The Tribune, Chandigarh, India

Inflation defies gravity
RBI moves in right direction

The RBI and the government have chosen to control rising prices even if it means lower growth. Thursday’s rate hikes will make capital dearer. Growth requires cheap loans for industry and individuals. But high prices hurt the poor the most. Prices have risen due to high demand, insufficient production and easy money supply. In rescuing industry from recession the government gave a large financial bailout. Then came Central and state pay hikes. The job guarantee scheme and Bharat Nirmaan have lifted rural incomes. The result is a massive demand for food and consumer goods.

Since supplies cannot be increased in a short time due to industrial and agricultural production constraints, the RBI is trying to suppress demand by withdrawing excess money from the system. It is driving banks to raise interest rates. This affects industry as well as individuals taking loans to buy houses, cars etc. However, those with money in banks stand to gain. The RBI has raised the key rates ten times since March 2010 but with mixed results. Demand has slowed and hurt the realty and auto sectors. Car and home sales have plummeted. And this raises the spectre of loan defaults. In some sectors, however, there has been no impact and demand is so robust that loan disbursement is high, corporate results are encouraging and wholesale inflation is at an uncomfortable level. This keeps 8 per cent growth hopes alive. India grows as urban Indians spend and consume a lot.

Also driving up prices is oil. The government’s rising oil bill and higher cost of servicing loans will take away money needed for education, health, infrastructure and welfare. Worse, industrial slowdown means lower tax revenue. Stock prices are declining as foreign money moves out to safer destinations. Experts expect two more rate hikes of the same size. High commodity prices are hurting almost all countries and central banks all over do what the RBI is doing to fight inflation: raising interest rates.

Obstacles to growth
Women encounter them all the time

Buoyed by the visible presence of some high profile women in key positions, India often forgets the ground reality with regard to the status of women. That exceptions are not the rule has been proved once again by a study conducted by the Centre for Social Research in Delhi, Kolkata and Bangalore. The study has brought to the fore the lack of women in managerial posts. So much so that in public sector banks only two women have reached the top positions. Earlier findings have revealed that women hold just 5.3 per cent of board positions on India’s top 100 companies.

It isn’t as if women have not been making headway. With the spread of education women have stormed every conceivable male bastion. Doors have been opened for them in the defence forces as well. Still, they have a permanent commission only in education, medical and legal wings. Even in the national polity where many of them occupy positions of power, often their roles are devoid of real power. A HPU study “Emerging trends in women leadership pattern: A case study of MC Shimla” found that women councillors don’t have much say in decision making and face many obstacles vis-a-vis male councillors. It is ironical that stereotypes continue to cast their shadow over women’s capabilities.

Women have time and again proved their mettle, be it in sports, finance or administration. Yet, as the study has revealed, women are often denied what is rightfully theirs on grounds that reek of gender biases. Taking into account their increasing role in different sectors of development, they must be given equal opportunites to make it all the way to the top. A nation that takes immense pride in individual victories of women cannot allow gendered glass ceiling and stop women’s ascent on frivolous pretexts and blinkered perspectives.

Thought for the Day

Education is not preparation for life; education is life itself. — John Dewey

ARTICLE

Dialogue with Pakistan
Need to involve the people also
by Kuldip Nayar

It’s a welcome development that New Delhi has found time to hold talks with Pakistan in the midst of internal upheavals that the Manmohan Singh government faces. Foreign Secretaries of the two countries are meeting later this month at Islamabad. They talked to each other during the summit at Thimpu, Bhutan, in February but apparently found little time to pursue any topic.

No agenda has been announced so far. But from the talks Indian Foreign Secretary Nirupama Rao has had with the visiting Pakistani journalists indicates that India would like to resume the dialogue. Her statement that the bilateral dialogue was meant to bring the 26/11 perpetrators to justice may create difficulties. This has been hanging fire for two and a half years. True, Pakistan Foreign Secretary Salman Bashir has been blunt enough to say that the 26/11 attacks were “an incident of the past” as if Islamabad has already put the tragedy behind it.

I sensed the same approach when some TV channels from Pakistan interviewed me a few days ago. They said that when it had been decided between the two countries to separate terrorism from the talks, India should not get stuck at the 26/11 happenings. What they do not understand — I told them so — that there is great anger over the use of Pakistani soil for an attack on Mumbai. Had some culprits got punished or had been near to it, people in India would have believed that Islamabad was serious about the speedy trial. Lashkar-e-Toiba (LeT) chief Hafiz Saeed, who helped plan and execute the attacks, goes on ranting and has no full stop in his jihadi threats against New Delhi.

David Headley’s acquittal of involvement in the 26/11 attacks at the Chicago trial has come as a big disappointment to India. And the general suspicion is that the US did not want the ISI to be singled out. This seems far fetched when the US itself told us of the “involvement” of the ISI. Moreover, to suspect the US court and the jury for pronouncing anti-India judgment is not fair. Every country has its own legal system.

However, Headley has damaged the ISI enough by admitting in the open court that terror outfit Lashkar-e-Toiba got “assistance” from Pakistan’s ISI for the Mumbai terror attack. It is difficult to buy the thesis that the ISI, feared at home, is at the back of terrorists because they have killed many army men. And there is no doubt that the ISI is manned and controlled by the army. It is possible that some rouge elements in the ISI might be helping the Taliban. It is also possible that some jihad-inclined men within the army might be harming the force. But it does not follow from this that the Taliban have the support of the ISI or the army.

The case of India is different in the sense that Pakistan considers it an enemy. The ISI must have been in the picture on the 26/11 attacks. If the question before us is to normalise relations with Pakistan, we cannot ask it to admit that the ISI is an instrument in the hands of the army or, for that matter, Pakistan. We have to live with it to go further. They too have doubts about RAW, although exaggerated.

Indeed, New Delhi went against public opinion in India when it began talks with Islamabad after a long suspension. For most, it is the punishment of the 26/11 perpetrators or nothing else. But now that the dialogue is taking place, it should be part of the agenda which can cover other subjects. No doubt, the Home, Water Resources, Commerce and Defence secretaries of the two countries have met in the last one year. But there does not seem to have been any progress. It is difficult to know which country is to blame because there is no transparency.

The two sides meet and disperse often without even any cliché-ridden statement. People do not know why the Sir Creek agreement, ready to be signed, has not been signed. Nor do they know why the Siachin Glacier pact, initialed by the then Prime Minister, Rajiv Gandhi, has not gone through, continuing a loss of crores of rupees to both sides every day. Pakistan has given a non-paper on the subject. What does it say? People do not know what the paper contains because only its publication would enable them to make their own judgment.

The problem with the dialogue between India and Pakistan has been that the public is kept out of what takes place during the talks. Which country took what stand and why the dialogue does not move forward from what was discussed some 60 years ago? The army is being blamed but the elected representatives, neither Zulfikar Ali Bhutto nor Begum Benazir Bhutto, could end the impasse. Conceded that there is a trust deficit, but this is at the government level. People on both sides want to normalise relations but they have not been able to do so because the governments come in their way. They are not even allowed to meet because of the visa restrictions which are so strict.

The army in Pakistan is, in fact, on the defensive after Osama bin Laden’s death. The arrests of some CIA informers indicate that the force is facing relentless criticism that it failed on Osama who was killed by the Americans in the Pakistani territory. For the first time the army has come out with a statement to point out that the attack on them was part of efforts to create division among important institutions.

This is an “unfortunate trend”, the army says in a Press release, and needs to be stopped because it is “detrimental to national interest.” So exasperated is the army that it has even said it doesn’t need the US aid which should be diverted to economic developments. Chief of Army Staff General Parvez Kayani has said that in the last 10 years the army has been given only $1.4 billion from some $8 billion aid received from the US.

Yet, the army has gone from strength to strength in defence as well as civil matters and stays crucial to any breakthrough with India. Somehow, it is not convinced that a rapprochement with New Delhi can help Islamabad to face, if not retrieve, the situation within Pakistan. History will repeat itself if no lesson is learnt from it. By now, both India and Pakistan should have realised that and become at least decent neighbours.n

MIDDLE

A matter of perception
by Raj Kadyan

We were dining at a restaurant in Shimla. There was only one more family at the time. The man was at the bar stool, the wife at the dinner table with her two sons aged 7 and 9. The TV was showing repeats of IPL matches and the boys were in animated discussion. My daughter Roopali asked them a few questions and the boys proved an absolute encyclopedia on cricket. “Who is your favourite?” Roopali asked. “Rayadu” the elder one said. “No, it is Malinga”, the younger asserted, and added a qualifier: “He has a fantastic hairstyle.” The elder boy looked at his sibling with hostile eyes and I could see their mother discreetly putting away the knives.

I am only a channel-switch viewer of cricket with no claim to any in-depth knowledge of the game. “What about Ishant Sharma?” I asked, on the mention of the coiffure, but the idea was tut-tutted by both. Seeing their high level of sharpness, Roopali asked, “You must be brilliant in your studies.” The elder looked at his mother for support but she only said, “Don’t force me to open my mouth.” The well-waisted father, alternating his vodka gulps with spoonfuls of fried nuts, sat detached and typically, wasn’t in the loop of the kids’ school scores. His sole contribution to the evening’s proceedings was a dissuasive warning when the younger boy climbed the hotel sofas with his shoes on. “Hey”, he had said in a stern fatherly voice, “Stop that or else I will cancel your paratha order.” It worked.

The daughter prudently dragged the discussion back to cricket. “If you were to choose your own Eleven, who would they be?” Their faces lit up. Rayadu, Harbhajan, Malinga, Gayle, Virat Kohli and Suresh Raina got taken in the first breath. “What about Dhoni?” she asked. “Yes, as a wicket keeper” said the duo. “But isn’t he also good with the bat?” she asked. “Only against weak bowlers,” the elder said decisively.

While they were mulling over and fiercely debating over the remaining names, I interjected, “How well do you know Harbhajan Singh?” They seemed to know everything: the number of steps he takes for the run-up, his bowling arm action, how many wickets he took, where and when, his spat with Symonds and much more.

Since the kids were so knowledgeable about cricket, I decided to check their level of general awareness. “Good you know so much about Harbhajan Singh,” I said applauding them, “Can you also tell me something about Manmohan Singh?” They looked puzzled. They then looked at their mother for a possible hint. But she only raised a non-committal brow. After a few seconds of silence, the elder boy hazarded a guess. “I think he is a second-string player.”

oped ENVIORNMENT

Managing growth with forests
A recent report "Forests in a Green Economy" by the UN Environment Programme examines the critical role of forests and provides policy recommendations for sustainable development and poverty eradication. Excerpts:

Economic progress and human well-being are dependent on healthy forests. Forests serve as carbon sinks and stabilise global climate, regulate water cycles and provide habitats for biodiversity while hosting a wide variety of genetic resources. Economic valuation studies conducted in different countries have demonstrated the important benefits form forests, in particular for climate regulation services and existence values.

The Food and Agriculture Organisation of the United Natons (FAQ) estimated that the forest industry contrirbuted approximately US$ 468 billion or 1 per cent of gobal gross value added to global GDP in 2006. Pulp and paper represented about 40 per cent of this contribution. A review of 54 case studies, over half of which were from Eastern and Southern Africa, estimated that the average annual income from forests
amounted to 22 per cent of
household income.

Forests also provide an essential source of cash, especially during poor harvests. The Centre for International Forestry Research (CIFOR) estimates that families living in and around forests derive an average of one-fifth to one-fourth of their income from forests-based resources.

In many countries, non-timber forest products (NTFPs) contribute prominently to local economies and livelihoods and are important exports. NTFPs include food, plants products, medicine, aromatic products and exudates such as tannin extract and raw lacquer. FAQ (2005) estimated that the value of NTFPs extracted from forests worldwide amounted to US$ 18.5 billion in 2005. It underscored these as lower bound values because of incomplete data.

Forests also provide employment. Although the figures range widely, studies show that more than a billion people depend on forests for incomes and employment. Much of this may be in the informal sector: a recent study by CIFOR on informal timber production in Cameroon estimates that 45,000 people earn their living from such production in the country.

Nutrition for the poor

Globally, forested watersheds, wetlands and mangrove ecosystems provide nutrition to poor households. In addition to sustaining freshwater and coastal fisheries, food sources including NTFPs such as fruits, nuts, honey, and mushrooms are an important source of nutrition. A 2008 review of bush meat affirmed that rural communities in Central Africa obtained a critical portion of their protein and fat from forests.

More than 2 billion people depend on wood energy for cooking, heating and food preservation. According to the International Energy Agency (IEA), in 2005, biomass energy accounted for an estimated 10 per cent of energy use. More than 83 per cent of this is used in less developed countries. In many developing countries biomass accounts for more than 50 per cent of total energy use. Halting tropical deforestation and planting new forests could represent the mitigation potential equivalent of doubling current global nuclear energy capacity or constructing two million new wind turbines. Unfortunately, the values and services that forests render are rarely captured in national accounting systems.

Despite the considerable value of forests, deforestation is rampant. The world's forested area is declining both in absolute terms (deforestation) and in net terms (taking account of forest planting and natural expansion), although at a slower rate than in previous decades. On average, 13 million hectares of tropical forests (an area the size of Greece) are disappearing annually. This is equivalent to approximately six billion tonnes of carbon dioxide being released into the atmosphere, contributing up to one-fifth of global greenhouse gas emissions.

These global trends conceal important regional variations. Over the past decade, forest cover stabilized in North and Central America and expanded in Europe. Forest cover expanded in Asia, mainly due to large-scale afforestation in China, which offset continued deforestation in South-East Asia. Africa and South America experienced the largest net loss of forests during this period.

These figures also mask the loss of natural forests. The general global trend is that natural forests and modified natural forests are decreasing while the planted forest area is increasing. Forty million hectares of natural forests have been lost since 2000. The loss of natural forests implies important and critical losses in biodiversity and decreasing forest ecosystem resilience against climate change.

Today, investments in forests remain low and forest-related activities are predominantly extractive. Over the last two decades, agricultural expansion and timber extraction were the main proximate causes of tropical deforestation.

This pressure is likely to worsen with increasing population, rising incomes and a shift toward meat-based diets. Additionally, market failures increase the likelihood of exploitation without considering the full range of forests goods and services. The Eliasch Review (2008) estimates that the net present value of reduced climate change benefits associated with emission reductions from halving deforestation from 2010 to 2100 is US$ 3.7 trillion on average. It also finds that the average benefit from halving deforestation exceeds average costs by a factor of more than three.

The forest transition theory

A.S. Mather (1992) presents a 'forest transition theory' to explain the growth of planted forests. The study uses on Thunen's rent theory to explain different stages of forest development. It states that as countries develop, forest land is converted to other land uses, agriculture in particular. The process accelerates as infrastructure improvements open up frontier forest areas and make timber extraction and agriculture economically viable.

Over time, as timber becomes scarce, off-farm employment opportunities become available. As the economy develops, a series of policy adjustments are made in response to increased profitability of forest management and forest creation. Consequently, the area of forest cover starts to increase again.

Such a transition has been observed in many developed countries and some developing nations. The forest transition theory underscores the central role that informed policy can play in ensuring that forestry services are appropriately valued.

New approaches to plantation

Intensively managed planted forests are highly productive plantations primarily intended to produce wood and fibre. There are around 25 million hectares of intensively managed planted forests worldwide, representing one-quarter of plantation forests and almost 0.2 per cent of the global land area. They generally comprise tropical 'fastwood' plantations of acacia and eucalyptus, as well as temperate conifers.

The New Generation Plantations Project led by WWF collects information and experience from tree plantations in a range of forest landscapes that are compatible with biodiversity conservation and human needs. This project is exploring how forest and plantation management can maintain and enhance ecosystem integrity and forest biodiversity.

New approaches to plantation management can also enhance biodiversity at the stand level. During the 1960s and 1970s, Brazil's Atlantic rainforest, Mata Atlantic, was deforested at an accelerated rate due to logging of valuable tree species for saw milling and subsequently cleared for cattle grazing.

Not for markets

Forests contribute substantially to local, national and global economies. They can contribute to a low-carbon, high-growth, socially inclusive and equitable, adaptive and low scarcity green economy through their multiple functions and improved management. Forests are also a source for low-carbon raw material and energy, and offer a full range of services for many sectors, human well-being, and climate change mitigation and adaptation.

To realise contributions from forests in a green economy, specific enabling conditions are required. Informed policy-makers recognise that forest management cannot be left entirely to markets because these are often imperfect or absent. Consequently, to fully realise benefits of forests in a green economy, governments will need to take an active role.

Governments and the international community need to undertake policy reforms to create incentives to maintain and invest in forests and introduce disincentives to modify market signals and associated rent-seeking behaviour.