E D I T O R I A L   P A G E

EDITORIALS

From Ayodhya to Delhi
THE Ayodhya issue involving the sentiments of the two principal communities of the country is refusing to come to an end. Efforts to find a solution through dialogue have failed to bear fruit. The simple reason is that the spirit of give and take has not been given primacy over the rigidity in attitude.

Blix deadline
THE Iraqi line so far has been that it is doing all it can to avoid war by cooperating with the United Nations weapons inspectors and the UN team must specify what exactly it wants from Iraq “instead of talking to us in general terms”.

OPINION

RUN-UP TO THE BUDGET
How to assess the General Budget
Case for lower income tax and higher excise duty on luxury items
Bharat Jhunjhunwala
FINANCE Minister Jaswant Singh will present his maiden budget on February 28. Some points against which the budget can be assessed are as follows:
Irrigation: There is need to make a distinction between sustainable methods of increasing irrigation such as water harvesting, construction of dams and interlinking of rivers; and unsustainable methods like the extraction of fossil water from groundwater aquifers.

MIDDLE

The one-third syndrome
M.K. Agarwal
THE term “syndrome”, simply put, signifies either the occurrence of a set of symptoms to show the presence of a particular disease, or an undesirable condition or behaviour. A familiar example of the former kind in the “irritable bowel syndrome”, it is a disorder of the intestines, accompanied by cramps, bloating and changes in bowel habits.

POINT OF LAW

USA in the Persian Gulf: the collapse of international law
Anupam Gupta
THE Gulf War of 1991, observes Samuel Huntington in his book, The Clash of Civilisations, “began as a war between Iraq and Kuwait, then became a war between Iraq and the West, then one between Islam and the West, and eventually came to be viewed by many non-Westerners as a war of East versus West, ‘a white man’s war, a new outbreak of old-fashioned imperialism’.”

TRENDS & POINTERS

Where people live with the dead
WHEN every inch of space counts, the living take the dead for neighbours. Several people in Raipur, capital of Chhattisgarh, have literally been living with the dead. When Raipur suddenly gained prominence on being declared the capital of the new state carved out of Madhya Pradesh two years ago, it found itself ill-equipped to cater to the throngs of people who headed this way.

SPIRITUAL NUGGETS

EDITORIALS

From Ayodhya to Delhi

THE Ayodhya issue involving the sentiments of the two principal communities of the country is refusing to come to an end. Efforts to find a solution through dialogue have failed to bear fruit. The simple reason is that the spirit of give and take has not been given primacy over the rigidity in attitude. In such a situation only the courts of law can help find a remedy. As a peace-loving democracy we should learn to respect the opinion of the judiciary. There is no room for violence or the use of force to settle such a delicate matter. Thus, the VHP’s three-day Dharam Sansad held in Delhi is within its rights in deciding to launch a country-wide peaceful campaign with month-long dharnas and demonstrations beginning on February 27 to pressure the Central government to accede to its demand on handing it over the 67 acres of acquired land around the disputed site in Ayodhya. In a free society every individual or group of individuals has a right to fight for one’s interests through peaceful means provided its actions do not lead to violence or inflame communal passions. Whether the VHP-sponsored gathering has toned down its strategy under pressure from the RSS, it parent organisation, or the BJP-led government at the Centre is beside the point. What is significant is that the VHP leadership, known for its hard stances, has found it prudent not to fix a deadline for starting temple construction which would have sharply raised the political and social temperature. This makes one believe that Ayodhya-related activity will henceforth be more visible in Delhi than in the most popular town of UP.

Another thing most striking about the gathering of sants and sadhus numbering over 10,000 was that speaker after speaker criticised Prime Minister Atal Behari Vajpayee and Deputy Prime Minister L.K. Advani for “betraying” the cause of Ram Mandir. These critics might have their own reasons for expressing their anger, but they should not forget that those running the government are supposed to see everything in its totality. They have not only to be fair to every citizen of the country but also seem to be so besides protecting the maryada of the judiciary. They cannot blatantly favour anybody even if that person or group happens to be their sympathiser. Mr Vajpayee and Mr Advani know it better than anybody else. They have done what they could under the circumstances — to hasten the judicial process to find an answer to the knotty Ayodhya question. Even then the government is being taken to task by the Opposition, which has raised the question, “Why this hurry now?” Of course, in a democracy many decisions are taken in accordance with electoral calculations. Even then if something can be done to cure a painful sore, affecting the country’s image abroad, it is welcome. The government has come under severe criticism from another angle: that it does not appear to be fair in approaching the court for vacating an interim order passed in March, 2002, banning all kinds of religious activity on the acquired land and its transfer, in full or part, to anybody till a final verdict is given on the title suit by the Lucknow Bench of the Allahabad High Court. The apex court has, however, made it clear that it cannot be pressured to act in accordance with the intentions, stated or otherwise, of any authority. The matter will be heard on March 6, and the highest court of the land has an impeccable reputation throughout the world for its independent functioning. It should be allowed to bring the nation out of the morass in which it finds itself today.

Blix deadline

THE Iraqi line so far has been that it is doing all it can to avoid war by cooperating with the United Nations weapons inspectors and the UN team must specify what exactly it wants from Iraq “instead of talking to us in general terms”. Well, chief weapons inspector Hans Blix spoke in no uncertain terms on Friday when he ordered Iraq to destroy scores of its Al Samoud-2 missiles, parts and components, whose range exceeds the limit set by the UN in 1991. Even the manner in which the projectiles were to be eliminated was mentioned in great detail. Fuel, launchers, testing equipment and all software and documentation about the missile programme are also to be destroyed - but not the factories where these were built, as demanded by the USA. The deadline he gave to Baghdad to begin the destruction is March 1, which also happens to be the date of Mr Blix’s next report on Iraqi compliance due to the Security Council. The time-bound message means that the manoeuvrability of Mr Saddam Hussein stands further curtailed. The UN diktat presents him with a serious dilemma. If he complies, he will be eliminating a valuable weapons system which his military badly needs in case there is an attack by a US-led coalition. If he does not, he will be liable to US allegations that he has been defying the UN inspectors. Mr Blix has not mentioned the course of action that is likely to be taken if the order is ignored, but it is obvious that the defiance will bring a war that much closer to reality. The USA and Britain are preparing a UN resolution that will give a green signal to military action. If Baghdad complies, it will strengthen the hands of France, which has been resisting US pressure and demanding that the weapons inspection process should be extended.

On the other hand, the USA seems hell-bent on going to war. Criticism in the UN and worldwide protests, including those within the USA, have not swayed it. The first week of March is going to be crucial in the fluid situation. Ironically, there are many fence-sitters which might join the US bandwagon once it gets going. Before that, its endeavour is to ensure that, one, there are enough non-permanent members to secure the nine votes necessary to get the resolution passed and, two, to make sure that Russia, China and France do not veto the use of force. France has been categorical about using its veto power, although the other two have hedged their bets of late. The world’s eyes will be glued to the drama taking place in Paris and Washington. The future of the world in general and the UN in particular will depend on the signals emanating from these capitals in the days to come. If the USA goes ahead without UN approval, the comity of nations will change forever, in an undesirable manner.

OPINION

RUN-UP TO THE BUDGET
How to assess the General Budget
Case for lower income tax and higher excise duty on luxury items
Bharat Jhunjhunwala

FINANCE Minister Jaswant Singh will present his maiden budget on February 28. Some points against which the budget can be assessed are as follows:

Irrigation: There is need to make a distinction between sustainable methods of increasing irrigation such as water harvesting, construction of dams and interlinking of rivers; and unsustainable methods like the extraction of fossil water from groundwater aquifers. It is necessary to promote sustainable methods by increasing government investment, in water harvesting in particular.

Rural infrastructure: Roads, power supply and telephones should be concentrated in small towns. The present strategy of providing these services to every village leads to substandard services. The result is that people migrate to cities in the absence of good quality infrastructure in towns as well as villages. The solution to the problems of urbanisation will come by increasing investment in towns.

Public investment in infrastructure should be increased considerably. It has become clear that neither domestic nor foreign investment may come into the desired areas. The experiences of Dhabol and the Mumbai-Pune Highway indicate that we cannot rely on the private sector to meet the country’s infrastructural needs. On the other hand, the experience of the Golden Quadrangle highway and telecom industry indicates that it is possible to attract private investment in a big way. The approach of the government should be to remove the glitches in the inflow of private investment in all the areas and simultaneously continue to increase public investment in deficient areas.

Government debt: The Government of India is reeling under debt. Nearly one-half of government revenues are used to pay interest on borrowing. It does not seem possible to repay the debt from revenue receipts. The only way is to generate capital receipts. There is need to create a National Debt Retirement Commission to locate surplus assets like wasteland, forestland, railway scrap, big bungalows of ministers and government servants, defence land, defence scrap, unused buildings, etc, and sell them to repay the debt.

FDI: Countries that have received high levels of FDI, with the exception of China, have got into a deep crisis in the long run. The reason is that FDI inflows may often only replace domestic sources of growth with foreign ones. Such competitive FDI is harmful because it creates a long-term liability of profit repatriation. Thus FDI should be encouraged only where the domestic industries are deficient in technology. There is need to subject all FDI proposals to a technology audit. Conditions may be imposed on them to reinvest earnings for a reasonable period. This will save us from the long-term negative effects such as those that have hit Latin America and East Asia.

FII: Greater availability of global capital to domestic companies through FII and commercial borrowing reduces the cost of capital and enables them to stand up to the MNCs. Therefore, relaxation of limits on FII holdings is a lesser evil compared to FDI. The problem with FII arises because of volatility. This should be managed by retaining an adequate amount of forex reserves.

Capital account convertibility: The government has relaxed much control on outward remittances on the capital account. This seems appropriate at the present juncture when forex reserves are high. But it is difficult to reverse such a policy once opened. It can happen that the forex reserves may deplete at a fast pace. Indian capital may flow outward while foreign capital does not come in. There is need, therefore, to go slow on capital account convertibility. We have to look inward for both the expansion of the market and meeting our investment needs.

Priority sector lending: The share of priority sector lending in gross bank credit has been consistently declining. Bank managers do not have any incentive to lend to a large number of SSIs because it entails higher administrative costs. The requirement of 40 per cent lending to priority sectors has not delivered. It is necessary to develop a cross-subsidisation policy. A 1 per cent tax can be imposed on all large loans and a 2 per cent subsidy can be provided on small loans. This will make it profitable for the banks to lend to small borrowers.

Small-scale industries: The SSIs should be compensated for the employment opportunities and entrepreneurship that they help generate. This can be done by providing across-the-board preference to labour-intensive industries instead of the present policy of reservations. The incentives can be in the form of lower rates of taxes, exemption from the operation of certain labour laws, preference in government purchases, assistance in technology upgradation and creation of websites, etc. These incentives should be available to all labour-intensive industries. This will promote labour-intensive production in all sectors rather than the few reserved sectors as at present.

Fiscal deficit: A reduction in fiscal deficit and establishment of macroeconomic stability is no assurance that foreign capital will inflow in a big way. In the last three years foreign investment has declined even as inflation has been contained. Reduction of fiscal deficit is not a cure-all mantra. It is more important to look at the quality of the government expenditures. Higher fiscal deficit for the construction of dams and roads is beneficial while that for paying higher pensions is harmful. Therefore, the government must concentrate on improving the quality of its expenditures.

Revenue deficit: The present economic slowdown too is rooted in the poor quality of government expenditure. Most government expenditure is going toward the salaries of government servants. Part of this salary, along with corruption income, is invested in gold and part in Swiss banks. This outflow is the principal cause of the slowdown. The solution to this problem is not downsizing or reduction of revenue deficit. Revenue functions such as justice and law and order are critical for growth. We need good governance, not less governance. Therefore, the effort must be made to improve the functioning of the government. The Fifth Pay Commission had given suggestions such as online monitoring, external evaluation, etc. These should be implemented.

Excise duty: The effort at simplification by introducing one single VAT instead of multiple rates of excise duty is in the right direction. But at the same time it is necessary to provide incentives to labour-intensive production. Similarly, we need to tax luxury consumption.

Income tax: The present progressive income tax structure is based on the idea that the rich must pay more. But it has the negative effect of promoting consumption. The rich increase their consumption and pass it off as business expenses because it leads to tax savings. The same can be better secured by imposing higher excise duty on luxury consumption goods such as refrigerators and TV sets. That will mean that one who earns and invests will pay less tax and one who consumes more will pay more tax. We need to establish equity in consumption rather than in incomes. Individual income tax should be lowered along with a parallel increase in excise duty on luxury items.

The writer, a well-known economic commentator, was associated with the IIM, Kolkata.

MIDDLE

The one-third syndrome
M.K. Agarwal

THE term “syndrome”, simply put, signifies either the occurrence of a set of symptoms to show the presence of a particular disease, or an undesirable condition or behaviour. A familiar example of the former kind in the “irritable bowel syndrome”, it is a disorder of the intestines, accompanied by cramps, bloating and changes in bowel habits. Commonest example of the second category is the “bored-housewife syndrome”, a woman in such a state feels utterly weary, having nothing to do all day except laze about, eat and drink, and go shopping. But, not so well known is the “one-third syndrome”, although its incidence is far more pervasive. This piece is a brief account of this affliction.

Let us first take up the “one-third benefit syndrome”. Analysis shows that overall productivity of labour on a job, in real terms, in only one-third of the norm — thanks to the work habits, operating culture are the physical climate. Further, about one-third of public money spent in any irrigation, road, or other project, reportedly goes to line private pockets. Similar is the fate of government grants meant for the destitute, and rehabilitation of those affected by natural calamities like, cyclones, earthquakes and floods. Commenting on the massive seepage, taking place all the way from the point of sanction of funds down to their final utilisation and distribution, a former Prime Minister helplessly bemoaned that no more than one-third of the aid actually reached the grassroots level.

It is interesting that the ills, which afflict the Indian power sector, should be the direct consequence of what is known as the “one-third shortage syndrome”. Here is a step-wise account, given by an eminent power engineer, of how the system gets debilitated. Experience, he says, indicates that, on a long-term basis, just two-thirds of planned power generation capacity gets actually installed. The generation too, from this capacity, is merely two-thirds. Of the generated power, hardly two-thirds is supplied to the consumer, the balance being lost in transmission and distribution. Actual billing, God bless, is again something like two-thirds of the consumption! Then, tariff realisation itself amounts to around two-thirds of the billing. The last nail in the coffin is driven by the consumer himself, as he gainfully utilises only about two-thirds of the power he receives. At every stage, operation or transaction, one-third component is wasted, frittered or stolen. No wonder, laments the author of the theory, the financial health of most of the state power utilities is so very poor, investments are abysmal, and consumer satisfaction is pitiful.

Polity has its own manifestations of the syndrome. One-third population is always found below the poverty line — politician’s utility and longevity seem to lie in maintenance of this level. One-third of the youth , at any time, are on the unemployment rolls — they constitute a powerful energy bomb, only waiting to explode. But, paradoxically, of the fortunate lot that have landed public employment, one-third are simply redundant and are not wanted; they only clog the organisational machinery and constitute a sheer drag on the exchequer. Then, lamentably, we are not a full but only one-third democracy. Because, out of the three basic tenets or attributes of democracy, just one viz. “government of the people” survives: the other two stand usurped — “government by the people” having yielded place to government by the politician-bureaucrat combine, and “government for the people” having come to mean government for the rich and the powerful.

Talking of Indian Parliament, it is estimated that as much as one-third sitting time of Parliament is wasted on interruptions, pandemonia, walkouts, adjournments and frivolities. Serious debate and informed discussion seem to be the concern of no more than one-third members. And how ironical that the government itself should be working for only for one-third time in the year! For the remainder part, it is on a “vacation” of sorts, thanks to the innumerable official holidays, festivals and jayantis, frequent pen-down strikes by the workers, go-slow calls from the unions, and a whole array of leaves, of every description, to which the employees themselves are entitled.

Several other aspects of life exhibit kindred behaviour. With regard to the cycle of time — yesterday, today and tomorrow — man is in control of only the one-third. Yesterday cannot be recalled, tomorrow cannot be assured; only today is his, which, if he procrastinates, he loses; and which lost, is lost forever. Coming to married people, experience shows that they are cooing and wooing only one-third of the time, and for the rest, are engaged in simply cursing, vexing and rueing! They even neglect to be agreeable to each other; minor differences can lead to parting of beds, if not of ways. Couples are found to have not spoken to each other for days together because of difference of their opinion whether the clock should stand by the window or above the mantelpiece, or whether the first-born should be a boy or a girl. It is seen that, on the whole, man devotes almost one-third of his expected sojourn on earth on inanities, trifles and idle nothings. What all these examples typify is the “one-third dissipation syndrome”.

I had a temptation, dear reader, to continue a little longer, but am reminded of the words of Byron: “It is too bad that a poor wretch can be punished for stealing your handkerchief or gloves, while no punishment can be imposed on those who steal your time.” I have no desire, dear friend, to steal your time, much less your temper or patience. It is also not my intention to change your gratification into vexation, and pleasure into boredom. Therefore, au revoir (goodbye, until we meet again)!

POINT OF LAW

USA in the Persian Gulf: the collapse of international law
Anupam Gupta

THE Gulf War of 1991, observes Samuel Huntington in his book, The Clash of Civilisations, “began as a war between Iraq and Kuwait, then became a war between Iraq and the West, then one between Islam and the West, and eventually came to be viewed by many non-Westerners as a war of East versus West, ‘a white man’s war, a new outbreak of old-fashioned imperialism’.”

But for a generational switch in the American Presidency — George W. Bush Jr stepping into the shoes of George W. Bush Sr — and the resultant efflorescence of cowboy rhetoric in the White House, not much has changed since 1991 as the world teeters on the brink of another Gulf war.

If Gulf War I signalled the emergence of an unipolar world, and the beginning of the disintegration of international law, Gulf War II will mark the demise of multilateralism — peace protests in Europe notwithstanding — and the total collapse of law in the international area.

“Impotent to restrain a great nation which has no decent respect for the opinion of mankind,” Philip Caryl Jessup, later a Judge of the International Court of Justice, wrote in 1940, “failing in its severest test of serving as a substitute for war, international law plods on its way, followed automatically in routine affairs, invoked, flouted, codified, flouted again but yet again invoked.”

The layman and the common lawyer, he said, who find it difficult to fit international law into their concept of “law” — a concept which is generally of the Austinian type — usually are alike in asserting that there is no international law. They forget that law has many meanings.

There is the law of gravity, said Jessup, the Sherman Anti-Trust Act (in the USA), the law of supply and demand, international law.

An old Chinese proverb (he continued, writing on the “reality of international law” in the prestigious US journal, Foreign Affairs) runs something like this: “One should always have in the background of one’s mind a multiplicity of definitions covering the subject at hand, in order to prevent oneself from accepting the most obvious.”

And Cardozo said (he added, referring to the great American Supreme Court judge who has left behind a prodigious legacy of quotable quotes): “If the result of a definition is to make... (facts) seem to be illusions, so much the worse for the definition; we must enlarge it till it is broad enough to answer the realities.”

The definition of international law that President Bush has contrived to answer the “reality” of his imminent invasion of Iraq is as broad as the post-September 11 sense of panic of the American people.

“Before September the 11th,” the President told a joint session of the US Congress on January 28, “many in the world believed that Saddam Hussein could be contained. Imagine those 19 hijackers with other weapons and other plans — this time around by Saddam Hussein. It would take one vial, one canister, one crate slipped into this country to bring a day of horror like none we have ever known.”

Almost three months ago, he said, referring to UN Security Council resolution 1441 passed on November 8, 2002, the council gave Saddam Hussein his final chance to disarm. The 108 UN inspectors sent to Iraq were not sent to conduct a “scavenger hunt” for hidden materials across a country the size of California. It is upto Iraq to show exactly where it is hiding its banned weapons, lay the weapons out for the world to see, and destroy them as directed.

That, the reader may note, is a blunt Texan way of shifting the burden of proof onto the accused, here a nation rather than an individual, with a view to creating a casus belli or a pretext for war which, once launched, will suffer no pretext for cessation excepting the complete and unconditional surrender of the accused.

And its disarmament to a degree that is reminiscent of the Treaty of Versailles.

Mandated by Security Council resolution 687 of 1991 — described in Prof Peter Malanczuk’s latest edition of Akehurst’s work on international law as the “mother of all resolutions” — to accept the destruction or removal of all chemical and biological weapons and all ballistic missiles with a range greater than 150 km, Iraq has, on the testimony of none other than Hans Blix himself, undergone considerable disarmament already through inspections since 1991.

“The implementation of resolution 687.. brought about considerable disarmament results,” Blix reported to the Security Council on January 27, a day before President Bush addressed the US Congress, totally unfazed by Blix’s report.

“(M)ore weapons of mass destruction were destroyed under this resolution,” said Blix, “than were destroyed during the Gulf War.”

No less significant were his observations on the nature and range of the inspection regime.

“We have now an inspection apparatus (he said) that permits us to send multiple inspection teams everyday all over Iraq, by road or by air”. Inspections already conducted “have included universities, military bases, presidential sites and private residences (and) have also taken place on Fridays, the Muslim day of rest, on Christmas Day and New Year’s Day”.

Even more importantly, Blix informed the Security Council that “Iraq has on the whole cooperated rather well so far with UNMOVIC” (United Nations Monitoring, Verification and Inspection Commission), of which he is the head or executive chairman.

But for those who make or unmake international law in the unipolar laboratories of the White House, the Hans Blixs matter as little today as pacific countries like India and their national security concerns.

TRENDS & POINTERS

Where people live with the dead

WHEN every inch of space counts, the living take the dead for neighbours. Several people in Raipur, capital of Chhattisgarh, have literally been living with the dead.

When Raipur suddenly gained prominence on being declared the capital of the new state carved out of Madhya Pradesh two years ago, it found itself ill-equipped to cater to the throngs of people who headed this way. The severe shortage of space meant even land earmarked as the final resting place of the dead was encroached upon. And the poor denizens of Raipur did not find it odd or eerie to live in a graveyard. A small neighbourhood has come over the graveyard in Telibandha, off the highway that connects Raipur to Mumbai and Kolkata. People sit, sleep and eat on graves. Some use the tombstones to wash clothes. IANS

SPIRITUAL NUGGETS

To kill a man is to kill the man in oneself.

***

Murder is never heroic.

***

Collective murder is no more respectable than individual murder.

***

In violence we forget who we are.

—Marcy McCarthy, On the Contrary