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Nov 3

TH
1. Downstream concerns on the
Brahmaputra
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NIMMI KURIAN
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As Chi a s la gest h d oele t i da o the


Brahmaputra, or Yarlung Tsangpo, became
fully operational this month, it has once again
evoked concerns in India. The $1.5 billion
Zangmu hydroelectric dam has stoked a
i tual pa a oia o e Chi a s esou e hoi es
and their likely downstream impact. But the
debate has generated more heat than light. It
has also unwittingly ended up being a singleissue debate, fixated on water diversion and
its likely impact. But is that all there is to it?

An overwhelming focus on diversion has


moved attention away from other critical
issues such as water quality that India needs
to raise with China. There are growing
concerns over worsening environmental
deg adatio fa i g Ti et s Th ee i e s a ea
comprising the Yarlung Tsangpo, Lhasa river
and Nyangchu basins in central Tibet. One of
the most intensely exploited areas in this
region is the Gyama valley, situated south of
the Lhasa river, with large polymetallic
deposits of copper, molybdenum, gold, silver,
lead and zinc. Studies by Chinese scientists
are pointing to the possibility of a high
content of heavy metals in the stream
sediments and tailings that could pose a
potential threat to downstream water users.
Global warming could further accelerate the
movement of these heavy metals besides
projected spatial and temporal variations in
water availability. By 2050, the annual runoff

in the Brahmaputra is projected to decline by


14 per cent. This will have significant
implications for food security and social
stability, given the impact on climatesensitive sectors such as agriculture.
The cumulative impact of run-of-the-river
dams also remains ill-defined and little
understood. In this regard, the Ninth Report
of the Inter-Ministerial Expert Group on the
Brahmaputra (IMEG) in 2013 called for a close
monitoring of the 39 run-of-the-river projects
on the Yarlung Tsangpo and its tributaries.
Despite being projected as run-of-the-river
projects, the fact that the Jiexu, Jiacha and
Zangmu dams are within 25 km of each other
and at a distance of 550 km from the Indian
border has further stoked downstream
concerns.
These also raise the larger question about the
cumulative impact of massive dam-building

projects across the entire Himalayan region


and the consequences of such intensive
interventions in a region that is ecologically
fragile. The dangers of water accumulation
behind dams could also induce devastating
artificial earthquakes. In the geo-dynamically
active Himalayas, earthquakes are an everpresent danger with a recorded history going
back to the 13th century. A sobering
reminder is the devastating earthquake of
1950 in Assam in which the Brahmaputra
Valley suffered the most damage. Recent
research by Chinese scientists has shown that
the Sichuan earthquake of 2008, which
resulted in the loss of 80,000 lives, could have
been triggered by the Zipingpu Dam in
Sichuan province. These findings were part of
a study conducted between 2008 and 2012
by Fan Xiao, a Chinese geologist and chief
engineer of the Regional Geological Survey

Team of the Sichuan Geology and Mineral


Bureau.
Cost of data
What sort of normative bargains should we
be mindful of while designing data-sharing
protocols between India and China? Are
these to be seen merely as commercial
transactions or do these raise larger
questions regarding contested market-based
mechanisms such as Payment for Ecosystem
Services? While India provides floodforecasting data to Pakistan and Bangladesh
free of cost, it pays to receive the data from
China. India pays China Rs. 82 lakh annually to
receive advance flood data as per MOUs
reached in 2008, 2010 and 2013. These
provide flow data from May to October on
the water level, discharge and rainfall from
three measuring stations on the

Brahmaputra, namely Nugesha, Yangcun and


Nuxia.
The justification for payments is being
advanced on the premise that downstream
users are disproportionate beneficiaries of
data flows. But then it can also be argued
that location bestows a disproportionate
advantage on the upper riparian and
consequently a primary responsibility to build
cultures of trust and confidence within the
egio . A uppe ipa ia s illi g ess to ea
the costs involved in the maintenance and
operation of upstream measuring stations
could be read as an indicator of its willingness
to invest in such riparian trust-building
practices. These could further strengthen the
larger philosophical argument of an
inherently intrinsic as against instrumental
value of nature and have beneficial ripple

effects on the discourse on water as a human


right within the region.
At the end of the day, the core issue in a
shared transboundary basin becomes the
criticality of perception, right or wrong. These
become the vectors through which the
actions of the upper riparian get refracted
and processed. While technical issues of
measurements, flow patterns and runoffs
have their importance, it is just as often the
more intangible, perceptual aspects that
create and entrench positions and produce or
retard cooperation at the transboundary
level. For its part, China has assured India
that othi g ill e do e that ill affect
I dia s i te est . I dia s offi ial a ati e has
largely tended to downplay many of these
concerns with official pronouncements that
I dia t usts Chi a . But is t ust i a
transboundary river basin to be built on such

rhetoric or is it best served by investing in


process-oriented, institutionalised norms?
I dia a o lo ge sta d at the ate s edge
and expect answers or solutions to these
critical questions without wading in. It is in
I dia s i te ests as a lo e ipa ia state to
start a serious conversation with China on
some of these larger questions of benefit
sharing, risk allocation and trade-offs on the
Brahmaputra.
(Nimmi Kurian is with the Centre for Policy
Research, New Delhi.)
It is i I dia s i terests to start a serious
conversation with China on some of the
larger questions of benefit sharing, risk
allocation and trade-offs on the
Brahmaputra
2. Erdoga s o e a k

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In a stunning reversal of the June election
esults, P eside t e ep Ta ip E doga s
Justice and Development Party (AKP) has
returned with an absolute majority in Turkey.
With 49.4 per cent of the popular vote, the
AKP has secured 316 seats in the 550member Parliament, well past the 276
needed to form a government. More
important, Mr. Erdogan is now closer to
realising his ambition of rewriting the
ou t s Co stitutio so that his e e o ial
presidency could be turned into an executive
authority. Even though Mr. Erdogan was not
in the electoral fray, the whole focus of the

campaign was on the President. Despite his


constitutional position that is supposed to be
non-partisan, Mr. Erdogan was a regular
presence in the campaign. His pitch was
stability and security, which the AKP claimed
only it could ensure. There were reports that
Mr. Erdogan undermined efforts to build a
coalition government with the support of
smaller parties after the June election so that
he could portray the AKP as the only option
for a stable government. And he succeeded in
making the case that the AKP should be given
a stronger mandate.
Even if the AKP has not got enough numbers
to change the Constitution, Mr. Erdogan will
e ai the ou t s ost po e ful politi al
leader. But political victories cannot
whitewash the damage done to Turkish
democracy by his dictatorial tendencies,
divisive politics and a foreign policy pinned on

regional ambitions. As Prime Minister for 11


years, he not only imposed total control over
the AKP, but also weakened institutions that
could challenge his authority. Public criticism
has not been tolerated. Newspapers have
been brought under intense government
p essu e. The outh p otests i Ista ul s
Gezi Park against the government were dealt
ith utall . The pe iod et ee the AKP s
June election defeat and the November
victory is a case in point. Immediately after
the electoral loss, Mr. Erdogan took a
confrontational approach towards the Kurds.
The peace process between the Kurdistan
Wo ke s Pa t PKK a d the go e
e t
crumbled, while Mr. Erdogan often attacked
the left-wing Kurdish political party, the
Peoples De o ati Pa t HDP , as a p o
of the PKK. The bomb blasts and other violent
incidents that occurred recently strengthened
his narrative that Turkey needs strong hands

to tackle its mounting security challenges


making it easier for the AKP to clinch the
i to . The all is o i M . E doga s
court. He can use the mandate to carve out
more powers for himself, and thereby further
damage the Turkish polity. He can also be
mindful of the constitutional limits of the
ceremonial presidency and guide the AKP-led
government to strengthen democratic
institutions and promote peace between the
government and the rebels as well as
different ethnic groups. The choice he makes
ill defi e Tu ke s futu e.
3. Misuse of sedition law
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Once again the law of sedition has been
misused, this time in Tamil Nadu. A folk
singer associated with a radical leftist group
has been charged with sedition and
committing an act with an intent to cause a
riot. His offence: disseminating two songs
pillorying Chief Minister Jayalalithaa and her
government for its policy of retailing liquor.
There is nothing in the compositions that
even remotely threatens the state or
established government; neither is there
anything that encourages violence, beyond
calling for the closure of state-run liquor
outlets as part of a campaign against
government policy. The song has gone viral
on social media, and many relate to its
central theme. The song delineates with a
great sense of irony, in tunes that are catchy,
the idea of the state selling liquor while at the
same time showering the people with

freebies. In a sense, it has captured the


present patronage paradigm in the political
economy wherein the ruling party poses as
the provenance of all welfare, but keeps the
people disempowered through alcohol
addiction and dependent on state doles. The
artist, Kovan, whose real name is Sivadas, has
managed to capture this reality in his songs.
While the tenor of one of the songs, as well
as caricatures in its video portraying Ms.
Jayalalithaa in poor light, may appear
defamatory of an individual, it should be
remembered that small radical groups using
folk forms for political propaganda
communicate in strong, yet easily
understandable language.
Powerful political figures ought to have it in
them to take such criticism in their stride.
They must act to address the underlying
grievances rather than use repressive

easu es. The state s espo se has ee


eedlessl a g . Ko a s a est a ks et
another instance of a pliant police force
invoking Section 124A of the Indian Penal
Code, which deals with sedition, with utter
disregard for several judicial pronouncements
limiting its scope. Courts have deprecated the
tendency to invoke this grave charge for mere
expressions of critical views. The Supreme
Court has said that even words that indicate
disaffection towards the government cannot
be termed seditious, unless there is actual
incitement to violence and intention to cause
disorder. In this case, it is particularly
disgraceful that the Chennai police have
equated strident criticism of the Chief
Minister with an alleged threat to the
government established by law. It was only
recently that the Maharashtra government
withdrew a controversial circular to the effect
that strong criticism of public servants could

attract the charge of sedition. In 2012,


cartoonist Aseem Trivedi was booked for
sedition for a cartoon that highlighted
corruption. In Meerut last year, the police
initially invoked Section 124A, but later
dropped it, against a group of Kashmiri
students for, of all things, cheering the
Pakistan team during a cricket telecast. Given
its repeated misuse, it is time this unwanted,
outdated, pre-colonial provision was
jettisoned altogether.
4. Fast forwarding to thorium
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JAIDEEP A. PRABHU
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A new worldwide plutonium market brought


under safeguards is a safe bet to help India
advance its ambitious thorium reactor
programme
What is the single greatest factor that
prevents the large-scale deployment of
thorium-fuelled reactors in India? Most
people would assume that it is a limitation of
technology, still just out of grasp. After all,
the construction of the advanced heavywater reactor (AHWR) a 300 MWe,
indigenously designed, thorium-fuelled,
commercial technology demonstrator has
been put off several times since it was first
announced in 2004. However, scientists at
the Bhabha Atomic Research Centre have
successfully tested all relevant thoriumrelated technologies in the laboratory,
achieving even industrial scale capability in
some of them. In fact, if pressed, India could

probably begin full-scale deployment of


thorium reactors in ten years. The single
greatest hurdle, to answer the original
question, is the critical shortage of fissile
material.
A fissile material is one that can sustain a
chain reaction upon bombardment by
neutrons. Thorium is by itself fertile, meaning
that it can transmute into a fissile
radioisotope but cannot itself keep a chain
reaction going. In a thorium reactor, a fissile
material like uranium or plutonium is
blanketed by thorium. The fissile material,
also called a driver in this case, drives the
chain reaction to produce energy while
simultaneously transmuting the fertile
material into fissile material. India has very
modest deposits of uranium and some of the
wo ld s la gest sou es of tho iu . It as
keeping this in mind that in 1954, Homi

Bha ha e isio ed I dia s u lea po e


programme in three stages to suit the
ou t s esou e p ofile. I the fi st stage,
heavy water reactors fuelled by natural
uranium would produce plutonium; the
second stage would initially be fuelled by a
mix of the plutonium from the first stage and
natural uranium. This uranium would
transmute into more plutonium and once
sufficient stocks have been built up, thorium
would be introduced into the fuel cycle to
convert it into uranium 233 for the third
stage. In the final stage, a mix of thorium and
uranium fuels the reactors. The thorium
transmutes to U-233 as in the second stage,
which powers the reactor. Fresh thorium can
replace the depleted thorium in the reactor
core, making it essentially a thorium-fuelled
reactor even though it is the U-233 that is
undergoing fission to produce electricity.

After decades of operating pressurised heavywater reactors (PHWR), India is finally ready
to start the second stage. A 500 MW
Prototype Fast Breeder Reactor (PFBR) at
Kalpakkam is set to achieve criticality any day
now and four more fast breeder reactors
have been sanctioned, two at the same site
and two elsewhere. However, experts
estimate that it would take India many more
FBRs and at least another four decades
before it has built up a sufficient fissile
material inventory to launch the third stage.
The earliest projections place major thorium
reactor construction in the late 2040s, some
past 2070. India cannot wait that
long.Procuring fissile material
The o ious solutio to I dia s sho tage of
fissile material is to procure it from the
international market. As yet, there exists no
commerce in plutonium though there is no

law that expressly forbids it. In fact, most


nuclear treaties such as the Convention on
the Physical Protection of Nuclear Material
address only U-235 and U-233, presumably
because plutonium has so far not been
considered a material suited for peaceful
purposes. The Non-Proliferation Treaty (NPT)
merely mandates that special fissionable
material which includes plutonium if
transferred, be done so under safeguards.
Thus, the legal rubric for safeguarded sale of
plutonium already exists. The physical and
safety procedures for moving radioactive
spent fuel and plutonium also already exists.
If India were to start purchasing plutonium
and/or spent fuel, it would immediately
alleviate the pressure on countries like Japan
and the U.K. who are looking to reduce their
stockpile of plutonium. India is unlikely to
remain the only customer for too long either.

Thorium reactors have come to be of great


interest to many countries in the last few
years, and Europe yet remains intrigued by
FBRs as their work on ASTRID, ALFRED, and
ELSY shows.
The unseemly emphasis on thorium
technology has many reasons. One, thorium
reactors produce far less waste than presentday reactors. Two, they have the ability to
burn up most of the highly radioactive and
long-lasting minor actinides that makes
nuclear waste from Light Water Reactors a
nuisance to deal with. Three, the minuscule
waste that is generated is toxic for only three
or four hundred years rather than thousands
of years. Four, thorium reactors are cheaper
because they have higher burnup. And five,
thorium reactors are significantly more
proliferation-resistant than present reactors.
This is because the U-233 produced by

transmuting thorium also contains U-232, a


strong source of gamma radiation that makes
it difficult to work with. Its daughter product,
thallium-208, is equally difficult to handle and
easy to detect.
The mainstreaming of thorium reactors
worldwide thus offers an enormous
advantage to proliferation-resistance as well
as the environment. Admittedly, there still
remains a proliferation risk, but these can be
addressed by already existing safeguards. For
India, it offers the added benefit that it can
act as a guarantor for the lifetime supply of
nuclear fuel for reactors if it chooses to enter
the export market, something it is unable to
do for uranium-fuelled reactors.
It is clear that India stands to profit greatly
from plutonium trading but what compelling
reason does the world have to accommodate
India? The most significant carrot would be

that all of I dia s FBs that a e tasked for


civilian purposes can come under
international safeguards in a system similar to
the Indo-U.S. nuclear deal. There is little
doubt that India will one day have a fleet of
FBRs and large quantities of fissile material
that can easily be redirected towards its
weapons programme. This will limit how
quickly India can grow its nuclear arsenal to
match that of, say, China. Delhi has shown no
inclination to do so until now, but the world
community would surely prefer that as much
as possi le of I dia s pluto ium was locked
under safeguards.
The U.S. could perhaps emerge as the
greatest obstacle to plutonium commerce.
Washington has been resolutely opposed to
reprocessing since the Carter administration,
preferring instead the wasteful once-through,
open fuel cycle. Although the U.S. cannot

prevent countries from trading in plutonium,


it has the power to make it uncomfortable for
them via sanctions, reduced scientific
cooperation, and other mechanisms. The
strong non-proliferation lobby in the U.S. is
also likely to be nettled that a non-signatory
of the NPT would now move to open and
regulate trade in plutonium. The challenge
for Delhi is to convince Washington to
sponsor rather than oppose such a venture.
In this, a sizeable portion of the nuclear
industry could e Delhi s allies.
Scientists predict that the impact of climate
change will be worse on India. Advancing the
deployment of thorium reactors by four to six
decades via a plutonium market might be the
most effective step towards curtailing carbon
emissions.

( Jaideep A. Prabhu is a researcher in foreign


and nuclear policy. He can be reached at
@orsoraggiante )
The greatest hurdle to begin full-scale
deployment of thorium reactors in ten years
is the critical shortage of fissile material
5. Portents of a religious autocracy
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PUSHPA M. BHARGAVA
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illustration: satwik gade

Cultural intolerance is a dominant element in


the functioning of the present government,
which wants to decide what we eat, wear,
read, watch and who we love
With the Rashtriya Swayamsevak Sangh (RSS)
being the fountainhead of Hindutva, and the
Bharatiya Janata Party (BJP) government
being strongly influenced by the RSS, we may
ask: A e e o i g to a ds a Hi du
religious autocracy which would move the
country away from rationality and reason
a d, thus, de o a ? U fo tu atel , it
seems so. In any rational and reasonable
society as in a democracy, dissent is accepted
as a norm and reasoned dissent is
encouraged. However, in India at present, the
space for reasoned dissent is shrinking day by
day, being reduced as part of the public policy
of the present government. Consequently,
intolerance to any different view is

increasing. Thus, on October 22 in Karnataka,


a young Dalit student-writer, Huchangi
Prasad, was kidnapped and beaten up by a
group of men for showing disrespect towards
Hindu gods and writing about caste
discrimination. Though the caste system has
been the bane of Hindu society, it is now
being practised with increased vigour. This is
reflected in the growing number of crimes
against Dalits, including the horrific incident
in Faridabad last month where two Dalit
children were burnt to death when a mob
attacked their home.
Apart from violence, cases have been filed
against well-known organisations such as
Greenpeace, and individuals such as Teesta
Setalvad, because they have dared to show
dissent.
Promoting unreason

According to Article 51a(h) of our


Constitution, it is the fundamental duty of
e e itize to de elop the s ie tifi
temper, humanism and the spirit of inquiry
a d efo
. Ho e e , the go e
e t o
is the biggest hurdle to the practice of
scientific temper which, by definition, is
rooted in reason and rationality. No
government in the past has had such little
understanding of science. This can have a
su sta tiall egati e effe t o the ou t s
developmental agenda.
Absurd claims are being made about our past:
that we had large planes that could perform
interplanetary travel and the ability to
transplant an elephant head over a human
torso. History is being distorted to suit
religious beliefs with mythological figures and
gods presented as historical figures.

There have been organised attempts to


impose the Hindutva agenda across the
country with the tacit support of
organisations that have no respect for the
law, leave aside reason or secular values. The
recent actions of the Shiv Sena, despite being
in a ruling alliance with the BJP, such as
throwing black ink on Observer Research
Fou datio Chai a udhee d a Kulka i s
face because he launched a book written by
former Pakistan foreign minister Khurshid
Mahmud Kasuri, not allowing Pakistani
musician Ghulam Ali to perform in Mumbai,
and storming the offices of the Board of
Control for Cricket in India during a meeting
with officials of the Pakistan Cricket Board,
are examples. Apart from attacks on
freethinkers and Dalits, minorities are also
made to feel like second-class citizens.
Churches have been attacked and more
recently, in an apparently premeditated

assault, Mohammad Akhlaq, a blacksmith in


Dadri near Delhi, was lynched and his son
severely injured on the suspicion that they
ate beef. This incident was defended by BJP
legislators Sangeet Som and Sakshi Maharaj.
A Hindu fundamentalist organisation has
announced a reward to all Hindus who have
five or more children, to prevent the Muslim
population in the country from increasing at a
higher rate than the Hindu population. The
Hindu Mahasabha has meanwhile announced
that November 15, the death anniversary of
Nathuram Godse, the assassin of Mahatma
Gandhi, would be celebrated as Martyrdom
Day.
Privatising essential services
In any good democracy, education upto Class
XII (upto 18 years of age) and health are
taken care of by the state. In India, however,

both education and health are being


increasingly privatised and commercialised,
making them accessible only to the rich
something that would characterise an
autocracy.
In filling up top posts in the country, greater
emphasis is being laid on political advantage
and relationship with the RSS than on merit.
An example would be the appointment of
Gajendra Chauhan as Director of the Film and
Television Institute of India, sparking protests
from students and filmmakers.
Cultural intolerance is a dominant element in
the functioning of the present government
which wants to decide what we may eat,
what we may wear, whom we may love, what
books we may read, and what films we may
watch, in a way that no previous government
has done. This government does not seem to
be aware that eating of beef was permitted in

ancient India. The qualities of beef are stated


in the Ayurvedic text, Charaka Samhita, as
follows:
The flesh of the o is e efi ial fo those
suffering from the loss of flesh due to
disorders caused by an excess
of vayu, rhinitis, irregular fever, dry cough,
fatigue, and also in cases of excessive
appetite resulting from hard ma ual o k.
The votaries of Hindutva do not realise that
no religion is superior to another, and all have
substantial elements that go against the grain
of scientific temper, rationality and reason.
History tells us that all autocracies are antiintellectual. It is, therefore, not surprising
that the present regime, instead of
introspecting on the fact that over 300
eminent persons have returned national

awards, has termed these persons antinational and manufacturers of dissent.


The above listing is random and only partial.
There is extensive evidence suggesting that
the main objective of the BJP/RSS combine is
to destroy the democratic fabric of India and
make it a Hindu religious autocracy.
Being a professional biologist, I would like to
end by quoting an important biological
maxim variety leads to evolution and
ho oge eit leads to e ti tio . I dia s
greatest asset is the variety it has in virtually
every area. We have to learn to respect this
variety through action, if we do not want the
country to become a Hindu religious
autocracy.
(Dr Bhargava is former vice chairman,
National Knowledge Commission. He recently

decided to return his Padma Bhushan.


bhargava.pm@gmail.com)
All autocracies are
anti-intellectual. Hence it is not surprising
that those who have returned national
awards have been termed anti-national and
manufacturers of dissent
6. A blast from the colonial past
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PETER RONALD DESOUZA


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Peter Ronald deSouza


It is a bit late to enter the national debate on
etu i g a a ds e ause of the li ate of
i tole a e . The p o o atio to joi ,
however, has come from ace musician Zubin
Mehta. In his interview on October 30, he had
alled the etu i g of a a ds a ovement
that ust e hea d . As a a tist of the
highest eminence, one who can hear the tone
of each musical instrument when he conducts
a o hest a, M . Mehta s des iptio is a
opportunity for us to join the debate and take

it two octaves higher. Let us begin with a


brief history lesson.
Soon after the massacre at Jallianwala Bagh,
Rabindranath Tagore, who had heard the
rumours, was restless because he wanted to
know the extent of the tragedy. Tagore sent
Charlie Andrews to investigate what had
happened and report to him. When he
e ei ed A d e s s epo t, ith its
description of innocent men, women, and
children gunned down in cold blood by
General Reginald Dyer who wanted to teach
the ati es a lesso , Tago e as deepl
troubled and very angry. He was determined
that the massacre not go unopposed.
A d e o i so s iog aph des i es hi
as pacing up and down his room the whole
night, deciding on what that response should
be. He was determined to deny the regime its
legitimacy to rule; a regime that was guilty of

killing its subjects was one that had lost the


right to be loved and respected by the
people.
Tagore s ote of protest
Tagore, who had been given the knighthood
by the British government, in recognition of
his achievements in literature, decided to
return it. This was to him an appropriate form
of protest in that dark hour. He wrote to the
Viceroy Lord Chelmsford, on May 31, 1919,
aski g to e elie ed of his k ighthood . It is
a long statement but it must be read at
length since it has something to teach us
today.
The e o it of the easu es take
the
government in the Punjab for quelling some
local disturbances has, with rude shock,
revealed to our minds the helplessness of our
positio as B itish su je ts i I dia .

Considering that such treatment has been


meted out to a population, disarmed and
resourceless, by a power which has the most
terribly efficient organisation for destruction
of human lives, we must strongly assert that
it can claim no political expediency, far less
moral justification. The accounts of the
insults and sufferings by our brothers in
Punjab have trickled through the gagged
silence, reaching every corner of India, and
the universal agony of indignation roused in
the hearts of our people has been ignored by
our rulers possibly congratulating
themselves for what they imagine as salutary
lesso s
The ti e has o e he adges of ho ou
make our shame glaring in the incongruous
context of humiliation, and I for my part wish
to stand, shorn of all special distinctions, by
the side of my countrymen who, for their so-

called insignificance, are liable to suffer a


deg adatio ot fit fo hu a ei gs .
It was a moral statement, indicating that the
regime had lost its right to rule. It was also a
political statement and a statement of
solidarity. It carries a lesson.
The British state was in a quandary. In
complete contrast to how the current
government at the Centre is reacting to the
return of awards by eminent personalities,
the Englishmen did not criticise Tagore for
not protesting against the Mughal invasion of
India; nor did they charge him with being a
stooge of the Congress movement; nor did
they hold him guilty of having enjoyed the
colonial largesse. Even the colonial state did
not stoop so low. Instead, it went into a
huddle. Viceroy Chelmsford cabled Edwin
Montagu, the Secretary of State, as follows:

I p opose to epl , i ie of the


advertisement that would be given to Tagore
and the fact that grant of his request might
be interpreted as admission of mistaken
policy in the Punjab, that I am unable to
relieve him of his title and, in the
circumstances, do not propose to make any
recommendation to His majesty on the
su je t.
Mo tagu e do sed the Vi e o s de isio .
King George-V concurred. They did not accept
the return of the knighthood on the grounds
that it was given for literature and that his act
of protest was a statement of politics and not
of literature. Sadly, at least in the colonial
go e
e t s e es, Tago e e ai ed i
a i d a ath till his death.
While Tagore denied the colonial state its
legitimacy to rule, they, in turn, denied him
the dignity of his protest. That was 1919.

BJP following the colonial script


Fast forward to 2015. The Bharatiya Janata
Party-Rashtriya Swayamsevak Sangh (BJPRSS) regime, it seems, is following very closely
the colonial handbook of governance.
Its methodology is the same. First, they attack
the class of intellectuals, writers, filmmakers,
s ie tists, as pe so s ho a e a ti- atio al
a d a ti-Hi du . At its eeti g i a hi o
October 30, the top leadership of the RSS,
o
e ti g o i telle tuals said: these a e
people of a particular ideology who have
always been biased and intolerant towards
the a gh a d Hi duis .
That Narendra Dabholkar, Govind Pansare
and M.M. Kalburgi and Nayantara Sahgal,
Ashok Vajpeyi and Pushpa M. Bhargava,
were/are Hindus is a fact of little
consequence. The strategy is clear: do not let

the public see the protesters as having a case.


As Lo d Chel sfo d said, It ust ot e
i te p eted as ad issio of istake poli .
The second step the government follows is:
attack the reputation of individuals. That is
what explains their charge that Pushpa M.
Bhargava was a beneficiary of Congress
largesse. That Mr. Bhargava is the man who
helped uild I dia s i stitutio al apa it i
the biological sciences, and who has
relentlessly campaigned for a scientific
temper in our public discourse, is again a fact
of little consequence.
Third, they drum up nationalist fervour to
portray the protest as diminishing the nation
in the eyes of the world. To compare this with
the assa e i
, Ge e al D e s a tio s
had also built up nationalist fervour back in
Britain. When he returned to England he was
gi e a he o s el o e.

A growing current of anti-intellectualism


It is the same colonial card that the RSS-BJP
regime is now playing versus the dissenters.
See what they say. The protests are
a ufa tu ed , sa s the Fi a e Minister. It
is o l the Lut e s Delhi that is p otesti g
says the BJP chief, suggesting that those
protesting are the very people who have
been in a location of privilege, and are now
feeling disempowered.
Must we remind him that the entire Cabinet,
and people at the top in the civil services,
fight to be allotted choicest bungalows in
Lut e s Delhi? u h o
e ts feed a
growing current of anti-intellectualism as can
e see o so ial edia. Fo the BJP s spi
masters, it seems the colonial handbook of
governance is the guide to follow. Lord
Chelmsford, not Tagore, is the teacher. These
are parts of the first octave.

Now for the second octave. Stepping back


from the noise of battle, between the regime
and the group of writers, filmmakers,
scientists, and social scientists, we see a
deeper, more structural process of change
u de a . M olleague D.L. heth alls it a
transformational moment for Indian
de o a .
There are many aspects to this
transformational moment an institutional
capture; the creation for a new iconography
for the state; an abandonment of the
doctrine of secularism; attempts to capture
young minds through new school curricula; a
shift in foreign policy; the prioritisation of
economic growth over environmental
sustainability; and an undermining of the
movement towards a scientific temper.
However, the aspect I want to dwell on here

is the changes taking place to the coordinates


of our public discourse.
The RSS and the BJP want to dump the state
built by Jawaharlal Nehru, Sardar Vallabhbhai
Patel, Maulana Abul Kalam Azad and Dr. B.R.
Ambedkar. In contrast, they want to build a
state-society combination that embodies the
thi ki g of M.. Gol alka , the s se o d
Sarsanghchalak. The way to do so is to
ha ge the pu li dis ou se. Peaceful coe iste e, he e diffe e es a e tole ated, is
epla ed a politi s of othe -i g , he e
these diffe e es ha e to pass the atio al
ultu e test . Natio al ultu e is hat
Hindutva says it is, not what Kalidas or Asoka
or Akbar or Mahatma Gandhi said. This
politi s of othe -i g is fed so ial o fli ts.
These need to be created.
Here, the steps followed are simple. Divide
the society-polit i to t o g oups: us a d

the . The , ha ge the ultu al oo di ates


to terms and phrases like pseudose ula is ; good go e a e da ; lo e
jihad ; ghar wapsi ; eef eati g a d, o ,
U ifo Ci il Code all elements intended
to bring about the palatable public discourse.
As a result, Nehru is made the villain who
delayed our development. Secularism is a
foreign import. Over the last few years, the
RSS-BJP strategy seems to be working. An
other-ing is taking place. You can hear it in
conversations. Zubin Mehta saw it.
One would be too nave to expect to Prime
Minister to confront this trend of other-ing
for he is one of its authors. It is this tactic that
will give him the electoral success he seeks. It
may destroy the national fabric that
comprises peaceful co-existence and
communal harmony but that is a cost the

dispensation is willing to make the people of


our country pay.
The British followed a policy of divide and
rule. So does the RSS-BJP. Zubin Mehta knows
a thing or two about conducting an orchestra
of many instruments and many musical
movements. He knows how to produce
harmony. He also knows when disharmony
occurs.
( Peter Ronald deSouza is professor at the
Centre for the Study of Developing Societies
and holds the Dr. S. Radhakrishnan Chair of
the Rajya Sabha .)
The RSS and the BJP want to dump the state
built by Nehru, Patel, Azad and Ambedkar
and replace it with a state-society visualised
y the SS s for er Sarsa gh halak, M.S.
Golwalkar

The Ce tre s derisio for the a e of


legitimate protests is comparable to the
quandary experienced by the British regime
when Tagore returned his knighthood. The
olo ial era s poli y of di ide a d rule has
returned to haunt our diverse national fabric
as the regime attempts to manufacture
social divides
7. Corrections and Clarifications
Class 1-10 GK Questions - Important
Problems, Model Answers, Question Bank.
Join Now for Free!www.meritnation.com/GKQA
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>>It as Bha a i s Kiratarjuniya . The report,
W aps off a i h lite a lega
Life page,

Nov. 2, 2015) wrongly spelled it


as Kirtarjuniya .
>>The report on the Anthropological Survey
of I dia s fi st authe ti de og aphi
database of the Shompen tribe was wrongly
headli ed: A I stud sa s ho pe women
outnumber e No . ,
, so e
editions). The text of the report, correctly
said o pa ed to the u e of e i
the Shompen tribe, there are fewer o e .
>> u li e Bha
i po kets title No . ,
2015, Sport), said the win was the World
No. 10 s fifth Challenger title. Actually, Yuki
Bhambri was World No. 105 before winning
the tournament.
>>The te t of Chikka a gappa joi s
hu ha ka O t. ,
, po t said
Shubhankar had a score of 4 under 64 in the

third round. It should have been 4 under 68 ,


as the scoreboard correctly said.
BL
1. Positive outlook
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The new draft civil aviation policy signals
good intentions, but making it a reality
requiresthe buy-in of all stakeholders
For a policy that has been over a decade-anda-half in the making the last formal
announcement was in 1992 the new draft
civil aviation policy reads more like a
statement of intent than a clear roadmap. In
fa t, o e ould a gue that I dia does t

require a formal civil aviation policy having,


much like the IT industry, grown quite well
without one. Between 2000 and 2010, air
operations grew 160 per cent. India is now
the o ld s fou th la gest do esti a iatio
market. Over the next half-a-decade, the
sector is expected to clock a growth rate of
10 per cent a year, well over the GDP growth
rate.
But this remarkable surge masks a highly
skewed development. Only 75 of the 476
airstrips in the country have scheduled
operations while the principal hubs of Delhi
and Mumbai are already stretched to
capacity. Per capita availability of seats is a
quarter that of Thailand or Indonesia. Despite
rising fleet strength, key activities such as
maintenance, repair and overhaul (MRO) take
pla e la gel o e seas. A d o i gl , I dia s
overall aviation safety rating was lowered due

to a critical shortage of flight control


personnel and safety inspectors. The draft
policy does address some of the key
concerns. While a new regional connectivity
scheme is expected to drive connectivity to
remote areas, the proposals to cap fares
at Rs. 2,500 for flights of less than one hour
and introduce a 2 per cent cess on other fares
to provide a viability gap funding to operators
are market-distorting and fraught with
problems. On infrastructure, the proposal to
give tax breaks for MRO services is welcome.
The move to give infrastructure status to colocated MRO, ground and cargo handling, as
also aviation fuel handling, will provide tax
benefits as well as open up cheaper term
funding opportunities. On the ease of doing
usi ess f o t, e el digitisi g the DGCA s
services is welcome but not enough. The
industry would have wanted greater clarity
on issues such as fleet and capital

requirements, which act as entry barriers.


Disappointingly, the policy also does not clear
the air on the so-called 5/20 rule (five years
of domestic operations and 20 aircraft) for
domestic airlines wishing to fly abroad, which
provides an edge to select incumbent players
at the expense of new entrants. The move to
liberalise helicopter operations, however, is a
positive for this neglected sector.
The e a eke a eas he e the i ist s
intent can be achieved only if other agencies
cooperate. From tax breaks that the finance
ministry has to approve, to reducing tax on
aviation fuel for which States have to agree,
to cutting airport charges, which other
stakeholders need to accept, there are far too
many ifs and buts for the draft policy to be
truly meaningful. One can only hope that the
final policy will provide the kind of clarity
stakeholders are seeking.

2. End this curious silence over Syria


SANJAY KAPOOR
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India should back ussia s i te e tio ,
rather than worry about how the US will react
During the recent India-Africa Summit, the
visiting Egyptian president El-Sisi in his
meeting with Prime Minister Narendra Modi
stressed the importance of concerted
international efforts to realise lasting peace in
the violence torn West Asian region.
Couched in diplomatese, the Egyptian
st o g a see ed to justif his ou t

su p isi g de isio to suppo t ussia s


military intervention in Syria even when its
major ally, Saudi Arabia, or the US wanted no
relief to be given to Syrian president Basheral-Assad. Immediately after Russia launched
its military strikes in Syria in early October,
Egyptian foreign minister, Sameh Shoukry,
stated they would curtail the spread of
terrorism and help deal a fatal blow to the
Islamic State (IS) in the war-torn country.
On the face of it, there is no reason why India
should not follow a position similar to that of
Eg pt o e te di g suppo t to ussia s
decision to get into Syria to fight the Islamic
State. After all, when the Russian president
Vladimir Putin, ordered air strikes against IS
targets in Syria, he was doing exactly what
India wanted to nip their threat in the bud
or to prevent its menacing spread into India
and other vulnerable societies that could hurt

its interests, Bangladesh and Afghanistan, for


example.
Diplomatic tightrope
Diplomacy endeavours to find a way out in a
world of sharp contradictions especially
when countries are not willing to commit
themselves to a bloc or a position. So, India
may agree with Russia, but would be loathe
to admitting it openly lest it antagonise the
US and its western and Arab allies.
The US and its allies such as the UK, Saudi
Arabia and Turkey see in Russia militarily
entering the unending strife in Syria an
attempt to shore up the fortunes of President
Basher-al-Assad, rather than taking on the
abhorrent IS. Russian entry into the fouryear-old war in Syria has triggered off
unceasing propaganda from the western
media and human rights organisations such

as Amnesty International and Human Rights


Watch (HRW).
They allege that the Russians are dropping
bombs not on the militants of IS, but on USsuppo ted ode ates . o ui k a d a g
has been their response that Putin jocularly
remarked that the allegations against Russian
bombers dropping missiles began to get
reported even before the aircrafts had left
the ground. Since then the accusations
agai st ussia a d its du
o s that
lack precision have intensified. Needless to
say, the trashing of Russian air strike
capability is a lot of gas.
Studied silence
Despite Defence Minister Manoha Pa ikka s
recent visit to Moscow to seal defence deals,
India has maintained a studied silence on
ussia s ia ad e tu e as it fi ds it diffi ult

to craft a policy that balances the two


competing narratives. Quite evidently, India
does not want its military ties with Moscow
to influence its foreign policy.
This is despite the fact that India is part of
BRICS and a member of the Shanghai
Cooperation Organisation (SCO), which have
Russia and China as its members. New Delhi is
not willing to compromise or degrade the
diplomatic investments it has made in the US,
Israel or even Saudi Arabia. It believes that
the perception of proximity with the US has
helped improve its profile in the eyes of the
world.
However, New Delhi hopes that a political
solution would be found to end this unending
war in Syria that has spawned enduring
sectarian hostilities and revived historical
faultlines between religions. The Russians by
entering Syria with their military hardware

have jumpstarted this process to find a


solution to end war in the region.
The recent conference in Vienna generated
real hope that the threat of the Islamic State
would be squarely challenged rather than
dealt with perfunctorily by the US and its
bombing raids.
At the egi i g of the ussia s out ageously
courageous decision to enter Syria in the first
week of October, there were reports that
China, too, was sending warships to Syria
making many foreign policy observers see it
as a SCO 4+1 initiative that also included Iran.
Subsequently, China clarified that it was not
in favour of foreign meddling.
For quite a while, China was distrustful of
I dia s p o i it ith the U a d t ied to
keep New Delhi away from the SCO. The
common understanding is that Russia eased

I dia s e t i to hat is also k o as Asia


Nato to ala e g o i g Chi ese i flue e i
the region.
This as u h efo e ussia s depe de e
on China grew after the US imposed sanctions
on Moscow and launched what the
A e i a s like to all a h id a i
Eastern Ukraine. This becomes tricky if one
sees it from the prism of the SCO.
The SCO founding principle is to bring in
joi t effo ts to ai tai a d e su e pea e,
security and stability in the region. To give
meaning to this goal, the SCO has also made
an executive committee of regional counterterrorism centre (RCTC), which has put in
pla e a s ste of effe ti e espo se to
glo al halle ges a d th eats . This esol e
has been interpreted in different ways by
different countries.

History of goodwill
Putin read the rise of the Islamic State as a
th eat to ussia a d the egio s sta ilit , a d
an attempt to overthrow its ally, Assad.
India has been ambivalent about Syria
despite its extremely warm ties with them in
the past. In 2011 and 2013 it abstained from
a UN resolution against Syria. At that time,
this writer during a visit to Damascus found
rapturous support for China, Russia and India.
Later, the Qataris, who gave a lot of funds to
Islamic militants opposed to Assad,
questioned why India was supporting a
country that had no migrant workers. India
seemed to have a rethink and ended up
attending a Friends of Syria seminar that was
opposed to Assad.
Since then, India has survived in this nowhere
zone hoping that the problem will sort

itself out. Russia provides India an


opportunity to have a say in challenging the
Islamic State ideologically and diplomatically.
Will we accept it?
The writer is the editor of HardNews
3. Of a piece, not piecemeal
AARATI KRISHNAN
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The Munjal model is eminently followable

BM Munjal
Most of the tributes pouring in for Brij Mohan
Lall Munjal, founder and chairman emeritus
of Hero Motocorp who passed away this
week, talk about how this self-made man
rose to become one of the 30 richest Indians.
What s o e e a ka le is ho he a aged
to enrich ordinary shareholders. The Hero
Motocorp (formerly Hero Honda) stock has
been one of the top wealth-creators in the
Indian market over the last 30 years. Those

who bought into the firm during in 1984,


would today find their investment of Rs.1,000
is worth Rs. . lakh. That s t ul e a ka le
in a a ket i hi h a
usi esses do t
even survive a decade.
Mu jal s usi ess su ess, hi h positio ed
Hero Motocorp as the largest two-wheeler
manufacturer in the world, came mainly from
his astute reading of the marketplace and his
focus on one chosen line of business. As a
bicycle-maker, Munjal was the first to spot
the huge unmet demand for an inexpensive
commuter bike in cities and towns hamstrung
by poor public transport. Pioneering the
concept of commuter motorcycles, Hero
flagged off the extremely fuel efficient CD
100 the first 100 cc motorcycle using fourstroke technology and with savvy
a keti g e e e Fill it, hut it, Fo get
it ? e t f o st e gth to st e gth. The

Munjals resisted all temptations to diversify


into unrelated businesses or make global
acquisitions. The joint venture with Honda
(which lasted from 1984 to 2011) is a case
study on successful partnerships. This organic
route to growth has helped the company
hone its manufacturing efficiencies and build
brands like Splendor (one of the largest
selling vehicle brands in the world). The
business has also avoided debt and churned
out prodigious amounts of cash year after
year, making the stock an institutional
investor favourite.
Mu jal s sto is p oof that it does t take a
complicated business model or strategy to
build a world-scale manufacturing outfit and
generate opportunities for your employees,
shareholders and suppliers. Simply stick to
your knitting.
Aarati KrishnanEditorial Consultant

4. Demographic dividend or damp squib?


CHARAN SINGH
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Dim prospects Without skills KR Deepak

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India can address the needs of the greying
economies of the West, provided its
workforce develops the requisite skills
The global economy is passing through a
demographic crisis, with its growing ageing
population. India, has an obvious advantage
here, and could provide the world with skills
and manpower.
I dia has the o ld s ou gest o kfo e
with a median age way below that of China
and the OECD countries. The rest of the
world, especially western countries, are
ageing rapidly because of low fertility rates
and increased longevity. Consequently,
according to the Union government , the

global economy is expected to witness a


skilled manpower shortage of around 56
illio
. Thus, the de og aphi
di ide d i I dia eeds to e e ploited to
meet the skilled manpower requirements in
India and abroad.
The demographic dividend not only implies
increased labour supply but also a challenge
in finding capacity in the economy to absorb
and productively employ extra workers. To
make a larger number of people employable
would necessitate large investment in human
capital. Investment in educational and
vocational training needs to be strengthened
if India has to successfully reap the benefits
of the demographic dividend.
In 2011-12, according to the Centre, in nearly
18 per cent of households in rural and 6 per
cent in urban areas, there was not a single
member in the age-group 15 years and above

who could read and write a simple message


with understanding. Similarly, the recent
report by the National Sample Survey
Organisation states that during the survey
period of July 2011 to June 2012, nearly 25
per cent of males and 29 per cent of females
in the age range 5 to 29 years did not
consider education necessary to eke out a
living.
Again, nearly 25 per cent males in the rural
areas and 33 per cent in urban areas reported
that they did not attend educational
institutions because they needed to work to
supplement the household income. In the
case of nearly 30 per cent females, the reason
was that they had to attend to domestic
chores.
In the case of vocational training, the
situation is worse. Amongst persons aged 15
to 59 years, only 2.2 per cent reported to

have had formal vocational training; 8.6 per


cent received non-formal vocational training.
As expected, the situation in rural areas was
worse than that in the urban areas. Amongst
rural males, the most significant share of
vocational training was driving and motor
mechanic work while for females, it was
textiles-related work.
High expectations
The demographic dividend is expected to
result in nearly 20 million people joining the
workforce annually in the next 10 years. With
the rising level of income, the expectations of
people, especially the young, are also rising.
The next generation of farmers want to be
part of the growth India story and therefore
out of the agriculture sector. To absorb such
a large labour force, it is necessary to plan for
appropriate vocations and employment
opportunities. Narendra Modi recently

observed that India will now need large


number of ITIs, and a new ministry of skill
development and entrepreneurship would
coordinate the skill development needs of the
country. The Pradhan Mantri Kaushal Vikas
Yojana has been announced to encourage
skill development for youth by providing
monetary rewards. While all these efforts are
encouraging, the fact remains that skill
development strategy has yet not been
successfully implemented.
I dia s o kfo e of ea l
illio i
2012 could increase to 850 million by 2025,
accounting for nearly one-quarter of the
global workforce. MSMEs, with their
flexibility and low cost, easily adapt to new
technology and can help in strengthening the
manufacturing sector. In fact, MSMEs have
the potential to absorb the increasing labour
force while helping to realise the potential of

the Make in India strategy. The need is to


explore new areas for MSMEs.
The writer is the RBI chair professor of
economics, IIM-B
5. LETTERS TO THE EDITOR Send your letters
by email to bleditor@thehindu.co.in or by
post to Letters to the Editor , The Hi du
Business Line, Kasturi Buildings, 859-860,
Anna Salai, Chennai 600002.
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STUDENTS AS STAKEHOLDERS
With efe e e to the a ti le, U e plo a le
e gi ee s: Who s to la e?
ajka al ao
(November 2), the entire onus for the
unemployability of students has been put on
the faculty members, which is far from the
truth The quality and attitude of students are
equally to blame. A majority of the students
fail to clear and obtain their degrees in the
first attempt. The criteria for admission to
engineering colleges have been drastically
reduced and many are compelled by parents
to pursue these courses. There is a total
disconnect between industry and academia.
It s also a is o eptio that positio s i
corporates remains vacant for want of
qualified engineers. The corporates are
primarily looking for skilled employees from
ITIs and polytechnics, and refrain from
recruiting full-fledged graduates as this would

be a costly affair. There is an oversupply of


engineers. The exams are designed to test
memory and not cognitive, creative or critical
skills. Students remain mum in class for fear
of being laughed at. We must encourage
students to question the status quo and not
accept what their teachers say as the gospel
truth. The ball has always been in the
stude ts ou t a d ill e ai the e.
AE Charles
Coimbatore
Politicisation is not the only reason for nonperformance. The demand for technical
degree colleges soared in India because
technical apprenticeship is not popular;
apprentice pay structure and training are
archaic. Moreover, the higher education
system does not give preference to
apprentices, apart from the standard and

quality of apprenticeship being under


scrutiny. Whereas in Germany, they have a
well integrated apprenticeship programme
that has created employment opportunities
and reduced the pressure on degree colleges.
I dia s poli
ake s e e ot ell p epa ed
to respond to the demographic challenge.
Post liberalisation, the demographic
explosion created a huge demand for
education; the government responded by
recklessly allowing private colleges and
deemed universities to operate. There was no
emphasis on quality. India cannot progress
with such a low skill system. It is important to
focus on quality higher education under the
skill India programme and address the issue
at the systemic level.
Naveen Agrawal
Puducherry

It is nether the first time nor the last that


such a sad article has been written about the
apa ilit of ou e gi ee s. It s a i dset.
Unlike in the West, where education is more
job- or career-oriented, we prefer getting
degrees. We must have better careeroriented courses, and more industry
interaction and participation with the UGC to
design courses in such a way that they meets
industry requirements.
Bal Govind
Noida, Uttar Pradesh
AGENTS OF CHANGE
The edito ial, D i i g de a d No e e ,
rightly reflects the slowdown in economy and
company strategy to combat the crisis by
decreasing costs. We can learn from
successful corporates. For instance, LIC

derives most of its revenues through his


agents.
The agent model can be implemented in
manufacturing by equipping people with tech
knowhow and allowing them to produce in
the factory for their clients. This will get rid of
fixed costs such as salary and excess capacity,
and give people an opportunity to earn more.
Vikram Sundaramurthy
Chennai
FB BLUES
Ma k )u ke e g s add ess at IIT Delhi ust
have been very inspiring. Though social
media, especially Facebook, is an inseparable
part of our lives, studies have shown that it
has become an addiction. FB can be stressful
to users who fear missing important social
information or offending people, of who feel
guilty rejecting friend requests or deleting

unwanted contacts or feel bad on being


unfriended or blocked. It can also make
people feel envious as they see the posts,
photos and videos of their friends vacationing
or compare the number of likes or birthday
greeting with their friends.
TS Karthik
Chennai
6. Opinion on sale
C GOPINATH
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The tricky world of online reviews

Co su e s ha e al a s elied o
o d of
outh to a i g deg ees fo aki g thei
purchase decisions. This is especially if we
ha e a good opi io of the opi io gi e s
opinions! We are also discerning when it
comes to accepting opinions. We often have
specific people we would like to consult on
particular product/ service groups: Ms X for
kitchen-related stuff, Mr Y for electronics,
and definitely not Mr Z for holiday
recommendations.

The web took all this to an infinite level by


allowing for comments and opinions to be
tagged on to articles, and shopping sites. The
advantage of reading a news item on the web
is that one can start or join an on-going
debate. Unfortunately, the anonymity seems
to bring out the worst in some, and one has
to sift through a lot of trash to find
meaningful comments. Some newspapers,
this o e i luded, ode ate
e ie i g
o
e ts efo e posti g ut I
ot su e I
like the censorship.
When it comes to products and services,
comments and opinions provide additional
i puts, a d a e the ode
o d of outh.
We suspect there must be psychological
reasons why a larger number of disgruntled
customers post an opinion as against satisfied
customers; they are bitter, want to let go of
some steam, and so on. Yet, this does not

seem to act as a filter when we are reading


the comments, and perhaps we do get
influenced against the product. One negative
comment may weigh more than a positive
comment!
Response matters
Opinions are big when it comes to products
and services. I have even used a potential
comment on a website as a threat to extract
better service from the reception desk of
hotels. Research shows that positive reviews
help drive traffic to a hotel, especially if it is a
lesser known hotel. Fortunately, potential
customers are more impacted by depth of
o
e t the faucet was dripping water all
ight a d the did othi g a out it as
agai st a ge e al p aise the people a e so
f ie dl .

Other research shows when there is a highpercentage of negative reviews, highinvolvement customers join in and tend to
conform. Bad comments have a momentum
of its own, so watch out if you see several bad
comments, it does not necessarily mean a
majority are rating it poorly. A kind of herd
mentality, I guess.
Fortunately, Trip Advisor and many other
sites allow the vendor or service provide to
post a rebuttal. This not only helps provide
the other side of the story but also suggests
that this is a hotel that cares about opinions.
The credibility of the opinions as a source of
additional information requires some policing
on the part of commercial site administrators.
Organisations whose exclusive business is
providing opinions, such as Yelp, and
Epinions.com regularly monitor and set up
verification methods.

Amazon.com takes legal action against


opinion frauds. It has sued several hundreds
of individuals who were in the business of
iti g fi e sta e ie s fo p odu ts o
Amazon for a fee as low as $5 ( Rs. 325).
Amazon also uses algorithms to identify false
reviews.
O e a ea that is still outside A azo s
pu ie is appa e tl o e sta e ie of
books. Political groups and religious cults
apparently target books they dislike with a
flood of o e sta e ie s ith a ie
towards taking them off the shelves!
The writer teaches at Suffolk University,
Boston, and Jindal Global University, Delhi
NCR
7. Time we managed forests differently
GHAZALA SHAHABUDDIN
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I dia s effo ts i i ol i g o
u ities ha e
been feeble. There is a problem of mindset,
policy and funds

Picturesque sight But for how long will it


remain so? KK Mustafah
In India, legally established protected areas
have historically been the most important
means adopted for biodiversity conservation.

Protected areas (PAs) primarily include


National Parks and Wildlife Sanctuaries, and
more recently, Community Reserves and
Conservation Reserves. Today, there are 703
PAs all across India, covering almost 5 per
cent of its land area.
PAs are widely recognised for their
significance in climatic and hydrological
modulation, provision of diverse forest goods,
nutrient cycling, and crop pollination. Yet, the
decline of biodiversity, even inside these
supposed bastions of conservation, is
alarming.
Complex problem
The task of conservation has become even
more difficult as most PAs are surrounded by
people who are alienated from the aims and
need for wildlife conservation. Restrictions on
forest use, poorly managed village

displacement, conflicts with wildlife, and


unclear forest rights fuel resentment among
local communities.
People in and around PAs live with issues of
livelihood insecurity on a daily basis and see
little effort on the part of PA managers to
redress their problems. One of the major
tasks facing PA managers is to enhance local
support for wildlife conservation. While this is
necessary for ethical reasons, there are
practical reasons for doing so as well.
A cooperative local community can help
reduce poaching and other illegal activities,
and provide knowledge and human resource
for better ecosystem management. Public
participation and outreach also go a long way
in developing a more conducive ambience for
dialoguing with different stakeholders in
situations of conflict. With much less policing
to do, PA managers can focus more on

constructive activities such as research and


wildlife management.
For a long time, the public involvement in PA
management was restricted to appointing
naturalists and wildlife enthusiasts as
honorary wildlife wardens. While experienced
in natural history, most of the wardens had
little or no scientific training.
Few possessed a holistic view of socialecological systems in which the PA was
embedded or had a sense of history about
the site. Further, the interface of PA
managers and wardens with local villagers
was restricted to fining them for illegal
activities such as grazing or poaching.
During the 1990s, the government, aided by
the World Bank, sought to redress this
problem through the India Eco-development
Programme (IEDP). The IEDP was limited in

terms of geographical spread and funding,


being carried out only in nine project sites
with a budget of Rs. 3 billion over a ten-year
period ($67 million at the time). However, the
IEDP represented a departure from the
exclusionary norms of conservation prevalent
in India at the time through its emphasis on
local benefit and participation.
A non-starter
However, the IEDP turned out be a nonstarter in many ways. Various schemes were
started with seed money from IEDP, but
could not be sustained beyond the project
period. One of the root causes was the
inability to create sustainable village
institutions that could work effectively and
carry on the activities beyond the project
period. Top-down approaches, activities
inappropriate in the socio-economic context

and continued exclusion of marginalised


groups also contributed to the problems.
There were a few exceptions. Periyar Tiger
Reserve (Kerala) conducted an ecotourism
program to train local people, earlier
dependent on illegal activities such as
poaching. Having the advantage of knowing
the flora and fauna well, they were converted
into effective nature guides to take tourists
on wildlife treks and hikes through the
rainforest reserve.
Other successful cooperatives were created
for enhancing local incomes such as direct
selling of plantation produce and food stalls
during religious pilgrimages. But such
successes were few and far between and in
most of the sites, IEDP sank without a trace
after the funded project.

Another opportunity for improving PA


management in India came in 2005, ironically
with the local extinction of the Bengal tiger in
Sariska Tiger Reserve.
A national-level Tiger Task Force, headed by
environmentalist Sunita Narain, was set up to
explore the long-term issues plaguing tiger
conservation. As a result of its deliberations,
the Tiger Task Force argued for the setting up
of an Advisory Committee in each State with
representation from forest officials, village
groups, NGOs, and other qualified individuals,
an existing legal provision.
Through its intervention in advising
management planning, the proposed
Advisory Committee was meant to help
resolve conflicts between local economy and
ecology. However, this was not even partially
operationalised by State forest departments.

Get local
As of today, Tiger Reserves (which constitute
only 48 out of the 703 PAs in the country)
continue to have a limited budget for ecodevelopment activities.
Unfortunately, even this budget is rarely used
for village-based activities except in high
profile Tiger Reserves. A recent positive
development has been the setting up of
State-level monitoring committees to keep
track of rehabilitation programmes for people
displaced from PAs.
Generating involvement in local PAs requires
not just the government but also
considerable funding. Livelihood
interventions, conflict mitigation and
compensation schemes, and public outreach
programmes are diverse areas requiring
financing, which is not currently available.

The large, 85 per cent budget cuts of the


Ministry of Environment, Forests and Climate
Change in the Twelfth Five-Year Plan have
already made it harder for PA managers to
meet even basic costs such as salaries and
purchase field equipment, leaving little for
additional activities.
One solution is to use funding from the
national Compensatory Afforestation and
Fund Management and Planning Authority
(CAMPA). CAMPA funds are garnered from
government and non-governmental user
entities for the purposes of compensatory
afforestation when forest land is diverted for
industry and infrastructure development.
Today, they are worth Rs. 380 billion ($5.9
billion). The use of CAMPA funds for
improving PA management can be justified as
it will have long- and short-term benefits for
biodiversity conservation. Also, tourist entry

fees to PAs, running into millions of rupees


annually, can strengthen such interventions.
Successful civil society initiatives, though
scattered, have demonstrated that public
outreach vastly improves effectiveness of
nature protection. For instance, snow leopard
conservation in Himachal Pradesh and birdbased tourism in Uttarakhand on-going
efforts led jointly by State Forest
Departments and NGOs are beginning to
yield results.
New legal categories of PAs in India such as
Conservation Reserves and Community
Reserves mandate public participation, a
requirement that can be leveraged for good
use. Existing provisions in the Wildlife
P ote tio A t fo people s i ol e e t a
be operationalised. Incremental
improvements in governance can be made

through locale-specific activities based on


partnerships amongst different sectors.
The writer is a Senior Fellow at the Centre for
Ecology, Development and Research. This
article is by special arrangement with the
Center for the Advanced Study of India,
University of Pennsylvania
8. All you wanted to know about...
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After a prolonged lull, the IPO market is
buzzing again. Offers from Coffee Day
Enterprises and Interglobe Aviation (owner of
IndiGo Airlines) have just concluded and
those from well known firms such as L&T
Infotech and VLCC in the offing. As a retail
investor, how can you judge if an IPO is much

in demand or will have no takers? The


behaviour of anchor investors to the IPO can
offer some clues.
What is it?
Anchor investors are institutional investors
who are offered shares in an IPO a day before
the offer opens. As the name suggests, they
a e supposed to a ho the issue
agreeing to subscribe to shares at a fixed
price so that other investors may know that
there is demand for the shares offered. Each
anchor investor has to put a minimum
of Rs. 10 crore in the issue.
SEBI introduced the concept of anchor
investors in IPOs in 2009. Book built IPOs are
supposed to have a 50 per cent reservation
for qualified institutional buyers (QIBs). Up to
30 per cent of the total issue size can be
allotted to anchor investors. No merchant

banker, promoter or their relatives can apply


for shares under the anchor investor
category. In offers of size less than Rs. 250
crore, there can be a maximum of 15 anchor
investors, but in those over Rs. 250 crore,
SEBI recently removed the cap on number of
anchor investors. Now, there could be 10
additional investors for every extra Rs. 250
crore allocation, subject to minimum
allotment of Rs. 5 crore per anchor investor.
The a ho i esto a t sell his sha es fo at
least 30 days after the allotment. This rule
ensures that investors who want to flip
sha es o listi g, do ot use the a ho
route. Anchor investors can bid for shares at
anywhere within the price band declared by
the company. If the price discovered through
the book building process is higher than the
price at which shares were allotted to anchor
investors, then these investors have to bring

in additional funds to make good the


shortfall. But if the book built price is lower,
the excess amount is not refunded to them.
Why is it important?
Today, many have a complex structure and
are not necessarily profitable at the net level
Sadhbhav Infrastructure Projects, Adlabs
Entertainment and Caf Coffee Day are
examples. In such cases, the anchor investors
can guideother investors.
Why should I care?
Unlike analysts, brokerages or investment
bankers who may put out reports on an IPO,
anchor investors have their own skin in game.
They have actually subscribed to the shares at
the published price. As the anchor portion of
an issue is usually taken up by serious
institutions such as mutual funds, insurance
companies and foreign funds, their valuation

signals can be useful. If the issue has


problems, say, of corporate governance, or
asks for a stiff price, the issue will face a tepid
response from anchor investors.
P a hat Dai s offe failed to d a a ho
investors as the price was at a sizeable
premium to listed peers and there were
challenges in growing the business. In the
case of Adlabs Entertainment IPO too, anchor
investors had bid at the lower end of the
price band. In the public issue which opened
a day later, poor retail response forced the
company to lower its price band to get
subscribed.
The bottomline
Today, grey market premia on upcoming IPOs
are much talked about. But the quoted
p e ia a e uite u elia le. Look to a ho
investors for better cues.

A weekly column that puts the fun into


learning
BS
1. Ashok Lahiri: Finding an Indian Deng
India's Deng Xiaoping will face a unique set of
challenges that China's Deng did not
Ashok K Lahiri
In his book Deng Xiaoping and
the Transformation of China, Ezra Vogel of
Harvard University concludes that no 20th
century leader has done more than Deng to
improve the lives of so many, or has had such
a large and lasting influence on world history.
After Mao Zedong's death in 1976 - while
China was still undergoing the after-shocks of
the Cultural Revolution - Deng Xiaoping
became its leader in 1978. He remained at
the helm for over 17 years as the "paramount

leader" of China. When Deng passed away in


1997, China's gross domestic product (GDP)
had almost quadrupled from 216.8 billion
renminbi in 1978 to 860.8 billion renminbi in
1996. China, with more than a billion people,
stood radically transformed.
Famous for having said "It doesn't matter
whether a cat is black or white, as long as it
catches mice," Deng was an inveterate
pragmatist. With little faith in ideological
dogmas, he steered China towards neither
Soviet-style communism, nor democracy, but
socialist economics, politics and culture with
Chinese characteristics. He dismantled the
agricultural collectives and gave land to the
peasants, actively encouraged private

enterprise, including foreign ones, and


opened up the economy to foreign trade.
Many seriously doubt the prospects for
communism in China, after Deng's reforms.
Happily for Deng though, his "communism
with Chinese characteristics" has been
endorsed by the Communist Party of India
(Marxist). According to the party's
"Resolution on Ideological Issues, 20th
Congress," adopted in April 2012 at
Kozhikode, China is in a primary stage of
socialism, and reforms are aimed at attaining
conformity between "the levels of productive
forces and the relations of production under
socialism."
Deng's admirers abound all over the world. In
India, there are many others, not just the

CPI(M). The former prime minister, P V


Narasimha Rao, famous for the reforms in
1991, was one of them. He was reportedly
rather miffed when, in December 1988, prime
minister Rajiv Gandhi went to Beijing and did
not take Rao, his external affairs minister,
along.
Jairam Ramesh in his book To
the Brink and Back has described Narasimha
Rao as India's Deng Xiaoping. Prime Minister
Rao, along with his finance minister,
Manmohan Singh, undoubtedly will be
remembered for the 1991 reforms. But, Rao's
tenure, and hence his contribution, as a star
reformer in India was limited compared to
Deng's in China. Of indifferent health when
he became prime minister, at the age of

almost 70, he ruled for only five years, and


faded away after demitting office.
Former Finance Minister P Chidambaram has
compared Dr Singh of India with Deng
Xiaoping of China. Deng ruled China
continuously for over 17 years. He resigned
from his official posts in 1992, but was de
facto leader until his death in 1997.
Manmohan Singh was out of power between
1996 and early 2004. For 2004-2014, when he
was the prime minister, doubts have been
raised not only about the extent of the
reforms but also his "real" powers. Perhaps
India still has not had its own Deng Xiaoping.
What about Prime Minister Narendra Modi?
Too early to pass a judgement. But there are

similarities.
Deng's famous statement "development is
the main principle" resonates with Mr Modi's
emphasis on "Vikas" or development. The
focused initiatives such as Delhi-Mumbai
Industrial Corridor have the same flavour as
Deng's 1980 special economic zone initiatives
in the southern and coastal Guangdong and
Fujian provinces of China. Like Deng in China
during 1979-1997, Mr Modi is the paramount
leader of the ruling party at least since 2014.
The responsibility for the Tiananmen Square
massacre in 1989, when he was in power,
continues to haunt Deng's memory. In power
after an intense power struggle within his
party, Deng, like Mr Modi, has controversies

from his earlier years: for example, the 1957


"anti-rightist campaign" against half a million
intellectual critics and destroying many of
China's best scientific and technical minds.
Fingers continue to be pointed at Mr Modi,
even after judicial acquittal, for the 2002 riots
following the Godhra train arson.
But, can any prime minister turn himself or
herself into India's Deng? There are some
obvious impediments. First and foremost, the
requirement of a long uninterrupted tenure
as Deng's of over a decade and a half. Deng
had to manage his Communist Party. But,
that may have been a bit easier in a
totalitarian system than winning three
successive Lok Sabha elections.

After Pandit Nehru, no prime minister in India


has led his/her party to victory in three
successive elections. Not impossible, but a
demanding task. Reforms often involve
losers, such as project-displaced people, or
retrenched employees of a loss-making public
enterprise. Through sustained reforms,
growth and employment will have to be
promoted in line with rising popular
aspirations, while compensating the losers
from the reform process and managing
expectations.
Second, he/she has to remain within the
boundaries of the Indian Constitution and
laws. Even the Unique Identification (UID)
system or Aadhaar has faced legal challenges
in recent times. In China,hukou - a system of

household registration for availing grain


rations, housing, and health and education
facilities - has been effectively used to
manage the rural-urban migration process
and avoid unplanned urbanisation. Hukou in
India stretches the imagination.
Third, an Indian prime minister will need the
cooperation of the states to implement many
of the reforms, especially at the ground level.
It is unlikely that a single party will be in
power in all the 29 states in the near future.
Centre-state coordination is considerably
more difficult in India than in one-party-ruled
China.
Does all this mean that Indian democracy is
an impediment to India producing its own

Deng Xiaoping and hence growing fast? No, it


does not. It means that India's Deng will face
a unique set of challenges that China's Deng
did not. Deng Xiaoping had his own bag of
challenges, and managed them successfully.
India's Deng will have to manage his/her own.
2. Anjuli Bhargava: Minimum city
Politics and poor governance are robbing the
Maximum City of its spirit
Anjuli Bhargava
All through my early career, whenever I
returned from a visit to the city of Mumbai on work or otherwise - I usually felt a certain
wistfulness. Born and brought up in Delhi, I
loved Mumbai's pace, its resilience, its
efficiency and its spirit. Evenings in Mumbai's
ubiquitous pubs and bars thrilled me more
than Delhi's perfect couple dinner parties. Its

cabbies - who in some ways reflect the pulse


of the city - always offered me more insights
than golfers and globe-trotters I met in Delhi.
Even with its limited space, the city offered a
host of delights - the National Centre for the
Performing Arts with its rich theatre, art and
music, the Bandra festival and even the buggy
rides on Marine Drive. At heart, I was a
Mumbaikar and had many a heated argument
with defensive Delhiites on the relative merits
of the two cities. Of course, Delhi was the
easier city to live in but it lacked a certain
something that Mumbai offered.
That's why on my recent trip to Mumbai after an unusually long gap - I was quite upset
to find the city of the early and late 1990s
almost gone. Of course one has seen the slow

erosion over the years but this is no longer


the Mumbai I knew. As I spoke to more and
more long-time residents of the city -not to
mention at least seven cabbies on
interminable rides through the city - I felt
their despair and unhappiness. To me the
biggest shock was that Mumbaikars seemed
to be losing their spirit - that innate quality
that gave them the resolve to carry on
despite all odds. What we all saw during the
2005 floods seems to have been swept away.
Manmohan Singh's "Shanghai" is in a
shambles.
Why has this happened ? A large portion of
the blame lies with the city's crumbling
infrastructure that has made already hard
lives almost impossible. Even as people

continue to pour in to Mumbai from all


corners of the country, an execution paralysis
has gripped the city. A host of agencies has
failed to come together to improve the city's
roads, flyovers and bridges. Arterial roads
have not been expanded and are in a
constant state of repair. Navigation in and out
of the business districts at peak times is a
nightmare. Traffic, that was always dense but
moving, now seems stationary. A gamut of
projects aimed at relieving the stress lies in
various stages of non-completion.
When I mentioned the present chief
minister's new war room and what it hoped
to do to one top businessman and a few
professionals in the city, they said they would
believe it when they saw it. The Mumbai

Trans Harbour link was conceived in 1966, the


Bandra Worli sea link was conceived in the
1960s (only a portion has been executed), the
Navi Mumbai airport in 1994 and the list goes
on. Hope was for the nave.
One of my cab drivers - who drove me for
meetings on two days - squarely blamed the
divisive politics at play in the city.
Factionalism, intolerance and a kind of
goonda raj had, he argued, eroded the city's
cohesiveness, leading to a poorer quality of
life for people like him. His brother and he both immigrants from Tamil Nadu - had
managed to buy cars that they now owned
and ran as taxis but still slept on top of their
cabs at night - parked in any spot where the
sea breeze offered some relief from

Mumbai's stifling humidity and heat. Why


didn't he return to his village where he had,
at least, a roof over his head, I asked. He
answered with silence.
Above all, many Mumbaikars I spoke to felt
that they and others around them no longer
seemed to care about what happened to
their fellow citizens - so busy were they
struggling to keep their heads above water.
Being India's capital city and partly thanks to
the Commonwealth Games, Delhi, as a city,
has improved in many ways in the recent
past. Citizens of Delhi and even Gurgaon were
trying to make changes (car-free day, Raahgiri
etc). But in Mumbai, hope has slowly been
sucked out of the bloodstreams of its citizens
and a cynicism has replaced it. If a 2005 kind

of crisis were to repeat itself, the city might


no longer respond the way it did. One may no
longer feel wistful when leaving Mumbai but
one can't help but feel sad.
3. Rahul Khullar: Why gradual reforms work
and should continue
India needs to walk the talk to signal abiding
credible commitment to reform.Inaction is no
longer justifiable
Rahul Khullar
The silly season (because of Bihar) is coming
to a close. And, the next one is a year away.
Time to get back to the grind on domestic
policy reform. Why? First, in today's global
economic climate, no country is going to
export its way out of trouble. We have to look
within, namely, at the domestic real sector.
Second, there is little room for manoeuvre on

the fiscal and monetary fronts. For instance,


cutting Plan outlays for a third year in a row is
not an option. Third, India needs to walk the
talk to signal abiding credible commitment to
reform. Last, much of what needs to be done
is well known. Inaction is no longer justifiable.
It is now imperative to move beyond general
exhortations to specifics of reform. Since bigbang reforms are political anathema,
gradualism reigns. And, it has worked. Recall
how milk prices have been raised in small
increments without any hullabaloo.
Incrementalism also worked with diesel. This
piece proposes a package comprising: (a)
specific reform of subsidies (fertilisers,
kerosene, LPG and food, in that sequence),
and; (b) redirecting subsidy savings to

expenditure that better reaches the poor and


intended beneficiaries and upgrades rural
infrastructure. This piece is organised in two
parts: First, fertilisers and then, endconsumer goods.
Fertilisers: The subsidy is Rs 73,000 crore per
annum (excluding arrears). Roughly Rs 50,000
crore is on account of urea (N) and Rs 23,000
crore on phosphate (P) and potash (K). This is
not a subsidy for the poor or others at the
bottom of the pyramid. True, some of it
reaches small holders. However, kulak
farmers corner most of it. The vast numbers
of landless receive precisely nothing.
The unintended outcomes have been (a)
subsidy to foreigners - smuggling across
national boundaries is commonplace, and (b)
soil degradation - under-pricing leads to
general overuse of chemical fertilisers; and,

when relative prices are out of kilter, the


problems of the N-P-K balance are
exacerbated.
Past efforts at raising prices have been
stymied, mostly by our public
representatives. The opposition is couched in
terms of the impact on poor farmers and the
poor in general. It is no coincidence that
many of our MPs are large landholders. Some
reform has occurred. In April 2010, there was
a transition to a nutrient-based subsidy (NBS)
regime. This was okayed for P and K but not
for N. The result: between 2010 and 2015
prices of phosphates rose 150 per cent and
potash 275 per cent. In stark contrast, urea
prices increased from Rs 4,830 per tonne to
Rs 5,360 per tonne - a paltry 10 per cent over
five years. This has led to a worsening of the
N-P-K balance. In short, the urea subsidy
must be addressed on priority.

The urea subsidy regime is complicated. First,


there are plant-based production subsidies.
Second, there is a maximum retail price
(MRP) at which urea can be sold.
Conceptually, the subsidy comprises two
parts - the subsidy directly accruing to
producers; and the difference between the
cost of production (net of production subsidy)
and the MRP. The MRP (Rs 5,360) is 29 per
cent of the international prices at present,
implying an effective subsidy of 71 per cent. A
large upfront hike is now an imperative.
The proposal: immediately increase MRP to
Rs 7,500 per tonne; increase MRP by 25 paisa
per kg every month starting April 1, 2016;
reduce plant-based subsidies steadily to halve
the gap between domestic costs and
international prices by April 1, 2018.

The international prices of P and K are $460


and $300 per tonne respectively. The subsidy
is Rs 12,350 per tonne (P) and Rs 9,300 per
tonne (K). That is, a subsidy of 40-45 per cent
on international prices. The proposal: reduce
subsidy on P to Rs 11,000 and on K to Rs
8,000 per metric tonne immediately; reduce
the subsidy (on P and K) by 25 paisa per kg
per month starting April 1, 2016. The subsidy
on potash was cut by 20 per cent in 2013: a
reduction is, therefore, doable.
Come to kerosene. The total subsidy is Rs
14,000 crore. Of this, Rs 8,000 crore is borne
by the central government. Upstream
suppliers fork out Rs 5,000-6,000 crore. This is
not a subsidy for the poor. Less than two per
cent of the subsidy reaches the poor; what
little does is used for lighting, not fuel. Most
of the kerosene is used as adulterant,
enriching others. Rightly, the finance minister

has announced the phase-out of kerosene


subsidy through the Public Distribution
System in areas except where electrification
is yet to take place.
The cost of kerosene is Rs 33 per litre
whereas the retail price is Rs 15 per litre. The
subsidy borne by the central government is
Rs 12 per litre. Kerosene prices have
remained unchanged since June 2011. This,
when inflation averaged 10 per cent for most
of these years. And, prices of kerosene in
Pakistan, Bangladesh, Nepal and Sri Lanka are
three-four times those in India. Need we say
more? Front-loading a price increase is
entirely justifiable.
The proposal: increase kerosene prices to Rs
18 per litre immediately; increase prices by Rs
0.75 per litre per month starting April 1,
2016. The subsidy will be eliminated over two

fiscal years (including the burden borne by


the public sector undertakings); decontrol
kerosene prices with effect from January 1,
2018; plough back revenues saved for
electrification of 19,000 un-electrified
villages. The prime minister has prioritised
this task and the implementation timing
coincides with the phase out of the subsidy.
The author is ex-chairman, Telecom
Regulatory Authority of India
4. Martin Feldstein: Chile's uncertain future
It's no surprise that Chile is considered a
developed country - the only South American
member of the OECD
Martin Feldstein
When I was in Chile in October, I was
impressed by the contrast between the
palpable success of its long-standing freemarket policies and the current agenda of its

leftist president, Michelle Bachelet. How this


contrast is resolved will be important not only
to the country's more than 17 million people,
but also to everyone who regards Chile as a
model of what sound economic policies have
been able to achieve.
Chile's economic performance has been the
strongest in South America. Its per capita
GDP exceeds $22,000 in purchasing-powerparity terms, making its income higher than
that of Argentina, Brazil, and Mexico. It's no
surprise that Chile is considered a developed
country - the only South American member of
the OECD.
Copper is Chile's major product and accounts
for half of its exports. Although the
government owns Codelco, the world's
largest copper producer, it is Chile's only
publicly owned company. The company's

revenue varies with the global price of


copper, yielding higher government revenues
in some years and declines - for example, this
year - when the global price is down. The
government follows a wise fiscal strategy that
involves budget surpluses in years when
copper revenue is high, with the additional
funds channeled to a national stabilisation
fund.
But even with the currently depressed copper
price, Chile's budget deficit is only two per
cent of the GDP. As a result of Chile's cautious
fiscal strategy, the country has a national
debt that amounts to only 16 per cent of the
GDP - and a sovereign debt rating that is the
highest in South America.
Taxes and other government revenues are
less than 20 per cent of the GDP. Half of tax
revenue is collected with a value-added tax,

which is essentially a tax on consumption.


Although there is a tax on corporate income,
it is integrated with personal taxes in a way
that reduces its adverse effect on investment
and production.
Chile is well known for an investment-based
pension system. Employees are required to
contribute 10 per cent of their wages to a
private pension company of their choice and
can then select one of the investment
strategies offered by that company. The
government mandates the range of
investment strategies, which vary in terms of
the share of equities and fixed income that
companies may offer. For those who have
worked and contributed during their entire
adult life, this produces benefits that are
more than 50 per cent of pre-retirement
income.

Meanwhile, sound monetary policy, guided


by a series of talented central bankers (whose
independence is enshrined in Chile's
constitution), has prevented inflation and
kept long-term rates relatively low. Chile's
inflation target is three per cent with an
acceptable range of plus or minus one per
cent. Inflation this year is expected to be 3.9
per cent, and the 10-year bond rate is just 4.4
per cent. And, by protecting the floating
exchange-rate regime, the central bank
ensures that Chile does not confront the kind
of foreign-debt crisis that has hit other Latin
American countries.
Chile is also a devoted free trader. It has freetrade agreements with more than 20
countries and is a member of the nascent
Trans-Pacific Partnership. The economy has
also benefited from its openness to foreign
investment, with the stock of foreign direct

investment in Chile topping 80 per cent of the


GDP.
There is also universal literacy, with 98 per
cent of the adult population able to read and
write. On average, young people spend an
average of 15 years in school from primary
through tertiary education.
Chile's excellent economic performance has
been the result of the free-market policies
introduced during the military dictatorship of
General Augusto Pinochet but confirmed and
strengthened by democratically elected
governments over the 25 years since he left
office. So, given the success and popularity of
these policies, it is surprising that Chile's
voters have elected a president and a
parliament that many Chileans now fear
could put this approach at risk.

Ms Bachelet's policy agenda emphasises


three major changes. A key element would be
universal free university education, modeled
on European systems. Paying for this
educational reform would require higher tax
rates. And labour laws would be revised to
strengthen the role of unions.
Critics of Ms Bachelet claim that this agenda
is already depressing business investment
and is responsible for relatively slow
economic growth. And they worry that
foreign and domestic investors will be
discouraged by the new labour rules.
Fortunately, the Chilean public shows no
inclination to follow the mistakes of several
other South American countries, especially
Venezuela, Ecuador, Brazil, and Argentina.
Even Ms Bachelet's critics agree that Chile's

basic macroeconomic policies will not


change: an independent central bank
committed to price stability, a free-trade
regime with a floating currency, and a fiscal
policy that will keep deficits and public debt
low.
Ms Bachelet's term in office will end in 2017.
Under Chile's constitution, she cannot serve
another consecutive term. The election that
year will therefore be an important one to
watch.
Martin Feldstein is a professor of economics
at Harvard University and president emeritus
of the National Bureau of Economic Research.
He chaired President Ronald Reagan's Council
of Economic Advisers from 1982 to 1984
Copyright: Project Syndicate, 2015.
5. Merger gains for Reliance Comm

But operational performance and debt


situation must improve for market
sentiments to revive
Ram Prasad Sahu
While the merger of Sistema's wireless
operations into Reliance Communications
(RCom) will not change the pecking order in
the telecom space, it signals further
consolidation. This will benefit
Rcom. Sistema has nine million customers
and revenues of Rs 1,500 crore. The merger
of the fourth and ninth largest players will see
the merged entity continue to be the fourth
largest with a revenue market share of 6.5
per cent and subscriber market share of
12.19 per cent. Idea, the third largest player,
has a subscriber and revenue market share of
16-18 per cent.
A key benefit to Rcom is that the merger will

reduce the risks related to spectrum renewal.


In the eight markets (including Delhi, Tamil
Nadu, Gujarat) where their spectrum holdings
overlap, Sistema's holdings (bought in March
2013 auctions) are valid for another 18 years,
while Rcom faces renewal over the next six
years. The licence period will extend from
2021 and 2033.
The merger will help Rcom overcome the
revenue loss given that it could not retain
spectrum across five out of seven circles in
the 900-MHz band in the recent auctions. The
biggest benefit will be the ownership of the
coveted 800-850 MHz spectrum, which apart
from Rcom and Sistema only Reliance Jio and
Tata Teleservices possess. Given that
Sistema's holdings have been bought at an
auction they can be used to launch LTE
services. However, Rcom, according to
analysts at Citi, will have to pay Rs 7,000

crore to liberalise its spectrum in 17 circles to


use it for LTE or 4G services or for spectrum
sharing with RJio.
The merger will also help Rcom save costs
from scale efficiencies be it on utilising spare
capacity better, streamlining manpower,
lower capex or reducing overlapping costs.
While the deal will need regulatory
clearances and a couple of quarters to
complete, the Street gave it a thumbs up;
Rcom stock closed over six per cent higher.
But, there is a flip side as well. In FY15,
Rcom's customer base declined with a net
loss of 1.4 million customers even as it trails
the leaders in key metrics. The biggest
overhang for the Street continues to be its
balancesheet with a net debt to Ebidta
(earnings before interest, tax, depreciation
and amortisation) of nearly five times. Rcom's

net debt stood at Rs 38,595 as of June 30,


2015. While RCom is working on selling its
towers, global operations and other assets, so
far not much has fructified.
This financial pressure means that it is not
able to match its peers as far as capex on 4G
is concerned. While RCom has a capex of
about Rs 2,000 crore for FY16, its peers Idea
Cellular and Bharti Airtel have a capex of
about three to six times that number partly
due to their bigger size.
The telecom market continues to be fiercely
competitive and the road ahead will be tough
for RCom unless it is able to meaningfully cut
debt and improve its operating metrics. Most
analysts continue to have a sell rating on the
stock.

6. Why Raghuram Rajan's message is


important, but could rebound on RBI
Dr Rajan has displayed candour and courage
rare in India's public servants. However, there
may be unintended repercussions to the
institution he heads
Business Standard Editorial Comment
In the current public discourse on religious
tolerance, Reserve Bank of India Governor
Raghuram Rajan's convocation address to the
students of the Indian Institute of Technology
(IIT) Delhi on Saturday, delivered an
unmistakable if nuanced critique of the

ideological underpinnings of this government


and their outward manifestation. Drawing on
the work of Nobel Laureates Robert Solow
and Richard Feynman and using the example
of India's global IT achievements to make his
point, Dr Rajan linked the importance of ideas
to a nation's progress and highlighted the
need to "foster competition in the
marketplace for ideas" as a prerequisite for
delivering economic growth. Achieving this,
he argued, required "the right to question
and challenge, the right to behave differently
so long as it does not hurt others seriously".
When someone of Dr Rajan's stature and
authority adds his voice to the growing
avalanche of criticism from a broad range of
civil society, the importance of the message
cannot be underestimated. It is especially
impactful because he addressed precisely the
age cohort that the current regime targets
with its message of religious nationalism with

all its deceptive certainties.


In leveraging the functional independence of
his job as central bank governor to comment
on issues that are, strictly, outside his official
remit, Dr Rajan has displayed candour and
courage rare in India's public servants.
However, there may be unintended
repercussions to the institution he heads. To
be sure, this is not the first time he has
publicly expressed dissatisfaction with the
government's non-monetary policy actions
and it is unlikely to be the last. In this, he is
perhaps following the precedents set by
central bankers like Ben Bernanke and Janet
Yellen of the US Federal Reserve and Mark
Carney of the Bank of England. But they work
within developed democracies where
standards of debate are reasonably mature.
Dr Rajan raised this point in his speech.
"Tolerance means not being so insecure

about one's ideas that one cannot subject


them to challenge - it implies a degree of
detachment that is absolutely necessary for
mature debate." Unfortunately, this is
manifestly not the case in India, so it is
unlikely that his remarks will be received in
the spirit in which they were made.
Indeed, the manner in which senior ruling
party functionaries are fiercely dismissing all
criticism as politically motivated is a case in
point - though President Pranab Mukherjee's
repeated reference to intolerance in quick
succession admittedly makes that point hard
to refute. Dr Rajan's criticism should also be
set against the growing pressure - as much by
the last regime as this one - to curtail the RBI
governor's room for independent action and
the proclivity to establish unequivocal control
over institutions. It could encourage the
government to take that short step towards

appointing governors who may lack the


expertise and understanding that consistently
marked past appointees - and who is thus
amenable to doing the government's bidding.
It is a dangerous prospect.
7. Analysts doubt the little optimism on Titan
Management remains hopeful of a pick-up in
festive demand and gold-harvest-scheme
sales
Sheetal Agarwal | Mumbai November 02,
2015 Last Updated at 21:35 IST

Tita s pe fo a e fo the ua te e ded


September was weak, and below
expectations, but still the stock has risen over
two per cent, even as markets have inched
lower. The management commentary as well

as a better second half possibly explains this,


but some analysts doubt this optimism.
The September quarter performance was
pulled down by the absence of Golden
Harvest Scheme (GHS) and delayed festive
season. Notably, the GHS was present in the
base quarter ended September 2014 and
witnessed a surge in redemptions due to its
abrupt discontinuation to comply with new
regulations. Redemptions indicate the
booking of sales from GHS. So, the results are
not strictly comparable year-on-year. So, a
fall in revenues and profits in was expected.
What could have made markets
a bit optimistic is that jewellery
sales have picked up around
Dussehra. The management
also said it was hopeful the
coming festive/wedding season

and redemptions of new GHS will aid


revenues in the second half.
While a lower base effect (normalised for
dis o ti uatio of GH should push Tita s
overall growth numbers from December
quarter, prospects also hinge on the success
of the revamped GHS and improvement in
demand.
The management believes sales from GHS
redemption will be Rs 450 crore in the
ongoing quarter, with most redemptions
coming in the March quarter. But given the
higher ticket size versus the earlier GHS,
some consumers may be unable to join the
scheme. The fall in revenues, with a 210basis-point surge in employee costs, hit
Ebitda (earnings before interest, tax,
depreciation, and amortisation) margin,
which contracted 170 basis points year-on-

year to 7.6 per cent. Consequently, net profit


fell 39.4 per cent year-on-year to Rs 145
crore, lower than expectations of Rs 187
crore.
In the September quarter, jewellery sales (74
per cent of overall revenues) as well as Ebit
margins contracted due to high base effect
and lower share of high margin diamond
jewellery. Intense competition from ecommerce players also hit watches segment
(20 per cent of revenues). Lower ad spends
aided this segment's Ebit margin, which
expanded 192 basis points year-on-year to
15.3 per cent.
"Hope a d Tita s still-solid positioning (as a
play on discretionary spend revival) may keep
the stock above fundamentals. But, we
e ai u o fo ta le as i i g hope PE ,"
analysts at Kotak Institutional Equities said,

retaining their target price of Rs 320.


At Rs 355, the stock trades at rich valuations
of 40 times FY16 estimated earnings.
8.A hero forever
How Brijmohan Munjal rebuilt his company twice
Business Standard Editorial Comment
| New Delhi November 02, 2015 Last
Updated at 21:31 IST
Brijmohan Munjal belonged to a generation
of business leaders who built their empires
from scratch in an environment with a
licence-permit raj and artificially limited
markets - a world removed from today's
India. But only a handful of industry leaders
from that era were able to make a seamless
transition into the demands of a postliberalisation India. The late chairmanemeritus of the Hero Group, who did exactly

that, would often tell his friends the following


story: In the days of the licence raj, it was
easy to get tempted and make money
through a licence for a commodity in short
supply, such as steel sheets, oil or even
power, as these could be traded in the
market for a handsome profit. But Hero
Group, which had a licence to buy steel
sheets, never ever thought of doing that and
instead focused on making bicycles. He
travelled extensively, not just to acquire
knowledge on new technologies and designs,
but also to learn the best practices followed
by global firms, particularly in Germany.
In the process, Munjal did all that it takes to
build an industrial group based on a
sustainable business model. His vision
allowed Hero Group to rapidly overtake wellestablished rivals and become the world's
largest cycle maker, and Hero Motocorp the

world's largest two-wheeler manufacturer by


volume. He positioned his motorcycles as
more fuel efficient than scooters, which
struck a chord with cost-conscious Indian
buyers. The "Fill it, shut it, forget it" campaign
remains one of the most effective ones in the
country's corporate history. In the 1980s,
organised dealership networks didn't exist;
companies produced and sold through
traders. When Munjal changed that system, it
was thought to be ahead of its time - but,
eventually, that distribution mode became an
entry barrier for many of Hero's competitors.
His relationship with dealers was so strong
that till his last days as chairman, he would
remember most of the 1,000-odd dealers of
Hero MotoCorp by their first name. Forging
partnerships and nurturing them into strong
relationships were clearly his hallmarks.
That's not all - when the time came to end a

26-year-old alliance with Honda in 2010,


when the latter wanted to launch its own
branded motorcycles in India, Munjal took
charge of rebuilding the group all over again
and decided to replace the Hero Honda brand
much earlier than the June 2014 deadline set
out in the joint venture agreement. That
showed extraordinary self-belief, at a time
when the company was trying to come out of
the shadow of Honda's technological
excellence. Munjal, 92, who passed the baton
to his son in June this year, will always occupy
a prominent place in India's corporate history
for his ability to do all this - and still live a life
on the principle that if you work hard and be
good to people around you, success in
business will follow. After all, in the dog-eatdog business world, it's not often that you
find one of your strongest competitors
referring to you as his "business guru." Rahul
Bajaj did precisely that not only after Munjal's

death, but many times during the great man's


lifetime.
9. Hong Kong defect
Cleaner and leaner HSBC struggles to grow
Peter Thal Larsen November 02, 2015 Last
Updated at 21:22 IST
HSBC is cleaner and leaner but struggling
to grow.
The global bank's third-quarter earnings were
free of the big fines and compensation claims
that have been a recurring feature in recent
years. That suggests hefty investment in
compliance may be generating returns. HSBC
forked out just $200 million in the latest
three-month period to atone for bad
behaviour, compared with $1.6 billion a year
earlier. Other expenses are falling as
executives take a newly-sharpened axe to the
bank's cost base. Asian bad debt provisions

were down 30 per cent despite worries over


an economic slowdown in the region.
The problem now is growth. The turbulent
summer in emerging markets hurt HSBC in
two ways. Falling stock markets in Hong Kong
dragged down a popular investment product
whereby the bank shares a proportion of
customers' gains - or, in this case, losses. The
bank's measure of adjusted pre-tax profit in
the former British colony was down 16 per
cent as a result. Meanwhile, volatile markets
dented revenue in HSBC's investment banking
business. Though one quarter doesn't make a
trend, this is not what HSBC had in mind
earlier this year when it promised to "capture
growth opportunities in Asia".
Chief Executive Stuart Gulliver is undeterred,
however. HSBC's campaign to sign up more
retail and commercial bank customers in

China's Pearl River Delta, across the border


from its historical Hong Kong base, is
unaffected by stock market gyrations. The
bank is also setting up a new securities joint
venture in China - the first to be majority
owned by a foreign lender. If approved, this
would allow HSBC to tap into China's
booming bond market.
Investors remain sceptical. The shares have
fallen 17 per cent this year and trade on just
80 per cent of HSBC's latest reported book
value. Improved compliance may have
removed one form of volatility from the
bank's earnings. The challenge now is to show
that what remains is capable of sustained
expansion.
10. Letters: A sub-standard analysis
Apropos the report, "Rein in party members
to retain credibility, Moody's tells Modi"

(October 31), not only foreign governments


but ratings agencies also have the gumption
to advise India on its internal matters!
Business Standard | New Delhi November
02, 2015 Last Updated at 21:11 IST
Apropos the report, "Rein in party members
to retain credibility, Moody's tells Modi"
(October 31), not only foreign governments
but ratings agencies also have the gumption
to advise India on its internal matters! So
Prime Minister Narendra Modi's credibility is
on the wane? Does the credibility of the US
suffer when a white policeman shoots an
African-American? Or, when a non-resident
Indian is manhandled by the police and
permanently disabled?
What is the credibility and moral authority of
these rating agencies? Rewind to 2008 when
we witnessed the biggest market crisis since

the 1930s. Keeping 'both arms on the deal'


was the key reason for the crisis. All the
structured derivatives and other so-called
sophisticated products that brought down
not only 150-year-old institutions but
countries too were concocted by one
department, praised by another department
and sold by an arm of the same investment
banking outfit.
The less said about the 'independence' of
rating agencies, the better. Created from subprime loan books, these derivatives and
products were 'adulterated' by analysts, who
sang their praises, and auditors, who kept
their eyes closed. The biggest 'adulterers'
were the rating agencies. Such an agency is
telling India what it should do? I find that
agency's analysis sub-standard and poor.
T R Ramaswami, Mumbai

11. The Pakistan connect


Who would have thought that Pakistan
would find such a prominent place in the
history of the Bihar elections?
Business Standard | New Delhi November
02, 2015 Last Updated at 21:15 IST
Who would have thought that Pakistan would
find such a prominent place in the history of
the Bihar elections? Ahead of the final phase
of polling in 57 seats, senior Bharatiya Janata
Party (BJP) leader Sushil Kumar Modi has
questioned state Chief Minister Nitish
Kumar's visit to Pakistan three years ago.
"Who all was he trying to send a message to
by visiting Pakistan, which neither shares
borders with Bihar nor has business ties with
our state?... There is no prospect of Pakistani
investors coming over to Bihar," he tweeted.
Just a few days ago, while addressing a rally,

BJP President Amit Shah had said: "Even if by


mistake the BJP were to lose in Bihar, there
would be fireworks in Pakistan. Would you
like that?"
12. Kicking the can
HTC needs breathing space for revival
Robyn Mak November 02, 2015 Last
Updated at 21:21 IST
HTC needs to phone a friend. At
NT$65 billion ($2 billion), Taiwan's
largest handset maker is now worth
a little more than its dwindling
cashpile. Founder and Chairperson Cher
Wang, who took over as chief executive this
year, rules out a sale. So HTC needs to buy
time by raising funds - perhaps by selling a
stake. Even then, new smartphones and a
push into virtual reality both look like long
shots.

Quarterly results on October 30 underscored


just how badly the group has been hit by
slowing smartphone demand and fierce
competition from Chinese handset makers,
especially Xiaomi and Huawei.
With the business in flux, HTC has scrapped
earnings guidance. Analysts on average
expect a full-year net loss of NT$14.5 billion,
Eikon data shows. HTC's global market share
has fallen to less than two per cent, Reuters
reported in June. And the stock is now down
45 per cent this year.
With no debt, the company had over NT$43
billion of cash on its balance sheet as of
September. But that cash pile has already
shrunk by more than NT$12 billion in 2015. At
this rate, the company will run out of cash in
less than three years.

Finding an outside investor could buy the


company more time to return to profit, and
implement a restructuring that aims to slash
operating costs by more than a third. At
today's market prices, selling a stake
equivalent to roughly a quarter of its current
share capital would raise NT$16 billion about a year's cash burn at current rates.
Perhaps a Chinese tech company, a
Taiwanese hardware group, or a contrarian
financial investor could be interested.
However, a comeback based on a blockbuster
handset looks unlikely. Nokia and BlackBerry
show how hard it is to regain the momentum
in mobile devices. That will surely deter some
suitors.
Virtual reality is a promising and less crowded
market, but still in its infancy. Analysts at
Sinopac expect HTC's VR headset, which

competes against Samsung and the


Facebook-backed Oculus Rift, to ship just one
million units in 2016. Wang will need to paint
a bright picture of this future reality to get
new backers onboard.
13. Offer gifts at your own peril
The Aam Aadmi Party (AAP) government in
Delhi credits itself for coming to power on
the anti-corruption plank and for providing a
clean administration
Business Standard | New Delhi November
02, 2015 Last Updated at 21:14 IST
The Aam Aadmi Party (AAP) government in
Delhi credits itself for coming to power on the
anti-corruption plank and for providing a
clean administration. Chief Minister and AAP
chief Arvind Kejriwal had recently summoned
his ministers, party MLAs and their families to
give them a sermon on being honest and
remind them of the lofty ideals that helped

them ride into office. Diwali being the time


when giving and receiving gifts is par for the
course, an interesting notice adorns the
doorway to Delhi Health Minister Satyendra
Kumar Jain's office: "Please don't embarrass
by offering Diwali gifts". The footnote adds,
"including idols of gods".
14. Emulating Modi?
West Bengal Chief Minister Mamata
Banerjee seems to be competing with Prime
Minister Narendra Modi, not only for the
electorate's affection but also in the number
of foreign trips
Business Standard | New Delhi November
02, 2015 Last Updated at 21:13 IST
West Bengal Chief Minister Mamata Banerjee
seems to be competing with Prime Minister
Narendra Modi, not only for the electorate's
affection but also in the number of foreign
trips. In fact, she is so confident of getting

enough of the first to return her to power in


the state that she has scheduled a trip to the
US right after the Assembly elections slated
to take place in May or June next year.
Banerjee has accepted an invitation from
advocacy organisation US-India Business
Council to visit the country in July 2016. This
will be her sixth foreign trip as West Bengal's
chief executive but it has only drawn derision
from her opponents. Communist Party of
India (Marxist) politburo member
Mohammad Salim said Banerjee was "busy
without business" while Bharatiya Janata
Party's West Bengal chief Rahul Sinha said
she had planned the trip in advance because
she was not confident of getting re-elected.
15. Letters: Long-drawn-out process
Most importantly, the usually huge financial
outgo (over 15 per cent) towards payment of

a host of subsidies has shown a decline -a


welcome sign
Business Standard | New Delhi November
02, 2015 Last Updated at 21:12 IST
With reference to A K Bhattacharya's column,
"Fiscal gains no reason to celebrate yet"
(November 2), the Union government's
revenue surplus budget during August and
September has come as a pleasant surprise.
Most importantly, the usually huge financial
outgo (over 15 per cent) towards payment of
a host of subsidies has shown a decline -a
welcome sign.
However, this may be attributed to a
persistent decline in international crude oil
prices from $116 a barrel in February 2013 to
$109 in February 2014 and $59 in February
2015, the current rate being $48.5 a barrel.
This has facilitated a lesser and lesser amount

to be earmarked for subsidies that domestic


gas consumers are entitled to. This apart, the
roll-out of the Direct Benefit Transfer scheme
helped curb some universal leakages and
prevented the diversion of subsidies to
ineligible segments of society.
Another point to be noted is that the
government has been 'harvesting' a rich crop
for the country's oil-producing companies by
not passing on the full benefits of the
regularly falling international crude oil prices
to domestic consumers. The government's
revenue receipts were accentuated by a
constant rise in indirect taxes, key among
them being the service tax whose ambit is
being extended.
Interestingly, fiscal gains increased as the
government's revenue deficit dropped from
91 per cent (April-September 2014) to 68 per

cent (April-September 2015). Coupled with a


surplus of revenue receipts, this might have
enabled the government to be properly
placed to achieve fiscal consolidation. A
caveat: although this year's fiscal deficit
target of 3.9 per cent of gross domestic
product could be attained, there is no similar
positive expectation on this count in the near
future.
The position with respect to this year's
targeted revenue of Rs 69,500 crore from
disinvestments appears non-achievable,
considering that only Rs 12,700 crore has
been collected so far and Rs 8,077 crore was
generated through LIC's acquisition of Indian
Oil Corporation's shares.
With regard to the government's planned
capital expenditure to facilitate much-needed
investments in several key segments, more

funds are required. At the same time, the


government must take a holistic view of
public sector banks' lending limitations.
Instead of regular spoon-feeding by the
government these banks ought to be made to
fend for themselves.
Achieving fiscal consolidation is a long-drawnout process and requires a well worked-out
action plan, enough courage and the display
of acumen in fiscal discipline by the
government.
S Kumar, New Delhi