The Tribune, Chandigarh, India

Innocence and freedom
India’s gesture to help the peace constituency

FIFTEEN-year-old Nasir Sultan of Pakistan is finally back home after a three-month ordeal in Faridkot’s Juvenile Home. A class 10 student belonging to a village in Chitral district in the North-West Frontier Province, Nasir had landed himself in trouble on August 16 by illegally crossing over to this side of the Line of Control in the Ferozepur sector.

He did not know that he could meet his Bollywood idol Shah Rukh Khan only after
getting a passport and a visa. His innocence led to his arrest by the BSF on a
charge of violation of the Foreigners Act. His case was, however, taken up by
human rights groups and others, both in India and Pakistan, as he had committed
the illegality unintentionally.

There was a humanitarian angle involved. The police had given him a clean chit. He deserved the gift of freedom which he got quickly. India’s gesture is bound to create some goodwill. The case of Sunil Qureshi, another Pakistani teenager, who entered Indian territory illegally in May, also deserves a compassionate view. He, too, like Nasir aspired to find a role in India’s film industry.

Children crossing international borders innocently, violating the laws, should
not make them spend their lives in captivity. India showed rare magnanimity in
2005 also when it allowed seven Pakistani children to be repatriated. Pakistan
should also reciprocate.

It will be appreciated if laws are amended keeping in view the changing times. Human rights activists are right in saying that children who violate border laws should be repatriated to their respective countries after a flag meeting between the forces manning the international border. This will help the constituency of peace and friendship in South Asia grow.

Women aren’t for beating
A whiff of change in HP

MEN in Himachal Pradesh can puff their chests about understanding masculinity.
In a National Family Health Survey, the hill state has emerged as the topper, as
only 6 per cent women in Himachal reported spousal violence. In the rest of India,
however, domestic violence is widespread and tends to snatch women’s right to
stay alive.

The National Crime Records Bureau says that while one dowry death occurs every 77 minutes in the country, in every nine minutes there is a case of cruelty by the husband or his relatives. Even as India’s record of violence against pregnant women is most reprehensible, studies have ironically found a direct correlation between education and domestic violence.

Three years ago the law — the Protection of Women from Domestic Violence Act — was given some teeth, certainly an advance over the previous legislation. The new Act encompasses major areas of domestic violence, including verbal and emotional violence. Earlier there was ambiguity about the provision whether it could be used with retrospective effect, but some of the recent judgments have interpreted it in the right spirit.

It is heartening that a large number of women have begun using the law to seek redress. But the implementation of the 2005 Act is still beset with obstacles. Only 13 states have allocated budgets for the implementation of the Act. Many states have not even appointed protection officers. And as is true with several laws empowering women, the latest law, too, is becoming both tortuous and cumbersome, and many of the aggrieved women are denied justice.

The law, which grants sweeping powers to the magistrate trying the case and even entitles women the right to “shared household” can certainly be a restraint. But domestic violence in India is entrenched in patriarchal values and convoluted notions of male superiority and masculinity.

What is really needed is a major change in the mindset. Till men are made to respect their wives, the threat to women, which often manifests in virulent forms, will not cease. Indian women, a majority of whom meekly accept wife-beating, too, need to shed old attitudes. In the 21st century, protection within the four walls is their absolute right. They must demand and get it.

Thought for the Day

The thing is, you see, that the strongest man in the world is the man who stands most alone. — Henrik Ibsen

ARTICLE

Obama’s world
India’s reaction shows lack of self-confidence
by B.G. Verghese

THE welcome for Mr Barack Obama’s election victory in the US was surely overplayed in India, symbolically important and fascinating as it was. As in many Indian reactions, the alarm and dismay some days later over the President-elect’s reference to getting Pakistan fully on board in fighting terror by vaguely suggesting that India should compromise and make some concessions on Kashmir and also get it to sign the CTBT were equally excessive and misplaced.

The response betrayed an astonishing lack of self-confidence in many quarters that are tireless and tiresome in demanding a permanent seat for the country in the Security Council but simultaneously imagine that it is a big banana republic that can be played like a yo-yo.

India is already engaged with Pakistan in a peace process that includes, but goes well beyond, Kashmir. The current polls in J&K are moreover a sure signal that separatism is a wasting phenomenon and that what people want is a good government in which they are both participants and prime beneficiaries. There is growing realisation that self-determination means roads, schools, better farming, employment opportunities, power supplies, peace and order and not the chimera of independence or an azadi that simply does not exist in PAK, let alone the Northern Areas, and is yet to be genuinely won by Pakistan.

The ordinary resident of J&K is also completely fed up with the gun and the corruption that the gun culture has bred. There may yet be desperate efforts to disrupt the subsequent stages of polling through violence and this could affect polling percentages in certain pockets. But the first round of voting has indicated the unfettered mind of the people.

The conclusion of the poll should set the stage for a big push forward in internal reforms within J&K in the direction of multi-tiered autonomy that has been mooted. Preparations for this should commence now by quietly building a consensus both within J&K and in the rest of the country. The moderates in the Hurriyat have the choice to shed their airs and come on board or lose all relevance.

Simultaneously, this is the time for India to make the grand gesture of proposing discussions on joint management of the Indus waters with Pakistan as part of an incipient greater J&K confederation under twin sovereignties, extension of the Srinagar-Baramulla rail link to Muzaffarabad and the opening of international flights to Pakistan and elsewhere globally from and via Srinagar.

If Mr Obama can help facilitate dialogue on such an agenda, based on making boundaries/the LoC irrelevant, there should be no cause for concern. Shorn of all the humbug in which the J&K question has been so long wrapped, such a package would represent both a huge “concession” by and a handsome bonus for India.

The second bogey is the CTBT. India has been in the forefront of those seeking a nuclear-free world. If Mr Obama can persuade the new US Congress to ratify this treaty, which it declined to do a decade back, this initiative would need to be married to proposals for comprehensive and universal disarmament, possibly in agreed, verifiable stages.

Such a development would also be a practical way to reverse the wholly avoidable slide towards a new Cold War triggered by the US/NATO thrust to move its missile defences further and further east to the borders of Russia, ostensibly to contain Iran, which has predictably evoked a strong response from Moscow.

This leads on to the need for Mr Obama to look afresh at Iran, West Asia and Afghanistan on all of which American policy has gone seriously awry at a heavy cost to peace and tranquillity throughout the entire region and beyond. This is a geostrategic area of the greatest political, economic and cultural interest to India which has, however, strangely abdicated any role despite its own high stakes and the good relations it enjoys with all players on both sides of the fence.

The US/NATO intervention in these areas is part of the problem. Maybe, India could lend its good offices to assist a dialogue in Afghanistan with other regional players such as Pakistan, Iran, China, Russia, the Central Asian neighbours, the US, the EU and the UN that could lead to isolation of the Taliban-Al-Qaeda elements and phased military withdrawals all around as a prelude to a new Loi Jirga and a guaranteed settlement in Afghanistan. Moonshine? Worth a try?

A parallel effort to secure an early, phased US-alliance withdrawal from Iraq would need to be brokered in concert with Iran, in order to prevent a possible Shia takeover and balkanisation of that state, even as a separate effort is made to secure a positive movement towards an Israeli-Palestinian-Arab settlement. Since all these issues are interlinked, simultaneity in approach would not be as far fetched as might first appear.

This initiative must in turn be linked to efforts to combat the gathering recession through national efforts as much as some bold global pump-priming. Such an approach was indeed independently canvassed at the recent G-20 summit in Washington. However, linking any such endeavour to parallel efforts to catalyse the conversion of “swords into ploughshares” in these sorely troubled regions of the world and to “un-demonise” Islam, would appear to make eminent good sense and offers a perfect fit between sturdy self-interest and global economic and political imperatives. No one is suggesting that any of this is easy or non-controversial. But from seeds of thought are great enterprises launched.

MIDDLE

“Fall” is different this year
by Harwant Singh

IT is during “Fall” that we have been visiting America and are able to savour the “fall colours” for which this country is famous. Manhattan offers beautiful walks, not only in the Central Part but along Park Avenue, Fifth Avenue, Lexington Avenue etc.

Central Park is a riot of colour and along various Avenues it is the spectre of well-appointed stores with latest in clothes, jewellery and assortment of items for the rich and the famous. From Gucci to Cartier to Brioni, to Louis Vuitton or you name it, they are all there, though at a huge price, whereas Lexington Avenue offers more modest shopping.

But this year we have been late in coming, and colours in the Central Park have lost their myriad hues and wear a drab wintry look. However, there is “fall” of a different kind. It is the “fall” in the economy.

All those stores for the rich and others for not so rich are shorn of customers and wear a deserted look. Many have put up notices for discounted sales, while some others are simply down and out and ripe for outright closure and great picking.

The newspapers make gloomy reading with layoffs in thousands by the day: Industry after industry seems to be going under. No one appears to know how all this came about. There is a recall to the Great Depression of 1929 and we learn that Bernanke, Chairman Federal Reserve Bank of America is an authority on the Great Depression and will surely fix the economy.

They say that perhaps “sub-prime lending,” in housing is the villain. But Greenspan, the previous Chairman of Federal Reserve Bank, was an authority on housing finance. So also were a bunch of CEOs, each an expert in his field, drawing fat salaries and millions in bonuses, whose companies have gone bust.

America too has the largest number of Nobel Laureates in economics. But now
we are told the economics is not a precise science. No two economists agree
on any one economic issue. The debate often turns to free capitalism versus
controlled economy.

The motor car industry is on the brink of collapse and is in dire need of resuscitation in the form of bridge loan (whatever it means) of 25 million dollars. Oil prices had shot through the roof and the great American gas guzzlers had lost their attraction and now when the oil prices have come down there is no credit available and there is little money in the wallets.

Law makers are not enthused with this fat demand of 25 million dollars. So uncertainty prevails as it does in most other areas. Auto manufacturers should have been working on fuel-efficient vehicles rather than on gas guzzlers. is the refrain .

Much hope is being pinned on the President elect, Mr Barack Obama, and his team. But the new Presidency is still many weeks away and much more “fall” may occur. Nor does the President elect have a magic wand to restore sanity and economic order in a jiffy.

The way Roosevelt handled the 1929 depression is now the subject of much study. But no two situations are ever exactly alike, so we wait out for the current financial turmoil to run its course.

Even if we are late for the “fall colours” this year, the Fall is there, though of a different type where the colours are missing but it does offer great bargains and is a shopper’s paradise. All you need is a fist full of dollars!

OPED

Recession can be useful
Society is forced to explore better ways of doing things
by Hamish McRae

THE game has changed. Every day that passes brings more evidence of a rapid slowdown in the world economy. To meet that there will, and should be, a strong policy response not just from the main developed world economies but from the emerging markets too. So there will be tax cuts here and elsewhere, and there will be further cuts in interest rates around the world too.

There is no dispute about any of that. There is however a serious debate about the scale of what should be done. You can always puff up economies for a few months with such policies, but the more you artificially boost them in the short term, the greater the problems a few years down the line. You can buy growth now but have to pay for it later.

You can see this most clearly by looking at the US during the two Bush administrations. The US bought its way out of the early 2000s downturn by cutting interest rates below the rate of inflation and giving large tax breaks.

For a while the economy did fine, or so it seemed. But it was at the cost of creating an unsustainable housing boom and the build-up of huge debts by individuals and government alike. The private sector misbehaved of course, but it was the administrations that created the circumstances for it to do so. The US as a whole is weaker as a result.

We are in somewhat of that position here right now. There will be tax cuts and additional spending, to be announced in the pre-Budget report next Monday, but the scale and detail of the package is apparently not yet fixed.

This can be played up into a clash between Chancellor and Prime Minister and there doubtless is some tension. But then there should be some tension between the two offices. The custodian of the nation’s finances has a different constitutional role from that of the leader of the government.

There are at least three different reasons for concern about the scale of the boost that the Government is preparing. The first is international. Trust is vital and there is a danger of a systemic loss of confidence in British financial management. Already sterling has fallen by as much as it did in 1992 when it was ejected from the ERM.

We are going into this downturn with an exceptionally high budget deficit of around 4 per cent of GDP and that could rise to 6 per cent or more in the next financial year. It is plausible that the deficit could be even greater proportionately than the deficit run up by the Tories in the early 1990s.

The money has to be borrowed from the international financial community – there are not enough savings in Britain to do it. At some price a sovereign state (with the possible exception of Iceland) can always borrow, but the rates will reflect the risk, and the danger is long-term sterling rates rise sharply.

Second, there is the practical need to keep something in reserve. If you fire all your shots now, you are out of ammunition if they don’t hit the target. Imagine a situation in the autumn of next year. We will be in the pits of the downturn. Interest rates will be down to 2 per cent or below.

There will have been a temporary tax hand-back but the end of that will be in sight. House prices will still be falling and the economy will still be shrinking. And there will be nothing else that the Government can do.

We may not get there and let’s all hope we don’t but we cannot be certain that this recession will be short, or that there won’t be a second leg to it after the initial downturn. That is what happened to Japan in the early 1990s. It cut rates to near zero and had a huge public spending programme. Initially it did avoid a recession but at the cost of a deep one in the late 1990s and another in the early 2000s. Now it has debts of 180 per cent of GDP (against our 40-50 per cent) and is back in recession again.

Third, we don’t want to make the mistake of America in the early 2000s of failing to make the essential adjustments that a recession forces on us. We have to save more. As individuals we have to do it, and people actually are making quite a bit of progress to that end.

We are no longer, for example, taking out the equity of our homes and using it to support consumption. That change has been forced on us by the mortgage famine but makes sense anyway. It sounds harsh to say it and I don’t mean it to be so, but recessions, slowdowns, squeezes, however you describe them, do serve a purpose.

They force efficiency. They force our whole society to figure out simpler and more effective ways of doing things. Increasing efficiency is the only way our whole society – not just a few talented or cunning individuals – gets richer.

Why is Germany the world’s largest goods exporter? Because its companies
have lived through the fire, first of a high deutschemark and then joining the
euro at too high a rate. Again and again the pressure on them has forced them
to lift their game.

In an ideal world such pressure would be gradual and continuous. In the real world it comes from periods of harsh economic competition such as occur during a recession. But the reward from the harsh period we are now entering is that we will emerge as a more efficient society, and I would hope a more equitable one too.

— By arrangement with The Independent

How safe are retirement funds?
by Subhas Roy

GLOBALLY, superannuated people who had got used to a comfortable life have woken up to a disastrous dawn. Their nest egg has been applied in a pursuit of “higher” returns: into stock market equities, money market funds, mutual funds, corporate bonds, derivatives and such instruments as they were lulled into a false sense of security that believed that all such markets would only go up.

Stock markets have been known to fall off the edge. If bells are now tolling for the stock and financial markets, they are also tolling for the retirement funds: provident, pension and gratuity funds. These are the funds that even the Life Insurance Corporation website pro-mised would “gaze into your future and foresee financial stability during old age”.

Around $20 trillion of these funds exist globally. They are bigger than mutual funds, insurance company funds and the cumulative official foreign exchange reserves of countries, according to Morgan Stanley. In the USA, for many pensioners, 410(k) pension funds is the only form of saving and about 50 per cent of public pension goes into the stock market.

These funds had a lot of firepower being a key component of financial infrastructure of an economy and mainly as a source of long-term capital. However, when they lose, they lose serious money, not only for themselves but also for others.

Even conservative estimates say that $2 trillion of such assets have been wiped out globally in the past 15 months upon the global stock meltdown. This excludes loss during week of October 6 to 10, 2008, when $6 trillion worth of stocks were lost.

Retirement funds in India were estimated at Rs 7.4 lakh crore recently; 15 per cent of the GDP. The Employers’ Provident Fund Organisation alone covers 80 million persons comprising the working population and senior citizens who have retired. The LIC has a total corpus in excess of Rs 3.5 lakh crore, making it a giant in the field.

The Sensex declined by 35.6 per cent between December 2007 and October 1, 2008. How much of the retirement funds have been thus lost or will be lost in the blood bath in stock markets is not known. Not unexpectedly, it is unknowable and will remain so.

This is not to suggest that these funds have lost proportionate to the fall in the Sensex. This is because the EPFO (end October 2004 funds at Rs 2.4 lakh crore that must have grown significantly), has the largest corpus of all and has the bulk of it invested in a special deposit account in banks, earning a fixed interest of 8.5 per cent. Their and other private-sector pension funds’ investment in equities is reasonably limited.

However, they sit on risks, which are not necessarily on equities but on mutual funds, corporate bonds and derivatives as the fairer part of their corpus and there is no clarity on how much of such investments have been infected.

In 2003 the government allowed private pension funds into the field, with a sanction to invest up to 50 per cent in equities, in trying to lighten the fiscal burden, getting the monkey off its back, so to speak, in relation to its obligation to keep the retirement system going and perhaps, at the same time, completing the script prepared by the Washington Consensus.

In 2005, the government allowed private pension funds to invest up to 5 per cent in blue-chip companies and 10 per cent in equity-linked mutual funds, with its eyes widely shut to the fact that the Rs 60,000 crore of the UTI corpus had been wiped out in the equity debacle in 2003-04.

Under the Pension Fund Bill, 2005, christened NPS, the system became defined-contribution, instead of defined-benefit based. The risk of the investment was put on the shoulder of the individual; it was the employee who was asked to carry the risk, instead of the employer.

The 2008 “big-ticket” pension fund reform proposal was circulated as late as on August 14, at a time when the global stock market crisis was already raging full-throated. Sanction has been given to invest in bonds of multilateral international funding institutions such as the World Bank.

The latter, incidentally, has the promise of investment into infrastructure projects, presumably, including nuclear power plants. Also, rupee bonds of such institutions will presumably qualify as external liability of the country. Upon operationalisation of the scheme, around Rs 1 lakh crore is expected to arrive with gay abandon at the stock markets.

The stipulation is the returns have to match the special deposit accounts’ 8.5 per cent. The assets managers, given the responsibility for managing it, are not so sure that as of now they are up to producing it.

Chatterati
The healing touch
by Devi Cherian

RAHUL Gandhi’s healing touch to Sikhs for Operation Bluestar in Amritsar is going well with young voters. The second thing which is going well in recent times with this generation is how Rahul ridiculed Raj Thackeray for regional chauvinism.

This is the new Rahul image makeover — not for this election but targeting the general election. Keeping in mind that Mrs Gandhi is asthmatic, Rahul has to take over the campaign.

Recently, Rahul, on his way to Uttar Pradesh, saved the life of three-year-old Mahesh, who was suffering from malnutrition. Rahul got him to Delhi and treated him under his own supervision at AIIMS.

Well his mother, Sonia Gandhi, has just helped a 14-year-old Pakistani boy who suffered from cirrhosis liver and needed Rs 22 lakh for a transplant surgery. When Sonia provided the funds and the surgery was successful, the little boy and his family came to thank Sonia, Sonia presented him a cricket kit and movie CDs because he wants to become a cricketer when he grows up. In short, the family is always ready to help those in need.

Lucky omen

The election time is a party time for everyone. Bolly-wood, magicians and natak madalis, all make on extra buck. But one constituency in Delhi is the centre of attraction now-adays. There is a new BJP candidate here called Rajesh Yadav. He has the support of 40,000 eunuchs and they are campaigning for him day and night.

Rajesh Yadav says they are his lucky omen. They accompany him on padayatras, they perform road shows for him and they organised meetings. They also visit voters along with him. About 20,000 kinnars are working with this BJP candidate day and night as they say that it was the BJP’s former chief minister Sahib Singh Verma, who got them in the BJP fold.

Lalit group

A new brand of hotels. The hospitality king, the late Lalit Suri’s wife, Jyoti Suri, has renamed their hotel group as “The Lalit” group. In a tastefully done entertainment evening, Jyotsana hosted celebrities, politicians and businessmen.

Old friends of the family walked the ramp dressed in famous designers Rohit Bal and Rina Dhaka clothes. Right from Rajan and Ritu Nanda while daughter-in-law Shweta Nanda with mother Jaya Bachchan clapped and whistled.

Lalit’s three daughters and sons-in-laws with kids made a perfect family picture.
But the people who stole the show were actor- turned-politician Vinod Khanna
with wife Kavita.

Dr Farooq Abdullah left a hectic campaign to be there. He walked and enthralled the audience with his style. The others present were Anil Ambani, Amar singh, Arun Jaitley and Kamal Nath, besides media guys and, of course, Page 3 types.