Anniversaries are rarely the best occasions to make honest assessments. The spirit of the event can make you either indulge in celebration or sink into cynicism. There is, however, a strong case to make a broad evaluation of the Indian economic record since 1947 at this point of time.
The rapid pace of growth over the past four years, India being described as the new “poster boy” of the global economy, and the raucous celebration in the Indian (English) media, must compel us to ask one question. Can we at last see the “ending of poverty and ignorance and disease and inequality of opportunity,” which Jawaharlal Nehru placed as the agenda for the country exactly 60 years ago, on the midnight of August 14, 1947?
The nature of the question itself matters, since the headlines of the day — be they of India becoming the third largest economy in 2020 or of Indian corporates on the prowl overseas or, worst, of India adding the most number of new billionaires in the world — can make us forget what exactly the country set out to do on August 15, 1947: to provide all citizens a decent standard of living.
To begin at the end, any sober assessment of the Indian economy must conclude that we have, to borrow another of Nehru’s phrases from his midnight speech, only very partially “redeemed our pledge, not wholly or in full measure.”
Economic performance in 1950-2005, when compared to the first half of the 20th century (1900-1950) and if measured in very narrow terms, has been more than commendable: the per capita income hardly changed in the last half century of colonial rule, but it has grown by over 2 per cent a year since 1950. Any chosen indicator of the quality of life — education, life expectancy, housing, food consumption or any other measure — shows a substantial increase in independent India. That this has taken place even as the population has more than tripled over the past 60 years makes it an achievement that demands acknowledgement. Simultaneously, while at the time of Independence more than half of all Indians, perhaps even more, were living in starvation, only about a quarter of the population is now officially classified as poor.
Yet we know that what has been achieved has been far from enough. A number of other countries that embarked on the path of independent development around the same time or a little later — China is the most notable example, Malaysia and South Korea are two others — were able to achieve significantly more than India in providing economic opportunities, improving the quality of life, and making a dent in deprivation. It should be a matter of some shame for India that the number of people now living under the official poverty line — around 300 million — is not very much smaller than the total population of 360 million in 1951.
It is, of course, the received wisdom now to blame planning, the public sector, and state intervention for the failures in the first four decades of Independence. The list of errors, wrong turns, and failures on the path chosen were many, and progress in lifting India’s poor out of poverty certainly was excruciatingly slow. But to dismiss the era of planning (roughly 1951-1991) as the country’s “lost” decades is to offer a self-serving understanding of Indian economic growth. We cannot forget that there were strong economic and sound political reasons why Indian economic policy took the path it did. We cannot also overlook the fact that were it not for the foundations built during the era of planning, much of what has been realised after the early 1990s would not have been possible. In a sentence: If it were not for state guidance and investment, it would have been impossible in the new democracy for the backward, essentially agricultural economy with very low savings to turn, in a few decades, into a more diversified economy, with a degree of modern infrastructure, heavy industry, and technological capabilities.
Major failings
Two major failings of the planning era do need special mention, not the least because often they do not find place in critical appraisals. One was the half-hearted approach to land reform in rural India. This failure meant that the rural oligarchies remained in place, hampering both economic growth and social reform. The second was the indifference of both state and society towards illiteracy and the refusal to put in place a system of universal primary education. This can only be explained as callousness towards the citizens of the republic.
The economic performance in the more recent period has been remarkable. Over the past quarter century, India has been among the fastest growing economies in the world. And the record in the four years since 2003-04 has been exceptional. India’s savings and investment rates have crossed 30 per cent of the gross domestic product (GDP), a tripling of the 10+ per cent of the early 1950s. In foreign trade there is a new dynamism in both goods and more lately in services. The foreign exchange constraint that plagued the economy for decades has vanished and the problem now is the opposite, of coping with over-abundance. Where foreign companies were loath to invest in India, they are now falling over one another for “a piece of the India story.” (External resources still account for less than 10 per cent of investment, but their overwhelming influence on domestic money supply and the capital market now makes India very vulnerable to foreign investors.) On the ground we have had the remarkable achievements in the software and business process outsourcing sectors, the explosion in telecom services (though as yet still an urban phenomenon), and the growth of the pharmaceutical, engineering goods, and automotive industries.
Much of this reflects a new entrepreneurial dynamism in the private sector, which has made the most of a less deregulated environment. There is a negative side as well to this deregulation — a limited check on uncompetitive practices, the absence of comprehensive regulatory frameworks, the handing over of public sector spaces to private enterprise and a concomitant hollowing out of the public sector. But all that aside, the Indian economy is now in the midst of an investment boom.
The changes in the economy since 1991, and especially over the past decade, have made a major difference to the lives of a large number of people, not just to a thin sliver of the population. The opportunities that are available in certain sectors in urban India for work, enterprise and upward mobility are far greater than ever before. They are most visible in the IT and the “new” services (such as finance, tourism and retail trade) and are available to educated youth. But even these changes remain inadequate.
Even as we acknowledge the new dynamism of Indian enterprise brought about by deregulation, we cannot be blind to a larger and continuing failure. There is first the very slow pace of poverty reduction over 15 years of economic liberalisation. The official statistics tell us income poverty has been falling at a slower rate in the very years (1993-2005) during which GDP growth accelerated. So much for “India Shining.”
Public services
The second major failure has been the complete collapse over this very period of state provisioning of public services — in health care, school and university education, water supply, transportation, housing, and all manner of infrastructure services. The breakdown has hurt most the population that needs public services, since the well-off manage by turning to private providers.
The third and related failure is the inability of state and society to recognise and deal with the many sharp fissures that have either widened or appeared over the past 15 years.
We have historically been a highly unequal society. But the “non-inclusive” nature of the current phase of very rapid growth is worsening inequalities as never before. To list a few: There is the sharpening of the old divide between urban and rural India, with much of the rural population that is dependent on agriculture being increasingly left behind. There is the creation of a new geographical divide: the south, west and parts of the north are doing very well, while central, eastern and northeastern India (together home to the larger proportion of India’s poor) are not. There is the accentuation of the social divide with the Adivasis, in particular, being pushed over the edge as the valuable natural resources of their habitats are eyed by Indian and foreign corporates. There is the worsening of the divide within the urban centres themselves, with parts of cities becoming symbols of the new India, while the older areas are increasingly peopled by the marginalised.
No matter what the GDP growth rates say, India cannot possibly survive with an accentuation of such fissures. The unfortunate (perhaps inevitable) aspect of the current era is that even as the macro-economy is doing so well, those reaping the benefits are increasingly less concerned with the citizenry and worried only about appropriating larger gains. Witness the near opprobrium heaped on Prime Minister Manmohan Singh for mildly criticising the compensation chief executives give themselves. This is true of slogans like “aam aadmi” as well, brought out only at election time and forgotten soon after. If we forget what we set out to achieve in 1947 and focus only on “India Shining,” we will do so at our peril.
Dr. C. Rammanohar Reddy is Editor, Economic and Political Weekly, Mumbai
Friday, June 26, 2009
India’s biotech future
The last two decades have seen India make tremendous progress in the area of biotechnology, emerging as a driving force in some areas and a strong contender in others. A recent survey by Ernst & Young has identified India as one of the five emerging biotech leaders in the Asia-Pacific region, the others being Singapore, Taiwan, Japan, and Korea. The firm ranked India third in the region based on the number of biotech companies in the country. India is already the world ’s largest vaccine producer as well as the largest cultivator of Bt cotton. This is both commendable and encouraging considering that the Indian biotech adventure only began in the mid-1980s, with a majority of firms started by first-generation entrepreneurs with limited capital, often generated from their own resources in the absence of significant venture capital funding.
The Indian biotechnology sector today comprises over 350 companies generating revenues of about $2 billion that are estimated to reach $5 billion by 2010. The sector has been growing at between 35 per cent and 40 per cent per annum for the last three years. The current fiscal alone saw revenues cross $2 billion from $1.5 billion the previous year.
Biotechnology, the application of science and technology to modify biological systems for specific uses, encompasses many fields from biopharma to agri-bio and biofuels, to cite a few. Several Indian companies have started inventing and producing biotechnology-based drugs for diseases such as cancer and diabetes. Agriculture is beginning to gain momentum as well, with a focus on transgenic rice, corn, chickpea, and several other food crops, most notably in the area of genetically modified crops such as Bt cotton as well as bio-fuels. India is already building a global leadership profile in Bt cotton where it has the largest area under cultivation, over six million hectares, which is twice that of China. In 2006, India also ranked first in terms of growth in the transgenic crops sector where it registered over 200 per cent compared to the global average of 13 per cent.
Bio-pharma is about innovation, manufacturing and clinical trials. Whilst innovation can happen anywhere, the world today has a huge shortage of clinical and manufacturing capacity. This shortage is a unique opportunity for India which has a large reservoir of scientific manpower, a wide network of research laboratories, fast-growing manufacturing and clinical capabilities. India’s large and diverse patient population is, equally, an advantage from the clinical research and development perspective. Stem cells and regenerative medicine also promise innovative and affordable approaches to addressing the “double burden” of infectious as well as non-communicable diseases such as cancer and diabetes that plague developing countries.
In the area of biofuels and enzymes, the dwindling reserves of fossil fuel, mounting oil prices, and increasing quantities of greenhouse gases have accelerated the focus on promoting the production and use of alternative fuels derived from renewable raw materials. Considering India’s increasing vulnerability on the energy security front, biofuels and industrial enzymes decidedly represent an area of opportunity for Indian biotech.
— Photo: A. Roy Chowdhury
FIELD OF PROMISE: The country’s biotech revolution only began in the mid-1980s. It is now the world’s largest vaccine producer.
On the regulatory front, the environment is well in the process of getting streamlined thanks to the recommendations made by the Mashelkar Committee and the M.S. Swaminathan Committee. It is heartening that the Indian government has now recognised the success of the biotechnology industry. A National Biotechnology Strategy Document has been drawn up as a combined effort of all the stakeholders (government, industry, academia, NGOs) with a sense of urgency. Given the right impetus, the Indian biotechnology sector can undoubtedly steer towards global leadership. However, the challenges should not be underestimated.
Thus far, issues of intellectual property have constituted the main deterrent for the growth of the Indian biotechnology industry. Foreign venture capitalists believe that there is insufficient patent protection and access to patent litigation in India. This perception is slowly changing and there is an increased interest in investing in Indian biotech companies. I am confident that things will continue to improve as more Indian biotech companies enter global markets, especially in the U.S. and Europe.
Another area that needs focus is creating a strong educational foundation in terms of higher and specialised education and forging strong links between industry and academia. While government policies have been largely supportive, there is a need for more innovative, substantive and priority funding. This includes funding from venture capital firms which seem too coy of financing biotech initiatives especially those born out of academic laboratories. There is an immediate need to move from an “imitative” culture toward an “innovative” culture in all our R&D endeavours.
Despite these roadblocks, the Indian biotech sector’s prospects have never looked brighter. The growing capacity in bioprocess engineering, strong manufacturing expertise, competence in recombinant DNA technology, increasing number of bio-partnerships with international players, and the slow but sure transition to a product-driven model are all indicators of the rapid strides made by the industry in a remarkably short span of time. The impressive growth trajectory of about 40 per cent per annum achieved in this short time is indicative of the future of this sector.
India is already a major biotech player in the world and has the potential to become a leader in the near future. The challenge is to make all the Indian players work together to make this happen. It has to happen not only for the sake of the economy but for the sake of the people who will have access to better and more affordable medicine, food and sustainable energy.
The Indian biotechnology sector today comprises over 350 companies generating revenues of about $2 billion that are estimated to reach $5 billion by 2010. The sector has been growing at between 35 per cent and 40 per cent per annum for the last three years. The current fiscal alone saw revenues cross $2 billion from $1.5 billion the previous year.
Biotechnology, the application of science and technology to modify biological systems for specific uses, encompasses many fields from biopharma to agri-bio and biofuels, to cite a few. Several Indian companies have started inventing and producing biotechnology-based drugs for diseases such as cancer and diabetes. Agriculture is beginning to gain momentum as well, with a focus on transgenic rice, corn, chickpea, and several other food crops, most notably in the area of genetically modified crops such as Bt cotton as well as bio-fuels. India is already building a global leadership profile in Bt cotton where it has the largest area under cultivation, over six million hectares, which is twice that of China. In 2006, India also ranked first in terms of growth in the transgenic crops sector where it registered over 200 per cent compared to the global average of 13 per cent.
Bio-pharma is about innovation, manufacturing and clinical trials. Whilst innovation can happen anywhere, the world today has a huge shortage of clinical and manufacturing capacity. This shortage is a unique opportunity for India which has a large reservoir of scientific manpower, a wide network of research laboratories, fast-growing manufacturing and clinical capabilities. India’s large and diverse patient population is, equally, an advantage from the clinical research and development perspective. Stem cells and regenerative medicine also promise innovative and affordable approaches to addressing the “double burden” of infectious as well as non-communicable diseases such as cancer and diabetes that plague developing countries.
In the area of biofuels and enzymes, the dwindling reserves of fossil fuel, mounting oil prices, and increasing quantities of greenhouse gases have accelerated the focus on promoting the production and use of alternative fuels derived from renewable raw materials. Considering India’s increasing vulnerability on the energy security front, biofuels and industrial enzymes decidedly represent an area of opportunity for Indian biotech.
— Photo: A. Roy Chowdhury
FIELD OF PROMISE: The country’s biotech revolution only began in the mid-1980s. It is now the world’s largest vaccine producer.
On the regulatory front, the environment is well in the process of getting streamlined thanks to the recommendations made by the Mashelkar Committee and the M.S. Swaminathan Committee. It is heartening that the Indian government has now recognised the success of the biotechnology industry. A National Biotechnology Strategy Document has been drawn up as a combined effort of all the stakeholders (government, industry, academia, NGOs) with a sense of urgency. Given the right impetus, the Indian biotechnology sector can undoubtedly steer towards global leadership. However, the challenges should not be underestimated.
Thus far, issues of intellectual property have constituted the main deterrent for the growth of the Indian biotechnology industry. Foreign venture capitalists believe that there is insufficient patent protection and access to patent litigation in India. This perception is slowly changing and there is an increased interest in investing in Indian biotech companies. I am confident that things will continue to improve as more Indian biotech companies enter global markets, especially in the U.S. and Europe.
Another area that needs focus is creating a strong educational foundation in terms of higher and specialised education and forging strong links between industry and academia. While government policies have been largely supportive, there is a need for more innovative, substantive and priority funding. This includes funding from venture capital firms which seem too coy of financing biotech initiatives especially those born out of academic laboratories. There is an immediate need to move from an “imitative” culture toward an “innovative” culture in all our R&D endeavours.
Despite these roadblocks, the Indian biotech sector’s prospects have never looked brighter. The growing capacity in bioprocess engineering, strong manufacturing expertise, competence in recombinant DNA technology, increasing number of bio-partnerships with international players, and the slow but sure transition to a product-driven model are all indicators of the rapid strides made by the industry in a remarkably short span of time. The impressive growth trajectory of about 40 per cent per annum achieved in this short time is indicative of the future of this sector.
India is already a major biotech player in the world and has the potential to become a leader in the near future. The challenge is to make all the Indian players work together to make this happen. It has to happen not only for the sake of the economy but for the sake of the people who will have access to better and more affordable medicine, food and sustainable energy.
Trajectory of space technology
K. KASTURIRANGAN
India’s national programme could be coupled with an international collaborative framework
As India celebrates 60 years of Independence, the world space community observes the 50th anniversary of the launch of the Sputnik. The Indian space endeavour had its modest beginnings with the launch of a sounding rocket from Thumba on November 21, 1963. In the following four decades, the programme has made major strides. Its current capabilities encompass launch vehicles, satellites, developmental applications and space exploration, transforming the country into a pre-em inent space-faring nation.
The early inspiration for Indian space efforts came from the scientific community interested in research in geophysics and astrophysics. Jawaharlal Nehru’s approval for initiating space activities in India at the suggestion of space pioneer Dr. Vikram Sarabhai way back in 1962 was an act of extraordinary foresight and courage, particularly in the context of the newness and complexity of the technology and the high risks involved.
The vision of space that Dr. Sarabhai gave India is remarkable for its realism and pragmatism, unique for its deep insights into the socio-economic context of the country, and extensive in the level of detail and identification of different dimensions. The elements of the vision included the use of the space programme for societal benefit and enrichment, the development of high technologies, the creation of leadership, emphasis on self-reliance, the identification of new organisational structures, as well as the role of humans in space. Such an elaborate and carefully crafted vision, spread over a decade, helped the growth of a unique India-centric programme over the next three decades.
Three phases
The evolution of the programme beyond the period of vision took place in three distinct phases. The first phase involved demonstrating proof of concept ideas by the use of foreign space systems, the configuration of the ground system to suit special national needs, as well as working closely with the potential user community. The Satellite Instructional Television Experiment (SITE), using the American ATS-F satellite, with emphasis on rural areas and dealing with such subjects as family welfare, agriculture, primary education and teacher training, is one such example.
In the second phase, unique experimental systems were tried out to derive an end-to-end experience in the realisation of space systems where the potential of its use at the national level had already been clearly demonstrated in the proof of concept phase.
The building of two experimental earth observation satellites, Bhaskara-I and Bhaskara-II, that enabled India to acquire valuable experience in realising the capability for space-based imaging, and processing these on the ground through appropriate ground infrastructure, is a case in point. The Ariane Passenger Payload Experiment (APPLE) mission conducted in 1981 to gain experience in satellite communications is another example. This experimental phase also witnessed significant progress in the design and development of launch vehicles.
The realisation of India’s first launch vehicle SLV-3, an all-solid, four-stage rocket with a modest payload capability of 40 kg, followed by the ASLV with a 150-kg payload, were milestones. These early versions ultimately paved the way for the development of the current operational satellites and launch vehicles — the Polar Satellite Launch Vehicle (PSLV) and the Geo-synchronous Satellite Launch Vehicle (GSLV).
The Indian space programme today is a large, integrated programme, which is self-reliant and applications-driven, maintaining vital links to the user community and committed to excellence in scientific endeavours. The technological capabilities include building of state-of-the-art satellites as well as appropriate launch vehicles. India has established two major operational space systems.
The Indian National Satellite (INSAT) system, currently comprising nine satellites in orbit and with a capacity of 199 transponders in C, extended C and Ku bands, is one of the largest domestic satellite communication systems in the world. The design life of the most recent ones among these is 15 years.
The Indian Remote Sensing Satellite (IRS) system, with a constellation of seven satellites, comprises some of the best satellites in the world for generating information on natural resources. IRS represents a wide range of spatial resolutions from 1 km to better than a meter. Both the INSAT and the IRS employ unique Indian designs and a variety of sophisticated, indigenously developed technologies.
Space launch vehicles developed by India are aimed to provide autonomous launch capability to orbit these classes of satellites. The PSLV is well-proven through eight successive successful flights, and it provides the capability to orbit remote sensing satellites of the 1.4 tonne class in polar sun synchronous orbits. The GSLV, capable of launching the 2 to 2.5 tonne class INSAT satellites, has been operationalised with three successful flights in a row, making India one of six countries to demonstrate geo-stationary satellite launch capability. Because of the strict technology control regimes, the launch vehicle development had to depend solely on indigenous efforts.
Both the IRS and INSAT satellites have benefited the country in various areas of national development. INSAT satellites are the mainstay for TV broadcasting and provide connectivity to more than 1,100 TV transmitters. They network radio stations, provide rural area communications, business communications and tele-education and tele-medicine services. They are used to relay cyclone warnings, gather meteorological data, assist weather forecasting for emergency communication support during disasters and provide search-and-rescue support.
Imagery and data from the IRS satellites are used for vital applications such as locating zones of groundwater availability in habitations without access to drinking water, monitoring crops, providing advisories to coastal fishermen on potential fishing zones, planning watershed, rural development and wasteland management programmes, and disaster management support.
Manned missions
Another recent landmark is the Space Capsule Recovery Experiment (SRE-1), intended to demonstrate our capability to orbit a spacecraft to perform experiments in microgravity conditions and bring it back to earth, thus proving the technology of deorbiting and recovering objects from space. The SRE-1 provided valuable inputs for the design of future reusable launch vehicles and manned missions.
In the area of space science, recent highlights include developing a multi-wave length astronomy observatory (Astrosat) and the mission to the moon (Chandrayaan-1). Astrosat, with the capability to make observations over a broad band of electro-magnetic spectrum from visible, ultra-violet to X-rays, is planned for launch in 2008. Scientific data from this mission is expected to provide insights into some of the hottest and densest regions in the universe. The technology of the observatory itself is highly complex with high-precision pointing and the ability to slew the satellite to look at different regions in the sky.
Soaring high: The PSLV-C 8 vehicle on the launch pad in Sriharikota.
Chandrayaan-1 represents India’s foray into the domain of planetary exploration. Through this very first initiative, India is playing the role of a lead partner in a truly international cooperative effort. The scientific outcome of this mission will help improve the understanding of the origin and evolution of the moon.
The next major development in the field of launch vehicles will be the GSLV-Mk III with the capability to place a 4-tonne satellite into a geosynchronous transfer orbit. The realisation of the GSLV-Mk III, which draws considerably from the technologies of the previous PSLV and GSLV programmes, in the next two or three years will enable India to meet all its requirements in the context of heavier communication satellites with higher power and more capacity.
In the coming years one of the major tasks is to reduce the cost of space transportation by developing reusable air-breathing propulsion launch vehicles and recoverable systems. The Indian Space Research Organisation (ISRO) has taken the first steps in this direction. The futuristic communication satellites will call for operations in higher frequency band like Ka-band, optimisation of frequency channels through beam forming, switching and onboard regeneration. Some of these are planned to be experimented in the GSAT-4 mission. On the remote-sensing side, major developments of the future include space-borne synthetic aperture radars with all-weather capability and advanced ocean observation systems that will include ocean colour monitors for biological productivity studies, scatterometers and altimeters for physical oceanography.
ISRO recently announced plans for a manned mission. Many new areas of science and technology have to be developed for this purpose, including life support systems, space biology, reentry and safe recovery of astronauts. Expanding further the role of space, the Indian scientific community is studying lunar basing concepts, as well as missions to Mars and other planets. These activities could have a strong international collaboration and cooperative component. India’s capability and credibility in space will certainly qualify it to play the role of an important partner.
In a nutshell, the future of India’s space programme will certainly continue to have a core component to meet the social objectives with a policy of technology self-reliance. However, expanding the scope into futuristic application and space exploration could be taken up through increased international collaboration and a cooperative framework.
We are at a turning point in the history of space research and our unique national programme is eminently suitable to be coupled with a pragmatic international collaborative framework. This could be the best way to meet the country’s aspirations in space in the 21st century.
Dr. K. Kasturirangan, former head of India’s space programme and former ISRO Chairman, is Director, National Institute of Advanced Studies, Indian Institute of Science, Bangalore.
India’s national programme could be coupled with an international collaborative framework
As India celebrates 60 years of Independence, the world space community observes the 50th anniversary of the launch of the Sputnik. The Indian space endeavour had its modest beginnings with the launch of a sounding rocket from Thumba on November 21, 1963. In the following four decades, the programme has made major strides. Its current capabilities encompass launch vehicles, satellites, developmental applications and space exploration, transforming the country into a pre-em inent space-faring nation.
The early inspiration for Indian space efforts came from the scientific community interested in research in geophysics and astrophysics. Jawaharlal Nehru’s approval for initiating space activities in India at the suggestion of space pioneer Dr. Vikram Sarabhai way back in 1962 was an act of extraordinary foresight and courage, particularly in the context of the newness and complexity of the technology and the high risks involved.
The vision of space that Dr. Sarabhai gave India is remarkable for its realism and pragmatism, unique for its deep insights into the socio-economic context of the country, and extensive in the level of detail and identification of different dimensions. The elements of the vision included the use of the space programme for societal benefit and enrichment, the development of high technologies, the creation of leadership, emphasis on self-reliance, the identification of new organisational structures, as well as the role of humans in space. Such an elaborate and carefully crafted vision, spread over a decade, helped the growth of a unique India-centric programme over the next three decades.
Three phases
The evolution of the programme beyond the period of vision took place in three distinct phases. The first phase involved demonstrating proof of concept ideas by the use of foreign space systems, the configuration of the ground system to suit special national needs, as well as working closely with the potential user community. The Satellite Instructional Television Experiment (SITE), using the American ATS-F satellite, with emphasis on rural areas and dealing with such subjects as family welfare, agriculture, primary education and teacher training, is one such example.
In the second phase, unique experimental systems were tried out to derive an end-to-end experience in the realisation of space systems where the potential of its use at the national level had already been clearly demonstrated in the proof of concept phase.
The building of two experimental earth observation satellites, Bhaskara-I and Bhaskara-II, that enabled India to acquire valuable experience in realising the capability for space-based imaging, and processing these on the ground through appropriate ground infrastructure, is a case in point. The Ariane Passenger Payload Experiment (APPLE) mission conducted in 1981 to gain experience in satellite communications is another example. This experimental phase also witnessed significant progress in the design and development of launch vehicles.
The realisation of India’s first launch vehicle SLV-3, an all-solid, four-stage rocket with a modest payload capability of 40 kg, followed by the ASLV with a 150-kg payload, were milestones. These early versions ultimately paved the way for the development of the current operational satellites and launch vehicles — the Polar Satellite Launch Vehicle (PSLV) and the Geo-synchronous Satellite Launch Vehicle (GSLV).
The Indian space programme today is a large, integrated programme, which is self-reliant and applications-driven, maintaining vital links to the user community and committed to excellence in scientific endeavours. The technological capabilities include building of state-of-the-art satellites as well as appropriate launch vehicles. India has established two major operational space systems.
The Indian National Satellite (INSAT) system, currently comprising nine satellites in orbit and with a capacity of 199 transponders in C, extended C and Ku bands, is one of the largest domestic satellite communication systems in the world. The design life of the most recent ones among these is 15 years.
The Indian Remote Sensing Satellite (IRS) system, with a constellation of seven satellites, comprises some of the best satellites in the world for generating information on natural resources. IRS represents a wide range of spatial resolutions from 1 km to better than a meter. Both the INSAT and the IRS employ unique Indian designs and a variety of sophisticated, indigenously developed technologies.
Space launch vehicles developed by India are aimed to provide autonomous launch capability to orbit these classes of satellites. The PSLV is well-proven through eight successive successful flights, and it provides the capability to orbit remote sensing satellites of the 1.4 tonne class in polar sun synchronous orbits. The GSLV, capable of launching the 2 to 2.5 tonne class INSAT satellites, has been operationalised with three successful flights in a row, making India one of six countries to demonstrate geo-stationary satellite launch capability. Because of the strict technology control regimes, the launch vehicle development had to depend solely on indigenous efforts.
Both the IRS and INSAT satellites have benefited the country in various areas of national development. INSAT satellites are the mainstay for TV broadcasting and provide connectivity to more than 1,100 TV transmitters. They network radio stations, provide rural area communications, business communications and tele-education and tele-medicine services. They are used to relay cyclone warnings, gather meteorological data, assist weather forecasting for emergency communication support during disasters and provide search-and-rescue support.
Imagery and data from the IRS satellites are used for vital applications such as locating zones of groundwater availability in habitations without access to drinking water, monitoring crops, providing advisories to coastal fishermen on potential fishing zones, planning watershed, rural development and wasteland management programmes, and disaster management support.
Manned missions
Another recent landmark is the Space Capsule Recovery Experiment (SRE-1), intended to demonstrate our capability to orbit a spacecraft to perform experiments in microgravity conditions and bring it back to earth, thus proving the technology of deorbiting and recovering objects from space. The SRE-1 provided valuable inputs for the design of future reusable launch vehicles and manned missions.
In the area of space science, recent highlights include developing a multi-wave length astronomy observatory (Astrosat) and the mission to the moon (Chandrayaan-1). Astrosat, with the capability to make observations over a broad band of electro-magnetic spectrum from visible, ultra-violet to X-rays, is planned for launch in 2008. Scientific data from this mission is expected to provide insights into some of the hottest and densest regions in the universe. The technology of the observatory itself is highly complex with high-precision pointing and the ability to slew the satellite to look at different regions in the sky.
Soaring high: The PSLV-C 8 vehicle on the launch pad in Sriharikota.
Chandrayaan-1 represents India’s foray into the domain of planetary exploration. Through this very first initiative, India is playing the role of a lead partner in a truly international cooperative effort. The scientific outcome of this mission will help improve the understanding of the origin and evolution of the moon.
The next major development in the field of launch vehicles will be the GSLV-Mk III with the capability to place a 4-tonne satellite into a geosynchronous transfer orbit. The realisation of the GSLV-Mk III, which draws considerably from the technologies of the previous PSLV and GSLV programmes, in the next two or three years will enable India to meet all its requirements in the context of heavier communication satellites with higher power and more capacity.
In the coming years one of the major tasks is to reduce the cost of space transportation by developing reusable air-breathing propulsion launch vehicles and recoverable systems. The Indian Space Research Organisation (ISRO) has taken the first steps in this direction. The futuristic communication satellites will call for operations in higher frequency band like Ka-band, optimisation of frequency channels through beam forming, switching and onboard regeneration. Some of these are planned to be experimented in the GSAT-4 mission. On the remote-sensing side, major developments of the future include space-borne synthetic aperture radars with all-weather capability and advanced ocean observation systems that will include ocean colour monitors for biological productivity studies, scatterometers and altimeters for physical oceanography.
ISRO recently announced plans for a manned mission. Many new areas of science and technology have to be developed for this purpose, including life support systems, space biology, reentry and safe recovery of astronauts. Expanding further the role of space, the Indian scientific community is studying lunar basing concepts, as well as missions to Mars and other planets. These activities could have a strong international collaboration and cooperative component. India’s capability and credibility in space will certainly qualify it to play the role of an important partner.
In a nutshell, the future of India’s space programme will certainly continue to have a core component to meet the social objectives with a policy of technology self-reliance. However, expanding the scope into futuristic application and space exploration could be taken up through increased international collaboration and a cooperative framework.
We are at a turning point in the history of space research and our unique national programme is eminently suitable to be coupled with a pragmatic international collaborative framework. This could be the best way to meet the country’s aspirations in space in the 21st century.
Dr. K. Kasturirangan, former head of India’s space programme and former ISRO Chairman, is Director, National Institute of Advanced Studies, Indian Institute of Science, Bangalore.
Nuclear renaissance: the Indian scene
ANIL KAKODKAR
India has come a long way in gaining technological independence in nuclear energy. Now it has to move rapidly to realise energy independence
Sixty years of independent India is a significant enough segment of our history to reflect on, as we look forward to an Indian resurgence for which we are very favourably poised. With favourable demography and the tremendous importance that knowledge-based activities have gained in recent times, we are in a specially advantageous position. Our vast population, which otherwise is a huge burden, could well become a potential asset. This is both a challenge and an opportunity .
Seen in the context of energy, which is one of the most important inputs to support the growing economy, today there is the requisite buying power to support the rapid growth of the energy sector. At the same time, there are severe energy resource constraints looming large. The non-availability of energy in required amounts could, in fact, severely restrict our developmental aspirations. One may question the developmental model that relies heavily on large-scale energy use. However, it seems impossible to sustain a tension-free society with 20 or 30 times less per capita energy access in the current interdependent world so closely connected through modern-day communications. Even at such a low level of per capita energy use, today we account for around 6 per cent of the global use of coal and around 2.5 per cent of the global use of hydrocarbons. With a projected growth of about 10-15 times the current electricity generation capacity by the middle of the century, while in per capita energy use terms we will still be a factor of three lower than the current usage in the western industrialised world, we will, along with China, cause very significant stress on global fossil energy. Such a stress, apart from leading to the serious question of sharply rising energy prices, will raise formidable issues related to the sustainability of energy resources and a much larger threat to global climate stability in an already fraught scenario.
One needs to look at nuclear energy in this context. Energy associated with processes involving the nucleus of an atom is several million-fold higher than the energy associated with processes that involve electrons that orbit around the nucleus. The latter forms the basis of energy through burning of fossil fuels. Thus, a kilogram of uranium can be a source of a million times more energy as compared to a kilogram of coal or a kilogram of hydrocarbon. Non-emission of greenhouse gases that have threatened the global climate is also a feature of nuclear energy that is catching the imagination of even some of those who earlier opposed it. As a matter of fact, nuclear energy released through fission or fusion of atomic nuclei and solar energy that we receive from the sun are the only two viable basic energy sources capable of meeting our long-term energy needs. We also cannot escape the fact that the sun derives its energy from nuclear fusion.
There is, however, a serious fear of the unknown, accentuated by the man-made Hiroshima-Nagasaki holocaust. Such concerns are natural and have been faced by humankind whenever there has been a paradigm shift in things around it. Whether it is in learning to live with fire or shifting from horse carriage to locomotives and automobiles, man has gone through similar situations. But eventually he has mastered the new technology and accessed its benefits, overcoming the fear of the unknown. In the absence of such adventures we could not have made progress.
Our living with nuclear radiation is as old as the universe itself. The origin of the universe is, in fact, inseparably associated with radiation and nuclear synthesis. The evolution of life in the universe has taken place alongside the radiation environment. This co-existence continues. Extremely high energy intensity that is associated with the atomic nucleus also leads to the military dimension associated with nuclear energy. The co-existence of military and commercial dimensions is a standard feature of any technology — be it explosives or steels and other materials or engines, or for that matter nuclear energy.
In the case of nuclear energy we are, however, talking on an altogether different scale. Given the population pressure and the need to provide a good quality of life to all, we must evolve ourselves as a society that can benefit from such high-intensity energy source without the risk of its misuse.
Sixty years of independent India have seen our country develop a self-reliant capability in nuclear technology based on indigenous research and development (R&D). We are today a recognised state with advanced nuclear technology. Our domestic R&D has enabled the development of indigenous Pressurised Heavy Water Reactor (PHWR) technology for electricity generation. It is a commercial success, meeting or exceeding global benchmarks in terms of capital cost, gestation period, O&M performance, and generation costs. Investments made in R&D have led to the Nuclear Power Corporation of India’s (NPCIL) 14 commercial nuclear power units running with profits and returning around Rs.450 crore as annual dividend besides generating a surplus that can finance the setting up of generation capacity to the tune of around 1000 MWe a year.
In spite of these favourable factors, one does occasionally hear comments that are based on the presumed superiority of imported technology over domestic development–reflecting a deep-seated inferiority complex and lack of self-esteem. Hopefully, with the opening up of markets, R&D-driven innovations will become inevitable and come centre stage in Indian business, thus leading to our competing on the world scene on the basis of our technologies rather than our strength just in terms of knowledge workers. In any case, our PHWR technology, along with technologies that create its inputs such as nuclear fuel, heavy water, zirconium structurals, and so on, is in a mature state to propel itself on the domestic scene and also on the global scene when the technology control regime around us is deshackled.
Three-stage programme
Unfortunately, our nuclear resource endowments are modest in terms of uranium, which is the only naturally available material that contains a fissionable component. Our thorium endowments are, however, vast. Our three-stage nuclear power programme is based on this reality, which is unique in India’s case. The programme has its first stage of commercial deployment of PHWRs well under way as mentioned earlier. In the second stage, we will deploy a series of fast breeder reactors, which will enable power generation capacity to be taken to several hundred thousand megawatt level beginning with the plutonium in the spent fuel being discharged from PHWRs and breeding more plutonium from uranium in the spent fuel. Our vast thorium resources can then be deployed for power generation at high levels realised by fast reactors for a few hundred years. Fast breeder reactors are thus key to our energy independence.
The imperatives of our three-stage nuclear power programme are unique, with no parallel in the short or medium term. We have now mounted an aggressive uranium exploration programme using advanced electromagnetic survey techniques to detect deep-seated deposits. This is a new approach and experts in geology say there is no reason why India should not be host to rich and large uranium deposits. The availability of additional uranium resources, which is the main constraint today, will enable us to construct more PHWR units, leading to a rapid increase in generation capacity over and above the 10,000 MWe planned for the first stage. This augmented base will lead to a much larger share for nuclear power in the long run through 50-60-fold multiplication as a result of the three-stage programme.
We look at the possibility of opening up international civil nuclear cooperation also in the same light. The import of uranium, or for that matter the import of reactors and uranium, can add to quicker capacity addition in the short run. With a three-stage strategy, it will lead to further manifold multiplication in the long run.
Our emphasis on three-stage deployment should thus continue. As a matter of fact, the advancement of domestic technological capability in fast breeder reactors, thorium reactors, and associated fuel cycle activities has already earned us significant recognition worldwide. It is clear that this path, while not an immediate priority to other countries that are advanced in nuclear technology, primarily as a result of their easy access to uranium, will soon become important for them.
Renaissance of nuclear power is bound to lead to stress on uranium supplies in the near future, just as we are witnessing stress on fossil fuels today. Fast breeder and thorium reactors will, therefore, have to come centre stage. When this happens, our prior work and experience on these systems will provide us a distinct advantage.
Environmentally acceptable spent fuel management is another important attribute of our three-stage programme. In the absence of reprocessing and recycling, the spent fuel has to be disposed of as such after suitable conditioning. This leads to the issue of having to cope with safe management of long-lived waste over a period of the order of 100,000 years. While technological solutions for this purpose are available, such a waste repository will become a potential plutonium mine once most of the radioactivity has decayed down over a period of time and pose a potential nuclear security risk for future generations. It is ironical that while we remain conscious of the needs of future generations in terms of resources and environment, opposition to reprocessing on grounds of proliferation concerns with little regard for the much needed energy that is contained in the spent fuel completely ignores the security threat to future generations with the creation of such plutonium mines.
INDIGENOUS CAPABALITIES: Sixty years of independent India have seen the country develop a self-reliant capability in nuclear technology based on indigenous research and development. The reactors in Kalpakkam are among the achievements.
Reprocessing and recycling under good institutional control, in fact, simultaneously realises sustainability for resources, environment, and security. In fact, with accelerator-driven thorium systems there is even a possibility of efficient incineration of long-lived waste, with radioactive waste management not remaining an issue beyond a period longer than what can be managed within the life span of institutions.
The implementation of the three-stage programme has to be a sustained mission involving the development and sequential deployment of a range of technologies. We have already advanced on the fast breeder reactor technology, and we are one of the very few countries with capabilities in this area.
When we complete the 500 MWe Prototype Fast Breeder Reactor (PFBR), we will be the second country in the world to operate a commercial power unit based on a fast breeder reactor. While more units based on the PFBR design will be built, we will need to bring in metallic fuel technology with its much shorter doubling time, as early as possible. The 300 MWe Advanced Heavy Water Reactor will be a technology demonstrator for energy from thorium and a forerunner to the future third stage reactor systems.
While electricity is the most convenient energy carrier today and we talk about nuclear reactors producing electricity, hydrogen as an energy carrier will soon become a necessity following the depletion of naturally available fluid hydrocarbons. Nuclear reactors that can make fission energy available at high-enough temperature of around 1000 degrees C are necessary for the commercially viable production of hydrogen. The development of such reactors along with the development of technologies for production, storage, transport, and utilisation of hydrogen is thus a part of our development agenda. The development of Accelerator Driven Sub-critical Reactor systems and fusion energy systems also form a part of our long-term energy vision. We are already a partner in the International Thermonuclear Experimental Reactor (ITER) Project.
We have thus come a long way in gaining technological independence in nuclear energy despite the embargo regime. Now we have to move further, rather rapidly, to realise energy independence. Looking at the severe fossil energy resource constraint that will soon impact us, the only way to secure energy independence in the long run is to take recourse to new energy technologies that can exploit other energy resources available indigenously.
India, with its efforts to provide a decent quality of life to all its people and ambition to be a dominant player on the global scene, needs to be a leader rather than a follower, in terms of energy technologies, specially the ones that can address its specific requirements, which in many ways are unique. The new confidence with which India is marching ahead gives the hope that this indeed will happen.
Dr. Anil Kakodkar is Chairman, Atomic Energy Commission, and Secretary, Department of Atomic Energy.
________________________________________
India has come a long way in gaining technological independence in nuclear energy. Now it has to move rapidly to realise energy independence
Sixty years of independent India is a significant enough segment of our history to reflect on, as we look forward to an Indian resurgence for which we are very favourably poised. With favourable demography and the tremendous importance that knowledge-based activities have gained in recent times, we are in a specially advantageous position. Our vast population, which otherwise is a huge burden, could well become a potential asset. This is both a challenge and an opportunity .
Seen in the context of energy, which is one of the most important inputs to support the growing economy, today there is the requisite buying power to support the rapid growth of the energy sector. At the same time, there are severe energy resource constraints looming large. The non-availability of energy in required amounts could, in fact, severely restrict our developmental aspirations. One may question the developmental model that relies heavily on large-scale energy use. However, it seems impossible to sustain a tension-free society with 20 or 30 times less per capita energy access in the current interdependent world so closely connected through modern-day communications. Even at such a low level of per capita energy use, today we account for around 6 per cent of the global use of coal and around 2.5 per cent of the global use of hydrocarbons. With a projected growth of about 10-15 times the current electricity generation capacity by the middle of the century, while in per capita energy use terms we will still be a factor of three lower than the current usage in the western industrialised world, we will, along with China, cause very significant stress on global fossil energy. Such a stress, apart from leading to the serious question of sharply rising energy prices, will raise formidable issues related to the sustainability of energy resources and a much larger threat to global climate stability in an already fraught scenario.
One needs to look at nuclear energy in this context. Energy associated with processes involving the nucleus of an atom is several million-fold higher than the energy associated with processes that involve electrons that orbit around the nucleus. The latter forms the basis of energy through burning of fossil fuels. Thus, a kilogram of uranium can be a source of a million times more energy as compared to a kilogram of coal or a kilogram of hydrocarbon. Non-emission of greenhouse gases that have threatened the global climate is also a feature of nuclear energy that is catching the imagination of even some of those who earlier opposed it. As a matter of fact, nuclear energy released through fission or fusion of atomic nuclei and solar energy that we receive from the sun are the only two viable basic energy sources capable of meeting our long-term energy needs. We also cannot escape the fact that the sun derives its energy from nuclear fusion.
There is, however, a serious fear of the unknown, accentuated by the man-made Hiroshima-Nagasaki holocaust. Such concerns are natural and have been faced by humankind whenever there has been a paradigm shift in things around it. Whether it is in learning to live with fire or shifting from horse carriage to locomotives and automobiles, man has gone through similar situations. But eventually he has mastered the new technology and accessed its benefits, overcoming the fear of the unknown. In the absence of such adventures we could not have made progress.
Our living with nuclear radiation is as old as the universe itself. The origin of the universe is, in fact, inseparably associated with radiation and nuclear synthesis. The evolution of life in the universe has taken place alongside the radiation environment. This co-existence continues. Extremely high energy intensity that is associated with the atomic nucleus also leads to the military dimension associated with nuclear energy. The co-existence of military and commercial dimensions is a standard feature of any technology — be it explosives or steels and other materials or engines, or for that matter nuclear energy.
In the case of nuclear energy we are, however, talking on an altogether different scale. Given the population pressure and the need to provide a good quality of life to all, we must evolve ourselves as a society that can benefit from such high-intensity energy source without the risk of its misuse.
Sixty years of independent India have seen our country develop a self-reliant capability in nuclear technology based on indigenous research and development (R&D). We are today a recognised state with advanced nuclear technology. Our domestic R&D has enabled the development of indigenous Pressurised Heavy Water Reactor (PHWR) technology for electricity generation. It is a commercial success, meeting or exceeding global benchmarks in terms of capital cost, gestation period, O&M performance, and generation costs. Investments made in R&D have led to the Nuclear Power Corporation of India’s (NPCIL) 14 commercial nuclear power units running with profits and returning around Rs.450 crore as annual dividend besides generating a surplus that can finance the setting up of generation capacity to the tune of around 1000 MWe a year.
In spite of these favourable factors, one does occasionally hear comments that are based on the presumed superiority of imported technology over domestic development–reflecting a deep-seated inferiority complex and lack of self-esteem. Hopefully, with the opening up of markets, R&D-driven innovations will become inevitable and come centre stage in Indian business, thus leading to our competing on the world scene on the basis of our technologies rather than our strength just in terms of knowledge workers. In any case, our PHWR technology, along with technologies that create its inputs such as nuclear fuel, heavy water, zirconium structurals, and so on, is in a mature state to propel itself on the domestic scene and also on the global scene when the technology control regime around us is deshackled.
Three-stage programme
Unfortunately, our nuclear resource endowments are modest in terms of uranium, which is the only naturally available material that contains a fissionable component. Our thorium endowments are, however, vast. Our three-stage nuclear power programme is based on this reality, which is unique in India’s case. The programme has its first stage of commercial deployment of PHWRs well under way as mentioned earlier. In the second stage, we will deploy a series of fast breeder reactors, which will enable power generation capacity to be taken to several hundred thousand megawatt level beginning with the plutonium in the spent fuel being discharged from PHWRs and breeding more plutonium from uranium in the spent fuel. Our vast thorium resources can then be deployed for power generation at high levels realised by fast reactors for a few hundred years. Fast breeder reactors are thus key to our energy independence.
The imperatives of our three-stage nuclear power programme are unique, with no parallel in the short or medium term. We have now mounted an aggressive uranium exploration programme using advanced electromagnetic survey techniques to detect deep-seated deposits. This is a new approach and experts in geology say there is no reason why India should not be host to rich and large uranium deposits. The availability of additional uranium resources, which is the main constraint today, will enable us to construct more PHWR units, leading to a rapid increase in generation capacity over and above the 10,000 MWe planned for the first stage. This augmented base will lead to a much larger share for nuclear power in the long run through 50-60-fold multiplication as a result of the three-stage programme.
We look at the possibility of opening up international civil nuclear cooperation also in the same light. The import of uranium, or for that matter the import of reactors and uranium, can add to quicker capacity addition in the short run. With a three-stage strategy, it will lead to further manifold multiplication in the long run.
Our emphasis on three-stage deployment should thus continue. As a matter of fact, the advancement of domestic technological capability in fast breeder reactors, thorium reactors, and associated fuel cycle activities has already earned us significant recognition worldwide. It is clear that this path, while not an immediate priority to other countries that are advanced in nuclear technology, primarily as a result of their easy access to uranium, will soon become important for them.
Renaissance of nuclear power is bound to lead to stress on uranium supplies in the near future, just as we are witnessing stress on fossil fuels today. Fast breeder and thorium reactors will, therefore, have to come centre stage. When this happens, our prior work and experience on these systems will provide us a distinct advantage.
Environmentally acceptable spent fuel management is another important attribute of our three-stage programme. In the absence of reprocessing and recycling, the spent fuel has to be disposed of as such after suitable conditioning. This leads to the issue of having to cope with safe management of long-lived waste over a period of the order of 100,000 years. While technological solutions for this purpose are available, such a waste repository will become a potential plutonium mine once most of the radioactivity has decayed down over a period of time and pose a potential nuclear security risk for future generations. It is ironical that while we remain conscious of the needs of future generations in terms of resources and environment, opposition to reprocessing on grounds of proliferation concerns with little regard for the much needed energy that is contained in the spent fuel completely ignores the security threat to future generations with the creation of such plutonium mines.
INDIGENOUS CAPABALITIES: Sixty years of independent India have seen the country develop a self-reliant capability in nuclear technology based on indigenous research and development. The reactors in Kalpakkam are among the achievements.
Reprocessing and recycling under good institutional control, in fact, simultaneously realises sustainability for resources, environment, and security. In fact, with accelerator-driven thorium systems there is even a possibility of efficient incineration of long-lived waste, with radioactive waste management not remaining an issue beyond a period longer than what can be managed within the life span of institutions.
The implementation of the three-stage programme has to be a sustained mission involving the development and sequential deployment of a range of technologies. We have already advanced on the fast breeder reactor technology, and we are one of the very few countries with capabilities in this area.
When we complete the 500 MWe Prototype Fast Breeder Reactor (PFBR), we will be the second country in the world to operate a commercial power unit based on a fast breeder reactor. While more units based on the PFBR design will be built, we will need to bring in metallic fuel technology with its much shorter doubling time, as early as possible. The 300 MWe Advanced Heavy Water Reactor will be a technology demonstrator for energy from thorium and a forerunner to the future third stage reactor systems.
While electricity is the most convenient energy carrier today and we talk about nuclear reactors producing electricity, hydrogen as an energy carrier will soon become a necessity following the depletion of naturally available fluid hydrocarbons. Nuclear reactors that can make fission energy available at high-enough temperature of around 1000 degrees C are necessary for the commercially viable production of hydrogen. The development of such reactors along with the development of technologies for production, storage, transport, and utilisation of hydrogen is thus a part of our development agenda. The development of Accelerator Driven Sub-critical Reactor systems and fusion energy systems also form a part of our long-term energy vision. We are already a partner in the International Thermonuclear Experimental Reactor (ITER) Project.
We have thus come a long way in gaining technological independence in nuclear energy despite the embargo regime. Now we have to move further, rather rapidly, to realise energy independence. Looking at the severe fossil energy resource constraint that will soon impact us, the only way to secure energy independence in the long run is to take recourse to new energy technologies that can exploit other energy resources available indigenously.
India, with its efforts to provide a decent quality of life to all its people and ambition to be a dominant player on the global scene, needs to be a leader rather than a follower, in terms of energy technologies, specially the ones that can address its specific requirements, which in many ways are unique. The new confidence with which India is marching ahead gives the hope that this indeed will happen.
Dr. Anil Kakodkar is Chairman, Atomic Energy Commission, and Secretary, Department of Atomic Energy.
________________________________________
India and its neighbours
For the first two-thirds of India’s existence as an independent nation, it managed to tackle the pulls and pressures exerted by the two poles of a divided world with a fair amount of success. However, its relationships with the countries abutting its borders fell well short of the optimum for much of that time. As the Republic begins its 60th year and adapts to a world still unsettled after the end of the Cold War, it appears to have discovered the formulae for li ving in harmony with its neighbours.
In the debate over India’s interaction with its immediate environment, attention is usually focussed on the relationships with the rest of South Asia. While the country’s bilateral connections with each of its neighbours have specific complications, the difference in size between the smaller countries of the subcontinent and the giant in their midst is a common problematic factor. New Delhi has often felt frustrated by its neighbours’ failure to comprehend the compulsions that drive a large nation. The rest of the subcontinent has, of course, regarded India as the regional bully. These mutually antagonistic perspectives are finally being discarded. The transformation has been wrought not through the development of the necessary diplomatic tools alone. The shifts in the international order have forced the countries of South Asia to adjust to the presence of one another.
Positive impact
The change in the equation between India and its biggest neighbour, China, has had a positive impact, though not directly, on its relationships with the rest. There is not much evidence to show that the People’s Republic has used the considerable influence it wields over some South Asian countries to make them change their attitudes towards the subcontinental giant.
Beijing has not forced New Delhi to change its ways either. But the improvement in the bilateral relations between them has served as a model. In the course of the interaction with a power greater than itself, India has been sensitised to the existential concerns of the smaller countries around it. The Sino-Indian exchanges have also led to the recognition of the important principle that differences over certain issues should not preclude the development of bilateral ties in other areas.
Boundary dispute
Fifty years after the boundary dispute arose, the Indian public appears to be coming around to the view that it was unnecessarily allowed to spin out of control. That does not translate into a willingness to concede control of any part of Arunachal Pradesh or to an acceptance of the loss of Aksai Chin. However, as the Special Representatives of the two countries try to arrive at a final delineation of the border, more and more people in this country appear to be coming round to the view that the relationship with the People’s Republic should not be held hostage to this dispute.
Of the three Ts that figure prominently in Sino-Indian ties, the question of Tibet has lost much of its salience. While the Dalai Lama’s presence in Dharamsala continues to be an irritant, there is near-unanimity of opinion within this country that Tibetans must make their own peace with the People’s Republic. The impressive rate of growth in trade and investment between the two countries has made a marked contribution to the change in outlook. The target of $40 billion in bilateral trade by 2010 does look achievable. That India and China are exploring the possibilities of working together with other countries, especially Russia, to strengthen multipolarity at the international level shows how far they have moved away from the adversarial positions they used to take. The recently-launched strategic partnership holds real promise.
It took quite some effort on New Delhi’s part to convince Islamabad that the principle underlying the Sino-Indian rapprochement could apply to their interaction as well. For Pakistan, this involved a fundamental change in outlook since the Kashmir issue was something more than a territorial dispute. Through its containment of a 15-year-long insurgency, India appears to have substantiated its argument that violence will not produce a solution. The international community’s abhorrence of jihadist militancy and the adverse impact the sponsorship of terrorism had on its own internal security and economic well being were the other factors that made Pakistan change direction.
Difficult relationship
Given the bitterly-estranged-twins nature of the India-Pakistan relationship, the deus ex machina of power politics could not have been the only factor that brought about a change in attitudes. The political leaderships in both co untries have displayed vision and a sense of pragmatism by deciding to address the more complex and less problematic issues on parallel tracks simultaneously.
While there has been no real progress on the hard issues in contention, the utility of the new approach cannot be doubted. The mechanisms put in place to enhance people-to-people contacts have worked. Forward-looking forces in the two countries have become acquainted with each other, and through their interaction they have generated a serious drive towards détente.
Pakistan front
In speaking about the India-Pakistan equation, it is too early to drop the caveat that the process of rapprochement could end and even be reversed if there is another spurt in cross-border terrorism. But there is a growing belief that difficult issues could become more resolvable by dealing intelligently with the less intractable problems.
At the same time, it needs to be said that the official-level talks, directed by the respective Foreign Secretaries, cannot go on indefinitely without producing results. The trust deficit has not been overcome completely. There are enough die-hard hate-mongers on both sides of the border who look for opportunities to fan dormant hostilities.
Bangladesh
Over much of the three and a half decades Bangladesh has been in existence, its approach towards India has fluctuated with changes in government. Relations have appeared to be on the upswing whenever one section of the political class has been in power, only to deteriorate when the other section of the same class or a military-dominated administration has taken the reins. There are some signs that a paradigm shift could take place in the not-too-distant future. Dhaka appears to have realised that the country ringing its territory on three sides could be a lucrative market for its natural resources. The imaginative decision taken by the Manmohan Singh Government to relax restrictions on imports from Bangladesh could over time enhance the pace of change.
However, an accurate assessment of India-Bangladesh relations might be possible only after an elected government takes office in late 2008. The systemic overhaul underway could unravel if the current caretaker government oversteps its brief. The resultant political turmoil could profoundly affect on Bangladesh’s relations with India.
Nepal and Sri Lanka
After trial and error, Indian diplomacy appears to have finally got it right in the arena of relations with both Nepal and Sri Lanka. While supporting the process of democratisation in what might soon become an ex-kingdom, New Delhi has ensured that its hand is not too discernible. As for its relations with Sri Lanka, India’s firm opposition to the LTTE’s terrorism, support for the integrity of the island nation, and sympathy for the democratic demands of the Tamil people represent a policy package that is principled as well as practical. In respect to these two countries and Bhutan, India has shown that ‘Big Brother’ can be a benevolent sibling.
In the debate over India’s interaction with its immediate environment, attention is usually focussed on the relationships with the rest of South Asia. While the country’s bilateral connections with each of its neighbours have specific complications, the difference in size between the smaller countries of the subcontinent and the giant in their midst is a common problematic factor. New Delhi has often felt frustrated by its neighbours’ failure to comprehend the compulsions that drive a large nation. The rest of the subcontinent has, of course, regarded India as the regional bully. These mutually antagonistic perspectives are finally being discarded. The transformation has been wrought not through the development of the necessary diplomatic tools alone. The shifts in the international order have forced the countries of South Asia to adjust to the presence of one another.
Positive impact
The change in the equation between India and its biggest neighbour, China, has had a positive impact, though not directly, on its relationships with the rest. There is not much evidence to show that the People’s Republic has used the considerable influence it wields over some South Asian countries to make them change their attitudes towards the subcontinental giant.
Beijing has not forced New Delhi to change its ways either. But the improvement in the bilateral relations between them has served as a model. In the course of the interaction with a power greater than itself, India has been sensitised to the existential concerns of the smaller countries around it. The Sino-Indian exchanges have also led to the recognition of the important principle that differences over certain issues should not preclude the development of bilateral ties in other areas.
Boundary dispute
Fifty years after the boundary dispute arose, the Indian public appears to be coming around to the view that it was unnecessarily allowed to spin out of control. That does not translate into a willingness to concede control of any part of Arunachal Pradesh or to an acceptance of the loss of Aksai Chin. However, as the Special Representatives of the two countries try to arrive at a final delineation of the border, more and more people in this country appear to be coming round to the view that the relationship with the People’s Republic should not be held hostage to this dispute.
Of the three Ts that figure prominently in Sino-Indian ties, the question of Tibet has lost much of its salience. While the Dalai Lama’s presence in Dharamsala continues to be an irritant, there is near-unanimity of opinion within this country that Tibetans must make their own peace with the People’s Republic. The impressive rate of growth in trade and investment between the two countries has made a marked contribution to the change in outlook. The target of $40 billion in bilateral trade by 2010 does look achievable. That India and China are exploring the possibilities of working together with other countries, especially Russia, to strengthen multipolarity at the international level shows how far they have moved away from the adversarial positions they used to take. The recently-launched strategic partnership holds real promise.
It took quite some effort on New Delhi’s part to convince Islamabad that the principle underlying the Sino-Indian rapprochement could apply to their interaction as well. For Pakistan, this involved a fundamental change in outlook since the Kashmir issue was something more than a territorial dispute. Through its containment of a 15-year-long insurgency, India appears to have substantiated its argument that violence will not produce a solution. The international community’s abhorrence of jihadist militancy and the adverse impact the sponsorship of terrorism had on its own internal security and economic well being were the other factors that made Pakistan change direction.
Difficult relationship
Given the bitterly-estranged-twins nature of the India-Pakistan relationship, the deus ex machina of power politics could not have been the only factor that brought about a change in attitudes. The political leaderships in both co untries have displayed vision and a sense of pragmatism by deciding to address the more complex and less problematic issues on parallel tracks simultaneously.
While there has been no real progress on the hard issues in contention, the utility of the new approach cannot be doubted. The mechanisms put in place to enhance people-to-people contacts have worked. Forward-looking forces in the two countries have become acquainted with each other, and through their interaction they have generated a serious drive towards détente.
Pakistan front
In speaking about the India-Pakistan equation, it is too early to drop the caveat that the process of rapprochement could end and even be reversed if there is another spurt in cross-border terrorism. But there is a growing belief that difficult issues could become more resolvable by dealing intelligently with the less intractable problems.
At the same time, it needs to be said that the official-level talks, directed by the respective Foreign Secretaries, cannot go on indefinitely without producing results. The trust deficit has not been overcome completely. There are enough die-hard hate-mongers on both sides of the border who look for opportunities to fan dormant hostilities.
Bangladesh
Over much of the three and a half decades Bangladesh has been in existence, its approach towards India has fluctuated with changes in government. Relations have appeared to be on the upswing whenever one section of the political class has been in power, only to deteriorate when the other section of the same class or a military-dominated administration has taken the reins. There are some signs that a paradigm shift could take place in the not-too-distant future. Dhaka appears to have realised that the country ringing its territory on three sides could be a lucrative market for its natural resources. The imaginative decision taken by the Manmohan Singh Government to relax restrictions on imports from Bangladesh could over time enhance the pace of change.
However, an accurate assessment of India-Bangladesh relations might be possible only after an elected government takes office in late 2008. The systemic overhaul underway could unravel if the current caretaker government oversteps its brief. The resultant political turmoil could profoundly affect on Bangladesh’s relations with India.
Nepal and Sri Lanka
After trial and error, Indian diplomacy appears to have finally got it right in the arena of relations with both Nepal and Sri Lanka. While supporting the process of democratisation in what might soon become an ex-kingdom, New Delhi has ensured that its hand is not too discernible. As for its relations with Sri Lanka, India’s firm opposition to the LTTE’s terrorism, support for the integrity of the island nation, and sympathy for the democratic demands of the Tamil people represent a policy package that is principled as well as practical. In respect to these two countries and Bhutan, India has shown that ‘Big Brother’ can be a benevolent sibling.
Indian capital, foreign policy
SIDDHARTH VARADARAJAN
Bandwagoning with unipolarity has been a trend, but there are limits
It is customary nowadays to divide the history of independent India’s economic policy into the pre-1991 and post-1991 periods, but what can we say about the impact of liberalisation on Indian foreign policy? Certainly, the diplomatic priorities and strategies of today are not what they used to be in the decades after Independence. But then neither is the world that confronts Indian policymakers the same one that Nehru and Indira Gandhi had to reckon with. Disaggregat ing the observable changes that have occurred on the foreign policy front is especially difficult because 1991 produced two distinct ruptures — the old domestic order of dirigisme ended, but so did the ancien regime of bipolarity. Indian foreign policy has had to adapt to this fundamental change in both internal and external environments.
On the domestic front, economic liberalisation has not produced a uniform or coherent foreign policy vision but there is a growing realisation of the need to consolidate South Asia as an integrated economic space. Unfortunately, other than the free trade agreement with Sri Lanka and greater physical connectivity within the region, the Indian state has not had much success in this direction.
At the global level, Indian capital tends to favour a policy of greater accommodation with Washington. In structural terms, some of the fastest growing sectors of the Indian economy such as information technology have benefited from forging symbiotic ‘back office’ ties with American companies. In key sectors where liberalisation has yet to take effect, many big Indian corporates have struck alliances with U.S. companies. Indian companies also anticipate making inroads in the lucrative defence and ancillaries sector through offsets if the U.S. is able to establish itself as a major source of weapons for the Indian military. That is why Indian capital takes a benign view of the growing cooperation between India and the U.S. in the defence sector.
This pressure from the business elite gains added policy heft from two other sources. First, the urban upper middle class sees closer political and strategic relations with the U.S. as its passport to greater personal prosperity in an increasingly globalised world. Second, to the extent to which the upper echelons of India’s bureaucratic and military elite come from this stratum, this ‘natural’ predisposition towards the U.S. gets further magnified. It is not as if the Indian ‘nomenklatura’ has lost sight of the ‘national interest’. But its quest for global prestige means it is easily flattered and deceived, and has little difficulty buying into the American rhetoric about ‘shared values.’
So strong is this impulse to bandwagon with the U.S. that successive governments since 1991 have had no option but to go along. Even the 1998 nuclear tests — though sold to the public as an affirmation of the country’s strategic autonomy — were used by the erstwhile National Democratic Alliance to signal the willingness of resurgent Indian capital to be accommodated in Pax Americana. Similarly, the United Progressive Alliance government — which came to power with the promise of pursuing an ‘independent foreign policy’ — has had no compunction pushing the Indo-U.S. ‘strategic partnership’ to new and unprecedented heights.
But if bandwagoning with unipolarity has been the dominant foreign policy trend since the 1990s, there are today other structural impulses that serve to place limits on how far India can go down this path.
The first is the role that public opinion plays. Throughout the 1990s, India drew closer to the United States but the rhetorical shell of nonalignment and solidarity was perforce maintained by those running the government. The UPA sought to break out of this shell with its discourse of “national interest” but has not succeeded in carrying the country on issues such as Iran or the visit to Indian ports of American warships while on active, aggressive deployment in the Persian Gulf. In the years to come, harmonising the expectations of the U.S. for greater military cooperation with the popular perception that America is not a benign power will be a difficult task for the Indian government.
The second structural impediment will come, paradoxically, from the same source that triggered the growing proximity with the U.S. in the first place, that is, Indian capital.
It is too early to make generalisations but the recent flood of Indian acquisitions abroad — for example, Tata buying Corus in Britain, Jindal Steel investing $2 billion in an iron and steel venture in Bolivia — is bound to have its impact on Indian foreign policy. Comparative advantage is forcing Indian companies to think of globalisation along new vectors.
India is rediscovering Asia, Africa and Latin America, this time not as the object of political solidarity but as the source of raw materials and the destination for its products. Until recently, major external acquisitions were limited to energy and involved PSUs rather than corporates. But with the growth of the Indian multinational and its expansion – at least in the first instance – to areas where India’s unique strategic identity can profitably be leveraged, it is possible that Indian capital may not see bandwagoning with unipolarity as the most effective business strategy. Of course, some companies may well feel India’s growing proximity to the U.S. opens more doors than it closes, but this is likely to be true only in Europe and parts of Asia.
A close look at India’s trade statistics, for example, tells us the greatest opportunities exist in those parts of the world — for example, West Asia and the Arab world — where it pays to put some political distance between Delhi and Washington.
Will these two factors serve to temper India’s rush to embrace the United States in every sphere, and especially the military? It is difficult to say. Strategic partnerships have a way of becoming self-fulfilling prophecies not only because of the links and interests that get formed between the two partners but also because of the links and interests that are foregone as a result. Understanding this dialectic, and doing so in time, is what will be decisive.
Bandwagoning with unipolarity has been a trend, but there are limits
It is customary nowadays to divide the history of independent India’s economic policy into the pre-1991 and post-1991 periods, but what can we say about the impact of liberalisation on Indian foreign policy? Certainly, the diplomatic priorities and strategies of today are not what they used to be in the decades after Independence. But then neither is the world that confronts Indian policymakers the same one that Nehru and Indira Gandhi had to reckon with. Disaggregat ing the observable changes that have occurred on the foreign policy front is especially difficult because 1991 produced two distinct ruptures — the old domestic order of dirigisme ended, but so did the ancien regime of bipolarity. Indian foreign policy has had to adapt to this fundamental change in both internal and external environments.
On the domestic front, economic liberalisation has not produced a uniform or coherent foreign policy vision but there is a growing realisation of the need to consolidate South Asia as an integrated economic space. Unfortunately, other than the free trade agreement with Sri Lanka and greater physical connectivity within the region, the Indian state has not had much success in this direction.
At the global level, Indian capital tends to favour a policy of greater accommodation with Washington. In structural terms, some of the fastest growing sectors of the Indian economy such as information technology have benefited from forging symbiotic ‘back office’ ties with American companies. In key sectors where liberalisation has yet to take effect, many big Indian corporates have struck alliances with U.S. companies. Indian companies also anticipate making inroads in the lucrative defence and ancillaries sector through offsets if the U.S. is able to establish itself as a major source of weapons for the Indian military. That is why Indian capital takes a benign view of the growing cooperation between India and the U.S. in the defence sector.
This pressure from the business elite gains added policy heft from two other sources. First, the urban upper middle class sees closer political and strategic relations with the U.S. as its passport to greater personal prosperity in an increasingly globalised world. Second, to the extent to which the upper echelons of India’s bureaucratic and military elite come from this stratum, this ‘natural’ predisposition towards the U.S. gets further magnified. It is not as if the Indian ‘nomenklatura’ has lost sight of the ‘national interest’. But its quest for global prestige means it is easily flattered and deceived, and has little difficulty buying into the American rhetoric about ‘shared values.’
So strong is this impulse to bandwagon with the U.S. that successive governments since 1991 have had no option but to go along. Even the 1998 nuclear tests — though sold to the public as an affirmation of the country’s strategic autonomy — were used by the erstwhile National Democratic Alliance to signal the willingness of resurgent Indian capital to be accommodated in Pax Americana. Similarly, the United Progressive Alliance government — which came to power with the promise of pursuing an ‘independent foreign policy’ — has had no compunction pushing the Indo-U.S. ‘strategic partnership’ to new and unprecedented heights.
But if bandwagoning with unipolarity has been the dominant foreign policy trend since the 1990s, there are today other structural impulses that serve to place limits on how far India can go down this path.
The first is the role that public opinion plays. Throughout the 1990s, India drew closer to the United States but the rhetorical shell of nonalignment and solidarity was perforce maintained by those running the government. The UPA sought to break out of this shell with its discourse of “national interest” but has not succeeded in carrying the country on issues such as Iran or the visit to Indian ports of American warships while on active, aggressive deployment in the Persian Gulf. In the years to come, harmonising the expectations of the U.S. for greater military cooperation with the popular perception that America is not a benign power will be a difficult task for the Indian government.
The second structural impediment will come, paradoxically, from the same source that triggered the growing proximity with the U.S. in the first place, that is, Indian capital.
It is too early to make generalisations but the recent flood of Indian acquisitions abroad — for example, Tata buying Corus in Britain, Jindal Steel investing $2 billion in an iron and steel venture in Bolivia — is bound to have its impact on Indian foreign policy. Comparative advantage is forcing Indian companies to think of globalisation along new vectors.
India is rediscovering Asia, Africa and Latin America, this time not as the object of political solidarity but as the source of raw materials and the destination for its products. Until recently, major external acquisitions were limited to energy and involved PSUs rather than corporates. But with the growth of the Indian multinational and its expansion – at least in the first instance – to areas where India’s unique strategic identity can profitably be leveraged, it is possible that Indian capital may not see bandwagoning with unipolarity as the most effective business strategy. Of course, some companies may well feel India’s growing proximity to the U.S. opens more doors than it closes, but this is likely to be true only in Europe and parts of Asia.
A close look at India’s trade statistics, for example, tells us the greatest opportunities exist in those parts of the world — for example, West Asia and the Arab world — where it pays to put some political distance between Delhi and Washington.
Will these two factors serve to temper India’s rush to embrace the United States in every sphere, and especially the military? It is difficult to say. Strategic partnerships have a way of becoming self-fulfilling prophecies not only because of the links and interests that get formed between the two partners but also because of the links and interests that are foregone as a result. Understanding this dialectic, and doing so in time, is what will be decisive.
The crisis of Indian agriculture
M.S. SWAMINATHAN
If farm ecology and economics go wrong, nothing else will go right in agriculture
The post-Independence history of Indian agriculture can be broadly grouped into four periods. Before describing them, I should mention that during the colonial era famines were frequent and famine commissions were abundant. The growth rate in food production during the 1900-1947 period was hardly 0.1 per cent. Most of the important institutional developments in agriculture emanated from the recommendations of famine commissions. The great Bengal Famine of 1942-43 provided the backdrop to India’s Independence.
It is to the credit of Independent India that famines of this kind have not been allowed to occur, although our population has grown from 350 million in 1947 to 1,100 million now.
Phase I: 1947-64
This was the Jawaharlal Nehru era where the major emphasis was on the development of infrastructure for scientific agriculture. The steps taken included the establishment of fertilizer and pesticide factories, construction of large multi-purpose irrigation-cum-power projects, organisation of community development and national extension programmes and, above all, the starting of agricultural universities, beginning with the Pant Nagar University established in 1958, as well as new agricultural research institutions, as for example the Central Rice Research Institute, Cuttack, and the Central Potato Research Institute, Shimla.
During this period, the population started increasing by over 3 per cent a year as a result of both the steps taken to strengthen public health care systems and advances in preventive and curative medicine.
The growth in food production was inadequate to meet the consumption needs of the growing population, and food imports became essential. Such food imports, largely under the PL-480 programme of the United States, touched a peak of 10 million tonnes in 1966.
Phase II: 1965-1985
This period coincides with the leadership of Lal Bahadur Shastri and Indira Gandhi, with Morarji Desai and Charan Singh serving as Prime Ministers during 1977-79. The emphasis was on maximising the benefits of infrastructure created during Phase I, particularly in the areas of irrigation and technology transfer. Major gaps in the strategies adopted during Phase I were filled, as for example the introduction of semi-dwarf high-yielding varieties of wheat and rice, which could utilise sunlight, water, and nutrients more efficiently and yield two to three times more than the strains included in the Intensive Agriculture District Programme (IADP) of the early 1960s. This period also saw the reorganisation and strengthening of agricultural research, education and extension, and the creation of institutions to provide farmers assured marketing opportunities and remunerative prices for their produce. The National Bank for Agriculture and Rural Development (NABARD) was set up. All these steps led to a quantum jump in the productivity and production of crops such as wheat and rice, a phenomenon christened in 1968 as the Green Revolution. C. Subramaniam (1964-67) and Jagjivan Ram provided the necessary public policy guidance and support.
The Green Revolution generated a mood of self-confidence in our agricultural capability. The gains were consolidated during the Sixth Five Year Plan period (1980-85) when for the first time agricultural growth rate exceeded the general economic growth rate. Also, the growth rate in food production exceeded that of the population. The Sixth Plan achievement illustrates the benefits arising from farmer-centred priorities in investment and in the overall agricultural production strategy.
Phase III: 1985-2000
This was the era of Rajiv Gandhi, P.V. Narasimha Rao and Atal Bihari Vajpayee, with several other Prime Minister serving for short periods.
This phase was characterised by greater emphasis on the production of pulses and oilseeds as well as of vegetables, fruits, and milk. Rajiv Gandhi introduced organisational innovations like Technology Missions, which resulted in a rapid rise in oilseed production. The Mission approach involves concurrent attention to conservation, cultivation, consumption, and commerce. Rain-fed areas and wastelands received greater attention and a Wasteland Development Board was set up. Wherever an end-to-end approach was introduced involving attention to all links in the production-consumption chain, progress was steady and sometimes striking as in the case of milk and egg production. This period ended with large grain reserves with the government, with the media highlighting the co-existence of “grain mountains and hungry millions.” This period also saw a gradual decline in public investment in irrigation and infrastructure essential for agricultural progress as well as a gradual collapse of the cooperative credit system.
Phase IV: 2001 to the present day
Despite the efforts of Prime Ministers Atal Bihari Vajpayee and Manmohan Singh, this phase is best described as one characterised by policy fatigue, resulting in technology extension and production fatigues. No wonder that the farmers, who keep others alive, are now forced to take their own lives and 40 per cent of them want to quit farming, if there is an alternative option.
The agricultural decline is taking place at a time when international prices of major foodgrains are going up steeply, partly owing to the use of grain for ethanol production. Land for food versus fuel is becoming a major issue. For example, the export price of wheat has risen from $197 a tonne in 2005 to $263 a tonne in 2007. Maize price has gone up from about $100 a tonne in 2005 to $166 a tonne now. International trade is also becoming free but not fair. Compounding these problems is the possibility of adverse changes in rainfall, temperature, and the sea level as a result of global warming. Melting of Himalayan ice and glaciers will result in floods of unprecedented dimensions in north India. If agricultural production does not remain above the population growth rate and if the public distribution system is starved of grain, there is every likelihood of our going back to the pre-Independence situation of recurrent famines. The grain mountains have disappeared and we are today in the era of diminishing grain reserves, escalating prices, and persistence of widespread under-nutrition.
Where do we go from here?
The Green Revolution of the 1960s was the result of synergy among technology, public policy and farmers’ enthusiasm. The post-60th anniversary era in agriculture will depend upon our determination to implement Jawaharlal Nehru’s exhortation, “Everything else can wait, but not agriculture” in both letter and spirit.
If farm ecology and economics go wrong, nothing else will go right in agriculture. This is the principal message of the current agrarian crisis. The agrarian crisis is likely to spread if the economics of small-scale farming is not improved. At the same time, State governments should not promote policies for ecocides (that is, acts of ecological suicide such as free electricity to pump groundwater, leading to the exhaustion of aquifers). How can we resolve the crisis? The first and foremost priority should go to making the era of farmers’ suicide history.
— Photo: K.K. Mustafah
Needed, a new deal: Progress in agriculture must be measured principally by the growth rate in the net income of farmers.
About 35 districts identified by the Union Ministry of Agriculture as the most affected by the agrarian crisis should be developed into Special Agricultural Zones (SAZ), where integrated attention will be paid to natural resources conservation and enhancement, eco-farming, improved local level consumption to overcome malnutrition, and pro-small farmer commerce. Most of these areas are rainfed and attention will have to be paid to the generation of multiple livelihood opportunities. These areas require the joint efforts of agricultural scientists, extension agencies, policy makers, and mass media. Unless the various government departments/ Ministries dealing with agriculture, animal husbandry, fisheries, forestry, environment, agro-processing and agri-business, irrigation, commerce, rural development and finance work on the principles of convergence and synergy, it will be difficult to find lasting solutions to the problems of small farmers. The major purpose of a Special Agricultural Zone is ecological restoration and the strengthening of the work and income security of farm families with about one hectare or less of land. While the Special Economic Zone (SEZ) is designed to enhance trade and export income involving mega-investment by the private sector industry, the SAZ is needed to save the lives and livelihoods of small farmers and landless labour by providing key centralised services to support decentralised small-scale production as well as market and income security. The SAZ concept will provide an effective method to end farmers’ suicides by creating a platform for collective action by all the departments and agencies concerned of the Central and State governments, private sector industry and civil society organisations. The present relief measures are fragmented both in design and implementation, and unless they are replaced with a holistic approach, with special emphasis on minimising risks and maximising net income, the crisis will get worse.
While carefully designed SAZs can help end the era of farmers’ suicides, the emerging larger agricultural production and food security crisis can be managed if the following steps are taken to achieve an evergreen revolution, leading to the enhancement of productivity in perpetuity without associated ecological harm. The five basic components of an evergreen revolution strategy are:
Conservation of prime farmland for agriculture and soil health care and enhancement, issue of Soil Health Cards indicating the organic matter and macro- and micronutrient status of the soil;
Water harvesting, management and conjunctive use of surface, rain, ground and treated effluent water and safeguarding water quality;
Credit and insurance reform;
Low-risk and environmentally friendly Green Technologies (such as integrated pest and nutrient management) and the provision of the needed inputs at the right time and place and at affordable cost;
Assured and remunerative marketing.
These five steps need to be taken and implemented in an integrated manner, so that we generate an Ever-green Revolution Symphony. The above steps are common to all farming zones. However, differentiated steps are needed in the following three areas:
First, we must defend the gains already made in the Green Revolution areas of Punjab, Haryana, and western Uttar Pradesh. This heartland of the Green Revolution, or India’s fertile crescent, is in a state of acute ecological and economic distress. Conservation farming and green agriculture should replace exploitative agriculture. Public policies promoting ecocides should be withdrawn and replaced with incentives for conservation farming. This region will remain a major source of foodgrains for the public distribution system, and hence needs urgent attention.
Secondly, we must extend the gains to additional areas like Bihar and the entire eastern India, which possess good soil and water resources, as well as to rainfed, hill and coastal areas. A second fertile crescent can be created immediately in the region comprising Bihar, eastern Uttar Pradesh, Chhattisgarh, West Bengal and Assam, where the untapped production reservoir even with technologies on the shelf is high.
Finally, we should make new gains, particularly in the areas of farming systems diversification and value addition. There is now a mismatch between production and post-harvest technologies. This should end. A quality literacy and value-addition movement should be launched.
The National Commission on Farmers has outlined a detailed strategy to achieve these goals. A draft National Policy for Farmers has been provided by the NCF, which if adopted will help make the growth rate in the net income of farmers as the principal criterion for measuring agricultural progress. Farmers are ready to help the nation. Are we ready to help them?
M.S. Swaminathan, eminent agricultural scientist, is founder-chairman of the M.S. Swaminathan Research Foundation, Chennai.
If farm ecology and economics go wrong, nothing else will go right in agriculture
The post-Independence history of Indian agriculture can be broadly grouped into four periods. Before describing them, I should mention that during the colonial era famines were frequent and famine commissions were abundant. The growth rate in food production during the 1900-1947 period was hardly 0.1 per cent. Most of the important institutional developments in agriculture emanated from the recommendations of famine commissions. The great Bengal Famine of 1942-43 provided the backdrop to India’s Independence.
It is to the credit of Independent India that famines of this kind have not been allowed to occur, although our population has grown from 350 million in 1947 to 1,100 million now.
Phase I: 1947-64
This was the Jawaharlal Nehru era where the major emphasis was on the development of infrastructure for scientific agriculture. The steps taken included the establishment of fertilizer and pesticide factories, construction of large multi-purpose irrigation-cum-power projects, organisation of community development and national extension programmes and, above all, the starting of agricultural universities, beginning with the Pant Nagar University established in 1958, as well as new agricultural research institutions, as for example the Central Rice Research Institute, Cuttack, and the Central Potato Research Institute, Shimla.
During this period, the population started increasing by over 3 per cent a year as a result of both the steps taken to strengthen public health care systems and advances in preventive and curative medicine.
The growth in food production was inadequate to meet the consumption needs of the growing population, and food imports became essential. Such food imports, largely under the PL-480 programme of the United States, touched a peak of 10 million tonnes in 1966.
Phase II: 1965-1985
This period coincides with the leadership of Lal Bahadur Shastri and Indira Gandhi, with Morarji Desai and Charan Singh serving as Prime Ministers during 1977-79. The emphasis was on maximising the benefits of infrastructure created during Phase I, particularly in the areas of irrigation and technology transfer. Major gaps in the strategies adopted during Phase I were filled, as for example the introduction of semi-dwarf high-yielding varieties of wheat and rice, which could utilise sunlight, water, and nutrients more efficiently and yield two to three times more than the strains included in the Intensive Agriculture District Programme (IADP) of the early 1960s. This period also saw the reorganisation and strengthening of agricultural research, education and extension, and the creation of institutions to provide farmers assured marketing opportunities and remunerative prices for their produce. The National Bank for Agriculture and Rural Development (NABARD) was set up. All these steps led to a quantum jump in the productivity and production of crops such as wheat and rice, a phenomenon christened in 1968 as the Green Revolution. C. Subramaniam (1964-67) and Jagjivan Ram provided the necessary public policy guidance and support.
The Green Revolution generated a mood of self-confidence in our agricultural capability. The gains were consolidated during the Sixth Five Year Plan period (1980-85) when for the first time agricultural growth rate exceeded the general economic growth rate. Also, the growth rate in food production exceeded that of the population. The Sixth Plan achievement illustrates the benefits arising from farmer-centred priorities in investment and in the overall agricultural production strategy.
Phase III: 1985-2000
This was the era of Rajiv Gandhi, P.V. Narasimha Rao and Atal Bihari Vajpayee, with several other Prime Minister serving for short periods.
This phase was characterised by greater emphasis on the production of pulses and oilseeds as well as of vegetables, fruits, and milk. Rajiv Gandhi introduced organisational innovations like Technology Missions, which resulted in a rapid rise in oilseed production. The Mission approach involves concurrent attention to conservation, cultivation, consumption, and commerce. Rain-fed areas and wastelands received greater attention and a Wasteland Development Board was set up. Wherever an end-to-end approach was introduced involving attention to all links in the production-consumption chain, progress was steady and sometimes striking as in the case of milk and egg production. This period ended with large grain reserves with the government, with the media highlighting the co-existence of “grain mountains and hungry millions.” This period also saw a gradual decline in public investment in irrigation and infrastructure essential for agricultural progress as well as a gradual collapse of the cooperative credit system.
Phase IV: 2001 to the present day
Despite the efforts of Prime Ministers Atal Bihari Vajpayee and Manmohan Singh, this phase is best described as one characterised by policy fatigue, resulting in technology extension and production fatigues. No wonder that the farmers, who keep others alive, are now forced to take their own lives and 40 per cent of them want to quit farming, if there is an alternative option.
The agricultural decline is taking place at a time when international prices of major foodgrains are going up steeply, partly owing to the use of grain for ethanol production. Land for food versus fuel is becoming a major issue. For example, the export price of wheat has risen from $197 a tonne in 2005 to $263 a tonne in 2007. Maize price has gone up from about $100 a tonne in 2005 to $166 a tonne now. International trade is also becoming free but not fair. Compounding these problems is the possibility of adverse changes in rainfall, temperature, and the sea level as a result of global warming. Melting of Himalayan ice and glaciers will result in floods of unprecedented dimensions in north India. If agricultural production does not remain above the population growth rate and if the public distribution system is starved of grain, there is every likelihood of our going back to the pre-Independence situation of recurrent famines. The grain mountains have disappeared and we are today in the era of diminishing grain reserves, escalating prices, and persistence of widespread under-nutrition.
Where do we go from here?
The Green Revolution of the 1960s was the result of synergy among technology, public policy and farmers’ enthusiasm. The post-60th anniversary era in agriculture will depend upon our determination to implement Jawaharlal Nehru’s exhortation, “Everything else can wait, but not agriculture” in both letter and spirit.
If farm ecology and economics go wrong, nothing else will go right in agriculture. This is the principal message of the current agrarian crisis. The agrarian crisis is likely to spread if the economics of small-scale farming is not improved. At the same time, State governments should not promote policies for ecocides (that is, acts of ecological suicide such as free electricity to pump groundwater, leading to the exhaustion of aquifers). How can we resolve the crisis? The first and foremost priority should go to making the era of farmers’ suicide history.
— Photo: K.K. Mustafah
Needed, a new deal: Progress in agriculture must be measured principally by the growth rate in the net income of farmers.
About 35 districts identified by the Union Ministry of Agriculture as the most affected by the agrarian crisis should be developed into Special Agricultural Zones (SAZ), where integrated attention will be paid to natural resources conservation and enhancement, eco-farming, improved local level consumption to overcome malnutrition, and pro-small farmer commerce. Most of these areas are rainfed and attention will have to be paid to the generation of multiple livelihood opportunities. These areas require the joint efforts of agricultural scientists, extension agencies, policy makers, and mass media. Unless the various government departments/ Ministries dealing with agriculture, animal husbandry, fisheries, forestry, environment, agro-processing and agri-business, irrigation, commerce, rural development and finance work on the principles of convergence and synergy, it will be difficult to find lasting solutions to the problems of small farmers. The major purpose of a Special Agricultural Zone is ecological restoration and the strengthening of the work and income security of farm families with about one hectare or less of land. While the Special Economic Zone (SEZ) is designed to enhance trade and export income involving mega-investment by the private sector industry, the SAZ is needed to save the lives and livelihoods of small farmers and landless labour by providing key centralised services to support decentralised small-scale production as well as market and income security. The SAZ concept will provide an effective method to end farmers’ suicides by creating a platform for collective action by all the departments and agencies concerned of the Central and State governments, private sector industry and civil society organisations. The present relief measures are fragmented both in design and implementation, and unless they are replaced with a holistic approach, with special emphasis on minimising risks and maximising net income, the crisis will get worse.
While carefully designed SAZs can help end the era of farmers’ suicides, the emerging larger agricultural production and food security crisis can be managed if the following steps are taken to achieve an evergreen revolution, leading to the enhancement of productivity in perpetuity without associated ecological harm. The five basic components of an evergreen revolution strategy are:
Conservation of prime farmland for agriculture and soil health care and enhancement, issue of Soil Health Cards indicating the organic matter and macro- and micronutrient status of the soil;
Water harvesting, management and conjunctive use of surface, rain, ground and treated effluent water and safeguarding water quality;
Credit and insurance reform;
Low-risk and environmentally friendly Green Technologies (such as integrated pest and nutrient management) and the provision of the needed inputs at the right time and place and at affordable cost;
Assured and remunerative marketing.
These five steps need to be taken and implemented in an integrated manner, so that we generate an Ever-green Revolution Symphony. The above steps are common to all farming zones. However, differentiated steps are needed in the following three areas:
First, we must defend the gains already made in the Green Revolution areas of Punjab, Haryana, and western Uttar Pradesh. This heartland of the Green Revolution, or India’s fertile crescent, is in a state of acute ecological and economic distress. Conservation farming and green agriculture should replace exploitative agriculture. Public policies promoting ecocides should be withdrawn and replaced with incentives for conservation farming. This region will remain a major source of foodgrains for the public distribution system, and hence needs urgent attention.
Secondly, we must extend the gains to additional areas like Bihar and the entire eastern India, which possess good soil and water resources, as well as to rainfed, hill and coastal areas. A second fertile crescent can be created immediately in the region comprising Bihar, eastern Uttar Pradesh, Chhattisgarh, West Bengal and Assam, where the untapped production reservoir even with technologies on the shelf is high.
Finally, we should make new gains, particularly in the areas of farming systems diversification and value addition. There is now a mismatch between production and post-harvest technologies. This should end. A quality literacy and value-addition movement should be launched.
The National Commission on Farmers has outlined a detailed strategy to achieve these goals. A draft National Policy for Farmers has been provided by the NCF, which if adopted will help make the growth rate in the net income of farmers as the principal criterion for measuring agricultural progress. Farmers are ready to help the nation. Are we ready to help them?
M.S. Swaminathan, eminent agricultural scientist, is founder-chairman of the M.S. Swaminathan Research Foundation, Chennai.
Inflation isn't unique to India, it's global
Indians tend to analyse economic events as though India was a case by itself. Yet the most causal look at our major issues inflation, economic slowdown, outsourcing, pollution, rising trade and remittances shows that they are also global issues.
Today, inflation is a problem across the world. Indians are worried that wholesale price inflation is approaching 13%, and consumer price inflation is approaching 9%. This is well above what is politically tolerable, and well above the RBI’s preferred range of 4.5-5%. The RBI has for two years been raising interest rates, and squeezing money supply through higher cash reserve ratios for banks, and open market bond sales.
Some analysts, such as Surjit Bhalla, protest that this policy is sadly misconceived and produces all pain and no gain. According to this view, tight money will hit growth and increase defaults without impacting inflation, which is mainly imported through booming global prices. After skyrocketing since early 2007, global commodity prices are now falling. This will automatically tame inflation, so the RBI should shift its focus to stimulating rather than slowing the economy, according to this view.
An opposite view comes from Friedmanite monetarists, who hold that inflation is always and everywhere a monetary phenomenon. Maybe commodity prices have doubled, but if money supply does not rise to accommodate higher purchases of commodities, people will be forced to buy less of other items, whose prices will fall. On balance, say monetarists, there will be no inflation.
I am not a pure monetarist. I believe that money matters, but that money alone does not determine outcomes. This puts me at odds with both Friedman and Bhalla. Global commodity prices are indeed a cause of inflation, in India and elsewhere.
Although financial dailies devote much space to monetary and fiscal policy, the main tools for curbing inflation in India have been trade policy and price control. The export of wheat, non-Basmati rice and (recently) maize has kept Indian grain prices much below world prices.
Import duty on edible oils has been scrapped. Export duties and arm-twisting has kept steel in India below world prices, and the current import policy for cement favours importers (who pay zero import duty and no countervailing duty) over domestic producers (who pay excise duty). Price control has kept the price of petrol, diesel, kerosene, LPG and fertilisers far below the world price, although this has serious fiscal consequences.
These measures could have terrible consequences if maintained for a long time, but in the short run have contributed greatly to inflation control. Neighbouring Pakistan suffers from 25% inflation, and so does Vietnam. The price of foodgrains in India is only 6-7% higher than a year ago, a remarkable feat considering that global prices have doubled. But this may not impress voters, who are concerned about the erosion of their living standard and are not consoled by the news that others are suffering even more.
Commodity prices have fallen sharply since early July. Given the slowdown in most economies, this trend may continue. So, should the RBI ease monetary policy, and stimulate growth? Can we say that food and fuel inflation represent imported inflation that is largely beyond the control of central banks, and so should be ignored both on the way up and down?
This is not an issue in India alone. It is an issue in countries across the globe. In many countries, central banks are reluctant to tighten money to slow growth in order to contain inflation, arguing that they cannot really tame imported inflation. Many central banks, in Opec as well as Asian manufacturing-exporters, have run up huge trade surpluses but resist currency appreciation. This tends to keep demand up and inflation high. Yet central banks persist, since they can much more easily check exchange rates than imported inflation.
This approach suffers from what Keynes called the fallacy of composition. A single central bank can legitimately argue that it lacks the power to check imported inflation, and so is better off stimulating growth. But if every country adopts this approach, the consequence will be global inflation stoked by central banks.
Any single country may import inflation, but the world as a whole cannot import inflation. Higher prices are not imported from Mars. They come from the actions of central banks and governments. So it is a serious mistake for any large country — including India — to feel that it cannot check imported inflation.
The US Fed has kept short-run interest rates extremely low at 2% to prevent a recession, even though inflation is running at 5.6%, the highest rate since 1991. China too has a negative real interest rate. It has tightened nominal interest rates for two years and raised the cash reserve requirements of banks to a huge 17%. Yet many economists — such as Arvind Subramaniam and Adam Posen in a recent op-ed in The Financial Times — accuse China of a loose monetary policy, arguing that China aims above all to resist currency appreciation through massive forex reserve accumulation. This artificial cheapening of the yuan is inflationary.
Subramiam and Posen argue that the US and China are currently refusing to share a reasonable part of the pain involved in inflation-fighting. Their monetary policies are much too loose, and they are free-riding on the inflation fighting efforts of others (notably the EU, India and Brazil). The two economists want co-ordinated central bank action to tackle inflation. Specifically, they want the US and China to do much more.
While agreeing, I would add two caveats. First, don’t overstate India’s inflation-fighting virtues: at 9%, its repo rate is negative or almost negative in real terms. Second, don’t overstate the looseness of US monetary policy: its structural credit crunch constrains lending even though interest rates are low.
What are the chances that we will really get purposive global action against inflation? Not high. Rich countries face recession, and politicians there will happily risk some inflation to save jobs and incomes. So, expect inflation to remain high despite falling commodity prices.
Today, inflation is a problem across the world. Indians are worried that wholesale price inflation is approaching 13%, and consumer price inflation is approaching 9%. This is well above what is politically tolerable, and well above the RBI’s preferred range of 4.5-5%. The RBI has for two years been raising interest rates, and squeezing money supply through higher cash reserve ratios for banks, and open market bond sales.
Some analysts, such as Surjit Bhalla, protest that this policy is sadly misconceived and produces all pain and no gain. According to this view, tight money will hit growth and increase defaults without impacting inflation, which is mainly imported through booming global prices. After skyrocketing since early 2007, global commodity prices are now falling. This will automatically tame inflation, so the RBI should shift its focus to stimulating rather than slowing the economy, according to this view.
An opposite view comes from Friedmanite monetarists, who hold that inflation is always and everywhere a monetary phenomenon. Maybe commodity prices have doubled, but if money supply does not rise to accommodate higher purchases of commodities, people will be forced to buy less of other items, whose prices will fall. On balance, say monetarists, there will be no inflation.
I am not a pure monetarist. I believe that money matters, but that money alone does not determine outcomes. This puts me at odds with both Friedman and Bhalla. Global commodity prices are indeed a cause of inflation, in India and elsewhere.
Although financial dailies devote much space to monetary and fiscal policy, the main tools for curbing inflation in India have been trade policy and price control. The export of wheat, non-Basmati rice and (recently) maize has kept Indian grain prices much below world prices.
Import duty on edible oils has been scrapped. Export duties and arm-twisting has kept steel in India below world prices, and the current import policy for cement favours importers (who pay zero import duty and no countervailing duty) over domestic producers (who pay excise duty). Price control has kept the price of petrol, diesel, kerosene, LPG and fertilisers far below the world price, although this has serious fiscal consequences.
These measures could have terrible consequences if maintained for a long time, but in the short run have contributed greatly to inflation control. Neighbouring Pakistan suffers from 25% inflation, and so does Vietnam. The price of foodgrains in India is only 6-7% higher than a year ago, a remarkable feat considering that global prices have doubled. But this may not impress voters, who are concerned about the erosion of their living standard and are not consoled by the news that others are suffering even more.
Commodity prices have fallen sharply since early July. Given the slowdown in most economies, this trend may continue. So, should the RBI ease monetary policy, and stimulate growth? Can we say that food and fuel inflation represent imported inflation that is largely beyond the control of central banks, and so should be ignored both on the way up and down?
This is not an issue in India alone. It is an issue in countries across the globe. In many countries, central banks are reluctant to tighten money to slow growth in order to contain inflation, arguing that they cannot really tame imported inflation. Many central banks, in Opec as well as Asian manufacturing-exporters, have run up huge trade surpluses but resist currency appreciation. This tends to keep demand up and inflation high. Yet central banks persist, since they can much more easily check exchange rates than imported inflation.
This approach suffers from what Keynes called the fallacy of composition. A single central bank can legitimately argue that it lacks the power to check imported inflation, and so is better off stimulating growth. But if every country adopts this approach, the consequence will be global inflation stoked by central banks.
Any single country may import inflation, but the world as a whole cannot import inflation. Higher prices are not imported from Mars. They come from the actions of central banks and governments. So it is a serious mistake for any large country — including India — to feel that it cannot check imported inflation.
The US Fed has kept short-run interest rates extremely low at 2% to prevent a recession, even though inflation is running at 5.6%, the highest rate since 1991. China too has a negative real interest rate. It has tightened nominal interest rates for two years and raised the cash reserve requirements of banks to a huge 17%. Yet many economists — such as Arvind Subramaniam and Adam Posen in a recent op-ed in The Financial Times — accuse China of a loose monetary policy, arguing that China aims above all to resist currency appreciation through massive forex reserve accumulation. This artificial cheapening of the yuan is inflationary.
Subramiam and Posen argue that the US and China are currently refusing to share a reasonable part of the pain involved in inflation-fighting. Their monetary policies are much too loose, and they are free-riding on the inflation fighting efforts of others (notably the EU, India and Brazil). The two economists want co-ordinated central bank action to tackle inflation. Specifically, they want the US and China to do much more.
While agreeing, I would add two caveats. First, don’t overstate India’s inflation-fighting virtues: at 9%, its repo rate is negative or almost negative in real terms. Second, don’t overstate the looseness of US monetary policy: its structural credit crunch constrains lending even though interest rates are low.
What are the chances that we will really get purposive global action against inflation? Not high. Rich countries face recession, and politicians there will happily risk some inflation to save jobs and incomes. So, expect inflation to remain high despite falling commodity prices.
High forex reserves can worsen recession
High foreign exchange reserves have, in the current global recession, saved Asian countries (including India) from the travails they suffered in the Asian financial crisis of 1997-2000. So, they must aim for rising forex reserves in future too, right? Wrong.
In truth, high Asian forex reserves are an important reason for the current recession. High reserves promise safety in a storm. But beyond a point this safety becomes illusory, because rising forex reserves worsen the global imbalances that have precipitated the recession.
The global recession has many roots. One is the erosion of traditional US household prudence. US households used to save 6% of their disposable income. But in recent years they went on a borrowing and spending spree, and household savings dropped to virtually zero. Corporations and financiers also ran up record debts, partly to buy assets such as houses, stocks and commodities. This created huge bubbles in all three markets.
When the bubbles finally burst, US households, corporations and financiers found themselves in dire straits. Many financial giants were rescued by the government. Meanwhile households, sobered by the turn of events, started saving 4% of disposable income, up from zero. More saving meant less spending, and made the recession deep and sharp.
Most Asians are smugly blaming US imprudence and loose financial regulation for the crisis, while portraying themselves as innocent victims. Yet they must share the guilt too. US profligacy did not arise in a vacuum. It arose in part because Asian insistence on high forex reserves meant that they poured dollars into the US to buy US securities. This flood of dollars from Asia drove down US interest rates, making it very attractive to borrow. That spurred the borrowing spree, and the accompanying bubbles.
Historically, rich countries had surplus savings, manifested in a trade surplus. Poor countries lacked savings, manifested in trade deficits, with the deficit being plugged by an inflow of dollars from rich to poor countries. For the world as a whole, current account surpluses and deficits of countries must necessarily balance. Historically, the surpluses of rich countries were offset by the deficits of poor ones.
But after the Asian financial crisis, something strange happened. Asian countries, above all China, began generating huge savings surpluses, manifested in huge current account surpluses. Many used undervalued exchange rates to artificially create trade surpluses, which were then invested in US treasuries (that is what foreign exchange reserves are).
However, poor Asians could not run huge surpluses unless others were willing to run huge deficits. Remarkably, the rich US began to do so. This arose partly from the sophistication of its financial system, which found many ways—too many, in fact-- of converting the flood of money from Asia into a borrowing and spending spree.
This sharp rise in US spending boosted the global economy, and created the record global GDP growth in 2003-08. US demand sucked in huge quantities of manufactures and services from Asia, above all from China. Asian manufacturing sucked in huge quantities of commodities from Africa and Latin America, raising incomes there too.
Alas, this boom was based on huge global imbalances that had to be corrected at some point. No country, not even the rich US, could keep running gargantuan trade deficits forever, to offset the surpluses of Asia. US asset bubbles burst, the boom ended, and US spending and imports plummeted.
Ending the consequent recession means reducing global imbalances to manageable proportions. Americans will have to save more, spend less and export more. Asian countries, especially China, will have to consume more, save less, and export less. This re-balancing will restore global balance, and enable global growth to rise sustainably again.
However, such re-balancing means that Asian countries must stop piling up ever-rising forex reserves (and trade surpluses). Such reserves represent excessive saving, excessive exports and insufficient imports. Excess forex reserves have provided apparent safety to Asian countries in a recessionary crisis, yet are also a cause of that very crisis.
What will happen if Asians insist on trying to keep savings and forex reserves high? Well, if Asians keep savings high and Americans and Europeans do so too, then world demand will collapse and the recession will become a Depression. Asians must recognize that high forex reserves serve as a safety cushion only up to a point, and beyond that exacerbate global imbalances that threaten disaster. Saving too much can be as harmful as saving too little. Unless Asian countries recognize this and go slow on future reserve accumulation, the recession may become worse than anyone dares imagine today.
In truth, high Asian forex reserves are an important reason for the current recession. High reserves promise safety in a storm. But beyond a point this safety becomes illusory, because rising forex reserves worsen the global imbalances that have precipitated the recession.
The global recession has many roots. One is the erosion of traditional US household prudence. US households used to save 6% of their disposable income. But in recent years they went on a borrowing and spending spree, and household savings dropped to virtually zero. Corporations and financiers also ran up record debts, partly to buy assets such as houses, stocks and commodities. This created huge bubbles in all three markets.
When the bubbles finally burst, US households, corporations and financiers found themselves in dire straits. Many financial giants were rescued by the government. Meanwhile households, sobered by the turn of events, started saving 4% of disposable income, up from zero. More saving meant less spending, and made the recession deep and sharp.
Most Asians are smugly blaming US imprudence and loose financial regulation for the crisis, while portraying themselves as innocent victims. Yet they must share the guilt too. US profligacy did not arise in a vacuum. It arose in part because Asian insistence on high forex reserves meant that they poured dollars into the US to buy US securities. This flood of dollars from Asia drove down US interest rates, making it very attractive to borrow. That spurred the borrowing spree, and the accompanying bubbles.
Historically, rich countries had surplus savings, manifested in a trade surplus. Poor countries lacked savings, manifested in trade deficits, with the deficit being plugged by an inflow of dollars from rich to poor countries. For the world as a whole, current account surpluses and deficits of countries must necessarily balance. Historically, the surpluses of rich countries were offset by the deficits of poor ones.
But after the Asian financial crisis, something strange happened. Asian countries, above all China, began generating huge savings surpluses, manifested in huge current account surpluses. Many used undervalued exchange rates to artificially create trade surpluses, which were then invested in US treasuries (that is what foreign exchange reserves are).
However, poor Asians could not run huge surpluses unless others were willing to run huge deficits. Remarkably, the rich US began to do so. This arose partly from the sophistication of its financial system, which found many ways—too many, in fact-- of converting the flood of money from Asia into a borrowing and spending spree.
This sharp rise in US spending boosted the global economy, and created the record global GDP growth in 2003-08. US demand sucked in huge quantities of manufactures and services from Asia, above all from China. Asian manufacturing sucked in huge quantities of commodities from Africa and Latin America, raising incomes there too.
Alas, this boom was based on huge global imbalances that had to be corrected at some point. No country, not even the rich US, could keep running gargantuan trade deficits forever, to offset the surpluses of Asia. US asset bubbles burst, the boom ended, and US spending and imports plummeted.
Ending the consequent recession means reducing global imbalances to manageable proportions. Americans will have to save more, spend less and export more. Asian countries, especially China, will have to consume more, save less, and export less. This re-balancing will restore global balance, and enable global growth to rise sustainably again.
However, such re-balancing means that Asian countries must stop piling up ever-rising forex reserves (and trade surpluses). Such reserves represent excessive saving, excessive exports and insufficient imports. Excess forex reserves have provided apparent safety to Asian countries in a recessionary crisis, yet are also a cause of that very crisis.
What will happen if Asians insist on trying to keep savings and forex reserves high? Well, if Asians keep savings high and Americans and Europeans do so too, then world demand will collapse and the recession will become a Depression. Asians must recognize that high forex reserves serve as a safety cushion only up to a point, and beyond that exacerbate global imbalances that threaten disaster. Saving too much can be as harmful as saving too little. Unless Asian countries recognize this and go slow on future reserve accumulation, the recession may become worse than anyone dares imagine today.
Building Infrastructure is not Keynesian
Across the globe, politicians from Manmohan Singh to Barack Obama plan to boost government spending to revive flagging economies. Especially popular are big infrastructure projects, widely seen as an excellent way to give a Keynesian boost to economies. Yet this represents a misunderstanding of Keynes.
In a recession, many things fall together—production, employment, prices and business profits. Businesses go bust, and this can lead to runs on banks and a crisis in the financial system. Keynes emphasized that the root cause of a depression was a vicious downward spiral of consumption. Tackle that, he said, and a flagging economy can revive.
Andrew Mellon, US Treasury Secretary in 1929-33, viewed the Great Depression as moral retribution for wicked over-spenders, and a recipe for increasing prudence and savings. By contrast, Keynes realized that a recession was caused by excess saving, which drove down demand and GDP in a vicious downward spiral. To escape the spiral, Keynes proposed government action to boost consumption and end over-saving. The government could boost its own spending through public works. Or else it could cut taxes to boost private consumption.
Keynes did not advocate building infrastructure. Instead, he suggested that governments should pay people to dig ditches and then fill them up again. This would not create infrastructure. But it would put money into the pockets of people, and that was the aim of the exercise.
Why, then is infrastructure creation so widely equated with Keynesian economics? Because of public misunderstanding of the history of the Great Depression. US President Roosevelt launched the New Deal to combat the 25% unemployment he faced on being elected in 1932. The New Deal created jobs in projects to build roads, dams and electric systems. It was a huge political success, and aided his re-election in 1936 and 1940. Yet economists remain sharply divided on its economic impact.
The economy revived from 1932 to 1936, but then plunged into a fresh depression in 1938, wiping out most earlier gains. So, the New Deal created jobs quickly, but not sustainably. It failed to address the financial collapse and deflation that many economists believe turned a mere recession into a Great Depression. T he downturn was finally cured not by the New Deal but by World War II: the wartime economy needed all the manpower available.
In the middle of the Great Depression, Keynes produced his seminal General Theory, explaining the interaction of production, wages and employment. During the New Deal, Roosevelt swore by balanced budgets, the ruling economic orthodoxy. But Keynes’ General Theory argued that this was a mistake, and that governments should run large fiscal deficits during a recession to pump more demand into the economy. Roosevelt’s budget-balancing efforts typically failed, and he often ended up with budget deficits without meaning to. So he was a Keynesian by accident more than intention.
Yet the public remembers Roosevelt as the first leader to try to spend his way out of a recession, exactly what Keynes advocated. After World War II, Keynesian demand management became the new economic orthodoxy. Governments everywhere began pumping money into flagging economies to stimulate growth.
Hubris followed. In the 1970s, constant pumping of money led in many countries to inflation rather than growth. Clearly, Keynesian spending did not boost GDP in all situations. But it retained its reputation as a useful tool, though not a panacea, in recessions.
Global experience showed that Keynesian demand management did not require infrastructure spending. The simplest, quickest way to increase purchasing power was to cut taxes. This increased demand instantly.
However, it also had drawbacks. When consumers were given additional purchasing power, they did not necessarily buy domestic goods: they also bought imported goods. Thus the Keynesian stimulus could leak out of the domestic economy through imports, and boost foreign economies instead.
Public spending on infrastructure stood out as a way to minimise such leakages. In most countries, infrastructure utilized mostly domestic equipment and labour. So, the stimulus remained mainly within the country and did not leak out through imports.
Besides, infrastructure projects were popular with politicians keen to channel projects into their constituencies. Politicians hated Keynes’ idea of paying people to dig and fill up ditches. They preferred job creation to build infrastructure, creating a base for future growth.
Manmohan Singh thinks this is the best way to combat the recession. So do many economists. But I have reservations.
In Rooosevelt’s time, road building was labour intensive. But today, it is highly mechanised, using little labour. Dams are no longer built by armies of workers. Power plants, ports and airports are hugely capital-intensive. With today’s technology, infrastructure is not a massive job creator, unless we insist on obsolete, inefficient techniques.
This is exactly what we do in the National Rural Employment Guarantee Scheme. This mandates that 60% of the cost must be in wages. But such labour-intensive techniques yield low-quality roads that disappear after every monsoon. Decades of rural employment schemes have failed to create permanent assets. This approach cannot create good infrastructure.
Keynes would not have been surprised. He would have said that creating jobs should not be confused with creating infrastructure. He would have opted for digging and filling ditches.
Building infrastructure is time-consuming. Every big project requires a lengthy environmental impact assessment, with public hearings. Land acquisition disputes can hold up projects for years. So infrastructure projects disburse money slowly, and cannot provide a quick Keynesian boost.
Now, India badly needs infrastructure. But this requires massive long-term spending. Don’t confuse this worthy aim with providing a rapid Keynesian boost.
The fastest, most effective boost comes from slashing slash taxes. In the West, cutting income tax is a popular Keynesian nostrum. But in India only a tiny fraction of people pay income tax. So the right taxes to slash are excise duty and sales tax. These are paid by everybody (notwithstanding substantial tax evasion), and will immediately boost purchasing power. There will be no time lag, as in project spending. That is the Keynesian way to go.
In a recession, many things fall together—production, employment, prices and business profits. Businesses go bust, and this can lead to runs on banks and a crisis in the financial system. Keynes emphasized that the root cause of a depression was a vicious downward spiral of consumption. Tackle that, he said, and a flagging economy can revive.
Andrew Mellon, US Treasury Secretary in 1929-33, viewed the Great Depression as moral retribution for wicked over-spenders, and a recipe for increasing prudence and savings. By contrast, Keynes realized that a recession was caused by excess saving, which drove down demand and GDP in a vicious downward spiral. To escape the spiral, Keynes proposed government action to boost consumption and end over-saving. The government could boost its own spending through public works. Or else it could cut taxes to boost private consumption.
Keynes did not advocate building infrastructure. Instead, he suggested that governments should pay people to dig ditches and then fill them up again. This would not create infrastructure. But it would put money into the pockets of people, and that was the aim of the exercise.
Why, then is infrastructure creation so widely equated with Keynesian economics? Because of public misunderstanding of the history of the Great Depression. US President Roosevelt launched the New Deal to combat the 25% unemployment he faced on being elected in 1932. The New Deal created jobs in projects to build roads, dams and electric systems. It was a huge political success, and aided his re-election in 1936 and 1940. Yet economists remain sharply divided on its economic impact.
The economy revived from 1932 to 1936, but then plunged into a fresh depression in 1938, wiping out most earlier gains. So, the New Deal created jobs quickly, but not sustainably. It failed to address the financial collapse and deflation that many economists believe turned a mere recession into a Great Depression. T he downturn was finally cured not by the New Deal but by World War II: the wartime economy needed all the manpower available.
In the middle of the Great Depression, Keynes produced his seminal General Theory, explaining the interaction of production, wages and employment. During the New Deal, Roosevelt swore by balanced budgets, the ruling economic orthodoxy. But Keynes’ General Theory argued that this was a mistake, and that governments should run large fiscal deficits during a recession to pump more demand into the economy. Roosevelt’s budget-balancing efforts typically failed, and he often ended up with budget deficits without meaning to. So he was a Keynesian by accident more than intention.
Yet the public remembers Roosevelt as the first leader to try to spend his way out of a recession, exactly what Keynes advocated. After World War II, Keynesian demand management became the new economic orthodoxy. Governments everywhere began pumping money into flagging economies to stimulate growth.
Hubris followed. In the 1970s, constant pumping of money led in many countries to inflation rather than growth. Clearly, Keynesian spending did not boost GDP in all situations. But it retained its reputation as a useful tool, though not a panacea, in recessions.
Global experience showed that Keynesian demand management did not require infrastructure spending. The simplest, quickest way to increase purchasing power was to cut taxes. This increased demand instantly.
However, it also had drawbacks. When consumers were given additional purchasing power, they did not necessarily buy domestic goods: they also bought imported goods. Thus the Keynesian stimulus could leak out of the domestic economy through imports, and boost foreign economies instead.
Public spending on infrastructure stood out as a way to minimise such leakages. In most countries, infrastructure utilized mostly domestic equipment and labour. So, the stimulus remained mainly within the country and did not leak out through imports.
Besides, infrastructure projects were popular with politicians keen to channel projects into their constituencies. Politicians hated Keynes’ idea of paying people to dig and fill up ditches. They preferred job creation to build infrastructure, creating a base for future growth.
Manmohan Singh thinks this is the best way to combat the recession. So do many economists. But I have reservations.
In Rooosevelt’s time, road building was labour intensive. But today, it is highly mechanised, using little labour. Dams are no longer built by armies of workers. Power plants, ports and airports are hugely capital-intensive. With today’s technology, infrastructure is not a massive job creator, unless we insist on obsolete, inefficient techniques.
This is exactly what we do in the National Rural Employment Guarantee Scheme. This mandates that 60% of the cost must be in wages. But such labour-intensive techniques yield low-quality roads that disappear after every monsoon. Decades of rural employment schemes have failed to create permanent assets. This approach cannot create good infrastructure.
Keynes would not have been surprised. He would have said that creating jobs should not be confused with creating infrastructure. He would have opted for digging and filling ditches.
Building infrastructure is time-consuming. Every big project requires a lengthy environmental impact assessment, with public hearings. Land acquisition disputes can hold up projects for years. So infrastructure projects disburse money slowly, and cannot provide a quick Keynesian boost.
Now, India badly needs infrastructure. But this requires massive long-term spending. Don’t confuse this worthy aim with providing a rapid Keynesian boost.
The fastest, most effective boost comes from slashing slash taxes. In the West, cutting income tax is a popular Keynesian nostrum. But in India only a tiny fraction of people pay income tax. So the right taxes to slash are excise duty and sales tax. These are paid by everybody (notwithstanding substantial tax evasion), and will immediately boost purchasing power. There will be no time lag, as in project spending. That is the Keynesian way to go.
Government unveils stimulus package
Across-the-board
4 per cent cut
in Cenvat
Package aims to revive various crucial sectors
NEW DELHI: Unveiling the much-awaited stimulus package to shore up various sectors of the economy from the global downturn, the government on Sunday effected an across-the-board 4 per cent cut in Cenvat to bring down the prices of cars, cement, textiles and other products, and earmarked an additional Rs. 20,000 crore for infrastructure, industry and export sectors for the current fiscal.
In what may be dubbed as a mini-budget of sorts to lessen the impact of the global slowdown and recession in the West on the Indian economy, the package, while entailing a revenue loss of Rs 8,700 crore in the remaining four months of 2008-09, seeks to revive various crucial sectors such as housing, exports, automobile, textiles and small and medium enterprises (SMEs).
In an all-encompassing measure, the Cenvat on all products — barring non-petroleum goods — have been reduced from 14, 12 and 8 per cent to 10, eight and 4 per cent for various categories.
Full exemption from basic customs duty has been effected on naphtha to provide relief to the power sector. While the export duty on iron ore fines has been withdrawn, the levy on export of iron lumps has been cut from 15 to 5 per cent.
Apparently, the package, drawn up at the instance of Prime Minister Manmohan Singh, who also holds the Finance portfolio, seeks to boost power, exports, housing, auto, SMEs and infrastructure sectors through additional funding.
Tax-free bonds
The 10-point package, with significant incentives for the sectors affected by the slowdown, has also permitted India Infrastructure Finance Company Ltd. to raise Rs. 10,000 crore through tax-free bonds by March as part of the exercise to support the Rs. 1,00,000-crore highways development programme.
Briefing journalists here on the package, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “The market forces would compel manufacturers in a competitive environment to bring down prices and pass on tax benefits to customers.”
He pointed out that as part of steps to create demand in the economy, which was expected to grow by over 7 per cent, “the total spending programme in the balance four months of the current fiscal year, taking Plan and non-Plan expenditure together is expected to be Rs. 3,00,000 crore.”
Close watch
Mr. Ahluwalia stressed that the government was keeping a close watch on the evolving economic situation and “will not hesitate to take additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity.”
An official statement said: “The government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem.”
It also noted that monetary measures effected by the Reserve Bank of India were being “supplemented by fiscal measures designed to stimulate the economy. In recognition of the need for a fiscal stimulus the government had consciously allowed the fiscal deficit to expand beyond the originally targeted level.”
“The economy will continue to need stimulus in 2009-2010 also and this can be achieved by ensuring a substantial increase in Plan expenditure as part of the budget for next year,” the statement said.
4 per cent cut
in Cenvat
Package aims to revive various crucial sectors
NEW DELHI: Unveiling the much-awaited stimulus package to shore up various sectors of the economy from the global downturn, the government on Sunday effected an across-the-board 4 per cent cut in Cenvat to bring down the prices of cars, cement, textiles and other products, and earmarked an additional Rs. 20,000 crore for infrastructure, industry and export sectors for the current fiscal.
In what may be dubbed as a mini-budget of sorts to lessen the impact of the global slowdown and recession in the West on the Indian economy, the package, while entailing a revenue loss of Rs 8,700 crore in the remaining four months of 2008-09, seeks to revive various crucial sectors such as housing, exports, automobile, textiles and small and medium enterprises (SMEs).
In an all-encompassing measure, the Cenvat on all products — barring non-petroleum goods — have been reduced from 14, 12 and 8 per cent to 10, eight and 4 per cent for various categories.
Full exemption from basic customs duty has been effected on naphtha to provide relief to the power sector. While the export duty on iron ore fines has been withdrawn, the levy on export of iron lumps has been cut from 15 to 5 per cent.
Apparently, the package, drawn up at the instance of Prime Minister Manmohan Singh, who also holds the Finance portfolio, seeks to boost power, exports, housing, auto, SMEs and infrastructure sectors through additional funding.
Tax-free bonds
The 10-point package, with significant incentives for the sectors affected by the slowdown, has also permitted India Infrastructure Finance Company Ltd. to raise Rs. 10,000 crore through tax-free bonds by March as part of the exercise to support the Rs. 1,00,000-crore highways development programme.
Briefing journalists here on the package, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “The market forces would compel manufacturers in a competitive environment to bring down prices and pass on tax benefits to customers.”
He pointed out that as part of steps to create demand in the economy, which was expected to grow by over 7 per cent, “the total spending programme in the balance four months of the current fiscal year, taking Plan and non-Plan expenditure together is expected to be Rs. 3,00,000 crore.”
Close watch
Mr. Ahluwalia stressed that the government was keeping a close watch on the evolving economic situation and “will not hesitate to take additional steps that may be needed to counter recessionary trends and maintain the pace of economic activity.”
An official statement said: “The government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem.”
It also noted that monetary measures effected by the Reserve Bank of India were being “supplemented by fiscal measures designed to stimulate the economy. In recognition of the need for a fiscal stimulus the government had consciously allowed the fiscal deficit to expand beyond the originally targeted level.”
“The economy will continue to need stimulus in 2009-2010 also and this can be achieved by ensuring a substantial increase in Plan expenditure as part of the budget for next year,” the statement said.
Fighting terrorism by reforming governance
C. Raj Kumar
A framework for action at the highest levels of the government is suggested so that an actionable plan can be evolved within a time-frame to fight terrorism and prepare a response mechanism.
The terror attacks in Mumbai have once again demonstrated how incapable India is as a nation to prepare itself to fight against terrorism. This is notwithstanding the courage and bravery displayed by the members of the National Security Guard (NSG), the Mumbai police and other law enforcement agencies. The anger and outrage that the citizenry has expressed against the politicians needs to be understood well as they do play a leading role in governing India and have a duty and responsibility to act now. In doing this, they will indeed have the full support of the people of India.
The following framework for action at the highest levels of the government is suggested so that an actionable plan can be evolved within a time-frame both to fight terrorism and prepare a response mechanism in the aftermath of terrorist attacks.
1. Formation of a Central anti-terrorism commission
On July 30, 2008, this writer wrote in these columns on the need to establish a Central Anti-Terrorism Commission (CAT-COM) under the Prime Minister’s Office. Despite numerous acts of terrorism in India, the governance machinery has not adequately responded to the issue. Responding to terrorism should be done in a methodical, legal and strategic manner, and it should be done by an exclusive body vested with the necessary powers and resources along with a legal mandate to seek fundamental reforms in the law enforcement machinery. The internal security of India is a serious matter. It deserves attention at the highest level, and professionals with the highest degree of competence and integrity should be appointed to this commission. CAT-COM should not be merely an advisory body, but a commission that has powers to seek legal, administrative, and institutional reforms and formulate policies with a view to fighting terrorism and implementing them swiftly. The government is fully empowered to establish such an institution and this is a good time and opportunity to do that.
2. Strengthening law enforcement machinery across all States
The law enforcement machinery across all States needs to be significantly improved. The police are not adequately equipped to deal with new threats. The NSG and the officers of the Mumbai police demonstrated courage and bravery in responding to the latest attacks. But our law enforcement machinery functions under stressful and inhospitable conditions. Some of the problems the machinery at the State and Central level faces include, but are not limited to, political interference, lack of autonomy, lack of proper training and resources, and lack of adequate compensation and career development opportunities. While these are some of the problems the law enforcement machinery faces as an institution, it also constantly faces a credibility deficit, given the numerous cases of human rights violations and other abuses relating to civil liberties which the police in India have been involved in. It is important that the police force ensure transparency and accountability in its functioning. It has also to be ensured that it functions independent of and free from interference.
3. Reforming governance
When terrorist attacks happen, India as a country expresses shock and at times gets carried away in the zeal to seek justice. But getting justice in India is inextricably connected to seeking reforms in our dysfunctional criminal justice system, which is also corrupt and inefficient. We need police reforms and reforms relating to the criminal justice system: both are urgent imperatives. There have been a number of reports based on careful studies of each of these issues, but little or no effort has been taken to implement the recommendations. Institutionalised corruption in India is a social reality across all governmental institutions. This has also affected India’s ability to effectively ensure national security. The governance reforms relating to fighting terrorism should take place at three levels:
a. Intelligence machinery: Our intelligence machinery should be urgently reformed so that institutions such as the Research and Analysis Wing (RAW) and the Intelligence Bureau (IB) are better prepared to perform their functions in an effective manner. The RAW, the IB and other agencies need to be empowered and made more relevant so that they are able to gather information that would be useful in preventing attacks. There is no doubt that intelligence-gathering is a long and arduous task, but the Central government needs to put good governance systems in place so that effective gathering of intelligence becomes possible. A related issue is the sharing of intelligence between the Central government and the State governments and among the state governments. Terrorism is an issue of utmost importance in national security and the Central government has to work closely with State governments so that any information relating to possible terrorist attacks or movements or security risks is quickly shared. The legal and constitutional framework should be put together to ensure that fighting terrorism jointly becomes the legal obligation of both the State and Central governments.
b. Vigilance apparatus: There is a lot more to be done to empower the vigilance apparatus. When the investigations into the latest Mumbai terrorist attacks move forward, we will get a lot more information as to how there were so many security lapses that led to less than a dozen individuals holding a city to a ransom for three days. For example, there should have been many more closed circuit television (CCTV) cameras that actually work and are able to provide information in real time to the security establishment. Security needs to be stepped up in all public places. Police officers should have better equipment than they currently have, in order to be able to respond to the kind of terrorist threats that are being faced today. Airports and seaports need to be made more secure. But security should not mean harassment. Rather, there should be effective systems that use the latest technology and communications systems, to ensure that security is tighter and more effective but without involving harassment of any kind.
c. Anti-terror response: The State police forces are phenomenally ill-equipped and do not have the training or support to fight terrorism. While it may be useful to establish anti-terror cells in every State, the focus ought to be on creating a framework to develop sound anti-terror response mechanisms that will involve huge coordination between various agencies including disaster management teams, fire-fighters, State police forces, Central government security agencies, the RAW, the IB and others at the State and Central level.
Crisis response mechanisms need to be put in place in the aftermath of terrorist attacks so that no individual or institution is caught unawares in dealing with such situations. The anti-terror response mechanism should have a wide range of facilities properly put in place so that in the event of a terrorist attack the government is equipped to deal with it. Since many developed countries of the world including the U.S. and the U.K. have been victims of terrorism in the past, it will be useful to discuss with the institutions they have in place to respond to terror. In addition to the police-based law enforcement machinery, fire fighting systems need to be on the ready, experts trained in hostage negotiations should be available, hospitals should be equipped to meet sudden contingencies, and doctors, social workers, and trauma psychologists should be oriented to meeting crises situations. All of them will have a critical role in the aftermath of terrorism.
Depoliticising national security and making renewed efforts to fight terrorism are essential steps to radically reform India’s internal security structure. The terror attacks in Mumbai provide an opportunity for the politicians to get their act together to build a safer and more secure India.
(Professor C. Raj Kumar is an honorary consultant to the National Human Rights Commission and is on leave of absence from the School of Law of the City University
A framework for action at the highest levels of the government is suggested so that an actionable plan can be evolved within a time-frame to fight terrorism and prepare a response mechanism.
The terror attacks in Mumbai have once again demonstrated how incapable India is as a nation to prepare itself to fight against terrorism. This is notwithstanding the courage and bravery displayed by the members of the National Security Guard (NSG), the Mumbai police and other law enforcement agencies. The anger and outrage that the citizenry has expressed against the politicians needs to be understood well as they do play a leading role in governing India and have a duty and responsibility to act now. In doing this, they will indeed have the full support of the people of India.
The following framework for action at the highest levels of the government is suggested so that an actionable plan can be evolved within a time-frame both to fight terrorism and prepare a response mechanism in the aftermath of terrorist attacks.
1. Formation of a Central anti-terrorism commission
On July 30, 2008, this writer wrote in these columns on the need to establish a Central Anti-Terrorism Commission (CAT-COM) under the Prime Minister’s Office. Despite numerous acts of terrorism in India, the governance machinery has not adequately responded to the issue. Responding to terrorism should be done in a methodical, legal and strategic manner, and it should be done by an exclusive body vested with the necessary powers and resources along with a legal mandate to seek fundamental reforms in the law enforcement machinery. The internal security of India is a serious matter. It deserves attention at the highest level, and professionals with the highest degree of competence and integrity should be appointed to this commission. CAT-COM should not be merely an advisory body, but a commission that has powers to seek legal, administrative, and institutional reforms and formulate policies with a view to fighting terrorism and implementing them swiftly. The government is fully empowered to establish such an institution and this is a good time and opportunity to do that.
2. Strengthening law enforcement machinery across all States
The law enforcement machinery across all States needs to be significantly improved. The police are not adequately equipped to deal with new threats. The NSG and the officers of the Mumbai police demonstrated courage and bravery in responding to the latest attacks. But our law enforcement machinery functions under stressful and inhospitable conditions. Some of the problems the machinery at the State and Central level faces include, but are not limited to, political interference, lack of autonomy, lack of proper training and resources, and lack of adequate compensation and career development opportunities. While these are some of the problems the law enforcement machinery faces as an institution, it also constantly faces a credibility deficit, given the numerous cases of human rights violations and other abuses relating to civil liberties which the police in India have been involved in. It is important that the police force ensure transparency and accountability in its functioning. It has also to be ensured that it functions independent of and free from interference.
3. Reforming governance
When terrorist attacks happen, India as a country expresses shock and at times gets carried away in the zeal to seek justice. But getting justice in India is inextricably connected to seeking reforms in our dysfunctional criminal justice system, which is also corrupt and inefficient. We need police reforms and reforms relating to the criminal justice system: both are urgent imperatives. There have been a number of reports based on careful studies of each of these issues, but little or no effort has been taken to implement the recommendations. Institutionalised corruption in India is a social reality across all governmental institutions. This has also affected India’s ability to effectively ensure national security. The governance reforms relating to fighting terrorism should take place at three levels:
a. Intelligence machinery: Our intelligence machinery should be urgently reformed so that institutions such as the Research and Analysis Wing (RAW) and the Intelligence Bureau (IB) are better prepared to perform their functions in an effective manner. The RAW, the IB and other agencies need to be empowered and made more relevant so that they are able to gather information that would be useful in preventing attacks. There is no doubt that intelligence-gathering is a long and arduous task, but the Central government needs to put good governance systems in place so that effective gathering of intelligence becomes possible. A related issue is the sharing of intelligence between the Central government and the State governments and among the state governments. Terrorism is an issue of utmost importance in national security and the Central government has to work closely with State governments so that any information relating to possible terrorist attacks or movements or security risks is quickly shared. The legal and constitutional framework should be put together to ensure that fighting terrorism jointly becomes the legal obligation of both the State and Central governments.
b. Vigilance apparatus: There is a lot more to be done to empower the vigilance apparatus. When the investigations into the latest Mumbai terrorist attacks move forward, we will get a lot more information as to how there were so many security lapses that led to less than a dozen individuals holding a city to a ransom for three days. For example, there should have been many more closed circuit television (CCTV) cameras that actually work and are able to provide information in real time to the security establishment. Security needs to be stepped up in all public places. Police officers should have better equipment than they currently have, in order to be able to respond to the kind of terrorist threats that are being faced today. Airports and seaports need to be made more secure. But security should not mean harassment. Rather, there should be effective systems that use the latest technology and communications systems, to ensure that security is tighter and more effective but without involving harassment of any kind.
c. Anti-terror response: The State police forces are phenomenally ill-equipped and do not have the training or support to fight terrorism. While it may be useful to establish anti-terror cells in every State, the focus ought to be on creating a framework to develop sound anti-terror response mechanisms that will involve huge coordination between various agencies including disaster management teams, fire-fighters, State police forces, Central government security agencies, the RAW, the IB and others at the State and Central level.
Crisis response mechanisms need to be put in place in the aftermath of terrorist attacks so that no individual or institution is caught unawares in dealing with such situations. The anti-terror response mechanism should have a wide range of facilities properly put in place so that in the event of a terrorist attack the government is equipped to deal with it. Since many developed countries of the world including the U.S. and the U.K. have been victims of terrorism in the past, it will be useful to discuss with the institutions they have in place to respond to terror. In addition to the police-based law enforcement machinery, fire fighting systems need to be on the ready, experts trained in hostage negotiations should be available, hospitals should be equipped to meet sudden contingencies, and doctors, social workers, and trauma psychologists should be oriented to meeting crises situations. All of them will have a critical role in the aftermath of terrorism.
Depoliticising national security and making renewed efforts to fight terrorism are essential steps to radically reform India’s internal security structure. The terror attacks in Mumbai provide an opportunity for the politicians to get their act together to build a safer and more secure India.
(Professor C. Raj Kumar is an honorary consultant to the National Human Rights Commission and is on leave of absence from the School of Law of the City University
Has the Kyoto protocol worked?
David Adam
The world is on track to meet its Kyoto targets for greenhouse gases. But the drop has little to do with climate policies.
Agreed in 1997, the Kyoto protocol aimed to cut emissions of greenhouse gases across the developed world by about 5 per cent compared with 1990. It came into force in 2005, following ratification by Russia, which means the deadline for the legally binding cuts to be made is 2008-12. It was based on the “common but differentiated responsibility” approach to global warming, with countries most able to make cuts asked to do so. Many countries were allowed to incre ase pollution, including all those in the developing world. Most controversially, Kyoto introduced mechanisms such as carbon trading to help countries meet their targets in “flexible” ways — often in other countries — rather than by making cuts at home.
Figures released by the U.N. last month suggest the world is on track to meet its Kyoto targets for greenhouse gases — carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons and perfluorocarbons. Emissions by the 40 industrialised nations that agreed binding cuts in pollution are down 5 per cent on 1990 levels. But the drop has little to do with climate policies: the bulk of the decline is down to the collapse of the Soviet Union and the subsequent economic decline in eastern Europe in the 1990s. Without these so-called “economies in transition,” greenhouse gas emissions have grown by almost 10 per cent since 1990.
Yvo de Boer, executive secretary of the U.N. climate secretariat, said the figures showed emissions were rising once again in eastern Europe. “The biggest recent increase in emissions of industrialised countries has come from economies in transition, which have seen a rise of 7.4 per cent in greenhouse gas emissions within the 2000 to 2006 time frame,” he said.
Among industrialised nations, 16 are on target to meet their Kyoto obligations, including France, the U.K., Greece and Hungary, the U.N. said. Some 20 countries are off-course, including Canada, Germany, Ireland, Italy, Japan, New Zealand and Spain. Nations that miss their Kyoto target in 2012 will incur a penalty of an additional third added to whatever cut they agree under a new treaty in Copenhagen.
Has Kyoto worked? “In terms of emission reductions achieved, the answer would be no,”De Boer said. “A 5 per cent cut is a pretty small step on what will be a long and arduous journey. On the other hand, Kyoto has had great success in putting an architecture in place. Monitoring and verification systems, carbon markets, technology transfer and funds for adaptation have all been mobilised by Kyoto,” he said. “I think this is a fabulous architecture that we can build on on the road to Copenhagen.”
There are seven key issues on the road to Copenhagen.
Global vision
The world has yet to formally agree a goal in the battle against global warming. This could be a maximum temperature rise, such as 2{+0}C, or concentration of carbon dioxide in the atmosphere. More likely, it will be a vaguer ‘direction of travel’ such as the G8 pledge to halve global emissions by 2050.
Mitigation
The key issue - who will cut their carbon by how much and by when. To be meaningful, targets must be short-term, perhaps something like 25-40 per cent by 2020 for the developed world. Developing countries, such as China, could be allowed to increase pollution, as long as they reduce the rate of increase, and agree to take on proper reductions within 15 years or so.
Adaptation
How much rich countries will pay poorer ones to cope with floods and droughts. And how the developed world can make sure the promised money is paid.
Technology
How developing countries will access affordable clean technology to reduce emissions, such as carbon capture and solar power, developed by companies in industrialised countries.
Finance
How developed countries will provide funds for adaptation and mitigation in the developing world, and how those funds will be managed.
Forests
How developing countries with tropical forests can be paid to keep them intact — deforestation causes about a fifth of all greenhouse gas emissions.
Carbon trading and offsets
How systems such as the UN clean development mechanism and the European emissions trading scheme set up under Kyoto can be strengthened and expanded. — © Guardian Newspapers Limited, 2008
The world is on track to meet its Kyoto targets for greenhouse gases. But the drop has little to do with climate policies.
Agreed in 1997, the Kyoto protocol aimed to cut emissions of greenhouse gases across the developed world by about 5 per cent compared with 1990. It came into force in 2005, following ratification by Russia, which means the deadline for the legally binding cuts to be made is 2008-12. It was based on the “common but differentiated responsibility” approach to global warming, with countries most able to make cuts asked to do so. Many countries were allowed to incre ase pollution, including all those in the developing world. Most controversially, Kyoto introduced mechanisms such as carbon trading to help countries meet their targets in “flexible” ways — often in other countries — rather than by making cuts at home.
Figures released by the U.N. last month suggest the world is on track to meet its Kyoto targets for greenhouse gases — carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons and perfluorocarbons. Emissions by the 40 industrialised nations that agreed binding cuts in pollution are down 5 per cent on 1990 levels. But the drop has little to do with climate policies: the bulk of the decline is down to the collapse of the Soviet Union and the subsequent economic decline in eastern Europe in the 1990s. Without these so-called “economies in transition,” greenhouse gas emissions have grown by almost 10 per cent since 1990.
Yvo de Boer, executive secretary of the U.N. climate secretariat, said the figures showed emissions were rising once again in eastern Europe. “The biggest recent increase in emissions of industrialised countries has come from economies in transition, which have seen a rise of 7.4 per cent in greenhouse gas emissions within the 2000 to 2006 time frame,” he said.
Among industrialised nations, 16 are on target to meet their Kyoto obligations, including France, the U.K., Greece and Hungary, the U.N. said. Some 20 countries are off-course, including Canada, Germany, Ireland, Italy, Japan, New Zealand and Spain. Nations that miss their Kyoto target in 2012 will incur a penalty of an additional third added to whatever cut they agree under a new treaty in Copenhagen.
Has Kyoto worked? “In terms of emission reductions achieved, the answer would be no,”De Boer said. “A 5 per cent cut is a pretty small step on what will be a long and arduous journey. On the other hand, Kyoto has had great success in putting an architecture in place. Monitoring and verification systems, carbon markets, technology transfer and funds for adaptation have all been mobilised by Kyoto,” he said. “I think this is a fabulous architecture that we can build on on the road to Copenhagen.”
There are seven key issues on the road to Copenhagen.
Global vision
The world has yet to formally agree a goal in the battle against global warming. This could be a maximum temperature rise, such as 2{+0}C, or concentration of carbon dioxide in the atmosphere. More likely, it will be a vaguer ‘direction of travel’ such as the G8 pledge to halve global emissions by 2050.
Mitigation
The key issue - who will cut their carbon by how much and by when. To be meaningful, targets must be short-term, perhaps something like 25-40 per cent by 2020 for the developed world. Developing countries, such as China, could be allowed to increase pollution, as long as they reduce the rate of increase, and agree to take on proper reductions within 15 years or so.
Adaptation
How much rich countries will pay poorer ones to cope with floods and droughts. And how the developed world can make sure the promised money is paid.
Technology
How developing countries will access affordable clean technology to reduce emissions, such as carbon capture and solar power, developed by companies in industrialised countries.
Finance
How developed countries will provide funds for adaptation and mitigation in the developing world, and how those funds will be managed.
Forests
How developing countries with tropical forests can be paid to keep them intact — deforestation causes about a fifth of all greenhouse gas emissions.
Carbon trading and offsets
How systems such as the UN clean development mechanism and the European emissions trading scheme set up under Kyoto can be strengthened and expanded. — © Guardian Newspapers Limited, 2008
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