The Tribune, Chandigarh, India

Pick up speed
Rail corridors can accelerate growth

Railway Minister Pawan Kumar Bansal has held out the assurance that the dedicated freight corridor linking Ludhiana with Dankuni near Kolkata will be completed in three years. The Railways is notorious for project delays and the reason is often a paucity of funds. Besides, the Railway portfolio has remained mostly with politicians from West Bengal and Bihar who made little efforts to mobilise resources and used the limited resources largely to fund projects in their own regions. North India has, by and large, remained neglected. Chandigarh is the capital of Punjab and Haryana but has no direct train links with most district headquarters. Politicians from Punjab – quite a few of them run their own private bus services — have rarely raised citizens’ demands for better rail connectivity.

The two dedicated freight corridors were first proposed in April 2005 to fast-track the movement of iron, coal, cement and other minerals to meet the needs of a fast-growing economy. The Rs 24,000-crore eastern corridor will link the foodgrain-producing states of Punjab and Haryana with mineral-rich Bihar and Jharkhand and the state with ports, West Bengal, covering a distance of 1,839 km. Funds are to come from the World Bank and the Railways. The Japanese government is funding the Rs 24,000-crore western rail corridor which will connect Delhi, Haryana, Rajasthan, Gujarat and Maharashtra. A special purpose vehicle called the Dedicated Freight Corridor Corporation of India has been set up under the Railway Ministry to execute the projects.

There is no denying the significance of the two projects for accelerating economic growth in India. Given the financial constraints that the Railways as well as the Government of India face, doubts still persist about their timely completion. Now that a Cabinet Committee on Investment has been set up under the Prime Minister, it should monitor the progress of these railway projects and meet their emergency need for funds, if any, since their implementation can make India a more attractive destination for foreign investment.

Debate makes a House
Punjab sessions have to be longer

The Punjab Legislative Assembly is in session, a very sacred exercise in the democratic process. It becomes even more significant given the fact that every year it meets for less than 20 days on an average. By any measure, that is far too short a period for any meaningful transaction of business, legislation being the primary responsibility of the august House. Often even the budget sessions — which, as an all-India conference of party Whips has suggested, should have at least 25 days to discuss various proposals — are wrapped up in less than a week. The current session is scheduled only for five days with one day dedicated to obituaries.

While the Assembly sessions are reduced to a farce because of the short duration, it is hard to blame any particular party in the state, for this has been the practice for decades, whichever be the alliance or party in power. In fact, Opposition groups have made it worse by engineering walkouts in the few days that the House is held. This time the Congress has promised not to paralyse the Assembly unless the SAD-BJP alliance “deliberately obstructs” their raising of various issues. The government has made similar promises too. The trick, however, lies in declaring any action “intentional obstruction” and thereafter not letting the other party present its view. This is resorted to by both the government and the Opposition.

Walking out of a battle amounts to giving the opponent a walkover. It is, thus, the duty of the Opposition to stay in the House, no matter what the provocation. Ask the questions and have the patience to listen to the answers. Thereafter, expose the government with facts if there is any gap in the explanation. If the government or the Speaker do not allow them to raise issues or give misleading answers, present the case before the people after the session. Law and order, finances, agriculture, education, public services, nearly every field in Punjab needs the attention of the Assembly. Besides, there are important pieces of legislation pending to be taken up for many sessions. A five-day session is just not enough for all of this.

Thought for the Day

Try not to become a man of success, but rather try to become a man of value. —Albert Einstein

ARTICLE

Sustaining high industrial growth
Need to change economic structure
by Jayshree Sengupta

The good news is that industrial growth is picking up — it was at 8.2 per cent in October 2012. But it has to be sustained and should not be just a blip or a 'one off' phenomenon. Meanwhile, exports have been shrinking and registering only 4.1 per cent growth which is a cause for concern, especially when the current account deficit is at 3.8 per cent, higher than it was at the time of the economic crisis of 1991. Imports have been rising at a faster rate than exports and that is why higher export growth would be important to pay for the rising imports. In oil imports — India has to import 80 per cent of its needs. Besides this, huge amounts of gold are also being imported. Some of the demand is because of the enormous amount of black money circulating in the economy, but even an average middle class person is thinking of investing in gold these days because of high inflation.

Higher industrial growth will create more jobs no doubt, especially if it is being fuelled by domestic demand. The Indian economy, comprising 1.2 billion people, is big enough to promote industrial and services growth. Both China and India are the biggest economies in Asia, and on their growth are dependent all the smaller economies in the region. If India is not doing well, other neighbouring countries will also be pulled down. Obviously, the domestic demand is being fuelled by income generation from the public and private sectors in the country and domestic consumption accounts for 60 per cent of the demand.

India is thus big enough to be self-sufficient but we need foreign exchange for technology and infrastructure even though China has more or less officially declared that it will no longer be an export-driven economy. India is less dependent on exports than China as they comprise around 30 per cent of the GDP. Unfortunately, both export growth and consumption growth have slowed down in recent times. Unless the domestic demand picks up, high industrial growth cannot be sustained.

China has done a lot to raise and sustain its industrial growth. Its network of infrastructure — roads, power stations, water availability, etc — has been revamped.

In India we need to spend $1.3 trillion on infrastructure. We are unable to compete with China in manufactured goods on two accounts — availability of cheap power and cheap credit. No country can compete with China because of these two reasons and also the availability of skilled and disciplined labour force. But the Chinese have learnt that one big jolt to the industrialised countries' demand due to an economic downturn can lead to serious problems. So, now they are concentrating on increasing the domestic demand more which basically comes from increasing the purchasing power and disposable incomes of the people. This in turn comes from creating more jobs, especially in the construction and social sectors like medical services.

For India to have sustained high industrial growth may take some time because it would mean completely taming inflation. The middle class no doubt is growing and has power to spend on goods and services, but only if they feel secure about the future inflationary trends. If inflation can be brought down, many people would want more manufactured goods. But, unfortunately, inflation has been high, specially food inflation, which leaves very little disposable income for other goods. Also 30 per cent of the population below the poverty line has to be brought out of poverty.

For the manufacturing sector to get a boost, lower interest rates would be important. The lower interest rate will also raise the demand for consumer durables. If the manufacturing sector can grow fast it would provide jobs to the youth. Most industrialists, however, complain today of the shortage of trained labour and lack of a steady policy framework that is predictable and transparent. More technical and science training has to be given to job-seekers. Corruption also plays an important negative role because much money goes towards bribing officials and other functionaries for permission and certificates. Delays are expensive and increase costs. It should be noted that recently Transparency International has rated India at the 94th position among 174 countries.

India can, however, become a manufacturing giant in the future because the diverse talents of Indians which are no less than those of the Chinese but the physical infrastructural constraints stand in the way in India, especially for small and medium-scale enterprises. The SMEs have to be encouraged by making credit, power and water easily available to them as they comprise 45 per cent of India's manufacturing output.

Manufacturing growth promoting policies, however, have to be environment-friendly, otherwise it might lead to pollution problems like in China. No matter how hard it is trying, the pollution problem is still around. Thus, the emphasis on ‘green growth' is vital, and more recyclable natural materials should be used as well as environment-friendly technology.

Connectivity between villages and towns would improve the incomes of the rural population and the demand for industrial goods. This has already been achieved in China which has spent a lot on rural infrastructure which has helped rural areas to urbanise. One village is being lost every day in China due to the rapid pace of urbanisation. We shall also face the same problem in the future when most of India will be urbanised, but if it leads to higher incomes for the rural population, it should be encouraged.

Gandhiji, however, did not visualise rapid urbanisation but rural industrialisation in which rural industries that do not require much investment would employ the surplus rural population. But to succeed, India would need to bridge the power deficit of 13.5 per cent and electrify the 80,000 villages that are without power. Regular availability of power will create the incomes for home-based industries in rural areas. Most people in the villages work in small enterprises and the use of motorised tools would enhance their productivity. But without power, they are rendered uncompetitive because of the high cost of production.

To become a major industrial nation by 2030, as predicted by a Washington think-tank recently, India will require many changes in the economic structure of the country in which efficient and viable small and medium enterprises coexist with the big factory-based organised sector and with a middle class bigger than that in the US and Europe combined, to support it with their demand. Our population will be among the youngest in the world by 2030 with the median age increasing from 26 to 32 whereas other big countries will have to deal with an ageing population which is less productive.

MIDDLE

Chugging along with mind games
by Rajbir Deswal

On a luxury train, we play mind games oftener. May be, of different kinds. It begins on the platform itself when you envy those who don't have to walk long enough to the compartment. Being inside, your mind seeks perching you close to the window, or even the aisle — I don't think a middle seat should not be the most dreaded one since you are literally put in dire straits — mentally and physically.

With the water bottle in your package offer, you begin to suspect if it could be really drinkable, bottled at a local factory in Kishanganj, close to the railway tracks, where they sit with ease with a bottle to hold in hand. Shit! Then comes the newspaper distributor and you go for the one that your neighbour has also opted for, since you know that after a little while he will not ask, but pounce on yours, plonked leisurely on the tray in front of you, for a second helping — reading.

Your neighbour has a peek-a-boo and is more interested in your reading material than his own. Here and there you can spot, particularly the oldies, keenly looking at the glossy pictures. You know what I mean.

You have just begun to feel comfortable when the breakfast boy comes calling, seeking your preferences for vegetarian or non-vegetarian stuff. No, the Jain food or Navratra food is not served here. Having received your tray with polythene-packed food, micro-heated and wrapped in foils and zip-locked cutlery. While you unzip the cutlery pack you see your neighbour struggling tucking the polyethylene, as they say between the canines of terrier. His hand reflexively drifting to your face after the jerky act, is sure to happen in such a manoeuvre.

Most of them around are more interested in having a dekho at others. You start eating your stuff with or without a fork like a baby holds his bottle since you fear you can nudge your fellow passengers right and left. This nudging may not be taken to be a genuine one if the person sitting next to you is of the opposite sex.

When all are done and left-overs and the soiled paper plates are to be collected by the person already moving like a Christmas tree in a aisle, you find that someone missed out on his food, who was thankfully woken up by the waiter to cater to his order. That he was snoring leisurely is another thing that you just gloss it over, but when he takes out his cell phone on being woken up and starts talking loudly giving instructions to his staff back in his office, you begin to think that his snoring was still something to cope with.

May be, having been made wiser by some experience in the past, some people foresee the waiter who would literally spill beans with an adequate amount of ketchup, splashing on their slim-fit grey business suit.

Having reached the destination, you hear a sweet voice on the PA system of their presumption of your having had a comfortable journey and that you would afford the railway another change to serve you. Also not to be forgotten, after this imploration comes the suggestion for you to carry your water bottle with you, or break it.

Now this is a daunting task since your hands are already full with a stroller to drag, carry-baggage, a laptop slung on your shoulders, aerators mounted on the forehead, a newspaper tucked under that armpits and, maybe, a purse to dangle on your forearms, if you belong to the fair sex, influenced by Pakistani Foreign Minister Hina Rabbani Khar.

Happy journey on Indian Railways.

OPED NEIGHBOURS

Hurdles in normalising relations
A critical foreign policy challenge confronting India is the maintenance of friendly ties with its neighbours. India, it is claimed, cannot rise to its potential if it is embroiled in conflicts or tensions with its neighbours. India has supposedly failed in this regard.
Kanwal Sibal

Having good relations with neighbours is not a unilateral exercise; it is a reciprocal one. If India should have good relations with its neighbours, then it is equally incumbent on the neighbours to have good relations with India. No one can argue that India's conduct alone is deficient.

A Muslim rebel with a gun. Stability in Afghanistan and containment of the Taliban threat there in a regional context is another challenge that will acquire sharper contours post-2014. Photo: Shutterstock

India should, of course, try to do its best to win over the neighbours, but if the neighbours see it in their interest to balance a much larger India by drawing in external powers, and prevent their national identities from being overwhelmed by India's civilisational and cultural pull by emphasing differences with India and stoking anti-Indian national sentiments, there is little India can do. This challenge will not go away.

The argument that India as a bigger country should be more generous with its neighbours is fallacious. Big countries like China and the US do not believe in the merits of this approach. Vietnam and Cuba come to mind.

India's economic growth will be of key importance for tying our neighbours economically to the Indian market. It will be important to give stakes to a cross section of people in our neighbouring countries in various sectors of our economy. In this context the strengthening of SAARC should be a priority.

Our improved relations with the US have excluded one external factor that in the past complicated our relations with our neighbours. China, however, remains a problem in this regard.

Pakistan — a failing state?

Pakistan remains a perennial problem. While some aspects of our relations with that country are improving, as for example, in the trade area, larger questions about the rise of Islamic radicalism there and fears that Pakistan could become a failing state are being debated.

There is little that India can do help Pakistan fight its own internal demons. India is, in fact, the reason why these demons exist in the first place. Unless Pakistan radically changes its attitude to India, ceases to whip up religious sentiments against us that feed the jihadi groups, the problem of radicalism in Pakistan cannot be successfully controlled.

India should continue to encourage more economic and people-to-people ties with Pakistan, but should also be clear-sighted about the serious obstacles in normalising relations with that country.

We should shed the belief that concessions will make Pakistan more amenable.

India does not need to reassure Pakistan about its intentions or make Pakistan trust us. The reverse is needed: it is Pakistan that needs to make the requisite effort to convince India that it has abandoned the use of terrorism as state policy.

Do we have a stake in Pakistan's survival as a united country, or should we encourage the break-up of the country? So long as Pakistan is adversarial, we have no stakes in Pakistan's territorial integrity. It would be ironical for India to be supportive of Pakistan's geographical health when it wants a slice away a part of Indian territory.

We should not, however, actively seek to destabilise Pakistan, as managing a fragmented Pakistan would raise its own problems.

On the other hand, a broken-up Pakistan loses value for the Chinese. Even a chronically unstable Pakistan loses value. It is unlikely that the Chinese will want to rescue Pakistan with economic largesse. In that context, disarray in Pakistan is not unhelpful to us.

The Taliban threat

Obversely, we cannot have a viable Central Asia and even Afghan policy if Pakistan remains unstable. If this whole region is to be integrated economically, with energy and trade connectivity, the geo-political key is in Pakistan's hands.

The US is backing the project to link Central Asia with South Asia, with TAPI symbolising this vision, but the US's ability today to bend Pakistan to its will has suffered erosion.

Stability in Afghanistan and containment of the Taliban threat there in a regional context is another challenge that will acquire sharper contours post-2014.

The West is looking for a compromise with the Taliban, believing it can live with an Islamized Afghanistan so long as it is not anti-West. The backing the Muslim Brotherhood is receiving from the West in the Arab world would indicate that practical, realpolitik deals can be made with Islamic radicalism and rationalised. Such a scenario is not in our interest, but the means we have to forestall this are limited.

We have therefore a multifold challenge in Afghanistan, of retaining our presence and influence in that country, creating internal support for us there that can be used to counter the Taliban and the revival of radical forces there that can threaten our security directly with Pakistani support.

Lack of direct access to Afghanistan exposes the lack of a credible Indian policy towards Central Asia. We have to galvanise Iran to cooperate with us for an alternative access to Afghanistan trough Chabahar.

The Iranian nuclear issue has serious implications for India should there be recourse by the West to military action against that country. The de-stabilisation of the Gulf region which will occur as a result would be very costly for India, as India has huge energy, manpower and financial interests in the region. India would have to steer clear of the rising Shia-Sunni conflict in the Muslim world.

China's muscle-flexing

India's Look East Policy is now facing new challenges with the erstwhile equation between China and East and Southeast Asia disturbed by China's muscle-flexing in the South China Sea.

India has concerns about the freedom of passage through international waters, but otherwise India's priorities concerns are in the Indian Ocean area. However, for geo-political reasons, India would need to come closer to those countries targeted by Chinese claims, though without getting directly embroiled in the territorial disputes.

In the Indian Ocean area, India should try to maintain its dominant status as a littoral state as much as possible, knowing however that at some stage Chinese presence in these waters will increase, as is portended by China's active search for port facilities in this area.

India's declared openness to cooperation with China on maritime issues should be based on the legitimacy of not only China's presence in the Indian Ocean but also India's maritime presence close to China's shores.

India would need to give priority to its relations with Myanmar, now that the latter wants to loosen the Chinese grip over the country. Myanmar is of key importance to create east-west connectivity in this region from which India can benefit greatly. Our challenge is to implement our infrastructure projects in Myanmar without inordinate delays.

As part of our Look East Policy, keeping the Chinese dimension in view and bilateral benefits that can accrue to us, India would need to boost its relations with Japan, including mobilising Japan's clout in the ADB to finance the east-west corridors in Asia. Our increasing strategic engagement with Japan is a welcome move.

Other challenges

Beyond all these challenges, there are those of energy, food security and of climate change.

The energy issue is not one of foreign policy alone, but it has a strong external dimension for us because of our huge dependence on energy imports.

Our diplomacy will need to facilitate investment in hydrocarbon fields abroad as part of our energy security drive, besides working for avoidance of conflict in areas which are our biggest source of oil and gas. We have a shared interest with the US in this but US policies in the Gulf region, driven by the Israeli and Iranian factors, are not in line with our interests as they keep the area on the boil.

Energy, of course, is one area where technology can achieve such breakthroughs as can change the global energy scenario.

Climate change issues, in which energy use and environmental concerns intersect with issues of competitiveness and market openings for western technologies will become a source of increasing external pressure on India in the years ahead.

The water issue in South Asia-Tibet region looms ahead. Apart from countering Pakistan's cynical manipulation of the water issue to sustain its negative postures towards India, securing Chinese cooperation in transparent handling of the Tibetan dimension will be a challenge.

In the competition for access to natural resources, China is already far ahead of India because of greater financial resources at its disposal and its ability to organise a coordinated national effort to that end which our system does not permit.

A new Indian approach that goes beyond relying on the private sector to make economically rational decisions from their perspective would be needed, but that implies a different way of economic governance.

At the end of it all, the internal and the external cannot be compartmentalised in any country. Success or failure at home will mean success or failure abroad.

The economy is the building block of a successful foreign policy, as required resources then become available to erect defenses at home and to pursue interests abroad.

While it may not be a foreign policy issue per se, the establishment of an indigenous defence manufacturing base is vital for acting independently on the world stage. No country that cannot independently defend itself can reach big power status.

Our external dependence on arms and technology supplies limits the options available to our foreign policy.

Excerpted from the Y B Chavan Memorial Lecture on "India's Foreign Policy - Future Challenges" delivered by Kanwal Sibal, a former Foreign Secretary, at the Institute for Defence Studies and Analyses, New Delhi, on November 30, 2012