O P I N I O N S

EDITORIALS

Tragedy on the hills
Focus on rescue and relief
Death and destruction have wreaked havoc in Uttarakhand as we witness a monumental tragedy unfold in the wake of the floods following torrential rain last week. Hundreds of lives have been lost, many more people are missing even as tens of thousands of pilgrims and other visitors have been rescued and brought to safety.

Passing the burden
Implications of coal imports 
The Cabinet Committee on Economic Affairs has taken two important decisions: to allow power producers to pass on the cost of imported coal to consumers and sell 10.5 million tonnes of foodgrains in the open market. Public and private power plants fail to operate at full capacity because of coal shortages.

Universities of Punjab
In pursuit of survival or excellence?
Post-industrialisation, knowledge-based industries brought innovation and research to the centrestage. This meant the degree provider universities had to evolve to become centres of excellence to keep pace with the fast changing technologies and systems globally, as also to facilitate their own unique contribution in different streams of knowledge.

• Thought for the Day

ARTICLE

Dramatic fall of the rupee
Wooing foreign investors won’t be easy
by Jayshree Sengupta
Recently the rupee touched Rs 60 to a dollar — something which it has never done before. So, what is going on? The blame can be put on international as well as domestic factors.  The main international factor has been the US Federal Reserve’s announcement that it will be slowing down its monetary easing policy.

MIDDLE

The jamun tree
by Robin Gupta
A jamun tree, renowned for its succulent fruit, laden on leafy branches that swept the earth, stood tall in the garden in a house where I lived for years. The tree, of hoary ancestry in the village, had escaped Corbusier's axe when Chandigarh, a new township, was fashioned.

OPED DEFENCE

Welfare for the veterans, by the veterans 
Neglect of ex-servicemen is one of the reasons that a career in the armed forces has lost its sheen. It is time we devoted serious attention to the host of issues and problems affecting the veterans
Brig M.L. Kataria (retd)
There are 2.5 million ex-servicemen (ESM) in India who are entitled to post-retirement care according to the terms of their service. If we include their spouses and dependants, they add up to about 10 million. It is estimated that this number may swell 20 million by the year 2040.

EDITORIALS

Tragedy on the hills
Focus on rescue and relief

Death and destruction have wreaked havoc in Uttarakhand as we witness a monumental tragedy unfold in the wake of the floods following torrential rain last week. Hundreds of lives have been lost, many more people are missing even as tens of thousands of pilgrims and other visitors have been rescued and brought to safety. There has been a massive deployment of personnel from the Army, the Air Force, the National Disaster Response Force, the Central Reserve Police Force, the Border Roads Organisation, and other Central and state organisations. They all have put in tremendous effort to help those in need, and in repairing the infrastructure, especially roads, to enable more effective and swift evacuation of stranded people.

Tragedies bring out the best and the worst in people. As they faced the fury of nature, strangers thrown together by circumstances worked with each other for their mutual safety. Indeed, there have been many heart-warming stories of how stranded people reached out to those less able and of the assistance provided by locals to tourists. On the other hand, there have been some reports of scalping as some people exploited the hungry and the needy.

Unfortunately, some political leaders have not been able to rise to the occasion and have treated the tragedy as yet another theatre to engage in petty politicking. Visits by VIPs to disaster-struck areas distract the security agencies from their primary duty of rescue and relief. There have been cases of one-upmanship in issuing statements about how various state governments had helped the victims. Some sections of the media have focused too much on providing high numbers regarding deaths, or in reporting the ghastly details. The need of the hour is to steadfastly keep an eye on the rescue and relief operations and to support the personnel engaged in them. Yes, the tragedy has forced us to re-examine how the fragile ecology of the Himalayas has been exploited in the name of development, and at what horrendous cost. Indeed, we have to look at why such ‘development’ was allowed, and how to regulate the number of pilgrims according to the capacity of the various shrines and other important destinations. Accountability must be fixed for the lapses that have obviously occurred, but right now the focus should not be allowed to shift as thousands of jawans battle with difficult terrain to save their fellow citizens, even as the impending rain makes their task more urgent.

Passing the burden
Implications of coal imports 

The Cabinet Committee on Economic Affairs has taken two important decisions: to allow power producers to pass on the cost of imported coal to consumers and sell 10.5 million tonnes of foodgrains in the open market. Public and private power plants fail to operate at full capacity because of coal shortages. Coal India is unable to meet its commitments to power producers. It supplies only 65-75 per cent of the contracted quantities. The situation has worsened after the ban on mining in some states where coal blocks were allocated on extraneous considerations. The decision to allow power companies to recover the cost of imported coal, pushed up by a depreciating rupee, from the users will result in an additional burden of 15 to 17 paise per unit on consumers. A long-term solution is to encourage greater private sector participation in exploiting coal and other sources of energy.

The decision to offload foodgrains in the open market is welcome since it will vacate storage space for the fresh produce. But the timing is improper. Around the procurement season prices tend to fall, and selling grains at this time serves little purpose. Why the government had to take so long to decide on selling a part of the foodgrains rotting in the open defies logic. On the one hand, high food prices hurt the poor. On the other, godowns overflow with grains, raising the cost of storage for the government. Keeping food stocks many times the buffer requirement makes little economic sense. Mountains of grains have been raised in recent years for implementing the legal right to food once the Bill is passed.

A normal monsoon augurs well for India's food security as well as the power sector. The lower demand for power comes as a relief for the cash-strapped power utilities of Punjab and Haryana. Nevertheless, the Central decision will add to Punjab's power subsidy burden since the state gives free power to farmers and certain sections of the poor.

Universities of Punjab
In pursuit of survival or excellence?

Post-industrialisation, knowledge-based industries brought innovation and research to the centrestage. This meant the degree provider universities had to evolve to become centres of excellence to keep pace with the fast changing technologies and systems globally, as also to facilitate their own unique contribution in different streams of knowledge. Unfortunately, many prestigious universities of Punjab are bogged down by the vital issue of survival; pursuit of excellence is a far fetched dream for them. This is happening despite the fact that the grants and funding to these universities have been raised manifold. Yet, they fail to keep in tune with the research environment and academic standards followed globally as well as with the phenomenal cost that involves quality research. Maximum funds the universities generate or receive as grants are exhausted in paying salaries and pension, etc, to the staff. This puts quality on the back-burner.

These institutions are not able to hire the best talent as faculty, which comes at a cost. They also fail to nurture talent with quality research and innovation, and end up becoming breeding grounds for mediocrity. This is evident not only in the universities of the state but also across the country. Government-funded universities also sit on the horns of an ideological dilemma: to keep a socialist stance and offer free education to the poor or corporatise the universities to bring in funding and the much required quality. Following the obligations of vote politics, most universities end up spending large sums of money on funding education of the poor and the needy, as most education loans are not structured for the poor.

The agrarian crisis of the state specially needs to be addressed by the agriculture university, which should contribute to the agri- industry with modern well-researched knowledge base. Corporate responsibility is missing in the field of advanced research, and industry collaboration programmes are not yet envisaged in Punjab. Ideally, universities should be self-sufficient. They also need to be innovative on the road to excellence by first acquiring survival skills. 

Thought for the Day

If opportunity doesn't knock, build a door. —Milton Berle

ARTICLE

Dramatic fall of the rupee
Wooing foreign investors won’t be easy
by Jayshree Sengupta

Recently the rupee touched Rs 60 to a dollar — something which it has never done before. So, what is going on? The blame can be put on international as well as domestic factors.  The main international factor has been the US Federal Reserve’s announcement that it will be slowing down its monetary easing policy. Earlier, in a bid to resuscitate the economy the US central bank had pumped in dollars in the financial markets by buying government bonds, thus keeping interest rates very low. Since 2008 the Federal Reserve has pumped in $3.3 trillion and this process continued this year too. But recently the Chairman of Fed Reserve, Ben Bernanke, announced that he is planning a slowdown in monetary easing because there are signs of revival in the American economy and it is registering 2.4 per cent annualised growth. Unemployment has also fallen from 7.5 per cent to 7 per cent. It had an immediate impact on the stock markets worldwide and the dollar strengthened and bond prices crashed and yields rose.

Already the $ 3.3 trillion that has been released in the US economy made investors opt for emerging markets because of the near-zero interest rates in the US. Now the attraction of emerging markets is much less because the US economy is reviving and FIIs are withdrawing money from the bond and equity markets and going back to invest in the US Treasury bonds (the safest bet) as the interest rates are likely to be hiked. The Indian financial markets have also seen the outflow of FIIs and as a result, they are being starved of dollars. FIIs have sold Indian debt (bonds) totalling $3 billion in the past fortnight. They have sold equities worth Rs 1458 crore.

In 2013, around $15.4 billion came in and helped to finance India’s burgeoning current account deficit and there was no shortage of dollars. The withdrawal of FIIs has created a big vacuum as importers are demanding dollars and exporters are not bringing in enough foreign exchange. The RBI has already spent millions to prop up the rupee and is not likely to act in a hurry. Because there is a danger of speculative elements coming into play and buying up dollars to let the rupee fall more. Forex reserves, however big they are, can be depleted in a matter of days then.  So, the RBI is waiting and watching.

The situation would not have been so bad if the current account deficit had not deteriorated so much.  The fall in oil prices, however, reduced it from 7.5 per cent of the GDP in December 2012 to 5 per cent in March. India would need $ 80 billion to finance it. The Finance Minister says it is because of the import of gold that the CAD has been ballooning. Who are the people buying so much gold?  Obviously people with black money (including politicians) and there are millions of them, who are buying gold, and not the average housewife or the common man. Gold is now freely available in its purest form from banks. The banks are touting all kinds of offers for gold purchases instead of focusing on their regular business of lending to industry and other businesses.

It is the all-pervasive corruption in the country which is generating all this black money into the system and there is only one way to beat inflation and detection by tax authorities—buy gold and store it.  No house or property deal can be completed with white money only, and black money is an integral part of it. With inflation near double digits for three years, it is inevitable that people with black money would find in gold a safe haven. No wonder, there is phenomenal increase in gold imports. On the other hand, export of jewelry is slowing down because of the scarcity of bullion.

The general export growth slowdown, on the other hand, can be blamed on the recessionary conditions in the western markets. The biggest buyers of Indian goods, the EU member-countries, are suffering from high rates of unemployment. Naturally the demand is less. Also, the manufacturing sector growth has slowed down to 2.5 percent because of infrastructure problems, high inflation and the flagging domestic demand. Also slowing down of new investment has been due to the high interest rate of 8.25 per cent which the RBI is refusing to scale down for fear of stoking inflation. After many months of tight money policy, inflation has come down to 4.8 per cent but not the food inflation which remains high.

Thus, we have an unbalanced situation in which imports are rising rapidly and exports are slowing down, and the current account is beyond sustainability. The FII inflows helped a lot to ease the dollar demand but now they are also moving out quickly because India’s GDP outlook is less than promising and lower than the expected 6 per cent. A weak rupee has further contributed to their rapid withdrawal which is contributing to its weakening.

Opening up various FDI sectors cannot attract FDI overnight. It comes to countries with steady policy framework and stability of the regime. Right now India’s transitional political regime may not seem attractive to foreign investors. Inflation also has been a deterrent as well as the problem of a steady supply of skilled labour and infrastructure. FDI has dipped by 38 per cent to $22.4 bn in 2012-13.

Various important bills are still awaiting parliamentary approval and no one knows when they will be passed. The land acquisition Bill is the most important one from the point of view of foreign investors. In its present form, with clauses about rehabilitation and compensation to people whose land is to be acquired, it will remain a controversial subject and may not get parliamentary nod anytime soon.

To woo back the FIIs would not be easy. To prop up exports will also not be easy in the current world market situation. It would be very difficult for the rupee to regain its former value unless commodity prices decline. Already oil prices have slipped a little and also gold prices have come down with the strengthening of the dollar. We should be prepared for a lower rupee unless the RBI steps in and boosts the rupee by releasing a huge amount of dollars. Besides, the steps that the government takes to reduce the demand for gold are important.  If the current spate of scams continues, bringing in more uncertainty in the market and lowering business expectations, there would be further problems ahead. And if export growth and industrial growth do not pick up, the outlook for a higher GDP growth may darken more.

MIDDLE

The jamun tree
by Robin Gupta

A jamun tree, renowned for its succulent fruit, laden on leafy branches that swept the earth, stood tall in the garden in a house where I lived for years. The tree, of hoary ancestry in the village, had escaped Corbusier's axe when Chandigarh, a new township, was fashioned.

In season the jamuns streaked a sparkling white car, crowned by a red beacon standing below it, with a kaleidoscope of purple hues. Also, visiting petitioners, masked behind predating eyes, a smile stretching their lips to the furthermost corner of hope.

The jamun tree sheltered many birds. She saved me from being drenched when I stood in her shade wondering what would happen next. Leaving each morning for office with a swing in my step, I looked back at the tree bidding her adieu. Casting her shadow wide, she would remonstrate: 'Be careful! Birds of passage have many nests!’

As Managing Director of a financial corporation, I could make rich men richer. Thinking over these matters in my luxurious office, I turned my attention to callers who bowed with isles of lucre in their eye, putting forth their tales of falsehood, spinning all kinds of lies. My idea of governance denied a role to the sarkar in business or industry. Trapped in portraits of Bengal, for me the government was the commissioner on an elephant back, sporting his Solapuri topi above bejewelled crowns, surveying many thousands of acres in a vast division, superintending the maintenance of peace and the mandate of Pax Brittanica.

Breaking through my reverie, Messrs Chadha and Hingorani from Ludhiana entered the chamber; with appropriate salutation, they would have me believe that Bathinda was the most appropriate area for setting up a winery which would generate employment at intoxicating pace and produce the best table wine. It was the Chief Minister's constituency, moreover! My query was: "And will our grapes give the vineyards of France a run for their money?" "Yes, sir, we will beat them hollow; we will supply the cheapest and best", declared Mr Chadha, his glittering eyes watching the calligraphic trajectory of my pen.

Take charge of yourself, Hingoraniji! Southern France has received bouquets and accolades from Kings and Counts for centuries. In natural reflex, he declared, “I am prepared!” Turning to the tree for approval, I thought aloud: "Next you will propose jamun as the best fruit of all to present an imperial red wine.” To myself I reasoned, “The tree will bear fruit when I am gone!”

"Yes, sarkar", said Mr  Chadha, sensing the fait accompli, "it will be the best wine of all!"

The entrepreneurs were well connected; there was fanfare on the opening day. My effort at placing a fine brew before the public was appreciated by all. The winery project, however, failed and was written off! Worse still, the jamun wine I had lovingly nurtured in pitchers placed on my terrace, on the day appointed for taking its bouquet, vanished altogether. The devil, I was told, had exceeded his portion.

The jamun tree was to be felled the next day, to end its purposeless existence. That evening, there was a howling storm, the worst of its kind; doors were unlatched and windows flew open. Flashes of lightning revealed a rag-picker filling her crumpled sack with fallen fruit. "Take away the jamuns from every branch above, from the fallen heaps beneath," I told her. The crone looked at me with fear-stricken eyes and stumbled into a sorrowing night.

OPED DEFENCE

Welfare for the veterans, by the veterans 
Neglect of ex-servicemen is one of the reasons that a career in the armed forces has lost its sheen. It is time we devoted serious attention to the host of issues and problems affecting the veterans
Brig M.L. Kataria (retd)

There are 2.5 million ex-servicemen (ESM) in India who are entitled to post-retirement care according to the terms of their service. If we include their spouses and dependants, they add up to about 10 million. It is estimated that this number may swell 20 million by the year 2040.

While in uniform, the soldier, sailor or airman, comes home for brief periods, once or twice a year. Hardly 20 per cent of them are lucky enough to have one or two tenures of not more than two to three years in a peace station, where again, not all of them get government accommodation. The hunt for hired accommodation and admissions for school children being tedious, tiring and uneconomical, he lives in barracks and goes back to the borders after his tenure in town.

Ex-servicemen’s contingent on Rajpath during the Republic Day parade. A number of government organisations and private associations have their fingers in the pie for ex-servicemen’s management in India, but there is no single organisation accountable to deal with their problems