Friday, 21 February 2014

India US relations: One aspect-Arms

The arrest of Indian diplomat Devyani Khobragde makes us rethink on the existing diplomatic policy of India with US. The blossoming of ties with the US has become an important diplomatic asset for India. Historically, these relations were somewhat thorny and adverse. But after the dissolution of Soviet Union in 1991, India began to get closer to United States. Recent developments include the rapid growth of India's economy and bilateral trade, closeness between the computer industries, a geopolitical coalition to balance China and the 2008 India US Nuclear Deal in which long standing American opposition was reversed. The prominent challenge of this relationship is that its quite asymmetrical in many aspects from trade, culture to economic and military transactions. The Obama administration's reluctance to accommodate Indian interests on major issues has created deep differences that are questioning the resilience of the partnership.

Here we are going to discuss one of such aspect- US arms sales to India. With the advent of technology, the US has emerged as a World class arms supplier, as evident in being India's largest arms supplier, leaving behind Russia and Isreal.
This development can be attributed to Indo-US civilian nuclear deal. Though it haven't yet proved to be a significant deal in regard to energy, but it has been successful in opening the door to major US arms sales.  With little prospect of substantial amount of output, it remains a worthless deal on energy. Failure to deliver a single operational nuclear power plant for so many years is a testimony to this fact.

The rise in arms sales from mere 100 million dollars to billions of dollars yearly might be projected as required boom to survive in the world race, or as advancement of India's security interests. But at the peak of Khobragade affair, awarding US with another mega-contract- a $1.01 billion deal foe 6 additional C-130J military transport aircraft, let alone the imposing of any penalty, is a sign of some flaw in our foreign policy.

US has security alliance and strategic partnership with Pakistan since 2004, strategic partnership with China since 1997. Then why US has given so special treatment to seek some special results from the relationship ? The major question arises here - Is this relationship is sustainable when we have our regional adversaries on the same end as we are, leave alone the long run prospects.

This fact is widely acceptable and makes sense that no country can ever emerge as a major international power in a complete sense, if it remains dependent on imports to meet even its basic defense needs. Capacity to acquire and develop one's own resources is the foremost requirement to become a powerful nation.
In contrast, India has emerged as the world's biggest arms importer since 2006, accounting for 10% of all weapons sold globally. Is this fact is a thing to proud or to shame? These stats can suggest that we are leading in a well planned military power, but deep inside these lack strategic direction and long term perspective.

This dependency is making India subjected to external pressures, and keeping it devoid of its capabilities. Further financially it is a major burden on taxpayers. These defense transactions are hugely prone to compromises and corruption as demonstrated by Bofors scandal, Break missile Scandal. This factor can explains why India is not able to repeat the indigenous success it has gained in other sectors where imports are least possible like space, missile, and information technology.
Some experts suggest that displacement of Russia as India's largest arms supplier has been a diplomatic game played by US as happened in early 70s with Egypt.

The major concern is not that we are importing but is that are we importing the worthy things in a transparent and fair manner? There is lack of competitive bidding and transparency in arms deal. There was one case -buying 126 fighter jets- where India called out for bids, but American firms' performance was miserable even in first round.

A major well known rule of foreign diplomacy is that it must be backed by leverages to maximize the advantages for both sides. Though India contributes to a number of contracts with the US, but is has not yet successful to make use of them to persuade US to stop arming its rivalry Pakistan against India. India has not even tried to access American market with competitive  IT and pharmaceutical companies, which currently are facing number of US non tariff barriers.

The four-point declaration of intent signed by US with India last year include to move beyond the sale of complete weapon systems to co-production through technology transfer. According to which, efforts to identify specific opportunities for collaborative weapons will be pursued in accordance to national policies and procedures. There is lot to do in that direction. For the time being, US has now willing to co-produce some smaller defensive units with India, like Javelin anti-tank missiles. But such restricted access to technology should not serve the way US is expecting-to secure additional multibillion dollar contracts.

Need is to make US willing to sell high-precision conventional arms, anti-submarine warfare systems, long range air- and sea-launched cruise missiles, and other conventional counterforce systems that could tilt the regional military balance in India’s favor?
A wise India would consider declaring a moratorium on arms purchases from all sources to give itself time to strategize its priorities and clean up its procurement system. A moratorium of just three years will save the country a whopping $20 billion without compromising national security. With non-traditional threats — ranging from asymmetric warfare in the form of cross-border terrorism to territorial creep through furtive encroachments — now dominating India’s security calculus, procurement of more mega-weapons to meet traditional security challenges must wait until the nation has added strategic direction to its defence policy.

Wednesday, 19 February 2014

Politics of Subsidies

    Seems like every political party is luring a common man to gain his support. Recent two moves of AAP and Congress -Subsidization and free distribution of electricity by AAP and subsidization of LPG cylinders from 9 to 12 by Congress suggest the same.

    On the one hand the government are trying to cover these actions under the umbrella of welfare of people and to earn votes, on the other hand various Economists and opposition are not missing their opportunities to condemn their policies. The economists have expressed reservations on increasing the burden of subsidies while the opposition is crying that it will lead to fiscal indiscipline.  All these disturbances raise the most basic question: What exactly the subsidy - a boon or curse or just a charity shop to make political gains by wooing the voters.
    RBI governor Rnagrajan stated- "we need to get careful with these expanding and misdirected subsidies". Hopefully this statement answers this basic question. But it does not explain the term 'misdirected' which is crucial to cut down anything. We will focus on various repercussions of these moves on the state economy. And for that we need to study the increasing gap between the government saving and expenditure.

    The recent move of Union government to increase number of cylinders from 9 to 12 will cost the exchequer an additional Rs. 5,000 crore annually.  This step might bring some relief to millions of middle class and poor Indians who are battling high rates of inflation during recent times. But the cost to public exchequer is definitely going to deteriorate the state of Indian economy.

    At this moment of time, resources needed to foot the bill for the fuel, food and fertilizer subsidies are not sufficient. Here comes a new term to  create illusion- "convenient accounting". This term refers to pushing this year’s expenditure to the next fiscal’s accounts. The Finance Ministry plans to book in next financial year, 2014-15, the expenditure that will be incurred on subsidies during the remaining months of the current fiscal (January-March). This will keep the fiscal deficit for 2013-14 within the target of 4.8 per cent of gross domestic product (GDP) — at least on paper.

    The Budget Estimates (BE) for 2013-14 for these subsidies is Rs.2.21 lakh crore. The Finance Ministry has not so far raised before Parliament a demand for additional grants for these subsidies. However, as per latest official data, at the end of November, 2013, the fiscal deficit was already 94 per cent of the BE for 2013-14. With four months still to go in the current fiscal year, the Finance Ministry has limited space to manage the fiscal deficit, the excess of the government’s expenditure over its income. The UPA Government has not been able to garner through disinvestments the Rs.40,000 crore projected in the Union Budget. Moreover, tax collections are growing at a rate less than the target of 19 per cent. Union Finance Minister P. Chidambaram has pressed in budget cuts in social schemes in an election year to keep the fiscal deficit below 4.8 per cent but they are not going to be enough.

    Mr. Chidambaram has said that the UPA Government will not let the India’s fiscal deficit for 2013-14 breach the 4.8-per cent target. International rating agencies have warned that a slip-up will trigger a rating downgrade for India.

    This situation has dramatically undermined the confidence in the government’s ability to manage the macro-economy.
    After having a quick glance over the current state of economy, lets try to figure out why this is happening and what is the way out? Lets have a look over the need of subsidy and various issues out of it.
    The broad purpose of subsidy is redistribution of income, offset market imperfections and other social policy objectives as needed.

    Subsidies have fiscal effects, trade effects and redistributive effects. And the most lasting and worrisome effect is that it creates vested interests and acquire political hues. And subsidies have tendency to continue indefinitely irrespective of regime. Subsidy have proliferated in India for several reasons:
    1. Wide expansion of governmental activities: Even after 20 years of privatization, governmental activities have substantial amount of area to work on. These sectors includes social policy, railways, food security, fertilizer and monetary policy.
    1. Weak determination of governments to recover costs from the respective users of the subsidies: Subsidies amounted to 14% of GDP, but the Tax GDP ratio in India is 17.7, one of lowest in the world. We have 42500 super rich(having income greater than 1 crore), but our tax collection doesn't justify it. There is a government document,
    Statement of revenue  foregone which lists the income which government  could have earned but hadn't earn. In India, for every 100 Rupees, government is leaving 60 Rupees unearned. Sometimes, this revenue forgone is given to big industries and taxpayers as part of concessions and sometimes it is the inefficiency to collect.  Effective corporate tax rate is 20% instead of 33% on paper. Further due to the complicated procedures for paying tax, a common man prefers evading tax rather than getting involved into it.
    1. Low efficiency of governmental activities- Wide spreading corruption is the overt testimony for this. 39% of subsidized kerosene is stolen. Malpractices in targeting results in inclusion and exclusion errors accounting to more gap between the needy and the better offs.

    The most general issues arising from subsidies are: a) distortionary effects of agricultural subsidies on the cropping pattern, b) their impact on inter-regional disparities in development, c) the sub-optimal use of scarce inputs like water and power induced by subsidies, d) Inadequate targeting of subsidies, e) discouraging effect on economic growth of sectors not covered by the subsidies, and last but not least f) environmental sustainability.
    An example of sustainability issues arising from the subsidy structure can be seen in problems of water and energy consumption in agricultural sector. During green revolution, liberal subsidy in irrigation resulted in decline of groundwater from 20 cm per year in Punjab to 3 to 5 meters in Gujarat.

    As subsidies are politically sensitive, nobody wants to take stand on rationalizing it. At present subsidy in India is footed on 3 fs- food, fuel and fertilizers which are making a burden on public exchequer. And the more worrisome concern is that it is not well targeted resulting in nulling out of the overall objective of subsidy.

    The requirement of subsidy in the country like India cannot be denied in a country where social and economic inequality is prevalent. But its appropriate projection is a must condition.

    The Way Forward
    1. First and foremost need is to reduce the overall scale of subsidies. And energy subsidy could be the most important sector to focus to bring sustainable economy.
    2. Another thing is that there is no subsidy on productivity related sectors. Like infrastructure(one dimension is connectivity), skill development,  education, health, life standard. India spend less on these which would be beneficial in long run. Further essential needs should be subsidized. According to UNESCO, India has lowest public expenditure on higher education per student in the world- an important parameter in deciding the wellness of a country. Even World bank has criticized India for increasing economic inefficiency due to its vast subsidy bills.
    1. There is need is to create subsidy for job creation in small sectors rather than supporting just only industry giants by giving concessions.
    1. There is urgent need to fill the holes in the existing economic policies and bring transparency in the procedures(as in concession given to corporates).
    2. Further policy arbitrariness should be eliminated. As seen in the recent decision of increasing cylinders from  6 to 9 and then 9 to 12 cylinders. While Verrapa Moily himself gave the statement average requirement in India is 6.9 per person and more than 89% people are sufficient with 9 cylinders. Then there was no reason to increase it to 12.
    3. As fuel subsidy constitutes major amount of total subsidy and also with the rising price of oil products  in international market and increasing subsidy, the rates of petrol are quite fluctuating. We need to focus more on self dependency rather than relying on imports by increasing production and encouraging conservation
    1. Subsidy should be correctly targeted, introduction of technology, computer based system will be helpful.
    1. Demolishing public sector monopolies and promoting private investment so as to increase production.
    2. Preventing natural resources by incentivizing environmental friendly technologies. Energy economy and a budgeted carbon emission were a means of achieving ecological sustainability, and one way of getting there was to cut “unjustified elements” of subsidies.
    3. Governments must ensure sustainability through regulatory and price-cum-incentives approach and also that companies adhered to the overall national sustainability agendas.
    4. Outcome based calculation and reviewing periodically to eliminate unnecessary things.
    5. Clarity on the proposed term for any scheme.
     These reforms are necessary to form a multipronged national strategy to fight against the setbacks of subsidy.

Sunday, 16 February 2014

Right to Privacy

After the much controversial PRISM surveillance program by US there Whistle-blower, recent information breaches raise  focus on privacy and security concerns. With the growth of modern technology and communication system, the potential of invading one's privacy has increased drastically. Edward Snowden, the whistleblower who pulled back the curtain on the United States' internet surveillance programme,  said of mass-surveillance dragnets that “they were never about terrorism: they’re about economic spying, social control, and diplomatic manipulation. They’re about power.”
Phone tapping, CMS(Central monitoring system), NETRA are few of the recent attempts by India to fight against security breaches.
According to News reports, Netra — a “NEtwork TRaffic Analysis system” — will intercept and examine communication over the Internet for keywords like “attack,” “bomb,” “blast” or “kill”. It is the first attempt by Indian Government at mass surveillance rather than surveillance of predetermined targets. It will scan tweets, status updates, emails, chats and even voice traffic over the Internet (including from platforms like Skype and Google Talk) in addition to scanning blogs and similar public parts of the Internet. Thus, while phone tapping and the CMS monitor specific targets, Netra's working area is vast and indiscriminate.

 This article discusses the evolution of right to privacy in India and how it is being protected now. First of all, lets take a look over its origin. At the eve of independence, Constituent Assembly out rightly rejected the right to privacy in the Constitution. Similarly a proposal to provide citizens with a fundamental right against unreasonable governmental search and seizure was also rejected by Constituent Assembly, which if accepted at that time, would derive the principles in the Constitution from which US derives its protection against state surveillance against own country's citizens. Then, the guardian of the Constitution, Supreme Court interfered and came with the view that other rights guaranteed in the Constitution would be seriously affected if the right to privacy was not protected.
And In Kharak Singh vs. The State of UP, the court recognized "the right of the people to be secure in their persons, houses and papers" and declared that this right cannot be violated. This includes the unauthorized intrusions into homes as interference.

Unfortunately, this judgment was too conservative about the circumstances in which the right could be applied. Majority of judges held the view that "shadowing a person could not be seen to interfere with that person's liberty", which is quite contradictory to the contemporary and universally acknowledged principle that there is a "chilling effect" on expression and action when people know or suspects that they are being watched.
As defined by Supreme Court, the right to privacy now extends beyond government intrusion into private homes, thus not limited to only places. Thus any breach of this right for surveillance of communication must be for permissible reasons and should comply with just, fair and reasonable procedure. Any violation of this procedure is open to a constitutional challenge.

After touching the grounds of history, lets focus on the much hue and cries over mass-surveillance program by Netra. What's new about it, when phone tapping and target surveillance has become a normal thing. So, there is a difference between these  two. In target surveillance, proper reasons have to be given for surveillance of people concerned. While in mass surveillance, there are significant risks of arbitrariness when executive power is exercised in covet form. European Court of human Rights stated that the extent of discretion conferred and the manner of its exercise must be transparent enough to protect individuals from arbitrary interference. Similar principles were laid down over phone tapping which require that the nature of offences which give rise to such interception orders, the procedure to be followed, storing the data obtained, and circumstances where these tappings should be erased be made clear.
Further, our safeguards apply only to targeted surveillance and require written requests before interception or telephone tapping can be carried out. CMS makes this process more opaque by making it more opaque because now state can intercept communication directly, without making requests or anything. And there is no accountability and know how whether the requisite paperwork was done.

Another question arises is -How far Netra like system is going to serve for its cause? A very basic question arises- Will anti social elements and culprits use Bomb, Blast, Kill in their conversation? Don' they have code words for it? Isn't it easy to mock the identity at every level, conceal it and communicate in a manner that is impossible to track. So, who is going to affect then, probably who is not aware of all these. Are we blocking from the common man who doesn’t know how to tweak the system? These mere questions reflects the serious flaws, caveats in the very aspect of Netra.

 More importantly, India should understand, after supporting "Right to Privacy in the Digital Age" in General Assembly on December 18,2013, there remains a little relevance for such systems. The resolution calls upon states to end violations of privacy by ensuring that national legislation complies with obligations under international human rights law, and “to review their procedures, practices and legislation regarding the surveillance of communications, their interception and collection of personal data, including mass surveillance, interception and collection, with a view to upholding the right to privacy by ensuring the full and effective implementation of all their obligations under international human rights law.”

India has no transparency yet in terms of disclosing the quantity of interception taking place every year and notification to people whose communication was intercepted. We don’t even have any external oversight body or similar independent regulatory body to prevent this abuse of surveillance systems.

There is need to maintain “a necessary balance” between security and privacy concerns. Unfettered and unwarranted mass surveillance poses a threat to any democratic country as it threatens various rights which are reinforced by right to privacy such as right to freedom of thought, association and movement.

Women disappearance: Gender Inequality: Reflection of a deeper malady

Recently in Birbhum district, a tribal woman was tied to a tree on the orders of a tribal and was allegedly  gang raped as a punishment for falling in love with a man from a different religion.
What are the reasons behind such ghastly incidents?
What might be consequences of these? Is there a lack of political will to crack down on such councils which are running in gross violation of law or are there some others layers to it as well?  Or there is meagre representation of women in the political arena? Or Women have become a challenge in race of getting their rights, hence are being denied for their most basic right, that is, right to vote.

In 1936, Bombay legislative council debate, the speech by BR Ambedkar clearly stated that "the community which denies equality and promotes orthodoxy and encourage prejudices in favor of inequality, casteism, sexism . Can these communities can be trusted for justice? I don't believe we should surrender ourselves in hands of such communities".

For ages it was believed that the different characteristics, roles and status accorded to women and men in society are determined by sex, that they are natural and therefore not changeable. 

Incidents like Birbhum indicates the mentality of our society on one hand, and on the other hand it represents the political unwillingness of the concerned authorities. India is a democratic country, atleast in words and deeds as far as elections are concerned. Elections are held at regular intervals for State Assemblies and Parliament, how far they are fair and transparent is a debatable question. But, they do not reflect the true consent of people because a large number of women are "missing" from the electorate. According to an estimation, more than 65 million women (approximately 20% of the female electorate) are missing in the voters list. Thus, what these elections reveal is the preferences of a population that is more or less skewed against women. And this preference is also a key factor in gender inequality.

The "missing women" phrase was coined by Amartya Sen. He did a study a found that the ratio of women to men in the population is suspiciously low in developing world. The worsening sex ratio in India reflected the gross neglect of women. Missing of 100 million women was attributed to gender discrimination. And the key reasons found were- "boy preference at the birth", "mistreatment of young girls", "partiality throughout the life". Similar study showed that the number of female deaths from intentional injuries or  violence was alarmingly high in India.

There is agreement over the fact that the phenomenon of gender inequality is one of the most prominent problem faced by the developing world recently. And the way out is only through political action and public policy.
A study carried out by the professors at the Indian School of business computed the sex ration in the electorate across all the states in India over last 50 years. The analysis brings upfront 3 shocking facts:
  1. The absolute number of missing women has increased four times from 15 million to 68 million. This indicates the worsening of the trend with time. In terms of percentage, it has gone up from 13% to 20%.
  2. The adverse sex ratio for backward states like Rajasthan, Uttar Pradesh, Bihar, Madhya Pradesh has become worse. And this trend has not significantly changed over the 50 years.
  3. With the exception of few states like Andhra Pradesh and Kerala, the sex ration in the electorate is far worse than the general sex ration in the population.
These trends suggest that there  are more missing women voters in the population, so, fewer female voters can raise their opinions through elections. Political decision are based on election outcomes which also under-represent the female population. It is not a true reflection of the female policy preferences.
Not all the women who are eligible to vote in Indian elections are registered to vote and, hence, missing from the electoral list.

These worsening gender inequality in Indian electorate has long lasting consequences due to the democratic system of governance in India. Politicians compete to get elected and their policy preferences are also different, and this adverse sex ration make it more likely to neglect the preferences of women.
Competitive electoral process make this situation worse by perpetuating the gender biased policies in India. Because the fact is that the politicians respond to their vote banks or the existing electorate in the population and not the missed ones.
The participation of these missing ones would definitely going to influence the government policies and decisions. Unfortunately, even if an individual politician is not biased against women in his policy preferences. But the binding with party, the electoral competitiveness, and the will to win ensure that he chooses policies in favors of his traditional electorate which is male dominated in India.
This can easily explain why gender bias has persisted in Indian society for so long.

Despite having a well functioning democracy from such a long time, and higher per capita income,  India is the worst performer in the Gender Inequality Index(GII) of the World Bank. GII is the indicator for loss of achievement due to gender inequality within a country. It is based on measures of labor participation and empowerment. India is ranked 133rd out of 146 countries and even lags behind Iraq and Sudan which frequently faced war and adversaries

Way Ahead
Many opine that women's reservation in Parliament and State Assemblies can address this gender bias problem in India. But the not so successful experiment of women's reservation at the level of Panchayat since mid 1990s suggest the limited impact of the solution.
Professors at Indian School of Business coined the term-"compensatory justice", which suggest that the impact of the reservation depend on the exact nature of reservation policy.
 For example, if seats are reserved on a quick rotation basis then there might be no long-term policies favoring women and thereby having minimal impact. On the other hand, if seats are reserved for a certain number of election rounds then the impact would depend on the basis of the reservation at the constituency level. The objective of compensatory justice is that it should start with those constituencies where the neglect is highest. Thus the reservation policy of a constituency should be based on the gender ratio there. Because an adverse gender ratio is a measure of neglect of women in that society, and it would work in more localized and targeted way.
However, again the challenge is competitive electoral process. Even in reserved constituencies where there are less women than men, women political candidates who compete with each other to get themselves elected might choose policies which favor men. And again the whole process might perpetuate gender-biased policies.
To summarize, the competitive electoral process in Indian democracy with or without women’s reservation will fail to deliver policies that are not gender-biased. In the presence of missing women, whose consent cannot be taken into account in the electoral process, democracy will fail to deliver policies that promote women’s welfare (especially in those situations where there is a divergence in opinion between men and women). India can begin to address this disaster by first recognizing that an adverse gender ratio is a human rights problem which is an outcome of the sustained, gross neglect of women. And the solution for this lies outside the competitive democratic system, may be in the society first.

The importance of gender equality can be summarized in UN Secretary General Kofi Annan statement, "Gender equality is more than a goal in itself. It is a precondition for meeting the challenge of reducing poverty, promoting sustainable development and building good governance." There is a need for new kinds of institutions, incorporating new norms and rules in the real world that support equal and just relations between women and men. 

(Don’t) Waste the Thunder, Recycle

6:30 PM, I pressed the doorbell of my flat. As I was waiting for my brother to open the door, my eyes fell on a dozen cold drink bottles ...