2009. Andhra Pradesh had already been pro-reform since the mid-1990s under the leadership of N Chandrababu Naidu. IT, power, irrigation, water conservation through watershed development and state finances saw reforms. As a result, GSDP growth rate, which remained below the national average for over half a century, surpassed the national average for the first time during 2001-01 to 2004-05, rising to 6.32%, against the All-India growth rate of 5.99%.The per capita GSDP also crossed the national average for the first time. The lagged effects of reforms introduced earlier helped in Reddy's period.
High agricultural growth, twice the national average, achieved in Reddy's period cannot be traced to economic freedom, as there is no indicator bearing on economic freedom in this sector. But it did contribute significantly to accelerating GSDP growth. By neglecting agriculture, Naidu left considerable slack in this sector, which Reddy made up for, restoring priority to agriculture through the sheer revival of the traditional public support systems like extension and better access to credit and inputs. Similarly, control of Maoism is also not traceable to the index of economic freedom as constructed, but was responsible for high growth in the northern districts of the state. Expansion of irrigation in this period cannot be traced to the massive investments made which have yet to yield results, but to generous subsidies for well irrigation in the form of free power that have led to unsustainable exploitation of ground water. These areas are known for high value activities like dairying and horticulture that contributed significantly to high farm growth.

    Adisquieting feature of the present index of economic freedom is its failure to accommodate education, health and accountability in governance in rural areas by empowering people. The present index is, in fact, biased against human development, as it clubs together all the revenue expenditure, any increase in its ratio to GSDP signifying lower economic freedom. For Andhra Pradesh in the last two years, revenue expenditure on health and education constituted 97-98% of total expenditure on these heads. This accounted for nearly one-fourth of total revenue expenditure. The Planning Commission, while formulating the 11th Five Year Plan, had weighed in against bringing down the revenue deficit to zero by 2009, as it would hit sectors like health and education.

While Andhra Pradesh succeeded in pushing its GSDP growth rate above the national average, during the same period, its performance in respect of human development was sliding down below the national average, as brought out by the CESS, Hyderabad, in its recent work. Apart from lower public expenditure, lack of accountability to local communities is the main factor. Engaging contract teachers for schools in the state was a right move, as Aiyar points out, but improvement in the system as a whole is possible only by ensuring accountability. A recent study by the National Council for Applied Economic Research on the devolution of powers to panchayati raj institutions places Andhra Pradesh just around the national average, but going by the field data, it ranks below the national average and certainly below the three other southern states. Finally, the post-reform experience brought out by Aiyar and others in this report shows considerable fluctuations in the ranking of states in respect of economic freedom — those ranking high in one period sliding down to low level in the subsequent period, suggesting that that some of the reforms tend to disappear with the exit of imaginative leaders. Therefore, institutionalisation of reforms and their insulation from the political exigencies of the day is a matter for serious reflection.

*Partnered by the Cato Institute, Friedrich Naumann Foundation, Indicus Analytics and Academic Foundation

 

C H HANUMANTHA RAO HONORARY PROFESSOR, CENTRE FOR ECONOMIC AND SOCIAL STUDIES, HYDERABAD

 

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THE ECONOMIC TIMES

GUEST COLUMN

WITH HISTORY AS GUIDE, RISING FEARS OF RECESSION

DAVID LEONHARDT

If history is a guide, the odds that the US economy is falling into a double-dip recession have risen sharply in recent weeks and may even have reached 50%. Economies have a strong self-reinforcing nature. When people are optimistic, they spend, which begets hiring and then more spending. When people are anxious, they pull back, which leads to a cycle of hiring freezes and further anxiety that often lasts for months. The US appears to have entered some version of the vicious cycle. Most ominously, job growth has slowed to a pace that typically signals the start of a recession. Over the past 50 years, every time job growth has been as meager as it has been over the past four months, the economy has been headed toward recession, in a recession or in the immediate aftermath of one. From early 2010 through this spring, by contrast, employment was growing fast enough to make the economy look as if it were in a recovery, albeit a modest one. "The chances that we are in something that is going to feel like a recession are close to 100%," said Joshua Shapiro of MFR Inc. in New York, who has diagnosed the economy more accurately than many other forecasters lately. "Whether we reach the technical definition" — which is determined by a committee of academic economists and based on gross domestic product, employment and other factors — "I think is probably close to 50-50." A double dip would present obvious political problems for President Barack Obama, whose approval ratings have already fallen below 50% and who is scheduled to give a speech to Congress on Thursday outlining a new jobs plan. A weak economy also could threaten incumbents of both parties in Congress, whose approval rating has hovered around 15% in recent polls.

More immediately, the main significance of the recent slowdown is that the economy may not merely be going through a weak phase that will soon pass, as many policymakers hope. Instead, history seems to suggest that the situation will probably get worse before it gets better. In a recent research paper, Jeremy J Nalewaik, a Federal Reserve economist, described this concept as "stall speed": Once the economy slows markedly, it often continues to do so. (He did not make a forecast.) In the other two severe downturns of the past 80 years — in the 1930s and the early 1980s — the economy suffered just such a stall and fell into a second recession not long after the first.

Today, Europe's troubles continue to weigh on banks and financial markets. Consumers remain indebted, and the housing market remains depressed. State and local governments continue to cut jobs, aggravating the problems in the private sector. Congress is unlikely to pass a major jobs bill. The economy could, of course, defy history and turn around soon. Eventually, consumers will begin spending more on houses, cars, appliances and services, and employers will begin hiring in large numbers. A further decline in gas prices, which have generally been falling, would particularly help households.

But the latest indicators suggest that even if the economy does not continue to worsen, it appears to be too weak to add enough jobs each month — roughly 1,25,000 — even to keep pace with population growth. Anything less, and the share of the population that is employed will continue to fall. Over the past four months, job creation has slowed to an average of just 40,000 jobs, or 0.1%, according to the Labor Department's survey of employers. The last time such a meagre increase did not coincide with a recession came in the 1950s.
The department's survey of households presents a somewhat sunnier picture, but it is a smaller and noisier survey. And even it shows an unemployment rate of 9.1% last month, up from 8.8% in March. In the past, an increase of three-tenths of a percentage point has typically coincided with a recession. James D Hamilton, an economist at the University of California, San Diego, who has studied forecasting, said he believed the most likely case was still that the economy would avoid a double-dip recession. He also noted that the recent job growth numbers were estimates still subject to revision, although the unemployment rate is not. "It's extremely hard to predict recessions," Hamilton said. The more important point, he added, was that the economy remained very weak, and weaker than people had expected. Perhaps the best sign of how difficult it is to know the economy's direction is that, as a group, the nation's professional forecasters have failed to predict all the recessions since the 1970s, according to data kept by the Philadelphia Fed. In the past 30 years, the average probability they put on the economy lapsing into recession has never risen above 50% — until the economy was already in a recession. The forecasters, on Wall Street and elsewhere, are not blind to economic change; they just tend to underestimate its severity. When the economy is on the verge of recession, the average recession odds from forecasters tend to rise to about 30%. There has been only one occasion, in 1988, when the chances rose above 30% and a recession did not follow. And what do many forecasters say are the prospects of a double-dip recession now? Somewhere between 25% and 40%.

©2011 New York Times News Service

 

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THE ECONOMIC TIMES

GUEST COLUMN

WHY THE WEST FEARS GLOBALISATION

SANJEEV SANYAL

As the US and Europe threaten to fall back into recession, some western economists have begun to question the foundations of both globalisation and capitalism. In a recent Financial Times column, Jeffrey Sachs of Columbia University wrote about "The great failure of globalisation" (August 18, 2011). Another well-known economist, Nouriel Roubini went so far as pull out old Marxist arguments in a recent syndicated column called "Is Capitalism Doomed?". It is obvious that economic pain is frightening western intellectuals. However, their arguments not only distort the facts but, if taken seriously, also run the risk of driving western civilisation into permanent decline.

The basic argument being put forward by these economists is that globalisation has hurt the poor by allowing rich capitalists to invest in emerging markets. To quote Sachs, "They have been able to invest in new and profitable projects in emerging economies". He then deduces that globalisation is a failure because of the "simple fact" that unskilled workers in developed countries have been hurt by this shift. Yet, he does not spare a thought about the hundreds of millions of people in China, India and other emerging markets who have used global trade and investment to climb out of abject poverty. As China has become richer, we can now see how industries are moving to even poorer countries like Vietnam and Bangladesh.

Surely, the success or failure of globalisation should be judged from a global perspective and not only from that of rich countries. While income inequalities may have increased within each country, they have fallen sharply between countries as emerging markets have used globalisation to grow. As someone who grew up in the autarchic stagnation of pre-liberalisation India, this writer knows from personal experience that humanity as a whole is clearly better off today. Moreover, the gains from globalisation go beyond economics. Young people from Cairo to Delhi are using globalising technologies like Twitter, Facebook and mobile phones to demand accountability from entrenched elites. How is this a bad thing?

I agree with Sachs' recommendation that western governments need to invest in education in order to move the workforce up the value-chain. However, there is a danger that by deeming globalisation and capitalism as failures, we will give in to the slippery slope of trade protectionism and restriction of capital flows. This will hurt everyone but Asia is now strong enough that it will eventually recover and go ahead. The real longterm danger is to western civilisation itself. To understand this, consider the long histories of the two emerging giants, China and India.

In the first millennium AD, India was the world's dominant economy. Angus Maddison estimates that it accounted for 33% of world GDP. Its merchants plied trade from the Persian Gulf to the South China Sea. The remnants of this age of Indian dominance are still clearly visible across southeast Asia in archeological ruins, culture, language and place-names (Singapore, for instance, means "Lion-City" in Sanskrit). Unfortunately, when faced with competition from the Turks, Arabs and Chinese, Indian society turned inwards in the 12th century. Caste rules were imposed to discourage merchants from sailing across the seas. The consequence was that Indian civilisation went into centuries of decline.

By the 15th century, China replaced India as the world's largest economy. Between 1405 and 1433, Admiral Zheng He led a series of grand voyages that explored the South-East and the Indian Ocean. There is speculation that they may even have visited the Americas. Chinese naval technology of this period was so advanced that Europe would take another three centuries to catch up. Yet, it was not China that would dominate the following centuries but the "barbarians" from Europe. Why? The success of the naval expeditions had made court eunuchs like Zheng He powerful and the Confucian mandarins decided to cut them down to size. The fleet was destroyed and their records suppressed. China closed itself from the world and, like India, suffered centuries of decline. It was only after they opened out to the world again, in 1978 and 1991 respectively, that they came back as major global players. Roubini writes that "the world's middle classes are feeling the squeeze of falling incomes and opportunities". This is simply not true. China's salaries are rising at 15-17% per annum. India's confident new middle-class is demanding accountability from its politicians. This is hope, not hopelessness. The lesson to be learned from history is that globalisation is not the problem but the ability of a society to deal with a changing world. Western societies would do well to ignore the insecurities of its economists and embrace the new world. Otherwise, it runs the risk of turning a few years of fiscal pain into a few centuries of civilisational decline.

(The author is Global Strategist, Deutsche Bank)

 

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BUSINESS LINE

OPINION

THE CHIMERA OF 'INDEPENDENT' DIRECTORS

S. BALAKRISHNAN

It is a matter of regret, that though the concept of independent director is a sine qua non for listed companies, it does not have a place either in the existing Companies Act. However the principle has got recognition in the new Companies Bill (the Bill). But no company director can be fully independent. Directors, especially non-executive directors (NEDs), including the category of independent directors, are liable to answer for all acts, real, alleged or imaginary, of commission and omission. Even for minor infringement of some obscure legislation, of which professionals themselves may well not be aware, they can be hauled up, harassed, arrested, prosecuted and imprisoned. With statutes increasing exponentially, they require all support and help. To Clause 49 of the Listing Agreement can be ascribed the credit for the introduction of the illusory concept of independent directors in India. Will anybody be an idealist that he will work for a company 'free of cost'? The answer is a resounding No!

Where money is involved, one can forget independence!The Bill stipulates that an Independent Director shall not be entitled to any remuneration, other than sitting fee, reimbursement of expenses for participation in the Board and other meetings, and profit-related commission and stock options as may be approved by members – an instance of dangling the carrot!That independent directors will receive profit-related commission and stock options will definitely impair their independence.

CII argument

Readers will recall that the Chairman of Union Carbide was held responsible for the Bhopal gas tragedy and sentenced to imprisonment, creating a furore among commercial bigwigs and CII observing that "while as board members, independent and non-executive directors have the same legal duties and obligations as executive directors; however, because of their limited involvement in the day-to-day running of the company, it is undesirable for the law to expose them to personal liability". One cannot agree fully with the views expressed by the CII. The view that "a limited immunity should be made available to an independent director against arrests and prosecution unless the same is authorised in writing by a magistrate not below the rank of a district judge", seems more acceptable and logical.

The tenure of independent directors can be limited and an individual should not be counted as independent director for more than a specified number of companies. However, the problem is having a 'ready supply' of people duly qualified and willing to act as independent directors. This problem will get more acute with the continuing increase in the registration of companies and their subsequent listing. Supply will definitely be less than demand. And this leads one to the point that the concept of independent directors is only a chimera!

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BUSINESS LINE

OPINION

RACE TO THE BOTTOM

Airline companies in India appear to be competing in a fatal race to the bottom. A combination of rising fuel costs, high taxes and competition-induced irrational pricing is causing tremendous turbulence in the industry. Airline operators are faced with a paradox: every seat on a plane needs to be filled to recover fixed costs but for every seat that they fill they fail to recover the variable costs fully. Simply put, ticket prices are not high enough to cover the costs of flying an airplane. For this, the airline companies have only themselves to blame. The scramble to offer the lowest fare and grab every potential flier on the horizon has led to irrational pricing and undercutting of each by the other, fuelling a rapid downward spiral. Just consider these numbers. Jet Airways, the largest of the private operators, has accumulated losses of Rs 1,850 crore, while for Kingfisher Airlines it is a whopping Rs 5,600 crore. SpiceJet, relatively more stable financially, flew into the red in the last two quarters and has accumulated losses of Rs 720 crore. And we are not even talking of Air India which has problems of its own and accumulated losses of Rs 20,300 crore.

The airline companies might be putting on a brave face but they could end up paying a heavy price for this. For, their losses are funded by borrowings, and more borrowings. It is scary, indeed, that the total borrowings of the industry are around Rs 70,000 crore now. Something has to give sooner than later as margins in the airline business are thin at the best of times and the prevailing margins cannot cover even the interest costs. "We are playing the game of last man standing" — the pithy comment of SpiceJet CEO, Mr Neil Mills, in a recent interview to this newspaper — sums it all up.

So, what are the flight path options? First, the airline companies can decide whether they must arrest the free fall in fares. Collusive action is not an option, but one or two of them may have to soon pull away from the pack and start charging more realistic fares. Second, the governments at the Centre and in the states can drop the tax on aircraft fuel which, at around 24 per cent, is on the high side. They will, of course, be mindful of the revenue implications, and the political consequences. Third, the civil aviation authorities can ensure a more efficient navigation system so that aircraft do not burn extraordinary amounts of fuel circling over airports waiting for landing slots. With fuel constituting a large proportion of airline costs, every tonne saved will be welcome. Finally, it is great for consumers to have such low fares and yet a wide choice of carriers and flight schedules between most cities. But such rich choices cannot come cheap for all time. Either fares go up or one or more airlines will go under and cause consumer choice to narrow. The options now are therefore all stark.

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BUSINESS LINE

LEARNING FROM THE LIVES OF JUDGES

G. SRINIVASAN

The life stories of Supreme Court judges, close to a span of forty years, through biographical sketches of how they had come to occupy the pinnacle position in judiciary will definitely make an absorbing reading. This is all the more so when autobiographies by judges or other biographies of them by other commentators are acutely few, though their unbiased judgments on issues of public importance had drawn accolades across the country and abroad.

The book under review by George H.Gadbois, Jr, Professor Emeritus of Political Science, University of Kentucky, US, attempts to execute three tasks. One is to provide a brief biographical essay for each of the 93 men who served on the apex court from 1950 through mid-1989 and the second is to account for why and how theywere chosen and to the extent feasible the selection milieu. The third is to paint a collective portrait of them, paying specific attention to changes in the background characteristics of the judges over the four decades.

Personal interaction

The author's audacity is visible throughout his voluminous work as the contents of his biographical essays were gleaned from tête-à-tête with the judges as 68 were alive when the study was made in 1983 and 1988 and he was able to meet with all save four. The rest he either met or corresponded with widows, children or with other relations. The 40 years are divided into two spans—from 1950 to 1970 and from 1971 to 1989. The reason is that the Executive, after largely conceding to the Chief Justice of India (CJI) the power to select judges during the first 20 years sought after 1970, to retrieve some of that power. Afterwards, the selection power was shared between the CJI and the Executive and the selection criteria too underwent some changes.

Assertive Executive

When S..M. Sikri became Chief Justice of India in January 1971, the Executive asserted the powers clearly bestowed upon it by the Constitution and initiated the names of those it wanted on the Supreme Court. There were little changes in the backgrounds and prior careers of the new judges. They continued to be selected from the ranks of senior high court judges and brought as much as experience to the office as earlier appointees, the author avows, adding that the most compelling factor in most of these appointments was having patrons who were close to the Prime Minister. "So this was not court-packing in the conventional sense. But, no matter by whom chosen, few would argue that a Khanna, a Mathew, a Mukherjea, or a Chandrachud were not excellent appointees", the author declares with panache. The author's biographical sketches of Justice H.R.Khanna and Justice V.Krishna Iyer highlighting the lofty principles of serving judiciary with exemplary courage and with a clear conscience for the weal of the weakest and the poorest deserve keen study by social activists and general public alike.

Post-retirement jobs

The author adverts to post-retirement race for sinecure by judges particularly when governments of the day, both at the Centre and in States, seek their instrumentality for heading one Commission or another. All said and done, the author is not off the mark when he concludes that "background differences notwithstanding, all brought to the Supreme Court, a reputation for integrity and rectitude and left with that reputation intact. They served their nation well. India would not be the vibrant democracy it is without them". A biographical book on such judges is definitely an invaluable vade-mecum.

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BUSINESS LINE

GETTING THE BEST OUT OF INDIA-JAPAN CEPA

B.S.RAGHAVAN

The India-Japan Comprehensive Economic Partnership Agreement (IJCEPA) is the most exhaustive of all the agreements that India has concluded with other countries so far.

It covers more than 90 per cent of trade and an incredible range of provisions in respect of improvement of business environment for greater investment, trade in goods and services, removal of technical barriers to trade (TBT), sanitary and phytosanitary (SPS) measures, movement of natural persons, intellectual property-related protocols, government procurement and mutual cooperation on matters of common interest and global importance.

The readiness shown by Japan in agreeing to abolish, with immediate effect, 87 per cent of its tariff lines, relating to 93 per cent in volume, compared to India's 17.4 per cent, and in conceding to India's plea for phased reduction during a span of 10 years, on the ground of giving sufficient time to domestic industry to adjust to the trade liberalisation, has been nothing short of generous.

The trade volume of items still attracting tariff on the Japanese side is only 2.93 per cent, as against India's 13.62 per cent.

Japan has thus opened up for unrestricted entry a tremendous number of items of export interest to India, besides enabling Indian professionals in information technology-related services, accounting, research and development, tourism, market research and management consultancy, to set up shop in Japan.

But getting the most out of the CEPA hinges on a vital pre-requisite: The willingness on the part of both India and Japan to jointly work the Agreement, in a constructive and accommodating spirit, by laying down, and adhering to, specific milestones and timelines.

BLUEPRINT FOR ACTION

It is from that perspective of giving it a fillip that this column offers the following Blueprint for Action:

Increasing the inflow of Japan's direct investment: Under the Agreement, all direct Japanese investments will be treated on par with domestic investment, as regards concessions, incentives and facilities, and application of regulatory and tax regimes. Japanese investment should be pushed from the present measly $1.2 billion to $20 billion by 2020.

Pushing up trade volume: India's trade with Japan is at present an unmentionable two per cent of its total trade.

With the reduction / abolition of tariff on both sides, it should be possible to push it up to 10 per cent by 2015, or at least equal to India's total trade with China (which at present is eight per cent of India's total trade).

Raising exports in the domain of textiles: Japan is today the fourth largest apparel products importer on the globe, constituting seven per cent of its total imports. India's share in this sector is barely 0.8 per cent, the lion's share going to China, Italy, South Korea, Thailand and Vietnam.

Here is a challenge to India's enterprising artisans in Tirupur and Ludhiana. If they bend their energies towards renovating and revamping production lines, suitably recasting the basket of products and redrawing business plans, they can raise India's share of apparel supplies to Japan, to at least five per cent by 2015.

Likewise, though the demand for knitted garments is very high in Japan, India's share in 2009 was only 0.2 per cent, leaving it to Bangladesh, China, Indonesia, Italy, South Korea, Thailand, Turkey and Vietnam to dominate the market. Since, under the CEPA, Japan has agreed not to levy any import duty on Indian exports of knitted and woven apparel, it is undoubtedly possible to raise India's share to 10 per cent by 2015.

Setting up Technical Woking Groups to anticipate and solve disputes on interpretation: The CEPA extends to many intricate technical areas such as intellectual property rights, TBT, SPS, and procurement, likely to give rise, during implementation, to honest differences in interpretation. Technical Working Groups, constituted in advance, will help iron out these differences.

Establishing a Ministerial level India-Japan Monitoring Group to supervise the pace and progress of implementation: The CEPA has been in the making for more than seven years, and it should not take an equal time to get off the ground.

Not the existence, but the implementation, of the Agreement is the key. Hence, going the extra mile to give it an impetus is eminently worthwhile.

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BUSINESS LINE

A LEAP IN THE DARK?

A. SESHAN

T wo-thirds of the decision-making process is based on analysis and information and one-third is always a leap in the dark. - Napoleon

The Annual Report of the Reserve Bank of India is an authoritative document looked forward to with eagerness not only by observers in India, but in international institutions also. The latest Report brings the story up to the middle of August going beyond its accounting year (July-June). It maintains the high standards that have evolved over time.

One may not agree with its interpretations or forecasts. But the document cannot be faulted for factual accuracy or analytical rigour. Although this year's edition has shrunk in size, it does not detract in any way from its utility for the readers.

The uncertainties of domestic and international factors that impinge on policy making have multiplied owing to the increasing integration of economies and the instantaneous transmission of information. In this situation, the size of the economy does not matter much. The debt crises of small countries such as Greece have as much impact on the world economy as the downgrading of the rating of the US.

Under such circumstances policy-making, based on recent trends, is at best a measured and reasoned response to what has happened. Also, while one can estimate an equation and come out with prognostications, it is difficult to capture the feedback effect. Hence it is going to be groping in the dark when one tries to forecast for being pro-active. The RBI's policies need to be understood keeping this in mind.

Inertial or structural?

In para 1.48 the Report says: "Tackling food inflation also needs a strategy to break the inertial element arising from rising real wages leading to increases in the Minimum Support Price (MSP), which in turn leads to higher food inflation that feeds back to higher wages with an element of indexation……….Rural wage programmes need to be linked with productivity."

What is referred to as 'inertial' is really structural. We have inertial inflation when people reconcile themselves to a certain rate of price increase through adaptive changes in consumption pattern, as brought out in many anecdotal reports in newspapers. Inflation rate is then dynamically in equilibrium!

Linking wages to productivity in schemes like the MGNREGP is more easily said than done. There are enough accounts of the misuse of the scheme by both the implementing agencies and the participating labourers.

There is growth in rural employment and incomes without any corresponding increase in output unlike in the West where the discussion is about jobless recovery.

Infrastructure challenge

The RBI should be worried about the prospect of a trillion dollar expenditure on building the infrastructure in the Twelfth Plan. We do not know how much of the resources would be generated in the country and outside and how much would get spent within. In addition to infrastructure spending, there will be other expenditures on various sectors, both of a capital and current nature. The money supply (M3), at the end of March 2011, was Rs 65 lakh crore . The figure may grow up to a mind-boggling level by the end of the next Five-Year Plan.

Since infrastructure projects have a long gestation period with resultant lags in the flow of benefits to the economy, the central bank is going to face a major challenge in sticking to its agenda of controlling inflation. It will do well in starting to plan for its policy for the Twelfth Plan period, besides the one for the next year.

Threshold inflation

It is in this context that one is dismayed by the statement that in India the threshold inflation rate is 4-6 per cent, beyond which growth will be affected (page 33). There is no reference to the supporting research. Whatever study justifies the drawing of the Lakshman Rekha should be placed on the Web site of the RBI for examination by those who have knowledge of the esoteric subject of econometrics.

What is interesting is that the RBI has subtly changed its rationale for accommodating a 4-per-cent inflation rate in its monetary policy.

Demand for currency

There is a good discussion of the determinants of demand for currency and velocity (pp. 38-39).The standard error of the regression equation as a whole indicates its predictive power. In addition to the regression coefficients, their standard errors and R-squared value, it is also available in the software econometric packages and hence can be given in the future.

One important feature in India is the increasing demand for currency during election time. A dummy variable for the years concerned may perhaps throw some light on the matter.

Analysis should also take cognisance of the fact that although velocity and money multiplier are two different concepts, they can work together to counteract any monetary or fiscal policy.

This is what has happened in the US in the aftermath of the fiscal and monetary stimuli provided to the system. The extent of leveraging of the original increment in money supply through the multiplier influences velocity.

I am intrigued by the continued absence of any reference to offshore banking units in RBI reports.

The researcher is helpless as there is no other source of information for this subject.

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BUSINESS LINE

CHECKS AND BALANCES FOR PVT BANKS

S.S. TARAPORE

On August 11, 2010 the Reserve Bank of India (RBI) put out a Discussion Paper on New Private Sector Banks. After much discussion and debate the RBI, on August 29, 2011, put out the draft guidelines on licensing of new private sector banks and comments have been sought by the end of October 2011. The RBI deserves to be applauded for handling an explosive subject with maturity and astuteness. The whole process of finalising the guidelines, the preparation of applications by aspirants, the granting of licences and the setting up of new banks is going to be such a long journey that those applicants envisaging a rapid gain for themselves would very quickly drop out.

Granting of licences for banks has serious implications for the overall financial sector and the RBI is justified in undertaking a cautious calibrated approach. The whole process for the new banks to be operational may take two to three years.

Promoters' share

After the nationalisation of banks in 1969, no private sector bank was licensed up to 1993. After the 1993-94 round of licensing there was a long pause till 2001 when revised guidelines were issued. After another dormant decade, in 2011 the issue of bank licences is once again under examination.

The draft guidelines for new licences for banks now put out by the RBI envisages eligibility for promoters/promoter groups with a 10 year successful track record. The RBI recognises that as depositors' money is involved it is only appropriate that there should be a comprehensive 'fit and proper' assessment to ensure that the promoters are not operating in risk prone areas.

The draft guidelines envisage that new banks should be set up only through a wholly owned non-operating holding company (NOHC) which would be regulated by the RBI or other appropriate regulators. There would need to be an arms length operation between the promoter group and the bank.

The minimum capital of Rs 500 crore is low in the current milieu and to set up banks with resilience a higher minimum of say Rs 1,000 crore should be prescribed. The NOHC minimum holding of 40 per cent is locked in for five years.

The excess over 40 per cent would be required to be brought down to 40 per cent within two years from the date of licensing of the bank. This should be a water-tight non-negotiable clause. Invariably, the 'greed factor' comes into play and the NOHC would persuasively argue for a relaxation of this clause, so that the divestment is undertaken after a much longer time.

Again, the NOHC's shareholding is to be brought down to 20 per cent within 10 years and 15 per cent within 12 years; this stipulation should be cast in stone. The RBI has to be satisfied that the NOHC is ring-fenced and the RBI should be able to undertake a consolidated supervision of the NOHC and the bank.

Tight regulation

For years I have been advocating that corporates should be allowed to enter the banking field with strong safeguards. It is gratifying to note that the present draft guidelines enable corporates to apply. The case for corporates being given entry in to banking is that they would be able to set up strong banks.

The RBI is right to be concerned about 'self-dealing' by promoter groups and hence the stipulation that a bank would not be allowed to lend to any single group company more than 10 per cent and to the group as a whole not more than 20 per cent of the bank's net worth.

This is a fear expressed by those opposed to corporate entry into banking. It would be best to put a total ban on direct or indirect lending by a bank set up by a corporate to any company connected to the promoter group. The RBI should come down heavily on any mutual compensatory lending between two promoter groups through banks set up by corporates. The stipulation that the new bank should set up 25 per cent of its branches in unbanked rural centres is flawed as a bank can easily set up a tin shed proximate to a metropolitan centre. The stipulation should be the proportion of business in unbanked rural areas.

Gestation phase

It is unfortunate that public sector units (PSUs) are debarred from setting up new private sector banks. To think of it, if PSUs were debarred from setting up private banks in the 1993 guidelines, there would have been no Axis Bank today! The RBI must reconsider this issue.

The final guidelines could take till the end of the current fiscal year. The whole edifice of the guidelines is based on the Amendment of the Banking Regulation Act. Again, the scrutiny of applications by the RBI and the screening by the High Level Advisory Committee could take a year or more. Hence, no new bank is likely to be set up before the end of 2013. Nonetheless, potential applicants would do well to undertake vigorous pre-investment activity.

Death and birth are part of the law of Nature but in India we do not accept that banks should be allowed to die and, as such, how are banks to be born?

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BUSINESS LINE

 

'THE DOHA ROUND NOW IS ABOUT TRADE POLITICS'

ARUN S

Critics of the World Trade Organisation might want an official burial to the protracted global trade talks as the Doha Round has long been dead. However, the WTO Director-General, Mr Pascal Lamy, says the Round, launched in 2001 for further liberalisation of world trade, is only deadlocked. He has been tirelessly touring the world talking to political, business and civil society leaders on the benefits of concluding the Round. In Delhi earlier this week, Mr Lamy spoke to Business Line on matters including the Round's future and the global trade forecast.

What is the current state of negotiations?

When you look at the WTO commitments from members, we have three regimes — that of the developed, emerging and poorer developing countries.

The negotiations are stalemated in the debate between the US and emerging countries (including India).

The US says 'since you have now emerged, you should eliminate duties like us on chemicals, industrial machinery and electronics'.

The emerging countries say 'we accept we are not like LDCs, but we don't want to be treated like developed countries because of our development challenges'. That is where the problem lies. But I am not prescribing a solution.

India still has huge development challenges and it needs to reaffirm this reality. But what an average westerner sees of China or India is their shining side. India and China also want the shining side of their reality projected abroad.

If developed countries are convinced that India or China is like them, they will ask for a level playing field in international trade rules. Therefore, people should understand the whole reality rather than the perception they have of the reality.

The issue now is not trade policy, but trade politics. It is my duty and that of political leaders to put perceptions in line with reality instead of using their perceptions to antagonise.

World trade and its issues have changed a lot since the Round started in 2001. Does it make sense to arrive at an agreement so late with the same old mandate?

Nobody remembers who accepted what in the tariff reductions negotiations in the (previous) Uruguay Round. What people remember is that the global trading system was strengthened.

And this is why it could work efficiently during the present economic crisis. So, on top of the balance of concessions, there is a virtue in strengthening the system and making it more predictable. Stabilising market openness through a global trade deal is a big plus for the conduct of business.

Can one expect any forward movement on Doha Round after the Ministerial Meeting in December?

WTO is a forum not only for negotiation, but also for implementation, litigation and capacity-building. The real challenge of the meeting is for the Ministers to draw a road map on all these WTO activities for the next two years.

Is there the political will to break the deadlock?

I have not heard any of the 153 WTO members saying 'we should throw in the towel'. Most members, including China and India, want to conclude the Round; but they haven't yet found a way to do that.

But they say serious engagement from the US can be expected only in 2013 when its new President takes charge?

We need to sustain a negotiating and implementation agenda that goes beyond the volatility of short-term political factors. No international negotiation will be possible if you have to stop negotiations when there is election somewhere.

What do you have to say on India's efforts?

India is cooperative, proactive, and trying to find solutions. India has offensive and defensive interests and I don't expect India to surrender on either of these fronts.

Has the delay in concluding the Round dented WTO's credibility?

The credibility of the WTO was tested during the recent economic crisis. The WTO is an insurance policy against protectionism and it did work during that time. But if the Doha Round is procrastinating, there is a risk of this credibility being dented.

Our mission is not only to implement existing rules, which I think we are doing rather well, but also to adjust trade regulations to the changes in world trade. If we cannot do that, we risk having a problem.

Are you considering a 'Lamy Draft' to save the Round?

It has always been an option. But it is the only bullet that I have got. When you have only one bullet, you better pull the trigger at the right moment and on target.

For the moment, I don't agree that given where we are, pulling the trigger would be a major contribution. My first duty is to do no harm.

What is your take on the global trade prospects?

There are two engines — a slow one including the US, European Union and Japan, with 2 per cent growth, and a fast one i.e developing countries with 6 per cent growth.

This growth differential is increasing. Our forecast of 6.5 per cent growth in world trade volume this year may be revised downwards in line with a downturn in demand.

A growth differential in itself is not the reason for reduction of trade. On the contrary, some say the only way developing countries can sustain this growth is to keep importing equipment and consumer goods to satisfy their domestic consumption.

So the risks are less on trade volumes than on the resurgence of protectionist tendencies which so far have been reasonably well contained during the crisis.

The major risk for the world economy from this possible downward revision of growth is the permanence of high unemployment which then triggers protectionism. Therefore, we have to remain very vigilant.

Do you see the Doha Round being completed before your term ends in September 2013 so that you can leave with head held high?

I don't know. Whether or not the Round will be concluded and when is not in my hands, but that of the members. I am just the facilitator or the midwife.

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                                                                                                               DECCAN CHRONICAL

EDITORIAL

GOOD BEGINNING MADE IN DHAKA