Round The World

New Delhi, 15 September 2008

Beijing No Angel

EXPOSES DOUBLE STANDARDS

By Monish Tourangbam

School of International Studies (JNU)

Efforts to put an end to the ambivalence regarding China's role during the Nuclear Suppliers Group (NSG) meeting at Vienna dominated the course of the visit of the Chinese Foreign Minister Yang Jeichi to India recently. Yang said that he was "shocked" to read news reports in India that China had attempted to play a spoiler at the NSG meeting.

Asserting that there was no competition between the two Asian neighbours, Yang underscored that Beijing wanted to "move beyond doubts" in order to craft a cooperative and strategic relationship with New Delhi. Besides, China had made clear its intention to support India before the final draft was circulated at the NSG meeting, he added.

According to his statements, Beijing had settled its policy for the NSG meeting before the Chinese President Hu Jintao left for his Korean trip on 26 August. Sounding diplomatically correct, he denied any real competition in the "fundamental sense" and referred to statements by the Indian political leadership that Asia was big enough to accommodate the rise of both the countries.

Clearly, these statements run contrary to the recent article in the People's Daily, mouthpiece of the ruling Communist Party of China by an associate researcher at the Chinese Academy of Social Sciences, a Government run think-tank, deriding the merits of the Indo-U.S. nuclear deal. Terming the safeguards agreement that India signed with the International Atomic Energy Agency (IAEA) as loose and non-binding, the author talked about the apprehensions that it had raised in the international community.

Critical of the "double standards" followed by Washington on non-proliferation, the article said, "Whether because of geostrategic considerations or driven by commercial interests, the U.S.-India nuclear agreement will have a significant impact on the international non-proliferation mechanism." Terming the initial proposal presented by the U.S. to the NSG as "vague", it complained that the deal allowed New Delhi to continue with nuclear tests "as there is no constraining link between supply of nuclear materials and India conducting a nuclear test."

Needless to say this article surprised New Delhi as Beijing had considerably watered down its objection to the Indo-U.S. deal in the run-up to the parleys at Vienna. In fact, the Chinese establishment had been making vague comments that it respected the sovereign right of every country to develop its capability for using nuclear energy for peaceful purposes but avoided any direct criticism of the deal.

However post article, Beijing went into damage control mode, thereby, indicating a split within its Establishment. The division came to the fore when its Foreign Ministry refused to endorse the article. In a bland statement its spokesperson asserted that she had not read the article. But added that China hoped the NSG found a way to strike a balance between N non-proliferation and the peaceful use of energy. Implying, Beijing wanted the deal to be modified, made more palatable and was prepared to consider supporting it if the "relevant countries" provided the necessary assurances on nuclear safeguards.

Importantly, however, things are not always clear as they seem. The history of Chinese diplomacy is witness to the fact that its Establishment will never dirty their linen in the public when it comes to a crucial foreign policy issue. It seems highly implausible that the People's Daily would be allowed to publish an article against the wishes and without the knowledge of the Government.

As such, rather than indicating a real split in the Chinese leadership, the whole thing seems a synchronized step to keep New Delhi guessing on Beijing’s real intentions regarding its stand at Vienna.

Recall, on day one of the NSG meet, China showed its "true colors" and quietly opposed the waiver by joining the naysayers’ bandwagon, which included Austria, New Zealand, Ireland and Switzerland. By day two, Beijing openly accused the NSG of trying to intimidate countries to support the waiver making plain its intentions of delaying the process.

Bluntly, without the NSG waiver, the deal could not be forwarded to the US Congress for ratification and would be ‘dead.’ Following intense efforts by Washington and a last-minute call by President Bush to his Chinese counterpart Beijing backed off. New Delhi, on it part issued Beijing a demarche.  

Notwithstanding this, top echelons in the Government are busy savoring the taste of the pudding rather than finding out how it was made. Reacting to Beijing’s stand, asserted Foreign Minister Pranab Mukherjee, "Every sovereign country has the right to express its sovereign will. I don't want to comment on what role was played by which country…this is their internal matter."

Obviously, New Delhi is keen to remove uneasiness in Indo-Chinese ties prior to Prime Minister Manmohan Singh visit to Beijing next month. Towards that end, the Congress Party too has erased Beijing's opposition at Vienna as a bad dream and accepted the Chinese Foreign Minister’s version.

But, such diplomatic niceties were absent when the National Security Advisor Narayanan, reported to the Union Cabinet that China was the last one standing against India as all other objectors fell in line. In fact, Narayanan, made plain that Beijing’s opposition was “not ideological like the other non-proliferation enthusiasts" that have strict non-proliferation ideals.

In sum, amidst this "Chinese jugglery", New Delhi needs to remember that Beijing is far from being an "angel" when it comes to proliferation of nuclear know-how and materials. Has China forgotten that it had signed a bilateral civilian nuclear power agreement with the Reagan Administration in 1985 when it was not a signatory to the NPT? --- INFA

(Copyright, India News & Feature Alliance)

Round The World

New Delhi, 10 September 2008

NSG Clearance To India

END OF NUCLEAR APARTHEID

By Prof. Chintamani Mahapatra

School of International Studies, JNU

After a hard diplomatic struggle, the Nuclear Suppliers Group reportedly gave a clean waiver to India to the full satisfaction of the Manmohan Singh Government. The opponents of the Indo-US civilian nuclear cooperation initiative, however, continued to find fault with the outcome of the NSG deliberations.

The main point of contention at Vienna among the NSG members was, of course, related to a possible nuclear test by India in the future. The group of six, consisting of Austria, New Zealand, the Netherlands, Switzerland, Ireland and Norway wanted strict conditionality in the waiver provisions to prevent any further nuclear test by India.

It was actually not easy for either India or the United States to convince these countries to give a clean waiver to India and accept the draft prepared by the US in consultation with India. Austria and Switzerland, for instance, are industrially developed countries which have traditionally followed a policy of neutrality even during the prolonged Cold War.  They are not members of the North Atlantic Treaty Organization nor are they great economic partners of the United States.

The Netherlands is a NATO member, yet a promoter of strict non-proliferation and Amsterdam decided to side with the minority of holdout countries opposing the US draft. Ireland is a close trade and investment partner of the United States. American investment in Ireland is more in dollar terms than India, China, Russia and Brazil combined. It was still not easy for the US to use its leverage until the last moment. Norway has minimal stake in India. It is not an energy starving nation and hardly realizes the energy requirements of India.

New Zealand was the real tough nut to crack. It entered into a trilateral strategic alliance with Australia and the US in 1951. The Labour government in 1985 used its non-proliferation principle and demanded that the US ships passing through its territorial waters must declare the nuclear status. The US, as a matter of principle neither affirms nor denies information about its carrying nuclear weapons. New Zealand was prepared to lose the benefits of the ANZUS alliance rather than alter its non-proliferation policy. It has not returned to ANZUS until now.

There is little doubt that hard bargaining and skillful diplomacy by the US and the UPA Government’s cooperation brought out the consensus at Vienna. One of the important developments that impacted upon the deliberations was the leak of a letter written by the White House to the Congress in reply to a host of questions raised by the American legislators regarding the nuclear deal. A large number of questions were on the credibility of the 123 agreement in promoting non-proliferation. There were apprehensions that the nuclear deal with India would enhance India's nuclear weapon capability.

The 26-page letter tried to convince the US legislators that the Presidency was committed to non-proliferation; that the 123 agreement with India would in no way increase India's weapon capability; that US civilian nuclear cooperation would end in the eventuality of an Indian nuclear weapon test. Expectedly, when this letter was made open to public, Indian opponents of the nuclear deal raised a hue and cry. Their main argument being that the Prime Minister's assurances to Parliament were negated by this letter.

Ironically, the same letter worked wonders at the 45-member NSG meet. It convinced many suspicious members that the Bush Administration was in no way rewarding India with sophisticated technology to improve its nuclear arsenals. It facilitated negotiations with the members by highlighting the non-proliferation and environmental aspects of the nuclear deal and the need to security clean energy.

Meanwhile, the Manmohan Singh government explained to its public that it was not bound by the content of a letter exchanged between the two branches of the US Government and reiterated that what mattered was the letter and the spirit of the 123 agreement. Around the same time, Foreign Minister Pranab Mukherjee issued a suo moto statement on the country’s nuclear policy aimed at the NSG member countries. He reiterated the no-first use of the nuclear weapon pledge. He also re-emphasized the self-imposed moratorium on nuclear testing. Moreover, Mukherjee stressed the export control mechanism put in place through appropriate legislations and also indicated that despite being a non-signatory to the NPT, India has had a robust non-proliferation record.

Clearly, these two developments had an impact on a large number of NSG members, but a few holdouts appeared headstrong. It was argued that the NSG waivers to India should have more explicit provisions to ensure against any future nuclear test by India; and that any nuclear explosion by India would automatically end nuclear cooperation of member countries with it.  

Every one knew that such provisions would be considered in India as a red rag to a bull. That implies that some interested parties were seeking to derail the whole process to the disadvantage of India and the US. One such suspect turned out to be China. A report on the Chinese government-sponsored People's Daily first made a critical comment on the Indo-US nuclear deal. At one time, the Chinese delegate in Vienna threatened to stage a walk out. Another source of opposition came from the non-proliferation lobby of the United States. Pakistan was most likely lobbying against the deal, though relatively quietly.

Once the consensus was reached after top-level political interventions by Washington, there was expected unhappiness in certain quarters. What was not expected was yet another round of strong reactions against the nuclear deal by the opponents of the deal in India. In the end, the communists and the nationalists should have respected the majority support in Parliament to the deal. To the contrary, some of them continue to call it a sell-out. Others characterized it as surrender of national sovereignty. None other than the Government could point out that the NSG waiver spelled the end of nuclear apartheid against India after a span of more than three decades! ---INFA

 (Copyright, India News and Feature Alliance)

Round The States

New Delhi, 10 September 2008

Small Nano, Big Hurdle

INDUSTRY WARY OF POLITICAL SHENANIGANS

By Insaf

The Singur siege may well be over officially, but it has done its damage and set a bad precedent for the industry, at least in West Bengal if not elsewhere. For one, it is uncertain whether the Tatas will still roll out the wonder car, Nano from there or go to other plants in Uttarakhand, Karnataka or Maharashtra. Two, IT major Infosys technologies is “rethinking” its maiden investment plan in the State as it has seen the “political parties intimidating top businessmen, stopping people from work, blocking national highways and even non-enforcement of high court order…” Three, there is bound to be resistance to land acquisition for future plants, particularly power plants in the backdrop of the nuclear deal going through. On Monday last, Bengal Governor Gopal Krishna Gandhi brokered a deal between Chief Minister Buddhadeb Bhattacharjee and Trinamool Congress leader Mamata Banerjee, ending the Singur siege by the latter.

The compromise, “land-for-land” worked out is: land would be given to farmers who did not take financial compensation for the land acquired for the Nano plant and the Vendor’s Park. The Government would part with 47.11 acres land belonging to the West Bengal Industrial Development Corporation within the factory compound. And, this according to the Government would in no way affect the Tata factory or the Park. However, the Tata’s are firm that they will not part with any land from within the Nano complex. Moreover, they want a firm assurance that there would be no more political blackmailing and disruption of work before they resume production at the factory premises. Else, this would be the end of the road for the Nano in West Bengal.

Other than Singur, three other States, Orissa, Meghalaya and Andhra Pradesh have raised the ante on popular resistance to land acquisition. If a car project has the farmers of Bengal all ‘revved up’, the steel plant with South Korea’s Posco has disconnected the land-owners in Orissa, who refuse to part with their land. With land required for nuclear power plants the government will need to tread carefully, as there would be resistance from people because of the radiation risks. Thus, solar power plants could be an answer. However, they require huge areas--running into thousands of acres. Can either the States or the Centre acquire the requisite land easily? Andhra Pradesh and Meghalaya have already given the signal--opening of new uranium mines in these two States has been put on hold thanks to protesting villagers as they do not trust Government assurances. Looks like, the industrialists may join the no-confidence club. 

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Assam Angry With PM

Prime Minister Manmohan Singh’s recent visit to Assam with an eye on the next Lok Sabha poll has left the indigenous people of the State unhappy, even angry. They are glad that the PM laid the foundation stone of the Jorhat Medical College and announced an education package with proposals to create world-class educational institutions in the State --- a world-class university, an institute of petroleum technology and a national design institute on the pattern of the well-known National Institute of Design at Ahmedabad. Importantly, however, the PM failed to address the core issues facing the State: illegal infiltration, increasing terrorism sponsored by Bangladesh and initiation of the dialogue process with the ULFA. They expected the PM to deal with these issues against the backdrop of the recent observation by the Guwahati High Court that Bangladeshis had already become “kingmakers” in Assam. What is more, Pakistan’s ISI is pushing ahead with its design to establish a Greater Islamic State of Bangladesh including Assam. This, according to the Guwahati High Court, is a most serious threat that faces the State and its indigenous people.

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Will Sheila Dixit Create History? 

Is Delhi Chief Minister Sheila Dixit poised to create history? Political pundits answer may well be in the affirmative, given the possibility of her steering the Congress for another five-year rule in the Union Capital. Come November, Delhi along with five other States goes to the polls. The soothsayers’ confidence is based on three factors: One, Congressmen do need her given her sober image. Two, she is their best bet amidst the warring factions. Notwithstanding, daggers against her once elections are over. However, her ‘Party’ could well be over if her detractors within (Sonia’s Political Secretary Ahmed Patel) succeed in putting a spoke in her winning wheel. Three, the BJP is in total disarray. Its Prime Ministerial candidate Advani, has made no impact and it has yet to find a counter to Dixit.  All eyes are on which way the poll wheel turns!

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Madhya Pradesh too is abuzz with who will be Congress supremo Sonia Gandhi’s favourite for Chief Ministership in the forthcoming Assembly poll. Will it be the Union Commerce Minister Kamal Nath, who is backed by AICC General Secretary Digvijay Singh. The former two-terms Chief Minister has made plain that he is not in the running. Raising a moot point: Is it pay back time? Recall, without Nath’s backing Singh might not have been Chief Minister. However, Nath would need Sonia’s “compulsory blessings” After all, it was thanks to her that Diggy Raja, was ‘blessed’ with the all-important General Secretary-ship, despite losing the State elections. Not a few Congressmen aver that Sonia would plumb for MPCC Chief Suresh Pachouri, regardless of popular sentiment. As she did in Chhattisgarh, when Ajit Jogi was made CM despite open rebellion by State satraps. 

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Meghalaya Mosque Opens To Women

Meghalaya has earned the distinction of being the first State in the region to allow women into mosques to worship alongside men. Last Friday, the special Ramzan aazan in the Idgah Masjid in Lalban area of Shillong witnessed a mixed congregation, with a number of women with headscarves offering prayers. The mosque, which has been built by Shillong Muslim Union (SMU) divides the male and female section with a curtain. Many are happy that a beginning has been made. Said the Masjid’s General Secretary: “It was a distant dream for us, but we achieved it…So long women were given the status of a mother and daughter, but they should be given the right to pray.” The ball is now in the women’s court. Will this be followed in other matriarchal societies and elsewhere in the North-East?    

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Camel Care In Rajasthan

By year-end Rajasthan should have its first well-equipped hospital exclusively for the ‘ship of the desert’--the camel. A rescue centre, 24-hour free treatment, including hospitalization and operations, is envisaged at this hospital, to be set up at Bassi, on the Jaipur-Agra highway, by an animal welfare organization, Help in Suffering (HIS).   Camels, says the HIS are largely afflicted with saddle soars and nose peg wounds. Already, the NGO is busy educating camel owners on management practices to help keep their animals healthy. Other than distributing free plastic pegs to avoid the wounds and soars, a custom-made hydraulic ‘camel ambulance’ is doing the rounds. Besides, a Swiss and French NGOs have promised funds for camel welfare. It’s goodbye to the last straw that broke the camel’s back---INFA 

(Copyright, India News and Feature Alliance)

Economic Highlights

New Delhi, 11 September 2008

Pay Panel Gains

CUT  TAXES TO BENEFIT EMPLOYEES 

By Shivaji Sarkar

Government employees are upbeat over the Sixth Pay Commission report, little realizing that more than them it is the Government which is the main beneficiary. Of the Rs 16,000-crore benefit that the panel is supposed to give over Rs 5,300 crore would go back to the Government by way of income-tax at 33 per cent alone. In fact, some employees would now be subjected to an additional tax as their salaries would touch the Rs 10-lakh per annum mark.

In its latest report, the Reserve Bank of India has come up with the desired suggestion of reducing the income-tax rate and raising exemption limits, for increasing the disposable income and ease inflationary pressure. The high inflation rate, around 13 per cent on wholesale price index (more on the basis of consumer price index) has already eroded substantial part of the pay panel benefit. The taxes would eat up the rest.

It is well-known that wage revision is undertaken primarily to neutralise the effect of price rise. One, it is dearness allowance component which takes care of it marginally. Two, it keeps the market going at an even pace. For with higher wages one is expected to increase purchases and help other sectors of the market.

It is no secret that the market is highly depressed owing to high inflationary pressure. Industrial growth too has slid. “There are also some downside risks to the industrial growth momentum during 2008-09”, admits the RBI. Growth in other sectors too has fallen including infrastructure, power and the core sector. Thus raising, what RBI says are “apprehensions regarding sustainability of industrial and manufacturing growth”.

Clearly, the central bank is concerned that inflation has eroded the disposable income of the middle-class, supposedly the “engine” for overall growth. It has, in no uncertain terms, expressed concern that the Government has not taken any step to rectify this and is circumspect on the benefit to the market of the so-called ‘higher wages’ of Central Government employees. Moreover, the RBI is wary that as the salaried class is in a tight spot, it may default on repayment of EMIs and pose a risk to the banking system.

In the face of the above, the RBI has thus vociferously suggested “adjustment” – the bank’s euphemism for reduction – in the income tax and excise duty for increasing the disposable income of the middle-class. “It may have a possible impact on consumption demand for industrial goods,” is the RBI’s guess. 

In all fairness, higher salaries were expected to surge other economic activities. But with the government policy eating into the kitty itself, that opportunity is lost. Therefore, it is time the Government has a re-look at its tax policy. The taxes, be it corporate or personal income-tax, remain at a very high level. Over the years, big time industrialists--Rahul Bajaj, Arun Bharat Ram or Sanjiv Goenka, Nusli Wadia, or Ajay Piramal-- have expressed concern over the high tax regime. There is unanimity that high taxes only lead to avoidance and evasion. And yet our Government has unfortunately not tied up the taxes with its liberalisation policy.

Moreover, often taxes are unproductive and unimaginative. The answer lies in lowering the taxes and abolishing the personal income tax, which unfortunately has come to be known as the “impoverishing tax”. The Kelkar committee had estimated that 48 per cent of the direct tax collected goes into tax administration! It is certainly one of the most expensive systems of realisation of resources. Any corporate would simply go bust at this kind of a cost.

Let’s study the scenario. Today, there are more I-T commissioners and naturally the administration costs have gone up. In addition, the income-tax department has started spending on decorative and unrelated activities. As such, the Government not only needs to review the size of the department but also prune it. This apart, extra staff in a department means not so clean operations, as some instances have shown.

Many a times the large official force ends up causing harassment to the public simply because it is under pressure to justify its existence. This again adds up to the cost. Then there are the subsequent litigation and appeal processes, which too are a burden on the economy, other than causing loss to productive man hours. The cumbersome I-T rules only make the process more difficult. A Mahabharata of rules are eventually added every yea and each has several interpretations.

In the past, the Government has had the experience of overall higher tax accrual following tax rates being moderated from 97 per cent to 33 per cent. This meant an erosion of over one-third income in direct tax. And, there are umpteen cases of indirect taxes, which rob an average Indian of almost another 40 per cent of his/her income.

Thus, it is crystal clear: tax rates need to be cut. Finance Minister P Chidambaram must examine the pros and cons of a high tax regime carefully, so that all the money that is being generated is gainfully utilized and not burnt up. The Government should, in fact bring it down to the level of five per cent for an income up to Rs 5 lakh a year and beyond that to a maximum level of 10 per cent. Even the corporate incomes should not be taxed at more than 15 per cent.

Let’s face the fact that if the taxes were low, people would voluntarily prefer to pay rather than avoid these. At the same time, the Government’s coffers would get bulkier as more and more people would be integrated with the system. As of now most taxpayers are out of it and the taxmen are well aware. 

What is being suggested is no revolutionary step. It only makes the tax system more imaginative, less exploitative and interwoven with market realities. At the end, an affordable tax regime would reduce the cost of tax policing, boost the market and bury   inflation. –INFA

 (Copyright, India News and Feature Alliance)