The Tribune, Chandigarh, India

Cheaper home loans
A small step, but was badly needed

THE industry’s expectations from the government and the RBI are so high that whatever steps are announced to push up demand appear inadequate, especially when compared with what the US, Europe and China have lined up. No sooner did the government banks announce a cap on interest rates on home loans up to Rs 20 lakh at 9.25 per cent than the supposed beneficiaries dubbed it “disappointing”. Most realtors operate in big cities where houses are expensive and a loan of Rs 20 lakh is too small to make a difference. The cheaper-loans bonanza, therefore, is directed at house buyers in small towns and cities.

The government banks are also unhappy with the rate cuts. Their cost of borrowing is higher than the deposit rates and there is little hope of the government providing any support to cover up their losses. Some welcome aid has poured in from the World Bank at this critical hour. Despite the relief, the poor and lower middle class house buyers may still feel the pinch of costly credit and wait for interest rates to fall further. Therefore, the chances of a revival of demand for houses even in smaller towns are limited. Of late, some of the builders have started planning housing projects in the small-town India to take advantage of the growing demand and proposed government benefits. But their number is insignificant.

A vast majority of the poor in India needs affordable houses. Only government agencies can meet their demand. Profit-driven private builders can play a limited role only. The government will have to work out more incentives for low-cost, green housing. Besides, giving a boost to housing and infrastructure is critical to arrest the deterioration in the economy. These sectors not only provide livelihood to poor labour but also tend to rescue the sinking cement and steel manufacturers. All eyes are on the RBI for another round of rate cuts as the government’s options are limited by the financial crunch.

Education is a right
Not a single child be denied it

IT has taken over 61 years to wake up, but the dream of making free education the right of every child is close to becoming a reality. The Right of Children to Free and Compulsory Education Bill, 2008, introduced in the Rajya Sabha on Monday seeks to give this right to every child in the 6-14 years age- group. This is a first step, which will have to be followed by many more if it is to be ensured that no child is left out without elementary education. There are two aspects of the enabling legislation. One is providing education free and two is making it compulsory. It is a travesty of the promise made in the Directive Principles of State Policy in the Constitution that any child should be deprived of education merely because his or her parents cannot afford it. The government will have to ensure that every child in the targeted age-group has the right school in the immediate neighbourhood. That is going to require considerable expansion, which is well worth the effort. In fact, it should have been the top priority all along.

Making education compulsory may prove to be more difficult. Despite the law banning child labour, a large number of children are still engaged in menial jobs. It will be a major national task to bring them all to school, considering that many of them add to the meagre income of their families. A carrot and stick policy is inevitable. There is need to ensure quality along with numbers.

While the law can be of help, its implementation will need to be flawless. As things stand today, there are many schools which do not have teachers. Where there are teachers, they don’t come to school and even farm out their jobs to proxy teachers. Where both are present, even basic facilities like the blackboards are absent. All these hard realities will have to be addressed fast once the Bill becomes the law. One heartening sign is that it also seeks to ban capitation fee and earmark seats in private schools for children from the disadvantaged sections of society. In fact, it even seeks to evolve norms and standards for primary education fixing up qualifications for teachers, pupil-teacher ratio and a ban on private tuitions by teachers. The key to the government’s proposal lies in its implementation by the states which have not been giving education the priority it merits.

Thought for the Day

I am a free man, an American, a United States Senator, and a Democrat, in that order.

— Lyndon Baines Johnson

ARTICLE

Think of the poor
They can’t fend for themselves in bad times
by Jayshree Sengupta

EVERY country today is reeling under the global meltdown, and India is no exception. We may see the impact to be less sinister or dramatic than in the US because not only are we far away from the “epicentre” of trouble, we are also not fully globalised. Indeed, it is a blessing in disguise that we are not so well integrated with the world economy, and exports constitute only a comparatively small proportion of India’s GDP (around 15 per cent). But already problems have surfaced and some industries have been more affected than others.

Export-oriented small and medium industries and big labour-intensive industries (textiles, garments, diamonds, carpets) are already reeling under the cancellation of orders. They have been eagerly waiting for some relief. At last the relief package has come in India after many such packages had been announced by other countries across the world.

The much-awaited economic rescue package came on December 7 to offer relief to the various sectors of the economy affected by the slowdown. But whether the package is big enough and whether all the affected sectors are going to benefit from it is yet to be seen. For a huge country like India, where there around 800 million poor (including the very poor), the need for job creation is enormous. Even those who are employed, most are in the unorganised sector without any social benefits attached to their jobs. In the current slowdown, many would be losing their jobs or other means of livelihood and small fiscal incentives and monetary measures alone may not help.

Reduction of excise duties like ad valorem Cenvat rate by 4 per cent may help in boosting the demand of the middle classes but it will not help the poor because they are not buying “white goods”, cars, furniture, etc, much in any case. The poorest sections of the population need a social safety net to fall back upon and this important need has not been addressed in the package.

The government has once again aimed at increasing liquidity in the system by tinkering with the interest rates. The reduction in interest rates is going to be achieved through the reduction in the repo rate — the interest the RBI charges for lending to banks — by 100 basis points or 1 percentage point (from 7.5 per cent to 6.5 per cent) and the reverse repo, the rate at which it borrows cash from banks, by 100 basis points (from 6 per cent to 5 per cent). With these cuts in the repo rates, the RBI hopes, the flow of credit to productive sectors of the economy on viable terms will increase. But all depends on the banks’ mood and their confidence about the borrowers’ ability to pay back. It is hoped that all commercial banks are going to reduce their PLR (prime lending rates) and deposit rates. But will the banks be more willing to lend to customers after the package? So far, banks have been going slow on disbursing loans to even very creditworthy customers.

The government’s bailout package will involve an additional Plan expenditure of up to Rs 20,000 crore in the current year, amounting to 0.8 per cent of India’s GDP. It is in addition to the huge sum of Rs 236,000 crore, requested for by former Finance Minister P. Chidambaram in supplementary grants from Parliament recently. In effect, the two together will mean a widening of the fiscal deficit to more than 10 per cent of the GDP (when the states’ deficits are also counted). It could lead to inflationary pressure being generated in the absence of a substantial increase in output.

Inflation as measured by the Wholesale Price Index (WPI) has indeed come down, but the Consumer Price Index (CPI) that takes into account the price of food articles of workers is still in double digit, causing huge hardships for the poor. In fact, reducing food prices should be at the core of any relief package.

A special credit window of Rs 7000 crore ($1.5 billion) for small and medium enterprises has been announced, to be handled by the Small Industries Development, Bank of India. To boost the textile sector, an additional allocation of Rs 1400 crore has been made. It may not be adequate for the vast textile sector accounting for 17 per cent of India’s exports. On the whole, the amount may be too little also for the small enterprises which are looking for loans from the formal financial sector on easier terms.

For infrastructure, the government has authorised the India Infrastructure Finance Company Limited (IIFCL) to raise Rs 10,000 crore through tax-free bonds by March 31, 2009. These funds would be used by IIFCL to refinance bank lending of longer maturity to eligible infrastructure projects, particularly in highways and port sectors.

More direct infrastructural spending (instead of the much slower public-private partnership route) would have been beneficial for building the much-needed rural infrastructure which would have given wage employment to the rural unemployed. As is well known, it is lack of proper rural infrastructure like roads, canals and bridges that is standing in the way of accessing a higher amount of agricultural output.

There has been no mention about enhancing the scope of the NREG — with more days of work than 100 days — which could mean additional employment generation for people looking for jobs in the rural areas. Higher allocations could have been made for health, education, low cost housing and the PDS to offer relief to the vulnerable sections. Basically a “trickle down” approach has been adopted in the relief package and the amount is considerably small as compared to China’s mega package of $587 billion aimed mainly at restructuring and reconstructing the Chinese economy and preparing the people affected by the global recession to take up new skills that would allow them to move on to the industries that are expanding.

Maybe, more segments of the economic stimulus package are in the offing because clearly the present one is not enough either to stimulate the economy or in generating confidence in the financial sector. The economic stimulus can only work when people regain their confidence in the economic policies of the government and this can happen only when the government is seen to be thinking of the poorer sections of society as its main plank of action.

The fiscal package should not mean that a few million of the billion people may be incentivised to get an additional car or a washing machine. This cannot be enough to keep the factories going as even the US is realising. More drastic measures are needed to give purchasing power in the hands of the “aam admi” or the common person. Otherwise the gloomy growth forecast of less than 6 per cent in 2009 may come true and more people will be receding into poverty, a dangerous development for all.

MIDDLE

E-governance
by S. Raghunath

Inaugurating an international exhibition of modern office equipment on Pragati Maidan in New Delhi, Prime Minister Dr Manmohan Singh exhorted central government emp-loyees to visit the shop in large numbers and see for themselves how electronics, computers and Information Technology (IT) had revolutionised office administration.

I have been talking to a Section Officer (SO) who works in South Block and who has just been to the exhibition and I asked him what he thought about it.

“Oh, some of the exhibits were straight out of Science Fiction,” he said, “and they were simply unbelievable. Computers and IT have taken over in a big way and we’ve to instal state-of-the-art systems in central government offices on a war footing if India is to catch up with advanced countries by 2020 A.D. and become a developed country in the fullest sense.”

“Did any particular exhibit catch your fancy?” I asked.

“Yes,” said the SO, “there was a palmtop computer exhibited by a Swedish firm and using it, I could do up my TA bills claiming reimbursement for first class rail travel when, in fact, I’ve travelled by bicycle and the calculations won’t take longer than 10 seconds instead of five hours if I’ve to do them manually.”

“Amazingly,” I said.

“Then there was an adding machine displayed by an Italian company and it would be invaluable in precisely computing the time I waste idly chatting with my colleagues, the number of times I take coffee and tea breaks and go out of the office unauthorisedly and wandering around the corridors without any purpose and the final print- out would appear instantly on a liquid crystal display screen merely on the press of a button.”

“Fantastic,” I said, “I didn’t even know that gadgets existed.”

“I’ve told you nothin’ yet,” said the SO, “there was a fully computerised filing system exhibited by a Japanese firm and if I could instal it in my office, it would revolutionise my working and I’d be a more effective and efficient public servant because I could file the samosas my wife packs for lunch under “S” and the vegetable stuffing under sub-heading “v” and it can be instantly retrieved whenever I feel peckish after I’ve had my elevenses.

“Oh, I forgot to tell you about a micro-miniature calculator displayed by a British firm and using it, I can precisely calculate the exact amount of the 11375th instalment of variable, ex gratia Dearness Allowance due to me under the Sixth Pay Commission recommendations, less commutation of pension, in less than a minute.”

“Now that you’ve been to the exhibition,” I said, “I suppose you can’t wait to instal advanced computer, automation and IT systems in your office.”

“Oh no,” said the SO, “wandering around the exhibition has made me so tired that I’ve applied for a month’s casual leave.”

OPED

Back to Portugal
Once there was revolution in the air
by Robert Fisk

WESTERN countries can be divided into those who fear an Islamic take-over (France, Britain, Germany, the United States) and those who like boasting that they threw the Muslims out of their lands (Serbia, Spain and Portugal).

Lisbon still flaunts a statue of one of its greatest Muslim-bashers – Good winning against Evil, of course – and Alfonso I declared himself king after biffing the Moors in 1139. The last army of the Muslims who had created the paradise of Spanish Andalusia was finally chucked out of the Alentejo 110 years later. The Moorish citadel – now the Castle of St George – survived the 1755 earthquake and it’s good to remember that Lisbon itself was once a Phoenician city. Long live Lebanon.

Oh, how many years have passed since the revolution! The Carnation Revolution, I mean – the real Portuguese one – whose aftermath I covered more than three decades ago in a Lisbon sprouting red flags and a thousand newspapers, its walls thick with every leftist and Marxist exhortation to overthrow fascism. The very last right-wing dictator in Europe, Mr Caetano, had gone, and bliss was it in that dawn to be alive.

Well, maybe. There was the infamous Red Major, Otelo Carvalho, who was going to turn Portugal communist – or so Ambassador Carlucci and his lads at the US embassy would have us believe. His first name lent him credibility – the “green-eyed monster” was capitalism – but there was also the laid-back socialist academic Mario Soares, who would become prime minister, and then there was the mysterious Ramalho Eanes.

The Times, for whom I then worked, asked me to interview all the presidential candidates but I refused after meeting Eanes. He would become president, the young and arrogant Fisk told his long-suffering foreign editor, because he had been a senior intelligence officer in the Portuguese army in Angola. The Americans liked him. Ergo, he would become president. The reputation of a young and pig-headed reporter was saved when Eanes duly took over Portugal.

Covering this odd country – a soft touch, if ever there was one, before I headed off to infamy in the Middle East – was helped by the fact that The Times, and its editor William Rees-Mogg, had earlier run a massive story on page one (happily coinciding with a state visit to Britain by the awful Caetano), denouncing a village massacre by Portuguese colonial troops in Angola.

The story was based on the word of a Catholic priest – no one at the time missed the earnest Catholicism of Rees-Mogg – but it had one flaw. No one – neither the staff of The Times, nor Rees-Mogg nor, indeed, the Portuguese army – could locate the name of the village on a map.

It’s difficult to remember just how
powerfully the Cold War governed our lives in those days. If Portugal went communist, then so would Spain and then Italy, and France and... Who knew when the Soviet virus would blow across the English Channel?

Indeed, when the Portuguese air force staged a military bombing display to remind us of the country’s Nato membership, we gentlemen (and one lady) of the press moved a quarter of a mile from the US diplomatic guests lest a commie pilot blasted the entire CIA network to bits in one fell swoop.

But I never really believed in the Red Menace. The Portuguese, though less educated than they are today, had a folk memory of the anarchy of the Peninsula War and infinitely more real experience of the Spanish Civil War, when the left sometimes turned out to be as barbarous as the Francoists.

One of Pedro’s employees was almost in tears this week when she told me how the Spanish side of her family was liquidated in the war. Her grandfather is in one of three mass graves; no one knows which one to dig up.

The other reason why I refused to believe the world’s fears – and the fears of William Rees-Mogg – was embodied in the experience of one Ted Smyth, the first secretary at the Irish embassy in Lisbon. With a young translator, Ted and I would tour revolutionary Portugal, talking our way through fascist road blocks and commie checkpoints with the Irish tricolour – symbol of a more divisive revolution – flapping away on the bonnet of our limousine.

To Beja in the Alentejo – last outpost of the 13th-century Moors and still providing the central support for Portugal’s modern-day but hideously unreformed Communist Party – we would journey. The Reds were taking over the latifundia from the feudal landowners, but what upset my favourite diplomat was just one single incident.

Ted Smyth (happily, still with us) came from a County Meath Protestant farming family – there weren’t many Prods in the Irish foreign service in those days – and discovered a young woman on a tractor driving over a field of stones with a plough attached to her vehicle. “You can’t plough like that!” he admonished the revolutionary lady.

“You’ve got to take the stones out of the field first!” She refused to listen and he watched the plough fall to pieces behind the tractor. This convinced Ted Smyth there would be no communist revolution in Portugal.

I was lounging on a beach at Porto Covo (still, mercifully, as antiquated as it ever was) when I received a letter from The Times’s foreign editor, Louis Heren, offering me the Middle East. I felt like King Faisal being offered Iraq by Winston Churchill. “Good stories, lots of travel and sunshine,” he promised me.

So I took the next plane out of Lisbon and came back 33 years later to find a modern, liberal, happy country. I told Pedro that I would meet him again at his favourite restaurant, The Policeman. In 33 years’ time.

— By arrangement with The Independent

A struggling PM in Japan
by Blaine Harden

JAPAN has become a land of incredible shrinking prime ministers. Prime Minister Taro Aso and his two predecessors have shrunk by following the same formula of fecklessness.

Without a national election or a popular mandate, they were anointed by members of the ruling Liberal Democratic Party (LDP), which has more or less ruled Japan as a one-party state since World War II and is now hanging on to power by its fingernails.

Once in power, they could not get much done, owing to gridlock in parliament, where the opposition Democratic Party of Japan controls the upper house.

While accomplishing little, they managed to frighten or offend many of Japan’s elderly voters, a large and politically powerful group. Their approval ratings plummeted below 30 percent.

Now, the shrinking process itself seems to be shrinking. It took about 11 months each for Shinzo Abe and Yasuo Fukuda to squander political capital, sink in the polls, lose heart and quit. Aso, in power less than three months, is floundering faster and fading sooner, although he appears determined not to quit.

On Friday, he rolled out his second stimulus package, an attempt to revive the sputtering economy and his plunging popularity.

The package commits $111 billion in spending to improve the weakening job market and prop up the economy. But Friday’s announcement is not all that new.

It includes $66 billion in spending that Aso announced in October as part of a stimulus plan that he said then was his government’s most urgent priority.

The prime minister has, however, refused to submit a stimulus package to parliament this year. He is expected to do so in January.

The delay, as the economy contracts, corporate earnings collapse and jobs disappear, has puzzled his own party, angered the public and provided ammunition to the opposition, which has questioned Aso’s judgment and his fitness to run the government.

Aso’s chief cabinet secretary, Takeo Kawamura, said this past week his boss will not quit because it would be bad for Japan. “One should not change the horse when passing through a strong current,” he told reporters.

But after less than three months in power, Aso has shown the public that he can be a high-strung steed, quick to anger and prone to sudden, disorienting changes of direction.

He has criticized the elderly for not staying healthy, accused doctors of lacking common sense and scolded parents for failing to discipline young children. He has also been vague, contradictory and coy about when he might exercise his power to dissolve the lower house of parliament and call a national election.

While the worsening economy is a profound concern, what voters here really seem to want is an election, according to recent polls and even some prominent members of the ruling party.

— By arrangement with LA Times-Washington Post

Inside Pakistan
Global isolation
by Syed Nooruzzaman

THE isolation of Pakistan in the comity of nations following the November 26 terrorist strike on Mumbai has caused uneasiness among the people who refuse to be guided by passion or blind nationalism. But such people, perhaps, feel helpless because of one mistake after another committed by the PPP-led government in Islamabad.

The government announced a ban on the Jamaat-ud-Dawa after the UN declared it a terrorist organization. The decision was appreciated by people like Senator Javid Ashraf Qazi, a former chief of the ISI and the Military Intelligence. According to Business Recorder, Senator Qazi commented that “Pakistan would have been isolated if it had not acted against the Jamaat-ud-Dawa after the UN Security Council had blacklisted it … The government did the right thing.”

The controversial organizations like the Jamaat have been functioning “like a state within a state” because of their clout “in certain sections of society and the ‘institutional support’ they have enjoyed since the days of the anti-Soviet Afghan jihad.” They have also been “promoting public welfare projects”, as Business Recorder says, but “their role as spoilers has been more pronounced”.

Yet the Pakistan government is not serious about taking strong action against these outfits. Quoting Punjab’s Inspector-General of Police Shaukat Javed, The News has reported that “the jihadi leaders placed under preventive detention will be let off soon if no evidence of their involvement in the Mumbai terrorist attack is received from India.”

This is contrary to what the world community wants the Pakistan government to do in the interest of peace and progress. If this is how Islamabad handles those responsible for bringing Pakistan to the edge of a precipice, it cannot prevent its total isolation at the global level.

Media’s contribution

The media has not been guiding the Pakistan government properly. The TV channels have contributed considerably to the situation getting worse. As Dr Tariq Rahman says in his article in Dawn (December 14), “After having denied that there can be any evidence regarding the involvement of elements in Pakistan, they attack the civilian government’s attempt to arrest suspects from an extremist group.

“Anchor persons, some of them respected for their stance on issues like the removal of the chief justice and the rule of law, dismiss the government’s actions as a consequence of external pressure. This is exactly what the media had been doing with reference to the Taliban’s attacks on Pakistan’s cities until the Taliban started owning them.”

However, the Taliban story is different. In Pakistan’s tribal areas, media persons function under tricky situations. They have been targeted by both militants and men of the intelligence agencies. As an editorial in The News (Dec 16) says, “There is now a significant body of evidence which tells us that both the military and the extremists that they are fighting are attempting to prevent the news getting to a wider populace. Journalists and reporters are being intimidated.”

Keeping aside the unfortunate reaction to what happened in Mumbai, telling the truth in Pakistan is not as easy as a layman thinks. The media freedom remains restricted considerably. The latest proof is that terrorist Qasab’s village, Faridkot, in Punjab province has been virtually declared out of bounds for journalists.

Burning trucks

As if the Mumbai terrorist attack was not enough to cause global isolation of Pakistan, extremists in the NWFP burnt down NATO trucks loaded with supplies for Afghanistan. This has sent out a fresh message that the government in Islamabad is not able to govern in most parts of the country. It will not be surprising if NATO stops sending its supplies to Afghanistan through Pakistan.

If this comes about, Pakistan will be a major loser. In an editorial on December 15, Daily Times said, “The suspension of NATO supplies through Pakistan will probably satisfy those who have recommended it as Pakistan’s response to the CIA drone attacks coming from Afghanistan. But this suspension will symbolically alter the status, in part, if not in full, of a NATO ally given to Pakistan when it agreed to ‘comply’ with the UN Security Council Resolution 1373 in 2001.

“The ‘expenses’ of the supply line going through Pakistan are included in the payments made to Pakistan for its efforts to fight terrorism. An alternative supply route may cause several other anti-Pakistan developments to take place.”