India-China ties in a trough

BRP Bhaskar
Gulf Today

A year after President Pranab Mukherjee spoke of India-China relations as the defining partnership of this century and called upon governments of the two countries to jointly impart momentum to bilateral ties, there is no sign of a forward movement. On the contrary, mutual distrust is threatening to destroy the good work done after the 1961 hostilities over the disputed border.

Ahead of a visit to the border state of Arunachal Pradesh by Tibetan spiritual leader Dalai Lama, who has been living in exile in India since 1959, this month the Chinese Foreign Ministry warned that it could damage bilateral relations.

Arunachal Pradesh, which was administered by the British under the name of North East Frontier Agency, is now a full-fledged state with an area of about 84,000 square kilometres and a population of 1.38 million. China claims it is South Tibet. After India ignored the warning and the Dalai Lama went ahead with the visit, Beijing announced Chinese names for six Arunachal towns to reinforce its claim.

This was the Dalai Lama’s seventh visit since 1983 to Arunachal Pradesh, where the 17th century Tawang monastery, headquarters of the Kama-Kargyu sect of Tibetan Buddhists, is located. While China routinely objected to his visits, this is the first time it has followed up the protest with any step at all. P. Stobdan, a former diplomat, believes China only wants to discourage India from thinking it can use the Dalai Lama as leverage in the dealings between the two countries.

India-China relations are now in a trough now. Each side feels that the other is not sufficiently sensitive to its interests.

Prime Minister Narendra Modi, whose neighbourhood policy is conditioned by the Hindutva perspective on Pakistan and terrorism, is peeved with China for blocking India’s bid to join the Nuclear Suppliers Group and its attempt to get the UN to brand Pakistan-based Jaish-e-Mohammed chief Masood Azhar as a terrorist.

China is suspicious of India’s evolving strategic relationship with the United States. Also, it is unhappy about India’s indifference to President Xi Jinping’s pet One Belt One Road project.

OBOR is a global network of roads, railways, pipelines and utility grids that will link China with South Asia, Central Asia and West Asia and through them to Europe. When completed, it will be the world’s largest platform for economic, social and cultural cooperation.

India’s reservations about OBOR stem primarily from its opposition to the China-Pakistan Economic Corridor, which will run through Azad Jammu and Kashmir. CPEC is one of several corridors envisaged as part of OBOR. The corridors are expected to be dotted with energy and industrial clusters.

The Indian government initially cited lack of details about the elements of the project as a reason for its holding back. Last month an official spokesman spelt out its objection: “CPEC passes through Indian territory.”

The argument is, no doubt, valid but the objection comes too late. The 1,300-km Karakoram highway, which runs from Kashgar in the Xinjiang region of China to Abbotabad in Pakistan and will become part of CPEC, has been operational for about four decades already. India learnt of that road project only after work on it began in 1959.

India is yet to respond to China’s invitation to attend a meeting on OBOR which it has scheduled for May. The government must take an early decision in the matter, after weighing carefully the advantages that may accrue to the country from the project and the disadvantages that may result if it keeps out of it.

India’s absence will, no doubt, diminish OBOR’s worth as it is now the world’s fastest growing economy and one of the largest markets. But India needs to note that more than 60 countries with a combined GDP of $21 trillion have evinced interest in the project and it thus bids fair to be a success even without India. In fact, the chances are that circumstances may eventually compel India to join it so as to benefit from it.

An early positive decision may confer two advantages. It may lift India-China relations from the trough into which it has fallen. Many details of OBOR are still to be worked out. By joining the group before the details are filled in India may be able to play a role in shaping its course in a way beneficial to it.

India must not lose sight of the fact that it cannot secure its legitimate place in a reformed UN except with the concurrence of China, which is one of the five permanent members of the Security Council. --Gulf Today, April 25, 2017.

Farmers need more than relief

BRP Bhaskar
Gulf Today

India’s farmers who have lived precariously for ages are paying a heavy price for the rapid growth of the national economy in the era of globalisation. More than 300,000 of them are believed to have taken their lives in distressing circumstances.

Factors that contributed to the worsening of farmers’ condition include credit constraints, cut in agricultural subsidies, rise in input costs and fall in the prices of produce. Many farmers switched from food grains to cash crops expecting higher returns but their hopes did not materialise.

The first steps towards economic liberalisation were taken by Manmohan Singh as finance minister in PV Narasimha Rao’s government in 1991. According to a study report, during 1996-2003, on an average 15,000 farmers committed suicide each year. During 2004-2012, the figure rose to 16,000.

Agriculture is a state subject and the markets are regulated by state laws. Many states adopted a model law drafted by the Centre in 2003 to ensure fair prices to farmers. Middlemen who are able to exert influence on the supply chain defeated its purpose.

The Centre is now in talks with the states to draw up a new model Agricultural Produce Market Committee Act which will provide for a single licence and single-point levy of market fee at the state level. It envisages this as the first step towards a single licence and single-point levy of market fee at the national level.

While procedural reform can take its time, steps to provide relief for farmers in distress cannot wait. Appeals to the Centre by Congress Vice-President Rahul Gandhi, who has toured affected regions in several states, have so far fallen on deaf ears. Betraying total lack of compassion for the suffering farmers, a leader of the ruling Bharatiya Janata Party dubbed Rahul Gandhi a ‘distress’ tourist.

The last time the Centre intervened directly in the issue was when Manmohan Singh’s first government announced a loan waiver and debt relief programme. It is believed to have benefited 42.8 million farmers and cost the exchequer Rs 700 billion. It probably helped the Congress-led United Progressive Alliance to win a second successive term.

Earlier this month, the new BJP government of Uttar Pradesh, the largest state, announced waiver of crop loans of up to Rs 100,000 of small and marginal farmers in fulfilment of the party’s electoral promise. About 21 million people, constituting 92.5 per cent of the state’s farming community, are expected to benefit. The state government also decided to write off bad loans of about 700,000 farmers totaling Rs 56.30 billion.

While these steps will go a long way in relieving the distress of farmers, there is concern over the way they will impact the state’s finances, which were already facing a deficit of about Rs 500 billion.

The Centre allows the states to float bonds to cover the cost of debt relief programmes. However, lately the experience is that they do not attract investors. It thus becomes necessary for the Centre to bear a good part of the burden.

Loan waiver is only a palliative measure. It does not improve the farm economy. A World Bank study has shown that banks tend to move away from areas with high bailout percentages to those with lower percentages. They fear that waivers increase the tendency to default on loans as the borrowers believe a new government will bail them out.

The UP bailout has prompted farmers in other states to press their governments for similar relief measures.

Maharashtra’s BJP government has said it will study the UP scheme to see if the state can adopt it. Opposition parties in the state have been agitating for debt relief measures for some time.

In Tamil Nadu, which has been in the grip of drought for more than a year, the government decided last August to write off the loans that small and marginal farmers had taken from cooperative banks. It cost the state about Rs 58 billion. The big farmers who were left out moved the high court and won a favourable verdict.

The bailout did not end the misery of the state’s farmers. They are now staging demonstrations in New Delhi demanding water for their parched lands.

A large section of the farming community still depends on private money-lenders for their credit needs and the government’s debt relief measures do not benefit them.

Indian agriculture is plagued by chronic problems which call for more than palliative measures. The Centre needs to draw up a comprehensive programme, in consultation with the states, to make farming remunerative and sustainable. -- Gulf Today, Sharjah, April 18, 2017.

Banking sector problems remain

BRP Bhaskar
Gulf Today

With the State Bank of India absorbing six smaller public sector units on the first of this month, the country now has a banking institution with enough assets to figure in the list of the top 50 in the world.

The merger is part of a plan for consolidation in the banking sector. While consolidation is probably  a necessity at this stage, it is not a complete solution to the banking industry’s problems. 

The SBI’s roots go back to the colonial period. After the East India Company took control of the subcontinent with the help of three largely mercenary armies headquartered in Kolkata (Calcutta), Mumbai (Bombay) and Chennai (Madras), Britain permitted setting up of presidency banks in these cities. In 1921 they were merged to form the privately owned Imperial Bank of India.

A few years after gaining freedom, the government nationalised it and renamed it as the State Bank of India. Banks established by the former princely states were made its associates. All the associate banks and a niche bank for women launched in 2013 have now lost their identity in the SBI.

In 2015 the SBI was at the 52nd place in Bloomberg’s listing of the world’s banks. With the merger pushing up its assets to Rs 550 billion, it moves up to the 45th place.

The SBI now has about 24,000 branches, 270,000 employees and 370 million account holders. Its deposit base is about Rs 26 trillion and advances total Rs18.5 trillion. 

However, it is way behind the Industrial and Commercial Bank of China, which, with assets of $3.6 trillion, is the world’s largest bank. There are three more Chinese banks among the top 10.

The idea of merger of the associate banks in the SBI to create a mega bank capable of playing a significant role in the global economy was mooted by the Manmohan Singh government.  It moved slowly as the Left-led employees’ unions were against it. 

Prime Minister Narendra Modi gave it high priority as part of a banking reform plan.  Last year the government provided Rs 25 billion to infuse fresh capital in the public sector banks and made a commitment to provide Rs70 billion more in the next five years.

Basel III (the Third Basel Accord), the voluntary global regulatory mechanism, stipulated that banks must achieve a capital adequacy ratio (ratio of capital to risk-weighted assets) of 10.25 per cent by March 2017 and 11.5 per cent by March 2019. Fresh capital was needed to meet this requirement.

The government and the SBI management have claimed that the merger would result in reduced costs and increased efficiency, leading to recurring savings estimated at more than Rs10 billion in the first year.

Ironically, its immediate impact was increased costs to account holders as the bank raised the minimum balance requirements and fixed fees for transactions above a prescribed minimum. As a mark of protest, a citizens’ group called for observance of April 6 as “no transaction” day. A few thousand customers of the associate banks are reported to have moved their accounts elsewhere.

All that happened on April 1, the day of the merger, was the replacement of the name-boards and stationery of the associate banks with those of the SBI. The databases of the banks are likely to be merged only by the end of May. 

Since the associate banks, like the SBI, had worked on a national basis, there is a need to undertake rationalisation of branches and redeploy staff.  A category of employees of the associate banks, numbering more than 12,000, were given the option to take voluntary retirement, but only about 3,000 used the opportunity.

The government’s plan reportedly also envisages consolidation of the other 20 public sector banks into 10 large units.  Moody’s, the global credit ratings and research agency, has warned that the proposal involves risks that may offset potential long-term benefits. A prudent course will be for the government to study the SBI merger experience over a period of a year or so and recast its plan on a realistic basis.

The banking industry’s major problem is not the small size of the units but warped policy as also faulty implementation. The gross non-performing assets of 49 commercial banks stood at Rs 6 trillion in June 2016. Of this, the 20 public sector banks’ share was Rs 1.54 trillion. While banks are generally harsh on farmers who default on loan repayments when crops fail, they declare hefty loans of business magnates as non-performing assets and allow them to get away. -- Gulf Today, Sharjah, April 11, 2017.

Unending wait for justice

BRP Bhaskar
Gulf Today

The vast majority of India’s population suffers from various kinds of disabilities on account of birth. In extreme cases, disabilities take the form of condemnation to eke out a measly living doing the dirtiest of jobs.

The Constitution that India adopted on emerging as a free nation proclaimed that no citizen shall be subjected to any disability, restriction or condition with regard to access to basic amenities and other facilities on grounds only of religion, race, caste, sex or place of birth. It also empowered the state to make special provisions considered necessary to enable the disadvantaged sections to overcome their disabilities and become full and equal citizens.

Accordingly, the Centre and the states have enacted a plethora of laws. However, justice eludes hapless citizens as the authorities are often lax in implementing them.

In 1993, in the fifth decade of Independence, the Centre passed a law prohibiting construction of dry latrines and employment of manual scavengers. It prescribed a year’s imprisonment or a fine of Rs 2,000 or both for breach of its provisions. But no one was convicted under this law in any state.

The Comptroller and Auditor-General in a report in 2003 said Rs6 billion had been spent on the scheme for rehabilitation of scavengers under the law but it had failed to achieve its objectives. Later in the year Safai Karmachari Andolan, an organisation of the community, moved the Supreme Court for a declaration that continuance of manual scavenging was a violation of constitutional rights and a directive to the Central and state governments to implement the law.

While the matter was before the court, the Centre superseded the 2003 law with another one which spelt out measures for rehabilitation of manual scavengers. The Supreme Court closed the case after issuing certain directives to the Centre and the states in the light of the new law.

On October 2, 2014, Prime Minister Narendra Modi launched with fanfare an ambitious Swachh Bharat Mission (SBM) with the objective of making India clean in five years as a tribute to Mahatma Gandhi on his 150th birth anniversary. It envisages large-scale construction of community toilets, grant of financial aid to build household toilets and making towns and villages free of open defaecation. 

Successful completion of the mission would eliminate manual scavenging. The Urban Development Ministry, which recently undertook a sample survey in three selected districts each in the large states of Uttar Pradesh, Maharashtra and Karnataka, found that all three had failed miserably in achieving the targets for building household latrines in the first two years.

Karnataka had achieved a paltry 2.1 per cent, UP four per cent and Maharashtra 14.4 per cent. In many instances the state governments had not even transferred the funds allotted by the Centre to the urban local bodies. The Ministry concluded that the mission was unlikely to achieve the goal of Clean India by 2019.

The SBM websites claim that more than 38 million household toilets have been built in the villages and more than 3 million in urban areas. The Urban Development Ministry’s survey yielded information that casts doubts on these claims. 

For instance, it pointed out that at Akola town in Maharashtra only 85 households sought assistance to build toilets but the website displayed photographs of 2,978 completed units. It also put up photographs of more than 600 toilets said to have been constructed at Bhadohi, Jahanabad and Mathura in UP although not even one application from these towns was verified and approved.

The Socio-Economic Caste Census data released in 2015 put the number of families engaged in manual scavenging at 180,657. The Centre is supposed to provide funds to the states for their rehabilitation. In the 2015-16 budget it made an allocation of Rs 4.7 billion for the purpose but not a rupee was spent.

One reason for the failure of the rehabilitation scheme is the systematic falsification of data by the states. Most of them deliberately fudge the number of manual scavengers to convey the false impression that they had complied with the legal ban. Sometimes this is done in a very crude manner. For instance, the government of Telangana state, which had more than 150,000 dry latrines at the end of 2015/ claimed there were no manual scavengers in the state.

The Central and state governments owe it to themselves and to the people to address the problem of manual scavenging boldly and honestly and put an end to the misery of those who have been waiting endlessly for justice. -- Gulf Today, Sharjah, April 4, 2017.