Economic Highlights

New Delhi, 2 April 2010

Power Projects

CAG WARNS OF GANGA DRYING

By Shivaji Sarkar

A billion people of this country needs two lakh megawatt power supply. The Prime Minister says the nation cannot progress without this vital input. So a massive effort is on to generate power through ethical or unethical means, even if it leads to a massive ecological fall out and desertification of the northern plains.

In this regard, many ridiculed the sadhus and Jagadguru Shankaracharya when they led a massive protest during the Kumbh Mela at Haridwar demanding stoppage of tunneling and hydro-electric projects on the Ganga and its tributaries in the Himalayas in Uttarakhand, called Devabhumi – God’s own land. The harbingers of modernization called it a medieval action to take the country backwards.

Now a very independent constitutional body, the Comptroller and Auditor General (CAG) has come to support what the sadhus have been saying – “the Ganga would dry up and desertify northern plains”. The CAG has stated the obvious – a corporate-government nexus is draining both the Ganga and the exchequer.

Remember the protesters of the Tehri Dam built on the Bhagirathi were similarly derided. It is possibly nobody’s case that the dam built by a private operator, almost after a decade of its completion is yet to get filled up and is producing power far below its stated capacity of 2400 mw. Is it a case of miscalculation or deliberate way to mislead policy makers?

The investments stated and the cost to the society for Tehri mega dam has not been measured properly. The total project cost alone would be around Rs 50,000 crore. (Official documents underestimate it). It does not include the cost of sinking the Tehri town and the 107 villages around it. It is camouflaged in the cost of Rs 594 core in rehabilitation. The project cost also does not include the land given to it for free.

A report last year said that the Alaknanda that gives a picturesque ambience to the Badarinath Valley had dried up almost five km below the Vishnuprayag dam and the hydro-power project. This was not taken seriously.

Apparently, the sadhus have shaken the people who matter. But few had thought that they would be supported by the CAG. It has given an alarming warning – “there would be no water in large stretches of the Alaknanda and the Bhagirathi river beds – the two major tributaries of the Ganga – if the Uttarakhand government goes ahead with 53 power projects on these two rivers. The river bed is already dry at Shrinagar in Garhwal”.

Additionally, it is affecting aquatic life and biodiversity. The CAG states that it might erase many of the biodiversities. This clearly is an indirect cost to human life. It is also threatened by a direct challenge. Many of the villages on the banks of the rivers may face immense problems as the rivers dry up. The CAG even fears mass migration. All this has a tremendous economic fall-out as people would be losing their livelihood and shall be reduced to penury.

Poverty in the area is high but life is sustainable owing to the rich biodiversity and availability of water. If that basis is lost, the cost on the government would directly be much more than what it might be earning from power generation.

Moreover, there is a social cost too. The area has not been known for crimes but it is rising now as people are finding living difficult. Crimes in modern economics are considered a law and order problem. But what is happening in parts of Uttarakhand is the result of a lopsided development approach. Thus, so-called modern solutions may not be appropriate to compensate for a rich biodiversity that Uttarakhand has. The locals complain that they are not much benefited by the generation of power. Over 75 per cent of it is exported to Uttar Pradesh, Delhi and the northern grid.

Somehow development has been made synonymous with profits and corporate growth. Uttarakhand has certainly attained that, though at a terrible cost to sustainable development and the growth that nature had helped it. Destruction to that basic is benefitting the few, who are depriving the area of its riches to fill the corporate and in many cases individual coffers. Let us not reduce Uttarakhand to the tribal areas of Jharkhand and Chhattisgarh.

The CAG has faulted the Uttarakhand government for massive diversion of river water. But it seems for political reasons it has not raised the issue of diverting almost one-third of this water to Delhi. The Uttarakhand government is a successor to the erstwhile UP government and decisions are made by the Centre. Technically it has to take the blame for which it had not taken a decision except to continue the projects finalised in the 8^th and the 9th plans, when the State was not born.

While five power projects are already operational out of 53 sanctioned and under construction, more than 200 are in the pipeline. As a result of such intense construction of dams the report says that three to four km of the riverbed around each project will have no water.

Importantly, the State government needs to have a relook at its power and industrial policy. The State is supposed to be paid Rs 5 crore annually from each power project of above 100 mw and Rs 5 lakh if it is of less than 100 mw.  It is no surprise then that most of the projects are below 100 mw capacity. The private operators are earning a fortune whereas the state is to earn only about Rs 2.65 crore to not more than Rs 10 crore a year.

It is indeed a huge differential in the cost-benefit ratio. Added to this is the cost of not only drying up of Uttarakhand but of all the riparian States through which the Ganga flows. It should not be just seen as an ecological disaster or desertification of the northern plains alone but a threat to the bread basket of the country. Quantifying the losses in economic terms is difficult. It must be measured in terms of multiple benefits that the Ganga bestows-- some seen and many not.

Therefore, the nation needs to protect its pristine but fragile Himalayan ecology if it wants to continue on its growth trajectory. All the States need to compensate Uttarakhand through some annualised budgetary contributions on the promise that it protects its pristine ecology. The survival of the fragile State ensures the survival and sustenance not only in the northern plains but also the entire Indian sub-continent. ---INFA

(Copyright, India News and Feature Alliance)

Round The World

New Delhi, 30 March 2010

US-Pak Talks

ALARMING, BUT LET’S NOT PANIC

By Monish Tourangbam

Research Scholar, School of International Studies, JNU

The recently-concluded US-Pakistan Strategic Dialogue has raised many an eyebrow in the Indian strategic circles. While one needs to be concerned as well as calculative of the new developments, it would be immature to resort to unnecessary barrage of criticism and brickbats. If the Pakistanis attempt, as quite evident, was to somehow convince the US to intervene in matters pertaining to the India-Pakistan dispute, then they obviously came back empty-handed. The American side maintained a very cautious line. The Obama administration has made concerted efforts to cultivate increasing ties with New Delhi and appears to be in no mood to jeopardize this intense and diverse relationship.

During the dialogue, the US came out in full support of the developmental efforts in Pakistan and its increasing cooperation in the fight against terrorism. However, it was categorical that the India-Pakistan issues need to be resolved bilaterally. If the Pakistani side re-emphasized its desire to maintain parity in certain issues of the US-Pakistan and US-India relations, for instance in the field of civilian nuclear cooperation, the US reiterated the point that all bilateral relations stood on its own merit and the trajectory of US-Pakistan relations should be weighed independent of any other bilateral ties.

Pakistan Foreign Minister Shah Mehmood Qureshi in the course of the dialogue stated Pakistan’s hope that that the US would play a “constructive” role in resolving the Kashmir dispute and provide it with “non-discriminatory” access to energy. There are no points for guessing that the “non-discriminatory access” plainly refers to Pakistan’s wish to strike a grand civilian nuclear deal with the US, similar to the one signed between New Delhi and Washington.

In both the cases, the Obama administration has not given any indication that it seriously takes heed of the Pakistani wish.  New Delhi has maintained a policy that seeks to resolve the Kashmir issue on a bilateral basis and concentrates on countering Pakistan-based cross-border terrorism. Lately, the Islamist anti-India militant organisations such as the Lashkar-e-Taiba (LeT) and the Jaish-e-Mohammad (JeM) at a conference held in Kotli, a district along the Line of Control (LoC) in Pakistan-occupied-Kashmir (PoK) rejected the India-Pakistan talks and instead projected jihad as the only way to liberate Kashmir from what they call “Indian occupation”.

India is overtly critical of any hint of external intervention in this dispute and the Obama administration is very clear about this policy stand. As such, a deliberate effort was made to steer clear of any inciting undue criticism at this juncture on this delicate issue. Commenting on the case of the India-Pakistan water dispute, the US Secretary of State, Hillary Clinton, opined that the US knew that an agreement existed between the two South Asian countries and that contentious matters should be resolved on a bilateral basis.

“Where there is an agreement, as there is between India and Pakistan on water, with mediation techniques, arbitration built in it, it would seem sensible to look to what already exists, to try to resolve any of the bilateral problems between India and Pakistan.” She was all hopeful and sought to indicate America’s desire to assist on any water resource development in Pakistan as long as it was purely domestic in nature, and she did not support unnecessarily complicating the issue by connecting it to external matters (read broader India-Pakistan rivalry).  

It was made clear that the US wanted the US-Pakistan Strategic dialogue to serve as a means to appraise US-Pakistan ties and its cooperation in Afghanistan, and not as a platform to discuss India-Pakistan dispute and as an instrument to showcase Pakistan’s displeasure of US-India engagement.

Even Richard Holbrooke, US Special Representative to Pakistan and Afghanistan commented that the US administration did not see a role for itself in India-Pakistan disputes unless called upon by both countries. Earlier, he also made efforts to reassure Indian strategic circles by emphasising that the US also had strategic dialogue with India, that they were bilateral in nature and that the current one with Pakistan was certainly not at the expense of India or any other country.

As far as Pakistan’s wish for a broad-based civilian nuclear deal with the US is concerned, at this juncture there is no need for India to panic and it would be wrong to blow critical trumpets on the issue. Washington seems to be in no mood to consider such a grand venture with Pakistan in the near future. Moreover, Pakistan has a shoddy record when it comes to non-proliferation, with the father of Pakistan’s nuclear weapons programme, Abdul Qadeer Khan, having disclosed selling nuclear technology to countries like Iran, North Korea and Libya.

At his end, Qureshi seemed to be harping on nuclear cooperation, reiterating Pakistan’s wish to have what he called “non-discriminatory” access to energy clearly signifying the desire of parity with the India-US deal, a culmination of long negotiations and dialogues. It is also worth remembering that India also had to take arduous diplomatic pains to get pass the 46 nation Nuclear Suppliers Group waiver and a safe pass from the US Congress. But as is evident, Washington has been vague at best regarding this.

Indeed, Clinton sidestepped questions on the issue except to say that the Obama administration was prepared to discuss "whatever issues" the Pakistani delegation raised. She seemed to support more specifically prospects for American assistance to increasing the efficiency of more immediate steps towards harnessing energy resources in Pakistan. Bruce Riedel, a former CIA analyst and now with the Brookings Institution said: “There will be some horse-trading. We owe them helicopters but I would be very surprised if we gave them anything on the nuclear front.”

There are some serious concerns in India concerning the pumping of military aid into Pakistan and the supply of high-tech weapons that New Delhi fears will be diverted towards building Pakistani arsenal against India. Pakistan sent a 56-page wish list ahead of the talks, asking for more helicopters and pilotless drones, all in the name of fighting insurgents in the Pakistan-Afghanistan border. The US has provided F-16 fighter jets to Islamabad and Pakistan's Navy chief was in Washington recently to discuss the handover in August of a refurbished U.S. frigate, the USS McInerney. Moreover, non-military aid has also flowed into Pakistani coffers and in the absence of a transparent mechanism to track the use of this supposedly benign currency, New Delhi has reason to be worried.

President Obama increasingly seems to consider Afghanistan as the litmus test of his administration’s foreign policy report card and in the process has become more dependent on Islamabad. Pakistan is indeed an important frontline State and its assistance is inevitable if peace and stability is to be restored in neighbouring Afghanistan. But at the same time too much reliance on the Pakistani military and its intelligence runs the risk of history repeating itself. Over-dependence on these entities in the past has led to the strengthening of fundamentalism and jihadi groups in the region. Unaudited reliance on these Pakistani establishments smacks of a historical blunder that would lead to another tragedy for the region and the international community. And this time around, history might repeat itself as a catastrophe.--INFA

(Copyright, India News and Feature Alliance)

Political Diary

New Delhi, 3 April 2010

Aaj Ke Netas

HAVE BLOOD ON THEIR HANDS

By Poonam I Kaushish

In a sad reflection of our political times, it’s been a week when inanities and trivia consumed our polity. An acerbic tu-tu-mein-mein of one-upmanship played between motor-mouthed smart alec aaj ke netas who revelled in idiocy, defended the indefensible, justified the unjustifiable and derided institutions and high posts. All to score petty points against each other. Ignoring that at some point all have blood on their hands. Serious substantive issues of governance can wait.

 If ten days ago it was over kissa Mayawati ka mayajaal, followed by Mulayam’s cheap sexist remark that reservation for women would lead to businessmen wives in Parliament where people would whistle at them, this week’s fracas is over Bollywood icon and Gujarat tourism brand ambassador Amitabh Bachchan presence at the Mumbai sea-link inauguration which snow-balled into a full-blown media hogging controversy.

In a telling defensive response, Congressmen obsessed with the ‘more loyal than the King’ syndrome of obeisance to the First Family, first distanced themselves and then attacked Bachchan. Why? Because the star once close friends with the Gandhi’s had now fallen out. While Maharashtra Congress Chief Minister Ashok Chavan pleaded his ignorance over Bachchan’s invite, Party spokespersons compounded the folly with an incredible explanation: The actor was endorsing Gujarat led by BJP’s Narender Modi who was the “maut ka saudagar” of the 2002 pogram. Averred they, “Does Amitabh condemn Modi’s role in the riots or endorses it?”

Matter didn’t end there. Chavan preponed his visit to a literary programme in Pune to avoid bumping into the celebrated actor again. Almost on cue, posters of his son Abhishek  were removed from an event in the Capital where Chief Minister Sheila Dikshit was present. Followed by a Union Minister cancelling a public engagement to evade coming face to face with him. Next, the Commonwealth Games Chairman and Congress MP Kalmadi ruled out naming Bachchan the games brand ambassador.

Modi, on his part, invoked Gujarati pride and came up with an equally outlandish criticism, dubbing the Congress, the “Taliban of untouchability” for hounding Bachchan. Even as the aam aadmi wonder what’s the big deal if Bachchhan fell out with the Gandhi’s, given that he is a brand ambassador of many products because as a successful star his name sells.

What’s wrong if he promotes Gujarat tourism? As a proud Bharatvasi doesn’t he have the democratic right to endorse a State? It does not mean he is holding a brief for Modi or his brand of politics. Why should any reference to Gujarat be seen through the prism of the 2002 riots?  Will the Congress stop doing business with the Ambani’s and Tata’s because their industries are based in Gujarat? Stop buying the Nano, Vimal textiles and Amul products because they are out of Gujarat?

What does the Congress have to say for the 1984 Sikh riots in Delhi which left over 3000 dead. And Rajiv’s Gandhi’s chilling cold-blooded statement: “When a big tree falls, the earth shakes.” Aren’t we familiar with are criminal-politcos with their “bullet-proof vests.” The neta-police nexus. Is the Congress any different from the Shiv Sena or MNS which attacked Sachin Tendulkar for asserting that Mumbai belongs to all Indians?

Tragically, the irrational and frivolous outpourings over Bachchan underscore the ugly truth: Rajniti today has been reduced to a political charade. Substance is elusive, if it is there at all. Wherein all stand equally guilty. A politics of I-me-myself. All willy-nilly playing ducks and drakes with governance and issues which have a bearing on our daily lives. For the polity issues like garibi hatoa, providing roti, kapada aur maakan and bijli, sadak, paani are mere slogans to ride the crest of the popularity wave during polls. Not serious matters

Instead of wasting their energy on Modi, why aren’t are leaders debating issues like the increasing threat of Maoists who have encompassed 13 States, the rising  insurgency in the North-East which is worse than Kashmir, skyrocketing prices and run-away inflation. Why hasn’t the Congress put Delhi CM on the mat for burdening the aam janata with more taxes because her Government wasted three precious years in getting its act together for the 14-day Commonwealth Games. 

Forget Brand India, see Asli Bharat which is in the grip of the Bolangir-Kalahandi syndrome – hunger, poverty and suicides. According to the Global Hunger Index 2010 recently released, India is placed at the 66th spot out of 88 countries surveyed. Of which 12 States fall in the ‘alarming’ categories, Madhya Pradesh shows extreme levels of hunger. Punjab, Kerala, Haryana and Assam fall in the serious category. With 87% of the population living below the poverty line, the struggle to eke out a living is an onerous task. Over 30m have joined the ranks of hungry since mid-1990s, the study revealed.

Shockingly, in Maharashtra’s Vidarbha region 9 farmers committed suicide in the last 24 hours. This takes the toll of farmers’ suicides to 19 in the last one week and 194 this year. Does anyone care? More than six decades post Independence and being counted as one of the key growth engines to the world economy, why are hunger deaths still happening in India? Obviously, because those in power are greedy for money.  Not even 15 paise out of a rupee of development aid has percolated down to the people who needed it most. The real beneficiaries are Government officials, who more often than not bribe their way to stay in lucrative posts.

More. Over 230 million of the rural poor are — the highest for any country in the world. Malnutrition accounts for nearly 50% of child deaths in India as every third adult (aged 15-49 years) is reported to be thin (BMI less than 18.5). According to the latest report on the state of food insecurity in rural India, more than 1.5 million children are at risk of becoming malnourished because of rising global food prices.

Besides, almost 80% of rural households do not have access to toilets within their premises. The figure exceeds 90% in states like Chhattisgarh, Jharkhand, Orissa and MP. The proportion of stunted children (under-5) at 48% is again among the highest in the world. Every second child in the country is stunted, according to the health ministry's figures. Around 30% of babies in India are born underweight. In fact, the Index reveals that the country’s rates of child malnutrition are higher than most countries in Sub-Saharan Africa.

We have the poor being imprisoned for thefts of food but those in power prosper and refuse to be accountable.  Our netas continue to parrot “everyone is equal before law”, yet till date all have successfully thwarted the due process of law. Be it Lalu-Rabri, Mulayam, Mayawati, Modi, Shibhu Soren et al. Either because cases were investigated long after the crime and the delay was directly linked to the period when they were enjoying power or the ruling Party needed their help to keep the Government afloat. 

It’s all very well for the Prime Minister to lament, “Democracy will have little meaning for the common man if he cannot secure basic rights and easy access to speedy justice”. But what are our judges doing about the backlog of over 2.5 crore cases pending at various levels across the country.

Sadly, the charades being played out on the political chessboard prove conclusively that shadow matters not substance. High time that our netas stop getting their shorts in knots over excessive trivia, get their act together, take responsibility, amend their ways and address real serious issues of governance. The minimum they owe the aam aadmi who reposed faith in them. Else history will never forgive them. ---- INFA

(Copyright, India News and Feature Alliance)

Events & Issues

New Delhi, 29 March 2010

American Nudge

HEALTH CARE REFORMS VITAL

By Dr P K Vasudeva

Today President Barack Obama is the happiest person. His election campaign promise of providing health care to all deserving has been fulfilled with the historic health care legislation seeing the light of day through a slender margin victory for the Democrats. The legislation will extend insurance cover to another 34 million uninsured (economically poor).

Obama is the first American President who has moved the country closer to a comprehensive health cover for a large swathe of the population. Among other things, the legislation puts the pressure on insurers into taking all customers, regardless of pre-existing conditions and imposes stricter limits on spending for medical treatment in a bid to cut costs. The two bills cleared will cost the exchequer some $940 billion over 10 years. A new tax on the highest earners, fees from healthcare companies and savings in Medicare bills could offset part of the cost.

Indeed, this could be a great incentive for India to bring in similar legislation to alleviate the sufferings of the large morbid and malnourished population of the country. Materially pharmaceutical firms, IT and business outsourcing industries could reasonably expect to gain. Since the focus will now be on cost cutting to retain profit margins, American healthcare companies will look to outsourcing a good deal of the business such as medical health records that will need to be created for the 34 million new beneficiaries. For the pharma industry, the increased coverage and lower cost bodes well for their generic products but they can expect stiff competition from multi-national drug firms that have already entered the generic market in anticipation of a policy accent on low-cost medicine. For the policymaker, the Obama reform is an intangible but important takeaway.

According to a report by Technopak Advisors, healthcare, a $35 billion industry in India is expected to cross the double mark-- $75 billion by 2012 and $150 billion by 2017. However, India is yet to measure up to international standards of domestic healthcare. A majority of citizens still struggle for access to primary healthcare, and diseases such as malaria and cholera continue to kill. Other challenges include inadequate affordable healthcare infrastructure, especially in the rural areas.

After 60 years of Independence, the country has a paltry health insurance cover for just three per cent of the population, all of which are either in government service or employed in the organised industry. And, while the National Rural Health Mission (NHRM) is a commendable improvement on earlier health care programmes, it basically focuses on specific illnesses and diseases and the creation of medical infrastructure for delivery. Missing for over 95 per cent of Indians is the benefit of a subsidised universal health cover and that is indeed shocking for a nation that prides itself on its rapid rise to prosperity and expecting double digit economic growth in the next two years.

A health insurance scheme for the poor will involve huge public spending and New Delhi may plead concern for the fiscal deficit. Obama has taxed the super-rich to partly neutralise the cost. India can leverage its global standing and strengths to create revenues for the benefit of the needy through a Tobin-type tax on capital flows. This could be a major step for inclusive growth for which the country is making all out efforts to ensure that the poor get their due.

According to healthcare industry representatives, if the Centre seriously wants to tackle the affordability or accessibility concern on healthcare, it needs to bring in dramatic reforms along with increasing its spending. The Union Budget for 2010-11 saw the healthcare allocation increase of Rs 2700 crore from the previous fiscal, with a specific focus on rural areas. However, this allocation is not enough to take care of the 1.25-billion population. The Centre has drawn flak from several quarters in the past on its low spending on healthcare, a little over one per cent. The commitment is that it would spend about two per cent of GDP this fiscal. 

Our public expenditure on healthcare is still one per cent of the GDP, while the private sector contributes 4.5 per cent. Can a rapidly developing economy like ours be so dominantly dependent on private spending? It is, therefore, expected that the health expenditure rate will mirror the GDP growth of 7-8 per cent and the Government will increase the spending to two per cent of the GDP.

For years now, the healthcare industry has been asking for infrastructure status in the background of the Centre spending as little as it does. And, the government needs to at least facilitate private healthcare providers to grow and could make policies to govern these institutions, other than demanding that these ensure affordable healthcare.

If the gap between the need for healthcare and the existing infrastructure is not bridged and if the shortfall in the next-generation healthcare and medical manpower is not addressed, then obviously people in the healthcare industry have a reason to worry -- that the country is sitting on a mega health challenge. The industry estimates that by 2025 an estimated 189 million people in the country will be over 60 years of age and requiring higher healthcare spending.

India has 16 per cent of the world's population, 18 per cent of the world's mortality and 20 per cent of the world's morbidity as per industry estimates. The Centre needs to drive efficiencies in the system and if necessary go all out for public-private partnerships. At the same time, preventive healthcare too needs a huge thrust. On the geographical skew of hospitals being largely in big cities, the Centre could consider offering a 10-year tax holiday, if that is what it would take to get the private players into the smaller cities.

Additionally, all the talk on traditional medicine in the country should be promoted as an alternate system. As developed countries seem to take more to alternate systems such as meditation or yoga, the Centre needs to encourage and incentivise the adoption of these systems in India, as well. The Patanjali Yoga Centre of Swami Ramdev is contributing a lot by providing affordable Ayurvedic medicines and concentrating on yoga, pranayam and meditation that needs to be encouraged by the government.

This apart, a number of other measures could be adopted: hospitals attracting and treating foreign patients should be given tax benefits. Concessional funding, tax benefits or subsidies should be provided for starting new hospitals in tier-II and tier-III towns. Hospitals that improve service quality and get national and international accreditation should receive tax benefits. Individuals taking health insurance should also receive tax incentives. The tax deduction limit on medical expenditure should be raised. Private players should be encouraged to manage government hospitals and selectively use them for teaching purposes.

The Government should provide guarantee on loans taken by healthcare groups investing in health education and creating skilled pool of health and nursing assistants, hospital equipment maintenance and hospital housekeeping services among the poorer sections. Above all, if there is a will there will be a way for a healthier India. ---INFA

(Copyright, India News and Feature Alliance)