The Tribune, Chandigarh, India

Positive signals
India will gain with end of US recession

If the growth of the US economy by 3.5 per cent in the July-September 2009 quarter is anything to go by, the Americans can feel somewhat relieved that the recession is behind them. The positive signals are manifest—a turnaround in growth after four quarters of continuous decline, improved corporate earnings, and more consumer spending, exports and home construction. The number of people on jobless aid has slid by 148,000 to 5.8 million. Considering that a housing slump had been the main factor behind the economy’s downturn, a jump of 23.4 per cent in residential investment can be seen as a hopeful sign. Evidently, the stimulus packages that the US government announced at the height of recession helped in enhancing demand for consumer goods and homes.

India can draw comfort from the fact that even at the peak of western recession, it was not badly hit. While much of the world showed negative growth rates, India, along with China, was in the positive range with India’s growth rate hovering around 6 per cent. The Manmohan Singh government doubtlessly deserves to be commended for managing the economy wisely at a crucial time. The Indian banking system with its tight regulatory controls proved resilient as compared to the recklessness with which American and other western banks lent money leading to a recovery crisis. Now, with the US joining Germany, Japan, France and Singapore in shrugging off recession, India can hope for a turnaround in exports which have been declining for over a year, and a revival of the international job market.

What is crucial for the US at this stage is to see that the economy shows a meaningful momentum on a sustained basis. The fiscal situation continues to be dismal with the deficit ballooning, largely due to the huge spending on bailouts and a drop in tax revenues. The accumulated debt of the US government has hit an all-time high. However, with consumer spending picking up across the board there is much to be hopeful about.

When sugar is less sweet
States will have to bear some burden

The Union Cabinet has kept up the promise of Agriculture Minister Sharad Pawar to pay a bonus on paddy though the amount of Rs 50 has been dismissed by the Punjab Chief Minister as “too little, too late”. It is the Cabinet’s other decision to fix the “fair and remunerative price” (FRP) of sugarcane at Rs 129.84 a quintal that may rattle the sugarcane-producing states. It is likely to unsettle their finances. Earlier, they would “advise” (read force) the sugar mills to pay the SAP. Now the Centre has shifted the responsibility for paying the state advised price from the sugar mills to the states.

The sugar industry has suffered for long due to the politically motivated sugarcane prices. The states did not follow any objective criteria for jacking up the “advised” prices. Now, they will have to foot the bill for their political largess. The order is bound to create a political controversy as the financial condition of the states, particularly Punjab, is already shaky. Against the Central price of Rs 129.84 a quintal, Punjab had hiked the state advised price for sugarcane to Rs 200 a quintal. The latest order may force the state to either go back on or prune the SAP.

This will hurt farmers. Already due to low returns from sugarcane, farmers are shifting to paddy. In Punjab the area under sugarcane has fallen by 30 per cent this season. Lower sugarcane supplies will hit sugar mills’ operations. Their gain from paying less for cane could be wiped out by inadequate sugarcane supplies. They may have to pay more to farmers so that they keep growing enough sugarcane. Whether the government’s recently introduced FRP in place of the statutory minimum price for cane is “fair” and “remunerative” is debatable, but at least the irrational pricing system will stand scrapped. It had harmed the mills, which, in turn, had failed to make timely payments to farmers.

Thought for the Day

Personally, I would like to die like Gandhiji — suddenly, not after a prolonged illness — for I know how my father suffered during his life-and-death struggle. — Indira Gandhi

ARTICLE

Pitfalls of democracy
When power flows from high command
by Kuldip Nayar

With every election, democracy is undoubtedly deepening in India. But it is also exposing the system’s limitations. True, the frequency of polls is at regular intervals. It is also true that the voters are free to exercise their ballot and walk up to the polling booths on their own and on their free will.

Yet, it is equally true that elections have been reduced to an exercise to grab power — the power which has itself become an end by itself, not an opportunity to serve or perform. Three traits are recognisable: criminals, moneybags and defeat of women candidates.

Take the example of the three states — Maharashtra, Haryana and Arunachal Pradesh — which went to polls recently. Criminals have captured 50 per cent seats in Maharashtra. There are regular charges under Indian Penal Code against them. Of these, 15 per cent have been booked for murder and 22 per cent for dacoity and kidnapping and six for extortion. The state’s record is “better” than before. In the 2004 assembly election, the number of criminal candidates was 123. This time they are 143.

Haryana, next door to Delhi, has elected 17 per cent of criminals. Haryana has “slipped” in the sense that in the last election there were as many as 28 members with a criminal history. This time their number has gone down to 17. Arunachal Pradesh has made no “progress.” It has maintained the figure of 5 per cent like the last time.

Also, money is becoming crucial in every poll. There is no doubting about the relationship between the assets of a candidate and the victory. The analysis of assets declared by candidates — a statutory requirement — showed that if a candidate possessed more than Rs 1 crore, his or her chance of success straightway went up by 50 per cent in all the three states.
In Haryana, an affluent candidate was best placed with 72 per cent chances of success. In Maharashtra, the success was 68 per cent and in Arunachal Pradesh 58 per cent.

And it was distressing to see fewer and fewer women winning the election. The government’s efforts to reserve 33 per cent of seats in Parliament and state assemblies become all the more necessary to offset their poor representation.

In all the three states, women have done badly. The percentage of the success is 3.82 per cent in Maharashtra, the most advanced, 5 per cent in Arunachal and almost twice the average, 8.89 per cent, in the otherwise backward Haryana.

A new thing which has, however, emerged is the proliferation of family members. Earlier, this was confined to the Mrs Indira Gandhi’s dynasty —she nominating her son Rajiv Gandhi, and Sonia Gandhi, positioning her son, Rahul Gandhi, in the Congress party she heads.

However, this assembly election has seen chief ministers, party chiefs and those highly placed in the Congress or the BJP nominating their sons, nephews, daughters and daughters-in-law. Most of them have won. The most reprehensible part is that the son of India’s President has returned on the Congress ticket. The President is a figurehead in our Constitution and she becomes crucial when the alliances break. Prime Minister Manmohan Singh leads a coalition which has inherent weaknesses.

What is most disturbing is that the ideology has more or less disappeared. The name of the Congress or that of the BJP was there but candidates seldom mentioned or projected the party’s ideology. Combinations and alliances on the basis of sub-castes and regional bias have come to the fore. With no ideology and a surfeit of loyal relatives, political parties are rapidly taking the shape of a private limited company which distributes shares to its deal ones. Both concentrate on the strategy to succeed by hook or by crook.

What gave the Congress and the Nationalist Congress Party (NCP) the edge in Maharashtra — they won 188 seats out of 288 — was the alliance and the fallout of the fight between the two Marathi chauvinists, Bal Thackeray’s Shiv Sena and the breakaway Maharashtra Navnirman Sena (MNS) led by his nephew, Raj Thackeray.

The division of votes — MNS secured 6 per cent — also affected the fortunes of the BJP. The MNS also helped the Congress-NCP alliance which had also announced the installation of Rs 250-crore Shivaji statue on the Mumbai seafront.

Again, in Haryana, Om Prakash Chautala, who did not win even half a dozen assembly seats in the last election, emerged as the Jat leader by projecting the community’s pride. In the house of 90, the Congress secured only 40. And what the party did to form the government is itself a shameful story. Seven independent MLAs were picked up by the police overnight. All have been promised ministership or equivalent positions with the same status and emoluments. And it was not a surprise that the session was convened for one day to administer oaths to 90 MLAs, to elect the Speaker and Deputy Speaker, to have the Governor’s address, discussion on it and vote of thanks before adjournment.

The state government should have intervened to stop the horse-trading. But how could he have such gumption when he owes his appointment to the Congress-ruled Centre? The civil society does not speak out because it has more or less accepted that politics cannot be cleansed. Then why blame the extreme communists, the Naxalites, who have taken to the gun because of their loss of faith in the ballot box?

The sham of democracy was underlined by the one-line resolution passed by elected members: Congress president Sonia Gandhi is authorised to nominate the leader. She named Ashok Chavan to head Maharashtra and Bhupinder Singh Hooda to lead Haryana.

The electorate returned members, not Sonia Gandhi. But this has become a practice. The Congress is no exception. All political parties, more or less, adopt the same procedure. BJP’s Vasundhara Raje Scindia, former Rajasthan Chief Minister, had to quit the leadership although she commanded the support of the majority of MLAs. The BJP high command — or the party mentor, RSS — “punished” her for the defeat in the Assembly election. If democracy is to prevail, the MLAs, who faced the voters, should have decided her fate.

It is always easy to hang all your problems on one peg. It makes you forget even the call of conscience. The high command would decide. But then, it leads to autocracy. At least, the Congress should have learnt the lesson when it was in the wilderness. But then, power is such a heady wine that it makes parties forget to differentiate between wrong and right, moral and immoral. The leader knows best.

MIDDLE

Fund-raising ideas
by S. Raghunath

I knew there had to be a catch — a loophole thru’ which an outsized adult elephant could wriggle with ease and still have plenty of room left.

Clarifying its landmark directive banning the collection of donations by private school managements, an official of the Haryana Education Department has said that they (private managements) were, however, free to organise “charity shows” to raise funds.

I have been talking to the “Sole Proprietor” a ‘mot juste’ description—who runs a string of pre-nurseries, LKGs and UKGs across the length and breadth of the state, including the capital Chandigarh and who indeed has found his pot of gold at the end of the rainbow.

“We’re deeply beholden to the Hon’ble Haryana Government for permitting us to hold charity shows to raise funds for our schools, “he said rubbing his hands in glee.”

“Just what do you have in mind?” I asked.

“Well, “said the sole proprietor, “I’m toying with several novel fund-raising ideas.”

“Such as....” I prompted.

“Well, I want to hold a mime show.”

“A mime show!” I exclaimed.

“Yes,” he said, “and I’m sure it would be hugely entertaining. The show will revolve round my surly and unkempt school peon entering a make-shift classroom set up on the pavement and going thru’ the motions of dusting the furniture and swabbing the floor. Then a nursery teacher will come in and mime writing the English alphabets on a non-existent blackboard and with a silent movement of her lips, she’ll say A for Apple, B for Bat, C for Cat and so on.”

“That would be quite a mind blowing show,” I said.

“But how are you going to price the tickets?”

“Well,” said the sole proprietor,” a ticket will cost just Rs 50,000 and the tickets will be sold after office hours in special counters set up under the table.

“I’m also thinking of staging a fashion show to mobilise funds for my schools.”

“A fashion show!”

“Yes, a bevy of my school ayahs dressed in gorgeous and ethnic ensembles of old cotton sarees and rubber sandals will parade to the accompaniment of liltin’ music by that well-known rock band The Daylight Robbers and the show will be directed and choreographed by my school cashier, Mr Shylock.”

“What about the tickets?” I asked, “how much will they cost?”

“Well,” said the sole proprietor,” the fashion show will be restricted to parents desperately seeking admission for their wards into the LKG and the ticket will cost a modest Rs 75,000 and as a value add-on bonus, each parent attending the show will receive a fabulous gift hamper of ash and sack cloth and the embossed address of the nearest bankruptcy court.

“I’m glad you’re abiding by the government order in letter and spirit,” I said.

“Thank you,” said the sole proprietor, “the word ‘donation’ has suddenly become dirty in my lexicon and from now on, charity shows and not donations will be the goose that lays the golden egg.

OPED

Indira Gandhi revisited
A life of chequered political career
by Vijay Sanghvi

Indira Gandhi was certainly a rare political personality who created her own history because she refused to play by the prevalent rules of the game. She created her own terms for the game she played and won battles, not one but several to overcome her sense of insecurity that was caused by the veterans of the Congress who were responsible for her installation as the Prime Minister in January 1966. She did not want to be a façade of the old veterans or even to allow them to rule by putting their guns on her shoulders.

She fought vigorously even at the cost of the great divide of the old party so that she could see the veterans on the other side of the fence, befuddled and being aware of their own incapacity to reign her in.

She had left them in confusion as her promise of two meals a day to every Indian electrified the nation with the poor identifying themselves with her to put her on a high pedestal in their hearts.

But they also were disappointed and even angry when she did not deliver on her promise for three years and rejected her in March 1977.

There would always be two views about the Emergency that she imposed to extricate herself from traps set up for her by the verdict of the Allahabad High Court to unseat her from the Lok Sabha in June 1975.

The bigger blow was delivered by her failure to win back power in Gujarat at the same time.The Gujarat debacle was virtually invited by her by her machinations to oust Chimanbhai Patel as the Gujarat Chief Minister as he had got into the seat in defiance of her in July 1974.

Both catastrophes had arrived on the same day. Many believe that she drove the country to the brink of dictatorship by her Emergency rule. But few would quickly point out that she had also brought back the nation to the democratic rule by holding the elections even when she knew that defeat was staring her in her face.

It was a matter of great courage, particularly when she knew that she would have to fight internal battles with her son, Sanjay Gandhi, for her decision to hold the elections. The story of that battle within the family would never come out as it has been buried with the mother and the son.

Most politicians would have lost their heart and gone underground in despair but not Indira Gandhi. She fought her way back, that too on her own terms to rise again to capture power.

But the ghost of Bhindranwale that she had encouraged as her political instrument to fight the Janata Party came calling back on her.

The menace of terrorism had so engrossed her that she did not find even time to attend to other problems. She sought the solution through the use of state power and shortened her career.

It was here the follies of her earlier political moves became apparent because she had removed from her proximity all men who had self-respect, vision and their own ground to stand on.

In fact. on her return she had become the most lonely person at the top with no men or women of vision, foresight and courage to point out to her mistakes.

Even among the bureaucrats she was surrounded by only mediocre characters who behaved more or less as yes men without showing courage to show her the inherent dangers of her decisions. No man of calibre was around her when she was faced by the menace of terrorism.

Even in her party, no one could point out to her that she had taken a wrong political turn. Everyone was scared of inviting her wrath. In those days she was not even responding to the name Indira Gandhi.

Yet she was a woman of rare courage and willing to gamble for she knew that her opponents would play the game by the rules they had known all their lives and would not expect her surprise moves.

She had also realised that her economic stance in the earlier stint between 1966 and 1977, she had adopted a wrong approach of restricting human creativity by acquiring immense power for the state intervention in every economic activity.

Consequently, she could not deliver her promises. She had lost control over the bureaucracy because she had allowed it to enjoy unrestricted power of intervention. She did tell Fritz Capra, known American author who included his interview with Indira Gandhi in his book “Uncommon Wisdom” that she realised that many things had gone wrong. If she were to start again, she would do it all differently but she could not throw away what was created before her time.

Even the nominated structure would not have eroded the party base but men and women selected for posts both in the party and the government had lost touch with the masses because of the style of functioning they got used to.

She bequeathed the legacy of not only the party but also her party managers to her son as she did not have time to bring about the changes. She had certainly made her place in history by her last actions. She was no doubt a person of rare courage and ready to gamble. But the final gamble did not pay off.

She paid with her life but she did it willingly for the nation and the people whom she loved dearly. It may be a coincidence but only on the previous day she had declared at a public meeting in Bhuvaneshwar that every drop of her blood was meant for the nation. Yes. It was.

US economy roars back
by Neil Irwin

The U.S. economy roared to life this summer, as an array of government actions led to the strongest quarter of growth in two years.

The Commerce Department reported on Thursday that the nation's gross domestic product rose at a 3.5 percent annual rate in the July through September quarter, the strongest evidence yet that the country has begun to emerge from the deepest downturn in decades.

But there were few signs in the new data that the private sector will be able to sustain that growth once the government pulls back, or that the rise will soon translate into an improving job market.

The unemployment rate has continued rising in recent months, to 9.8 percent in September, as businesses remained reluctant to hire.

"We've had a technical end to the recession, which is something that economists and bankers like to talk about," said Robert Dye, senior economist at PNC Financial Services Group. "But it's not going to feel like we've had an end to the recession on Main Street until unemployment starts to go down."

The renewed growth of the U.S. economy — which followed a 6.4 percent rate of contraction in the first quarter and a 0.7 percent decline in the second — was driven by sweeping government interventions, including the Cash for Clunkers program to stimulate auto sales, a first-time homebuyer tax credit and other policies to stimulate housing, and the rollout of federal stimulus spending.

Economists are wary about what happens as those programs recede. Cash for Clunkers is already over, Congress is looking to extend the homebuyers tax credit through the first part of next year, and stimulus spending is set to taper off over the course of 2010.

For the expansion to be sustained — let alone accelerate enough to create steady job growth — businesses must gain enough confidence to invest in the future, consumers will need to once gain make purchases absent government incentives, and buyers of American products abroad will need to open their wallets, economists said.

Progress on those fronts is mixed. The good news is that the deck is now cleared for a recovery. Businesses, having slashed their inventories for six of the last seven quarters, are now rebuilding them. Housing investment, having subtracted from the economy for three straight years, is now ticking up. Even business investment in equipment and software perked up, after six straight quarters of decline.

The bad news is that loans are still hard to get and businesses have become highly risk-averse. Moreover, investment in commercial real estate and other development continues to decline rapidly.

Jan Hatzius, chief economist of Goldman Sachs, said the government's fiscal intervention and efforts by businesses to rebuild inventories probably contributed about 4 percentage points to GDP growth.

"We're going to lose those 4 percentage points over the next year, and so the private economy and the underlying organic growth path needs to pick up that much to offset it," she said.

GDP is the broadest measure of the nation's economic output, measuring the total value of goods and services produced within U.S. borders during a given period. A panel of economists will eventually decide when the recession ended based on a wide range of data.

It is common for the economy to begin expanding again well before the job market improves; the last recession ended in Nov. 2001, for example, though job growth did not get back on track until late 2003. — By arrangement with

LA Times-Washington Post

Inside Pakistan
Are all Mehsuds Taliban sympathisers?
by Syed Nooruzzaman

An interesting study of the situation in South Waziristan by Shaukat Aziz in Daily Times (Oct 29) gives an idea about the strategy of the Pakistan Army regarding the fight against the Taliban. The writer, a former Vice-President and founder of the Islamabad Policy Research Institute, says that Hakimullah Mehsud, who today heads the Tehrik-e-Taliban Pakistan may be having the support of less than 30,000 people in South Waziristan, the area inhabited by Mehsud tribe. Some of these 30,000 tribesmen are followers of Waliur Rahman, a former deputy of Baitullah Mehsud, who lost the battle of the Taliban leadership to Hakimullah.

“The last census two decades ago (all censuses of tribal areas are notoriously inaccurate) calculated the population of South Waziristan, the area of the Mehsud tribe, at 2,50,000; a rough estimate today would place it at about 400,000. Out of these, 200,000 left South Waziristan before the commencement of the ground operation on October 17, and about 150,000 left since. The remaining 50,000 Mehsuds are not all Taliban. I estimate about 30,000, equally divided under Hakimullah and Waliur Rahman”, as Shaukat says.

South Waziristan has borders with the NWFP, Balochistan and Afghanistan. The Pakistan Army has reportedly sealed all the exit points for the success of Operation Rah-e-Nijat. Yet there are reports that some of the militants the Army wanted to capture dead or alive have fled their hideouts. Among them are believed to be some foreign elements. No one knows the fate of Hakimullah and Qari Hussain, alias Qari Raees, an expert in training suicide bombers, residents of Kotkai village, which fell to the armed forces on October 24.

Need for pluralist culture

The fight against the militants in South Waziristan is different from that in the Swat-Malakand area. According to an article by veteran journalist I. A. Rehman (Dawn, Oct 29), the challenge in Swat came from “alien militants who had gathered local adventurers around them and the primary task was to force the outsiders to retreat to their previous positions… In South Waziristan the extremists … have been attacked in their homes. Unlike the outsiders in command in Swat, who could retreat to their own habitats, the Waziristan militants cannot abandon their homes, not for a considerable period at any rate. The question of what is perceived as an attack on traditional autonomy is also far more serious here than it was in Swat.”

The writer adds: “Two things about the terrorist threat must be borne in mind. First, the fight against terrorism is going to be long, bitter and costly. The conflict in Afghanistan is a major contributing factor but Pakistan will not be rid of the terrorist threat even after peace has returned to Afghanistan. This is because of the second reality that the roots of terrorism in Pakistan are indigenous; they lie in the enormous work the state has done, by its acts of omission and commission, to eradicate the ideas of liberal Islam and facilitate the rise of obscurantists, leaving the entire area of intra-religious discourse open and clear to utterly conservative and dogmatic twisters of texts and exploiters of the faithfuls’ vaguely understood belief.”

There is need “to build a tolerant, pluralist society” to bring terrorism to an end, Rehman suggests.

Shrinking economy

The Pakistan economy continues to reel under terrorist depredations despite all efforts of the US and Saudi Arabia to save it from sinking. The IMF staff are not even holding routine consultations required for the promised $7.6 billion aid. The IMF Regional Economic Outlook report could not be presented in Pakistan as planned on October 29 because of security problems.

Business Recorder says, “The linkage between peace and prosperity is self-evident and was underlined by IMF Managing Director Strauss Kahn in a speech delivered on Friday (last); ‘ultimately, peace and prosperity feed on each other. I believe history teaches us this lesson. We all remember how the Great Depression created fertile grounds for a devastating war’.”

However, according to the Pakistan State Bank's annual study of the economy for 2008-09 (Business Recorder, Oct 30), it is “showing a gradual recovery and real gross domestic product (GDP) growth is likely to be close to the target of 3.3 per cent during the current fiscal year (2009-10)”.

But the government may face “significant risks to its fiscal targets, as demands for expenditure continue to rise even as revenue targets are increasingly looking uncertain in the wake of the economic slowdown and low import growth”, the paper pointed out.