The Tribune, Chandigarh, India

Falling exports
Thrust on new markets welcome

Exporters have not cheered the new incentives in the foreign trade policy announced on Thursday. The stock markets too have rather ignored the policy as expectations were belied. It is a difficult situation to handle. India’s exports have dipped for the past ten consecutive months. Job losses have been widespread, particularly in the textile sector. Reversing the downtrend is a big challenge for the country. On the one hand, the government finances are overstretched in handing out packages to various segments of the economy to perk up growth and bail out those in trouble. On the other, the US and Europe, which together account for 35 per cent of India’s exports, are only slowly emerging from the grips of recession. What is worse, they have turned more protectionist than before.

Within the constraints, Commerce Minister Anand Sharma has commendably offered more tax incentives and subsidised credit to exporters. It is the foreign trade policy’s thrust on exploring new markets for Indian products that is commendable. One lesson that the latest recession has left for countries, big and small, is not to be dependent solely on exports or on select markets. Just as Asean countries have lately warmed up to India to sell their wares, India too needs to look for new markets where its goods are competitively priced. The Commerce Minister has identified some such markets: Africa, Latin America, Central Asian countries and the Asia-Oceania region.

Besides, this is the time to ponder how to cut manufacturing costs, remove systemic inefficiencies and build infrastructure so that Indian products become globally competitive. There is a lot to learn from China, which has quadrupled its exports after joining the World Trade Organisation in 2000. Of course, India cannot keep its currency under-valued like China, but the experiment of building special economic zones too has not taken off the way it was expected. The foreign trade policy has ignored the big picture.

Equality in education
Interest-free education loans pave the way

Access to higher education in India is marked by a high degree of inequality and the dice is heavily loaded in favour of the privileged and well-to-do sections of society. Now all this is likely to change. The Cabinet Committee on Economic Affairs has approved interest-free education loans to students from economically disadvantaged families who want to pursue technical or professional courses in recognised institutes. This should open doors for those who are denied the opportunity due to lack of money.

That the scheme employs income rather than caste as a determinant for interest subsidy implies that it will not only reach out to larger sections of society but will also be more widely acceptable. Unlike caste-based reservations, it doesn’t undermine merit. Besides, the upper ceiling of Rs 4.5 lakh, higher than the initial proposal of Rs 2.5 lakh, has been arrived at after much deliberation to widen the ambit and scope of the scheme. In the modern world education is an important means that increases social mobility. It guarantees individual success, is crucial to survival and allows people to break social barriers. Though the 1986 National Policy on Education states: “In higher education in general, and technical education in particular, steps will be taken to facilitate inter-regional mobility by providing equal access to every Indian of requisite merit, regardless of his origins” huge gaps have existed. Higher education has remained a preserve of the creamy layer. Affirmative action like the interest subsidy can provide a level-playing field provided there are no lapses in implementation.

The scheme has appropriate checks and balances in place to ensure that it is not misused. For one the interest subsidy shall be available only once and not to those who drop out on reasons other than medical grounds. However, the proposal to be applicable from the academic year 2009 to 2010 should not be caught in red tape.

Thought for the Day

My nationalism is as broad as my swadeshi. I want India’s rise so that the whole world may benefit. — Mahatma Gandhi

ARTICLE

Controlling drought
Centre needs to help poor farmers
by Jayshree Sengupta

NOW it is drought which has assumed centrestage and not recession after half of India and 246 districts in ten states have been declared as drought stricken. Even though some places have been getting a lot of rain this month, causing floods, in general rains have been 29 per cent below normal.

While everybody is worried about the fate of farmers and food prices facing the aam admi, many are instead worried about the GDP growth and are asserting that the impact of drought on GDP will be negligible.

We are hearing from official sources that drought won’t have any impact on the country’s GDP because agriculture only contributes 17-18 per cent or less than 20 per cent to it. We are also aware that though the contribution of agriculture to the GDP is shrinking, more than half the population still depends on it for their livelihood. It means that a huge population is feeding on a shrinking piece of cake.

What government sources are saying is that agriculture is not so important any more because sectors like industry and services are contributing a bigger share to the GDP. Indeed the services sector has been contributing 56 per cent to the GDP.

There may be reasons to believe that industrial growth is going to pick up in the coming months because it was at an impressive 7.8 per cent in July. But there could be some disappointment on that front because industrial growth picked up in July due to the steep fall in raw material prices over a longish period and lower interest rates as well as a less than sharp rise in wages.

However, the recent rise in the prices of all major raw materials like steel, copper, zinc, coal, aluminium, etc. could drive up costs and reduce profits in the future. Another reason for industrial growth to be spiked is the likely higher interest rate regime of the future when inflation slowly inches up. According to experts, interest rates may rise by 0.5 per cent in the fourth quarter of the current financial year due to a higher rate of inflation.

The service sector is still trying to recover from the slack demand problem especially from markets abroad but with the news of recession receding in two major EU countries (France and Germany) and Japan also witnessing positive growth, there is hope that the service industries especially IT, tourism and hospitality would receive a fresh impetus. But the US is not out of the woods yet and the Obama administration has still not softened its protectionist stance towards outsourcing.

In any case, out of humanitarian concerns about the millions dependent on agriculture and who are without work and income, urgent steps are needed. We cannot be obsessed by GDP growth alone and such obsession has been declared as archaic in today’s world by many famous names. Poorer farmers, women labourers and migrant daily wage farm hands are all going to face high food prices (food inflation currently is at 9.3 per cent as measured by the Consumer Price Index) because it is only the rich farmers who have a marketable surplus and who will benefit from the recently announced higher procurement prices. No amount of food stock in the government granaries would be of help for those who have no purchasing power.

The minimum support prices have been raised for rice and dals and they too will definitely lead to a further hike in food prices. The government will have to monitor the distribution of food grains and dals to remote villages though the task will be a difficult one — considering the huge amount of corruption that is inbuilt in the Public Distribution System.

Another interesting point is that though agriculture may not be contributing a big share to the GDP because of various problems, (low productivity per hectare, poor inputs etc), around 40 per cent of rural incomes still comes from agriculture.

It means that though services and small enterprises that are increasingly a part of rural India are important, they are not the only drivers of the rural economy.

Drought will impact the earnings and demand of people dependent on agriculture and they will have lower demand for the goods and services within the village and they will also demand fewer two wheelers, fast moving consumer goods and farm implements, tractors and TV sets, from outside. This slack demand will naturally impact on industrial growth and ultimately, the GDP growth.

Finally, who will help the farmers whose crops have failed? Already many farmers have committed suicide in Andhra Pradesh. Lengthening the loan repayment period is one solution but who will give fresh loans to impoverished farmers? It is likely that he or she will sink into deep debt.

Many western economists believe that only 4 to 5 per cent of the population should be employed in agriculture because the developed countries have only a small proportion engaged in agriculture. But first we shall have to raise agricultural productivity to be able to let only a few big farmers managing the entire food production.

Many advocates of GM (genetically modified) crops say that we could beat drought and low productivity by introducing drought resistant crops. GM crops would also free many people from farming activities. Actually this year may see the introduction of many GM crops and could take the form of the second Green revolution in India. This is likely to take place through the Agricultural Knowledge Initiative with the US (signed alongside the Nuclear Deal) in which genetic engineering and biotechnology will play a very important part.

It is only in the US that this sort of farming is popular and not in the EU. Needless to say, the giant American multinationals are waiting to do big business in India in seeds and many multinational companies like Monsanto and Cargill are already here.

Fewer people in agriculture will typically have to be balanced by more people in manufacturing and services. In India, as is well known, there has been jobless growth and there has hardly been any expansion in job opportunities in the organised industrial sector. In services, the job opportunities are few for unskilled labour because of the mandatory requirement of computer literacy and knowledge of English. Only a few thousands can be absorbed in the IT sector at a time but in other types of services, people could find jobs if there was a proper infrastructure.

If only rural India was properly connected with urban India, many commuters could be employed from the villages. Unfortunately, this is not the case and poor connectivity between remote villages and urban areas will also cause many problems in drought control, and more importantly, distribution of food grains to the remote villages. Unless this is done, we may be witnessing several cases of starvation deaths and many more suicides.n

MIDDLE

Police duties
by Trilochan Singh Trewn

Lion Gate of Mumbai dockyard is located close to the museum and the Taj Hotel on sea front. One of the dry-docks is just a stone’s throw from Lion Gate which is main entry and exit point for several thousands of dock workers.

Those were the days of prohibition in Maharashtra and we were having an Independence Day eve party on board our ship in the dry-dock. Among those dignitaries who attended the party were film actresses Nutan and Suraiya. Suraiya had especially come from Lonavala for this purpose.

Non-vegetarian small eats for the party were arranged through Bademian who had a small shop near rear entrance of the Taj Heritage Hotel. Besides a number of filmdom artists, the famous producer of Ramayana television serial Ramanand Sagar was also invited for this get-together. He was there with his family and was still enjoying his nimboopani when the party ended at 11.30.

Every departing guest was seen off at gangway by the Commanding Officer personally. I was detailed to see off Nutan till Lion Gate where two types of policemen were manning the gates, the naval police in white uniform and the security policemen donning khaki uniforms. Both of these were part of dockyard management organisation.

All of us were seated in cars. When we were near Lion Gate a naval policeman in white uniform told us to stop. He looked inside cars and spotting naval officers and guests, saluted smartly. They spoke to me and another accompanying naval officer to make sure that each outgoing guest was well accounted for. The naval sentry then saluted smartly once again and waved us off.

We drove some metre further to be in Lion Gate itself when the naval dockyard police in khaki uniform made us to stop. These policemen did not salute us, nor they cared for our identity. They politely opened all car doors and the boot to ensure that no unauthorised article/liquor or government property was being taken away. Then by a waving of hands they allowed the cars to drive out of the dockyard.

Nutan, who was watching all this at the two check points, was seated next to me and curiously asked me the significance of having two varieties of policemen. I had anticipated this querry from anyone who happened to visit naval dockyard for the first time.

I explained that the naval police in white uniform was there to check the identity and authorisation of visitors entering and leaving dockyard, while the dockyard police in khaki was mainly concerned with material security only. They were not bothered who entered or left the dockyard provided he did not take any unauthorised item or government property with him.

Today, the concept of security has changed drastically. Now stress is on thorough identity check of persons entering and what they are carrying into the dockyard. What they take out comes next only!

OPED

The Afghan war
It may be a pyrrhic victory for the West
by Abhijit Bhattacharyya

SIX years down the 21st century Afghan war collective wisdom of the West (NATO) suddenly faces a surge in its urge for a visible and effective result, showing victory to the people who appear no longer united and in pursuing a bloody battle in a remote Asian terrain of death and destruction.

Indeed, the mounting casualties of 75 bodybags in July 2009 clearly have rattled 41 capitals the armed forces of which are on a do-or-die “Mission Afghanistan”.

Fatality aside, what appears to have toll the bell is that the troops in the high-risk and high-casualty zone are suffering from low morale, thereby affecting their mental stability. Thus, the number of suicides reported by the US army has risen to the highest level since record keeping began three decades ago.

Last year, 192 suicides were committed by active duty soldiers and soldiers on inactive reserve status, twice as many as in 2003, when the war began. This year the figure is likely to be even higher; as from January to mid-July 129 suicides were confirmed or suspected, which is more than the number of American soldiers who died in combat during the same period.

In reality the US is in the midst of an emergency action plan to understand and address the problem of suicide, thereby increasing the financial burden as the bolstered suicide-prevention programme has resulted in the hiring of mental health providers.

With the mounting NATO soldier casualty and the simultaneous flexing of Taliban muscles, it is becoming increasingly clear that the 21st century Afghan war of 41 versus 1 is unlikely to be a quick burst of 100-metre dash in the long run. The 1 Afghanistan is likely to be a long, protracted, marathon war of attrition against the 41, thereby affecting the economy and financial resources of all the belligerents.

In fact the new secretary general of NATO, Anders Fogh Rasmussen (the former Danish Prime Minister), realising the mounting internal pressure and conflicting interests within the NATO members, has categorically stated, (on being asked about the durability and duration of the ISAF in Kabul) that the “NATO forces will remain in Afghanistan for as long as it takes”. Obviously, the point is unlikely to be welcomed unanimously, not only in NATO but also by Afghanistan as well as by Pakistan.

Thus Afghanistan appears to be proving the 6th century BC Chinese philosopher general Sun Tzu’s theory to be prophetic—“No country has ever profited from protracted warfare. Those who do not thoroughly comprehend the dangers inherent in employing the army are incapable of truly knowing the potential advantages of military actions. Thus when employing in battle, a victory that is long in coming will blunt their weapons and dampen their spirit.”

With the NATO commander in Kabul, General McChrystal’s review of operations, the clamour for more me, machine and money is already in the air. The General’s thoughts leading to an increased thrust on the counter-insurgency offensive is sure to result in spending more for receiving more bodybags back home.

To avoid that, it would perhaps, therefore, be better to deploy less of one’s own men and put more locals in the front. However, to do so again one would require a fat purse to recruit, retain and train the “good” Afghans to fight the “bad” Afghans.

And the sheer size of the monetary contribution for the purpose is an estimated US $20 billion (Euro 13.98 billion; UK pound 11.89 billion) over five years to set up new security force. However, the very nature of the financial estimate raises questions about sustainability of the contemplated plan of action.

A further rough calculation suggests that Afghanistan, which now has got an army of 86,000 men and a police force of 80,000 personnel, will need to increase its soldiers to 1,34,000 and the entire police-military strength to 4,00,000 head.

As the Afghanistan government has neither the resources nor full control over its own territory, any increase in the Afghan National Army is fraught with grave inherent risk as the recruitment starts with the stark reality that the Taliban infested/controlled provinces of Farah, Helmand, Kandahar, Uruzgan, Zabul, Paktika, Ghazni, Khost, Paktiya, Logar, Wardak, Nuristan are unlikely to produce dependable and loyal professional soldiers.

In fact, history shows that soldiers recruited by foreign masters from politically disturbed areas are unlikely to prove good soldiers solely serving the interests of foreigners who are considered unacceptable by the brethren of the recruited soldiers.

Thus the English rulers in India made it an unwritten law to recruit soldiers from remote areas with high illiteracy unaffected by politically volatile provinces. In a way, what the NATO forces face today in Afghanistan, was faced by the British while recruiting soldiers in the 19th century Indian society.

However, while the British could avoid the disturbed areas to go to the high hills and the friendly rural belt to catch the potential fighters young, things in Afghanistan are much more dangerous and complicated.

As it is, the recruitment and retention of Afghan soldiers are proving not only difficult, but the battle field performance also reportedly has not been up to their Taliban brethren’ quality. This is understandable because whereas the Taliban have a “genuine” motivation to take on the “outsiders”, how can the Pashtun soldiers of the Afghan National Army fight their own blood relations on behalf of the foreigners who will not stay in the land-locked terrain of Asia?

Also, how can the Afghan government soldier do justice to his profession, when his friends and relatives in the village are at the mercy of the very Taliban against whom he is crossing the sword? Understandably, the situation is grim for all.

NATO needs more soldiers to “hammer the Taliban and hold the territory”. But the members thereof are not united. NATO requires big money but with divergent and unfocussed views of the members.

Fortyone nations are fighting 1 foe in Afghanistan. Yet the Afghan war is perceived by most as an Anglo-American mission in Kabul. General McChrystal wants more boots in the battle zone, but the mounting casualties are creating problems back home.

Thus both NATO and Afghanistan today can do little to come out of the military mess of the 21st century. More than three decades ago, the USA could wriggle out of the Saigon-Hanoi war zone owing to its being one-on-one all out war.

But the present situation is more complicated than even the decade long Soviet-Afghan confrontation as 41 nations are pitched against a poor, illiterate, superstitious, backward, starving and virtually destitute country with only one positive and high rate of growth, the population. It is indeed a long-term emergence of a piquant scenario.

The low growth rate (at times negative growth) populations of advanced nations are out there against soldiers of the soil who are capable of being out in droves, as even if two brothers die in the field, between four and five will replenish to fight another day. In comparison, the one son (and at times one child) loss of mothers from London, Liverpool, New York and New Jersey in the road side of Logar and Nuristan is bound to create more problems for NATO and the West.

Hence the need for more Afghan heads to fight the Taliban herds. The Afghan war is all set to result in a pyrrhic victory for the West and an equally bloody civil war at its worst. One need not feel bad, sad or glad about the potential outcome. Reality bites and it will bite all the belligerents.

Make direct payment of fertiliser subsidy
by Bikram Singh Virk

Owing to the massive hike in the crude oil prices and other ingredients of the fertilisers at the international level, the prices of the commodity skyrocketed last year and the fertiliser subsidy bill for the fiscal 2008-09 shot up to Rs. 75,849 crore.

Now on the softening of crude and falling international demand, the prices have come down substantially. The spending on fertilizer subsidies in this year’s budget is nearly 34 per cent less at Rs. 49,980 crore.

Furthermore, it has also been proposed to give subsidy direct to farmers instead of giving it to the fertiliser companies. This will ensure that the farmer does not end up paying for inefficiencies of the fertiliser companies and the bogus production shown only to claim the subsidy in some cases.

The mode of disbursal is under discussion and various ideas are under consideration as to how this subsidy could effectively be delivered direct to farmers.

One of the ideas mooted recently was to do the same through banks, which on the basis of the Kisan Credit Cards (KCCs) were to credit the amount of subsidy to individual accounts of farmers on the basis of their land-holdings. But this is full of flaws on many counts as a majority of the farmers do not have the KCCs.

Moreover these KCCs are mostly with land-owners and not tillers. Tenant farmers will not benefit at all if subsidy is disbursed through this route.

Handing over the subsidy on the basis of mutations will also be difficult as most states have not yet fully computerised their land revenue records and farmers will be required to do rounds of government offices to show the ownership of their land. This mode will also ensure the flow of subsidy into the hands of land-owners and not tillers.

The only viable method of routing the subsidy to the real beneficiary will be if it is given on the basis of procurement quantity by the central and state agencies for the central pool. The produce is sold to these agencies against J-forms, which are the basis for payments to farmers. These forms can become the basis for the distribution of the subsidy as well.

This will encourage farmers to contribute more to the central pool and reduce their expenditure on fertilisers, making the optimum use of fertiliser.

Furthermore, his earning will more than double with a single stroke.

Costwise too, the non-subsidised prices of fertiliser will not harm the farmer as the prevalent prices in the international market, which are Rs. 27,000 and Rs. 17,000 per tonne of DAP and urea respectively, are nearly three times the domestic retail prices for both, which stand at Rs.9,340 and Rs. 4,820 respectively. Given the consumption, which ranges from 150 kg to 200 Kg an acre for each crop, he stands to gain a lot even after buying fertilisers at the market rates.

Apart from a financial boost, it will motivate the farmer to use less chemical and more bio-fertilisers, which will help in improving the soil health of Punjab and Haryana.

The fertiliser manufacturers will also come up with various other nutrient based variants of fertilisers against the traditional content-based products like urea, DAP and MoP.

For non-wheat and paddy growers, whose number is very small and are producing fruits and vegetables, some other modality can be worked out whereby they can ask for a pucca bill at the time of sale of produce through market committees and later claim subsidy on its basis.

Opposition to the proposed mode, which can come from some of the official quarters as they will be denied an opportunity to siphon off some part of it neatly by inventing or circumventing some channels of distribution, should be fully scrapped in favour of the procurement quantity based mode as it is best for better returns to the farmer and national food security.

Inside Pakistan
by Syed Nooruzzaman
New chief of Pak Taliban

The 29-year-old battle-hardened Taliban commander, Hakeemullah Mehsud, the new chief of the Tehreek-e-Taliban Pakistan (TTP), is a very ambitious person. He had the “ambition and desire” to play the “leadership role” even when Baitullah Mehsud, now dead, was running the militant movement ruthlessly with his around 30,000 well-paid fighters.

But who is Hakeemullah? What is his background? How he might have prevailed over the Taliban “shura” to declare him as the TTP chief? How he could have silenced the other claimant to the TTP leadership, Waliur Rehman, also a Mehsud from South Waziristan?

An exhaustive write-up by Zahir Shah Sherazi in Dawn (August 27) gives some idea about the man who has replaced Baitullah Mehsud. Sherazi was a member of a group of TV journalists who were granted an interview by Hakeemullah last November when he controlled a part of the Orakzai tribal agency. The report has interesting details.

Sherazi says, “While Baitullah was introvert and media-shy”, Hakeemullah is “extrovert and media-savvy”. He is not a traditional maulana or moulvi. He has had no proper education in a madarsa. However, this “best shooter and driver in the entire tribal area” has “expansionist designs”, a fact the Pakistan government cannot afford to ignore.

Hakeemullah’s real name, according to Sherazi, is Jamshed. He first became prominent in the tribal belt as Zulfiqar Mehsud, a spokesman for the Baitullah-led militant group in 2007. Then he acquired the nickname Hakeemullah. He belongs to the Eshangai branch of the Mehsud tribe.

Emerging scenario

Daily Times says the Taliban in Pakistan is not as strong as it was during the days of Baitullah Mehsud. “Hakeemullah may control the tribal agencies, but he has fewer people under his arms than Baitullah had. The question to be resolved next is what happens to the 30,000 men on the payroll of Baitullah, who ruled on the basis not of charisma, of which he had little, but of the iron-clad guarantee of payments — both salaries and compensation for ‘martyrdom’. It is being said that Waliur Rehaman will be the vice-chief of Hakeemullah, and will retain control over South Waziristan.”

But, as Daily Times points out, “this arrangement seems untenable”. The money factor may keep Hakeemullah and Waliur Rehman suspicious of each other’s intentions.

“How can Pakistan exploit this situation? The initial opinion seemed to be divided between those who recommend a forward policy and those who ‘caution against too much interference in the fiercely independent tribal areas’. If the fear is that going into South Waziristan will trigger some kind of tribal reaction that Pakistan cannot deal with, why not think of moving in areas outside South Waziristan, placing a wedge between Waliur Rehman and Hakeemullah?”, the paper suggests.

Against militants

According to Dawn (Aug 27), “The TTP as a fighting force has certainly been degraded after military operations in Swat and Bajaur, the two major strongholds of the TTP outside the Waziristan agencies. And the myth of the Taliban as an omnipotent force that would usurp the state’s writ over huge swaths of northwest Pakistan has certainly been dented. But the TTP still has the capacity to launch suicide attacks and destabilise the country.”

The News says, “We must all hope the authorities are working to a plan of action and will go after the Taliban at a time when they are vulnerable. We must all speak with one voice against militancy…. Already, in Swat and other conflict zones, people have begun to speak out against the militants. These voices need to be projected more widely.”

Now is the time to take on the Taliban head on. First there is need to launch a major propaganda war to nail the Taliban lie that the Army drive against the militants has been aimed at protecting the US interests in Pakistan. The Taliban can be no match to a professional Army. What is required is the will to eliminate the scourge in a manner so that it is never able to re-emerge.