Rolling out of reforms

BRP Bhaskar
Gulf Today

Pressure is mounting on the Narendra Modi government from domestic and foreign business interests to roll out economic reforms promised by the Bharatiya Janata Party in its election manifesto.

The Paris-based Organisation for Economic Cooperation and Development (OECD) said last week the Indian economy had shown signs of a turnaround and imbalances had lessened. It forecast that the economy, which registered a growth rate of only 5.3 per cent during the July-September quarter, could go up to 6.6 per cent in 2013-16 and to 6.8 per cent in 2016-17.

These rates are by no means too modest in the context of current global conditions. However, the Indian government is eager to push the rate up to the eight per cent level achieved before the global meltdown of 2008. Finance Minister Arun Jaitley told Parliament a few days ago that the government was committed to go ahead with reform measures “to take India back to the original potential of eight per cent economic growth”.

The Western economies have a stake in accelerated growth of the Indian economy since it will boost their own recovery plans. On its part, the Indian government is looking forward to infusion of fresh foreign capital to expand economic activity and generate jobs. The rub lies in some local laws which both domestic and foreign investors consider a stumbling block.

The World Bank’s Ease of Doing Business report ranked India at 142nd among the 189 countries surveyed. This meant a decline from last year when it was at the 140th place. The Prime Minister has reportedly set for himself a highly ambitious goal of putting the country among the top 50.

An action plan drawn up by the Confederation of Indian Industry, with the help of the consulting firm KPMG, contains a set of proposals to make India the “best place for doing business”. It envisages, among other things, rationalisation of the tax regime, easing of land acquisition process and streamlining of procedures for investment approval and provision of utilities.

Some proposals, like the one regarding e-filing of applications, will certainly help cut red tape, reduce corruption and improve efficiency. Some are couched in euphemistic terms. An example is the proposal for creation of an appropriate labour development ecosystem. It talks of 44 Central laws, many of which are old and outdated and impose a heavy compliance burden, and says there is urgent need to realign them to new economic needs. This is a scarcely disguised plea to scrap laws that protect the workers against exploitation.

The OECD’s prescription for curing the economy’s ills also includes many of the CII-KPMG proposals but it presents them in a wider context giving the impression that it is sensitive to the needs of the workers and other weaker sections of the society. It asks the government to boost manufacturing jobs by simplifying labour laws, improving access to education and improving the business climate. It also proposes increasing female economic participation and improving access to quality healthcare.

The proposals of CII and OECD are not new. The Congress-led United Progressive Alliance government had seriously considered similar proposals but could not go ahead with them because of strong opposition not only from the Left parties but also some of its own partners.

Soon Modi will have before him yet another set of proposals drawn up by a World Bank team, which is now in India. It comprises experts on trade and competitiveness practices and was sent by Bank president Jim Yong Kim at Modi’s request to suggest measures to improve the business environment.

The team was reportedly holding discussions with public and private sector stakeholders in New Delhi and Mumbai on the reform initiatives and discussing various reform options and feasibility of their implementation. Its recommendations are bound to be on the same lines as those of the CII and OECD.

Parliament is now in session, and the government may try to push some reform proposals through it. However, major reforms must wait till the budget session which begins in February.

With a clear majority in the Lok Sabha, the lower house of Parliament, the BJP has more elbow room than the Congress had. However, it is in a minority in the Rajya Sabha, the upper house, and needs the support of other parties to push any changes in law. Some of the reform proposals may require changes in the Constitution, for which a two-thirds majority in both houses is necessary. -- Gulf Today, Sharjah, December 9, 2014.

BRICS seeking greater say

BRP Bhaskar
Gulf Today

Leaders of Brazil, Russia, India, China and South Africa (BRICS), who will gather in New Delhi this week for their annual summit, are expected to pitch for a greater role in world affairs in keeping with their growing clout as newly emergent economies. The main item on the agenda of the summit, scheduled for March 28 and 29, is global governance. While China is not keen on early reform of the United Nations system, it shares the BRICS partners’ enthusiasm for reform of the global financial institutions.

As it happens, the summit takes place ahead of a meeting of the World Bank to choose its next president.  Since the creation of the World Bank and the International Monetary Fund at the end of World War II, the former has been headed by an American and the latter by a European.

On Friday President Barak Obama named Jim Yong Kim, an American of South Korean origin, as the US nominee for the post. Two other candidates are also in the field: Ngozi Okonjo-Iweala of Nigeria, whose sponsors include South Africa, and Jose Antonio Ocampo of Colombia, who has been nominated by Brazil.

China recently suggested that a non-American must head the institution. It is not clear if the BRICS nations can agree on a common non-American candidate. Even if they can, the US may be able to ensure the election of its nominee as it continues to wield considerable influence in the global financial system. However, the ideas the BRICS nations are working on may make reform of the system inevitable.

As an institution charged with the task of making resources available to member countries to tide over balance-of-payments difficulties, the IMF has a critical role in helping Europe to overcome its distress. The BRICS nations have already injected a large amount of capital into the IMF but some Europeans are asking for more.

“BRICS’ voice in the IMF must be enhanced if the European countries want it to provide more capital,” a Russian government spokesman said last week. At the New Delhi meet, the group is expected to work out a strategy to link increased participation in the European recovery programme to restructuring of the IMF’s capital base to bring it in tune with the new financial realities.

A parallel initiative envisages the setting up of a development bank of the BRICS nations. A proposal made by India in this connection has evoked a favourable response from Russia and China. India views the proposed bank, which will facilitate indirect investment of foreign exchange reserves of the central banks of the member countries, as an institution with the potential to become a powerful player in global decision-making.

For China, the BRICS development bank offers a platform to expand the international role of its currency, the renminbi. It has been facing criticism from other countries for manipulating the value of the renminbi to maintain export competitiveness.

With the Western economies in the doldrums, the BRICS nations are now the most favoured investment destinations. Their efforts to forge common strategies have set alarm bells ringing in some Western financial circles, particularly investment promoters.

One investment research group, in a recent report, bemoaned that countries like Indonesia and Mexico, which are beginning to rival some BRICS nations in terms of growth and investment strength, are often overlooked in favour of them.

Smaller markets such as Malaysia, Poland and Peru are also surging in importance although their total size is tiny compared to the trillion-dollar economies of BRICS, it said, adding they could be interesting picks for investors.

Against this background, the decision of leading stock exchanges of the five countries to establish the BRICS Exchanges Alliance assumes significance. Beginning March 30, members of the Alliance will begin cross-listing benchmark equity index derivatives on one another’s trading platform.

Initially, members of the Alliance aim to expand their product offerings beyond their home markets and give investors exposure to the other BRICS economies.

While in New Delhi for the summit Chinese President Hu Jintao is expected to formally declare 2012 as Year of India-China Friendship and Co-operation. With memories of the disastrous end of the Hindi Chini bhai bhai (Indians and Chinese are brothers) era, inaugurated by Jawaharlal Nehru and Chou Enlai, still fresh in mind, this slogan is sure to be viewed with scepticism by many people. But the good that can result from renewed friendship must not be lost sight of. -- Gulf Today, Sharjah, March 26, 2012.

Civil Society rejects World Bank action plan for Orissa

The following is a Press Release from the Focus Orissa Forum on Climate Change, forwarded by the Asian Human Rights Commission (AHRC), Hong Kong:

The draft Climate Change Action Plan of Orissa (CCAP) prepared at the aegis of the World Bank and DFID does not consider the concern and interest of common odia, neither reflect state’s seriousness towards self-discipline, sobriety and adaptation, rather vociferously reiterates its nexus with neo-liberal lobby which propounds reckless industrialization and unwarranted investment. Notwithstanding the fact that its citizens are either the victims of Climate Change or are the vulnerable lot at coast and the hills, in spite of living a low-emission or net-absorption livelihoods, the authors of the document treat them as the Climate Criminals while allowing the criminals to expand and multiply their crimes. With its focus on promoting investment-intensive mitigation measures as a tool to encourage state’s ongoing unabated industrialization drive, it looks more as an “Inv estment Plan for Industrialization and Mitigation’ offering almost nothing for state’s farmers, fishers, forest-produce gatherers.

Orissa government’s Draft Climate Change Action Plan with a huge budget of Rs. 17,000 crore seeks to help industries more by reducing their expenditure on adapting to climate change, while providing hardly any budget for the victims of climate change at Saatabhayaa, around Talcher and Jharsuguda. It proposes a 15 fold increase in the capacity of thermal power plants at the guise of improvement technology which alone could lead to at least thirteen times higher levels of emission of heat and pollution. One can imagine the hazards that already boiling Talcher and Jharsuguda will face in this scenario. A budget of Rs. 5,500 crore is made for reducing transmission and distribution losses which is only going to help private energy companies sell more electricity and make more money. On the contrary allocation of mere Rs. 4 crore for the establishment of biogas plants can support only about 5000 biogas plants, which is even insufficient for one block.

There is hardly any money allocated for developing small and micro level irrigation facilities or in providing adaptive seeds to farmers. There is no allocation for increasing the supply of electricity to farmers. On the other hand the government has planned for enhancing the fees for irrigation. Over the last ten years, the government has kept on increasing the fees it collects from farmers for supplying irrigation water to them, while allowing industries to use increasing quantities of water, often without formal permission and from sources earmarked for irrigation purposes, without having to pay much.

The plan has more than Rs. 3,000 crore for the forest department, while the villagers who have sacrificed so much to protect their forests under community forest management /joint forest management have been allocated nothing but a small amount of five crore rupees for training purposes. In transport sector, 80% of the allocated budget for this sector is for highways while there is no budget for rail or for promoting the use of non-motorised transport such as bicycles.

Two of the most critical areas climate change impacts are falling production in agriculture, livestock & fishery; and increasing health hazards due to heat related illnesses and accidents. There is no budget under the action plan for something as obvious and basic as preventing and treating heat strokes. The livestock sector is seen by the government less as a victim of climate change and more as a producer of methane. The climate change action plan accuses the farmers of Orissa of not killing old and unproductive cattle due to religious cultural reasons and that this leads to large methane emissions.

An overall reading of the Orissa climate change action plan leads to the following conclusions:

1. It’s a hurriedly drafted document ghost-written by the World Bank and other External Agencies.

2. Notwithstanding the importance and implication of the document, the process of preparation of draft document has not been inclusive. There has been no involvement of civil society and other non-government stakeholders including academia, researchers, legislatures, PRIs, NGOs and the important climate refugees and vulnerable communities from different parts of the state in the drafting processes. Even the comments and suggestions provided by some of these stakeholders who were invited to the hurriedly called 4 stakeholder consultations have been ignored and not incorporated.

3. It treats Orissa as a cause of climate change while Orissa is actually a victim of climate change. Naturally it wants to impose the price of reducing emission of green house gases on the ordinary people of Orissa, who lives either low-emission or net-carbon-absorption livelihoods.

4. In spite of the heat wave conditions that have killed thousands of people in Orissa, the Action Plan seeks to ratify the setting up of large numbers of new thermal power plans which will lead to at least thirteen times growth in emissions and pollutions, thus would risk temperature increase.

5. It accepts that climate change is going to cause erratic monsoons and increased incidence of droughts and reduce agricultural production. However it proposes not increasing irrigation coverage but increase in water tariff collected from farmers.

6. It blames the people of Orissa keeping their old cows and bullocks and encourages that they should allow such animals to die.

7. It pays only lip service to the issue of renewable energy such as biogas or solar powers and allocates very small budgets for these areas. On the other hand it allocates large amounts of public money to help electricity companies increase profits by reducing transmission losses.

8. It tries to peddle false assumptions that bio-fuels will lead to lower carbon emissions. Bio-fuels can only lead to saving in petroleum use but not reduce carbon emissions as when bio-fuels are burnt, that too released green house gases. It encourages the diversion of land to growing bio-fuels which will lead to reduction in the availability of food and fodder.

9. It pays lip service to development of public transport, railways and non-motorised transport. But it does not allocate any budgets for these while allocating 80% of the transport sector budget for highways.

10. It ignores the contribution of community forest management in protecting and developing Orissa’ forests and allocates no budget for helping villages that are protecting their forests to gain access to alternate livelihoods and alternate fuel sources.

11. It pays only lip service to preventing and curing the health impacts of increasing temperatures and makes no budget allocation for preventing or treating heat strokes in spite of thousands of people having died due to heat strokes in the last few years.

It is important that the government have a genuine participatory process where academics, people currently affected severely by climate change, other people under threat of climate change impact, experienced bureaucrats, civil society organisations, people’s representatives debate on the issue of impact of climate change on Orissa in a decentralized manner from below. The principal approach should be to ensure that the state has systems to generate resources from global funds as well as in judiciously directing its own resources for fighting climate change and its impacts. Such resources should be used to reduce the impact of climate change on the people of Orissa, especially the people who are more vulnerable and unable to adapt without external support. It is important that the state should ponder over its industrialization and extractive development trajectory and comes out with a policy based on self discipline, sobriety and temperance in resource use. This draft sh ould be rejected altogether and a new decentralized, inclusive process be initiated from below with multistakeholders participation with a spirit of Odia nationalism rather than under the influence of the World Bank.

Focus Orissa Forum on Climate Change
Sudarshan Chhotoray
Dr.S.N.Patro
Achyut Das
Biswajit Mohanty
Bibhudhendra P Das
Dr. J.Panigrahi
Dhirendra Panda
Pranb Choudhury
Manas Ranjan
Kalish Das
Tapan Padhi
Pravat Sutar
Prasant Mohanty
Mangaraj Panda
Bisikesan Jani
Ranjan Panda
Bibekananda Pattanaik
Bidyut Mohanty
Pradip Pradhan

Hold World Bank accountable, says People’s Tribunal

India and the international community must join to hold the World Bank accountable for policies and projects that in practice directly contradict its mandate of alleviating poverty for the poorest, says the People’s Tribunal on the World Bank Group in India.

In a judgment, the tribunal says: “The evidence and depositions we have witnessed presents a disturbing and shocking picture of increased and needless human suffering since 1991 among hundreds of millions of India's poorest and most disadvantaged in rural areas and in the cities. It is clear to us that a significant number of Indian government policies and projects financed and influenced by the World Bank have contributed directly and/or indirectly to this increased impoverishment and suffering. All this has taken place while a minority of India's population that constitutes the middle class and rich has enjoyed the fruits of an economic boom.”

The following persons constituted the jury:

Amit Bhaduri, economist and social activist, he has authored many books and been

Professor Emeritus at Jawaharlal Nehru University, Delhi.

Meher Engineer, Physicist and former Director of the Bose Institute.

Ramaswamy Iyer, Former Secretary of Water Resources, Government of India

Alejandro Nadal, Professor of Economics at the Center for Economic Studies, El Colegio de Mexico.

Bruce Rich, Program Co-Director and Staff Expert at Environmental Defense

Aruna Roy, Social activist

Arundhati Roy, Novelist, author and activist

Justice P.B. Sawant, Former judge of the Supreme Court of India

S.P. Shukla, Former Secretary of Finance, Government of India

Sulak Sivaraksa, Founder and director of the Thai NGO “Sathirakoses-Nagapradeepa Foundation”.

Justice H. Suresh, Former Mumbai High Court Judge

Justice KK Usha, first woman to be appointed to the position of Chief Justice of Kerala High Court.

See text of the JUDGMENT