The Tribune, Chandigarh, India

Problems of plenty
Enough wheat stocks, still prices high

The Centre’s food management is truly chaotic. There is high food inflation (16.3 per cent) despite a glut of wheat. The current stock of 20 million tonnes is five times the buffer requirement. Some 10 million tonnes of wheat stored in the open may rot unless lifted early to make space for the new bumper produce. Agriculture Minister Sharad Pawar has ruled out wheat exports. Some experts from Punjab Agriculture University advocate exports so that prices do not fall, hurting farmers. Exports, if done, would cause a huge loss. The current wheat price in Chicago translates to Rs 825 per quintal. Once India decides to export, prices would plunge.

Pawar’s decision to ban exports has been prompted perhaps by the National Food Security Bill under which the government is to issue 25 kg of wheat/rice at Rs 3 a kg to the families below the poverty line. He is raising wheat allocations to those above the poverty line through the public distribution system. How PDS food items are sold at profit is well known. The annual Central food subsidy bill comes to Rs 47,000 crore. The FCI has been steadily releasing wheat to the registered mills at below-market rates to cool prices. The current rate is Rs 1,240 a quintal. This has resulted in huge profits to the mills as the retail rate of wheat flour has not come down as expected.

Instead of getting FCI stocks cleared throughout the year Punjab and Haryana put pressure on the Centre when the new crop is due. If the Centre now auctions wheat in bulk, wheat prices would plummet, leaving growers in depair again. Traders and millers gain while growers and consumers suffer because of Central mismanagement. The Centre has neither built any additional storage capacity nor encouraged the private sector to chip in. More silos are needed to safely store foodgrains. Mechanical grain handling can cut costs. Food security would remain a dream unless issues like wastage, procurement, storage and pricing are handled competently.

The Headley worry
Confirming India’s worst fears

Pakistani-American Lashkar-e-Toiba operative David Coleman Headley, accused of plotting the 26/11 Mumbai terror attacks and conspiring to target a Danish newspaper, has dodged death sentence by pleading guilty before a US court in Chicago. By changing his plea, he has not only evidently escaped the gallows, but has also obtained an assurance from the US that he would not be extradited to India or Pakistan. That strengthens the suspicion that he was a double agent on the rolls of the US who turned rogue after being brainwashed by the jihadis he was asked to infiltrate. The 49-year-old Headley was earlier arrested in 1998 for conspiring to smuggle heroin into the US from Pakistan. But he cooperated and got away with only a two-year jail term and was sent to conduct surveillance operations for the Drug Enforcement Administration in Pakistan and allegedly came in contact with LeT operatives there.

But he may not be able to get away that lightly this time, considering that he has admitted guilty on all 12 counts on which he was charged. These include all six counts of conspiracy involving bombing public places in India, murdering and maiming persons in India and providing material support to foreign terrorist plots and the LeT. Equally significant is the fact that he has admitted that he aided and abetted the murder of US citizens in India. He may now spend his entire life behind bars.

US law forbids access to convicts without their consent. That means that the India security agencies may not be able to grill him. But his admission of guilt confirms all that India had been saying about Pakistan’s involvement in the dastardly act. He attended training camps in Pakistan operated by Lashkar on five separate occasions between 2002 and 2005 and later travelled to India five times to conduct surveillance. The least the US can do is to unravel the plot completely and destroy its roots which go deeply into Pakistan.

Thought for the Day

When you truly believe in something, and you carry it in your heart, you accept no excuses, only results — Ken Blanchard

ARTICLE

China’s dollar trap
Why Beijing needs Uncle Sam
by Zorawar Daulet Singh

The international system, we were told shortly after the 2008 blowback on Wall Street, had entered a “new era”. The Eastern hemisphere would henceforth dictate the terms of high politics and geoeconomics. Asia’s rise was now all but inevitable.

While this belief has resonated widely in the international policy community, it was the Chinese leadership that might have taken their great power status a little too seriously. On the other side of the equation, it appears that the US strategic community overstated their relative decline — a result of the geopolitical woes emanating from its Eurasian military interventions and the financial crisis’ adverse impact on the real economy and government finances.

The Chinese diplomatic shrill that came to the fore with the January announcement of US arms sales to Taiwan represents a return to an equilibrium in US-China relations, one based on the actual distribution of power among the two protagonists.

Beijing’s strident rhetoric in its recent diplomacy is a sign of both exuberance and frustration. To discern the present lack of tranquility in US-China relations, it is worth revisiting the post-crisis phase and Obama’s initial impulse to exaggerate the China factor.

China’s post-crisis massive fiscal expansion and its apparent success combined with a declining confidence in the Anglo-Saxon financial system created an impression among Beijing’s rulers that their improvised model of capitalist development, which had cultivated powerful state-owned enterprises, had been vindicated by the financial crisis. Such triumphalism was palpable in Chinese commentary in the months following the crisis.

This optimism, however, soon gave way to a rising concern over China’s dependence on the dollar, which in turn was linked to China’s structural dependence on Western consumer markets to sustain its high growth rates. Nothing captured this anxiety more than the laughter the US Treasury Secretary, Tim Geithner, invited from his Chinese audience last summer when he declared that “Chinese assets are very safe”.

By mid-2009, the consensus among Chinese economists was that China’s dollar holdings posed great risks to its future economy. Yet, China grudgingly recognised that not only did its dollar holding provide it with little actionable leverage in a world with a single reserve currency but that the post-crisis US response to revive its economic system via unrestrained fiscal and monetary expansion was tantamount to shifting a major portion of the financial risks of US debt to creditor economies.

Paul Krugman bluntly remarked last April that “China had driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place.” Against this backdrop — of a Chinese confidence in its fiscal economic strength that had staved off an immediate collapse of the Chinese economy but also a deeper fear of the vulnerability of its asymmetric interdependence with Western economies suggests that the Chinese political economy was itself in a state of flux.

During this time of Chinese introspection, the new American President was signaling a vision for a wider canvas in US’ China strategy.

The Obama Administration unable to accurately gauge the evolving geopolitical and geoeconomic situation and overeager to expunge the unilateralist legacy of the Bush years might have inadvertently given a cue to China to assume a more bold posture. On several occasions, Obama’s foreign policy team went on to extol the virtues of a broad cooperative arrangement with Beijing.

The expansion of the Strategic Economic Dialogue established in 2006 to a Strategic and Economic Dialogue (announced in April 2009) signaled an intention to extend the geoeconomic division of division of labour between Washington and Beijing to the geopolitical realm. The November 2009 Obama-Hu joint statement was an expression of the Obama global vision vis-à-vis China.

A fundamental weakness of the G-2 image, aside from the comprehensive national power asymmetry between the two potential collaborators was the fatuous presumption that the national interests of America and China were convergent enough to seriously consider seamless geopolitical cooperation on diverse issues such as North Korea, Iran, Afghanistan, Pakistan, energy security, climate change, non-proliferation, and reforms of the international financial system.

And since the terms of resolution to most of these strategic questions were largely being conceived in Washington, the G-2 in retrospect was probably a euphemism to extract Chinese concessions.

The Obama Administration can be faulted with either trying to be too clever or too naïve; the Chinese for misperceiving that a global power-sharing arrangement with Washington was actually possible. Nonetheless, upon being presented with a sustained narrative throughout 2009 that glorified a US-China concert system while papering over deeper contradictions, Beijing felt emboldened enough to actually believe it had arrived as a world player.

With Washington now better aware of contemporary geopolitical pluralism, but still incipient multipolarity, other actors including China can hope to receive more coherent policy communications from the Obama Administration.

China is still some years away from attaining great power capabilities. As international feedback mechanisms enlighten Beijing’s leadership of this empirical reality, Chinese foreign policy would probably revert back to its gradualist mantra of “peaceful development”, which has been underpinned by making a virtue out of the necessity of avoiding a geopolitical collision with the United States.

While it may be tempting to overanalyse the recent thaw in US-China interactions, none of the recent diplomatic rhetoric implies that the complexities of US-China interdependence has now turned on itself or changed the fundamental compact between the two — whereby the Chinese would maintain a status-quo like rise within a US-constructed economic and security system and in lieu would receive internal (single party rule for the Chinese Communist Party) and international legitimacy on the world stage and respect for core Chinese interests.

While the future course of the geoeconomic portion of this arrangement that manifested in a vast trading system between East Asia (with China as the export conduit) and the Organisation of Economic Cooperation and Development (OECD) world has been questioned or at least temporarily affected by the crisis and attendant severity of western household debt, the broader geopolitical arrangement remains intact. And the costs of “decoupling” from this arrangement will be enormous for China and its leadership.

Meanwhile, US monthly exports to China reached an all-time peak of $7.3 billion in November 2009 only to be surpassed a month later by exports of $9.5 billion!n

The writer is Research Fellow, Centre for Policy Alternatives, New Delhi

MIDDLE

Encounter with a goose
by Sarvjit Singh

Today being a Saturday, with a holiday at hand and one more to follow, I can afford to get out of bed when the sun is up. Cutting through the slant of mesmerising morning sun, suddenly a goose flutters down on the shiny dark wood floor of the room! A pristine white Bio flying machine with glossy black eyes and aesthetics unseen in three dimensions! The encounter has set blood racing in my veins! It can’t be real! So I decide not to pinch myself and spoil the experience.

In a jiffy I collect myself and put in queue the questions jostling and elbowing each other for the breath of answers. Hey beautiful being! Where you come from and where you go? “Born of the Arctic where the magnetic pull peaks, I head to the Antarctic, guided by forces unseen!” it quipped.

Miracle! It speaks! …And how come your symmetry’s so precise and beauty so perfect? “I was a man in the life bygone in which an encounter with a Master shook me out of trance when I saw myself tethered to a house, to relations and to objects. Suddenly I was infused with strength to unshackle myself. I, then shed the mass that had just fed the Ego through ‘form’. A day came, I dropped ‘the mind within mind’ that had warped vision with its waviness. In the dead of one night then, God of death appeared in my dream and I saw from close, it was ‘Creator’ itself in disguise. And with a shudder, I woke up in this new avatar. You see ‘Surrender brings Perfection’, it is written somewhere.”

That sounds magical! And you can fly half the globe before the first halt, I read somewhere? “That’s true! Perfection and tirelessness go hand in hand. Tiredness is an outcome of an unnecessary struggle. I ascend with the winds and dive ‘n’ recharge in stillness. There is bliss in the power of winds and the slight twist of a wing. When in harmony, you realise there is no difference between without and within. My lightness is my richness that lets me soar and swirl.”

Don’t you feel concerned at times if you won’t get fish tomorrow? “I thought you would have deduced, worry about future is a weight I cannot fly with. It is a blessing that I was born without. As you surrender to life, fear of death recedes.”

But don’t you miss a dwelling? “Beauty of creation is so vast and dynamic that I can’t think of wasting life in addiction of a place. Powered by the gushing winds and my art, I fly in ecstasy. Circling the globe over land and sea, I fly a few million miles in the 50 years granted to me. Bliss is being one with the ever-changing vistas above and beneath.”

“And I have to leave now or else I’ll burn my reserves flapping up to my flock. You know answers to questions that arise in one’s mind are hidden in a layer just beneath.”

Why then you dived down all the way to my house O Being of the High Skies? “Because you had a desire to see me!” it levitated a bit and said, before taking off swiftly, white light bouncing off its wings.

OPED

End of a dream
For Punjabi youth London is no El Dorado
by Ravi Dhaliwal

Hundreds of Punjabi students in the suburbs of Southall want to return home but have no money to pay for their one way tickets from London to Delhi or Amritsar.

Didar Singh Randhawa, President of the Management Committee which controls two of the main Gurdwaras in London- Singh Sabha (Park Avenue) and Havelock Road Gurdwara, is clearly worried over the trend.

“We are doing our best to help these students who, in the first place, made their way here after being misguided by agents in Punjab. Just recently, half a dozen girls, who paid anything between Rs 6 to 8 lacs to agents, landed up in the Gurdwara and requested us to provide boarding and lodging for them since they had no other place to go. We told them that they could live in the garage which is adjacent to the Gurdwara parking lot. At the same time, we have also told them to scout for jobs or be ready to leave the Gurdwara. After all how many students can we host ?” he told this correspondent.

Singh Sabha Gurdwara is also running a helpline-Sikh Awareness Society (SAS) – in collaboration with other Sikh organisations in an attempt to ensure that “Our Sikh sisters coming on student visas are not exploited by agents here in UK.” There are several other Sikh social organisations operating in London which are going out of their way to help students get jobs or pay for their air fare back to Punjab.

Says Labour party’s Ealing Southall Member of Parliament (MP) Virendra

Sharma,“The problem is being compounded with every passing day, every moment, and nobody knows how to convince parents of these kids back in Punjab not to send their wards for so called ‘higher studies in UK.’ Students coming in the late fifties and early sixties were students in the real sense of the term. They would come to UK, study and leave for India once their education was completed. However, now everyone who comes on a student visa wants employment the moment he or she lands at the Heathrow airport,” rued Sharma.

In Punjab, agents tell starry eyed youngsters that London is their El Dorado. That once they get a decent degree from a decent UK University, they can laugh their way to the bank! Subsequently, falling into their trap, parents either mortgage their small land holdings or borrow money at exorbitant rates of interest from private money lenders to send their wards to UK for what IELTS coaching ‘institutes’ and agents refer to as “quality job oriented education.”

However, once in UK, their dreams are shattered to smithereens. Spiralling costs in the aftermath of a long drawn out recession means that there are no jobs for these youngsters. Once they land in London these students totally forget about studies and become desperate to get a job. The reason is simple- in order to survive and pay their college and university fees and room rent on time , they have to find employment- which is not there. Homesickness quickly sets in and it is not uncommon to find cash strapped students shelling out anything between 5 to 10 pounds every day for the pleasure of talking to their folks back home in order to overcome their loneliness.

Employment opportunities for youngsters arriving on student visas are scarce. UK rules state that a student can work for just 20 hours a week , which in any case is totally insufficient for a student to pay for his or her room rent, food, fees and other sundry expenditure. A majority of the youngsters, having a middle class background, can not risk asking their kin back home to send more money because their parents have already accumulated enough debt in their misguided attempt to send their wards to UK for studying. Then begins the vicious cycle where students play hide and seek with UK Border Agency- UK’s immigration police- if they have to work for more than 20 hours so that some of their needs, if not all, are fulfilled.

In order to ease the pressure of paying room rent, which is anything between 40 Pounds to 60 Pounds per week in Southall, Hayes, Hounslow and Slough areas-all dominated by Punjabi students-these youngsters start living 3 or 4 to a room. Here girls mix up with boys-after all it is an alien land and there are no prying eyes to watch!

Earlier students were lucky enough to find work at top of the line Departmental stores like Tesco, Marks and Spencers, Debenhams, Westfield shopping centre (at Shepherd’s Bush) and Primarks or at the Heathrow airport-where the newly built Terminal -5 was a hit with students from Punjab. However recession has meant that jobs at these stores have dried up in double quick time. To top it, job placement agencies at the Heathrow airport have stopped providing jobs to students.

The UK Border – Britain’s immigration agency – has pasted posters in all Gurdwaras of London which ominously say “You came with dignity. Now you are staying here illegally. It is better you go back with dignity.”

Tighten your belt, Haryana
by V.N. Attri

Since the 1990s Haryana’s growth rate and per capita income have risen steadily. Even during the recent financial crisis, which severely affected economic activity at the national and state level, the performance of Haryana has been spectacular. Its average growth has been in double digit in recent times.

During 2009 the state economy witnessed a very healthy growth of 18.4 percent in the Gross State Domestic Product (GSDP) over the pervious year at the current prices. During the current year the per capita income is likely to grow further by 13 percent to Rs. 77,878 at the current prices.

The structure of the Haryana economy has undergone a significant change over the years. In Haryana’s state domestic product the share of the primary sector has declined vis-a-vis the shares of the secondary and tertiary sectors. At present, the share of the primary sector in the state domestic product is 19.8 percent, whereas the shares of the secondary and tertiary sectors are 28.8 and 51.4 percent at constant prices respectively.

In economic literature economic development is defined as “change of attitude” – the economic actor or agent should possess the attribute(s) of flexibility and adaptability so necessary for the growth the economy. In Haryana the people, the government and the bureaucracy seem to have undergone such a required change in their psyche. The unprecedented growth in Haryana is the outcome of a “participatory approach” through which farmers, industrialists, businessmen and policymakers in the state have contributed to the process of economic growth in the state.

In a recently published book entitled “Financial Structure, Economic Growth and Stability: Policy Challenges of 21st Century”, The author tries to establish the fact that a sound financial structure is a pre-condition for the stability and sustainability of the growth process. This involves bold policy initiatives to meet the growing challenges of fiscal management of the 21st Century.

It is worth mentioning here that Haryana happens to be one of the best states in the country in the field of fiscal management. The state has not availed overdraft for a single day in the recent times, as indicated in the Economic Survey, 2009-2010 published by the Haryana Government.

The performance of Haryana in the area of revenue growth, expenditure restraint and reduction of revenue and fiscal deficits has been good. The 12th Finance Commission of India has commended the performance of Haryana in maintaining the finances. The fiscal deficit as the percentage of the Gross State Domestic Product has been varying between 3 percent and 4 percent since 2001; though it also became negative during 2006-2007.

The revenue deficit, however, increased in 2009, which was earlier negative during the pervious three financial years. The restriction of deficit indicators to the manageable level(s) indicates that Haryana’s finances are in the position of meeting future challenges of sound fiscal management as a small and manageable deficit is the key to higher and sustainable development.

An analytical study of the data related to fiscal management of the state reveals that on revenue account, inclusive of revenue receipts and revenue expenditure, the performance of the state has been good. The interest payment-revenue ratio has been rising but is still within manageable limit of 15 percent in the current budget.

The deficit in the current budget is the consequence of a rise in the salaries of the employees of the state due the full implementation of the Sixth Pay Commission report by the state, which has put a burden of over Rs 4,000 cores during the current year.

Despite this strain, the government has not shied way from its responsibilities, and has actually increased the outlay of the annual plan for 2009-2010 from the budgeted figure of Rs. 10,000 crore to Rs. 10,400 crore in the revised estimates, which is 46.31 percent higher than the actual plan expenditure 2008-2009.

This reflects the deep commitment of the government to fight the economic recession with all measures at its disposal and maintain the pace of development in the state. However, after 2007-2008 there has been a deterioration in the financial position of Haryana, as a consequence of which the current budget of the state turned into a deficit budget.

In the last, it can be concluded that the state has been managing the finances prudently and judicially, but it has to adopt a conscious approach to fight out the impact of the financial crisis to the state in terms of a fall in revenue and non-revenue receipts. The challenges of the 21st century fiscal management can be met by creating a pool of skilled and innovated human capital in the state.

The writer is a Professor of Economics at Kurukshetra University

Positive
Haryana records double-digit growth despite financial crisis
Fast growth due to a participatory approach
No overdraft even for a single day in recent years
Priority to social sector, rural development and infrastructure
Negative
Budget deficit due to financial deterioration in past 2 years

Inside Pakistan
Shahbaz Sharif in the soup
by Syed Nooruzzaman

Pakistani Punjab’s Chief Minister Shahbaz Sharif, respected for his administrative ability, is in the dock these days. But he himself is to blame for his predicament. Last Sunday, while speaking at a function in Lahore, he asked the Taliban “not to target Punjab as his government would not take dictation from outsiders (Americans)”, according to The News (March 15). This strange comment from the head of a provincial government led to an interesting debate in Pakistan with the PML (N)’s second top leader being at the receiving end.

In a scathing comment, Dawn chastised him by saying, “Essentially, Mr Sharif has argued that his party, the PML(N), shares a common cause with the Taliban – that of opposing Gen Musharraf and his policies and rejecting ‘dictation’ from abroad – and, therefore, the Taliban should spare Punjab. The very thought that any mainstream politician, let alone as high-profile and powerful as the serving Punjab Chief Minister, could find anything in common with the Taliban ideology is despicable.”

The Frontier Post, a Left-leaning daily, remarked that “not even the profoundest sophistry or hundreds of explanations can help gloss over its terrible undertone that while the Taliban must spare Punjab, they may unleash their wickedness on the country’s other parts.”

Even a conservative paper like The Nation pointed out that “his suggestion that the Taliban should spare Punjab since both they and the PML (N) are against the US dictation, tooth and nail, has a parochial tenor.”

Real strength of militants

In the opinion of a well-known Dawn columnist, I. A. Rehman, “Mr Shahbaz Sharif may not have meant what he was quoted as saying, but it is impossible to deny the existence of groups and individuals who are soft on terrorists because of an imagined sharing of anti-American sentiment….

“The militants’ real strength does not lie in their arms or their suicide bombers; it lies in the pockets of support for them in Pakistan society. While most people condemn the loss of lives in terrorist attacks, they do not display the urge to join the struggle against the culprits.”

That is why in an article in Daily Times (March 17) Nizamuddin Nizamani says, “Mere use of force is not enough to counter the menace of terrorism; instead, an integrated approach could have been adopted, which should include discouraging the fanatic schools of thought….”

The Musharraf factor

Former President Gen Pervez Musharraf, accused of having caused most of the problems Pakistan is faced with today, including that of suicide bombings, has been in the news for some time for planning to re-enter politics.

The latest on the subject, according to The Nation, is that the former military dictator is believed to be trying to get a new party – All-Pakistan Muslim League (APML) – registered with the Election Commission of Pakistan with the help of his loyalists.

Barrister Saif, who has submitted the application for the registration of the APML, is the legal adviser and spokesman of General Musharraf. The Nation quoted Maj-Gen Rashid Qureshi (retd), close to the former President, as saying that “General Musharraf has not yet decided to join the party and is waiting for the right time to join Pakistani politics. There are 1,55,000 members of the Pasdaran-e-Pakistan and 1,50,000 lovers (of the former President) on Facebook.”

The Pasdaran-e-Pakistan is a movement launched by Musharraf loyalists.

Before General Musharaf begins to play his role afresh, one of his former ministers and a well-known economist, Dr Abdul Hafeez Shaikh, has been appointed Financial Adviser by Prime Minister Yousuf Raza Gilani. He will look after the Finance Ministry.

Intriguingly, the PPP-led government, “which does not tire of blaming the Musharraf government for all the difficulties it is facing today on the economic front”, has chosen a person from among his team “whose track record does not inspire much confidence”, as Daily Times (March 19) commented.