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COVER STORY

15-03-2002

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Briefing

The fallout in the alliance

V. VENKATESAN cover-story

INDIA'S federal scheme has a built-in insurance provision against electoral verdicts in the States being treated as people's judgment on the performance of the Central government, and vice versa. Therefore, technically speaking, the Atal Behari Vajpayee government has not lost its legitimacy to govern the country following the reverses that partners in his ruling alliance have suffered in the latest Assembly elections. The Prime Minister had also denied during his election campaign that the outcome of the polls would amount to a reflection on his government's performance or that they would constitute any sort of a referendum on his government.

But India's federal structure is such that political changes in the States will inevitably have an impact on the character of the Central government. More so when different political parties rule the States and the Centre. Even though it would be correct to say that voters in a State election vote on State-level issues rather than on national issues, there is bound to be some overlapping, as the agenda for the State elections is sought to be articulated by leaders concerned with national issues. And in India today, it is not unusual to find leaders aspiring for space in national as well as regional politics.

The Prime Minister and other senior leaders of the BJP, therefore, now find themselves in a quandary. Having campaigned on the issues of fighting terrorism, Pakistan's proxy war and the build-up of tension on the border, BJP leaders are acutely embarrassed to concede that the electorate has decisively rejected the Vajpayee government's stand on all these issues and refused to be swayed by war-mongering.

Indeed, observers are tempted to compare the present predicament of the National Democratic Alliance (NDA) with the euphoria witnessed during the 1999 general elections. Held in the aftermath of the Kargil War, the BJP managed to whip up patriotic sentiments across the country during the run-up to the elections and managed a stable majority for the NDA. However, with the Kargil victory pushed to the background, the performance of the government on various issues became the criterion for the electorate in Assembly elections held thereafter.

In the February 2000 Assembly elections held in Bihar, Orissa, Haryana and Manipur, the Congress(I) no doubt suffered a rout, but the BJP did not emerge as the principal beneficiary of that. The BJP's allies, the Biju Janata Dal and the Indian National Lok Dal, achieved remarkable victories in Orissa and Haryana respectively while in Bihar, it was the Samata Party's Nitish Kumar who managed to become Chief Minister, albeit for a short while, through tactical manoeuvres.

In the May 2001 Assembly elections in Tamil Nadu, Kerala, West Bengal, Assam and Pondicherry, the BJP was not in the reckoning, and this offered an excuse for its poor performance. Of over 800 Assembly seats at stake in the elections then, the BJP won the princely number of 11; its allies in Tamil Nadu, West Bengal and Assam suffered the worst rout.

The outcome of the February 2002 Assembly elections follows the script written soon after the Vajpayee government was returned to power in October 1999. Information Technology Minister Pramod Mahajan explained the results from Uttar Pradesh as being not vastly different from what the BJP secured in the 1999 Lok Sabha elections. In terms of Assembly segments, the BJP had won perhaps a few more seats than what it has secured in the recent elections. The difference, therefore, he hinted, could be easily explained in terms of the anti-incumbency sentiment.

In Punjab, the BJP was hardly in the reckoning, and it was not expected to do any better than what it secured in the 1999 Lok Sabha elections, even though its ruling ally, the Shiromani Akali Dal (SAD), had improved its strength since the previous Lok Sabha elections, party leaders reasoned. In Uttaranchal, the BJP's rout hardly surprised party insiders, who admitted a series of mistakes on the part of the Central leadership in its efforts to tone up the party machinery.

While changing the Chief Minister in Uttar Pradesh a year ago helped arrest the slide in the BJP's fortunes, a similar exercise carried out belatedly in Uttaranchal failed to help the BJP, it was felt. The relative inexperience of the new campaign strategists in the party's central office (as the tried and tested leaders have joined the Vajpayee Cabinet) and their inability to command the respect of State-level leaders were cited by party sources as the probable reasons for the debacle. In the case of U.P., some party leaders suggest that the BJP has to have some understanding with the Bahujan Samaj Party (BSP) in order to keep the Hindi heartland under its influence.

Whatever the factors, the NDA government at the Centre now finds only a few States under its control. On its own, the BJP rules only in Gujarat, Himachal Pradesh, Jharkhand and Goa. Its allies hold sway over Haryana, Andhra Pradesh, Jammu and Kashmir and Orissa. The BJP's diminishing influence in the Hindi heartland will therefore have a significant bearing on the ability of the NDA government to continue in office. Even though no one expects any ally to walk away from the BJP in the immediate aftermath of these elections, the poll outcome is expected to influence subtly relations between the Prime Minister and several of his allies.

Today the BJP's allies feel that they have nothing to lose if they cling to the ruling alliance. They are still not ready to accept that the verdict in the State elections indicates the diminishing returns of Vajpayee's charisma. Trinamul Congress leader Mamata Banerjee has reportedly expressed reservations about the Centre's disinvestment policy and the labour reforms, which, she believes, could have contributed to the BJP's reverses in the polls. The Telugu Desam Party (TDP) leader in Parliament, K. Yerran Naidu, has expressed similar sentiments.

But apart from these mild pleas for mid-term course corrections, most of the BJP's allies appear unconcerned about the impact of the election results for the NDA. At the first meeting of the NDA held at the Prime Minister's residence on February 25 after the results came, the allies avoided the subject altogether, even though they reportedly requested NDA convener George Fernandes to convene a separate meeting to discuss the issue. Leaders of the BJP, sensing the mood of the allies, refuted the argument that the poll outcome amounted to an admonition of the Centre by the electorate. "There was no political issue involved in the U.P. elections. It was nothing but casteism that influenced the outcome," said former BJP vice-president J.P. Mathur.

The real indications of the impact of the election outcome on the NDA will be felt when the Vajpayee dispensation comes under pressure to take some hard decisions to contain the Vishwa Hindu Parishad (VHP) before its current campaign to build a temple at Ayodhya crosses legitimate limits and threatens communal peace. The Shiv Sena has already sounded a clear warning. Its supremo Bal Thackeray has blamed the BJP's ambivalent stand on building the Ram temple at Ayodhya for its poor performance at the hustings.

While the hardcore elements within the BJP subscribing to the VHP's militant agenda would agree with Thackeray, saner elements, if any, within the BJP and the larger Sangh Parivar may say that Ayodhya was not an issue in the elections. Indeed, it was the fear that overplaying the Ayodhya card would further erode the party's vote bank that prevented the BJP and the NDA government from openly backing the VHP's latest campaign. Realising that Ayodhya would no longer serve as an effective electoral plank for the BJP, Vajpayee tried another game aimed at communal polarisation by his remark on the BJP's ability to win the elections without the support of Muslims. The remark, made towards the close of the election campaign, seems to have led only to the loss of whatever little support the BJP enjoyed among secular middle class voters.

Delinking Ayodhya from the electoral outcome would help the Parivar and the BJP substantially, it is felt. A return to hardline Hindutva agenda surreptitiously is possible if the BJP leadership distances itself from Ayodhya as an election issue. If it is conceded that Ayodhya was an election issue, and the failure to take a clear stand on it alienated the BJP from Hindu voters, an open espousal of the VHP's pro-temple movement by the BJP would be seen by its allies as furthering its electoral prospects as a prelude to the Lok Sabha elections due in October 2004. The dilemma of the BJP - and Vajpayee - now appears to be that it wants its allies, and also the VHP. Whether Vajpayee succeeds in keeping both with him remains to be seen.

BJP IN BIG TROUBLE

In the February 2002 round of Assembly elections, the electorate has put paid to the BJP-led government's gamble of stoking a new nationalist militancy over the scourge of terrorism. And the BJP's credibility as the leading party at the Centre comes under serious threat.

JUST short of touching the halfway mark of its tenure, the Atal Behari Vajpayee Ministry is lurching into a midlife crisis of multiple dimensions. There is a crisis of the imagination apparent in its blundering approach to the economic recession, its mindless reiteration of the discredited nostrums of privatisation and liberalisation. There is a crisis of internal cohesion manifest in the determination of the Hindutva fringe to resurrect the agenda of communal provocation, which has now decidedly reached the point of diminishing political returns. And there is a crisis of popular legitimacy evident in the complete shutout the Bharatiya Janata Party as a party has suffered in the recent elections to four State legislatures. Vajpayee and his associates, notably Home Minister L.K. Advani, may have imagined that they could renew their lease of political relevance by stoking a new nationalist militancy over the scourge of terrorism. But the electorate has put paid to this gamble in a manner that endows a bet on the imminent demise of the BJP-led government with a distinct chance of success.

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Ironically, while shackling the government and preventing it from taking constructive initiatives to deal with the diverse challenges it confronts, political gridlock could also be its only assurance of survival. Disillusioned and clearly restive, the BJP's many partners lack real options. Parting company with the ruling National Democratic Alliance could destabilise the Vajpayee government though not topple it. Among all the constituent parties, only the Telugu Desam Party has the ability on its own to write the obituary of the government. But a powerful negative incentive exists for prospective deserters in the mutual allergies between the Congress(I) and its potential partners, which makes an alternative government a difficult proposition within the numerical parameters of the current Lok Sabha.

A powerful agent has now been found to dissolve mutual antipathies in the Samajwadi Party's dependence upon Congress(I) support for forming a government in Uttar Pradesh. The writing on the wall has been clear for S.P. president Mulayam Singh Yadav since the results came in on February 24. And inevitably, the price to be paid would be a reciprocal arrangement to back up the Congress(I) at the Centre as part of a national alliance.

By February 25, the final shape of the legislature in U.P. had become clear. With counting in two seats suspended on account of suspected irregularities, the S.P. had firmly consolidated its position in the 403-member House with a tally of 143 seats. With allies contributing another four seats, the S.P. was both the largest single party and the leader of the largest pre-poll alliance.

Falling short of a majority by over 50 seats, the S.P. had made discreet overtures to the Congress(I) to secure the support of its 26 members. Harkishan Singh Surjeet, the general secretary of the Communist Party of India (Marxist), was interceding in the mission of restoring relations between the embittered rivals to a semblance of cordiality. The Congress(I) has not forgiven Mulayam Singh for having refused to back Sonia Gandhi's bid for the Prime Minister's post in 1999. And Mulayam Singh, for his part, has been zealous in refusing to concede any ground to the Congress(I) in U.P., for fear that a recovery in its fortunes would cut into his core constituencies.

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A mutual accommodation between the Congress(I) and the S.P. appeared inevitable simply because no other combination had even a remote chance of success. The big loser in the U.P. elections was the BJP, which finished with 88 seats, slightly over half its strength of 160 in the outgoing House. With its allies, notably the Rashtriya Lok Dal of Union Agriculture Minister Ajit Singh, the BJP is expected to command a strength of 107 in the newly constituted legislature. This leaves it with few options to make a realistic bid for power.

In proportionate terms, the biggest gainer in U.P. has been the Bahujan Samaj Party. Once the party of Dalit and backward class assertion, the BSP went through a complete character transformation, providing the party ticket to a wide range of communities in the just concluded elections. The rewards have been dramatic: it has increased its strength by close to 50 per cent, to finish with 97 seats in the legislature.

The big worry for the party now, of course, is retaining its flock. In 1996 the BSP began its tenure in the legislature with 66 members, but a succession of splits reduced it to 43 by 1998. In situations of stalemate, the BSP has been the first target of U.P.'s practised political head-hunters. Two days after the election results were in, the hunting expeditions had reportedly commenced. And the BSP's top leadership - party president Kanshi Ram and Chief Minister-in-waiting Mayawati - who had arrived in Delhi and maintained an inscrutable silence, were actively considering transporting their entire flock to safe havens in Punjab.

MAYAWATI has twice before, in brief tenures, been Chief Minister of the State. On both occasions she was propped up by the BJP, the second time on the basis of an understanding on alternating as Chief Minister with a BJP nominee at six-month intervals. Neither arrangement survived beyond a few months. But observers think that in the current situation there is likely to be a fresh stimulus for the two parties to arrive at an accommodation from their common interest of keeping Mulayam Singh out of power.

Party spokespersons discounted suggestions that negotiations had begun. But certain observers are convinced that the leaderships of the two parties had kept in touch all through the election campaign. Yet, both parties were wary of an open engagement because of the possibility of serious internal schisms emerging. A powerful section within the BJP, associated with incumbent Chief Minister Rajnath Singh, was known to be pressing the view that the best option for the party was to sit in the Opposition and allow its adversaries to be overwhelmed by the incumbency disadvantage in the next elections. This section derived considerable strength from the assessment of the national leadership of the party that the U.P. outcome would not have any immediate repercussions on the stability of the government at the Centre.

A day after formally submitting his resignation to Governor Vishnu Kant Shastri and being asked to continue till alternative arrangements were made, Rajnath Singh arrived in Delhi with Kalraj Mishra, president of the U.P. State unit of the BJP. After a meeting of the party's parliamentary board, the BJP's national president, Jana Krishnamurthy, made a brief public statement. The party, he said, read the electoral verdict in U.P. as a mandate for sitting in the Opposition. This reading was reaffirmed by Mishra in remarks to the media. The local chief of the party did, however, hint at the possibility of a flexible approach: "As the situation develops, we will decide our stand. We expect the Governor to find out who can give stability."

The BSP, which was waiting for a signal from the BJP about its intended course of action, did not react formally. Mayawati was undoubtedly inclined to view the BJP's formal disavowal of interest in forming a government as a negotiating ploy. But she had little to negotiate with since her claim to the chief ministerial post was an irreducible demand. The BJP was informally known to be willing to bring her on board the Union Cabinet, though it has firmly set its face against the option of propping her up as Chief Minister and submitting its fortunes in the pivotal northern State to her rather quirky style of governance.

As the BSP continued its agonising wait, pressures were building up from other quarters. A delegation representing the People's Front - which in U.P., translates itself effectively into the S.P. - was planning to call on the President, to impress upon him the need to invite the largest single party in the State legislature to form a government. The Congress(I) was awakening to the realisation that it could not remain uncommitted for too long, since, like the BSP, it also faced the threat of poachers making off with sections of its flock. An affirmation of support for the S.P. was expected to make a quantum difference in the situation, greatly enhancing Mulayam Singh's ability to attract fringe elements from within the BSP. Two days after the election results were in, the momentum was clearly in Mulayam Singh's favour, though he remained cautious in his utterances and showed little clarity about how he would finally assemble the requisite legislative numbers.

MEANWHILE, Vishnu Kant Shastri indicated that he did not contemplate any specific time-frame for completing the exercise of swearing in a new ministry in the State. The Constitution, he said, accorded legitimacy to the existing legislature until March 26 and the new House need only be constituted following that date. He also expressed the view that he would not be bound by the convention of giving the party with the largest number of seats the first chance at forming a government. Stability, he indicated, would be a crucial criterion and any party or combination of parties that staked a claim to Ministry formation needed to provide credible evidence of a legislative majority.

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Constitutional experts have observed that there are diverse kinds of precedents that the Governor could follow in constituting the next Ministry. After the 1996 Lok Sabha elections, President Shankar Dayal Sharma went by the narrow precedent of inviting the leader of the largest single party to form a government. This proved an unworkable solution since the first Vajpayee Ministry collapsed within 13 days.

After the U.P. Assembly elections of 1996, Governor Romesh Bhandari declined to follow this precedent and instead recommended an extension of President's Rule beyond the maximum constitutionally-sanctioned period of one year. The Allahabad High Court held his action to be ultra vires of the Constitution. The matter was referred to a Constitution Bench of the Supreme Court, which is yet to give its ruling.

President K.R. Narayanan, following the indecisive outcome of the 1998 Lok Sabha elections, established the practice of seeking written statements of intent from all political parties seeking to form a post-poll alliance. Some constitutional experts believe that this is the best practice, though others are not convinced that the head of state should get involved in the business of creating political coalitions. The principle of the single largest party getting the first call, they say, is the best practice.

Where President S.D. Sharma probably erred in 1996 was in laying down a deadline for the newly sworn in Ministry to secure the confidence of the legislative body it was accountable to. Rather, say these experts, the onus should be on the Opposition to initiate a motion of no-confidence in the Ministry if it has valid grounds to suspect that the government lacks the requisite legislative majority. This would move the process of political coalition-building out of the presidential and gubernatorial mansions, into the hall of the legislature, where it rightly belongs, these experts argue.

IN both Punjab and Uttaranchal, the unequivocal majorities that the Congress(I) registered are being read as a clear-cut manifestation of the incumbency disadvantage. In relation to its senior coalition partner, the Shiromani Akali Dal, the BJP suffered disproportionately in Punjab, being reduced to less than a fifth of its strength in the outgoing Assembly. The SAD on its part has retained ground in many of its traditional bastions, despite opinion surveys and exit polls predicting a rout. Seen against the predictions made by the exit polls, the Congress(I) majority falls short by over 20 seats. The new Chief Minister will have a comfortable enough majority to provide a stable government, though the extravagant predictions made by the exit polls make his relatively slim majority seem almost akin to defeat.

The margin of popular vote share separating the Congress(I) from the rival SAD-led front is just 1.6 per cent. This has led to much speculation about what the SAD could possibly have done differently to improve its electoral performance. And one of the possible options that the SAD could have pursued to its advantage, in the assessment of election pundits, is to have parted company with the BJP and instead forged an alliance with the BSP. This is a reality that is likely to hang heavily over the future participation of the SAD in the NDA government at the Centre.

Despite a fairly comfortable victory in Uttaranchal, the Congress(I)'s choice for the Chief Minister's post remained shrouded in mystery for long. There was, to begin with, considerable speculation over Congress(I) spokespersons' announcements that the new nominee need not come from within the ranks of the elected legislators. This was initially regarded as a necessary concession to realities, since neither of the party's senior leaders in the State, Harish Rawat and Satpal Maharaj, contested the elections. Word was also leaked out that N.D. Tiwari, senior Congressman, former U.P. Chief Minister and one-time member of the Union Cabinet in virtually all the heavyweight portfolios, may be asked to take up the responsibility. This was considered a remote possibility since Tiwari's experience makes him an outsized political personality in relation to the responsibilities of administering a small State. But after a spot assessment in Dehra Dun, the two Congress(I) general secretaries - Ghulam Nabi Azad and Ambika Soni - could do no better than prepare a short-list of five possible nominees and leave the final choice to party president Sonia Gandhi.

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THE verdict in Manipur has been remarkable for its complexity. With scant respect for reputations, the electorate has sent three former Chief Ministers packing - Radhabinod Koijam, Rishang Keishing and Nipamacha Singh. The Congress(I) has emerged as the single largest party, with 15 seats in the 60-member legislature. It is closely followed with 12 seats by the Federal Party of Manipur, the strongest of the five reasonably credible regional parties. The BJP again sought aggressively to build up a constituency for itself in the Naga hill areas, banking on the aborted decision of the Central government last year to extend the ceasefire with the Naga insurgent groups to the territorial bounds of Manipur. But it came a cropper with just one seat to its tally in the hills and another in the Imphal valley. Aside from the viability of any coalition that may emerge from the fractured verdict, the State also faces the problem of finding a new level of leadership that could substitute for the senior personalities who have been ejected.

Finally, there have been few unequivocal victors from this round of elections, though there is little ambiguity about identifying the one big loser. Now reduced to being the ruling party in just two States, and a junior partner in governments in two others, the BJP's credibility as the leading party at the Centre is under serious threat. The Congress(I), in contrast, is now the ruling party in no fewer than 13 States, though its growing irrelevance in the two largest states of U.P. and Bihar impedes it from making a credible bid for power on its own.

Intense political skirmishing is foretold by the agenda of the Budget session of Parliament, when, apart from the Union Budget, the government hopes to push through several important pieces of legislation. And then the election of the next President, which should take place not later than July, could test the main parties' political strength across the board - not merely in Parliament but in all the State legislatures too. Difficult days are clearly ahead for Vajpayee and his associates.

The drubbing of its life

Uttar Pradesh votes out the BJP government but a fractured verdict spells another round of uncertainty.

UTTAR PRADESH has once again proved that it is an enigma. Another exhaustive electoral exercise has failed to throw up a feasible answer to the political problems plaguing the State. Although the performances of the major parties in the three-phase Assembly elections were on predictable lines, the extremely splintered nature of the verdict came as a surprise.

When the results of 401 of the 403 seats that went to the polls were declared, the Samajwadi Party (S.P.) along with its allies had become the single largest alliance, with 146 seats; the Bharatiya Janata Party (BJP) and its allies had won 107 seats; and the Bahujan Samaj Party (BSP), which contested all the seats on its own, had emerged as a proud third force with 98 seats. The Congress(I) won 25 seats. As individual parties, the S.P. won 143 seats and its ally, the Communist Party of India (Marxist), two seats; the BJP finished a poor third, winning 88 of the 319 seats it contested.

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The mandate ensured that no stable government could be formed without the support of the BSP. Even if the Congress(I) and the S.P. came together, that alliance would fall far short of a majority. There were not enough independents and members from other parties to prop up an S.P.-Congress(I) government. A BJP-BSP combination was the only one that could form a government, but the ruling BJP made it clear that it would sit in the Opposition in deference to the people's verdict rather than support BSP leader Mayawati's attempt to form a government. And by no stretch of imagination could one expect the S.P., the BSP and the Congress(I) to come together. At the time of writing it was not clear who would form the government or whether it would be a repeat of 1996 when the State had no elected government for six months after the elections.

The real story in U.P., however, is that the BJP, which had projected the elections as a referendum on the Vajpayee government's policies on national security and terrorism, has got the drubbing of its life. And ironically, the S.P., which was accused by the BJP of siding with "anti-national elements" such as the Students Islamic Movement of India (SIMI), has emerged as the single largest party in the Assembly. The S.P. owed its victory to Mulayam Singh's all-out campaign. He was on the campaign trail, moving from village to village, far ahead of others. Also, his organisational skills helped him mobilise S.P. workers across the State while other parties were beset with dissent and infighting.

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Another equally important message is that the Congress(I), which seems to be regaining its status as the pivotal force in national politics by wresting power from the BJP elsewhere, remains a spent force in U.P. The party lost even Amethi, an Assembly segment in the parliamentary constituency of the same name which party president Sonia Gandhi represents in the Lok Sabha. The parliamentary constituency was adopted by Sanjay Gandhi in the 1970s and nurtured into a Congress(I) bastion by Rajiv Gandhi later.

Perhaps the most notable aspect of the elections is the performance of the BSP. There were predictions of the BSP faring better than last time, but its final tally of 98 was beyond the imagination of anyone. The BSP has established beyond doubt that it remains entrenched among Dalit supporters. Significantly, it has spread its influence to other castes and communities.

The credit for the BSP's good performance goes to Mayawati, who single-handedly led the party's campaign across the State. The BSP almost swept western U.P. and made significant inroads into the central and eastern parts of the State. In accordance with a social engineering formula that is strictly her own, she had allotted the party ticket to a large number of upper-caste - or what she calls "manuvadi" - candidates - 37 Brahmins and 36 Thakurs - and to a record number of Muslims (86). This formula apparently ensured the support of caste Hindus, besides Dalits and Muslims, to the party.

Although the parties' performances in terms of percentage of votes and the regionwise distribution of seats are yet to be assessed, one obvious fact is that the BJP suffered substantial setbacks, especially in the eastern region. Eastern U.P. was its stronghold and most of its State leaders, including State unit president Kalraj Mishra and Chief Minister Rajnath Singh, hail from that region. The party also lost substantially in the western region where it hoped to do much better in the company of Ajit Singh's Rashtriya Lok Dal (RLD). Interestingly, except the RLD, which won 14 of the 38 seats it contested, all other allies of the BJP proved to be a burden on it.

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Ram Vilas Paswan's Lok Jan Shakti Party, which was hoping to emerge as an alternative to the BSP in U.P., won just one seat out of the 18 it contested. The Uttar Pradesh Loktantrik Congress, which propped up the BJP government in 1997, contested 25 seats and won two. Sharad Yadav's Janata Dal (United), which tried to make a dent in S.P. leader Mulayam Singh Yadav's vote bank, won two seats out of the 16 it contested. The Shakti Dal of Maneka Gandhi, which contested 14 seats, drew a blank.

The BJP's poor performance did not come as a surprise. What is surprising is that the party's leadership failed to see the writing on the wall. In the Assembly elections in 1996, the party won 174 seats and 32.51 per cent of the votes. In the Lok Sabha elections in 1998, it won 36 per cent of the votes and led in 233 Assembly segments. This upsurge was attributed to the Vajpayee factor. The party could not maintain this trend. In the parliamentary elections of 1999, its share fell to 27.6 per cent of the votes and it led only in 110 Assembly segments.

In contrast, the S.P. and the BSP have consistently increased their shares in the votes and seats since 1996. In the Assembly elections in 1996, the S.P. won 21.8 per cent of the votes and 110 seats and the BSP 19.65 per cent of the votes and 67 seats. In the Lok Sabha elections in 1999, their respective vote shares increased to 25.7 per cent and 22.7 per cent. The S.P. led in 128 Assembly segments and the BSP in 87. This trend alone should have put the BJP on guard, but it chose to live in an ivory tower, playing around with controversial issues such as the reservation scheme and Ayodhya.

Although BJP leaders now say that the February elections did not constitute a referendum on the Vajpayee government, Chief Minister Rajnath Singh had claimed at all his public meetings during the campaign that a defeat for the BJP in U.P would mean a defeat for Vajpayee's anti-terrorism measures. He cautioned the electorate that such an eventuality would embolden Pakistan President Pervez Musharraf to encourage subversive activities in India and promote cross-border terrorism. Having raised the stakes, it was no wonder that Rajnath Singh resigned even before the results of all seats had been declared. He said that he alone was responsible for the poor showing of the party and that he resigned on moral grounds. Kalraj Mishra also offered to resign on moral grounds.

As the single largest party in the Assembly, the S.P. considered itself the natural claimant to the office of power and sought the support of all secular parties. But with the Congress(I) still undecided on supporting Mulayam Singh, it was not clear where he would get the numbers from.

Mulayam Singh's bitter speeches against Sonia Gandhi towards the fag-end of the campaign distanced the Congress(I) from the S.P. further. While a section of the central leaders of the Congress(I) wanted the party to support Mulayam Singh only if he succeeds in mustering the support of other parties and individuals, another section feared that the party ran the risk of splitting if it delayed a decision. But the exchange of words between S.P. and Congress(I) leaders during the campaign, the roza iftaars notwithstanding, made a rapprochement difficult.

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Senior S.P. leaders, however, were confident that the Congress(I) would come around ultimately. Amar Singh, party general secretary and Mulayam Singh's confidant, said: "We shall form the government, just wait and see." The party expected support from Kalyan Singh's Rashtriya Kranti Party, which won four of the 335 seats it contested, and the Apna Dal, which won three seats. Besides, a substantial number of independents were expected to support the S.P. The S.P. also hoped for a split in the BSP.

The BJP's decision to sit in the Opposition was widely seen as a case of posturing, aimed at taking away some of Mayawati's bargaining power. A section of State BJP leaders, including Mayawati's one-time friend Kalraj Mishra, was against propping her up once again in view of the bitter experience of supporting her chief ministership last time. This section was said to be enjoying the support of Union Home Minister L.K. Advani. Another section of leaders, which includes Vajpayee, says that the BJP should rather support a BSP government from outside.

Mayawati was only too keen to get the BJP's support but on condition that she would be the Chief Minister. She met Vajpayee in this regard. According to informed sources, Vajpayee, keeping in view the State leaders' reservations about Mayawati, offered her a berth in his Cabinet in lieu of her support for a BJP government in U.P., but Mayawati rejected the suggestion. Mayawati would only say that she and party president Kanshi Ram were assessing the situation.

In the meantime, the Governor's declaration that the "single largest party" criterion would not be enough for him to invite anyone to form the government added to the complexity of the situation. A person claiming this status would have to furnish proof of majority support in the Assembly, he said. This would be an uphill task for Mulayam Singh. In this background the Governor's decision to ask Rajnath Singh to continue as Chief Minister until March 26, when the present Assembly's term would come to an end, pointed to the possibility of the State coming under President's Rule. The BJP hoped that this would give it time to re-work its strategy.

A clear win in Uttaranchal

The Congress(I) secures a clear majority in Uttaranchal, defying exit poll projections.

THE Congress(I) stormed to power in the hill State of Uttaranchal in its first Assembly elections, held on February 14. The popular mood was decidedly against the Bharatiya Janata Party government even before the election process began. Disappointment had set in soon after the formation of the new State in November 2000, with the people feeling more and more sidelined in the affairs of the State.

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The Congress(I), with 36 seats in the 70-member Assembly, has won a majority on its own, defying exit poll projections, but is to form the government in alliance with the Uttarakhand Kranti Dal (UKD), which won four seats. The BJP, with 19 seats, has been left wondering as to what went wrong. Its confidence had been bolstered by exit polls.

The BJP suffered a string of defeats. All its Ministers except three - Chief Minister Bhagat Singh Koshiyari, Tourism Minister Ajay Bhatt, and Harbans Kapoor - lost. In all its eight Ministers, including Narayan Singh Rana and Kedarsingh Fonia, were defeated. The defeat of Nityanand Swami, the first Chief Minister of the State, came as a rude shock for the BJP: he lost by over 1,500 votes to Dinesh Agrawal of the Congress(I). Another notable setback for the BJP was the defeat of Ramesh Pokhriyal Nishank, a young Minister in the outgoing government, who once eyed the Chief Minister's post after Nityanand Swami's exit in October last. He lost by 997 votes.

In the Tehri Garhwal region, where the BJP was plagued by rebellion after the nominees of Member of Parliament Manvendra Shah, the erstwhile king of Tehri, were denied the ticket, the BJP did not win a single seat. Party rebels had vowed to defeat the official candidates there. The BJP retained only two of the five seats it held in Nainital district, the stronghold of Congress(I) veteran N.D. Tiwari.

Among the notable Congress(I) winners are its Legislature Party leader Indira Hridayesh, who won from Haldwani. She beat Agriculture Minister Banshidhar Bhagat by 3,000 votes. The party's State general secretary, Kishore Upadhayay, also won convincingly from Tehri.

The Bahujan Samaj Party (BSP) sprang a few surprises in Uttaranchal as it did in Uttar Pradesh: it won seven seats, mainly in Hardwar district.

The UKD, which was the first political party to have included the demand for the creation of the separate State of Uttaranchal in its manifesto, is likely to become a major player in the State's politics since Pradesh Congress(I) chief Harish Rawat has expressed his intention to include it in the government. "I want to bridge the communication gap that had been created between the people and the government ever since the BJP government came to power. It (UKD) represents a substantial section of the local people and has played a major role in the creation of the State. I want it to be involved in governance. But the final decision will certainly be taken by the party high command," he told reporters as the results began to pour in.

Koshiyari, bowing to the people's verdict, submitted his resignation to Governor Surjit Singh Barnala on February 24.

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Koshiyari said that the reasons for the BJP's defeat could be overconfidence on the part of party workers because they had assumed that since the BJP had helped in the creation of the State the people would automatically vote for them. "But we tried our best," he said.

AS for the next Chief Minister, Harish Rawat appeared to be leading the race. Local leaders felt that since the party was steered to victory under Rawat's leadership, he should be made the Chief Minister. "Besides, there is a precedent in Rajasthan, Karnataka and Madhya Pradesh where PCC presidents have been made Chief Ministers," said Dhirendra Pratap, the party's State general secretary and chief media coordinator, in Dehra Dun.

However, the CLP meeting on February 25, attended by All India Congress Committee (AICC) general secretaries Ghulam Nabi Azad and Ambika Soni, adopted a resolution authorising party president Sonia Gandhi to choose the new leader.

Sources in the Congress(I) headquarters said that since the party fought the Uttaranchal elections under Rawat's leadership, he was a strong contender for the post. Other contenders included N.D. Tiwari, AICC secretary Satpal Maharaj, and senior Congress(I) leader Vijay Bahugana. "We have requested Soniaji to decide for the CLP. However, the views of the newly elected legislators would be taken into consideration," Rawat told reporters. Rawat, who did not contest the elections, parried questions as to whether the Chief Minister would be elected from among the legislators.

Interestingly, Rawat announced that the party would change the name of the State from Uttaranchal to Uttarakhand, which was the original name given by the movement for a separate State even before it had acquired political undertones. Asked if the party would have performed better had it not changed its list of candidates at the eleventh hour, Rawat said, "I don't think so." He added: "We expected to touch the figure of 45. However, owing to certain circumstances, I personally could not expand my horizon. But definitely all the leaders contributed towards the party's victory." Satpal Maharaj, a leader from Pauri Garhwal, threatened to resign from the party as his nominees were not accommodated. The list of candidates was changed at the last hour to please Maharaj, who enjoys the patronage of N.D. Tiwari.

Uttaranchal witnessed incident-free polling and recorded a 53 per cent voter turnout despite the fact that many areas remained snow-bound and cut off from the rest of the State. In fact no candidates visited some of these areas for campaigning.

The Congress(I) won 30 per cent of the votes polled, and the BJP 27 per cent. The people, faced with several problems after the creation of the State, were perhaps unimpressed by the BJP's claim of having gifted them their own State. Obviously, the slogan coined by Union Home Minister L.K. Advani, Swaraj diya hai, Suraaj bhi denge (we have given you the State, now we will give you good governance), failed to appeal to the voters. Also, the BJP's knee-jerk reaction of packing off the non-performing Chief Minister Nityanand Swami even before he could complete one year in office and replacing him with Koshiyari only served to strengthen the people's perception of the government being a failure.

For progressive internationalism

A call for a New World Order, in tune with changing times, which promotes new global partnerships, crossing ideological frontiers and burying enmities.

SEPTEMBER 11 was seismic, not just for its ominous threat to a way of life taken for granted by people the world over, regardless of wealth, politics, nationality, race or faith. Its aftermath has also opened up the prospect of an entirely New World Order based upon 'progressive internationalism' which promotes new global partnerships, crossing old ideological frontiers and burying old enmities.

This, however, remains a prospect, not a certainty. For it is far from certain that all those countries that signed up for the international action against Al Qaeda will also sign up for a broader progressive agenda. Furthermore, there are still elements in the United States who want to act unilaterally rather than multilaterally, in isolation from, rather than in cooperation with, other nations.

Which way it goes is to some extent in our hands. As the only state that is a member of the G-8, the European Union (E.U.), the North Atlantic Treaty Organisation (NATO) and the Commonwealth, and with a permanent seat on the United Nations Security Council, the United Kingdom can play a pivotal role in world affairs.

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Prime Minister Tony Blair's leadership has already shown that governments like ours can be crucial. But only if we understand the new global politics. And only if we choose to engage in that global politics in a positive and practical manner. If we choose the alternative - sitting back cynically, predicting gloom and doom, from the comfort of an armchair or a rhetorical pose - we will miss this opportunity.

That is the stance of the 'rejectionist Left', which seems trapped in a time warp. The fall of the Berlin Wall triggered a huge shake of the international kaleidoscope. Subsequent events have continued to shake it. As the pieces now begin to fall into new configurations, we are living through a defining period. New geopolitical changes are afoot and we can no longer look at the world through an East/West prism.

Russia, together with China, has backed the U.S.-led international action against terrorism in Afghanistan. Russia is also seeking a partnership with NATO and the E.U. and is negotiating to join the World Trade Organisation (WTO). China has recently requested courses in Britain for thousands of its public officials to be trained in modern administration.

These are extraordinary changes, and if the Left is about anything, surely it is about embracing change and pressing for more of it, rather than being trapped in the past attempting to reject it.

Instead, we should embrace 'progressive internationalism'. When Britain and its allies saved the people of Kosovo from ethnic cleansing and genocide in 1999, Tony Blair, in a crucial speech in Chicago, called for a progressive new approach to 'humanitarian intervention' - a call subsequently endorsed by U.N. Secretary-General Kofi Annan.

Take the case of Sierra Leone. Who could honestly and credibly object to British troops intervening in 2000 in support of U.N. peacekeepers to prevent a legitimate government from being destroyed by rebels whose speciality was chopping off the limbs of babies in their way?

THE truth is that the people of Sierra Leone were desperate for us to go in and save them from a bunch of vicious thugs. And the truth is that our intervention there - as in Bosnia, Kosovo, East Timor, Macedonia and, yes, Afghanistan - was necessary.

And it was successful within what was practically deliverable in dangerous and difficult conditions. Of course there is a long way to go in each of these cases, and the predicament of each remains far from ideal. But our intervention promoted human rights, and international peace and security, just as surely as non-intervention would have undermined these. Ironically, those on the rejectionist Left have ended up joining forces with Ian Duncan Smith and the Conservative Right who do not like progressive internationalism either.

They ignore the new terrain. Rather than classic wars between states, or even progressive revolutions against corrupt old orders, we have new phenomena. Wars like those in Sierra Leone, Angola and the Congo are waged, not for noble causes, but for money and minerals, to buy arms, or to grab personal power. States that have failed, like Afghanistan, are dominated by terrorist cliques. Whole populations are brutalised by tyrants like Saddam Hussein or Slobodan Milosevic. Genocides as in Rwanda. Or ethnic cleansing as in the Balkans.

Where are the apologies from those who relentlessly predicted reckless U.S. escapades, failure and mayhem? Instead, on Afghanistan, I still see banners saying 'Stop the War'. No admission that life - though very far from perfect - is already better for the people of Afghanistan than the death, persecution and deprivation from which they suffered for so long.

It is no good that this anti-interventionist part of the rejectionist Left is condemning, on principle, in advance, and in a knee-jerk fashion any such action just because the U.S. is leading it. Surely we should be asking whether the proposed action is the best thing to do. Or maybe even the least worst thing to do?

And being a steadfast ally of the U.S. does not mean being a patsy. Otherwise how, under this Labour government, could Britain have been able to develop good relations with Iran, Syria and Cuba; reopen an embassy in Libya; and establish diplomatic relations with North Korea? Or stand up for the Kyoto Treaty on climate change? On the contrary, being an ally gives us real influence, which is no less effective because it is deployed in private and rarely generates headlines.

So the anti-interventionist Left is politically bankrupt. But they are unfortunately not the only ones to be so. There is another wing of the rejectionists, the so-called anti-globalisers such as George Monbiot who present themselves as the 'green Left' but are actually the 'anti-trade Left'? Their target is globalisation, which they seem to want to abolish. They reject any progressive multilateral initiatives to regulate trade, or to reform the international financial architecture, because these are not perfect.

But, despite all the problems it generates, globalisation is a force that does not allow the luxury of saying 'stop, I want to get off'. It is impossible to stop the Internet, satellite television and telecommunications, impossible to ban air travel or pop culture, the global mobility of trade, investment and currency flows. Moreover, the anti-globalisers appear to be content for Westerners like them to enjoy the Internet, trade and travel, while denying these very benefits of globalisation to the developing world.

Globalisation is a fact of life and the real question is altogether different: 'What sort of globalisation do we want and how can we get it?'

A look at the Left's reaction to industrialisation in the early 19th century is instructive. Like globalisation today, industrialisation then was also a fact of life with some damaging side-effects. And today's rock throwing militants who trash McDonalds are the modern equivalents of the Luddites who trashed factory machines. But both are and were minorities. The majority in the early 19th century formed friendly societies and trade unions - the origins of the modern Left and socialist movement.

There is the same split in the anti-globalisation movement today - between the balaclava rock-throwers with their nihilist ideology on the one hand and Greenpeace, Friends of the Earth, Drop the Debt, Jubilee 2000 on the other. Two centuries ago, the former would have been Luddites, the latter the embryonic Labour movement. A comparison also between failure and success: like the Luddites, the balaclava boys are in the long term irrelevant.

WHILE the Genoa G-8 Summit last July was being besieged by violent elements on the outside, the voice of Africa's poor was being heard for the first time inside. At the insistence of Britain's Labour Prime Minister, leaders from South Africa and Nigeria were invited to press their case for debt relief, fair trade and investment. A case supported by tens of thousands of peaceful protesters also in Genoa. And a case first expressed loudly and clearly by purposeful campaigners at the Birmingham G-8 Summit in 1998 - proof that the Left can succeed through protest which is targeted and effective, not narcissistic and violent. Yet what did George Monbiot write during the Genoa Summit? That the G-8 leaders were the last people to cancel poor country debt because they had created it. Who did he think could cancel debt, then? The protesters?

Progressive internationalists should unite with the many non-governmental organisations who are now preaching 'global justice' rather than 'anti-globalisation'. For our task is to master globalisation in the interests of the poor and not just the rich; in the interests of protecting our environment and not degrading it; in the interests of increasing the sum of world prosperity and ensuring a more equitable distribution of it; in the interests of the many and not just the few.

While many people are benefiting from globalisation, too many countries and people are being left behind. One in five of the world's population live in desperate poverty, without adequate food, access to clean water or sanitation, and with no education or access to healthcare. Over 90 per cent, or 530 million, Africans outside South Africa have no access to electricity. Amidst extraordinary technological and material advance, this is a moral outrage. But it is also a threat to the stability of the world. In an interdependent world, there can be no security for any of us without greater global social justice.

That is why we need to build on the tremendous progress this government has made on the international development agenda under Clare Short. An increased aid budget - up 45 per cent in real terms over the Conservative record - with all of that aid now focussed on the reduction of poverty. A 100 per cent debt write-off for countries indebted to Britain where the proceeds will be spent on the reduction of poverty. Huge investments in education and healthcare in developing countries. Also Gordon Brown's 'Marshall Aid Plan' for increasing aid by $50 billion a year together with his new agenda for global economic justice.

We are also championing a fairer international trading system that gives more trading opportunities for poor countries through the WTO. China is now in the WTO. Russia wants to join. With Europe a key influence, the last WTO Summit in Doha launched, not a neo-liberal trade round but one aimed explicitly at opening up rich markets to poor countries. The WTO, far from the caricature of anti-globalisers, is based upon the principle of one country-one vote. So the developing world, allied to progressive governments such as ours, can achieve reform. It is in any case much better to have a rule-based trading system than a free for all of national (that is, rich country) economic power.

Protectionism, whether through European common agricultural policy subsidies or U.S. barriers to Indian textiles, damages development. Totalling $300 billion, agricultural subsidies in the rich world are equivalent to the entire wealth of Africa. Only a rejectionist Left could prefer protectionism. Properly regulated through the WTO, free trade can empower developing economies.

SO the question is, how can we build on the international unity following September 11 to create a New World Order shaped by our values - of democracy, human rights, environmental protection, equality and justice, and the strong sense of solidarity and 'community' of which Tony Blair spoke in his Brighton speech in 2001? Or will it be shaped by a quite different agenda driven by hawks on Capitol Hill, let off the hook by rejectionists and cynics worldwide?

In promoting this New World Order we will need to knit together our 'foreign' objectives with our 'domestic' ones, because the global interest is becoming the national interest, as several examples illustrate. Britain's climate has been changing markedly because of global warming. The demand for drugs on our streets helps feed instability in countries such as Afghanistan, which in turn helps feed organised crime in Britain. Health hazards such as AIDS (Acquired Imm-une Deficiency Synd-rome) know no national boundaries: two-thirds of British AIDS victims are infected while travelling in African countries whose own health systems, professional classes and economies are being savaged by the plague.

In today's world there is no such thing as 'abroad': we are all interconnected. It is therefore in Britain's national self-interest to promote the Left's values of freedom, democracy, social justice and economic modernisation. Promoting our values enhances our prosperity and reinforces our security, by making the world a safer place in which to live, travel and carry on trade. And we defend human rights and democracy for other people because we demand them for ourselves.

Traditionally, foreign policy has not prioritised human rights. Instead, security, stability and trade have been its watchwords. But under globalisation, human rights are a condition for stability and also for prosperity. September 11 showed that they are conditions for security too. Regimes that govern by fear and repression are ultimately unstable. Nor will they achieve the creativity and the innovation essential for successful knowledge-based economies in this new century. In that sense, human rights make humans rich. And so they also help defeat the poverty and alienation in which terrorism can breed.

The Labour government is criticised for not doing more in every country where human rights are under attack. But because we cannot do everything it does not mean that we should do nothing. We should reject the cynical view that, since we cannot make the world perfect, we should stop trying to make it better. We cannot put everything right, but we can make a difference.

So what is progressive internationalism? It promotes global justice, human rights, conflict resolution and environmental sustainability, and it has three main features. First, we are not nationalists. That is why we support the U.N., the WTO, NATO and the E.U. Second, we are multilateralists, not unilateralists. That is why we play an active and leading role in supporting international treaties on nuclear, biological and chemical weapons and press all other countries to do the same.

Third, we are interventionists, not rejectionists. We believe that it is our duty to do what we can to deter aggression and attacks on liberty by whatever means will make a difference. Ideally that is done through constructive engagement and creative diplomacy. But ultimately it could be by military muscle, which is collective, proportionate, likely to achieve its objective and carried out in accordance with international law.

So we want a strong, efficient, responsive U.N. that can build a consensus among its members and can deal decisively to settle disputes, prevent conflicts and keep the peace. But the developing world must have some ownership of the intervention driven by countries such as ours with much greater resources and power. For instance, peacekeeping operations in Africa require a regional socket into which the international community can plug. African ownership of peace agreements is necessary - whether in Sierra Leone or in the Congo - for international deployment to be effective. That is why we are working with countries such as Nigeria in the west African regional group ECOWAS - the Economic Community of West African States - and with South Africa in the Southern African Development Community, to enhance their defence and conflict prevention capabilities.

The U.N. also has a key role to play in meeting one of the most sinister threats facing us today - the proliferation of weapons of mass destruction. The Labour government has taken a leading role in negotiations for a compliance protocol for the biological weapons convention and to ensure that the chemical weapons convention is properly implemented. We led the way to achieve an unprecedented agreement with the new agenda coalition of non-nuclear states, enabling us and the four other nuclear weapons states to pledge (at the Non-Proliferation Treaty review conference that took place in April-May 2000 in New York) to work for the complete elimination of nuclear weapons.

We shall continue to press for further, deep cuts in the nuclear arsenals of the U.S. and Russia, for entry into force of the Comprehensive Test Ban Treaty and for negotiations on a Fissile Material Cut-off Treaty.

However, as this is not a safe or perfect world, nations have the right to protect their people, and British defence equipment can help them to do so. The Labour government has made arms exports more accountable and transparent than in almost any other country with annual reports detailing the licences that we have agreed. We established for the first time a tough code blocking exports of arms for either internal repression or external aggression. An E.U. arms code is doing the same thing, and we initiated it.

OUR policy has not been perfect: for instance, we got the sale of Hawk jets to Robert Mugabe wrong and had to reverse it. But we have also led the way to ban landmines across the world, ban the sale of torture equipment, and ban small arms going to conflict zones.

By deploying the E.U.'s influence and huge resources, its potential as a catalyst for progressive change, we can promote an international agenda of which the Left should be proud. An empowering agenda to fight poverty, re-distribute wealth and prevent the spread of weapons of mass destruction. An agenda that recognises that there is no security at home without freedom, stability and good governance abroad, and that human needs must no longer be met by treating the environment as a free resource to plunder at will.

This agenda needs to be promoted in Europe and by Europe, through the U.N., the G-8, the Organisation for Economic Cooperation and Development (OECD), the Commonwealth - and, yes, through NATO, too. The Johannesburg Summit on Sustainable Development in August 2002 is crucial. Such multilateral diplomacy is difficult and often frustrating. Progress tends to be incremental, not dramatic. But when progress can be achieved, it brings wider benefit for more people than action by one country alone can ever secure. Multilateral diplomacy also needs prodding and pushing by protest that is purposeful rather than rejectionist.

This presents a challenge above all to the Left - a challenge to redefine our purpose and our role in a way that transcends some of the old lynchpins of nation-state politics. Arguments about the precise size of the public sector, the level of taxation, spreading wealth and opportunity remain vital. They are arguments around which the British Left in the past has largely defined itself. But they are dwarfed by the sheer scale of both today's global threats and today's global opportunities. The new global politics is shaping a new agenda for humankind, arguably as important for the Left as the industrialisation from which the modern Left first sprang in the 19th century.

In this century our task must be to shape our global economy and society on a global scale, just as in the last century we tried to shape national economies and societies on a national scale. Our national agenda was and remains to make economic forces work for everyone rather than simply for an elite or a small class; to establish high minimum standards of welfare and public services; and to entrench human rights and democracy. Now, in this century, we need to do the same internationally, through the internationalisation of socialism or social democracy. But this can only be achieved through building and working within international institutions such as the U.N. and the E.U., just as at a national level the Left created and worked through the institutions of representative democracy.

Our progressive internationalism should be a project for the globalisation of responsibility around which everyone on the Left could unite - from Greenpeace militants to Labour Ministers, even if we respect the different roles each quite properly plays. We must try to unite on such a new agenda, because it is the biggest challenge of our times. And we must do so as 'all or something people', not 'all or nothing people'.

Peter Hain is Britain's Minister for Europe and Member of Parliament from Neath. He is the author of The End of Foreign Policy? (Fabian Society, 2001).

Questionable claims

Archaeologists debunk the claim that underwater structures in the Gulf of Khambat point to the existence of a pre-Harappan civilisation.

IN May 2001, Murli Manohar Joshi, the Union Minister for Human Resource Development, Science and Technology, who also holds additional charge of the Department of Ocean Development, made an astounding announcement: An ancient underwater settlement had been discovered in the Gulf of Khambat, off the coast of Gujarat. The site, at a depth of 30 to 40 metres, was discovered by the National Institute of Ocean Technology (NIOT) in the course of routine exploration work to assess pollution and map resource levels. According to Joshi, the evidence suggested that at the site there was human habitation that was about 9,500 years old. In other words, the site existed circa 7500 B.C. The Ministry announced that the site represented an urban settlement that pre-dated the Harappan civilisation.

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Dr. S. Kathiroli, Project Director, Mission III, Coastal and Environmental Engineering, NIOT, who headed the expedition that made the discovery, said that he was excited by the regularity of the images picked by the sonar on the NIOT's ship and reported the matter to his Ministry. He had no idea what the images were; nor was he familiar with the samples that were dredged out - bits of stone, terracotta, a piece of wood and what looked like fossilised bone. The piece of wood was immediately sent for radiocarbon dating and was found to be about 9,500 years old. The other samples are yet to be tested. "Proof" that the settlement was on a river-bed came from a collection of pebbles examined by Dr. S.N. Rajguru, former head of the Department of Archaeology at Deccan College, Pune.

The finds comprise a piece of wood measuring approximately 25 cm in length and 20 cm in diameter, an assortment of pottery sherds, stone pieces presumed to be tools, fossilised bones, and a tooth. Sonar images showed what appeared to be a vast area of regular structures on the sea-bed and a submerged river-bed. No archaeologist, nor diver, has seen the underwater site. No underwater photographs were taken. The artefacts were recovered by a mechanical dredge that trawled large sections of the sea-bed. The decision to dredge the sea-bed was made by the Department of Ocean Development.

Prominent members of the archaeological community have since debunked the Ministry's claim. While not disputing the possible existence of underwater structures in the Gulf of Khambat, they argue that the evidence found so far is far too flimsy to support the grand claims that are being made. Their contention is that the government should hand over the excavation work to qualified marine archaeologists. It is a well established that civilisation began around 3500 B.C. in the Sumer valley (now in southern Iraq), and around 2500 B.C. in the Indian subcontinent with the Indus Valley civilisation. In archaeological methodology, the records generated from fieldwork have primacy in establishing the value of an excavation and the conclusions that are drawn. "It is highly unorthodox to go public so soon after a discovery and without first presenting the findings to one's peers," Jaya Menon, a lecturer in the Department of Archaeology and Ancient History, MS University, Baroda, told Frontline. "I don't see how claims were made without the involvement of marine archaeologists."

Professor K.V. Raman, former head of the Department of Archaeology, University of Madras, and former Superintending Archaeologist with the Archaeological Survey of India (ASI), says that the site needs more probing. On the pre-Harappan label being attached to the site, he says, "I am really sick of the politicisation of matters like this. It destroys the integrity of my profession."

Many aspects of the Khambat discovery are open to question. For instance, though the NIOT discovered the site last year, it has not involved agencies such as the National Institute of Oceanography (NIO), which has a marine archaeology department and has many submarine excavations to its credit. Nor have the respected departments of archaeology at Deccan College or the University of Allahabad been involved. Kathiroli says: "The work done so far is very little and helps only to establish the existence of an archaeological site. Much more detailed investigations are required to unravel the complete truth. With this in mind, a national project is being contemplated involving institutions such as the NIO, the ASI, the National Geophysical Research Institute, the Physical Research Laboratory (in Ahmedabad) and other academic institutions."

There are some basic objections which have been raised against the claim that the remains of a 9,500-year-old settlement exist under the sea in the Gulf of Khambat. First, no marine archaeologist has actually gone down and seen the site. Says Shereen Ratnagar, Professor of Archaeology at Jawaharlal Nehru University, New Delhi, and the author of many books on the Harappan civilisation: "There have been no divers, no mapping, no underwater photography in this case. These are the basics of excavating a submarine site. It's a long, tedious process. Even the work of mapping by people trained in archaeological draughtsmanship takes very long." Kathiroli says that an attempt to photograph the site failed because the water was turbid.

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The second objection is to the dating of the site on the basis of the age of a piece of wood. Says Dr. D.P. Agrawal, chairman of the Paleoclimate Group who is responsible for establishing Carbon-14 laboratories in India: "To date a city on the basis of a dredged sample of wood is irresponsible and ridiculous. I have worked with the Paleoclimate Group on the changes in climate over the ages. It is a known fact that during the Ice Age, about 20,000 years ago, the Arabian Sea was 100 metres lower (than its present level). Entire forests are buried beneath the sea in this area. It is not extraordinary to find a piece of wood going back to 7500 B.C. or 5000 B.C. There is no way it can be used as evidence to date this so-called city." Agrawal says that the two laboratories that dated the wood gave different dates. "One said it was 7,500 years old and the other 5,500. The variation is far too much and adds to the confusion."

Says Jaya Menon: "There are two interconnected ideas here. First, the age of the artefact cannot be correlated to the antiquity of the site. Secondly, the material you are dating should be from a secure context. Only then can you consider the information to be reliable. An underwater site is definitely not a secure context unlike an archaeological mound on land."

The third objection is that there is inadequate archaeologically stylistic evidence to support the claims. Agrawal points to the paucity of stylistic evidence such as beads, pottery and tools. According to him, "constructive evidence" of these seems to be lacking. A part of the array of artefacts contains what is presumed to be stone tools. It is now an established trend in archaeology that stone tools by themselves cannot be considered indicative of any historical fact. Animal bones and other signs of human habitation can be considered as worthy artefacts if they are discovered in association with fossilised human remains. The root of this argument lies in the debate that raged for years over what are called eoliths. These are stone fragments that could resemble primitive tools but could as well be creations of the process of weathering.

Raman is among those who have inspected the artefacts. "Most of what I could see were not man-made," he said. "They were naturally rolled pebbles. They deceptively look like tools but are not." Raman says the missing evidence is the "negative scar" on the stones, a mark that remains when the stone has been deliberately chipped. Equally important is the absence of metal among the artefacts. The tool technology in the Neolithic age was almost exclusively stone-based and the use of metal began only in Mohenjodaro. If metal is found at the site then it is clearly a post-Harappan settlement and not pre-Harappan as is being claimed. Raman says that a few artefacts from the site look like "human-made items - close grained basaltic stone, jasper and agate with beautifully perforated holes".

About the structures recorded by the sonar, Raman says: "There seem to be some formations. A platform of some sort and something like a tank, though I think the pillars that are seen look like natural formations."

The archaeologists whom this correspondent spoke to say that information on the material used to construct these structures will provide a crucial link to the period of the site. Raman explains: "Brick structures could be tied to the early Harappan culture. All Harappan sites used brick for building except Dholavira which used stone. If the structures at Cambay are of stone, then we have a very enigmatic situation on our hands. A situation with no parallels." Explaining the 'enigma' of finding a settlement that used stone and no metal, Raman says: "The wherewithal for cutting stone and transporting it were techniques only available to the Indus Valley as is evinced by Dholavira and not before that time. However, it was also a civilisation that knew the use of metal. To have a pre-metal stone architecture settlement will be very rare and remarkable for this region."

The Indus Valley or Harappan civilisation was the beginning of civilisation in this region. In terms of archaeological chronology it was the Bronze Age. The use of metal for making tools and bricks for construction and the building of settlements in specific formations were some of the characteristic features of the beginning of the Harappan civilisation. In the Stone Age, which preceded the Bronze Age, there was no knowledge of the use of metal for tools. Nor were there human settlements. No metal has been discovered so far at the Khambat site.

Raman says there are certain essentially Harappan items - seals and black-and-red pottery ware - that are conspicuous by their absence among the artefacts collected from Khambat. Does the lack of Harappan stylistic evidence indicate that Khambat is a pre-Harappan site? "No," says Raman, "cultures do not exist in isolation. There has to be some interconnectedness. If this is pre-Harappan, then there should be some evidence here of what was to come later."

The fourth objection is that the claims go against well-established evidence on the age of civilisations. Agrawal says: "Nowhere in the world have cities been proved to exist before 5,000 or 6,000 years ago."

About the claim that the site is the oldest, Jaya Menon says: "There seems to be some confusion regarding the dates. If, as they say, the civilisation is dated to 7500 B.C., then that is the Neolithic period. Yet, they are claiming that the discovery is like another Harappa or, rather, pre-Harappa. The two claims just don't fit. Their time-frame is Neolithic, which was a period when humans were just about beginning to move towards a sedentary life. The Harappan civilisation was an advanced one - far removed from the Neolithic period. So is the site Neolithic or Harappan?"

Responding to this, Rajguru says: "So far the oldest civilisation is that of the Indus valley, which is now near Baluchistan. If there is proof that the Cambay structures are really part of a mature civilisation then it will show that a civilisation even older than the Indus valley was in existence right here in India. That is why we are calling it Neolithic."

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Ratnagar answers this effectively. "If it is a civilisation, then it can't be Neolithic. A civilisation suggests an urban, literate society while Neolithic denotes the establishing of villages and a village economy, the coming of agriculture and animal rearing."

The fifth, and the most important, objection to the Khambat claims is that those making them did not follow any of the accepted procedures of the discipline of archaeology before going public with their "discovery". Many archaeologists and scientists argue that the theories put forth are "terribly incoherent" and that the lack of standard archaeological procedure itself discredits the discovery.

When a new archeological site is discovered, the first step is to assess the site and prepare a research design for excavation. Excavation consists of data collection (recording and raising artefacts and, at the same time, mapping and photographing them), data analysis (artefact and spatial analysis, paper reconstruction or 3-D modelling) and finally, interpretation of the findings and publication in scientific journals. Seldom is there a straightforward progression from Stage 1 to Stage 4, but in the case of Khambat the procedure adopted has been extremely unorthodox.

Stratification is important for dating a site. Ratnagar explains the methodology and asks: "What makes them say it's a city? It is at the bottom of a sea-bed. Things have fallen in over a period of time. A marine site is very difficult to stratify. There is no context here like a shipwreck to provide some baseline from which to explore and extrapolate. The closest you come to stratifying underwater structures is to suck the sand out, and even that is not stratification - you are just removing the sand in order to expose the artefacts. Stratification is recognisable only on land. On land when people build a house they put posts into the soil, then they make up a bit of a floor. After a generation they might knock it down and level it, build some more foundation trenches, walls and some floor. As we are digging we find all these strata and therefore we say that something found here is earlier than something found there... it is a slow process and we keep asking questions till we get our mound strata. How do you do this under water?"

Dating a site is a core concern of archaeology, and a number of techniques have been devised to aid archaeologists. Dating techniques are to be applied in conjunction with stratification. Radiocarbon dating and Thermoluminescence (TL) are the commonly used techniques. The wood found at the site was dated using the C-14 process. The pottery sherds are expected to be dated by TL at the Physical Research Laboratory. C-14 is relevant only in the case of organic materials such as wood, charcoal, shell and bone. TL is used for dating terracotta. There are, however, reservations about TL. Its main advantage is that it can tell a genuine piece of pottery from a fake. But it cannot give reliable dating for the ancient periods.

Climate-related tests can also establish chronology. These can be employed to verify the claim that the site was one that was over time swallowed by the sea. The process would involve drilling deep-sea cores from the sea-bed and examining the micro-organisms within. Variations in the ratio of two oxygen isotopes in the calcium carbonate of these shells are a sensitive indicator of the temperature of the sea when the organisms were alive. This has been used to provide a chronology of the Ice Age (or Pliestocene epoch). No sea-bed cores have been taken in Khambat though Rajguru has said that this will be done.

Rajguru is extremely optimistic about the discovery and says he is convinced that "this will lead to something very interesting". Like Rajguru, Kathiroli is eager to carry out more exploration. He hopes to receive more funding from the Ministry of Ocean Development and to involve other agencies as well as the Indian Navy.

Amidst the growing hype there are still the voices of those who know that the Khambat discovery is likely to be used more to make gains in politics than to arrive at a better understanding of the past. Ratnagar expresses the apprehensions of a number of archaeologists. "The oldest known civilisation is the Sumerian and this is what makes them (the saffron brigade) rant and rave. They want star sites in India because all the existing star sites are out in Pakistan - Mohenjodaro, Harappa and Mehrgarh. They are always looking for pre-Harappan cultures and want to find the origins of the Indus Valley civilisation in India. It all gives rise to a very basic question - does it really matter where civilisations arose?" For some, the answer would be a definite yes.

In agreement with Ratnagar is Agrawal: "They are dating this as pre-Harappan because then it is easy for them to establish something that is very close to their hearts. They want to say that the Aryans were from India. They want to establish that India was the cradle of civilisation." This understanding, according to Agrawal, is contrary to well-established views. "First they make a public presentation without publishing in scientific journals. Then they say that the city is 9,500 years old - 5000 years older than the oldest known city."

In this context, these lines from Archaeology: Theories, Methods, Practice, a respected publication by Colin Renfrew and Paul Bahns, take on relevance: "Why, beyond reasons of scientific curiosity, do we want to know about the past? And whose past is it anyway?... the past is big business...the past is politically highly charged, ideologically powerful and significant."

Weak premises, flawed arguments

The Coming Collapse of China by Gordon G. Chang; Random House, 2001; $26.95.

AT a time when many people predict for China the status of a superpower in the not-too-distant future, here is a book that, far from endorsing the orthodox view, actually throws doubt on the ability of the country to survive as a nation-state in its present form. Far from a global market swamped by Chinese goods and services (people now even bet on China stealing a march over India in software exports), Gordon G. Chang, in his book The Coming Collapse of China, argues that China itself would be swamped by foreign goods with China's accession to the World Trade Organisation (WTO) regime. All this is supposed to happen in the next five years or so as, in the author's view, China today suffers from a combination of social and economic weaknesses that renders the present regime vulnerable to an assault on its hold over the levers of power. The assault is expected to come from myriad sources of popular support. Or is it? After reading his work one is forced to reach the conclusion that the lawyer in Gordon Chang has not made out a convincing case.

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The author contends that the Chinese leadership has lost the revolutionary fervour that characterised the initial years of Mao Zedong's rule. He says that corruption and a penchant for high living among the leaders at the expense of the ordinary people mark the present rule. In the process, Chang claims that the ruling Communist Party of China lost the moral high ground that it needs to occupy for it to continue to rule China with a degree of legitimacy. Simultaneously, he alleges that the party is also suppressing democratic activists and members of the Falun Gong religious movement, besides separatists in the Muslim community in the northwestern province of Xingjian and the Buddhist majority in the Tibetan province in the southwest.

However, he realises that such sources of popular disaffection are not enough to cause a violent reaction that can throw the existing regime off its perch. While it may provide the initial spark, forces of far greater intensity are needed to cause a widespread social upheaval, which alone can pose a serious threat to a regime's capacity to survive. It is in this context that the author enters the argument of poor financial health of the state owned enterprises (SOEs) and the problem of non-performing assets of the country's banking system. The author argues that state-owned banks, which command nearly 90 per cent of the public deposits in the People's Republic of China (PRC), are hopelessly insolvent. They have lent monies to SOEs that not only are non-profitable but also suffer from a weak accounting system which renders suspect their capacity for mid-course corrections. They are kept afloat, he claims, only by an elaborate system of subsidies from the Central and Provincial governments. Hence he is extremely sceptical about the capacity of the SOEs to compete successfully with overseas manufacturers on level terms. Right now, he contends, it is not a serious issue as overseas suppliers have until now been denied access to the Chinese market. At this juncture, the author brings in his argument, namely, China's entry into the WTO. Chang rightly points out that the rules of domestic competition would change with the country's entry into the WTO as the accession binds China to provide a transparent and rule-based regime of internal trade competition.

Thus, the author sets the stage for a grand scenario of unfolding events. As Chang sees it, with the ushering in of competition under the WTO regime, the SOEs would soon fall like nine pins in the face of an onslaught by foreign enterprises. Their collapse would aggravate the problem of non-performing loan assets of the state-owned banks. As non-performing assets mount, banks themselves would be unable to service the claims of their depositors. Soon, the investing public would realises the true state of affairs in the banking system. They would panic and cause a run on the deposits in the banking system, which the latter would be unable to stem. As the banking system collapses, there would be widespread unrest among the public. Such unrest is likely to gather momentum as all kinds of disaffected groups - advocates of democracy, members of the Falun Gong cult, Tibetans, Uighurs and, of course, the common people who would have lost their money in the banking system - would link up with one another, thanks to the spread of communication devices. The author says that the millions of subscribers of cellular devices and pagers and Internet users, who have access to an instant communication infrastructure, are bound to talk to each other and the bandwagon of a new democratic revolution would well and truly have been launched.

As theories go, there is an element of cold logic to the author's reasoning. One need look no further than the collapse of successive regimes in Argentina in January to concede the point that a sound financial system is a pre-requisite for stable political order. Equally, there is merit in the author's proposition that unviable nature of SOEs could potentially drag the banking system to its downfall. However, the key question is whether the SOEs collectively or as a class are really all that vulnerable. Unfortunately, the author fails to present conclusive evidence of an imminent collapse of the SOEs in the post-WTO era. On the contrary, the perceived poor competitive capability of China's manufacturing sector flies in the face of evidence about its enormous success in notching up impressive rates of growth in exports.

One may argue that macro-economic statistics put out by the official agencies in China are suspect. However, international trade statistics, put out by the WTO or other multilateral agencies, which credit China with such success on the export front, can hardly be accused of fudging. If the argument that China is an inefficient manufacturer of goods is true, where then does its competitive success in exports come from? Not all its exports are bicycles, toys and stainless steel cutlery. Hence, there must surely be many things that the Chinese manufacturing sector must be doing right. Maybe even the export success is a mirage. But the book gives no evidence of that either. In fact, there is little discussion on China's export performance as a whole and it is a fundamental weakness of the author's argument. The competitive capability of China's manufacturing sector is the core issue here, for it underpins the author's argument about the collapse of the country's financial sector and the triggering, in the process, of massive public discontent. If the SOEs are not as bankrupt as is made out to be, then the argument of an imminent collapse of the financial system too falls through. In the event, the latent discontent among certain sections of Chinese society (such as Uighurs and Falun Gong members) would not gain the momentum that the author predicts.

Even from a macro-economic perspective, one must discount the 'collapse' theory. After all, China is the third largest economy in the world. Any collapse of an economy of such a size could cause disequilibrium of such enormous proportions that no surplus capacity elsewhere in the world could bridge. For instance, steel. Assume that Chinese enterprises are not as efficient a producer of steel as South Korean or Japanese ones are. (Actually they are, if anti-dumping duties against Chinese steel in the United States are anything to go by.) Yet China accounts for a little more than 100 million tonnes of the global steel output. However, the author argues that Chinese manufacturers would go out of business in the post-WTO regime. At present there is no manufacturer in the world who can step in and meet this shortage. Moreover, there will be shortage as the Chinese or overseas consumers of Chinese steel are not going to stop consumption merely because somebody has decreed that the Chinese steel industry has no business to be in existence. Even if the Chinese industries go out of business, the resultant hardening of prices should see them immediately coming back as viable units. In short, the size of the Chinese economy is its own guarantee of survival.

Even the importance assigned to civil unrest or even an armed insurrection by sections of the Muslim population in northwestern China or the latent protest movement among Tibetans against Chinese rule in Tibet is out of proportion to their capacity to cause a social and political change in China. If civil unrest were to be the sole criterion, India's current political system should have given way to something drastically different. For practically all of its independent existence, India has had to face unrest in Jammu and Kashmir and in the northeastern States. Even today the Naxalite movement is a political force in some pockets of Andhra Pradesh, Madhya Pradesh, Orissa, Bihar, West Bengal and Maharashtra. Yet, predictions of doom for India are as misplaced as they must be for China. Britain has had to contend with unrest in Northern Ireland. Israel is yet another example, whatever be the merits of its Palestinian issue. The fact of the matter is that most countries have had to contend with unrest in varying degrees and at various times. Yet, it has not been a factor in their stability. Hence, in all fairness, one would expect the author to say why it must be different for China.

By far the most ridiculous argument is the one dealing with the rise of prostitution as a factor in triggering social change. The author refers to the highway girls of Hangzhou in Zhejiang Province and the sex workers of Rugao in Jiangsu Province. Since the book is no travelogue, the reference to prostitution can mean only one thing - it too represents some kind of a threat to political stability or the moral decay that would be a forerunner of some politically destabilising consequences. By that yardstick, the Netherlands with its thriving sex trade should have been wiped off the face of the earth long ago.

A witch-hunt in the U.S.

My Country Versus Me by Wen Ho Lee with Helen Zia; Hyperion, 2002; pages 332, $23.95.

A Convenient Spy: Wen Ho Lee and the Politics of Nuclear Espionage by Dan Strober and Ian Hoffman; Simon and Schuster, 2002; pages 384, $26.

THE treatment that was meted out to Dr. Wen Ho Lee, a Chinese-American nuclear scientist, is a case of blatant abuse of power by the United States' Federal Bureau of Investigation (FBI), Department of Energy and Attorney-General of the time Janet Reno. Wen Ho Lee came to the U.S. from Taiwan in 1964. After graduating and obtaining his doctorate he worked at research institutes in Chicago and Idaho. He became a U.S. citizen and then began work at the Los Alamos National Laboratory (LANL). Wen Ho Lee preferred this job, which was set in a quiet locale where he enjoyed his research work and also fishing and trekking. He raised a family.

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Wen Ho Lee is a hydrodynamics code physicist. Working with several complex computer programmes, he developed a code that simulated detonation of thermonuclear weapons, atomic bombs and hydrogen bombs. His research was especially useful at the time of the war against Iraq. Like other scientists, Lee had the opportunity to participate in scientific conferences in various European and Asian countries. He went to China twice. As he had relatives in Taiwan, he used to visit the country of his birth once in two years with his family.

Although Lee participated in international conferences along with fellow scientists, he was under surveillance. In 1982, when he visited China, he was made to take a polygraph test. He passed it. At LANL he had the highest security clearance. But this did not deter the FBI from keeping a constant watch on him. When he attended a conference in Hong Kong, he was interrogated by the FBI about his meetings and conversations with Chinese scientists.

Lee was careful enough to read his papers at the conferences only after obtaining the permission of LANL. He attended a conference in Beijing and then visited some places of tourist interest along with his family. This aroused the suspicion of the FBI. When he went to Hong Kong with his daughter, this suspicion was strengthened. A story was made out that he went to Shanghai surreptitiously. The bill that he had paid was for the hotel charges for his daughter and not for a plane ticket to Shanghai.

At this time the U.S. had strained relations with China. Although both countries were not openly hostile to each other, they were constantly at loggerheads. The U.S. Congress was pressuring the Clinton administration to take strong measures against China for its nuclear programme, which was construed as being against the U.S., and alleged violation of human rights. The general impression in the U.S. was that the Chinese had stolen its nuclear secrets.

Lee was an unfortunate victim of this prejudice. Even though he passed his polygraph tests, the FBI had never really taken him off the hook. When some tapes were found to be missing from LANL, Notran Turlock, who was in charge of the counter intelligence unit, was convinced that the Chinese had a spy in the laboratory who had handed over some nuclear secrets that were described as the 'crown jewels'. To Turlock the obvious suspect was Wen Ho Lee. A report was sent to the FBI and Lee was interrogated. This time too he passed his polygraph test. But the FBI was not convinced.

The Chief of the Department of Energy was also convinced that Lee was a spy. Turlock leaked a story to the two reporters of The New York Times. The editors did not bother to cross-check the information and sources. The New York Times finally published a report which stated that the Chinese had stolen nuclear secrets from LANL and Lee had betrayed his country by acting as a spy.

Lee, in his book, My Country Versus Me, narrates what happened before and after the report was published. He explained to his interrogators that the tapes that he had copied did not contain classified material. He wanted to make back-up files, as other scientists did, he said. When the highest authorities of LANL were bent upon punishing Lee and the FBI did not want to take a reasonable view, nobody could stop the arrest of Lee. He was persecuted severely; he was in solitary confinement for 287 days. His wife and daughter tried hard to get him released. They gathered support from eminent scientists and met Congressmen, among others.

As the days went by, it became clear that the government had bungled and had a weak case. On May 11, 1999, Bob Vroman, who worked as the security chief at LANL, wrote to Senator Coural Bearns saying that the LANL inquiry in the case of Lee was singularly flawed. He expressly stated that ethnicity was the crucial component that led to Lee's identification as a suspected spy. Suspicion against some others with similar backgrounds was ignored.

Later on it was revealed in court that the files that Lee had copied were not classified documents, though they were protected material. Lee has also been charged with handing over to China secrets of a W 88 nuclear warhead. In fact, he had nothing to do with that project.

Dr. Harold Agnew, who was familiar with all aspects of the decisions on and manufacture of U.S. nuclear weapons, told the press that the People's Republic of China had developed its own nuclear weapons, tailored specifically for its own materials, designs, delivery systems, vehicles and manufacturing capabilities. According to Agnew, the so-called secrets that Lee was accused of supplying to China would be of no use to it, as China's weapons system was totally different from that of the U.S.

All this undermined the government's case. Then the government advocate entered into negotiations with Lee's advocates. It was decided that Lee should go in for a plea bargain. Accordingly, Lee admitted that he had made a mistake by downloading the material without permission. If he had not made this 'confession', he would have been in jail for an indefinite period of time and incurred large expenses. Under the plea bargain, he was declared a felon. He, therefore, cannot vote and will not be able to get any employment. But all except one of the 59 charges against him failed.

Judge Parker, while giving the judgment, apologised to Lee, which was quite unusual. He blamed the executive branch of the government for the frame-up. But the explanatory notice by The New York Times failed short of expectation. The paper did not apologise and did not make proper amends to Lee. The unprofessional conduct of its reporters and editors is inexcusable.

Lee comes out well from this narrative. It is heartening that there were thousands of Americans from various ethnic backgrounds who stood by him.

This case has again shown that American public officials and people's representatives are often carried away by irrational exuberance and become highly prejudiced. Although the Cold War has ended, they are still obsessed with China. Lee's case arose because of this obsession.

DAN STOBER and Ian Hoffman are journalists. They have closely followed this case and blame the government, LANL and the FBI. According to them, the FBI might have overlooked some other suspects. Both journalists maintain that it is possible that China stole some secrets. They do not think that Lee was totally innocent. But they have failed to make their case.

Stober and Hoffman have pointed out the loopholes in the Cox Committee report about the alleged penetration of Chinese intelligence in various aspects of life in the U.S. Committee chairman Christopher Cox was convinced that the Chinese were stealing nuclear secrets from the U.S. and that they were also influencing the U.S. political process. The committee came out with a report that affirmed these views. It surmised that thousands of the Chinese-American industrial enterprises were acting as conduits in this process. Stober and Hoffman have refuted this argument.

They have also shown that it was not the Chinese who took the initiative to collaborate with Americans, but it was the other way round. The Americans, sent scientists to China and helped them in their nuclear programme, which was already advancing with the help of the Soviet Union. However, the prejudiced Cox Committee report was hailed by many members of Congress.

Stober and Hoffman think that the data or codes that Lee copied may have been of use to him if he took up private employment. This is a shallow argument and should not have been made in a serious case like this.

Of an institution-builder

columns

The Partial Memoirs of V.K.R.V. Rao, edited by S. L. Rao; Oxford University Press; Rs.445.

SOME people called Dr. V.K.R.V. Rao, Alphabet Rao because of the four letters that preceded his name Vijayendra Kasturi Ranga Varadaraja Rao (1908-1991). Dr. Rao is best remembered as an energetic institution-builder. He founded the Delhi School of Economics, the Institute of Economic Growth, also in Delhi, and the Institute of Social and Economic Change, Bangalore. He also earned minor fame for his book The National Income of British India - 1931-32.

These partial memoirs have been put together by his nephew S. L. Rao, a fellow of the Tata Energy Research Institute, Bangalore. In his preface, the nephew delineates the uncle's character deftly and candidly. These memoirs do not quite bring V.K.R.V. Rao to life. These will, one hopes, arrest Rao's descent into near oblivion.

Rao was not the most comfortable man to be with. The nephew acknowledges this:

The memoirs are not defensive or self-justificatory, attempting to sanitise his life so that posterity can judge him favourably. Rao was brutally honest about himself and his foibles. He had understood the effect his domineering personality had on people and consequently on his relationships and career...

Rao quarrelled with P. C. Mahalanobis, C. N. Vakil, Economics Professor at Bombay University, T. T. Krishnamachari, at one time a powerful force in Delhi. Also with Ashok Mehta (1911-1984).

Rao refers to me in his introduction. I had of course been very aware of V.K.R.V. Rao as a student at St. Stephen's College, Delhi (1948-52), but I got to know him when he joined Indira Gandhi's Cabinet. In a review of Kiran Mishra's book on Dr. Rao, I wrote in The Asian Age in 1996:

When he became a Cabinet Minister, his temperamental angularities did not go unnoticed. He came into politics in his sixties. Adjustment was not easy. He was intellectually from the top drawer, politically he was a novice and at times it showed. His temper did not endear him to his officials. One Indian Ambassador formally complained to Indira Gandhi. Sardar Swaran Singh, who never lost his temper, pacified the Ambassador and also spoke to Rao. I had no problems with him.

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Rao had a brilliant career at Cambridge getting a 1st. In Cambridge he grew intellectually and physically. When he went up to Cambridge he was five feet and two inches. When he left he was five feet and nine inches!

When he came to the Lok Sabha from Bellary, much was expected of him. As a Cabinet Minister, he did not stand out. He was an accomplished speaker, though somewhat hectoring. He did not make much of an impression in Parliament. As a teacher, he had captive audiences. Not so in Parliament. Indira Gandhi did not include him in her Cabinet in 1971. That hurt. He was also close to S. Nijalingappa.

V.K.R.V. Rao first came to Delhi University in 1942 at the behest of Sir Maurice Gwyer. In 1957 Rao became Vice-Chancellor and was much in demand as a speaker.

I am not competent to comment on his work as an economist. He was a product of Cambridge of the 1930s. Maurice Dobb, the card carrying communist, influenced Rao, as did John Maynard Keynes (1883-1946). He was in favour of a planned economy and is today considered passe by the pundits of globalisation and private enterprise.

Rao's nature was rooted in austerity. He did not embrace its harsher Gandhian aspects. His Gandhism was tempered with Nehru's humanism and intellectualism.

In some ways these memoirs are enveloped in melancholy. Rao neglected his family and regrets having done so. The chapter "Chances I missed" is touching and honest. He confesses, he could not stick to any job for any length of time...

No stability, no firm roots, no sense of belonging and peace and preparing for retirement... this I regret and so I also regret the opportunity that more stable and less restless life would have given me in making a worthwhile and permanent contribution to the frontiers of knowledge in my chosen academic discipline...

In the next breath he says that, if given a chance to relive his life, he "would do nothing else but to repeat it". This, in my judgment, is not a sign of wisdom. It is bad enough to go wrong in one life but to want to repeat folly is obduracy of a conceited kind.

The real sadness comes in the chapter "What life has taught me".

Life has certainly taught me that arrogance, conceit, overwhelming confidence in one's own importance are only illusions, mirages in the desert that one realises only when one gets close to them. I have learnt humility and modesty, though this has come rather late for sustained and visible articulation.

P. N. Dhar has also contributed two pieces to the book. Both are exceptionally well-written.

This volume badly needs an index.

Conservation priorities

Will the National Wildlife Action Plan 2002-2016 be able to counter the forces of ecological destruction and protect India's natural ecosystems from over-exploitation, contamination and degradation?

ON January 21, Prime Minister A.B. Vajpayee released the National Wildlife Action Plan (NWAP) 2002-2016, at a meeting of the Indian Board for Wildlife (IBWL). This top advisory body on issues relating to nature was meeting after a gap of five years. And the NWAP was only the second one in India's history, the first having been put forward in 1983.

There is a desperate need for a new action plan. Two decades after the first NWAP, we live amidst a considerably different set of circumstances. The forces of ecological destruction are several times stronger. The rate of loss of biological diversity - that incredibly rich range of plants, animals and micro-organisms on which human life itself depends - is today higher than ever before. India has moved into an era of "globalisation", with natural resources up for grabs. New and powerful trade cartels are making a mockery of the bold efforts to save threatened species like the tiger. Village residents in many areas have become hostile to the current model of wildlife protection. And significantly, political support for conservation is now amongst the weakest in independent India.

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Creatures small and beautiful deserve as much attention as mega-fauna specimens such as the tiger (here in Ranthambore).

Will the new NWAP help counter these trends, or will it remain a nicely worded, glossy document meant for the shelves?

Framed by a committee of 15 wildlife experts and ecologists that was set up in 1998 by the Union Ministry of Environment and Forests(MoEF), the NWAP has 13 major focal areas. Each of these has a listing of the proposed priority projects, with a time-frame, and agencies responsible.

The National Wildlife Action Plan has 13 chapters: 1. Strengthening the network of protected areas (declared under the Wild Life Protection Act of 1972); 2. Effective management of these protected areas; 3. Conservation of wild (especially threatened) species and their habitats; 4. Restoration of degraded habitats outside protected areas; 5. Control of poaching and illegal wildlife trade; 6. Research and monitoring; 7. Human resource development; 8. People's participation; 9. Awareness and education; 10. Wildlife tourism; 11. Domestic and international legislation; 12. Financial measures; and 13. Integration of conservation with other sectors of planning.

Many of the basic thrusts of NWAP 1983 are reiterated, including the strong focus on legally notified protected areas as the major vehicle of conservation. Conservation of threatened species, control of wildlife trade and poaching, and education and awareness are the other continuing focal areas. New or strengthened areas of attention include community involvement in conservation, conservation outside protected areas, and sensitisation of developmental sectors towards conservation issues. The plan recommends that at least 2 per cent of the country's budget should go into forest conservation, and at least 15 per cent of this amount into wildlife. In order to achieve this, it recognises that decision-makers need to be convinced about the economic, water and livelihood security that wildlife habitats provide.

THE first imperative for conservation in India is making the development model more ecologically and socially sensitive. The major cause for loss of wildlife (and of livelihoods of people dependent on natural resources) is the destruction of natural habitats, and that is what today's 'development' model is best at. From the 1960s to the 1990s, for instance, Gujarat lost 70 per cent of its forest cover due to dam-related submergence or displacement. The story is repeated through the country, dams being ably assisted by industries, cities, ports, and infrastructure projects. Half of India's forests are gone, 40 per cent of its mangroves have been wiped out; a third of its biodiversity-rich wetlands have been drained out. Kalpavriksh, the non-governmental organisation, has put together a list of 50 national parks and wildlife sanctuaries threatened by mining. The consumerist lifestyles of the rich also take their toll, whether it is for marble mining in Sariska Tiger Reserve in Rajasthan or car rallies proposed through the Rann of Kutch Wild Ass Sanctuary in Gujarat.

Globalisation has increased the toll, for example for mining or in marine areas. Thousands of turtles are killed every year in the nets of commercial trawlers off Orissa's coasts, while critical wildlife breeding habitats in lagoons like Chilka (also in Orissa) and Pulicat on the Andhra Pradesh-Tamil Nadu border) are devastated by shrimp and prawn farming... all for exports. Toxic wastes are being welcomed into India, their foreign exchange potential being the lure. The 1990s saw a spurt in moves by State governments to reduce the extent of protected areas to accommodate industrial interests.

What does the NWAP have to offer by way of a challenge to this trend? It declares that "the national development agenda must recognise the imperative of identifying and protecting natural ecosystems from over-exploitation, contamination and degradation. Short-term economic gains must not be permitted to undermine ecological security." The NWAP also recognises that natural habitats are critical to water security, and the "source of survival of millions of people, in particular as a source of NTFP and aquatic resources". It suggests the following measures:

* Declaration of the surrounds of protected areas, wildlife corridors, biosphere reserves, World Heritage Sites, and Ramsar (convention) sites (wetlands of international importance) as ecologically sensitive under the Environment Protection Act (which would enable the government to regulate destructive activities);

* Re-orientation of laws relating to development and resource utilisation, to harmonise them with laws relating to wildlife and environment;

* Integration of wildlife into development sectors, including through the adoption of a regional planning approach and the declaration of a radius of 5 km around protected areas as special development areas;

* Phasing out mining, and avoiding major roads, railway lines and dams in critical wildlife habitats;

* Regulation of tourism, and its orientation towards conservation and local community benefits.

There is considerable stress on tackling poaching and trade in wildlife products through the creation of a National Wildlife Crime Cell, police-like powers to forest staff, setting up of special courts for wildlife related cases, and special vigilance measures on trade routes with the help of Customs, the Army, the Coast Guard, and the police.

Unfortunately, despite attempts by some members of the committee, the NWAP stops short of what should have been another major shift in conservation. For far too long Indian conservationists have focussed almost exclusively on protected areas (covering less than 5 per cent of the area of the country), to the detriment of biodiversity that exists in other areas. The NWAP only talks of regenerating degraded habitats outside protected areas, and encouraging communities to protect habitats in their jurisdiction. This is a missed opportunity.

The second major imperative for conservation in India is to make it a people's movement. 'Wildlifers' in the 1970s depended heavily on the goodwill of the then Prime Minister (who on the other hand furthered the suicidal course of development that her father initiated). What they did not realise, and what some still refuse to recognise, is that an initiative that rests on the interest of one political leader is simply not sustainable. Worse, the model of conservation that was ushered in was singularly lacking in social sensitivity. It ignored the survival and livelihood dependence of several million people on the natural resources within wildlife habitats, and overlooked the conservation traditions and beliefs that many of these communities possessed and practised. The result was a conservation programme that tried to separate human communities from wildlife. In a country where most of the land is used for some human purpose or the other, this kind of exclusionary vision was bound to fail.

The results of this model are clear. 'Protected areas' is a hated term. In most States, the creation of new protected areas is a political nightmare, generating public hostility. Conflicts between wildlife managers and local populations are commonplace. Alienated and hostile village residents are used as fronts and conduits for poaching and timber theft.

In Himachal Pradesh, a crucial part of the Great Himalayan National Park was denotified, ostensibly to protect the interests of two tiny villages inside, but actually to allow the construction of the Parbati hydel project. Inequities and vested interests within communities are aided and abetted by corrupt officials, poachers, and others, to undermine traditional conservation customs and practices. Often the protected area status itself does this: after the Kanger Ghati National Park in Bastar was notified, fishing became "illegal"... so adivasis who would earlier catch fish in a sustainable manner using plant-based poisons, now rush in, use the banned pesticide DDT, and rush out before park officials can catch them.

DOES the NWAP mark a turning point in the conservationist's vision regarding local communities? It does speak of local communities having the "first lien" on biomass resources, and the need to "reconcile livelihood security with wildlife protection". It proposes the following actions:

* Support to community-based conservation initiatives;

* Creation of participatory management institutions for every protected area;

* Formulation of management plans for protected areas, and working plans for forests, by teams involving local communities;

* Use of traditional knowledge in all aspects of conservation;

* Providing various benefits of conservation to local people; this includes an interesting recommendation to channel all tourism receipts of protected areas into a trust fund from which 70 per cent should go for local community use;

* Employment in wildlife programmes only to local people;

* Biomass and water resource rights for personal consumption, to local people who demonstrate conservation practices;

* Innovative measures to prevent damage to crops and livestock; speedier and simpler procedures to compensate such damage;

* Access to information for local people, and public hearings with them (though, strangely, this is restricted to areas outside protected areas).

A potentially powerful thrust is on identifying and declaring community managed wildlife habitats as community reserves, a new category under the proposed amended Wild Life (Protection) Act. (Kalpavriksh is putting together a directory of such sites, and estimates that there are probably several thousands of them.) The NWAP incorporates a suggestion that this writer has been making for years: to increase the protected area coverage to 10 per cent of India's landmass (from the current 4.7 per cent), by adding categories such as community conserved areas, and most forest lands by reorienting their management towards ecological services.

The gains of many of the positive recommendations could be offset partly by some rather regressive clauses. Though there was some dissension, it seemed that the dominant view in the committee was to prohibit clearly the forcible displacement of communities from within protected areas. Mysteriously, however, the final document advocates relocation to be in a "participatory manner, taking people into confidence", but only "as far as possible". Worse, it states that communities who want "civic and other amenities" inside protected areas "should be encouraged and aided to move out", and that States should "prevent land-based development activities within national parks and sanctuaries". These are extraordinary, potentially anti-constitutional statements.

The agreement in the committee had been that urban facilities should not be allowed inside protected areas. But the NWAP seems to deny everything from a water pump to watershed management. Surely anyone can see that if this is implemented, the induced displacement would be as much forced as actually throwing people out. This is not only socially unjust but it could backfire seriously on wildlife habitats, forcing village residents to destroy natural habitats for livelihoods. Village residents inside the Sariska Tiger Reserve and elsewhere have shown that one can have ecologically appropriate civic amenities, and land and water development, while improving the ecological status of the surrounds. These examples should have instructed the NWAP's vision.

Another lacuna is that panchayati raj institutions have not been provided a key role in the matter. Like it or not, these institutions are going to become increasingly powerful, and conservationists will have to find ways of relating to them.

The process of making the NWAP has left much to be desired. Fifteen people, no experts in their own right, have drafted a plan with implications for millions of others. It is unclear how this draft was circulated, but certainly there was no public forum at which it was discussed. The final version was not even shown to some members of the drafting committee, and constitutes a number of unfortunate dilutions. (This writer was a member of the committee.) It is doubtful that such a process will generate ownership of the action plan amongst any more than a handful of people. A pity, since this is a subject that is crying out for mass ownership.

One major weakness that the NWAP 1983 suffered from was the absence of a dedicated implementation and monitoring mechanism.

Despite its flaws, NWAP 2002-2016 is a vast improvement over its predecessor. What is urgently needed now is a national debate on this document. The MoEF should translate the document into Indian languages, disseminate it widely, and encourage the holding of workshops and public hearings especially at critical wildlife habitats. It should facilitate NGOs and community groups to carry the message forward. It should subject the Wild Life Act to public scrutiny, and attempt to bring it in line with the policy pronouncements of the NWAP. And just as it has promoted more participatory forms of forest management, it must promote collaborative and joint management of wildlife habitats.

Most important, the wildlife conservation lobby must sit with mass movements, human rights groups and social activists, to hold a dialogue on the various thorny issues of the wildlife-human interface. One such attempt is the series of National Consultations on Wildlife Conservation and People's Livelihood Rights, organised by groups across the country. Without a large-scale people's movement behind it, the NWAP will remain yet another document. Will the accusing glare of the tiger on its cover forever remain a reminder that we failed in our duty towards our fellow creatures?

Ashish Kothari is a founding-member of Kalpavriksh, and coordinator of the technical group formulating India's National Biodiversity Strategy and Action Plan.

Unhealthy policy

R. RAMACHANDRAN public-health

Pharmaceutical Policy 2002 reduces to the minimum all controls on drug pricing, thus putting the health of the people at the mercy of multinational corporations.

PEOPLE'S health is no longer the focus of the new, blatantly pro-industry, national drug policy. Cleared by the Cabinet Committee on Economic Affairs (CCEA) on February 4, and leaked to the press in parts, the policy document was formally released on February 15. For some reason the new policy is labelled "Pharmaceutical Policy 2002" as against the label of "Drug Policy" for the 1986 document and its revised version of 1994. Just how much the drug policy is concerned with the health of the people is evident from the fact that it precedes the new health policy, which is expected to be announced in the next few months.

The 1986 policy statement had public health as its basic premise even though the implementation of the policy has left a great deal to be desired. The post-1991 economic liberalisation process and the consequent progressive dilution of the price regulatory mechanism - called the Drug Price Control Order (DPCO) - are two of the reasons for the state of the public healthcare system being what it is today. Now even that intent of public healthcare has been given up. The trade and commercial aspects of pharmaceuticals have been accorded overriding importance. Only a facade, in the form of opening remarks that "the basic objectives" of the 1986 policy "still remain largely valid", now remains.

The following remarks in the new policy statement set the new premise: "The drug and pharmaceutical industry in the country faces new challenges on account of liberalisation of the Indian economy, the globalisation of the world economy and on account of new obligations undertaken by India under the WTO (World Trade Organisation) Agreements. These challenges require a change in emphasis... and the need for new initiatives... towards promoting accelerated growth of the pharmaceutical industry and towards making it more internationally competitive."

Accordingly, the thrust of the new policy seems to be aimed at allowing a rise in drug prices by diluting the DPCO substantially from its already weakened form of 1995, something which the industry has been lobbying for long. The pharmaceutical industry's response has been on expected lines. It would like the remaining controls also to be removed and the entire DPCO mechanism, which was put in place in 1970 and was revised in 1979, 1987 and amended in 1995, abolished. From a total of 166 drugs then under price control, the number was brought down to 74 in 1995 and to just 35 or so now - a near-halving at every revision. In 1995, the 74 drugs and their formulations that were under price control constituted about 40 per cent of the total market. In the present policy, the span of control has been reduced to 22 per cent. To put matters in a sharper perspective, there are 279 drugs listed in the National Essential Drug List (1996) of the Ministry of Health and Family Welfare (MoHFW) and 173 entries are termed important by the Ministry from the point of their use in its various health programmes.

According to a press statement issued by the Federation of Medical and Sales Representatives' Association of India (FMRAI), which has described the new policy as a "major assault on people's access to essential drugs", the Ministry of Chemicals and Fertilizers (MoCF) had earlier circulated secretly a document, Pharmaceutical Policy, 2001, which has now got the Cabinet's approval.

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The gradual dismantling of the regulatory framework in the pharmaceutical sector has already been in evidence for some time. Industrial licensing for the manufacture of drugs and pharmaceuticals stands abolished (except for bulk drugs produced by the use of genetic engineering, bulk drugs that require in-vivo use of nucleic acids and specific cell/tissue-targeted formulations). Foreign investment in the sector through the automatic route was raised from 51 per cent to 74 per cent in March 2000 and to 100 per cent in December 2001.

According to the document, the following two factors formed the raison d'etre of a new policy: a) The need to improve incentives for research and development (R&D) in the pharmaceutical sector and to enable the industry to achieve a sustainable growth pattern in view of the anticipated changes in the Patent Law; and, b) The need for "reducing further the rigours of price control particularly in view of the ongoing process of liberalisation".

The reports of two committees constituted by the government in 1999 have essentially formed the basis of the new policy. One, the Drug Price Control Review Committee (DPCRC) under the chairmanship of the Secretary, Department of Chemicals and Petrochemicals; and, two, the Pharmaceutical Research and Development Committee (PRDC) under the chairmanship of R. A. Mashelkar, the Director-General of the Council for Scientific and Industrial Research (CSIR). While the report of the latter has been made public, that of the former, the more relevant and a possibly contentious one, was not.

It is interesting to quote from the background note circulated by the government to the DPCRC prior to its deliberations. "DPCO is used as one of the essential instruments to achieve the objective of essential medicines of good quality, at reasonable prices, for the required health care of the masses. It has been an evolutionary process, which has been taking cognisance of ever-emerging new factors and their resultant effect on the availability of drugs at reasonable prices... controls have been gradually diluted with the promulgation of each subsequent order. However, the common feature of price control has been the principle of selectivity with the aim of product-wise price control, mainly based on the extent of mass usage of drugs."

The key "ever-emerging new factor" that the note identified was the inadequate machinery to administer the price control orders, leading to the concept of selectivity. It further observed that the determination of criteria for the selection of drugs under price control was a ticklish problem because of the need to strike a balance between the interests of the consumer and the manufacturer. "Therefore," the note said, "certain working principles were evolved and applied across the board... Industry, keen to get rid of price controls altogether, has time and again questioned these working principles... To make matters worse, industry has not been forthcoming in providing data to substantiate their claims."

The failure to evolve an effective mechanism to monitor the pharmaceutical industry's adherence to the DPCO, coupled with the liberalisation of the economy, has led the government to advance the dubious argument - at the behest of pharmaceutical companies - to justify the removal of price controls that market mechanism and competition will help check and stabilise drug prices. The questionable premise of selectivity on mass usage principle for price control has been further used to whittle drastically the list of drugs under price control.

The pharmaceutical sector is not like any other sector; it is a seller's market and the consumer, the public, has no choice in the matter because the interface between the product and the patient is through the doctor for whom the issues of price and affordability are secondary or the chemist who has no interest in selling cheaper drugs. Soon after the 1995 round of decontrol and the resultant reduction in the number of drugs under price control, the prices of drugs went up. Indeed, the policy statement makes the observation: "Although the prices of some bulk drugs have been steadily decreasing, yet the same do not get reflected in the retail price of non-scheduled formulations." But it ends up - based on that very dubious market figures - diluting the DPCO.

An analysis carried out by the Delhi Science Forum (DSF) on the impact of the 1995 decontrol throws up some interesting facts about the "market behaviour". The price movement of 28 essential drugs - eight under price control and 20 outside it - showed that out of the eight controlled drugs there was a decrease in six of them. On the other hand, the prices of the 20 drugs showed an increase in excess of 10 per cent and in some cases in excess of 20 per cent. More interestingly, the DSF analysis showed that in all segments there were wide variations in the prices of different brands of a given formulation and the top-selling brand in any formulation is not the cheapest one, sometimes twice as expensive. This is proof enough that the market mechanism does not stabilise drug prices and the market share of a brand is not dependent on its price. In fact, the very reason for putting in place a price control mechanism was this atypical market behaviour in the case of pharmaceuticals.

The DSF also analysed the increase in prices of 50 top-selling drugs between February 1996 and October 1998. It showed that the average increase in the case of brands under price control was 0.1 per cent whereas that in the case of brands outside price control was 15 per cent. It was also found that the price rise was not a one-time increase owing to an escalation in raw material costs but was indicative of a trend of continual increase in the prices of decontrolled drugs, Amit Sen Gupta of the DSF said.

Sen Gupta said that there was a prevailing myth that drug prices in India were the lowest in the world. "This is at best a partial truth. Drugs that are still patent-protected are much cheaper in India than elsewhere because of the 1970 Patents Act and we have lost this advantage after its amendment in the wake of TRIPS (Trade-Related aspects of Intellectual Property Rights). But for many off-patent drugs, which account for 80 to 85 per cent of the current drug sales in the country, prices are higher in India than in Sri Lanka and Bangladesh and even in Canada and the United Kingdom. In the United States, the U.K. and so on, there are effective price control mechanisms and bodies to monitor drug prices. When we argued that the change in the Patents Act would result in an increase in prices, the government said that it would use the mechanism of DPCO to keep the prices in check. Now that the Patents Act has been amended, the TRIPS argument is being used to dismantle the DPCO, confirming our fears."

The selectivity criteria (for mass usage) used this time round are as follows: A bulk drug (and all formulations containing it, either individually or in combination with other bulk drugs) will be kept under price regulation if the value of the turnover of the bulk drug in question - defined by some criteria - is more than Rs.25 crores and the percentage of the market share of any of its formulators is at least 50 per cent; and in case the turnover of the given bulk drug is less than Rs.25 crores but more than Rs.10 crores and the percentage share of any of the formulators is at least 90 per cent.

Further, the policy has accepted the recommendation of the DPCRC that low-cost drugs measured in terms of "cost per day per medicine" may be taken out of price control. A figure of Rs.2 per day has been fixed by the policy and the National Pharmaceutical Pricing Authority (NPPA), based on the formulator's representation, can recommend a particular drug to be exempted from price control. This particular provision seems to make sense because if the price of a drug is kept low without the intervention of the DPCO, there is no need for a regulatory mechanism but only a monitoring mechanism to see that the price limit is maintained even after the drug's exemption.

There is, of course, the usual caveat in the policy statement that the government reserves the right to intervene and bring a decontrolled drug back under control if the situation - such as an abnormal increase in price or monopolistic practices - warrants. For instance, the policy states that in the case of drugs/formulations that are listed by the MoHFW and are currently under price control but do not fall under the new criteria, the NPPA will monitor their price movements and consumption patterns in order to review their decontrol status if required.

The selectivity criteria adopted until now, following the 1995 DPCO, were: Include drugs that have a turnover of Rs.4 crores or more. However, if there are five or more producers of the bulk drug and 10 or more formulators with none of them having a market share of more than 40 per cent, it may be excluded. Include drugs that have turnover of Rs.1 crore or more if a single formulator had a market share of at least 90 per cent.

The present selection would seem as arbitrary as the earlier one. What constitutes mass usage - sale volume or value? Either way one could end up with the wrong selection criteria. For example, an anti-diabetic drug, listed as an essential drug but required to be taken only once a day, might be low in volume as well as value. Conversely, a very expensive drug, low in volume sales, could show up as having a high turnover. Similarly, a reasonably low-priced essential drug, but consumed in large quantities, might be missed out because the total turnover could still work out to be low. So the bottom line should be that the selection should be based on health need - namely, the list of essential drugs - and not on market behaviour which, in the case of drugs, does not follow the norms of other consumables. But this has been the problem with the Indian drug policy over the past four decades, in which the inputs of the health sector are never reflected in the policy articulated by the Department of Chemicals and Petrochemicals which in turn is influenced by the industry lobby.

In arriving at the selection criteria, the present policy statement has rejected the new criterion recommended by the DPCRC to ascertain the mass consumption nature of a bulk drug on the basis of the top-selling brand, on the grounds that it gives rise to anomalies. Yet, the policy does not offer any justification as to the final set of criteria that has the effect of keeping three-fourths of the drugs in the market out of price control. The basic data source that the DPCRC has used is the "Retail Store Audit for Pharmaceutical Market in India", published by ORG-MARG in March 2001, which lists all major brands and their sale estimates on an all-India basis.

The policy statement admits that no reliable data exist to ascertain mass consumption and the absence of sufficient competition in respect of a particular bulk drug - the two criteria used for the selection of controlled drugs. However, says the document, in the absence of any exhaustive and comprehensive information, the ORG-MARG data are the best available. According the ORG-MARG database, 23 drugs belong to the first selection criterion, Rs.25 crores turnover and 50 per cent market share of any formulator, and 12 belong to the second. However, the NPPA is expected to come out with the final list of controlled drugs in May, which may include other drugs in addition to those on the ORG-MARG list, in particular the "less than Rs.2 cost per day per medicine" category.

In addition to making higher profit margins for the manufacturer possible, the policy has done away with the ceiling on profitability on formulations that existed until now (vide the Third Schedule of DPCO 1995). In case of bulk drugs, the manufacturer has been allowed a 4 per cent higher rate of return over the existing 14 per cent on net worth or 22 per cent on the capital employed. Considering that more and more manufacturers are moving away from bulk drug manufacture to formulations, this provides an additional windfall. With no restriction on imports, pharmaceutical imports (which is largely of bulk drugs) have been rising at the rate of 29.3 per cent while exports (which are mainly of formulations) have been increasing at the rate of 18 per cent, according to the data of the Centre for Monitoring of Indian Economy (CMIE).

That the government should indulge in such massive decontrol exercise "to promote accelerated growth and improve competitiveness" defeats logic because pharmaceutical stocks, even during the current slowdown of rest of industry (except for the automobile sector), were the most robust in the last quarter of 2001. Now, with the announcement of the new policy, the pharmaceutical stocks, in particular those of multinational corporations (MNCs), have further shot up.

THE move to allow 100 per cent automatic foreign investment in the pharmaceutical industry is not likely to bring any large investment for production or technology or R&D, as MNCs are able to widen their markets now through imports alone. Further, Indian firms are increasingly turning into trading houses for MNC products. The existing MNCs have already shut their bulk drug production and R&D units. And the impending change in the patent regime will only aggravate this trend when the indigenous drug industry and R&D base would be completely eroded because of the removal of competition and the absence of any regulatory framework. While the new policy includes some measures on the R&D front based on the recommendations of the Mashelkar Committee or the PRDC, the policy puts forward no clear strategy that will counter this disturbing trend.

The Mashelkar Committee had recommended the establishment of a pharmaceutical R&D support fund (PRDSF), which will derive its finances from a 1 per cent surcharge on the maximum retail price (MRP) of all pharmaceuticals sold in the country to be collected by the Central Excise or other authorities concerned. An estimated Rs.100 crores should accrue to this fund annually. The committee had also recommended the setting up of a drug development promotion board (DDPB) to administer the utilisation of the PRDSF on the lines of the Technology Development Board (TDB), which administers the analogous technology development fund being created from the 5 per cent R&D cess on all technology import payments.

The new policy has approved, in principle, the setting up of the PRDSF under the administrative control of the Department of Science and Technology (DST), which will also constitute a DDPB. Hopefully, this "in principle" approval will be translated into an implementable measure through an act of Parliament. If the time taken over the TDB is any indication, the government machinery moves rather slowly on such matters. Of course, the experience of the highly successful TDB should greatly facilitate the take-off of the PRDSF once it is created. The Mashelkar Committee had also recommended several fiscal incentives to spur R&D in the drug sector. The new policy has endorsed these incentives, which include tax holidays and import duty exemption on raw materials, equipment and special consumables for R&D.

However, the basic premise on which the Mashelkar Committee worked remains questionable. Indeed, this premise is one of the chief arguments used by the DPCRC to dilute the DPCO under the new policy. The committee had observed that stiff price control measures under the DPCO left little scope for the firms to generate resources for R&D. This argument is dubious because the progressive reduction in the control span under the DPCO - down to 40 per cent after 1995 - does not result in any corresponding increase in R&D spending by the pharmaceutical companies. The overall R&D expenditure by the Indian drug industry (comprising about 150 companies) remains at a meagre 2 per cent of the total turnover. There is no guarantee, points out Sen Gupta, that the control relief will be channelled into R&D and not used to fatten the balance sheets of individual companies.

DPCO 1995 provided several incentives to drug manufacturers for R&D, which exempt them from price control. But the companies that have qualified for this price control exemption on grounds of indigenous R&D efforts over the years are fewer than the fingers on one hand. Interestingly, the Mashelkar Committee had set certain 'gold standards' for a company to qualify as an R&D-intensive company eligible for price benefits under the DPCO. Considering that hardly any company has qualified for exemption from the DPCO even without such standards being set, it is highly unlikely that such 'gold standard' companies would emerge as desired by the committee. Now that most drugs have been put outside DPCO controls, the DPCO does not any longer offer an incentive for R&D.

The upshot is that to meet the emerging challenges, in the wake of globalisation and the impending new product patent regime on the one hand and the new developments in the area of biotechnology on the other, there is no substitute for enhanced public spending in drug R&D. Even in advanced countries such as the U.S., significant R&D in pharmaceuticals is still public-funded. Indeed, what the country needs is a paradigm shift in medical research, drug development in particular, with a national-level strategic planning and new institutional mechanisms in public funded R&D.

Product development requires different levels of expenditure and facilities compared to the infrastructure available in public funded laboratories today, which possibly are good for the initial phase of discovering new molecules. Unfortunately, economic liberalisation has meant a squeeze on public spending on medical and biotechnology research in general, which in any case was only a little over 2 per cent of the overall government R&D expenditure. But there is no mention of improving public-funded R&D in the new policy statement.

The policy makes only cursory remarks about the aspects of quality control and education and human resource development, which should actually have received greater attention, especially with the increase in the spread of spurious drugs in the market. With licensing completely abolished, it is going to be even more difficult to keep a check on quality. The policy has endorsed the recommendation of the Mashelkar Committee to establish a new structure for the Central Drug Standard Control Organisation (CDSCO) under the MoHFW. With no clear indications of where the funding and manpower will come from, the hope of establishing a network of "world class" CDSCO laboratories can at best be a fond hope, if not mere rhetoric, like the rest of the policy document with matters regarding healthcare.

Human rights and human development

other

The integration of human rights and human development policies can result in significant improvements in human society, facilitating the dignity, well-being and freedom of the individual. An analysis in the Indian context.

C. RAJ KUMAR

DRAWING on Amartya Sen's work on democracy and development in general and his research on famines in particular, it may be argued that there is no such question of fulfilling some preconditions before a nation or a people becomes ready for human rights. On the contrary, it is through the institutionalisation of human rights and democracy that individuals become fit and worthy and possess dignity in human development terms. It is the opportunity for the exercise of democratic rights itself that gives training for democratic claims for development of all. Sen summarises the case for human rights from a development perspective in three aspects: "1. Their intrinsic importance, 2. Their consequential role in providing political incentives for economic security, and 3. Their constructive role in the genesis of values and priorities." Human rights, in other words, have intrinsic as well as instrumental value: without freedom, there is no development, and with freedom, development as a process of uplifting personal well-being is enhanced (Fortman, 2000). Alternatively, it may be argued that the "path of human development through the assistance of human rights" confronts all struggles and competing claims that arise because of this new integration (Majumdar, 2000). But this integration needs to be supplemented with policy changes at all levels of decision-making in the government for it to be effective.

The integration of human rights and human development policies rests upon an examination of the similarities and differences between these two conceptions (Amartya Sen, Human Development Report 2000, UNDP). They are ideologically close enough to derive motivation and concern for each other, promoting compatibility and mutual understanding. From an enforcement strategy standpoint, they are different enough to be able to supplement each other. Thus, an integral approach of these two conceptions can result in significant improvements in human society, thereby facilitating in numerous ways the advancement of dignity, well-being and freedom of individuals in general. An adequate conception of human development cannot ignore the importance of political liberties and democratic freedoms.

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It remains to be seen how far the role of integration of human rights and human development policies has been performed by the Indian judiciary and whether its assertions of these rights and principles constitute enforceable policies for governance administration. Another important analysis may be with reference to an observation of how these principles, which could be transformed into enforceable rights, are perceived by the government and what its position is with regard to their actual implementation. This analysis would lead us to the inquiry of whether or not the judiciary's role in promoting Directive Principles of State Policy as fundamental human rights has resulted in Parliament making amendments to the Constitution, thus giving constitutional legitimacy to judgments and solidifying the rights-development combination. Further, the rights-based approach to development requires both capacity-building within existing institutions of governance and providing support to the protection and promotion of human rights through the creation of human rights mechanisms and organisations.

The Declaration on the Right to Development (U.N. General Assembly Resolution 41/128, 1986), which stated unequivocally that the right to development is a human right, was adopted by the U.N. in 1986 by an overwhelming majority, with the U.S. casting the single dissenting vote. The first Article of the text of the Declaration on the Right to Development lucidly delineates the concept of the right to development. It states: "The right to development is an inalienable human right by virtue of which every human person and all peoples are entitled to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realised." The Declaration on the Right to Development is a world consensus document that emerged after a series of negotiations amongst the nation-states on what would constitute its provisions. The four main propositions of the Declaration are: a. The right to development is a human right; b. The human right to development is a right to a particular process of development in which all human rights and fundamental freedoms can be fully realised - which means that it combines all the rights enshrined in both the covenants and each of the rights has to be exercised with freedom; c. The meaning of exercising these rights consistently with freedom implies free, effective and full participation of all the individuals concerned in decision-making and the implementation of the process. Therefore, the process must be transparent and accountable, individuals must have equal opportunity of access to the resources for development and receive fair distribution of the benefits of development (and income); and finally, d. The right confers unequivocal obligation on duty-holders - individuals in the community, states at the national level, and states at the international level. Nation-states have the responsibility to help realise the process of development through appropriate development policies. Other states and international agencies have the obligation to cooperate with the national states to facilitate the realisation of the process of development (Sengupta, 2001).

The U.N. Declaration that was adopted in 1986 by the General Assembly has a lot of similarities, in terms of both text and interpretation, to Part III of the Indian Constitution, the Directive Principles of State Policy, which came into force in 1948. Some examples of these similarities may be: Article 1 of the Declaration speaks of "economic, social, cultural and political development" from a human rights perspective, while Article 38(1) of the Constitution speaks of creating a social order in which justice, "social, economic and political", shall inform all the institutions of national life. Article 2(3) of the Declaration speaks of people's "active, free and meaningful participation in development" and "fair distribution of the benefits", while Article 39(a) of the Constitution speaks of ownership and control of the material resources of the community to be "distributed as best to subserve the common good" and Article 39(c) speaks of the economic system not resulting in the "concentration of wealth and means of production to the common detriment". Articles 3(2) and 4(2) of the Declaration speaks of "full respect for the principles of international law concerning friendly relations and cooperation among states" and the need for "effective international cooperation with appropriate means and facilities to foster nations' comprehensive development" respectively, while, Article 51 of the Constitution speaks of the state endeavouring to "a. Promote international peace and security; b. Maintain just and honourable relations between nations; c. Foster respect for international law and treaty obligations in the dealings of organised people with one another". It is important for the Government of India, which includes the legislature, the executive and the judiciary, to understand the need to read, interpret and integrate the human rights and human development policies on the one hand and the Directive Principles of State Policy on the other to the United Nations Declaration on the Right to Development.

What is noteworthy is the fact that in some respects, the Directive Principles of State Policy go beyond the Declaration on the Right to Development, and hence it is all the more important for Indian governance administrators to take cognisance of these provisions and work towards their realisation. For example are provisions such as Article 39A (equal justice and free legal aid), Article 40 (organisation of village panchayats), Article 41 (right to work, to education and to public assistance in certain cases), Article 42 (provision for just and humane conditions of work and maternity relief), Article 43 (living wage, etc., for workers), Article 43A (participation of workers in management of industries), Article 45 (provision for free and compulsory education for children), Article 46 (promotion of educational and economic interests of Scheduled Castes and Scheduled Tribes and other weaker sections), Article 47 (duty of the state to raise the level of nutrition and the standard of living and to improve public health), Article 48 (organisation of agriculture and animal husbandry), and Article 48A (protection and improvement of environment and safeguarding of forests and wildlife).

THERE are always indicators of economic growth and social development on the basis of which governance administration is measured. Typically, these may be economic indicators of growth, which may include certain human development variables such as the level of education or the participation of women in development. On the whole, notwithstanding efforts to include human, social and political indicators of development, they have so far not been successful in finding a place of influence beside the powerful index of Gross National Product/Gross Domestic Product (GNP/GDP). One important purpose of the inclusion of human rights and human development in an integrated approach would be to dislodge the monopolistic hold of GNP/GDP on our minds. It has been argued that poverty can be removed at quite low-income levels, and that high average incomes are no guarantee against widespread misery (Streeten, 2000). Thus, research in this area by conjoining the "language of rights" to governance measurement indicators can result in a paradigm shift of both the social and institutional approach to development. To have a particular right is to have a claim on other people or institutions that they should help, assist or collaborate to ensure access to freedom. This insistence on rights and corresponding duties takes the governance debate beyond the idea of human development and links the human development approach to the concept that others have duties to facilitate and enhance development. Further, with the involvement of duties come a host of other concerns, such as accountability, culpability and responsibility.

The following are some of the indicators of governance administration in India, which will have a significant impact on the integration of human rights and human development policies: the right to food, education, health, shelter, environment and livelihood; rights of women, minorities, tribal people, children, aged, manual scavengers and the disabled and so on; the right to good governance; the right against corruption-free administration; and even the right to information. The Supreme Court and other courts have recognised that education, health, livelihood and environment have been declared as coming under the right to life under Article 21 of the Constitution. Of course, the problem of access to these rights and meaningful exercise of them needs to be examined and strategies have to be devised for their implementation. In pursuing a human rights-based approach to development, additional indicators that stress on participation, empowerment, transparency, accountability and democracy are required to measure the levels of enjoyment of human rights. These indicators, when couched in the language of rights, can be a vital tool in initiating reforms in governance and also in impressing upon the government that the task of implementing these reforms is no longer purely an administrative task but one which is a legal obligation and a duty of the government. Further, it may be argued that non-implementation of such duties may result even in sanctions under appropriate circumstances. Some of the needed creative indicators are those of access to justice, right to survival, right to development, and participative governance, including representation.

(Concluded)

C. Raj Kumar, a Visiting Researcher at the New York University School of Law, New York, was a Rhodes Scholar at the University of Oxford and a Gammon Fellow at the Harvard Law School.

For effective IT education

The course structure and teaching methods have to be overhauled in such a way that students develop into autonomous learners and acquire core capabilities that the workplace demands.

EDUCATIONAL choices in India after schooling are always dictated by the prevailing fads. The leading fad at any point of time could be medicine, engineering, commerce, management, electronics or biotechnology. Parents, the media and schools are, understandably, the chief contributors to this rat race. What is alarming, though, is that others, who should have been concerned with providing a stable environment in which students could pursue their natural talent (and ensure that there is a reasonable distribution of talent in a large variety of areas), are equally, if not more, culpable in this. These include the universities, the University Grants Commission (UGC) and the Ministries concerned.

While one would like to defend a vision of India becoming a competitive industrial state in a decade or so, especially in view of its success in nuclear, space, information and biological technologies, this presumes that India will have a strong base of scientific and technical manpower, in terms of both quality and quantity. The existing situation in the educational system, however, does not justify such optimism.

The process of shifting the focus of research away from the universities to the then newly created national research laboratories started in the 1950s. Even at that time, voices against this movement, notably that of Professor M.N. Saha, were ignored. The universities were isolated from the place of work as well as from funds. An estimate in the late 1960s put the research expenditure per annum by an academic scientist at Rs.6,000. The corresponding figures for the Indian Council of Medical Research (ICMR), the Council for Scientific and Industrial Research (CSIR) and the Department of Atomic Energy (DAE) were Rs.16,000, Rs.45,000 and Rs.72,000 respectively. In time the universities became institutions exclusively meant to produce teachers for the then expanding base of educational institutions. Research at universities, therefore, became purely academic and - owing to the enforced isolation - esoteric. What we are now witnessing is the terminal stage of this process, which makes universities irrelevant to society.

During the period before 1997 the university had a B.Sc. (Gen.) course with computer science as one of the disciplines.

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The opening up of the economy to external influences initiated a mushroom growth of "Vocational Courses" both in the universities and outside. This has, however, proved to be a cure worse than the disease. There are many reasons for this:

1. The university system, isolated as it is from the place of work, lacks the manpower and expertise to deliver these courses, especially as full three-year degree courses.

2. These are presented as terminal courses, not meant for top students. However, as these options are flaunted as "job-giving courses", primarily this group opts for them. The holding of entrance tests for these courses reinforces this perception.

3. An unintended side effect is the paucity of good students in the other, the so-called standard, disciplines in which the universities have both manpower and experience.

4. Wrong policies of the fund-givers: Since the 1970s the UGC has been liberally funding new disciplines, while being tight-fisted in even maintaining the standard ones. The limited funds have flown into the "job generating courses" at the cost of standard disciplines.

5. The UGC has arrogated to itself the mantle of designer of such courses. The liberal support promised for the controversial discipline of Vedic Astrology falls into this pattern of action.

6. The situation, financially and academically, is deeply de-motivating for teachers of standard disciplines, and this vitiates the learning environment further.

Thus it is this archaic notion of "vocationalisation" that has made the pursuit of sciences the last priority of students. We seem headed to a scenario, say in 2010, in which there would be jobs waiting to be done but no takers.

In 1995, the University of Delhi appointed a high-powered committee headed by Dr. Abid Hussain, with a brief to restructure the university radically to make it more job-oriented. Instead, the committee got sidetracked by the prevailing mindset into suggesting simplistic solutions such as starting new "job generating courses" within the existing framework. It ignored the warning that the major bottleneck in a proliferation of such three-year degree courses would be manpower. Out of several such courses that were suggested, the information technology (IT) courses were involved in the most serious controversies.

The IT bandwagon and its derailment have dominated news in the last few years. It started with the Y2K problem looming large on the industrial world. The problem was large in terms of the number of programs; most of them in what are now unfashionable programming languages, which had to be looked over with a fine-tooth comb for the use of the date. It was not a deeply technical problem for the most part. Thus anybody with an IT label was picked up by headhunters and all headed West, primarily to the United States where most of these programs were being used. By the end of 2000, with the problem over, most of these recruits were out on the road and heading for dotcoms or creating one, little realising that these were essentially commercial ventures and one had to have something or some service to sell and, alongside, commercial acumen. Thus a collapse was imminent and it arrived in due time.

HOW did the University of Delhi react to the situation? In 1997, it started two new courses: B.Sc.(Hons) in Computer Science and BCA, for a limited number of students (around 100). The university, however, buckled under pressure from students, colleges and parents and kept increasing the number of seats every year. The perception given by the media had a very important role to play in the building of these pressures. The growth has been really explosive (Table 1), far beyond the rate of growth of the employment market.

To be fair, the UGC played no role in this explosive increase. It was the Ministry of Information Technology (MIT) that kept on harping on the need to augment facilities for training in information technology, mainly to carve out a large share in the projected worldwide IT job market. One could argue whether investment in exporting manpower deserved to be accorded the highest priority by the MIT.

A study done before the IT meltdown has estimated the fractional requirement of personnel in various categories of pay packets in 2008 and determined that most of the manpower needs will be in the lower brackets (Table 2). The study was based on the projected expenditure in 2008 by the IT industry ($87 billion) and the predicted manpower demand (two million jobs).

At the University of Delhi most of the time has been spent in creating the physical infrastructure. One has not even started handling the major bottleneck of manpower training. In fact, the number of teachers available on any sort of a stable basis is only 0.8 per college as against a requirement of six to teach 75 students in three different years of a three-year degree course.

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The university has had to cut down drastically the number of colleges offering IT courses; and these will now admit students only for the B.Sc.(Hons) Computer Science course. Unfortunately, the major problem of the shortfall in teachers has not yet been addressed. The course also remains loaded in favour of subjects directly related to Computer Science, compared with the course in any Indian Institute of Technology, where the faculty is much larger and better trained. Success might yet elude this programme.

Finally, one should realise that the 2,243 students admitted last year will come out only in 2003, and that too under-trained. The majority of them formed the cream of school-leaving students in their batch. One is thus forced to ask the question: Are we being fair to them?

THE main problem here is that a system with a long response time, the university, is sought to be linked to one with a very short reaction time, the market. Our commitment to fixed three-year degrees, coupled with delays in getting courses framed and passed in the academic bodies, will clearly determine the lag. This lag, from the perception of the need to the first students arriving in the market, is at least five years. The market, on the other hand, with state-of-the-art communications, can react faster than in a year. As any system theorist can vouch for, this is a situation which is all set for uncontrolled oscillations.

The second problem is that college education does not promote qualities such as learning to work in a group, investigating an issue, or communicating with one's peers or a larger group orally or in the written form. It does nothing to enable one to learn to acquire and process information from a variety of sources, which is so important in today's IT-dominated world. Even traditional "science" skills such as observation, analysis of data, estimation and learning to make accurate measurements are not really tested.

Science education in the college today seeks to promote the acquisition of fixed, domain-based knowledge, which employers do not care about. It does nothing for qualities such as the ability to communicate and cooperate, which are in demand. No wonder students feel that college science education is irrelevant.

Clearly, the whole picture of university education needs a change. The Centre for Science Education and Communication (CSEC) at the University of Delhi has been working on an alternative for the last few years as a way out of this dilemma. It supports the concept of having linkages between institutions, which may be in different sectors.

A major initiative for restructuring the undergraduate science curriculum is currently under discussion in the University of Delhi. The thrust of the initiative is to:

* Build flexibility into the curriculum without having too many programmes;

* Integrate the use of IT in the curriculum so as to make every student IT-aware;

* Provide a flavour of the workplace to every student, according to her/his aptitude;

* Promote cooperation by introducing group work; and

* Help students develop communication skills. The main features of this scheme are:

1. Mainstreaming of skills in the early stages. The goal of an IT-enabled society can be realised only if all students, not merely a select few, go through programmes with an IT thrust, so that they emerge as informed users of technology. The university intends to use this year-long slot to enable students to learn to work in teams of four or five and use IT and electronics. The work will always be grounded in the context of the science subjects that they will be learning.

2. Strong disciplinary base in the intermediate stage. This time slot of three semesters will be used to cover almost the entire content of the present honours courses. This slot is bigger than it appears, as there is only one subject to cover.

3. A full-time connection with the workplace/environment in the terminal stage. The space for possible training in a specific technology should be provided for in the last semester of a three-year degree programme; this temporal compression would reduce drastically the system's reaction time. Spatial compression achieved by allowing students to enrol for the final semester at any college, irrespective of their parent college, would make more economic use of the infrastructure and manpower. Thus each training course needs to run in only one college, with a manageable number of students. Different colleges can provide a variety of professional courses, each serving a small group of students and managed by a small faculty. Their partner institutions in industry laboratories and so on could support them in planning, training and actual teaching.

The dream behind this restructuring is the creation of a student body that is broad-based in its foundation, open in its interaction and variable in its skill profile. Since the aims are quite different from those of the current B.Sc. programmes, mere updating of the syllabi will not do. What is needed is a radical overhaul of the course structure, teaching methodology and examination system. Every student must develop into an autonomous learner, because only then can he or she cope with the workplace demands of a knowledge-based society.

A university that is open to society may be a risky proposition, but the alternative is the status quo with its attendant instability. Are the planners and thinkers in human resource development, the Ministry, the UGC, the AICTE, the universities, and the academics at large ready to take this risk?

Prof. P.K. Srivastava is a former Professor of Physics, Delhi University, who is now Director, Centre for Science Education and Communication (CSEC), Delhi University.

Questionable proposals

The JNU's proposals to the UGC on new academic disciplines draw flak from students and teachers of the university.

IT is the Ministry of Human Resource Development again. Even as the controversy over certain deletions made in school history textbooks written by some historians continues, voices of protest have come from another quarter - Jawaharlal Nehru University (JNU) in New Delhi. The issue relates to the Tenth Plan proposals submitted by JNU to the University Grants Commission (UGC) regarding new academic disciplines and programmes. The document, titled "Tenth Plan Proposals: Towards a Twenty-first Century World Class University", has been assailed by the Jawaharlal Nehru University Teachers' Association (JNUTA) and the Jawaharlal Nehru University Students' Union (JNUSU). The document is seen to be yet another attempt by the ruling National Democratic Alliance (NDA) government to influence the educational system to suit certain ideological inclinations. The JNUTA says the plan document was not discussed by the Academic Council, or the various centres and schools of the university. In fact, even the deans of the three major schools of the university - the School of Social Sciences (SSS), the School of International Studies (SIS) and the School of Languages, Literature and Cultural Studies - were not involved in the drafting of the document. The proposals now await the UGC's scrutiny and will then be referred back to the Academic Council.

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The document, it is alleged, reads more like a political statement than a cogent, well-thought-out set of proposals. It also appeared that the university was being dictated to by the UGC. The document states that the proposals were formulated "keeping close to the Plan profile formulated by the UGC in October 2001". In fact, the UGC had agreed to give additional funds only if new centres were set up. Moreover, it was apparent that JNU's teaching and student community will not have any say in deciding the content and the structure of the new centres. The fact that both the teachers' union and the students' union are led by representatives of the Left, liberal and democratic forces may have had a bearing on the matter.

The proposal is for the establishment of six new centres, to meet the needs of growing interdisciplinary trends. Thus, the Centre for Studies in Globalisation, the Centre for Media Studies, the Centre for Cultural Policy and Development Studies, the Centre for Water Sciences, the Centre for the Study of Human Consciousness and the Centre for Comparative Culture Studies are to be set up during the Tenth Plan period. Over the last three decades the JNU has been a major centre for multi-disciplinary teaching and research. The document does not deny the fact. Hence, the emphasis on new centres which will be "interdisciplinary in the very conception" has met with scepticism. The suggestions in the proposal, it is felt, hardly matches the current standards of teaching and excellence in JNU. For instance, one of the stated objectives of the Centre for Media Studies is to "comprehend newspaper and electronic journalism, film and television; it will also study the most powerful medium of communication and transmission, i.e, oral communication".

However, the two proposals that rankle with the teaching community most relate to the establishment of centres for the Study of Human Consciousness and Classical Studies. The JNUTA says that while the proposal for the former was rejected twice by the Academic Council in 2001, the latter was supposed to emanate from the already functioning Centre for Sanskrit Studies. The JNUTA claimed that the proposals "sneaked in from the backdoor" in new forms. JNUTA president Kamal Mitra Chenoy said that on January 22, in an unprecedented move, the JNUTA's general body meeting rejected the document unanimously. He said that the two proposals had been mooted in the Ninth Plan document as well.

When the Ninth Plan document was drafted, the School of Languages, Literature and Cultural Studies had suggested that Sanskrit could be a part of its curriculum. However, the suggestion was not considered. In the Academic Council meeting held in April 2001, a proposal was made to set up a School of Classical Studies and Indology, though it was not on the agenda of the meeting. The stated objectives of the school included overcoming the gap between the East and the West, the ancient and the modern, the occult and the revelatory. The school was also to have a department of yogic science and human consciousness. The proposal was rejected by the teachers present at the meeting and the JNUTA representatives. Chenoy said that the two people who supported the proposal actually shared the ideology of the ruling government. Chenoy added that the minutes of the meeting, which were reportedly distorted in order to suggest that the Academic Council had voted in favour of the UGC's proposal, had not been circulated yet. Chenoy said that he had written a note of dissent to the minutes.

Although the proposal to set up a School of Classical Studies and Indology has not reappeared in the Tenth Plan proposal document in its original form, the document suggests that the Centre for Sanskrit Studies should in time grow into one of Classical Studies, incorporating areas such as the study of Greek and Hebrew languages and cultures. It adds that the centre's coverage should be extended to include studies in Prakrit, Pali, Classical Tamil, the Dharmashastra, Itihasa and Purana traditions and Avestan as well as the various schools of Indian philosophy. The creation of a lexicon-cum-encyclopaedia unit to compile a multimedia encyclopaedic dictionary of Indian intellectual terms was also suggested. The inclusion of Classical Tamil in the Sanskrit Studies section has puzzled several people.

The proposal states that the Centre for Human Consciousness "has been conceived as a subject of study by neuro-scientists, philosophers, anthropologists, psychologists and linguists, among others, sitting under one roof". Human consciousness, the proposal states, "has the elemental force of influencing every human being's daily as well as episodic life and is thus of fundamental significance for studying human life as an individual as well as a collective entity". Apparently, the centre would put to rest the perception that human consciousness is shaped by material realities and not vice versa.

The proposal to start a separate centre for studies in globalisation is also not free from controversy. The proposal states that both the SIS and the SSS are expected to initiate studies and programmes in globalisation. The document notes that the programmes will be multi-disciplinary and inter-disciplinary. Hence, the need for an exclusive centre for studies in globalisation has been questioned. Moreover, the content as prescribed in the document appears to have little to do with any critical analysis of globalisation.

The document contains certain inexplicable suggestions. For instance, it suggests that "it would be desirable and indeed it would be optimal if courses in chemistry are taught by professional chemists". Moreover, elaborating on the content of the proposed centre for comparative studies, it mentions a hitherto unknown discipline called "reception studies". The objective of a centre for cultural policy and development studies is also unclear. Apparently, the centre is being created as there is a "need to visualise a path of cultural development closer to our vision", in contrast to the colonial influence on cultural institutions. However, whether such a vision of culture and development is pluralistic is left unsaid. Chenoy said that even the proposal to set up an institute of advanced study was not necessary as JNU had always been considered as an institution of academic excellence and advanced studies.

PROFESSOR Harbans Mukhia, Rector and chairman of the committee which drafted the proposals, defended the document. He said that the UGC had indicated in March 2001 that it was considering some universities as projects of excellence. A committee was appointed to help meet the requirements for the UGC's proposals. Although JNU came up with 12 new proposals, all were not accepted. Mukhia said that it was clear that the UGC would support only new disciplines, for which an additional grant of Rs.30 crores would be given for the next five years. Mukhia said that since the grant amounted to much more than any previous grant the university had received, it had no choice in the matter. He added that (in academic terms) the new centres were going far beyond what was conceived in the past 30 years. He defended the proposal to set up a centre for the study of human consciousness and said that it was being taught in the University of New York, Stoneybrook, and that the major objection was only with regard to the introduction of courses on yogic sciences. "Disciplines are not inherently ideological. Why can't we study human consciousness or Sanskrit studies in our own terms? Should we not study it so much as a basis of Indian civilisation?" asked Mukhia.

The skeletons from the scam

The JPC report on the stock market scandal of 2001 would constitute the basis for a comprehensive clean-up of the financial system to shore up public confidence in it.

AFTER many months of low-key progress, the inquiries of the Joint Parliamentary Committee into last year's stock market scandal have begun to gain momentum. There are now realistic expectations that a report may be ready before the Budget session of Parliament runs its course, allowing a discussion to be scheduled along with the wider debate on economic policy and regulation that will follow the presentation of the Union Budget.

The JPC's main deliberations are centred around a series of voluminous reports that have been submitted by the statutory regulatory authority for the stock markets, the Securities and Exchange Board of India (SEBI). Though SEBI was itself found wanting in the enforcement of its authority over the years in which scam was brewing, it is keen now to retrieve credibility with both the investing public and Parliament. Its reports constitute a microscopic examination of the many dubious transactions that culminated in the short-lived bull run in the markets after last year's Union Budget was presented.

Though the Budget in itself provided a rather scant basis for a broad-based investment fervour, a small cartel of operators sought to utilise the momentary euphoria it had engendered to drive up prices and liquidate the long exposures they had taken. It was a self-defeating exercise since a rival cartel of bear operators knew from prolonged observation of the markets just where the vulnerabilities of the bulls lay. Shrewd short-selling in the expectation of profits to be made on the downside of the markets rapidly pushed prices down.

But the bulls had by then gone too far out on a limb. In a climactic contest between bulls and bears, stock markets nationwide plunged into an acute payments crisis, necessitating their closure for an extended period. They have remained subdued since reopening, manifesting a gradual and long-term drift downwards as bad news has piled up, not least from the financial results of companies whose infinite prospects seemed until last year to be the pivot around which the promise of the "New Economy" would be built.

The reigning narrative on the scam is that the bear operators were the villains of the piece. An assiduous effort to foster this public impression is evident in the sequence of official actions and the targeting of Shankar Sharma, chief of First Global Stock Broking and a key figure in the bear cartel. There is a certain symmetry here, as also a contrast, with the 1992 episode, when the bull operations spearheaded by Harshad Mehta, since deceased, were identified as the source of the evil and all the ignominy of rigging the markets was heaped on him. Now, as then, this remains an incomplete picture, and not just for the reason that the victimisation of Shankar Sharma has been read, with some accuracy, as payback for his shareholding in tehelka.com, the Internet news magazine that exposed in March 2000 certain scandalous trends in the matter of defence procurement.

The official narrative fails to carry credibility for the simple reason that there were two parties playing the price-rigging game. And the bear cartel came into the game rather late, when it became evident that the bulls had exposed themselves rather indiscreetly by a sequence of long investments that could not possibly earn them the speculative rewards sought.

The bull operation evidently served an ideological function. Since 1998, the information technology (IT) sector has been designated as the advance guard of a new phase of growth in the Indian economy that would reduce the old fundamentals to irrelevance, propelling the country into the frontier regions of the "New Economy". Aggressive buying by bull operators in certain scrips was expected to pay back through the sheer power of the self-fulfilling prophecy. But the limits of speculative excess had clearly been reached by March last year. Desperate for a bailout, the bull operators contacted the Unit Trust of India (UTI), the country's largest mutual fund. Seeming since long to have forgotten the burdens and obligations of its trusteeship function for public savings, the UTI was easily drafted into this role.

The crisis that has beset the UTI since the stock market crash last year is also part of the JPC's terms of reference. And in pursuing this inquiry, the JPC has the findings of the three-member committee that was set up last year by the Finance Ministry (the S.S. Tarapore Committee) to serve as preliminary guide-posts. The evidence gathered by the Tarapore Committee, though incomplete, offers a telling commentary on the manner in which the stock markets were manipulated in the service of the pecuniary advantage of a few and the larger ideological agenda of an economic reforms process that was running rapidly aground.

In March 2001, the top management of the UTI received from a broker cartel in the Calcutta Stock Exchange (CSE) an offer of a number of shares in two "New Economy" firms - Himachal Futuristic Communications Ltd (HFCL) and DSQ Software Ltd - at specified prices. Both the offers were discounted against the prevalent prices then and the UTI seemingly did not pause to examine the fundamentals of the companies involved. A little deliberation would have served it well.

Since a brief spell of public notoriety after being implicated in a collusive bid for telecom licences in the mid-1990s, when the tainted Himachal Pradesh politician Sukh Ram held the Communications portfolio, HFCL had sunk into obscurity. It re-emerged rather mysteriously in 1999 as a star performer on the bourses. DSQ Software had similarly ridden the euphoria for IT scrips into a wholly inflated valuation of its share price on the market.

In March 2000, the DSQ share was trading at over Rs.2,600 in the Bombay Stock Exchange (BSE). By October that year, it had fallen to Rs.307. HFCL, according to the SEBI report, showed a roughly similar share price trajectory. Both scrips registered a minor recovery subsequently, but when the UTI picked up large volumes of these shares in March last year, on the basis of a telephonic understanding with CSE operators, they were rapidly plunging in value. A 10 per cent discount was offered by the CSE operators, but the UTI's sense of accomplishment in obtaining this bargain must surely have been short-lived, since the following day values fell by 16 per cent and more. Today, the scrips of both HFCL and DSQ are worth next to nothing. And it would strain credulity to argue that the UTI could have gone through these transactions without collusive intent.

Behind the whole ignominious episode in the stock markets looms the figure of the Mumbai-based broker Ketan Parekh and an operation that was under way for at least two years prior to the final reckoning. Parekh controlled no fewer than 23 "entities" which operated in the markets, buying and selling shares in a bewildering maze of transactions. This conscious design of complexity succeeded for long in hiding the nexus between the sources from where Parekh was obtaining his funds - corporate houses and banks - and their ultimate destination in speculative ramping up of share prices.

SEBI has laid out a catalogue of the corporate entities that transferred large sums of money to Parekh to play the markets. Apart from DSQ and HFCL, the list includes all the entities whose shares attracted Parekh's speculative attention - the Essel group which controls the television broadcaster Zee, the software group Satyam, drug manufacturers Cadilla and Ranbaxy, and a few others. Parekh of course also tapped a rich vein of finance by inducing Global Trust Bank to sanction overdrafts well in excess of both its and his means. And the trail of fraudulent paper generated by the Madhavpura Mercantile Cooperative Bank (MMCB), with the intent of lubricating Parekh's speculative forays, ended in the collapse of the bank and the financial ruin of its numerous depositors.

The Essel group began transferring large volumes of funds to Parekh when the scrips of its companies, notably its flagship enterprise Zee Telefilms Ltd (ZTL), began gently to subside from the stratospheric heights they had touched in early 2000. According to the testimony received from the Essel group management, a specific undertaking was obtained from Parekh that the funds would not be used for investments in the listed companies belonging to the group. But SEBI has also been informed that the Essel management is aware that Parekh used funds provided him for certain "unauthorised" investments.

Between October 1999 and March 2001, when the ZTL share went through the cycle of boom and bust, Triumph Securities, a company owned by Parekh, accounted for over 18 per cent of the purchases of this scrip on the BSE. On the CSE, Parekh was a significant contributor to the purchases of ZTL shares by two big brokerage houses - the Singhania and Poddar groups. Both the big Kolkata brokers have now been declared defaulters, in part because they made extravagant purchases of these scrips at prices that the market could not be driven up to, even with all their access to corporate funds and bank deposits.

SEBI has made the observation that the large-scale transfer of funds to Parekh began when the shares of the corporate entities concerned were generally on a downward trend. But the derivative argument that the funds were not directly used to prime share values for the companies concerned may not quite stand scrutiny. It may be more credible in the estimation of some JPC members to believe that the funds were transferred with the intent of bolstering prices on the stock markets, so that the companies concerned could complete an ambitious sequence of planned mergers and acquisitions.

SEBI's findings on Cyberspace Infosys, which managed to ride the rollercoaster of a bull run without Parekh's benediction, constitute a telling narrative. Begun in obscure circumstances as a leasing and finance company, Cyberspace acquired its current identity in 1998 with a shrewd eye on the main chance that the hyperbole over IT offered. It claimed to have technical arrangements and tie-ups with Microsoft, Oracle and Lotus, leaving few enterprises from the global high-technology pantheon outside its gaze. It began 1999 with a modest quotation of Rs.38 on the BSE and showed little promise as the year wore on. In September, however, it began a dizzying ascent, touching by mid-March 2000 a quotation of Rs.1,300 on the BSE. The rapid descent began shortly afterwards. Cyberspace closed the year 2000 quoting at just over Rs.140. After the bull run of March 2001 had ended, it was down to the rather pathetic level of Rs.11.

The rise and fall of Cyberspace is a saga that directly implicates the UTI, which began large purchases of the share in September 1999 and continued doing so until March the following year. SEBI has seemingly sought to exculpate the UTI management by arguing that purchases of Cyberspace rarely triggered the circuit breakers that serve to stop trading in a share when prices ascend or descend too sharply on a given day. But this overlooks the simple fact that the circuit-breaker is a short-term remedy used to check speculative excesses on particular days. It has little efficacy in curbing a sustained speculative run on a scrip, as with the UTI's purchases of Cyberspace. And rather revealingly the SEBI report has observed that of the UTI's purchases of this scrip, over 34 per cent were transacted with entities directly associated with some members of the Johri family, the promoters of Cyberspace who are now fugitives from justice.

THE government is today engaged in a desperate holding operation to stem the rapid depletion of public trust in the UTI. Apart from the substantial financial outlays that will be required, which could run to over Rs.6,000 crores, the government also faces a yawning credibility gap.

In July last year, the UTI suspended repurchases in its pivotal US-64 scheme. Over the preceding May, the fund had faced redemptions of an unprecedented magnitude in this scheme, five times higher than in April. This was considered unusual and suggestive of a breach of confidentiality that benefited chosen corporate investors and individuals.

The Tarapore Committee has glossed over this matter with an anodyne argument: since the BSE indices were also falling, it is more than likely that a well-informed investor would have known that US-64 would also run into choppy waters, prompting a flight out of the scheme. Far from suggesting any breach of confidentiality, the committee has argued that this only points to the inherent advantage that nimble-footed investors have over others. But given the current state of knowledge about the UTI's dubious dealings, the burden of proof clearly stands reversed. A more convincing explanation would have to be found for the large-scale redemptions that occurred in May last year, to discharge which the UTI had to contract large commercial loans.

The stakes involved in the US-64 clean-up were aptly summed up by the Deepak Parekh Committee which went into the UTI's travails in a less turbulent time. "With over two crore unit holders," it observed, "public confidence in US-64 is a virtual proxy of public confidence in the Indian financial system." The Tarapore Committee has chosen to reiterate this finding, while refusing to venture into contentious terrain which could lead directly to evidence of malfeasance. The JPC presumably cannot afford that luxury, since its findings would constitute the basis for a comprehensive clean-up on which the financial security of those crores of investors depends.

A business model of the times

The Enron bubble was a prime example of the dominance of speculative finance in business.

MORE than two months after Enron, the seventh biggest corporation in the United States, filed for bankruptcy, the stench of scandal refuses to die. Shocking revelations about the company's modus operandi continue to pour in. Public and media attention was initially focussed on the company's close ties with the political establishment and the policy-making bureaucracy. However, more details of Enron's "business model", so successful until it crashed dramatically after October 2001, indicate that the Enron bubble was just an example of the manner in which speculative finance dominates business.

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In 1985, Enron started as a pipeline company selling gas. The deregulation of the energy and electricity markets, particularly since the 1990s, for which Enron was a leading campaigner, played a major role in determining its business model, which endeared it to Wall Street for more than a decade. The new opportunities that came its way after deregulation, particularly the ambiguously defined energy-trading rules, gave Enron a head start over others. Enron increasingly became an energy broker, selling electricity and later, other commodities.

However, Enron went beyond merely bringing together buyers and sellers - which is what brokers do. Enron's innovative spirit, for which it was recognised by Fortune magazine as the "most innovative" corporation in the U.S. for six years running, was in evidence early. Normally the broker's brief is to arrange a contract between buyers and sellers for a commission on the contracted price. Enron went a step further. It entered into separate contracts with both buyers and sellers in a contract, making a profit on the difference between the two quotes. The general lack of federal controls and monitoring of energy trading enabled Enron to keep its books shut. Of the three sides involved in energy-trading contracts, only Enron knew both sets of prices.

Over time, Enron began to design more complex contracts - essentially derivatives purportedly aimed at hedging risks arising out of uncertainties in interest rates or currency fluctuations. Often, more complex forms were aimed at hedging uncertainties about the weather or even a customer's ability to settle a contract. Since Enron's collapse, former employees have revealed that the company employed a battalion of doctorates in mathematics, physics and economics to manage these complex contracts. Wall Street analysts, wiser after the collapse, have been saying that the company was essentially betting on a mass scale. Between 1996 and 2000, Enron's sales increased from $13.3 billion to $100.8 billion. These were far above revenues generated by other large American companies such as Microsoft, General Electric or Exxon Mobil.

Enron was described by an analyst as "a giant hedge fund sitting on top of a pipeline". While its revenues were boosted through innovative accounting practices, its operating margins were rather thin - about 5 per cent in 2000 and 2 per cent in 2001. Its return on capital in 2001 was just 7 per cent - rather low in the highly risky business of hedging.

Consequently, while revenues were successfully inflated by ingenious accounting devices, Enron's profitability was never as high. Wall Street analysts, tuned to the more short-term figures on revenues and share prices, rarely questioned Enron's practices.

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Two things were needed to keep the show going. One, investor confidence had to be maintained so that Enron, the organiser of the betting system, was perceived as having pockets deep enough to sustain it. Enron's partnerships played a crucial role in maintaining the myth of the company's invincibility. Debts had to be kept off its balance-sheet because that would have lowered its credit rating, affected the market's (read Wall Street analysts) perception of the company's profitability and lowered its credibility as the main broker in the energy-trading business.

In the aftermath of the collapse, there have been suggestions that a few directors - notably the company's chief financial officer, Andrew S. Fastow - had mishandled the partnerships to siphon off funds to their own accounts. However, it is clear that the more than 3,000 partnerships, more than 800 of which were in tax havens like the Cayman Islands, played a far more purposeful role in Enron's business model.

The other aspect attributed to Enron's business style - and one in which the company's deep connections with both sides of the political divide in the U.S. played a crucial role - was the regulatory framework which governed its operations. At the heart of this arrangement was the utterly opaque nature of the business. There was no transparency in the energy-trading business. Buyers and sellers were prevented from having any idea of the quotes in the market. This enabled Enron the market-maker to gain privileged information at the cost of other participants in transactions in energy-trading contracts.

As its services became more complex and its stock soared, Enron created a network of partnerships that allowed its managers to shift debt off its books. In doing this it functioned like a bank, promising to deliver energy contracts, much the same way banks promise to make customers' deposits available to them on demand. Crucially, however, unlike bank deposits these contracts were not insured by federal agencies. Banks need to have cash in hand so that they can meet the demands of depositors. In Enron's case, this was achieved by the massive mobilisation of debt through its network of subsidiaries and partnerships, while keeping them off Enron's own balance-sheet. Although partnerships and subsidiaries are not uncommon devices among corporate entities, Enron did not maintain an arm's length with its partnerships. In fact, it used these partnerships to raise debt and then backed these debts by issuing its own stock. In several cases, it backed such debts by promising to issue its stocks in value terms rather than in terms of numbers of shares, which would have been the norm.

In one case, which Sherron Watkins, Enron's vice-president, referred to in her memo to Enron's former chief executive officer Kenneth Lay in August 2001, Enron guaranteed its own stock worth $1.2 billion to back debts of its partner, which in turn was connected to other partnerships with which Enron dealt. These partnerships commenced in 1997. Recent revelations indicate that Lay was very much aware of the nature and extent to which Enron was mired in them with adverse consequences for its own employees and shareholders. However, instead of promising to issue a fixed number of shares, which would have been the rational means to back such partnerships, Enron promised to issue $1.2 billion worth of stock, irrespective of the market price of the share when it would have to meet its guarantee.

For a company that was acclaimed as the past master in the art of hedging risks, this was not mere indiscretion but part of a deliberate strategy. In return for Enron's commitment, the partner gave Enron $1.2 billion in promissory notes. Enron paraded this on its balance-sheet as an asset - managing to increase its net worth by that much. When this unravelled, Enron was forced to revise its financial statements for the preceding four years. In effect, Enron took upon itself an astonishing array of risks in order to protect its partner entities. While it is tempting to view such arrangements as mere favours extended to top officials, it is clear that the partnerships played a far more important role. They were a key cog which kept Enron's wheel of fortune spinning.

Watkins, who testified before a congressional sub-committee on February 14, said that the partnerships were designed to boost Enron's cash flow and possibly to mislead Wall street as well that all was fine. Enron's backing of its partnerships' debts by issuing its own high-value stock meant that its own shareholders (among them thousands of its own employees with most of their savings) were paying for gains made by the owners of these partnerships, some of which were tied to top Enron employees. Among those who gained millions of dollars from this incestuous arrangement was Fastow.

Enron's business model was built on the quicksand of speculation where appearances were more important than reality. The conjuring of this bubble required that Wall Street be pleased. One of the surprising facts of the Enron saga is that it never failed Wall Street's expectations with regard to projections of earnings and profits. It is not a coincidence that Enron's rise and fall mirrored the longest bull run in American history. Robert J. Shiller, Professor at Yale and author of Irrational Exuberance, outlined the anatomy of speculative finance and the mechanisms that inflate the bubble of speculation (Frontline, November 25, 2000).

Shiller's analysis of the financial markets points to an insidious network of speculation. There are the stock market analysts who also double up as representatives of investment banks. Enron was after all a company whose stock kept soaring. The company kept issuing stock to take advantage of the boom in the market. For the investment banks, therefore, Enron was a big and important client. Arthur Anderson, Enron's auditor, now deeply mired in the scandal amid tales of shredded documents and indifferent auditing, was also Enron's consultant. In fact, Anderson made as much money from consulting for Enron as from auditing its books.

The credit rating agencies, whose primary task was to evaluate companies' debt status and their ability to repay them, either ignored the unique and completely illegal mode of debt-raising that Enron resorted to, or were clueless about its ramifications. Months before Enron's collapse, two agencies, Fitch and Standard and Poor, continued to rate Enron triple-B plus. Even Moody's, the agency which was the first to reduce it to junk bond status, which triggered the final collapse, had continued to rate Enron bonds high until then. The rating agencies even failed to factor Enron's announcement in October 2001 that it was reducing the company's net worth by $1.2 billion. The banks that extended credit to Enron's partnerships also helped maintain the fiction that sustained the Enron bubble.

The Enron collapse is not a mere corporate failure. Thousands of employees have lost their savings. But the damage is far wider. After all, 64 per cent of Enron stock is owned by institutional investors, many of them pension and mutual funds in which ordinary Americans have parked their savings. In less than six months the company's net worth has almost halved - from $70 billion to about $35 billion. Looking at Enron as a mere scandal in which gains and losses were merely confined to the wealthy and powerful is the surest way not to learn the lessons from the biggest collapse in American corporate history.

In Enron's wake

other

Under the banner of the Enron Virodhi Andolan, project-affected people demand that the land acquired from them for the Dabhol power plant, now closed, be returned.

ANUPAMA KATAKAM in Katalwadi, Anjanvel and Veldur

There is a saying that there is darkness under the diya. That is our fate here.

- Pandurang Bhuwad, farmer from Katalwadi village.

AS the night lights flicker on at the Dabhol Power Company's (DPC) plant, Katalwadi village plunges into darkness. It is perhaps ironic that Katalwadi, located just 2 km from the 2,144 MW power plant, will not have electricity for the rest of the evening and possibly the entire night. Yet, having no electricity is only a minuscule part of the problems faced by the residents of Katalwadi. Ever since the erstwhile U.S. energy behemoth Enron Corporation's offshoot laid claim to their land, the region's people, whose mainstay is agriculture, have been deprived of their livelihood and the ecology has been damaged permanently.

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With Enron practically non-existent now and the DPC plant up for sale, residents of the project-affected villages of Katalwadi, Anjanvel, Ranvi and Veldur want the Maharashtra Industrial Development Corporation (MIDC) to return the 200 hectares that has been lying unused, out of the 610 ha that was acquired for the project. Besides, in 1997, former Chief Minister Manohar Joshi had assured them that their land would be returned.

Katalwadi's residents believe that the time is right to launch an aggressive protest. Local groups plan to stage a satyagraha in front of the power plant on February 28. "We wanted to storm the premises but memories of 1997 still haunt us. The tahsildar has also cautioned us against this sort of action. It is more important that we are heard now," says Yeshwant Bait, an activist with the Enron Virodhi Andolan. The Andolan will also make a presentation before the Kurdukar Commission, which is investigating the power purchase agreement signed between Enron and the Government of Maharashtra.

Katalwadi's struggle against Enron and the Maharashtra government is by now legendary. In April 1997, the village, which was at the forefront of the anti-Enron movement, was attacked and several villagers, including women, were assaulted and imprisoned on charges that included attempted murder.

Situated on the banks of the Vasisthi river in Guhagar taluk in western Maharashtra, the area surrounding the DPC encompasses several agricultural villages and two fishing villages and is home to more than 92,000 people, who are entirely dependent on the region's natural resources.

"The DPC plant has been built on the ancestral lands of 700 families," Bait said. Most families in the region have been hurt by the project in some way or the other. Some, who have lost all their land, have had to work as labourers on others' fields. Many have lost the most cultivable part of their property.

Nearly 65 per cent of those affected by the power project belong to Katalwadi. Not a single person from the 243 families of this village has accepted any compensation or rehabilitation offers made by the government and the DPC. "Even though our livelihoods have been snatched from us, we have held out as a unified community for eight years against the company," Bait said. "By not taking the compensation we can fight for our rights. Since the company is going to change hands, this is a good time to make our demands heard again," Bait added. "We are now prepared and experienced to take on anyone. We will not allow another company here without it meeting our demands," Bait emphasised.

However, in spite of the villagers' tenacity, during the past eight years substantial damage has been done to the region. Since 1994, when the construction of the power plant started, there has been consistent degradation of the environment. Not only have farmers lost their means of livelihood but the sea water has been polluted. The sad reality, says Bait, is that whether it is Enron or any other company bidding for the DPC, many of the problems will remain unresolved.

The MIDC Act stipulates that unless 60 per cent of the affected people agree, the government cannot go ahead with land acquisition. Also, the MIDC should acquire only barren land or land that cannot be cultivated. Both conditions have been violated in this region. For instance, according to Ganu Ragho Jangli, he spent all his savings on cultivating the 4.5 ha that he owned in Katalwadi. A few months before the MIDC took over his land, he had planted 300 mango saplings of the Alphonso variety and 300 cashew plants. "When we heard that all our land was marked for the project, we tried to fight. But the High Court dismissed our petition. In one day and one night they bulldozed all the saplings, to lay a pipeline," Jangli told Frontline. "We were asked to vacate our houses. They didn't even allow us to take our belongings. We had to move into the village. The next day, when we came back, our entire land was fenced in," he said. Jangli said he spent all his savings cultivating paddy, mango and cashew nut on the 4.5 ha of land. "I just sat near the fence and cried," said Jangli's wife Savitri. "For many days after that I would come to the same spot and just stare at my land. We did not know what to do," she recalled. Similarly, at least 110 people in the region have been left landless.

Yet Jangli was determined to fight. He did not accept the compensation package that included Rs.75,000 for a ha of paddy field, Rs.60,000 for the crop, and Rs.50,000 for a ha of uncultivable land. "We could have earned Rs.10,000 from a mango tree every season. We used to harvest 7,000 kg of rice annually. How can you compare the compensation to these earnings?" asked Jangli. "Before they ruined our lives, our house used to be full of grain," Jangli recalled. Jangli says he struggles to provide for his seven-member family now. He and his wife sell milk besides working as labourers on another farmer's field. Jangli's son runs a roadside stall selling sweets and peanuts. Jangli said he was determined not to accept any compensation, however difficult his situation might be. Jangli's case typifies the Maharashtra government's and Enron's high-handedness and callousness in acquiring land.

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Katalwadi's women have been particularly active in the anti-Enron movement. Anandi Ramchandra Bhuwad of Katalwadi said she would fight on even if she had to starve. "We don't want money, we want our land," she said. Bhuwad proudly pointed out that at the height of the anti-Enron protests the women were very active. "We were beaten and thrown in jail," she said. "The next time they came, we women gheraoed them. After that they were too scared to enter our village. Let us see now which company will come."

Pollutants have reduced a once fertile belt into an unproductive stretch of land. Snehal Vaidhya, former sarpanch of Anjanvel, owns a 0.8 ha plot with mango trees. For three consecutive years she has had a bad crop. Usually, the trees should flower by mid-February. But smoke from the power plant has affected the trees. She pointed to some branches - they were yet to show signs of budding, which possibly meant another crop failure. The leaves were spotted and looked almost burnt. Even the coconut and arecanut trees have been affected. The fruit was much smaller than what it used to be, she pointed out. Today, Vaidhya's family supports itself by selling milk from the four buffaloes and the two cows that it owns. Mango grove owners do not fall under any category for compensation. "A chain of people are affected if the crop fails," said Atmaram More, sarpanch of Anjanvel. Not only the farmer but the picker and the trader are also affected, explained a mango trader.

Vaidhya has to contend with another problem. The water on her land has turned a bright orange. Along the sides of a natural spring conduit on her property, the soil is clearly brighter in comparison to its natural brown-red colour. "In the beginning, before we realised that there was contamination, our throats used to hurt. When the water started looking like a soft drink, we complained to the government and the company," Vaidhya said. The company then provided four houses on that hill with water from a separate water pipe. Since the company shut down in November, clean water is not supplied. Both Katalwadi and Anjanvel villages survive on water from a gram panchayat programme. The water has a thin layer of oil too. According to More, a well near Vaidhya's land got completely polluted. "We pulled out 20 barrels of water smelling of diesel. We never had this before Enron," he said. This well is located close to another village well, which is the only other source of clean water. "What if the contamination reaches that point? We won't have any water," said More.

Whether the power plant is responsible for the ground water pollution in the area is arguable. A recent study showed that the DPC used highly sophisticated machines. Therefore, the study concluded that it was not possible for naphtha (which is the fuel that the plant used) to leak from these machines and contaminate ground water. "Besides," says Vaidhya, "if they weren't guilty why would they immediately provide clean water?"

The MIDC could perhaps be held responsible. An article in The Hindu Survey of the Environment 2001 said that effluents released by chemical industries in the area had led to water pollution. In 1978, the government declared this part of the Konkan coast a chemical industrial zone. In 1989, the villagers filed a case complaining about the seepage of pollutants into both sea water and ground water. It was then that the government took notice of the pollution. But it was not until 1994 that the High Court ordered an inquiry. Troubled by the findings, the court ordered the Maharashtra Pollution Control Board (MPCB) to monitor the pollution levels and enforce environmental laws. However, till date little has been done by the MPCB.

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With regard to environmental groups charging Enron with violating environmental issues, in 1996, the High Court ordered a 'traces study', to be done at a cost of Rs.65 lakhs. According to Pradyumna Kaul, an activist with the Enron Virodhi Andolan, "that was hardly anything for them". The DPC sent an employee to collect water from the spring every day. But "six months after the plant shut, we are still getting contaminated water," said Vaidhya. Officials of the MPCB were unwilling to comment; they would only say that "Enron is a controversial issue". Earlier the MIDC came up with a similar response when approached for comments on land acquisition by the DPC.

The 3,000-strong fishing community of Anjanvel and Veldur villages was also affected. The construction of two jetties and a breakwater by the DPC shifted the flow of sea water. Moreover, both jetties were built at some of the best fishing points along that part of the coast - the Veldur jetty, which is at the confluence of the sea and a river, is a breeding ground for fish. In addition, the government has cordoned off the liquefied natural gas (LNG) terminal jetty. Now, fishermen have to navigate a long distance to get to another fishing spot. What used to be a 10-minute ride now takes at least an hour, not to mention the extra expense on fuel. The area was well-known for large prawns, which fetched a good price in the domestic as well as export market. Mahadev Khardpekar, a fisherman, said: "Even if they allow us to fish there now, there is no point. All the high-value fish have gone." Khardpekar said he used to earn approximately Rs.1,500 a month. He says he is lucky if he makes Rs.700 now. Also, owing to the effluents released into the sea, several varieties of fish had vanished, he said. Moreover, marginal fishermen like him, said Khardpekar, used dinghies or single cylinder outboard engine boats. "We cannot afford bigger vehicles for deep-sea fishing. Fishing along the coast is our livelihood," he explained. Further, fishermen were given Rs.30,000 each as compensation only if they were registered with the Fisheries Department. Many small fishermen do not do that.

In 1999, a Human Rights Watch report warned the government of severe pollution in the seawater near the region. The report quoted from a study conducted by a local organisation that concluded that "once water is circulated through the plant, it is to be discharged back into the sea at a higher temperature - probably 5C higher. The water, which may also contain toxic effluents, can raise the ambient temperature, thereby causing pollution, which will kill both fish and prawns."

Not everyone in Guhagar taluk supported the anti-Enron movement. The fishermen, said Baba Balekar, sarpanch of Veldur, were among the first to sell out and work for the DPC. Since they had no source of income and few alternatives, they went in for work on the site, which offered better income for fewer hours of work, Balekar said. "But we learnt a lesson. Once the construction work was over, we were asked to leave," Khardpekar said. Since they were uneducated and technically unskilled, the company had no use for them. Now, relieved that the plant is shut, Khardpekar said that the quantity and quality of fish has been improving. "If a new company comes, all our problems will return," he pointed out. This time, he said, he would fight with the others to save their land.

Local people who worked with Enron as contractors and others and worked for the plant have realised that the company resorted to manipulative tactics. Currently, only 56 project-affected people remain permanent employees at the plant, and that too because of a court order. Until May 1, 2001, 3,500 people from the region worked as contract labour. Over the past six months, everyone was laid off in stages. "They divided us. They played one against the other," said Yeshwantw Bait. "Everyone has been hurt. This time when we make our demands we will be more united," he said. But since the damage done in the area was irreparable, it hardly matters whether it is Enron or another power company, Bait lamented.

Development directions

Fundamentally flawed as a concept as it is, the Member of Parliament Local Area Development Scheme has been witnessing numerous instances of violation of guidelines and financial rules in implementation. Yet, allocations under the scheme are set to be enhanced.

THE Member of Parliament Local Area Development Scheme (MPLADS) was announced by the Prime Minister on December 23, 1993 to enable MPs to execute in their constituencies small works of a capital nature based on locally felt needs. At the start of the scheme, the quota for each was fixed at Rs.50 lakhs a year. It was raised to Rs.1 crore from 1994-95 and to Rs.2 crores from 1998-99 onwards. The MPLADS Committee of the Lok Sabha has recommended an enhancement of the amount to Rs.4 crores. A Rajya Sabha MP can choose a district for deployment of his funds allocation and a nominated member may select works in one or more districts anywhere in the country. The Union Ministry of Statistics and Programme Implementation is the administrative Ministry.

Under the scheme, each MP can suggest to the District Collector works worth up to Rs.2 crores in a year. Normally the advice of the MP shall prevail unless it be for technical reasons of non-suitability of land for the work or non-admissibility under the guidelines. The Ministry releases the funds directly to the Collectors, who will get the works carried out through government agencies or panchayati raj institutions. Private contractors are not to be engaged.

The funds should be used for the creation of durable assets to be vested in government. The government has given an illustrative list of 28 items of works that may be taken up, such as construction of buildings for schools, roads, culverts, and so on. There is also a list of works not permissible - such as the construction of government office buildings, works of private organisations, repair or maintenance works, raising of memorials, acquisition of land, creation of assets for individual benefit and building of places of worship.

On the performance of MPLADS, the Comptroller and Auditor General (CAG) presented a report in 1998 and another in 2001. These are available at the CAG's website: www.cagindia.org/reports

During the period between 1993 and 2000, Parliament sanctioned Rs.5,558 crores for the MPLADS and the Ministry released Rs.5,018 crores. The total amount utilised was Rs.3,221 crores representing 64 per cent of the released amounts. Low utilisation has been noted particularly in Jammu and Kashmir (38 per cent), Tripura (43 per cent), Dadra and Nagar Haveli (40 per cent), Lakshadweep (33 per cent) and Pondicherry (24 per cent).

The guidelines lay down that "the release of the funds will be made with reference to the actual progress achieved in expenditure and in execution of works" and that "the normal financial and audit procedures would apply to all actions taken under this Scheme subject to the guidelines". When a public authority gets a grant for some work, it is incumbent on it to obtain a utilisation certificate (U.C.) on completion of the work. The Audit Report reveals that the District Collectors failed to obtain utilisation certificates in respect of 11,915 works constituting 70 per cent of the 16,968 works completed. The Ministry continued to release funds without any correlation to their end use.

The Report states that amounts to the extent of Rs.1,797 crores remained unspent with the implementing agencies as on March 31, 2000. This represented 36 per cent of the total releases. The Financial Rules require that any unspent amount of a grant in a financial year should be returned to the Consolidated Fund.

The audit found that the Collectors reported inflated expenditure figures to the Ministry, by reckoning the amount released to the implementing agencies as the final expenditure. In a sample audit of 106 constituencies, it was found that out of a total expenditure of Rs.265 crores reported by the Collectors, Rs.82 crores, that is, 31 per cent of the total, was, in fact, not incurred at all. The Ministry had not maintained any check on the utilisation of funds released; hence there was no action to recover amounts that remained unspent.

It appears that the guidelines have been observed more in the breach. The audit found numerous instances of violation of guidelines and financial rules in the implementation of the scheme, especially in the matter of expenditure relating to (i) 1,220 inadmissible construction works in 48 constituencies, (ii) 518 works of private and commercial organisations and trusts, (iii) 1,552 repair and maintenance works in 47 constituencies, (iv) purchase of stores and stocks for Rs.5.5 crores in 38 constituencies, (v) 66 works in places of religious worship, (vi) construction of memorials in 13 places, (vii) works in private land without surrender of titles in six States, (viii) irregular sanction of loans, grants and donations in six constituencies and (ix) other 533 inadmissible works in 33 constituencies.

The scheme lays down that no work be taken up without detailed design and estimates approved and technically sanctioned by the competent authority. A sample audit in 20 constituencies found that 3,397 works had been undertaken without technical sanction while eight had been done without administrative sanction.

There is a clear directive that recommendations made by an MP in his or her letterhead and under his or her signature alone should be entertained by the Collector and that recommendation by any representative of the MP is not to be considered even if such a representative may have been authorised by the MP concerned. However, the 1998 Audit Report found in the sample audit in five States that works worth Rs.25 crores were sanctioned without proper recommendations by the MPs concerned: (1) Maharashtra: The Collector of Nanded accepted and approved nine works involving Rs.33 lakh recommended by the son of a Rajya Sabha MP during 1994-95 (2) Haryana: A Rajya Sabha MP authorised the Chief Minister to utilise Rs.1 crore released for 1994-95 anywhere and on any work. The Chief Minister recommended works of Rs.51 lakhs in Ambala district and authorised five MLAs of Ambala to suggest works for the remaining amount of Rs.49 lakhs. (3) Orissa: In 1995-96, the Collector of Cuttack sanctioned 144 works on the recommendations of some MLAs, ex-Ministers and ex-Speaker of the Orissa Assembly on behalf of a Rajya Sabha MP. (4) Tamil Nadu: In 1995-96, 17 works suggested by an MLA on behalf of a Lok Sabha MP were sanctioned by the Collector of Madurai and completed. (5) Uttar Pradesh: The District Magistrates of Allahabad, Lucknow and Sonebhadra sanctioned 920 works costing Rs.22 crores, not under written recommendations of the MPs concerned, but on the suggestion of some others 'representing' the MPs.

The 2001 Report stated that Collectors incurred expenditure on 570 works not recommended by the MPs.

In this regard, the Audit Report (Civil) of the Tamil Nadu government for the year ended March 31, 2000 also presented test audits. In the review of the scheme in six Lok Sabha constituencies and seven areas of Rajya Sabha members, the audit found that while an MP had recommended provision of computers in 25 selected schools, the Collector issued administrative sanction for construction of classrooms in some of them. This report adds that against the recommendation of another MP for the purchase of an ambulance for a medical college, a passenger vehicle was purchased. With amiable sobriety, the audit remarks: "The vehicle is being used by the Dean of the college for official purpose."

The 2000 Report was compiled on the basis of test audits conducted in 241 of the total 786 constituencies/ areas under the scheme. The irregularities cannot be taken as stray instances in a few regions. When each type of irregularity has been regularly repeated in hundreds of works throughout the country, there appears to be an allround financial mismanagement. There are numerous paragraphs in the 2000 Report about the 'maladies' that persist despite a mention in the 1998 Report. This has been due to the failure of the Ministry concerned to take action and remedial measures on the irregularities pointed out in the Reports. Had a thorough check been made on the entire operation of the scheme in all constituencies and States, the findings may be more staggering and distressing.

To say the least, the management of the scheme is a shambles. The accounting process is abominably anarchic. Some guidelines are blatantly contradictory to the constitutional provisions and the general financial rules. There is a clear guideline that the funds released under the scheme are non-lapsable: it means that funds unutilised in a particular year can be carried forward to the succeeding years.

Under Article 112 of the Constitution, the Annual Financial Statement, popularly known as the Budget, presents the estimated receipts and expenditure of the government. After the grants are approved and the Appropriation Bill is passed by Parliament, the government is empowered to draw from the Consolidated Fund monies not exceeding the amounts sanctioned. The grants sanctioned by Parliament are valid only for the financial year. The General Financial Rule No.64 states: "Any unspent amount is not available for utilisation in the following year."

THE guidelines require that the funds released for the scheme be deposited in savings account for each MP in a nationalised bank. Whatever be the manner of keeping the amounts released - in a treasury or in a bank - it is imperative that unspent monies in a grant should be returned to the Consolidated Fund. Otherwise there is no need to have Financial Rules directing that the Departments shall surrender to the Finance Ministry all the anticipated savings noticed in the grants or appropriations controlled by them.

The 2001 Report in paragraph 43(a) states: "The Ministry told the audit query that the Committee of Secretaries (CoS) in their meeting held on 6 August 1997 had decided that central monitoring of large number of works was neither practicable nor desirable."

Nothing could be more incredible than the Secretary in administrative charge of the Ministry disowning the basic responsibility in administration of the grants placed at the disposal of his Ministry. Financial Rule 65(1) reads: "The Department of the Central Government administratively concerned or the authority on whose behalf a Grant or Appropriation is authorised by Parliament shall be responsible for the control of expenditure against the sanctioned grants and appropriations placed at its disposal and shall exercise control through the Heads of Departments and other controlling officers, if any, and Disbursing Officers subordinate to him."

About the decision of the Council of Secretaries, the Audit observed: "As already mentioned earlier, this was a flawed decision, as the financial rules make it obligatory for any sanctioning authority to ensure fruitful application of resources whose transfer they sanction."

It is the Secretary of the Ministry concerned who will have to appear before the Public Accounts Committee to explain and justify the expenses incurred out of the grants and appropriations at the disposal of the Ministry. The Secretary cannot renounce his responsibility as the administrative head of the Ministry and his accountability to Parliament.

The First Report (December 1999) of the Rajya Sabha Committee on MPLADS has given an elucidative narration on the background leading to the creation of this scheme. In the introductory chapter, the report states: "He (MP) had to remain merely a silent spectator on any element of corruption which generally creeps in the entire system of implementation of projects and financing the same... Apart from this, the ghastly countenance of the mechanics of mal-implementation or delayed implementation of projects coupled by channellisation of funds for projects and absence of close monitoring of schemes contributed negatively to the entire scenario which gradually assumed a pernicious aberration from a normal state of affairs... Hence, there was a persistent demand from the Members of Parliament that some method should be evolved under which he or she should be able to recommend works directly in their constituencies and could also involve himself/herself in the system of implementation and completion of project works."

The Committee first accepts the position of the emergence of corruption, maladministration, delayed implementation and absence of close monitoring of development works by the government. Then, it hopes that the MPLADS would be an instrument for meeting the felt needs of the people.

There is a fundamental defect in the concept of the MPLADS itself. MPs are primarily responsible to look after legislative work and to ensure accountability of the administration. In the House, they question, debate, legislate, approve grants and taxation measures and give policy directions. On behalf of the House, they work in committees to inquire into the performance of Ministries and government organisations and submit their recommendations to the House.

The MPLADS changes the role of the MP. It allots a lump sum of Rs.2 crores to each MP and gives him or her the choice of the works to be undertaken. As the Rajya Sabha Committee expounded the position, the MP is to "involve himself in the entire system of implementation and completion of the project". In the process, the MP unerringly becomes a part of the administrative system of the government and loses his or her capability and moral right, as a member of the House and as a member of parliamentary committees, to scrutinise the 'faithfulness, wisdom and economy' of the expenses incurred in the administrative implementation of the works initiated by himself or by his colleagues under the scheme.

It is one thing for an MP to suggest a project, during a debate in the House, in a committee report or through personal representation to a Minister. Then it is for the executive to investigate the feasibility and desirability of the project and take suitable administrative action. Then, the Ministry concerned assumes responsibility for the work taken and becomes accountable to the House and to its committees. The conditions of responsibility and accountability on the part of the government have been lost sight of under the MPLADS. This is the prime reason for the growing number of irregularities, financial and administrative. As the MPs are involved in the works of the scheme from the beginning, the administration conveniently shifts the responsibility and disregards audit objections and reports.

It is neither here nor there in the MPLADS. The controlling Ministry disclaims responsibility for implementation of the works. The Collectors do not get utilisation certificates and make no effort to return unspent amounts released to them. The Rajya Sabha Report found fault with the element of corruption, mal-implementation, improper canalisation of funds and absence of close scrutiny in the works undertaken by the government. The failures of the government during the last 50 years have been overwhelmed and overshadowed by the volume and variety of irregularities generated by the MPLADS in a short period of seven years. The MPs have again become silent spectators to the implementation of several works without their knowledge, without their recommendations, in all possible violations of the financial and constitutional provisions. It is not known whether the works chosen under the scheme have been found to be different from the various projects undertaken by the planning departments at the national and the State levels. India is a country of mass poverty and hence concerted and coordinated measures are to be taken, on high priority, to tackle the problem nurtured by centuries of vast disparities and disabilities in the social and economic spheres. Piecemeal distribution of a few crores here and there will have no impact on the perennial poverty of the masses.

In the 2001-02 Budget, the grant for MPLADS was Rs.1,580 crores included in the Plan under Central Assistance for State Plans. The MPLADS grant is less than 1.7 per cent of the total Plan expenditure of Rs.95,100 crores allocated in the Budget. Where the total planning process has been found wanting and failing, it is futile to think that the felt needs of the people could be met by such disjointed efforts of works chosen individually by MPs within a limited areas.

There should be effective decentralisation of the planning process starting from the District Planning Boards where MPs, MLAs and heads of the district, block and panchayati raj institutions should be involved in the formulation of planning and supervision of the projects chosen. The MPLADS has only served the purpose of diverting the attention of the MPs from the failures of planning and administrative performance at all levels, and to confine their attention to some small schemes restricted to individual constituencies.

The government's disowning of responsibility for the works under the scheme and the involvement of MPs in the administrative system, thereby weakening their capability to ensure the accountability of the executive to Parliament, cuts at the very roots of the parliamentary system of democracy in the country.

Era Sezhiyan is a Senior Fellow, Institute of Social Sciences, New Delhi, and a former chairman of the Public Accounts Committee of Parliament.

Marketing the Mahatma

A U.S.-based company's bid to capitalise on the name of Mahatma Gandhi with the aid of his grandson is scuttled.

'MARKET forces' will not leave even the Mahatma in peace. A U.S.-based licensing company, CMG Worldwide, announced recently that it had a new big ticket client - Mahatma Gandhi. Its website listed Gandhiji among its six new clients. Other personalities rubbing shoulders with India's apostle of non-violence were Hollywood actress and dancer Ginger Rogers, Formula One racing champion Emerson Fittipaldi and wrestler Andre the Giant. CMG Worldwide is in the business of "representing the families and estates of deceased celebrities" and "acts as a business and marketing agent for its clients". The move to commercialise an icon of austerity stirred up a hornet's nest as soon as the Indian media got wind of it.

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Tushar Gandhi, a grandson of the Mahatma who negotiated the deal with CMG Worldwide, had several explanations to offer in support of his move. But finally he withdrew from any further dealings with CMG Worldwide. Thereafter, Gandhi's name vanished from the company's website.

After giving his provisional clearance for the advertisement, Tushar Gandhi told CMG Worldwide that he would grant his approval only after watching the final product.

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Meanwhile, CMG Worldwide put forward another business proposal. It wanted to be the sole agent for the commercial use of the Mahatma's name. "I considered this proposal seriously because I thought it would be a good opportunity to police the use of Bapuji's image and prevent any misrepresentation. The company was to refer every commercial project to me for approval," says Tushar Gandhi. He recalls his failed attempt to prosecute the producers of the Nikki Bedi show, when one of the guests on the TV programme insulted Mahatma Gandhi. "No action could be taken against them because Nikki Bedi as well as Rupert Murdoch, the Star TV owner, were foreigners. I felt that CMG Worldwide would be able to tackle such cases better since they are abroad," he says.

According to Tushar Gandhi, although no agreement had been reached, CMG Worldwide announced Mahatma Gandhi as one of its new clients. (CMG Worldwide did not respond to queries sent to it by this correspondent.) "If nobody in India understands why I was getting into this deal, it wasn't worth my while to continue with it. I broke all ties with CMG Worldwide, and returned two cheques they had sent for the advertisement. However, I still feel that we relinquished a good opportunity to protect Bapuji's image and get some funds for restoration," Tushar Gandhi explains.

WHILE people in general were relieved that the Mahatma's name was spared from being commercialised by a foreign company, many still question Tushar Gandhi's moral and legal right in the first place to enter into such a contract. Says Nagindas Sanghvi, Gandhian and writer: "Gandhiji has no legal heirs. He disowned his family in 1914. He was the Father of the Nation. How can one man decide how he should be represented? Tushar is just one of 54 Gandhi family members. What about the rest? And what about his intellectual heirs who are as much his sons and daughters?" Usha Gokani, the Mahatma's granddaughter and a trustee of Mani Bhavan, agrees with him. "They should have gone about this deal in a Gandhian way - more open and transparent. To vest power in only one person is not right. There should be consultation within a group of people. It would not have been difficult for the company to trace other prominent members of the Gandhi family or other Gandhians. Bapuji is as much my grandfather as the father of all other Indians," she says.

However, Tushar Gandhi justifies his stand. "He is still my great grandfather. You cannot deny that. In that capacity I still have the right to grant such permission. All 54 Gandhi family members have that right. They probably approached me since I am more in the public eye." Tushar Gandhi is also a politician. He was earlier in the Samajwadi Party but has now shifted to the Congress(I).

Former High Court judge C.S. Dharmadhikari disagrees with Tushar Gandhi's view. He says, "In a sense, he has bound the other family members by signing a no-objection certificate. All the others have to be consulted."

Many are also offended because the commercialisation of Gandhi's name goes against the very principles he stood for. "As a nation, we have a right to protest against the commercialisation of the Father of the Nation. You cannot equate Gandhi with personal property. He is not a marketable commodity. He belongs to humanity," says Justice Dharmadhikari.

However, Tushar Gandhi points out that Gandhi's image has been used in several advertisements, including one for an expensive textile brand, one that contradicts his principle of spinning and using khadi. A product called Dandi Salt is also being advertised now. "Gandhi himself used to raise money for the Harijan fund by giving his signature and photographs," he says.

"Gandhiji doesn't need Tushar to defend his name. His memory is best preserved by people who still follow his ideals and are doing constructive work at the grassroots level in villages; people like Baba Amte," says Himmat Jhaveri, a freedom fighter. Gopalkrishna Gandhi, the Mahatma's grandson and now the Indian High Commissioner to Sri Lanka, adds, "Anybody who seeks to misuse the Mahatma's name or image is not likely to succeed (in it) for too long." According to T.K. Somaiya, "The fact that people want to cash in on Gandhi's name proves that he is popular and relevant even today."

In 1997, V. Kalyanam, who was a member of the Mahatma's staff, tried to pass on a set of Gandhiji's personal papers that was in his possession to a cult organisation in the U.S. called the Saiva Siddhanta Church. The cult offered it for sale to Phillips International Auctioneers and Valuers, a firm in London. The Navjeevan Trust filed a case against all three parties in the Madras High Court in 1996 (Frontline, November 29, 1996). Finally, the papers were returned and are now with the Navjeevan Trust (Frontline, December 13, 1996).

Privatisation of Andhra Pradesh

columns

The disposal of state assets in Andhra Pradesh is not only based on unsound economics but also suggests that the State government now wishes to abandon its basic developmental functions.

THE Chief Minister of Andhra Pradesh, N. Chandrababu Naidu, has been the darling of large sections of the English language media in India for some time now. Most of the time, the image that is presented is one of a computer-savvy, efficient supremo who has managed to make the State one of the most dynamic in India during his tenure as Chief Minister.

After his government's enthusiastic adoption of India's first State-level World Bank Economic Reform Programme (APERP) in 1997 the international press has turned just as enthusiastic, and Hyderabad is increasingly being described as a "cyber capital" while Andhra Pradesh is presented as a fast-growing State which is rapidly integrating with the world economy to its own benefit.

All this begins to sound very strange once the actual performance of the Andhra Pradesh economy is examined in any detail. In fact, far from being the most dynamic, this State was the worst performing State of the southern region over the 1990s. The growth of real income, or Gross Domestic Product, was 5.4 per cent per annum between 1993-94 and 1998-99. This was significantly lower than in Karnataka (8.1 per cent) and Tamil Nadu (7.3 per cent) and even lower than in the much-maligned State of Kerala (6 per cent).

Similarly, employment growth was lower than the national average over the period between 1993 and 2000, which was already the worst rate of any period in post-Independence history. In terms of literacy and school enrolment, Andhra Pradesh is well below the national average and ranks among the worst States in India. School dropout rates are among the highest in India. The infant mortality rate is higher than the national average, and has shown an increase in recent years. The rate of incidence of major illnesses is nearly double the national average, and there is a faster rate of spread of communicable diseases, even as the proportion of State government expenditure committed to healthcare has declined.

Meanwhile, all this has occurred in the context of the growing indebtedness of the State government. This debt is increasingly contracted from abroad (including from the World Bank) and on more onerous terms. Currently all borrowing is effectively only to pay interest, since the State government's primary budget balance has now been in surplus for several years. In other words, there has been a huge increase in the State government's debt, which does not appear to have been used to improve basic economic conditions in the State. This not only condemns the State to future repayments but also ties the hands of future State governments with respect to economic policy.

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Clearly, the quality of life for most people in Andhra Pradesh has not improved and may even have worsened under the stewardship of Chandrababu Naidu. If these depressing facts still do not make a dent on the way in which the mainstream media eulogises the Telugu Desam Party (TDP) government in Andhra Pradesh, this reflects more than anything else the Chief Minister's highly developed skills in media management.

Media misrepresentation is at its most advanced when it comes to the Chief Minister's attempt at public sector "reform" and privatisation. So far, most of the attention has been concentrated on the World Bank-inspired reforms in the power sector, which have involved commercialisation of transmission and distribution agencies, increases in power tariffs and eventually aim at complete privatisation. But the sweeping changes affecting other public sector enterprises have been inadequately discussed in the rest of India.

The current impetus to privatisation in Andhra Pradesh is part of the APERP which is the World Bank-led set of reforms. The measures undertaken as part of the first phase have already been quite extensive, and if the second phase of such reforms goes through as planned, they will amount to an effective dismantling of almost all public enterprises in the State. In the first phase, 19 out of 40 State government public sector undertakings have been "dealt with", that is, liquidated, sold, or restructured pending the point of final closure. In the second phase, which is due to begin now, another 29 PSUs are proposed to be similarly "dealt with".

THE deeply disturbing implications of such a process became evident during the course of a workshop organised by the Andhra Pradesh Public Sector Employees Federation during February 19-20. The discussions at this workshop exposed not only the adverse effects of such privatisation for employment and future development, but also the patently undemocratic nature of the privatisation process itself.

The State government has made its intentions clear in a "Strategy Paper on State PSUs", in which it declares that, since the return on investments made by the State is negligible, there is a huge loss of opportunity in terms of revenue that could be generated on such investment. Therefore it proposes to privatise as many manufacturing and trading companies as possible, and encourage "market forces" (that is, private companies) to play in areas which are socially relevant. This, it claims, will release resources for poverty alleviation, education, health and development of infrastructure and technology.

The basic philosophy is summed up in the statement that "as against the declining efficiency of PSUs, private sector operations have emerged as an alternative force to reckon with, and there is no business that the private sector cannot operate", presumably better than the public sector.

There is much that is contradictory and even wrong in this analysis. First of all, public economic activity must be judged in terms of its social returns, rather than extant financial returns, simply because public investment has to meet socially desired goals. These included providing public goods and services which the private sector would naturally underprovide, such as facilities ranging from street lighting and roads to other infrastructure, as well as developmental activities. Especially in the areas of physical and social infrastructure, financial returns simply cannot be the basis of judging economic performance or desirability.

Second, if the government in fact wishes to encourage infrastructure development and poverty alleviation, then it should have expanded and revitalised some of the existing PSUs rather than closed them down. Consider some of the crucial developmental public institutions that have been liquidated or are about to be closed down in the first phase of "reform".

The Andhra Pradesh Small Scale Industries Development Corporation, the Andhra Pradesh State Agro Industries Development Corporation, the Andhra Pradesh State Textile Development Corporation and the Andhra Pradesh Meat Development Corporation are potentially of great significance even in terms of assisting private sector development and small-scale employment-intensive industry. They have all been closed down. The Andhra Pradesh State Irrigation Development Corporation, which provided irrigation facilities to hilly areas and lands of weaker sections, including tank irrigation which is completely neglected in the World Bank-sponsored projects, has been closed down.

The list of other important PSUs on the anvil for destruction is even more disturbing. These include the Andhra Pradesh State Road Transport Corporation, which cross-subsidises road connectivity of remote far-flung areas which is financially unviable with other routes, which the private sector on its own would never do. PSUs like Andhra Pradesh Agro and Andhra Pradesh Seeds have played important roles in the development of land in remote areas and of weaker sections, as well as in providing some form of quality and price control on the inputs available to farmers even from private sources. Eliminating these can have very negative effects on a cultivating community which is increasingly exposed to various forms of hard-sell by multinational companies and sale of spurious seeds and other inputs by some private agents.

A large number of cooperative societies, both producer and finance cooperatives, are also slated to be done away with, despite the fact that some of these have actually provided important services to rural communities which are unlikely to be replaced by other private companies.

A basic message which emerges from the pattern of closure or privatisation is that the State Government of Andhra Pradesh no longer wishes to fulfil the basic developmental functions of the state, despite its claims. Thus, all public developmental activity which occurs is under various foreign aid or loan projects, including under the "Janmabhoomi" scheme, rather than as part of an overall and systematic scheme of development. It is not surprising, then, that so little actual development has taken place in the State in the recent past.

But the future may be even less attractive for the people of the State, if the current plans for privatisation of the remaining PSUs are implemented. The question then naturally arises: who actually benefits from all this? And why does the TDP government insist on this agenda which is so clearly against the interests of the State as a whole?

One group of strongly interested parties turns out to be relatively easy to identify, although they are not local constituents. As mentioned earlier, the World Bank made "public enterprise reform" one of the important components of its economic restructuring programme, and has sanctioned about $26 million to finance 70 per cent of the payments to workers laid off under the Voluntary Retirement Scheme (which has been more than purely voluntary). It also insisted on an "Implementation Secretariat" in the State government for PSU reform, with a sharp commitment to privatisation and a strict timetable for implementation. This would report directly to the Cabinet Sub-Committee, bypassing all Ministries and Departments.

The Department for International Development (DFID) of the United Kingdom sanctioned a grant of $3.1 million for technical assistance "to strengthen the institutional framework in the Public Enterprises Department". The use of this money, which is incidentally all "foreign aid" to the State government, is especially interesting. It is being used to pay the salaries of the personnel of the Implementation Secretariat, provided by expatriate (mainly British) consultants from the Adam Smith Institute, a right-wing think tank based in London. As the State government's own Strategy Paper blandly states, "The fees of these professional experts are met from the funds sanctioned by DFID as grant. In selection of its personnel, I.S. is not constrained by the salary structure of the Government."

It has been pointed out by V.K. Srinivasan, a senior former bureaucrat who has been Principal Secretary to the State government, that "this is privatisation of governmental decision-making, with staff being neither responsible for results nor accountable to the government or the legislature". Nor has it provided "confidence and credibility at all levels" as the State government claims, since there are already several reported scams and controversies relating to the privatisation process so far.

Thus, the Implementation Secretariat was reportedly visited by Anti-Corruption Bureau officials, who sought to take over records relating to the privatisation of a cooperative. There has been some controversy also with respect to the privatisation of Nizam Sugar Factory and several other units. Clearly, the possibility of placing private profit above public service is not greatly diminished when foreign consultants rather than local bureaucrats are those who propose policies. Rather, the financial gain may simply be directed towards agents abroad rather than within the country.

The Andhra Pradesh privatisation experience thus far appears to be another example of transferring valuable public assets to private agents, without correct valuation of assets or genuine participation of stakeholders. There has been no attempt at a genuine reform of PSUs, which would orient them towards serving the obvious economic needs which exist. In the process, the urgent problems of development and welfare of the people of the State appear to have been forgotten or relegated to only secondary importance.

A fractured verdict in Manipur

KALYAN CHAUDHURI cover-story

With no political party winning a clear majority, the State is once again headed for political instability.

THE elections held on February 14 and 21 have presented Manipur, now under President's Rule, with a hung Assembly as none of the 16 political parties secured a simple majority in the 60-member House. The fractured mandate has once again thrown Manipur into the kind of political uncertainty that has persisted ever since it attained statehood in 1972. In the last 30 years, governments have changed not less than 18 times. Add to this seven spells of President's Rule, including the present one. The elections held in February were the ninth to the Assembly, the previous round having been held in February 2000.

The Congress(I) emerged the largest single party by winning 16 of the 55 seats, results for which were declared until the time of going to press. (Its previous tally was 10 seats.) The Federal Party of Manipur (FPM) proved that it was the strongest of the five regional parties in the fray, by finishing close behind with 13 seats. The Manipur State Congress Party (MSCP), a splinter group of the Congress(I), which formed the government in coalition with the FPM in 2000, won six. The performance of the Communist Party of India (CPI) was comparatively impressive; the party, which failed to win any seat in 2000, won five of the 15 seats it contested. The Bharatiya Janata Party's gamble of targeting Naga votes came a cropper, with the party winning only four seats in the hills and the Imphal valley. Its ally, the Samata Party, which was instrumental in bringing down the United Front government of the MSCP and the FPM, won three seats. The Nationalist Congress Party (NCP) won three seats, the Manipur People's Party (MPP) two, the Democratic Revolutionary People's Party (DRPP) two and the Manipur People's Conference (MPC) one. Repolling was ordered in some of the booths in the five constituencies, the results of which had been withheld.

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Many stalwarts of the State's politics, except R.K. Dorendra of the BJP, have lost this time around. They include Congress(I) leader and former Chief Minister Rishang Keishing, former Chief Minister and founder of the MSCP W. Nipamacha Singh (he contested on the MPC ticket), president of the FPM and former Deputy Chief Minister L. Chandramani Singh, former Speaker and NCP candidate Sapam Dhananjoy. Keishing's defeat, his first in three decades, is attributed mainly to a diktat to the voters from the underground Naga outfit, the National Socialist Council of Nagalim (Isaac-Muivah).

Having had a taste of the people's ire in 2001, the parties were cautious this time about avoiding horse-trading, for which Manipur politics is well-known. The alternative, therefore, was a coalition government. Political observers believed that the FPM held the key to the next government. They did not see any possibility of an understanding between the FPM and the Congress(I). The BJP, the Samata Party and the MSCP - all constituents of the National Democratic Alliance (NDA) - contested the elections separately but had not ruled out a post-poll alliance. All these parties appeared keen on allying with the FPM. The Congress(I) was likely to get the support, at least from outside, of the CPI.

Political instability first gripped the State after the 1984 elections. Despite enjoying a majority of its own (30 legislators in the 60-member House), the Congress(I) was forced to seek the help of independents to form the government. Defection is a common phenomenon in Manipur politics. Many legislators have been suspended for violating the anti-defection law, but that has not deterred others from switching allegiance during a political crisis. In 1997, a group of Ministers and legislators, led by former Speaker Nipamacha Singh, broke away from the ruling Congress(I) headed by Rishang Keishing and floated the MSCP, which had subsequently formed the government.

Several party leaders had maintained on the eve of the February elections that they were averse to seat adjustments or a pre-poll alliance. They had said they would rather wait until the results were declared to forge any kind of alliance, implying the inevitability of a coalition government. Such a coalition of convenience, going by the track record of past governments, may not last the full term.

In the 2000 elections, the MSCP won 29 seats. In order to form a stable government, it engineered the defection of nine MLAs from the Opposition parties, including the MPP and the NCP. Nipamacha formed the Ministry with the FPM, which had six seats. But the government started wobbling from Day One.

The coalition did not last long. Following the fast-paced switching of political loyalties, Nipamacha resigned in February 2001, paving the way for a new coalition government headed by the Samata Party leader, Radhabinod Koijam. The Samata Party had won just one seat, but its strength increased to 12 after 10 of the 11 Congress(I) MLAs under the leadership of Koijam joined it. Koijam was supported by all Opposition MLAs, barring the Congress(I)'s Rishang Keishing. Although the BJP and the Samata Party are both partners in the National Democratic Alliance government at the Centre, the BJP, with six MLAs in the Assembly, did not join the Koijam government. It supported it from outside.

Meanwhile, the MSCP faced a split following infighting between Nipamacha and Th. Chaoba, former Union Minister of State for Food Processing. The group led by Chaoba was recognised as the real MSCP by a High Court order. Nipamacha formed the MPC and the February elections from his home constituency, Wangoi. As a result of the bickering inside the party, 18 MLAs left the MSCP for the BJP. The total strength of the BJP subsequently increased to 26, when two more MLAs from the FPM joined it.

A fresh crisis emerged when the BJP, with a strength of 26 MLAs, wanted to join the Samata Party government on the condition that the new coalition government be led by the BJP and that Koijam step down in favour of the BJP's R.K. Dorendra. This formula was not acceptable to the Samata Party. The issue was referred to the respective high commands of the two parties. However, even the intervention of Home Minister L.K. Advani and Samata Party leader George Fernandes could not resolve the crisis. The Koijam government fell after BJP MLAs voted for a no-confidence motion against it.

A BJP wipe-out

Punjab's verdict illustrates how little mass support Far Right enterprises now wield in the State.

HAD there been an award for inventive excuses, Punjab Food and Civil Supplies Minister Madan Mohan Mittal would have won it hands down. After news broke on February 24 of the defeat of the Shiromani Akali Dal-Bharatiya Janata Party alliance, Mittal lashed out at journalists. "The media were responsible for demoralising our supporters," he said in a suitably hurt tone. "Many people voted for the Congress(I) only because of the exit polls, which predicted that we would be wiped out." Incredulous laughter greeted the assertion, since all of Punjab's voters had exercised their franchise on February 13 before any exit poll results became available.

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Wiser politicians chose silence. Chief Minister Prakash Singh Badal barricaded himself inside his house, and refused to talk to party cadre and the press alike. Badal's reaction was perhaps understandable. In 1997 he had led the SAD to its record high of 75 seats in the Assembly. This time the SAD won 41. The BJP fared even worse, winning just three seats and failing to retain even one of the 18 constituencies it had taken in 1997. For most people in the SAD-BJP, however, the defeat was no real surprise. The afternoon before counting began, Punjab Finance Minister Kanwaljit Singh took time out for a relaxed farewell lunch with his staff. He, unlike BJP colleagues including Mittal and Balram Dass Tandon, managed to retain his seat. Across town, at the Congress(I) headquarters, the staff members busied themselves with giving the building a fresh coat of paint. Others got down to placing orders for sweets and fireworks for celebrations planned the next evening.

In the event, the scale of the SAD-BJP defeat was somewhat smaller than most people had expected. Two out of three major exit polls grossly over-estimated the number of seats the Congress(I) would win. The television channel Aaj Tak's exit poll gave the party 91 seats while Zee-CMS estimated 83. Even the most pessimistic exit poll, commissioned by Doordarshan, predicted that the Congress(I) would win 71 seats. Pre-election opinion polls proved just as inaccurate. India Today gave the Congress(I) 90 seats, while Outlook magazine predicted that the Congress(I) would win some 73 seats. The Congress(I) had been told by a south India-based opinion poll company that the party would win a two-thirds majority. Another SAD-commissioned poll said that the party would win under 35 seats, which led at least some candidates to campaign less energetically than they might otherwise have done.

Politicians of the SAD and BJP are not the only ones to be disappointed with their performance. If the Congress(I) had hoped for considerably more seats than the 62 it eventually won, its ally, the Communist Party of India, was bitterly disappointed that it won just a single seat. Although the Congress(I) had hoped to break into key SAD strongholds in the rural southern Punjab, Akali candidates held their own. The most dramatic defeats, however, were those of the SAD rebel faction, the Far Right Panthic Morcha. Despite months of energetic campaigning, much of it on flagrantly communal lines, the Morcha failed to win a single seat. The BSP too failed to mark a presence in the Punjab Assembly, despite the personal campaign investment made by its supremo, Kanshi Ram. Nine of the 116 seats that were contested - one election having been postponed owing to the death of the SAD candidate - went to independents.

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What is truly significant about this round of elections, however, is that it has emphatically reversed a seemingly inexorable saffron tide. To understand the full magnitude of the Congress(I) victory, it has to be placed in the context of events since 1996. That year's Lok Sabha elections were the first that the State had faced after its decade of carnage, since the SAD had boycotted the 1992 Assembly elections in deference to terrorist fiat. The SAD picked up just 28.7 per cent of the popular vote to the Congress(I)'s 35.1 per cent, but won eight out of 13 Lok Sabha seats. The Congress(I) could manage just two. This success was in part the result of the SAD's alliance with the BSP, which won 9.3 per cent of the vote and three Lok Sabha seats. More important, however, was the BJP factor. Although it had just 6.4 per cent of the vote, these ate into the Congress(I)'s share, and tipped the balance in favour of the SAD in key urban areas such as Jalandhar, Ropar, Patiala and Ludhiana.

Politicians of both the Hindu and Sikh Right were quick to learn the lesson. In the 1997 Assembly elections, the SAD allied itself with the BJP. This time, the BJP's Hindu support base helped it raise its share of the popular vote to 37.5 per cent, while that of the Congress(I) fell to 26.4 per cent. The SAD reached its record total of 75 seats, two higher than its previous peak in the 1985 Assembly elections. Prime Minister Rajiv Gandhi's need to secure an Akali imprimatur for his pact with religious leader Harchand Singh Longowal had more or less conceded that contest. This time around, there was a no-holds-barred contest. The Congress (I) was left with just 14 seats, lower than the 17 it won in the face of the pro-Opposition wave of 1977, or the 32 it picked up against its will in 1985. The BJP, which had won just one seat in 1985 and six during the violence-torn election of 1992, managed to take 18 seats. This was truly a fairly-tale victory.

Unlike fairy-tales, however, this saga of SAD-BJP success did not have a happy ending. The romance ended after the 1998 Lok Sabha elections, in which the SAD-BJP alliance performed well. By 1999, urban Hindus were wholly disenchanted with the BJP, as many rural Sikhs were with the SAD. The reasons were simple. Corruption, poor administration and the absence of a developmental agenda had stripped the government of the massive popular support it had received just two years earlier. Hindu voters were furious with the BJP for failing to contain the religious Right within the SAD, while some of those elements, led by Badal's key foe Gurcharan Singh Tohra, had split to form the revanchist Sarv Hind SAD. In the Lok Sabha elections that year, the SAD won just two of nine seats it contested, and the BJP one of three. While the BJP roughly held its vote share of 9.7 per cent, the SAD's share fell to 28.5 per cent, much the same as in 1996. The Congress(I)'s share of the popular vote, however, grew dramatically, to 38.4 per cent.

Although comprehensive data were not immediately available, the pattern of victories suggests that broadly the 1999 Lok Sabha election results have been repeated. With 38.1 per cent of the popular vote, the Congress(I) has held on to the constituency it won in 1999. The SAD has improved its vote share substantially to 36.6 per cent. While the Congress(I)'s successes, as in 1999, came mainly from urban and semi-urban constituencies, the SAD has succeeded in expanding its base in Malwa, and mainly rural areas like Tarn Taran. Observers attribute this to the fact that the paddy procurement price was fixed at a record Rs.610 a quintal during the last harvest, the disastrous long-term consequences of the step notwithstanding. Schemes such as that for free power supply to landed farmers also appear to have helped the SAD hold on to its key Jat Sikh constituency.

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The real loser in this election has been the BJP, which has seen its vote share drop by almost five percentage points to 4.8 per cent, a figure which underlines the scale of the defection of its urban Hindu base.

Events from here on should be fascinating to watch. The SAD has already made its intentions clear, announcing even before the counting of votes began that it intended to build a memorial to those killed fighting Indian forces during Operation Bluestar. This marked turn to the Right by the SAD presumably serves two purposes. First, a communal mobilisation is intended to bring back alienated Sikh voters to its fold. Second, Badal hopes to fend off attacks from the Panthic Morcha, which accuses him of failing to protect Sikh communal interests. Although Tohra has led the Morcha to an unceremonious defeat, he could gain support from the many SAD MLAs who do not wish Badal to be able to ensure the succession of his son, MP Sukhbir Badal. Issues like alleged mass crimes committed by the Punjab Police in its war against terrorism could again come centrestage.

All of this will be of a piece with what has, without dispute, been the most acrimonious election Punjab has seen. The Congress(I) laid corruption centrestage, putting out posters charging Badal with having sold out Punjab's case on the Sutlej-Yamuna Link Canal in return for bribes from Haryana Chief Minister Om Prakash Chautala. Other Congress(I) posters showed SAD politicians selling government jobs in return for cash. The SAD responded with personal attacks on Pradesh Congress Committee(I) chief Amarinder Singh. Amarinder Singh was accused in SAD advertisements of everything from defaulting on bank loans advanced for a failed business to being lazy. The Congress(I)'s role in Operation Bluestar and the genocidal 1984 pogrom against Sikhs in New Delhi were also raised. Voters, however, do not seem to have been influenced by polemic on these issues. If the Congress(I)'s record in Punjab has not been forgotten, voters seem to have forgiven it in the hope that that it will deliver a development-oriented and corruption-free administration.

Will the man many people still call maharaja be able to deliver on these promises? His accession as Chief Minister is certain, but Amarinder Singh faces powerful enemies in his own party. Faridkot MP Jagmeet Singh Brar, who has sniped at the PCC(I) chief throughout the period of the elections, failed to attend even a lunch meeting on February 22, where inner-party disputes were to be resolved. Jagmeet Brar, however, has been weakened by the fact that his nominees lost all the Assembly segments in his Faridkot Lok Sabha constituency. Another potential rival, former Chief Minister Harcharan Singh Brar, failed to win an Assembly seat. Only Rajinder Kaur Bhattal, who replaced Jagmeet Brar as Chief Minister, remains a potent threat. Should the three dissidents group together, Amarinder Singh could well be faced with a full-scale revolt at the first sign of trouble - including any violence that results from a communal mobilisation by the SAD.

Amarinder Singh's own story, however, illustrates just how much Punjab has changed over the past decade, and how little mass support Far Right enterprises now have. In 1984, Amarinder Singh left the Congress(I), embittered by Operation Bluestar and its legacy. He joined the United Akali Dal led by revanchist preacher Jarnail Singh Bhindranwale's father, but by 1986 was affiliated with the more centrist Badal faction of the SAD. Unlike other SAD centrists, however, Amarinder Singh stood up against the Khalistan onslaught, and set up his own Akali Dal (Panthic). He unsuccessfully contested the 1992 Assembly elections, boycotted by all the other Akali groups. Although he attempted to rejoin the revived SAD of 1995, he was marginalised by the Far Right. Given no role in the 1996 Lok Sabha elections, the Akali Dal (Panthic) broke away from the SAD in the Assembly elections that followed, but it did not make much success.

"Punjab's people do not wish to live in the past," the prospective Chief Minister says. "What happened a hundred years ago is no longer relevant." His test will be realising a future. If he fails, the political centre of gravity could lurch to the Right again, with potentially horrific consequences.

Jayalalithaa's victory

T.S. SUBRAMANIAN cover-story

ON March 2, Jayalalithaa will be sworn in Tamil Nadu Chief Minister by Governor P.S. Rama Mohan Rao at the Madras University centenary auditorium in Chennai. The All India Anna Dravida Munnetra Kazhagam (AIADMK) general secretary registered a convincing victory over her Dravida Munnetra Kazhagam (DMK) rival Vaigai S. Sekar in the byelection to the Andipatti constituency in Theni district. Chief Minister O. Panneerselvam, who held the fort for her for five months, will now be "an ordinary volunteer of the party" again.

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Unlike in May 2001, when she was in a hurry to take over as Chief Minister despite being disqualified from contesting elections, she was prepared this time to wait for an auspicious day to be sworn in. A few hours after she was delcared elected on February 24, AIADMK Members of the Legislative Assembly met at the party headquarters in Chennai and passed a resolution electing Jayalalithaa Legislature Party leader. Panneerselvam drove to the Raj Bhavan to submit to the Governor his resignation and a copy of the resolution.

Again, unlike last May, Jayalalithaa did not attend the Legislature Party meeting this time, which was seen as a sign of her confidence that everything was under control. The Legislature Party resolution last May said: "This meeting categorically decides that it will not accept anybody or even consider anybody other than the party general secretary as the Leader of the Legislature Party." (Jayalalithaa had to step down in September after the Supreme Court struck down her appointment as Chief Minister by Governor M. Fathima Beevi because she had been disqualified from contesting elections. She attracted the disqualification after a Special Judge sentenced her to three years' and two years' rigorous imprisonment in two corruption cases in October 2000. The Madras High Court acquitted her in these two cases on December 4, 2001.)

Jayalalithaa defeated Vaigai Sekar, her nearest rival, by an impressive margin of 41,201 votes, which is attributed to her hectic five-day campaign in the vast constituency, a string of promises that she made to the electorate, and the special treatment that the constituency received in terms of development work. Jayalalithaa pointed out that she won despite the fact that all her allies in the last Assembly elections, such as the Tamil Maanila Congress, the Congress(I), the Communist Party of India (Marxist) and the Communist Party of India, had walked out of the AIADMK-led alliance and decided not to participate in the byelection.

The DMK put up a good performance, thanks to the united rearguard action by the rank and file and an effective one-day campaign by party president and former Chief Minister M. Karunanidhi. His sons M.K. Azhagiri and M.K. Stalin (Chennai Mayor) put aside their sibling rivalry and conducted a joint campaign.

The Marumalarchi Dravida Munnetra Kazhagam (MDMK) came a cropper again. Despite hectic electioneering by the party, led by general secretary Vaiko, its candidate V. Jayachandran received only 8,421 votes.

Out of 1,34,734 valid votes, Jayalalithaa received 78,437 votes; Vaigai Sekar 37,236; Jayachandran 8,421; and Dr. K. Krishnasamy (Puthiya Tamizhagam) 5,126. The independents together polled 5,514 votes.

Jayalalithaa's victory came on her 54th birthday. "It is the best birthday gift that I have received so far," she said, and declared that she would fulfil all the promises that she had made to Andipatti's voters. She vowed to make "Andipatti the No.1 constituency in the State, and Tamil Nadu the No.1 State in India."

Karunanidhi's reaction to the victory was tongue-in-cheek. He said, "I convey my good wishes to the winner on her birthday." He criticised the Election Commission for its "apathy and contradictory stances" regarding the DMK's complaints. The DMK, he said, would go to court against the "activities" of the Election Commission in Andipatti. Karunanidhi argued that the DMK's allegation that the AIADMK had enrolled 17,000 bogus voters in the constituency had been proved right by the fact that the AIADMK, which polled about 60,000 votes in the last Assembly election, had polled 78,000 now. The DMK president was unhappy with the Election Commission's decision to allow people carrying nativity certificates issued by Village Administrative Officers (VAO) to vote. The Commission had listed 16 documents as valid proof of the voters' identity, besides the photo identity card. But on February 19 it added the nativity certificate to the list. Karunanidhi said: "VAOs, in a pre-arranged move, sat near the polling booths and dispensed nativity certificates to bogus voters... This is an injustice (done to us)." Another document in the list was the post-office savings passbook. According to Karunanidhi, many savings accounts were recently opened in post offices in Andipatti.

Karunanidhi said: "We did not stay away from the democratic process. DMK cadres were up against money power, the misuse of official machinery and the Election Commission's prejudice." The more than 35,000 votes the DMK had secured, he said, were a morale-booster for partymen.

Vaiko alleged that the AIADMK had won by misusing the official machinery.

For the AIADMK, Jayalalithaa's victory was a foregone conclusion. Several days before the result was out, the Madras University centenary auditorium was reportedly spruced up for her swearing-in ceremony. However, Education Minister M. Thambidurai denied reports about this and said that the auditorium was undergoing "usual" maintenance works. A day before the counting, posters appeared all over Chennai with the message: "You (Jayalalithaa) are entering age 54. You are going to wear the crown just as people desired you to."

As counting progressed and the trend became clear, AIADMK workers burst firecrackers continuously before her residence in Poes Garden, Chennai. Ministers and party cadre made a beeline to her residence. They queued up and some of them prostrated before her in the portico.

During the campaign, Jayalalithaa made several promises: a new arts college in Andipatti; a medical college in Theni district; desilting of the Adhikari canal; construction of a reservoir at Theppampatti for which, she said, Rs.1.20 crores had been allotted; redress of the grievances of weavers; and so on. She evoked memories of the charismatic M.G. Ramachandran, or MGR, AIADMK founder and former Chief Minister, who was elected from Andipatti in 1984. She kept telling people that she was unnga veetu pillai (the title of a Tamil film starring MGR, meaning 'a child in your family'). Karunanidhi countered this campaign by saying that Vaigai Sekar was the "real child of your family and the son of the soil". Karunanidhi asked, "Why should an election be held from Andipatti when she could have contested from Saidapet or Vaniyambadi?" (While Thanga Tamilselvan, AIADMK legislator from Andipatti, resigned his seat to enable Jayalalithaa to contest from there, the Saidapet and Vaniymabadi seats fell vacant following the death of the MLAs representing them).

The message from Andipatti is : MGR's charisma still works in the constituency, 14 years after his death; people voted for Jayalalithaa on the expectation that Andipatti would enjoy benefits on account of being the "Chief Minister's constituency"; the non-participation of the TMC, the Congress(I), the CPI(M), the CPI and the Dalit Panthers did not materially alter any candidate's chances; and there is an underlying angst among the voters that they had unfairly punished the DMK in the last Assembly elections despite the development work that the Karunanidhi government had done from 1996 to 2001.

A surprise in Jammu

PRAVEEN SWAMI cover-story

LITTLE noticed outside the State, the byelection to the Jammu Lok Sabha seat saw intense drama. A surprise victory for the National Conference (N.C.) was preceded by allegations of rigging, a walkout, suspension of counting and, incredibly, a joint call by the Congress(I) and the Bharatiya Janata Party for a protest strike. The N.C. triumph in Jammu has obvious consequences for the State's politics, since Assembly elections are just months away.

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When campaigning began in Jammu, one local newspaper described the election as "a war of the weak". The BJP candidate for the seat, left vacant by the death of BJP member Vaid Vishno Dutt, was a little-known university teacher, Nirmal Kumar Singh. The Congress(I) also picked a new face, Madan Lal Sharma - its successful candidate of 1996 was Mangat Ram Sharma, who, however, performed poorly in 1998 and 1999. The N.C., for its part, changed its decision of 1998 and 1999 to put up a Hindu candidate, and instead picked a Rajouri-based Gujjar leader, Talib Husain.

Two factors may have been key to the N.C. decision. First, the failure of the BJP to contain terrorism in Jammu had alienated the party from many of its core group of voters. While Dutt had won over 43 per cent of the vote both in 1998 and 1999 on the basis of promises to take strong central action against the violence in Jammu, the situation had in fact deteriorated. Second, the principal action that had been taken - the imposition of the Disturbed Areas Act throughout Jammu last summer - undermined the pilgrim tourism industry.

It was clear, then, that the Congress(I), despite its internal problems, would attract significant sections of the BJP's Hindu constituency. Mangat Ram Sharma had won just 18.11 per cent of the vote in 1998 and 18.97 per cent in 1999. Any increase in support for the Congress(I) would clearly have come at the cost of the BJP. The N.C.'s Janak Raj Gupta won 26.81 per cent of the vote in 1998, and Rajinder Chib 22.13 per cent in 1999. This time around, the N.C. knew that even a small increase in this figure would bring it victory if the Congress(I) performance improved. Polling in the BJP's heartlands in Jammu city was low. While the Congress(I) made inroads into urban BJP strongholds, the N.C. was able to garner strong support in Hindu-majority areas such as Vijaypur, Nagrota and Samba.

Within the first few hours of counting, it was clear which way the wind was blowing. At 12-30 a.m. on February 25, the BJP was leading, with 1,84,933 votes against the Congress(I)'s 1,83,058 and the N.C.'s 1,80,177. Some 90,000 votes from the Rajouri and Darhal areas remained to be counted, but both these were N.C. strongholds. Talib Husain was certain to pick up the bulk of the votes from here, and an easy overall victory. The BJP and the Congress(I) then forcibly stopped the counting. The Sapal polling station in Poonch threw up one major controversy. The Presiding Officer had certified that just 25 votes had been polled there, Opposition leaders claimed, but 375 ballots had emerged from the box.

Returning Officer Rohit Kansal suspended counting and referred the issue to New Delhi. Bleary-eyed staff at the counting centre in Jammu received instructions to resume counting at 2-30 a.m. on February 25. At the time of going to print, the final results were still awaiting release by the Election Commission of India. Informed sources, however, told Frontline that Husain had registered a final lead of some 50,000 votes over his closest rival, Nirmal Kumar Singh.

For the N.C., which is besieged in the Kashmir Valley, the news that it retains support in the Muslim-majority areas of Jammu has come as a shot in the arm. BJP politicians in Jammu, meanwhile, have realised that appeals to communal sentiment have a diminishing effect. Union Minister for Food Processing Chaman Lal Gupta had alleged at campaign meetings that there was an enterprise under way to "change the demographic character of Jammu". Speaking to journalists on February 21, he said the "thousands of unauthorised houses coming up are proof of this". However, the Hindu residents of Jammu were clearly unimpressed by warnings of getting submerged in a deluge of Muslims.

Should the N.C. succeed in repeating its performance in Jammu in the Assembly elections too, it could help secure a smooth succession of power - and a transformation in the party's relationship with the BJP. On February 10, Chief Minister Farooq Abdullah announced that his son, Union Minister of State for External Affairs Omar Abdullah, would replace him as party president after the coming Assembly elections. Although the Chief Minister said he would continue in office if elected, the move is widely seen as a precursor to a transfer of power.

More important, Omar Abdullah has in the past suggested that he does not believe that the N.C. can sustain its relationship with the BJP in New Delhi indefinitely. This is in part because of the efforts made by the Prime Minister's Office (PMO) to encourage politicians allied with the All Parties Hurriyat Conference (APHC), and anti-N.C. forces in general, to participate energetically in the coming elections. In a June 2001 interview, Omar Abdullah said he would be "quite happy" to be removed from office. The remark was made in the context of his allegations that the Union government was funding former Union Home Minister Mufti Mohammad Sayeed's People's Democratic Party and also secessionist leader Shabbir Shah's Democratic Freedom Party. "Ever since Independence," the Minister said, "the Centre has been pursuing a programme of propping up elements against the N.C."

For the N.C., then, Jammu is an opportunity. It could use the Lok Sabha result to build a genuine secular agenda in Jammu. It could also succumb to the temptation of playing to the Muslim Right, in an effort to consolidate its constituency in Poonch and Rajouri. In its decision will lie not only the outcome of the Assembly elections, but also the future of politics in the region.

The return of Deve Gowda

PARVATHI MENON cover-story

THE election of Janata Dal(Secular) candidate and former Prime Minister H.D. Deve Gowda from the Kanakapura Lok Sabha constituency in Karnataka is a significant development that is likely to lead to a political realignment in the State. He defeated the Congress(I)'s D.K. Shivakumar, the State's Cooperation Minister and a close aide of Chief Minister S.M. Krishna, by a margin of over 50,000 votes. Deve Gowda polled 5,81,669 votes, Shivakumar 5,28,133 and K.S. Easwarappa of the Bharatiya Janata Party 2,28,134.

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The election was politically decisive for the major candidates and the parties they represented. For Deve Gowda, the victory has salvaged his political career. His swift rise in State and Central politics in 1995-96 was followed by an equally dramatic exit from the position of Prime Minister and a humiliating electoral defeat in Hassan, his home constituency, in the previous Lok Sabha elections. Deve Gowda rebuilt his own political base virtually from scratch, achieving in the process what appeared to be the near-impossible task of reuniting the Janata Dal (United), led by his former rival Ramakrishna Hegde, and the Janata Dal (S), prior to the elections. His victory was essential to give the reunited Third Front formation the credibility it would need in order to become a political force in the State once again.

Deve Gowda was one of the architects of Third Front politics at the Centre, and his presence in the Lok Sabha will provide an impetus to consolidation of that grouping. It is not for the first time that Deve Gowda has identified and used issues that are of foremost concern to the people to power his return to politics. In fact, he conducted a 'padayatra' to Bangalore from Vittenahalli village near Channapatna in the constituency between October and November 2001 in order to highlight the injustice meted out to farmers, when two farmers from the village were killed in police firing during an agitation over the right to tap neera from coconut trees.

During the electioneering, Deve Gowda raised issues that found an immediate response with the voters of the constituency that comprises both the rural and urbanised Assembly segments in and around Bangalore city. In his campaign, which covered almost every village of the constituency, Deve Gowda spoke of agrarian distress and suicides by farmers owing to the faulty economic policies and priorities; the virtual de-industrialisation of vibrant industrial pockets of the constituency owing to unfair competition and liberalisation; the absolute growth of poverty; and the spectre of large-scale unemployment that confronted the youth.

The victory of Deve Gowda, which will set the stage for the return of a vastly strengthened Janata Dal, is a major setback for the State Congress(I). The seat fell vacant following the death of a Congress(I) member, M.V. Rajashekhara Murthy. The Congress(I) did not follow the normal practice of putting up a relative of the MP in his place, although Murthy's widow would have been more than willing to contest. A powerful candidate was required to take on Deve Gowda, and Shivakumar, a relatively young Congress(I) leader, was chosen. A Congress(I) victory in Kanakapura not only would have dealt Deve Gowda and the Janata Dal a blow but would have been hailed as a mid-term mandate for the Krishna government. Shivakumar conducted an aggressive campaign, often treading the borderline of electoral misconduct. The Election Commission pulled up Shivakumar for a letter he wrote to government employees, highlighting the achievements of the State government, and asking them to vote for him. On election day, a Janata Dal(S) party worker was killed in Sathanur, the Assembly constituency represented by Shivakumar, allegedly by Congress(I) supporters. The defeat of Shivakumar, who is believed to be none-too-popular with the old guard in the party, may well open up rifts within the party.

The prospects of a win for Easwarappa, which were never too bright, only weakened considerably when the BJP's former ally, the Janata Dal(U), joined the Janata Dal(S). Despite a high-intensity campaign, the percentage of voting was rather low at 53. It was more or less uniform across all the eight Assembly segments - Kanakapura, Channapatna, Malavalli, Ramanagaram, Anekal, Magadi, Sathanur and Uttarahalli - which together account for 24.98 lakh voters.

A victory and many pointers

V.VENKATESAN cover-story

NARENDRA MODI'S victory in the byelection for the Rajkot-II Assembly seat in Gujarat gave legitimacy to his chief ministership but it simultaneously sent a clear signal to the ruling Bharatiya Janata Party: that it could not take for granted the only State that gave it an absolute majority in the last elections.

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Modi's victory margin of 14,728 votes over his Congress(I) rival Ashwin Mehta was half of what Vajubhai Vala, Finance Minister in the Keshubhai Patel Ministry, secured in 1998. It raised the question whether the BJP's decision to replace Patel with Modi was politically expedient. Modi's skills in political management and mobilisation of the party cadre during the elections, at a time when the BJP's fortunes were at their lowest ebb during the Keshubhai Patel reign, were key considerations behind the party high command's decision to reward him with the top post.

However, Modi was unable to ensure the BJP's victory in the byelections held at Sayajiganj and Mahuva (ST). The Congress (I)'s Dalsukh Prajapati wrested the Sayajiganj seat in Vadodara from the BJP by defeating Jitendra Sukhadia, a former Minister in the Keshubhai Patel Ministry. Another former Minister in the Patel Ministry, Jaspal Singh, was the Samajwadi Party candidate from the seat. Prajapati won by a margin of 22,544 votes. At Mahuva, in Surat district, Ishvarbhai Vahia of the Congress(I) defeated the BJP's Amitbhai Patel by 12,695 votes. In Rajkot-II successive years of water scarcity, the people's dislike of Vajubhai Vala for his alleged corruption and disunity among the party's senior leaders were factors that weighed against Modi. The BJP's critics attribute Modi's victory primarily to his incumbency advantage as Chief Minister.

Rajkot, the hub of the Saurashtra region, had been a BJP citadel for years. Last year it lost control of the Municipal Corporation to the Congress(I) after almost a quarter century. Vajubhai Vala's diminishing popularity with the voters was blamed for this setback. He had won the seat four times in a row, but came under a cloud after his close identification with the builders' lobby and Keshubhai Patel, both of whom were considered liabilities after the January 26, 2001, earthquake in the State.

The Congress(I) emerged as a united force. Its candidate Ashwin Mehta is an educationist involved with almost a dozen schools and colleges, most of them located in Rajkot-II. He also heads a local bank and enjoys a good rapport with all the faction leaders. Modi's erstwhile adversary in the BJP, Shankarsinh Vaghela, now a Congress(I) MP from Gujarat, campaigned against him, and this public display of unity within the Congress(I) probably helped bring down Modi's victory margin.

On the other hand, the disunity among the BJP's senior leaders was apparent, with Keshubhai Patel, who hails from Rajkot, excusing himself from campaigning for Modi on the grounds of ill-health. Patel, however campaigned in Sayajiganj and Mahuva. Among the other reasons for Modi's reduced margin are the alienation of the Patel community owing to Keshubhai Patel's isolation in the party, and the reluctance of the Vishwa Hindu Parishad and the Bajrang Dal to campaign for Modi. The VHP and the Bajrang Dal were apparently displeased with the BJP's not-so-definite stand on building a Ram temple at Ayodhya. The RSS, however, came out in full strength to support its former "pracharak", but it barely managed to reverse the slide in Modi's fortunes. A none too happy state of affairs for the BJP as it prepares for the Assembly elections due in the State in March next year.

Marketing the Mahatma

A U.S.-based company's bid to capitalise on the name of Mahatma Gandhi with the aid of his grandson is scuttled.

'MARKET forces' will not leave even the Mahatma in peace. A U.S.-based licensing company, CMG Worldwide, announced recently that it had a new big ticket client - Mahatma Gandhi. Its website listed Gandhiji among its six new clients. Other personalities rubbing shoulders with India's apostle of non-violence were Hollywood actress and dancer Ginger Rogers, Formula One racing champion Emerson Fittipaldi and wrestler Andre the Giant. CMG Worldwide is in the business of "representing the families and estates of deceased celebrities" and "acts as a business and marketing agent for its clients". The move to commercialise an icon of austerity stirred up a hornet's nest as soon as the Indian media got wind of it.

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Tushar Gandhi, a grandson of the Mahatma who negotiated the deal with CMG Worldwide, had several explanations to offer in support of his move. But finally he withdrew from any further dealings with CMG Worldwide. Thereafter, Gandhi's name vanished from the company's website.

After giving his provisional clearance for the advertisement, Tushar Gandhi told CMG Worldwide that he would grant his approval only after watching the final product.

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Meanwhile, CMG Worldwide put forward another business proposal. It wanted to be the sole agent for the commercial use of the Mahatma's name. "I considered this proposal seriously because I thought it would be a good opportunity to police the use of Bapuji's image and prevent any misrepresentation. The company was to refer every commercial project to me for approval," says Tushar Gandhi. He recalls his failed attempt to prosecute the producers of the Nikki Bedi show, when one of the guests on the TV programme insulted Mahatma Gandhi. "No action could be taken against them because Nikki Bedi as well as Rupert Murdoch, the Star TV owner, were foreigners. I felt that CMG Worldwide would be able to tackle such cases better since they are abroad," he says.

According to Tushar Gandhi, although no agreement had been reached, CMG Worldwide announced Mahatma Gandhi as one of its new clients. (CMG Worldwide did not respond to queries sent to it by this correspondent.) "If nobody in India understands why I was getting into this deal, it wasn't worth my while to continue with it. I broke all ties with CMG Worldwide, and returned two cheques they had sent for the advertisement. However, I still feel that we relinquished a good opportunity to protect Bapuji's image and get some funds for restoration," Tushar Gandhi explains.

WHILE people in general were relieved that the Mahatma's name was spared from being commercialised by a foreign company, many still question Tushar Gandhi's moral and legal right in the first place to enter into such a contract. Says Nagindas Sanghvi, Gandhian and writer: "Gandhiji has no legal heirs. He disowned his family in 1914. He was the Father of the Nation. How can one man decide how he should be represented? Tushar is just one of 54 Gandhi family members. What about the rest? And what about his intellectual heirs who are as much his sons and daughters?" Usha Gokani, the Mahatma's granddaughter and a trustee of Mani Bhavan, agrees with him. "They should have gone about this deal in a Gandhian way - more open and transparent. To vest power in only one person is not right. There should be consultation within a group of people. It would not have been difficult for the company to trace other prominent members of the Gandhi family or other Gandhians. Bapuji is as much my grandfather as the father of all other Indians," she says.

However, Tushar Gandhi justifies his stand. "He is still my great grandfather. You cannot deny that. In that capacity I still have the right to grant such permission. All 54 Gandhi family members have that right. They probably approached me since I am more in the public eye." Tushar Gandhi is also a politician. He was earlier in the Samajwadi Party but has now shifted to the Congress(I).

Former High Court judge C.S. Dharmadhikari disagrees with Tushar Gandhi's view. He says, "In a sense, he has bound the other family members by signing a no-objection certificate. All the others have to be consulted."

Many are also offended because the commercialisation of Gandhi's name goes against the very principles he stood for. "As a nation, we have a right to protest against the commercialisation of the Father of the Nation. You cannot equate Gandhi with personal property. He is not a marketable commodity. He belongs to humanity," says Justice Dharmadhikari.

However, Tushar Gandhi points out that Gandhi's image has been used in several advertisements, including one for an expensive textile brand, one that contradicts his principle of spinning and using khadi. A product called Dandi Salt is also being advertised now. "Gandhi himself used to raise money for the Harijan fund by giving his signature and photographs," he says.

"Gandhiji doesn't need Tushar to defend his name. His memory is best preserved by people who still follow his ideals and are doing constructive work at the grassroots level in villages; people like Baba Amte," says Himmat Jhaveri, a freedom fighter. Gopalkrishna Gandhi, the Mahatma's grandson and now the Indian High Commissioner to Sri Lanka, adds, "Anybody who seeks to misuse the Mahatma's name or image is not likely to succeed (in it) for too long." According to T.K. Somaiya, "The fact that people want to cash in on Gandhi's name proves that he is popular and relevant even today."

In 1997, V. Kalyanam, who was a member of the Mahatma's staff, tried to pass on a set of Gandhiji's personal papers that was in his possession to a cult organisation in the U.S. called the Saiva Siddhanta Church. The cult offered it for sale to Phillips International Auctioneers and Valuers, a firm in London. The Navjeevan Trust filed a case against all three parties in the Madras High Court in 1996 (Frontline, November 29, 1996). Finally, the papers were returned and are now with the Navjeevan Trust (Frontline, December 13, 1996).

The history project

The reconstitution of the Indian Council of Historical Research points to a continuing drive to project a certain ideological agenda.

SINCE assuming charge of the Union Ministry of Human Resource Development in 1998, Murli Manohar Joshi has made little secret of his intent to isolate the Left and liberal strains of social science research from all positions of authority. Recent jibes about "intellectual terrorism" and genuflection before the right of religious leaders to censor history texts, have done little to bolster the confidence of the academic community in the man who once held the honorific title of professor despite a consistent record of abusing it in word and deed.

The good news about the recent reconstitution of the Indian Council of Historical Research (ICHR), observers wryly commented, was that no religious leaders had been coopted into the body to exercise the authority that Joshi and Co. have conferred on them. Things could not get much worse, the observers reasoned, since the ideological agenda had been set in 1998, when the ICHR was reconstituted with little regard for the convention of retaining a third of the incumbent membership to ensure an element of continuity.

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As the details of the composition of the new council emerged, this element of resigned despair gave way to horror and the complacent were confronted with the reality that things had indeed just got worse. If the unwritten purpose of the 1998 reconstitution was to conquer the historical frontiers of Ayodhya, the HRD Ministry now seems to have shifted its sights further back in historical time - to the Harappan civilisation. And one of the new nominees to the ICHR is N.S. Rajaram, an engineer from Bangalore whose greatest distinction has been to engineer the presence of a horse in the Harappan civilisation through the ingenious use of modern digital techniques.

Since the character of his scholarship was exposed (see "Horseplay in Harappa," Frontline cover story, October 13, 2000), Rajaram has contrived one face-saving explanation after another, each less convincing than the previous one. He is currently credited with the insistence that the textual lacunae prevalent with the Harappan civilisation and the archaeological gaps pertaining to the Vedic period could be resolved quite simply by collapsing the two cultures into the same historical time-frame. This argument of convenience is, of course, dear to the heart of the Hindutva chauvinist view of history, though it has had the more serious scholars recoiling in horror.

Rajaram is also one of the principal contributors to an Internet-based forum (www.swordoftruth.com) that has set new standards in the concoction of facts and sectarian hate propaganda. A glowing account of his accomplishments on this website informs us that his most recent work "relates to the decipherment of the 5,000-year-old Indus script done jointly with the great Indian Vedic scholar Dr. Natwar Jha". "This is recognised," it continues, "as the most important breakthrough of our time in the study of Indian history and culture." But even this seemingly magnificent achievement has not quite exhausted his talents, since he is "regarded an authority on Christianity also, having authored a book on the early history of Christianity called The Dead Sea Scrolls and the Crisis of Christianity, published in England in 1997." He has also written two other books on like themes, titled in a manner that should make their purpose clear to the meanest intelligence: Christianity's Collapsing Empire and its Designs in India and Christianity's Scramble for India and the Failure of the Indian Elite.

In December 2000, well before Osama bin Laden had become a household name, Rajaram had memorably summoned up his malevolent presence to influence the debate over Ayodhya: "Can the terrorist warlord Osama bin Laden claim the ideological right to demolish the Venkateshwara Temple in Tirupati or the Golden Temple in Amritsar and build something else in there to mark the triumph of his 'faith'? These, like Ram Janmabhumi, the Westminster Abbey and the Statue of Liberty, are not pieces of real estate that can be bartered - or forcibly occupied and demolished." And in the extravagance of this projection of modern religious bigotry into the medieval period, Rajaram summed up the founder of the Mughal empire in India with charming brevity: "Babar was as much a religious fanatic as bin Laden."

Rajaram's prodigious talents do not end with the Harappan civilisation, early Christianity and the medieval Mughal empire. In a June 2001 contribution to his Internet forum, he was displaying a remarkable acuity about contemporary history: "When a history is written of the last twenty years of Indian politics," he stated, "Sonia Gandhi's name is likely to be associated above all with the Bofors scandal." And from this insight, Rajaram went on to suggest that evidence has been found of criminal collusion between the Congress(I) leadership, international drug cartels, the Vatican and a money-laundering syndicate based in the Gulf region.

By any criterion, Rajaram's fulminations would qualify as "hate speech" warranting action under the applicable laws. But under the twisted priorities of the HRD Ministry, his reward is elevation to a higher pedestal from where his influence can presumably be more widely diffused.

It is not clear whether Rajaram will be inconvenienced by having to share space with individuals who do not quite accept his magnificent scholarly achievements. Known principally for his excavations of the Harappan site of Dholavira, R.S. Bisht, Director of the Archaeological Survey of India, is one of the new nominees to the ICHR. Bisht is also the principal author of the text that accompanies the exhibits at the Harappan Gallery in the National Museum in Delhi. Opened in 2000 after major refurbishment, the Harappan Gallery is introduced to the visitor with a textual panel that states quite definitively that the script is yet to be deciphered.

Observers today do not rule out the possibility that this panel will be altered in the near future to reflect Rajaram's newly acquired status as a member of the ICHR. Bisht for his part has shown sufficient malleability in the past in his interpretation of the Harappan script. Departing from the accepted consensus, which dates from B.B. Lal's proposals in the 1960s, subsequently reaffirmed by all scholars, the introductory panel to the Harappan Gallery states that the script was written from "left to right".

When contacted by Frontline in November 2000, Bisht accepted principal responsibility for the authorship of the panel, but insisted that the text he had submitted to the National Museum had been in conformity with the consensus that the script was written from "right to left". He had not, he conceded, seen the final version of the panel as it was put up in the Gallery, and did not rule out the possibility that a typographical error could have crept in after the text went out of his hands.

This plea was contested then by D.P. Sharma, Keeper in the National Museum, who collaborated with Bisht in putting up the Harappan Gallery (Frontline, November 24, 2000). Sharma indeed went public with his grievance over the excision of certain sections of his book on Harappa, done with the seeming intent of bringing it in conformity with the ideological slant of the HRD Ministry. Among the excised portions, he claimed, was one that upheld the scholarly consensus on the script.

The panel continues to be displayed at the Harappan Gallery, despite the violence it does to historical understanding. This points to political design rather than innocent typographical error as the determining factor. As various scholars have pointed out, the effort to read the Harappan script from left to right is a transparent effort to "force-fit" it into the mould of the subsequently evolved Sanskrit script. It is part of the Hindutva programme of drawing a direct line of descent between the Harappan and Vedic civilisations, akin to Rajaram's pathetic effort to engineer a horse image on a Harappan seal.

If Rajaram qualified by virtue of deceit and Bisht by virtue of his malleability, there have been few quarrels over the scholarly accomplishments of Bombay University art historian Devangana Desai, who also figures as one of the 12 new members of the ICHR. An active engagement with the Vishwa Hindu Parishad campaign on Ayodhya has earned Makhan Lal of the Institute of Archaeology, Delhi, nomination to the council. And a similar commitment has been evident in several of the six incumbent members who have been retained, notably B.B. Lal, K.S. Lal, Satish Mittal and Hari Om.

A political design is evident in not merely the new inclusions and the retained membership, but also in some of the omissions. A case in point is Delhi University historian Prithpal Bhatia, a principled dissenter against the ICHR's decision in February 2000 to withdraw two volumes of the "Towards Freedom" project when they were at an advanced stage of publication. Joshi had then argued that the decision was consistent with the outcome of deliberations at an ICHR meeting held in June 1999. He suffered the mortification of being publicly reminded by Bhatia that "Towards Freedom" had neither been listed on the agenda of the said meeting nor discussed. It did not help Joshi's cause that the statement Bhatia contradicted had been made during the course of a parliamentary debate, leaving him vulnerable to breach of privilege action.

In line with the clandestine and dishonourable procedure it has adopted in undermining the most comprehensive documentation yet attempted of the climactic years of India's freedom struggle, the ICHR recently appointed a three-member committee to review the two volumes that were withdrawn from publication in early-2000. This followed the failure of arbitration efforts between the council and its publisher, Oxford University Press. Neither of the editors of the two volumes concerned - K.N. Panikkar, Vice-Chancellor of the Sri Sankara University of Sanskrit, Kalady, Kerala, nor Sumit Sarkar of the Department of History, Delhi University - was consulted over this decision. The ICHR's official spokesperson, P.K.V. Kaimal, also declined to comment on the issue, pleading that he was not authorised to do so.

In early February, the editors of the two volumes sent their first official communication to the ICHR since the controversy over the "Towards Freedom" project erupted. The two volumes, said Panikkar and Sarkar, had been assembled after appropriate consultations within the editorial board of the project. They had also gone through the scrutiny of the General Editor of the project, the eminent historian S. Gopal. After they had run this entire gauntlet of scholarly peer review, there was no occasion for further appraisal of the volumes. Though legal action was not specifically threatened, there was sufficient indication that Panikkar and Sarkar would contemplate this option if the integrity of their work was impugned in any manner by the ICHR's newly initiated review. In its next phase, the battle against the Hindutva assault on scholarship could well shift to the legal arena.

The foreign threat in banking

columns

The clearance granted for a major expansion of foreign bank presence in India will hit priority sector lending overall, reduce the Reserve Bank of India's regulatory authority over banks and lead to a situation where the banking sector will be left vulnerable in the face of an economic shock.

INDIA'S banking sector is set to witness a major expansion of foreign bank presence. The clarification recently issued by the Reserve Bank of India (RBI) regarding the cap on foreign direct investment (FDI) in private and public sector banks, set now at 49 and 20 per cent respectively, finally makes clear the implications of a Cabinet decision taken in May last year. The ceiling on FDI applies to all forms of acquisition of shares (initial public offers or IPOs, private placements, American depository receipts and global depository receipts, and acquisitions from existing shareholders). The clarification also makes clear states that even foreign banks with a branch presence in India can make FDI investments in private and public sector banks subject to approval from the RBI. This provides the basis for an expansion of the reach of existing banks through equity-enabled tie-ups with Indian entities. With the mushrooming of private banks promoted by Indians in recent years and the more recent trend towards merger of these entities with larger strategic partners, the new clarification sets the stage for an expansion of foreign bank presence in India.

There remain two other hurdles. Though the regulations that were recently clarified ensure that the equity stake of foreign partners can rise to levels which allow for foreign control, interference by the foreign stakeholder will be tempered by the stipulation under the Banking Regulation Act, Section 12 (2), that in the case of private banks the maximum voting rights per shareholder will be 10 per cent of the total voting rights.

It will not be long before this provision is diluted: foreign and private sector banks are already lobbying with the RBI to have it changed. A senior official in a foreign bank is quoted as having said: "We should be given more leeway and majority shareholders must have a say in the management of the bank. The 10 per cent cap is interfering with our right to manage our affairs. This cap on voting rights should be increased, to be proportionate to the shareholding."

The other hurdle is the lower cap of 20 per cent share of FDI in equity in the case of public sector banks, which clearly dominate the banking business in India. Here again, the lower ceiling has been necessitated by the fact that diluting the government's shareholding to less than 33 per cent would require legislative changes. The lower cap appears to be a temporary measure pending such changes. Given the desperate desire of the Bharatiya Janata Party-led government to push ahead with neo-liberal reform in general and financial sector reform in particular, it can be expected soon to make an effort to institute the changes necessary to allow for foreign bank takeover of public sector banks as well.

ONCE these changes are instituted, a fundamental restructuring of the organisational basis of India's banking sector is inevitable. Foreign banks, which are permitted to bring in capital that can be accessed at extremely low costs abroad, have pockets deep enough to buy their way to dominance. With liberalisation there has been a significant increase in foreign bank interest in expanding operations to India. However, for a number of banks the prospect of setting up a wholly new operation, building goodwill and then establishing a permanent presence appeared to be too expensive a proposition relative to the prospect of developing a profitable business. The new option of testing the waters with a small acquisition in an existing private sector bank and then, as liberalisation proceeds further, garnering a controlling interest in the bank concerned if the operations warranted it, is a far better. Thus an increase in FDI flow to the banking sector is extremely likely.

In fact, a number of foreign banks have evinced interest in acquiring a stake in Indian banks. Bank Brussels Lambert, a subsidiary of the Dutch ING Group, has expressed its intent to take control of Vysya Bank. BBL currently holds a 20 per cent stake in Vysya Bank. The promoters of Global Trust Bank are believed to have approached ABN Amro Bank, to sell the more than 26 per cent stake held by them in the bank. Citibank and ABN Amro are reportedly negotiating for a stake in Bank of Punjab. And, Citibank, ABN Amro and HSBC have been eyeing a stake in Centurion Bank.

Developed country governments, especially the U.S. government, have backed this interest and have been pressuring the RBI to make clear the nature of the liberalised rules regarding foreign bank expansion. Interestingly, the RBI clarification on FDI in banks issued on February 16 came days after U.S. Treasury Secretary Kenneth Dam met with the RBI Governor and the head of Citibank's South Asia operations. According to reports, Dam, who was in Mumbai ostensibly to discuss money-laundering rules, had taken up the issue of opening up foreign investments in local banks.

THERE are a number of implications of such an expansion of foreign presence. To start with, even with the diluted regulation that is currently in place, it is clear that private banks in general and foreign banks in particular have been lax in meeting the regulatory norms. The takeover trend would result in a sharp reduction in the extent of regulation of banking sector operations by the RBI. The implications of this for the priority sectors, especially agriculture, can be quite damaging.

Thus, during 2001, one of the observed effects of financial sector reform was a shortfall in private sector banks' advances to the priority sectors, which stood at 38.7 per cent of the total as compared with the required 40 per cent. On the other hand, despite a marginal fall in public sector bank advances to these areas, its overall tally in terms of share of advances stood at 43 per cent. The sector most affected was agriculture, in whose case private bank lending amounted to just 9.6 per cent of net credit, which was far short of the stipulated 18 per cent.

Within the private sector, the foreign banks were the major defaulters. According to the Annual Report of the RBI, advances provided by foreign banks to the priority sector came down from 35 per cent as of March 2000 to 31 per cent during 2001. Here again, agriculture was the prime area of neglect. Foreign banks' performance in the matter of credit to small scale industries and export sectors was much better, with lending to these sectors accounting for 10 and 19 per cent, respectively, of the net bank credit against the sub-sectoral targets of 10 per cent and 12 per cent. Clearly, even to the extent that priority-sector lending targets had been met, the choice was in favour of the more cost effective and profitable sectors. Overall, 60.8 per cent of the priority sector lending by foreign banks was directed towards export credit.

Second, the expansion in foreign bank presence will subject public sector banks to unfair comparisons with regard to "profitability" and "efficiency", and this would force these banks to change their lending practices as well. Thus, though the overall performance of the public sector banks in terms of priority-sector lending was satisfactory during 2001, total agricultural advances of public sector banks as a share of net bank advances fell by 2.3 per cent to 15.7 per cent, as compared with the norm of 18 per cent. Yet, it must be said that advances to agriculture and small-scale sector units accounted for the bulk of the public sector banks' advances to the private sector.

The RBI reports that the aggregate outstanding priority sector advances of the public sector banks increased by Rs.18,739 crores (14 per cent) to Rs.1,46,546 crores during 2001. This would have affected public sector bank income, relative to the private sector in general and foreign banks in particular.

IN the net, public sector banks are less profitable than private banks. Public sector banks,that account for 79.5 per cent of total assets of all commercial banks, earn only 67.2 per cent of aggregate net profits, whereas the older private sector banks with 6.5 per cent of total assets earn 8.1 per cent of aggregate net profits, the new private sector banks with 6.1 per cent of assets obtain 10 per cent of aggregate net profits and foreign banks with just 7.9 per cent of total assets garner 14.7 per cent of aggregate net profits.

Among the factors that account for this differential in profitability, there are two that are important. One is that the operating expenses for a given volume of business tends to be higher with public sector banks. The other is that income generated out of a given volume of business tends to be lower in their case of the public sector banks. These are the two areas in which changes are being made as part of the effort of the public sector banks to "match up" the performance of private domestic and foreign banks. The expansion of foreign presence would only accelerate this tendency.

The effort of the public sector banks to trim operating expenses has taken many forms. They are seeking to reduce the wage bill by reducing employment through the twin mechanisms of retrenchment under the voluntary retirement scheme and simultaneous computerisation. They are also seeking to reduce costs by limiting branch expansion and even reducing the number of branches. The full implications of the former for organised sector employment are yet to be gauged. The latter, which affects the rural areas first, reduces access to credit in such areas that were well-served by the post-nationalisation branch expansion drive, and worsens the tendency towards reduced provision of credit to the agricultural sector.

While this is occurring, public sector banks are working to increase income generated from a given volume of business. This not only leads to reduced interest in priority sector lending but also encourages diversification to more risky high-profit lending as well as to investments that yield incomes other than interest income. One form of high-profit lending is lending to stock market players, in the form of credit for share purchases and guarantees to brokers. And the principal form of investments that yield non-interest income is investment in shares. Recent experience, such as the stock market collapse in the wake of the Ketan Parekh affair, point to the dangers inherent in such diversification, which increases bank fragility substantially. This increase in fragility is all the more disturbing since it occurs in a context where mergers and acquisitions involving foreign and Indian banks are resulting in consolidation and increasing the size of entities that could be adversely affected.

Thus, the RBI's eagerness to rush through with reform of a kind that reduces its own regulatory authority and power can find India's banking sector displaying weaknesses of a kind that, in the face of any economic shock, can destabilise the system.

Shades of vendetta

HAROON HABIB in Dhaka world-affairs

Bangladesh Prime Minister Khaleda Zia's current term in office is marked by episodes of indiscriminate violence against the political opposition and the country's religious minority.

AN assessment of the first four months of the Bangladesh Nationalist Party (BNP)-led government in Dhaka would show that the current tenure of Prime Minister Khaleda Zia is significantly different from her first one during the period 1991-96. But then, unlike her first term, Khaleda Zia now leads a coalition government. It is her third stint as Prime Minister, although her second term lasted only a few weeks as she had to resign in the face of a popular agitation in March 1996 spearheaded by Awami League leader Sheikh Hasina.

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Although they are not represented in the Cabinet, the four-party alliance includes most of Bangladesh's fundamentalist religious organisations that follow the Taliban model of functioning. One of them is the Jamaat-e-Islami, which had fought hand in hand with Pakistani troops against the freedom fighters in 1971.

The coalition, which took power following its stunning victory in the October 1, 2001 election by winning a two-thirds majority in Parliament, has taken a direction that is different from that of any other past government in the country. It inherited the poor law and order situation that prevailed under the controversial 87-day tenure of a caretaker government. In the recent past, Bangladesh has witnessed widespread political persecution, torture, rape, looting and other forms of barbarity inflicted by the victorious political forces, especially after the elections. The alliance's activists were allegedly responsible for attacks on leaders and workers of the Awami League and also members of the the minority Hindu community, whom they consider their opponent's natural allies. The intimidation of and attacks against the religious minority and the destruction or desecration of its places of worship were of the largest scale since 1971, the year of independence.

The violence has cast a shadow over the country's nascent democratic culture and the people's right for franchise, for which purpose the Constitution was amended to facilitate free, fair and impartial elections under a caretaker authority. After the latest round of elections, the demand to make the nominated caretaker government accountable for its omissions and commissions has become forceful.

Except for its hostility towards the fallen autocrat of a President Lt.Gen. H.M. Ershad and his Jatiya Party, the first government of Khaleda Zia was seen as one that was generally tolerant to the Opposition. But this time it has shown considerable aggression on all fronts. The large-scale arrest of Opposition activists under Section 54 of the Criminal Procedure Code, without filing specific charges, the arrest of journalist-writer Shahriar Kabir, harsh treatment by the police of even senior Awami League leaders and former Ministers during agitations, and the unofficial ban on processions in Dhaka and elsewhere have reflected the government's position vis-a-vis the Opposition. Khaleda Zia has been harsh with Sheikh Hasina too; the former Prime Minister's special security has been withdrawn and she has been denied Ansar (para-police) protection.

The Awami League, which is yet to recover from its election defeat, has limited its protest to statements criticising the "autocratic attitude" and "indiscriminate arrests". The 11-party Left alliance also seems equally concerned about the "undemocratic behaviour" of the government but it is more interested in becoming the "third alternative force" than building a broad Opposition alliance. Gen. Ershad, who returned home on February 15 after a four-month-long self-exile abroad, seems to be toeing the government's line. The BNP-Jamaat understanding appears to be working well. In fact, the Jamaat feels that distancing itself from the BNP at this moment of global onslaught against "religious terrorism" might jeopardise its very existence.

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SOON after the election victory, student activists owing allegiance to parties of the ruling coalition occupied the dormitories of Dhaka University after driving out student supporters of the Awami League. They also forcibly occupied trade union offices. Elected Vice-Chancellors of universities were replaced by government supporters. The removal of the elected committee of the Bangladesh Football Federation (BFF) earned the country on January 10 a FIFA-imposed suspension from all international games. The government had to revive the elected body, which was headed by an Opposition supporter.

In the second half of its tenure, the Awami League faced serious charges of terrorism sponsored by some of its mid-ranking leaders and their family members. Deterioration of law and order, particularly in the cities, was another major point of criticism against it. The guns of public criticism have now been directed against the new government. The collection of tolls at bazaars, bus terminals and so on allegedly by government supporters is rampant; there has been an alarming rise in major crime, including murder and kidnapping. Prices of most essential commodities including rice have risen.

Thousands of Opposition supporters have reportedly left their homes out of fear. The independent newspaper Daily Star reported on February 15: "A capacity crowd of the auditorium of Engineers' Institution (in Dhaka) plunged into silence as some victims of mainly post-election violence started telling their sordid tales of torture at the opening of a two-day convention on 'Crime against humanity'." The daily further said that shocked by the barbarity that thousands of people including Hindus were subjected to in post-election outbreaks of violence, many people in the audience wiped their tears. The dais resembled a hospital ward, with wounded people lying on stretchers or sitting on chairs, holding crutches. With their hands or legs broken, eyes gouged, or bearing other signs of brutality all over the body, the victims demanded justice.

"Pro-liberation" politicians and secular democrats have expressed concern at what they see as the growing "anti-liberation" attitude of the new administration. In the past four months, the government retired 61 senior civil and police officials, causing panic in the civil administration and the Police Department. Besides making hundreds of high-ranking officials Officers on Special Duty or OSDs, the government has served notice on 185 senior officers, accusing them of taking part in political activities in favour of the Awami League. A large number of government contracts have been terminated and fresh contracts granted to party workers. The government has also decided to reduce the maximum number of years of service from 25 to 20 in order to facilitate another purge in the bureaucracy.

Significantly, the officials who have been acted against were all connected with the country's Liberation War or belong to families connected with secular politics. A host of independent intellectuals and leaders of civil society believe that the secular national identity, precisely the "spirit of liberation", has become a casualty in the hands of the new government. The case relating to the assassination of the Father of the Nation, Sheikh Mujibur Rahman, has been sent to cold storage as the Appellate Division of the Supreme Court failed to conduct the hearing in the last five months because the government did not appoint a judge. The prospects of the historic jail killing case - in which four leaders of the independence movement were killed inside the Dhaka Central Jail in 1975 - have also become clouded as most of the accused, who were charge-sheeted, secured bail recently.

The new government is also seen to be allergic to the name of Mujibur Rahman, though the slain leader's portraits still adorn government and semi-government offices. The government has decided to hang the portraits of the slain President, Gen. Ziaur Rahman, along with those of Mujib in government offices. (Gen. Ziaur Rahman was the husband of Khaleda Zia, and also her party's founder.) The holidays marking Mujib's birth and death anniversaries have been cancelled. A Bangladesh Navy frigate named after Mujib has been decommissioned in order to change its name, while the Non Aligned Movement International Conference Centre, built with Chinese assistance, was renamed because it was named after the hero of the Liberation War. Ten-taka currency notes with Mujib's portrait have been withdrawn from circulation.

The government is planning to rewrite the history of the Liberation War by portraying the Prime Minister's husband, who was an officer in the Pakistan Army in 1971, as its leader. Major Ziaur Rahman had read out the "Declaration of Independence" on behalf of Mujibur Rahman, who was then in the Pakistan Army's custody, from a radio station on March 27, 1971 (even though Bangladesh celebrates March 26 as Independence Day because the first announcement was made by senior Awami League leader Abdul Hannan from the Chittagong radio station on that day). Independent observers consider the move a wilful distortion of history and an attempt to negate the long political and cultural movements of the Bengali people against Pakistani colonial rule.

THE general elections were held against the backdrop of the September 11 terrorist attack in the United States and the "war against terrorism" in Afghanistan. The victorious combine has so far not made the U.S. unhappy. However, it is yet to be seen when the "moderates" (as Washington sees them) will turn into "fundamentalists".

In January, Khaleda Zia completed her first 100-day "action plan" in which she had declared a jehad against "terrorism and corruption". While 100 days is too short a period to assess achievements in the realm of the economy, her jehad ironically suffered a serious jolt when she had to ban the BNP's student wing, the Jatiyabadi Chhatra Dal (JCD), and arrest its president Nasiruddin Pintu, a Member of Parliament, along with several other party members on charges of terrorism and corruption.

Surprisingly, the Khaleda Zia government has so far distanced itself from its traditional anti-India rhetoric. As far as India-Bangladesh issues are concerned, New Delhi seems hopeful that it can settle most of them. An agreement on gas supply and transit is of major concern to India. Although New Delhi is yet to say state officially, the recent allegations by the Chief Ministers of West Bengal and Tripura about the presence on Bangladesh territory of agents of the Inter-Services Intelligence (ISI) of Pakistan and camps of northeastern insurgents, are matters of concern to India. The February 18 Foreign Secretary-level meeting in New Delhi may indicate how things will move in future.

Human rights and human development

other

The integration of human rights and human development policies can result in significant improvements in human society, facilitating the dignity, well-being and freedom of the individual. An analysis in the Indian context.

C. RAJ KUMAR

DRAWING on Amartya Sen's work on democracy and development in general and his research on famines in particular, it may be argued that there is no such question of fulfilling some preconditions before a nation or a people becomes ready for human rights. On the contrary, it is through the institutionalisation of human rights and democracy that individuals become fit and worthy and possess dignity in human development terms. It is the opportunity for the exercise of democratic rights itself that gives training for democratic claims for development of all. Sen summarises the case for human rights from a development perspective in three aspects: "1. Their intrinsic importance, 2. Their consequential role in providing political incentives for economic security, and 3. Their constructive role in the genesis of values and priorities." Human rights, in other words, have intrinsic as well as instrumental value: without freedom, there is no development, and with freedom, development as a process of uplifting personal well-being is enhanced (Fortman, 2000). Alternatively, it may be argued that the "path of human development through the assistance of human rights" confronts all struggles and competing claims that arise because of this new integration (Majumdar, 2000). But this integration needs to be supplemented with policy changes at all levels of decision-making in the government for it to be effective.

The integration of human rights and human development policies rests upon an examination of the similarities and differences between these two conceptions (Amartya Sen, Human Development Report 2000, UNDP). They are ideologically close enough to derive motivation and concern for each other, promoting compatibility and mutual understanding. From an enforcement strategy standpoint, they are different enough to be able to supplement each other. Thus, an integral approach of these two conceptions can result in significant improvements in human society, thereby facilitating in numerous ways the advancement of dignity, well-being and freedom of individuals in general. An adequate conception of human development cannot ignore the importance of political liberties and democratic freedoms.

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It remains to be seen how far the role of integration of human rights and human development policies has been performed by the Indian judiciary and whether its assertions of these rights and principles constitute enforceable policies for governance administration. Another important analysis may be with reference to an observation of how these principles, which could be transformed into enforceable rights, are perceived by the government and what its position is with regard to their actual implementation. This analysis would lead us to the inquiry of whether or not the judiciary's role in promoting Directive Principles of State Policy as fundamental human rights has resulted in Parliament making amendments to the Constitution, thus giving constitutional legitimacy to judgments and solidifying the rights-development combination. Further, the rights-based approach to development requires both capacity-building within existing institutions of governance and providing support to the protection and promotion of human rights through the creation of human rights mechanisms and organisations.

The Declaration on the Right to Development (U.N. General Assembly Resolution 41/128, 1986), which stated unequivocally that the right to development is a human right, was adopted by the U.N. in 1986 by an overwhelming majority, with the U.S. casting the single dissenting vote. The first Article of the text of the Declaration on the Right to Development lucidly delineates the concept of the right to development. It states: "The right to development is an inalienable human right by virtue of which every human person and all peoples are entitled to participate in, contribute to, and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realised." The Declaration on the Right to Development is a world consensus document that emerged after a series of negotiations amongst the nation-states on what would constitute its provisions. The four main propositions of the Declaration are: a. The right to development is a human right; b. The human right to development is a right to a particular process of development in which all human rights and fundamental freedoms can be fully realised - which means that it combines all the rights enshrined in both the covenants and each of the rights has to be exercised with freedom; c. The meaning of exercising these rights consistently with freedom implies free, effective and full participation of all the individuals concerned in decision-making and the implementation of the process. Therefore, the process must be transparent and accountable, individuals must have equal opportunity of access to the resources for development and receive fair distribution of the benefits of development (and income); and finally, d. The right confers unequivocal obligation on duty-holders - individuals in the community, states at the national level, and states at the international level. Nation-states have the responsibility to help realise the process of development through appropriate development policies. Other states and international agencies have the obligation to cooperate with the national states to facilitate the realisation of the process of development (Sengupta, 2001).

The U.N. Declaration that was adopted in 1986 by the General Assembly has a lot of similarities, in terms of both text and interpretation, to Part III of the Indian Constitution, the Directive Principles of State Policy, which came into force in 1948. Some examples of these similarities may be: Article 1 of the Declaration speaks of "economic, social, cultural and political development" from a human rights perspective, while Article 38(1) of the Constitution speaks of creating a social order in which justice, "social, economic and political", shall inform all the institutions of national life. Article 2(3) of the Declaration speaks of people's "active, free and meaningful participation in development" and "fair distribution of the benefits", while Article 39(a) of the Constitution speaks of ownership and control of the material resources of the community to be "distributed as best to subserve the common good" and Article 39(c) speaks of the economic system not resulting in the "concentration of wealth and means of production to the common detriment". Articles 3(2) and 4(2) of the Declaration speaks of "full respect for the principles of international law concerning friendly relations and cooperation among states" and the need for "effective international cooperation with appropriate means and facilities to foster nations' comprehensive development" respectively, while, Article 51 of the Constitution speaks of the state endeavouring to "a. Promote international peace and security; b. Maintain just and honourable relations between nations; c. Foster respect for international law and treaty obligations in the dealings of organised people with one another". It is important for the Government of India, which includes the legislature, the executive and the judiciary, to understand the need to read, interpret and integrate the human rights and human development policies on the one hand and the Directive Principles of State Policy on the other to the United Nations Declaration on the Right to Development.

What is noteworthy is the fact that in some respects, the Directive Principles of State Policy go beyond the Declaration on the Right to Development, and hence it is all the more important for Indian governance administrators to take cognisance of these provisions and work towards their realisation. For example are provisions such as Article 39A (equal justice and free legal aid), Article 40 (organisation of village panchayats), Article 41 (right to work, to education and to public assistance in certain cases), Article 42 (provision for just and humane conditions of work and maternity relief), Article 43 (living wage, etc., for workers), Article 43A (participation of workers in management of industries), Article 45 (provision for free and compulsory education for children), Article 46 (promotion of educational and economic interests of Scheduled Castes and Scheduled Tribes and other weaker sections), Article 47 (duty of the state to raise the level of nutrition and the standard of living and to improve public health), Article 48 (organisation of agriculture and animal husbandry), and Article 48A (protection and improvement of environment and safeguarding of forests and wildlife).

THERE are always indicators of economic growth and social development on the basis of which governance administration is measured. Typically, these may be economic indicators of growth, which may include certain human development variables such as the level of education or the participation of women in development. On the whole, notwithstanding efforts to include human, social and political indicators of development, they have so far not been successful in finding a place of influence beside the powerful index of Gross National Product/Gross Domestic Product (GNP/GDP). One important purpose of the inclusion of human rights and human development in an integrated approach would be to dislodge the monopolistic hold of GNP/GDP on our minds. It has been argued that poverty can be removed at quite low-income levels, and that high average incomes are no guarantee against widespread misery (Streeten, 2000). Thus, research in this area by conjoining the "language of rights" to governance measurement indicators can result in a paradigm shift of both the social and institutional approach to development. To have a particular right is to have a claim on other people or institutions that they should help, assist or collaborate to ensure access to freedom. This insistence on rights and corresponding duties takes the governance debate beyond the idea of human development and links the human development approach to the concept that others have duties to facilitate and enhance development. Further, with the involvement of duties come a host of other concerns, such as accountability, culpability and responsibility.

The following are some of the indicators of governance administration in India, which will have a significant impact on the integration of human rights and human development policies: the right to food, education, health, shelter, environment and livelihood; rights of women, minorities, tribal people, children, aged, manual scavengers and the disabled and so on; the right to good governance; the right against corruption-free administration; and even the right to information. The Supreme Court and other courts have recognised that education, health, livelihood and environment have been declared as coming under the right to life under Article 21 of the Constitution. Of course, the problem of access to these rights and meaningful exercise of them needs to be examined and strategies have to be devised for their implementation. In pursuing a human rights-based approach to development, additional indicators that stress on participation, empowerment, transparency, accountability and democracy are required to measure the levels of enjoyment of human rights. These indicators, when couched in the language of rights, can be a vital tool in initiating reforms in governance and also in impressing upon the government that the task of implementing these reforms is no longer purely an administrative task but one which is a legal obligation and a duty of the government. Further, it may be argued that non-implementation of such duties may result even in sanctions under appropriate circumstances. Some of the needed creative indicators are those of access to justice, right to survival, right to development, and participative governance, including representation.

(Concluded)

C. Raj Kumar, a Visiting Researcher at the New York University School of Law, New York, was a Rhodes Scholar at the University of Oxford and a Gammon Fellow at the Harvard Law School.

The skeletons from the scam

The JPC report on the stock market scandal of 2001 would constitute the basis for a comprehensive clean-up of the financial system to shore up public confidence in it.

AFTER many months of low-key progress, the inquiries of the Joint Parliamentary Committee into last year's stock market scandal have begun to gain momentum. There are now realistic expectations that a report may be ready before the Budget session of Parliament runs its course, allowing a discussion to be scheduled along with the wider debate on economic policy and regulation that will follow the presentation of the Union Budget.

The JPC's main deliberations are centred around a series of voluminous reports that have been submitted by the statutory regulatory authority for the stock markets, the Securities and Exchange Board of India (SEBI). Though SEBI was itself found wanting in the enforcement of its authority over the years in which scam was brewing, it is keen now to retrieve credibility with both the investing public and Parliament. Its reports constitute a microscopic examination of the many dubious transactions that culminated in the short-lived bull run in the markets after last year's Union Budget was presented.

Though the Budget in itself provided a rather scant basis for a broad-based investment fervour, a small cartel of operators sought to utilise the momentary euphoria it had engendered to drive up prices and liquidate the long exposures they had taken. It was a self-defeating exercise since a rival cartel of bear operators knew from prolonged observation of the markets just where the vulnerabilities of the bulls lay. Shrewd short-selling in the expectation of profits to be made on the downside of the markets rapidly pushed prices down.

But the bulls had by then gone too far out on a limb. In a climactic contest between bulls and bears, stock markets nationwide plunged into an acute payments crisis, necessitating their closure for an extended period. They have remained subdued since reopening, manifesting a gradual and long-term drift downwards as bad news has piled up, not least from the financial results of companies whose infinite prospects seemed until last year to be the pivot around which the promise of the "New Economy" would be built.

The reigning narrative on the scam is that the bear operators were the villains of the piece. An assiduous effort to foster this public impression is evident in the sequence of official actions and the targeting of Shankar Sharma, chief of First Global Stock Broking and a key figure in the bear cartel. There is a certain symmetry here, as also a contrast, with the 1992 episode, when the bull operations spearheaded by Harshad Mehta, since deceased, were identified as the source of the evil and all the ignominy of rigging the markets was heaped on him. Now, as then, this remains an incomplete picture, and not just for the reason that the victimisation of Shankar Sharma has been read, with some accuracy, as payback for his shareholding in tehelka.com, the Internet news magazine that exposed in March 2000 certain scandalous trends in the matter of defence procurement.

The official narrative fails to carry credibility for the simple reason that there were two parties playing the price-rigging game. And the bear cartel came into the game rather late, when it became evident that the bulls had exposed themselves rather indiscreetly by a sequence of long investments that could not possibly earn them the speculative rewards sought.

The bull operation evidently served an ideological function. Since 1998, the information technology (IT) sector has been designated as the advance guard of a new phase of growth in the Indian economy that would reduce the old fundamentals to irrelevance, propelling the country into the frontier regions of the "New Economy". Aggressive buying by bull operators in certain scrips was expected to pay back through the sheer power of the self-fulfilling prophecy. But the limits of speculative excess had clearly been reached by March last year. Desperate for a bailout, the bull operators contacted the Unit Trust of India (UTI), the country's largest mutual fund. Seeming since long to have forgotten the burdens and obligations of its trusteeship function for public savings, the UTI was easily drafted into this role.

The crisis that has beset the UTI since the stock market crash last year is also part of the JPC's terms of reference. And in pursuing this inquiry, the JPC has the findings of the three-member committee that was set up last year by the Finance Ministry (the S.S. Tarapore Committee) to serve as preliminary guide-posts. The evidence gathered by the Tarapore Committee, though incomplete, offers a telling commentary on the manner in which the stock markets were manipulated in the service of the pecuniary advantage of a few and the larger ideological agenda of an economic reforms process that was running rapidly aground.

In March 2001, the top management of the UTI received from a broker cartel in the Calcutta Stock Exchange (CSE) an offer of a number of shares in two "New Economy" firms - Himachal Futuristic Communications Ltd (HFCL) and DSQ Software Ltd - at specified prices. Both the offers were discounted against the prevalent prices then and the UTI seemingly did not pause to examine the fundamentals of the companies involved. A little deliberation would have served it well.

Since a brief spell of public notoriety after being implicated in a collusive bid for telecom licences in the mid-1990s, when the tainted Himachal Pradesh politician Sukh Ram held the Communications portfolio, HFCL had sunk into obscurity. It re-emerged rather mysteriously in 1999 as a star performer on the bourses. DSQ Software had similarly ridden the euphoria for IT scrips into a wholly inflated valuation of its share price on the market.

In March 2000, the DSQ share was trading at over Rs.2,600 in the Bombay Stock Exchange (BSE). By October that year, it had fallen to Rs.307. HFCL, according to the SEBI report, showed a roughly similar share price trajectory. Both scrips registered a minor recovery subsequently, but when the UTI picked up large volumes of these shares in March last year, on the basis of a telephonic understanding with CSE operators, they were rapidly plunging in value. A 10 per cent discount was offered by the CSE operators, but the UTI's sense of accomplishment in obtaining this bargain must surely have been short-lived, since the following day values fell by 16 per cent and more. Today, the scrips of both HFCL and DSQ are worth next to nothing. And it would strain credulity to argue that the UTI could have gone through these transactions without collusive intent.

Behind the whole ignominious episode in the stock markets looms the figure of the Mumbai-based broker Ketan Parekh and an operation that was under way for at least two years prior to the final reckoning. Parekh controlled no fewer than 23 "entities" which operated in the markets, buying and selling shares in a bewildering maze of transactions. This conscious design of complexity succeeded for long in hiding the nexus between the sources from where Parekh was obtaining his funds - corporate houses and banks - and their ultimate destination in speculative ramping up of share prices.

SEBI has laid out a catalogue of the corporate entities that transferred large sums of money to Parekh to play the markets. Apart from DSQ and HFCL, the list includes all the entities whose shares attracted Parekh's speculative attention - the Essel group which controls the television broadcaster Zee, the software group Satyam, drug manufacturers Cadilla and Ranbaxy, and a few others. Parekh of course also tapped a rich vein of finance by inducing Global Trust Bank to sanction overdrafts well in excess of both its and his means. And the trail of fraudulent paper generated by the Madhavpura Mercantile Cooperative Bank (MMCB), with the intent of lubricating Parekh's speculative forays, ended in the collapse of the bank and the financial ruin of its numerous depositors.

The Essel group began transferring large volumes of funds to Parekh when the scrips of its companies, notably its flagship enterprise Zee Telefilms Ltd (ZTL), began gently to subside from the stratospheric heights they had touched in early 2000. According to the testimony received from the Essel group management, a specific undertaking was obtained from Parekh that the funds would not be used for investments in the listed companies belonging to the group. But SEBI has also been informed that the Essel management is aware that Parekh used funds provided him for certain "unauthorised" investments.

Between October 1999 and March 2001, when the ZTL share went through the cycle of boom and bust, Triumph Securities, a company owned by Parekh, accounted for over 18 per cent of the purchases of this scrip on the BSE. On the CSE, Parekh was a significant contributor to the purchases of ZTL shares by two big brokerage houses - the Singhania and Poddar groups. Both the big Kolkata brokers have now been declared defaulters, in part because they made extravagant purchases of these scrips at prices that the market could not be driven up to, even with all their access to corporate funds and bank deposits.

SEBI has made the observation that the large-scale transfer of funds to Parekh began when the shares of the corporate entities concerned were generally on a downward trend. But the derivative argument that the funds were not directly used to prime share values for the companies concerned may not quite stand scrutiny. It may be more credible in the estimation of some JPC members to believe that the funds were transferred with the intent of bolstering prices on the stock markets, so that the companies concerned could complete an ambitious sequence of planned mergers and acquisitions.

SEBI's findings on Cyberspace Infosys, which managed to ride the rollercoaster of a bull run without Parekh's benediction, constitute a telling narrative. Begun in obscure circumstances as a leasing and finance company, Cyberspace acquired its current identity in 1998 with a shrewd eye on the main chance that the hyperbole over IT offered. It claimed to have technical arrangements and tie-ups with Microsoft, Oracle and Lotus, leaving few enterprises from the global high-technology pantheon outside its gaze. It began 1999 with a modest quotation of Rs.38 on the BSE and showed little promise as the year wore on. In September, however, it began a dizzying ascent, touching by mid-March 2000 a quotation of Rs.1,300 on the BSE. The rapid descent began shortly afterwards. Cyberspace closed the year 2000 quoting at just over Rs.140. After the bull run of March 2001 had ended, it was down to the rather pathetic level of Rs.11.

The rise and fall of Cyberspace is a saga that directly implicates the UTI, which began large purchases of the share in September 1999 and continued doing so until March the following year. SEBI has seemingly sought to exculpate the UTI management by arguing that purchases of Cyberspace rarely triggered the circuit breakers that serve to stop trading in a share when prices ascend or descend too sharply on a given day. But this overlooks the simple fact that the circuit-breaker is a short-term remedy used to check speculative excesses on particular days. It has little efficacy in curbing a sustained speculative run on a scrip, as with the UTI's purchases of Cyberspace. And rather revealingly the SEBI report has observed that of the UTI's purchases of this scrip, over 34 per cent were transacted with entities directly associated with some members of the Johri family, the promoters of Cyberspace who are now fugitives from justice.

THE government is today engaged in a desperate holding operation to stem the rapid depletion of public trust in the UTI. Apart from the substantial financial outlays that will be required, which could run to over Rs.6,000 crores, the government also faces a yawning credibility gap.

In July last year, the UTI suspended repurchases in its pivotal US-64 scheme. Over the preceding May, the fund had faced redemptions of an unprecedented magnitude in this scheme, five times higher than in April. This was considered unusual and suggestive of a breach of confidentiality that benefited chosen corporate investors and individuals.

The Tarapore Committee has glossed over this matter with an anodyne argument: since the BSE indices were also falling, it is more than likely that a well-informed investor would have known that US-64 would also run into choppy waters, prompting a flight out of the scheme. Far from suggesting any breach of confidentiality, the committee has argued that this only points to the inherent advantage that nimble-footed investors have over others. But given the current state of knowledge about the UTI's dubious dealings, the burden of proof clearly stands reversed. A more convincing explanation would have to be found for the large-scale redemptions that occurred in May last year, to discharge which the UTI had to contract large commercial loans.

The stakes involved in the US-64 clean-up were aptly summed up by the Deepak Parekh Committee which went into the UTI's travails in a less turbulent time. "With over two crore unit holders," it observed, "public confidence in US-64 is a virtual proxy of public confidence in the Indian financial system." The Tarapore Committee has chosen to reiterate this finding, while refusing to venture into contentious terrain which could lead directly to evidence of malfeasance. The JPC presumably cannot afford that luxury, since its findings would constitute the basis for a comprehensive clean-up on which the financial security of those crores of investors depends.

A business model of the times

The Enron bubble was a prime example of the dominance of speculative finance in business.

MORE than two months after Enron, the seventh biggest corporation in the United States, filed for bankruptcy, the stench of scandal refuses to die. Shocking revelations about the company's modus operandi continue to pour in. Public and media attention was initially focussed on the company's close ties with the political establishment and the policy-making bureaucracy. However, more details of Enron's "business model", so successful until it crashed dramatically after October 2001, indicate that the Enron bubble was just an example of the manner in which speculative finance dominates business.

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In 1985, Enron started as a pipeline company selling gas. The deregulation of the energy and electricity markets, particularly since the 1990s, for which Enron was a leading campaigner, played a major role in determining its business model, which endeared it to Wall Street for more than a decade. The new opportunities that came its way after deregulation, particularly the ambiguously defined energy-trading rules, gave Enron a head start over others. Enron increasingly became an energy broker, selling electricity and later, other commodities.

However, Enron went beyond merely bringing together buyers and sellers - which is what brokers do. Enron's innovative spirit, for which it was recognised by Fortune magazine as the "most innovative" corporation in the U.S. for six years running, was in evidence early. Normally the broker's brief is to arrange a contract between buyers and sellers for a commission on the contracted price. Enron went a step further. It entered into separate contracts with both buyers and sellers in a contract, making a profit on the difference between the two quotes. The general lack of federal controls and monitoring of energy trading enabled Enron to keep its books shut. Of the three sides involved in energy-trading contracts, only Enron knew both sets of prices.

Over time, Enron began to design more complex contracts - essentially derivatives purportedly aimed at hedging risks arising out of uncertainties in interest rates or currency fluctuations. Often, more complex forms were aimed at hedging uncertainties about the weather or even a customer's ability to settle a contract. Since Enron's collapse, former employees have revealed that the company employed a battalion of doctorates in mathematics, physics and economics to manage these complex contracts. Wall Street analysts, wiser after the collapse, have been saying that the company was essentially betting on a mass scale. Between 1996 and 2000, Enron's sales increased from $13.3 billion to $100.8 billion. These were far above revenues generated by other large American companies such as Microsoft, General Electric or Exxon Mobil.

Enron was described by an analyst as "a giant hedge fund sitting on top of a pipeline". While its revenues were boosted through innovative accounting practices, its operating margins were rather thin - about 5 per cent in 2000 and 2 per cent in 2001. Its return on capital in 2001 was just 7 per cent - rather low in the highly risky business of hedging.

Consequently, while revenues were successfully inflated by ingenious accounting devices, Enron's profitability was never as high. Wall Street analysts, tuned to the more short-term figures on revenues and share prices, rarely questioned Enron's practices.

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Two things were needed to keep the show going. One, investor confidence had to be maintained so that Enron, the organiser of the betting system, was perceived as having pockets deep enough to sustain it. Enron's partnerships played a crucial role in maintaining the myth of the company's invincibility. Debts had to be kept off its balance-sheet because that would have lowered its credit rating, affected the market's (read Wall Street analysts) perception of the company's profitability and lowered its credibility as the main broker in the energy-trading business.

In the aftermath of the collapse, there have been suggestions that a few directors - notably the company's chief financial officer, Andrew S. Fastow - had mishandled the partnerships to siphon off funds to their own accounts. However, it is clear that the more than 3,000 partnerships, more than 800 of which were in tax havens like the Cayman Islands, played a far more purposeful role in Enron's business model.

The other aspect attributed to Enron's business style - and one in which the company's deep connections with both sides of the political divide in the U.S. played a crucial role - was the regulatory framework which governed its operations. At the heart of this arrangement was the utterly opaque nature of the business. There was no transparency in the energy-trading business. Buyers and sellers were prevented from having any idea of the quotes in the market. This enabled Enron the market-maker to gain privileged information at the cost of other participants in transactions in energy-trading contracts.

As its services became more complex and its stock soared, Enron created a network of partnerships that allowed its managers to shift debt off its books. In doing this it functioned like a bank, promising to deliver energy contracts, much the same way banks promise to make customers' deposits available to them on demand. Crucially, however, unlike bank deposits these contracts were not insured by federal agencies. Banks need to have cash in hand so that they can meet the demands of depositors. In Enron's case, this was achieved by the massive mobilisation of debt through its network of subsidiaries and partnerships, while keeping them off Enron's own balance-sheet. Although partnerships and subsidiaries are not uncommon devices among corporate entities, Enron did not maintain an arm's length with its partnerships. In fact, it used these partnerships to raise debt and then backed these debts by issuing its own stock. In several cases, it backed such debts by promising to issue its stocks in value terms rather than in terms of numbers of shares, which would have been the norm.

In one case, which Sherron Watkins, Enron's vice-president, referred to in her memo to Enron's former chief executive officer Kenneth Lay in August 2001, Enron guaranteed its own stock worth $1.2 billion to back debts of its partner, which in turn was connected to other partnerships with which Enron dealt. These partnerships commenced in 1997. Recent revelations indicate that Lay was very much aware of the nature and extent to which Enron was mired in them with adverse consequences for its own employees and shareholders. However, instead of promising to issue a fixed number of shares, which would have been the rational means to back such partnerships, Enron promised to issue $1.2 billion worth of stock, irrespective of the market price of the share when it would have to meet its guarantee.

For a company that was acclaimed as the past master in the art of hedging risks, this was not mere indiscretion but part of a deliberate strategy. In return for Enron's commitment, the partner gave Enron $1.2 billion in promissory notes. Enron paraded this on its balance-sheet as an asset - managing to increase its net worth by that much. When this unravelled, Enron was forced to revise its financial statements for the preceding four years. In effect, Enron took upon itself an astonishing array of risks in order to protect its partner entities. While it is tempting to view such arrangements as mere favours extended to top officials, it is clear that the partnerships played a far more important role. They were a key cog which kept Enron's wheel of fortune spinning.

Watkins, who testified before a congressional sub-committee on February 14, said that the partnerships were designed to boost Enron's cash flow and possibly to mislead Wall street as well that all was fine. Enron's backing of its partnerships' debts by issuing its own high-value stock meant that its own shareholders (among them thousands of its own employees with most of their savings) were paying for gains made by the owners of these partnerships, some of which were tied to top Enron employees. Among those who gained millions of dollars from this incestuous arrangement was Fastow.

Enron's business model was built on the quicksand of speculation where appearances were more important than reality. The conjuring of this bubble required that Wall Street be pleased. One of the surprising facts of the Enron saga is that it never failed Wall Street's expectations with regard to projections of earnings and profits. It is not a coincidence that Enron's rise and fall mirrored the longest bull run in American history. Robert J. Shiller, Professor at Yale and author of Irrational Exuberance, outlined the anatomy of speculative finance and the mechanisms that inflate the bubble of speculation (Frontline, November 25, 2000).

Shiller's analysis of the financial markets points to an insidious network of speculation. There are the stock market analysts who also double up as representatives of investment banks. Enron was after all a company whose stock kept soaring. The company kept issuing stock to take advantage of the boom in the market. For the investment banks, therefore, Enron was a big and important client. Arthur Anderson, Enron's auditor, now deeply mired in the scandal amid tales of shredded documents and indifferent auditing, was also Enron's consultant. In fact, Anderson made as much money from consulting for Enron as from auditing its books.

The credit rating agencies, whose primary task was to evaluate companies' debt status and their ability to repay them, either ignored the unique and completely illegal mode of debt-raising that Enron resorted to, or were clueless about its ramifications. Months before Enron's collapse, two agencies, Fitch and Standard and Poor, continued to rate Enron triple-B plus. Even Moody's, the agency which was the first to reduce it to junk bond status, which triggered the final collapse, had continued to rate Enron bonds high until then. The rating agencies even failed to factor Enron's announcement in October 2001 that it was reducing the company's net worth by $1.2 billion. The banks that extended credit to Enron's partnerships also helped maintain the fiction that sustained the Enron bubble.

The Enron collapse is not a mere corporate failure. Thousands of employees have lost their savings. But the damage is far wider. After all, 64 per cent of Enron stock is owned by institutional investors, many of them pension and mutual funds in which ordinary Americans have parked their savings. In less than six months the company's net worth has almost halved - from $70 billion to about $35 billion. Looking at Enron as a mere scandal in which gains and losses were merely confined to the wealthy and powerful is the surest way not to learn the lessons from the biggest collapse in American corporate history.

In Enron's wake

other

Under the banner of the Enron Virodhi Andolan, project-affected people demand that the land acquired from them for the Dabhol power plant, now closed, be returned.

ANUPAMA KATAKAM in Katalwadi, Anjanvel and Veldur

There is a saying that there is darkness under the diya. That is our fate here.

- Pandurang Bhuwad, farmer from Katalwadi village.

AS the night lights flicker on at the Dabhol Power Company's (DPC) plant, Katalwadi village plunges into darkness. It is perhaps ironic that Katalwadi, located just 2 km from the 2,144 MW power plant, will not have electricity for the rest of the evening and possibly the entire night. Yet, having no electricity is only a minuscule part of the problems faced by the residents of Katalwadi. Ever since the erstwhile U.S. energy behemoth Enron Corporation's offshoot laid claim to their land, the region's people, whose mainstay is agriculture, have been deprived of their livelihood and the ecology has been damaged permanently.

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With Enron practically non-existent now and the DPC plant up for sale, residents of the project-affected villages of Katalwadi, Anjanvel, Ranvi and Veldur want the Maharashtra Industrial Development Corporation (MIDC) to return the 200 hectares that has been lying unused, out of the 610 ha that was acquired for the project. Besides, in 1997, former Chief Minister Manohar Joshi had assured them that their land would be returned.

Katalwadi's residents believe that the time is right to launch an aggressive protest. Local groups plan to stage a satyagraha in front of the power plant on February 28. "We wanted to storm the premises but memories of 1997 still haunt us. The tahsildar has also cautioned us against this sort of action. It is more important that we are heard now," says Yeshwant Bait, an activist with the Enron Virodhi Andolan. The Andolan will also make a presentation before the Kurdukar Commission, which is investigating the power purchase agreement signed between Enron and the Government of Maharashtra.

Katalwadi's struggle against Enron and the Maharashtra government is by now legendary. In April 1997, the village, which was at the forefront of the anti-Enron movement, was attacked and several villagers, including women, were assaulted and imprisoned on charges that included attempted murder.

Situated on the banks of the Vasisthi river in Guhagar taluk in western Maharashtra, the area surrounding the DPC encompasses several agricultural villages and two fishing villages and is home to more than 92,000 people, who are entirely dependent on the region's natural resources.

"The DPC plant has been built on the ancestral lands of 700 families," Bait said. Most families in the region have been hurt by the project in some way or the other. Some, who have lost all their land, have had to work as labourers on others' fields. Many have lost the most cultivable part of their property.

Nearly 65 per cent of those affected by the power project belong to Katalwadi. Not a single person from the 243 families of this village has accepted any compensation or rehabilitation offers made by the government and the DPC. "Even though our livelihoods have been snatched from us, we have held out as a unified community for eight years against the company," Bait said. "By not taking the compensation we can fight for our rights. Since the company is going to change hands, this is a good time to make our demands heard again," Bait added. "We are now prepared and experienced to take on anyone. We will not allow another company here without it meeting our demands," Bait emphasised.

However, in spite of the villagers' tenacity, during the past eight years substantial damage has been done to the region. Since 1994, when the construction of the power plant started, there has been consistent degradation of the environment. Not only have farmers lost their means of livelihood but the sea water has been polluted. The sad reality, says Bait, is that whether it is Enron or any other company bidding for the DPC, many of the problems will remain unresolved.

The MIDC Act stipulates that unless 60 per cent of the affected people agree, the government cannot go ahead with land acquisition. Also, the MIDC should acquire only barren land or land that cannot be cultivated. Both conditions have been violated in this region. For instance, according to Ganu Ragho Jangli, he spent all his savings on cultivating the 4.5 ha that he owned in Katalwadi. A few months before the MIDC took over his land, he had planted 300 mango saplings of the Alphonso variety and 300 cashew plants. "When we heard that all our land was marked for the project, we tried to fight. But the High Court dismissed our petition. In one day and one night they bulldozed all the saplings, to lay a pipeline," Jangli told Frontline. "We were asked to vacate our houses. They didn't even allow us to take our belongings. We had to move into the village. The next day, when we came back, our entire land was fenced in," he said. Jangli said he spent all his savings cultivating paddy, mango and cashew nut on the 4.5 ha of land. "I just sat near the fence and cried," said Jangli's wife Savitri. "For many days after that I would come to the same spot and just stare at my land. We did not know what to do," she recalled. Similarly, at least 110 people in the region have been left landless.

Yet Jangli was determined to fight. He did not accept the compensation package that included Rs.75,000 for a ha of paddy field, Rs.60,000 for the crop, and Rs.50,000 for a ha of uncultivable land. "We could have earned Rs.10,000 from a mango tree every season. We used to harvest 7,000 kg of rice annually. How can you compare the compensation to these earnings?" asked Jangli. "Before they ruined our lives, our house used to be full of grain," Jangli recalled. Jangli says he struggles to provide for his seven-member family now. He and his wife sell milk besides working as labourers on another farmer's field. Jangli's son runs a roadside stall selling sweets and peanuts. Jangli said he was determined not to accept any compensation, however difficult his situation might be. Jangli's case typifies the Maharashtra government's and Enron's high-handedness and callousness in acquiring land.

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Katalwadi's women have been particularly active in the anti-Enron movement. Anandi Ramchandra Bhuwad of Katalwadi said she would fight on even if she had to starve. "We don't want money, we want our land," she said. Bhuwad proudly pointed out that at the height of the anti-Enron protests the women were very active. "We were beaten and thrown in jail," she said. "The next time they came, we women gheraoed them. After that they were too scared to enter our village. Let us see now which company will come."

Pollutants have reduced a once fertile belt into an unproductive stretch of land. Snehal Vaidhya, former sarpanch of Anjanvel, owns a 0.8 ha plot with mango trees. For three consecutive years she has had a bad crop. Usually, the trees should flower by mid-February. But smoke from the power plant has affected the trees. She pointed to some branches - they were yet to show signs of budding, which possibly meant another crop failure. The leaves were spotted and looked almost burnt. Even the coconut and arecanut trees have been affected. The fruit was much smaller than what it used to be, she pointed out. Today, Vaidhya's family supports itself by selling milk from the four buffaloes and the two cows that it owns. Mango grove owners do not fall under any category for compensation. "A chain of people are affected if the crop fails," said Atmaram More, sarpanch of Anjanvel. Not only the farmer but the picker and the trader are also affected, explained a mango trader.

Vaidhya has to contend with another problem. The water on her land has turned a bright orange. Along the sides of a natural spring conduit on her property, the soil is clearly brighter in comparison to its natural brown-red colour. "In the beginning, before we realised that there was contamination, our throats used to hurt. When the water started looking like a soft drink, we complained to the government and the company," Vaidhya said. The company then provided four houses on that hill with water from a separate water pipe. Since the company shut down in November, clean water is not supplied. Both Katalwadi and Anjanvel villages survive on water from a gram panchayat programme. The water has a thin layer of oil too. According to More, a well near Vaidhya's land got completely polluted. "We pulled out 20 barrels of water smelling of diesel. We never had this before Enron," he said. This well is located close to another village well, which is the only other source of clean water. "What if the contamination reaches that point? We won't have any water," said More.

Whether the power plant is responsible for the ground water pollution in the area is arguable. A recent study showed that the DPC used highly sophisticated machines. Therefore, the study concluded that it was not possible for naphtha (which is the fuel that the plant used) to leak from these machines and contaminate ground water. "Besides," says Vaidhya, "if they weren't guilty why would they immediately provide clean water?"

The MIDC could perhaps be held responsible. An article in The Hindu Survey of the Environment 2001 said that effluents released by chemical industries in the area had led to water pollution. In 1978, the government declared this part of the Konkan coast a chemical industrial zone. In 1989, the villagers filed a case complaining about the seepage of pollutants into both sea water and ground water. It was then that the government took notice of the pollution. But it was not until 1994 that the High Court ordered an inquiry. Troubled by the findings, the court ordered the Maharashtra Pollution Control Board (MPCB) to monitor the pollution levels and enforce environmental laws. However, till date little has been done by the MPCB.

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With regard to environmental groups charging Enron with violating environmental issues, in 1996, the High Court ordered a 'traces study', to be done at a cost of Rs.65 lakhs. According to Pradyumna Kaul, an activist with the Enron Virodhi Andolan, "that was hardly anything for them". The DPC sent an employee to collect water from the spring every day. But "six months after the plant shut, we are still getting contaminated water," said Vaidhya. Officials of the MPCB were unwilling to comment; they would only say that "Enron is a controversial issue". Earlier the MIDC came up with a similar response when approached for comments on land acquisition by the DPC.

The 3,000-strong fishing community of Anjanvel and Veldur villages was also affected. The construction of two jetties and a breakwater by the DPC shifted the flow of sea water. Moreover, both jetties were built at some of the best fishing points along that part of the coast - the Veldur jetty, which is at the confluence of the sea and a river, is a breeding ground for fish. In addition, the government has cordoned off the liquefied natural gas (LNG) terminal jetty. Now, fishermen have to navigate a long distance to get to another fishing spot. What used to be a 10-minute ride now takes at least an hour, not to mention the extra expense on fuel. The area was well-known for large prawns, which fetched a good price in the domestic as well as export market. Mahadev Khardpekar, a fisherman, said: "Even if they allow us to fish there now, there is no point. All the high-value fish have gone." Khardpekar said he used to earn approximately Rs.1,500 a month. He says he is lucky if he makes Rs.700 now. Also, owing to the effluents released into the sea, several varieties of fish had vanished, he said. Moreover, marginal fishermen like him, said Khardpekar, used dinghies or single cylinder outboard engine boats. "We cannot afford bigger vehicles for deep-sea fishing. Fishing along the coast is our livelihood," he explained. Further, fishermen were given Rs.30,000 each as compensation only if they were registered with the Fisheries Department. Many small fishermen do not do that.

In 1999, a Human Rights Watch report warned the government of severe pollution in the seawater near the region. The report quoted from a study conducted by a local organisation that concluded that "once water is circulated through the plant, it is to be discharged back into the sea at a higher temperature - probably 5C higher. The water, which may also contain toxic effluents, can raise the ambient temperature, thereby causing pollution, which will kill both fish and prawns."

Not everyone in Guhagar taluk supported the anti-Enron movement. The fishermen, said Baba Balekar, sarpanch of Veldur, were among the first to sell out and work for the DPC. Since they had no source of income and few alternatives, they went in for work on the site, which offered better income for fewer hours of work, Balekar said. "But we learnt a lesson. Once the construction work was over, we were asked to leave," Khardpekar said. Since they were uneducated and technically unskilled, the company had no use for them. Now, relieved that the plant is shut, Khardpekar said that the quantity and quality of fish has been improving. "If a new company comes, all our problems will return," he pointed out. This time, he said, he would fight with the others to save their land.

Local people who worked with Enron as contractors and others and worked for the plant have realised that the company resorted to manipulative tactics. Currently, only 56 project-affected people remain permanent employees at the plant, and that too because of a court order. Until May 1, 2001, 3,500 people from the region worked as contract labour. Over the past six months, everyone was laid off in stages. "They divided us. They played one against the other," said Yeshwantw Bait. "Everyone has been hurt. This time when we make our demands we will be more united," he said. But since the damage done in the area was irreparable, it hardly matters whether it is Enron or another power company, Bait lamented.

Development directions

Fundamentally flawed as a concept as it is, the Member of Parliament Local Area Development Scheme has been witnessing numerous instances of violation of guidelines and financial rules in implementation. Yet, allocations under the scheme are set to be enhanced.

THE Member of Parliament Local Area Development Scheme (MPLADS) was announced by the Prime Minister on December 23, 1993 to enable MPs to execute in their constituencies small works of a capital nature based on locally felt needs. At the start of the scheme, the quota for each was fixed at Rs.50 lakhs a year. It was raised to Rs.1 crore from 1994-95 and to Rs.2 crores from 1998-99 onwards. The MPLADS Committee of the Lok Sabha has recommended an enhancement of the amount to Rs.4 crores. A Rajya Sabha MP can choose a district for deployment of his funds allocation and a nominated member may select works in one or more districts anywhere in the country. The Union Ministry of Statistics and Programme Implementation is the administrative Ministry.

Under the scheme, each MP can suggest to the District Collector works worth up to Rs.2 crores in a year. Normally the advice of the MP shall prevail unless it be for technical reasons of non-suitability of land for the work or non-admissibility under the guidelines. The Ministry releases the funds directly to the Collectors, who will get the works carried out through government agencies or panchayati raj institutions. Private contractors are not to be engaged.

The funds should be used for the creation of durable assets to be vested in government. The government has given an illustrative list of 28 items of works that may be taken up, such as construction of buildings for schools, roads, culverts, and so on. There is also a list of works not permissible - such as the construction of government office buildings, works of private organisations, repair or maintenance works, raising of memorials, acquisition of land, creation of assets for individual benefit and building of places of worship.

On the performance of MPLADS, the Comptroller and Auditor General (CAG) presented a report in 1998 and another in 2001. These are available at the CAG's website: www.cagindia.org/reports

During the period between 1993 and 2000, Parliament sanctioned Rs.5,558 crores for the MPLADS and the Ministry released Rs.5,018 crores. The total amount utilised was Rs.3,221 crores representing 64 per cent of the released amounts. Low utilisation has been noted particularly in Jammu and Kashmir (38 per cent), Tripura (43 per cent), Dadra and Nagar Haveli (40 per cent), Lakshadweep (33 per cent) and Pondicherry (24 per cent).

The guidelines lay down that "the release of the funds will be made with reference to the actual progress achieved in expenditure and in execution of works" and that "the normal financial and audit procedures would apply to all actions taken under this Scheme subject to the guidelines". When a public authority gets a grant for some work, it is incumbent on it to obtain a utilisation certificate (U.C.) on completion of the work. The Audit Report reveals that the District Collectors failed to obtain utilisation certificates in respect of 11,915 works constituting 70 per cent of the 16,968 works completed. The Ministry continued to release funds without any correlation to their end use.

The Report states that amounts to the extent of Rs.1,797 crores remained unspent with the implementing agencies as on March 31, 2000. This represented 36 per cent of the total releases. The Financial Rules require that any unspent amount of a grant in a financial year should be returned to the Consolidated Fund.

The audit found that the Collectors reported inflated expenditure figures to the Ministry, by reckoning the amount released to the implementing agencies as the final expenditure. In a sample audit of 106 constituencies, it was found that out of a total expenditure of Rs.265 crores reported by the Collectors, Rs.82 crores, that is, 31 per cent of the total, was, in fact, not incurred at all. The Ministry had not maintained any check on the utilisation of funds released; hence there was no action to recover amounts that remained unspent.

It appears that the guidelines have been observed more in the breach. The audit found numerous instances of violation of guidelines and financial rules in the implementation of the scheme, especially in the matter of expenditure relating to (i) 1,220 inadmissible construction works in 48 constituencies, (ii) 518 works of private and commercial organisations and trusts, (iii) 1,552 repair and maintenance works in 47 constituencies, (iv) purchase of stores and stocks for Rs.5.5 crores in 38 constituencies, (v) 66 works in places of religious worship, (vi) construction of memorials in 13 places, (vii) works in private land without surrender of titles in six States, (viii) irregular sanction of loans, grants and donations in six constituencies and (ix) other 533 inadmissible works in 33 constituencies.

The scheme lays down that no work be taken up without detailed design and estimates approved and technically sanctioned by the competent authority. A sample audit in 20 constituencies found that 3,397 works had been undertaken without technical sanction while eight had been done without administrative sanction.

There is a clear directive that recommendations made by an MP in his or her letterhead and under his or her signature alone should be entertained by the Collector and that recommendation by any representative of the MP is not to be considered even if such a representative may have been authorised by the MP concerned. However, the 1998 Audit Report found in the sample audit in five States that works worth Rs.25 crores were sanctioned without proper recommendations by the MPs concerned: (1) Maharashtra: The Collector of Nanded accepted and approved nine works involving Rs.33 lakh recommended by the son of a Rajya Sabha MP during 1994-95 (2) Haryana: A Rajya Sabha MP authorised the Chief Minister to utilise Rs.1 crore released for 1994-95 anywhere and on any work. The Chief Minister recommended works of Rs.51 lakhs in Ambala district and authorised five MLAs of Ambala to suggest works for the remaining amount of Rs.49 lakhs. (3) Orissa: In 1995-96, the Collector of Cuttack sanctioned 144 works on the recommendations of some MLAs, ex-Ministers and ex-Speaker of the Orissa Assembly on behalf of a Rajya Sabha MP. (4) Tamil Nadu: In 1995-96, 17 works suggested by an MLA on behalf of a Lok Sabha MP were sanctioned by the Collector of Madurai and completed. (5) Uttar Pradesh: The District Magistrates of Allahabad, Lucknow and Sonebhadra sanctioned 920 works costing Rs.22 crores, not under written recommendations of the MPs concerned, but on the suggestion of some others 'representing' the MPs.

The 2001 Report stated that Collectors incurred expenditure on 570 works not recommended by the MPs.

In this regard, the Audit Report (Civil) of the Tamil Nadu government for the year ended March 31, 2000 also presented test audits. In the review of the scheme in six Lok Sabha constituencies and seven areas of Rajya Sabha members, the audit found that while an MP had recommended provision of computers in 25 selected schools, the Collector issued administrative sanction for construction of classrooms in some of them. This report adds that against the recommendation of another MP for the purchase of an ambulance for a medical college, a passenger vehicle was purchased. With amiable sobriety, the audit remarks: "The vehicle is being used by the Dean of the college for official purpose."

The 2000 Report was compiled on the basis of test audits conducted in 241 of the total 786 constituencies/ areas under the scheme. The irregularities cannot be taken as stray instances in a few regions. When each type of irregularity has been regularly repeated in hundreds of works throughout the country, there appears to be an allround financial mismanagement. There are numerous paragraphs in the 2000 Report about the 'maladies' that persist despite a mention in the 1998 Report. This has been due to the failure of the Ministry concerned to take action and remedial measures on the irregularities pointed out in the Reports. Had a thorough check been made on the entire operation of the scheme in all constituencies and States, the findings may be more staggering and distressing.

To say the least, the management of the scheme is a shambles. The accounting process is abominably anarchic. Some guidelines are blatantly contradictory to the constitutional provisions and the general financial rules. There is a clear guideline that the funds released under the scheme are non-lapsable: it means that funds unutilised in a particular year can be carried forward to the succeeding years.

Under Article 112 of the Constitution, the Annual Financial Statement, popularly known as the Budget, presents the estimated receipts and expenditure of the government. After the grants are approved and the Appropriation Bill is passed by Parliament, the government is empowered to draw from the Consolidated Fund monies not exceeding the amounts sanctioned. The grants sanctioned by Parliament are valid only for the financial year. The General Financial Rule No.64 states: "Any unspent amount is not available for utilisation in the following year."

THE guidelines require that the funds released for the scheme be deposited in savings account for each MP in a nationalised bank. Whatever be the manner of keeping the amounts released - in a treasury or in a bank - it is imperative that unspent monies in a grant should be returned to the Consolidated Fund. Otherwise there is no need to have Financial Rules directing that the Departments shall surrender to the Finance Ministry all the anticipated savings noticed in the grants or appropriations controlled by them.

The 2001 Report in paragraph 43(a) states: "The Ministry told the audit query that the Committee of Secretaries (CoS) in their meeting held on 6 August 1997 had decided that central monitoring of large number of works was neither practicable nor desirable."

Nothing could be more incredible than the Secretary in administrative charge of the Ministry disowning the basic responsibility in administration of the grants placed at the disposal of his Ministry. Financial Rule 65(1) reads: "The Department of the Central Government administratively concerned or the authority on whose behalf a Grant or Appropriation is authorised by Parliament shall be responsible for the control of expenditure against the sanctioned grants and appropriations placed at its disposal and shall exercise control through the Heads of Departments and other controlling officers, if any, and Disbursing Officers subordinate to him."

About the decision of the Council of Secretaries, the Audit observed: "As already mentioned earlier, this was a flawed decision, as the financial rules make it obligatory for any sanctioning authority to ensure fruitful application of resources whose transfer they sanction."

It is the Secretary of the Ministry concerned who will have to appear before the Public Accounts Committee to explain and justify the expenses incurred out of the grants and appropriations at the disposal of the Ministry. The Secretary cannot renounce his responsibility as the administrative head of the Ministry and his accountability to Parliament.

The First Report (December 1999) of the Rajya Sabha Committee on MPLADS has given an elucidative narration on the background leading to the creation of this scheme. In the introductory chapter, the report states: "He (MP) had to remain merely a silent spectator on any element of corruption which generally creeps in the entire system of implementation of projects and financing the same... Apart from this, the ghastly countenance of the mechanics of mal-implementation or delayed implementation of projects coupled by channellisation of funds for projects and absence of close monitoring of schemes contributed negatively to the entire scenario which gradually assumed a pernicious aberration from a normal state of affairs... Hence, there was a persistent demand from the Members of Parliament that some method should be evolved under which he or she should be able to recommend works directly in their constituencies and could also involve himself/herself in the system of implementation and completion of project works."

The Committee first accepts the position of the emergence of corruption, maladministration, delayed implementation and absence of close monitoring of development works by the government. Then, it hopes that the MPLADS would be an instrument for meeting the felt needs of the people.

There is a fundamental defect in the concept of the MPLADS itself. MPs are primarily responsible to look after legislative work and to ensure accountability of the administration. In the House, they question, debate, legislate, approve grants and taxation measures and give policy directions. On behalf of the House, they work in committees to inquire into the performance of Ministries and government organisations and submit their recommendations to the House.

The MPLADS changes the role of the MP. It allots a lump sum of Rs.2 crores to each MP and gives him or her the choice of the works to be undertaken. As the Rajya Sabha Committee expounded the position, the MP is to "involve himself in the entire system of implementation and completion of the project". In the process, the MP unerringly becomes a part of the administrative system of the government and loses his or her capability and moral right, as a member of the House and as a member of parliamentary committees, to scrutinise the 'faithfulness, wisdom and economy' of the expenses incurred in the administrative implementation of the works initiated by himself or by his colleagues under the scheme.

It is one thing for an MP to suggest a project, during a debate in the House, in a committee report or through personal representation to a Minister. Then it is for the executive to investigate the feasibility and desirability of the project and take suitable administrative action. Then, the Ministry concerned assumes responsibility for the work taken and becomes accountable to the House and to its committees. The conditions of responsibility and accountability on the part of the government have been lost sight of under the MPLADS. This is the prime reason for the growing number of irregularities, financial and administrative. As the MPs are involved in the works of the scheme from the beginning, the administration conveniently shifts the responsibility and disregards audit objections and reports.

It is neither here nor there in the MPLADS. The controlling Ministry disclaims responsibility for implementation of the works. The Collectors do not get utilisation certificates and make no effort to return unspent amounts released to them. The Rajya Sabha Report found fault with the element of corruption, mal-implementation, improper canalisation of funds and absence of close scrutiny in the works undertaken by the government. The failures of the government during the last 50 years have been overwhelmed and overshadowed by the volume and variety of irregularities generated by the MPLADS in a short period of seven years. The MPs have again become silent spectators to the implementation of several works without their knowledge, without their recommendations, in all possible violations of the financial and constitutional provisions. It is not known whether the works chosen under the scheme have been found to be different from the various projects undertaken by the planning departments at the national and the State levels. India is a country of mass poverty and hence concerted and coordinated measures are to be taken, on high priority, to tackle the problem nurtured by centuries of vast disparities and disabilities in the social and economic spheres. Piecemeal distribution of a few crores here and there will have no impact on the perennial poverty of the masses.

In the 2001-02 Budget, the grant for MPLADS was Rs.1,580 crores included in the Plan under Central Assistance for State Plans. The MPLADS grant is less than 1.7 per cent of the total Plan expenditure of Rs.95,100 crores allocated in the Budget. Where the total planning process has been found wanting and failing, it is futile to think that the felt needs of the people could be met by such disjointed efforts of works chosen individually by MPs within a limited areas.

There should be effective decentralisation of the planning process starting from the District Planning Boards where MPs, MLAs and heads of the district, block and panchayati raj institutions should be involved in the formulation of planning and supervision of the projects chosen. The MPLADS has only served the purpose of diverting the attention of the MPs from the failures of planning and administrative performance at all levels, and to confine their attention to some small schemes restricted to individual constituencies.

The government's disowning of responsibility for the works under the scheme and the involvement of MPs in the administrative system, thereby weakening their capability to ensure the accountability of the executive to Parliament, cuts at the very roots of the parliamentary system of democracy in the country.

Era Sezhiyan is a Senior Fellow, Institute of Social Sciences, New Delhi, and a former chairman of the Public Accounts Committee of Parliament.

Battle-ready still

India is firm on keeping its troops in deployment mode, indicating that the eyeball-to-eyeball confrontation with Pakistan will continue for as long as it takes.

THE tough military-political posture India has adopted towards Pakistan shows no signs of a thaw. From all indications, Indian troops will continue to engage their Pakistani counterparts in an eyeball-to-eyeball situation for the foreseeable future. India states categorically that its forces will remain stationed along the border for as long as it takes or until the other side blinks. Pakistan President General Pervez Musharraf, on the other hand, stated in the third week of February that he would not make any more concessions to India and that it was India's turn to "respond".

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Before he made the statement, there were reports in the U.S. and Pakistani media that Islamabad had disbanded two major units of its Inter-Services Intelligence (ISI), reducing its staff strength by around 40 per cent. According to the reports, the Afghan cell of the ISI was completely disbanded while the Kashmir cell was turned into a mere intelligence gathering department.

However, New Delhi is far from impressed with the steps taken so far by Islamabad, though Musharraf continues to receive accolades from the West. The Indian political establishment claims that it has concrete proof that extremists and mercenaries are regrouping in Pakistan-Occupied Kashmir (POK). Indian officials claim that they include Al Qaeda and Taliban activists who fled Afghanistan in the wake of the United States' military action. At the same time, they concede that the level of infiltration across the line of control (LoC) has come down. The Indian side feels that Pakistan is viewing the current phase as an "interregnum" in order to prepare the ground for an escalation of infiltration at a later period.

Although the level of infiltration has come down, the killing of civilians in Jammu and Kashmir has shown no decline, officials point out. India continues to hold Pakistan responsible for the December 13 attack on Parliament House and the January 22 shoot-out outside the American Centre in Kolkata. They say that very few countries would tolerate the kind of civilian casualties that India has suffered.

India continues to attach great importance to the "list of 20" it wants extradited from Pakistan. It feels Pakistan should not have any problems about handing over the majority of the persons on the list as they are Indian citizens. Pakistan has been saying that those on the wanted list holding Indian passports are no longer in Pakistan and are either in the United Arab Emirates or in western European countries. Indian officials describe Islamabad's attitude as extremely uncooperative. India's External Affairs Ministry cites refusal to share information relating to Syed Ahmad Umar Sheikh as the latest illustration of this. This showed that Islamabad had "something to hide", a spokesperson of the Ministry said.

In fact, New Delhi has asserted that the arrest of Umar Sheikh in connection with the kidnapping of the U.S. journalist Daniel Pearl is further proof that Pakistan is the hotbed of terrorism in the region. India maintains that Pakistan has an obligation under the terms of United Nations Security Council Resolution 1373 to share with others information relating to international terrorism. Umar Sheikh has spent time in Indian jails on charges relating to terrorism, including the hijacking of an Indian Airlines flight from Kathmandu in December 1999.

India had earlier rejected Musharraf's plea for U.S. mediation in the matter. Although Islamabad and Delhi are vying to outdo each other in swearing fealty to Washington, the Bharatiya Janata Party-led government has formally ruled out third party mediation on Kashmir. New Delhi has also rejected the American offer of "facilitation" to expedite talks between the two countries. But there is considerable behind-the-scenes activity by the U.S. to kickstart the stalled dialogue.

Indian authorities continue to claim that they are under no pressure from Washington to de-escalate tensions along the border. Senior officials insist that India, unlike Pakistan, is not at the "mercy of the U.S." But indirect U.S. mediation has helped defuse Indo-Pakistan tensions on earlier occasions, most notably during the Kargil war some three years ago. Musharraf has been claiming that U.S. "facilitation" will help de-escalate tensions by the middle of the year.

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Indian officials assert that India's new "strategic relationship" with the U.S. does not adversely affect its independent foreign policy. They claim that there is no pressure of any sort from the U.S. to withdraw troops from the border. On the contrary, they say that India's concerns about terrorism in the region are appreciated in Washington. The U.S. has agreed to sell weapons-locating radars, which will be effective in detecting the presence of militants in the virtually impenetrable mountain ranges along the LoC.

Several Indians, including retired Army Generals, have questioned the rationale behind the continued deployment of troops along the border. They feel that coercive diplomacy has its limits. The presence of U.S. troops in Pakistani military bases is seen as an added insurance for Islamabad. There is also talk that the U.S. would be allowed to set up a permanent naval facility in Karachi. "India has a new neighbour in the region - the U.S.," former Prime Minister I.K. Gujral said recently.

THIS is the first time since Independence that the Army has been sent to the borders with the express aim of waging war unless certain conditions are met. Since the deployment in December, Musharraf has taken several steps to address India's concerns to the accompanying cheers of the international community. But the Indian troops continue to remain battle-ready. There are also worries about the morale of the troops during a long sojourn on the border. Besides, the cost of keeping almost the entire Army on permanent alert has to be considered. Highly placed Defence Ministry sources say that Finance Minister Yashwant Sinha has given an assurance that the Ministry's needs will be taken care of, even if it exceeds the budgeted figure.

The Pakistani Army is also preparing for a long haul. According to Indian Army sources, the Pakistani Army has been bolstering its defensive positions by building concrete bunkers.

Senior Indian officials insist that the continued deployment of troops has a purpose. Despite the tensions, the Directors-General of Military Operations (DGMOs) of both sides talk to each other every Tuesday, reducing the risk of war, they say. The implicit message is that the Indian troops can hunker on the border indefinitely, waiting for the other side to make concessions or blunder into a confrontation. Besides, according to knowledgable Indian officials, it costs the cash-strapped Pakistan government $600 million a month to keep its troops on the border.

The officials admit that it costs India "slightly more" to keep the troops in deployment mode. Pakistani officials, on the other hand, claim that India is expending a lot of resources to stay battle-ready. They point out that Indian soldiers have to be transported from the length and breadth of the country, whereas Pakistan's Army bases are by and large situated near the border.

The Iranian Army had massed in strength along its border with Afghanistan a couple of years ago after Iranian diplomats and journalists were killed by the Taliban militia after the fall of Mazhar-e-Sharif. The Iranian deployment was called off in less than a month, after the Taliban government apologised for the incident and ordered an inquiry. New Delhi, on the other hand, is apparently preparing to dig in for an extended stay. Air-conditioners and other appliances are being sent to the forward areas as summer is set to arrive. Officials, however, insist that the priorities have not changed in the last two months. According to senior Defence Ministry officials, the government's directive to the Army "was to mobilise and take control of the border".

Senior BJP leaders tried to whip up jingoism during the run-up to the Assembly elections in Uttar Pradesh and three other States by highlighting the tensions along the border. Some of them went to the extent of saying that a defeat for the BJP would be construed as a victory for Pakistan and would demoralise the troops on the forward lines.

The Indian Air Force began conducting exercises near the Pakistan border in the third week of February. The Army is expected to conduct fresh manoeuvres along the border soon. These exercises are intended to send a message to Pakistan that withdrawal from the border is far from imminent. Defence Minister Fernandes, speaking at the inaugural of an international defence exhibition in Delhi, ruled out a pull-back until Islamabad fulfilled the conditions laid down by New Delhi. "The forces were moved to the border in a certain situation and the situation still exists," he said.

Musharraf's new high

General Pervez Musharraf, buoyed by the economic and defence packages he has managed to get from Washington, is now less likely to accede to India's demands.

ARE we at the dawn of a new Pakistan where stereotyped roles are reversed? A new buoyancy is evident, thanks to the latest instance of patronage extended by the United States. This might sound like an overstatement but a mutation is definitely taking place. For once, the official machinery is hunting down jehadis; the military ruler wants to protect democracy and a fresh tranche of dollars is making its way to Pakistan. Religious extremists, who were thought to be down and out with the fall of the Taliban regime in Afghanistan, are refusing to be taken for granted. The only thing that remains immutable is the complexity that is synonymous with Pakistan and its relations with India.

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This February was worth watching as President General Pervez Musharraf posed as the new Valentine of the U.S., causing obvious complications in the Islamabad-Washington-New Delhi love triangle. Ever since his January 12 address to the nation, wherein he expressed his decision to go tough on the extremists operating from Pakistani soil, his stars have been on the ascendant. The speech was well received in quarters where it was intended to be. He was able to impress both his U.S benefactors on the one side and the pro-jehadi Urdu media on the other.

It would have been almost a bull's-eye for the General, had the Daniel Pearl kidnapping not happened to expose the real mood of the jehadi groups who retaliated in the only way they knew.

Pearl, who worked for The Wall Street Journal, was kidnapped on January 23 from Karachi. The kidnap drama ran like a parallel plot to the General's U.S. visit in early February and the extra courtesies extended to him there. But Musharraf managed to secure the economic and defence packages he was looking for ever since his government's volte-face towards Osama bin Laden and his forces after September 11.

This, despite the inability of the Pakistani government machinery to take the Pearl case to its logical conclusion even while Musharraf walked the corridors of the White House. Will the temerity with which the video recording showing Pearl's throat being slashed was forwarded to the U.S. and Pakistani authorities on February 22, cast a shadow on the relationship?

The world, barring India, seems to look at the twists and turns in the Pearl case as a reflection of the enormous challenges faced by Musharraf in tackling the jehadi elements within Pakistan. That the forces behind the kidnap and the gruesome murder of the reporter had the audacity to deliver the videotape right in Karachi to a news agency office speaks volumes about the situation on the ground.

There is little to suggest that the jehadis enjoy mass support within Pakistan. But their nuisance value cannot be underestimated. What makes the situation even more frightening is the prospect of collusion between the radical elements and members of the establishment. It is an open secret that the jehadis flourished in the past two decades with state patronage.

The government has conceded that Syed Ahmed Umar Sheikh is the prime suspect in the Pearl case. Umar is no ordinary person. Maulana Masood Azhar, the leader of the banned Jaish-e-Mohammad, and Umar Sheikh were released by the Indian government in December 1999 in the terrorist-for-hostages swap that followed the hijacking of Indian Airlines flight IC-814 from Kathmandu.

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Pakistan tried to involve and implicate India in the Pearl case. The argument, from Musharraf downwards, was that although Masood Azhar and Umar Sheikh were lodged in Indian jails for several years, New Delhi did not bother to bring them to trial. Implied in the observations was the charge that they could be acting at the behest of India.

On the face of it, the argument sounds logical. But Islamabad would have to do a great deal of explaining as to why it allowed these two to take shelter in Pakistan and at least Azhar to emerge as a top leader of the JeM. In this case, Musharraf cannot shift the blame to past regimes. The Pakistani media have published copious accounts of how Masood Azhar was helped generously by the various agencies in early 2000 in the establishment of the JeM. Such was the extent of help that within a few months the JeM emerged as one of the most powerful terrorist organisations in Pakistan.

The twists and turns in the Pearl case were intriguing particularly after the arrest of Umar Sheikh. Even the actual date of his arrest as put out is suspect. While the police claimed that he was picked up from Lahore on February 12, Umar Sheikh is reported to have told the Anti-Terrorism Court Judge in Karachi that he had surrendered himself to save the honour of his family. There has been no explanation from the authorities on the discrepancy. The leading English daily, The News published two damaging reports from the Pakistani point of view, allegedly on the basis of Umar Sheikh's confessions. The first report talked about Mansur Hasnain as an accomplice of Umar in the kidnapping of Pearl. What is more important, the report quoted Umar as telling his interrogators that Hasnain was the "chief architect" of the hijacking of IC-814.

Strangely, the government did not deem it necessary to contradict the report. It put out a bland press statement, that too only after the newspaper published a second report. It quoted him as saying that he and his associates were responsible for the attack on the Jammu and Kashmir Assembly building on October 1, the December 13 attack on Parliament House in New Delhi and the subsequent targeting of the American Centre in Kolkata.

Although the second report was denied by the government as being "fictitious and baseless", both reports raised many eyebrows in political and diplomatic circles in Islamabad. The question on everyone's mind is, what is the source of these reports? Even assuming that they were planted, it would be interesting to know who did it.

One explanation is that the reports reflect a rift within the establishment on the overall approach to tackling jehadi elements. The other is that they indicate differences between the U.S. and Pakistan on the kidnap issue. American investigators were closely associated with the probe into the kidnap. Whatever the truth, the episode does raise disturbing questions.

Rightly or wrongly, the kidnap of Pearl cast a shadow on the first official trip of Musharraf to Washington in February. Within Pakistan there are two views on the outcome of the visit, although Musharraf insists that the trip benefited Pakistan enormously. The trip was good for Pakistan and great for Musharraf personally. The Friday Times said editorially. After all he did manage to get a "soft" International Monetary Fund (IMF) and donor assistance for economic restructuring and poverty alleviation at the rate of $1 billion a year, a possible $1 billion U.S. debt write-off, direct U.S. social sector assistance of about $150 million, $150 million for military education and training in the U.S., and a U.S. textile quota increase of about $145 million a year. Besides, it was a great reception for a military leader who was considered an outcast prior to his country's rediscovery as a front-line state in the U.S.' war against terrorism.

The local media, however, highlighted the flip side. The Friday Times said: "what is worrying about all this praise for and attention to the person of General Pervez Musharraf is its likely fallout on the prospects of democratic revival in Pakistan. All other things being equal, after being eulogised in the capital of the sole superpower of the world, isn't General Musharraf less inclined to share power with civilians than he was before his D.C. trip?"

Hussain Haqqani, a former Pakistani diplomat, wrote in The Nation: "Gen. Musharraf reportedly told Pakistani reporters during his recent Washington visit that he felt his continuing in office was necessary for things in Pakistan to move forward in an orderly manner. 'I never said I will not go beyond three years,' he said, adding, 'I only said I would hold elections within three years as mandated by the Supreme Court.' That elections can be held without affecting who rules the country is an integral part of military rule. But General Musharraf also insisted that he wanted to stay on to sustain democracy."

Besides, the U.S. has once again specified its demands. The Friday Times editorial commented: "Get religion out of politics in Pakistan. Finish off the fundamentalists. Educate and modernise Pakistanis. Don't get into an arms race with India. Safeguard and freeze the nuclear programme. Live and let live with Afghanistan. Build oil and gas pipelines from Central Asia. And don't meddle in the problem between the Kashmiris and the Indians. Ironically enough, all this seems to be in Pakistan's intrinsic self-interest too. Everything, that is, except perhaps the bit about Kashmir."

In fact, Musharraf has already announced that he will work to stop the export of jehad. But if he were actually to implement it in the context of Kashmir, he stands to lose the only bargaining chip he might have in any future negotiations with India. As expected, the official version still says that the war on terrorism inside Pakistan or any other part of the world is unlike the war of terror in Kashmir.

How does this new-found exaltation it affect India-Pakistan relations? The new self-perceived high in Pakistan and Musharraf's self-esteem are proportionate to its belligerence towards India. The ascent of Pakistan in the U.S. charts is often accompanied by a steep descent in its diplomatic ties with India. Of course, New Delhi cannot escape responsibility on this count.

The perception in Pakistan was that India's mobilisation of troops along the border was largely motivated by domestic political factors - to be precise, the Assembly elections in Uttar Pradesh. The calculation was that India would come down once the elections are over. But India's latest rhetoric and actions, such as the air exercises near the border, seem to belie such expectations.

So it is only natural for Pakistan to respond suitably. If the General was ready to visit Agra when the world had spurned him as a military dictator, relations between the two South Asian neighbours are at a grim low today ever since his ratings rose with his new role in the post-September 11 drama.

Besides, a buoyant Musharraf is less likely to accede to India's demand for the extradition of the 20 wanted offenders who are residing in Pakistan. Instead, Union Home Minister L.K. Advani was named in some local reports as an accused in a plot to assassinate Muhammad Ali Jinnah in 1947.

The latest in this unfolding strategy and war of words is the candid statement by Musharraf that he will not hold talks with India unless it pulled back its troops from the border. He even said that Pakistan had no problem in stationing its troops as long as Indian troops remained on the forward lines. There is little scope for improvement in bilateral ties unless the two countries developed mutual trust. Sooner than later, New Delhi will have to decide whether it is prepared to trust Musharraf and give him the much-needed helping hand in tackling the jehadi elements. Tough words from across the borders could only help those very elements that India does not want to thrive.

Romancing the U.S.

Pakistan President Pervez Musharraf's visit to the United States did not quite go according to his script.

IF the President of Pakistan, Pervez Musharraf, came looking for the moon during his three-day visit to the United States in February, he must certainly have left feeling quite disappointed. But if the General was basically expecting a "feel good" visit that would have an implication back home, the Bush administration more than obliged him to achieve the purpose.

What struck many in the political town that is Washington was the transformation of Pakistan and General Musharraf - and all in a span of about five months. At one time Pakistan under Musharraf was one of the most reviled in the White House, and officials and law-makers in the State Department and on Capitol Hill were only too keen to advise Pakistan on how to go about restoring democracy, come to grips with terrorism, and so on.

In fact, just one year ago, President George W. Bush did not seem to know who the leader of Pakistan was. During the course of the 2000 presidential election campaign, Bush flunked a foreign policy quiz when asked about the name of the President of Pakistan. "The new Pakistani General, he's just been elected - not elected, this guy took over office," Bush remarked.

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What an elevation in status "the General from Pakistan" has had since then - from "this guy" to "I'm proud to call him friend" by the end of his first formal meeting with Bush and his advisers at the White House. Apart from the White House, senior Cabinet officials were also rushing to offer praise of Musharraf for his role in the war against terror; law-makers tripped over one another to heap praise on the U.S.' new-found "ally".

The atmospherics, in many ways, was nothing short of the bizarre. Suddenly this city, where memories are obviously short, was reaching out to a person who was at one time condemned, and in the process even let him off the hook for some truly unbelievable remarks.

In the course of his speech and interaction at the National Press Club, Musharraf argued that he did not seize power, rather it was handed over to him when he landed in the country following a mid-air drama; and that Pakistanis were seeing the real "essence" of democracy under his rule. Musharraf was certainly not aspiring to be the chairman of the Humour Club, but unknowingly was giving it a shot.

Musharraf had other things to say too, which raised the eyebrows of many in the administration and outside. Before embarking on his official visit, the General in an interview had argued that India might have had a hand in the abduction of the reporter of The Wall Street Journal, Daniel Pearl; and that Jaish-e-Mohammad leaders Omar Sheikh and Masood Azhar might actually be Indian agents. The implication was that Jaish-e-Mohammad and the Lashkar-e-Toiba were terrorist outfits nurtured by India to kill Indians.

IN Washington, the Pakistani ruler spoke of "reports" of another nuclear test by India but it was brushed aside by senior officials of the Bush administration. And after weeks of hanging on to the theory that Osama bin Laden may have died, Musharraf changed his tune and said that bin Laden may be in Afghanistan, dead or alive.

Musharraf may have come to Washington with many things in mind, but from the outset he gave the impression that Pakistan and his foreign policy were all about a single-point agenda - Kashmir. At a meeting organised by the Woodrow Wilson Centre for Scholars and the Carnegie Endowment for International Peace at the Ronald Reagan International Centre, Musharraf played up Kashmir on known lines - that it was the core issue and that mediation was needed if South Asia were to get out of the mess ever.

"I am committed to a peaceful resolution of the Kashmir dispute in accordance with the wishes of the Kashmiri people. All other differences existing between Pakistan and India should also be settled through peaceful means. We believe the United States can facilitate such a solution and help South Asia turn a new leaf," Musharraf said at the White House.

But he did not get very far with the Bush administration. From the President downward, the response was pretty much on expected lines - that while the U.S. would like to facilitate a meaningful dialogue between India and Pakistan, it was basically left to the two nations to hammer out a solution.

"The only way this issue is going to be solved is if the Pakistani government and the Indian government sit down and have a serious, meaningful dialogue to resolve this issue... the best thing our government can do is to encourage (the two sides) to come to the table and start to have meaningful, real dialogue," Bush said by way of a response.

If Musharraf was looking for American mediation over Kashmir as something "to take home to", that must have indeed been tricky, for the Bush administration at no time during the General's visit gave any indication of softening its stance on the issue. No wonder then that there is a perception in Pakistan that Musharraf returned home empty-handed.

Politically, however, the Bush administration was determined to make the best out of Musharraf's visit. For all practical purposes, Pakistan is about the only solid ally the U.S. has in that part of the Islamic world in its war against terrorism and has been playing host - for a fee, of course - to American personnel and materiel.

At every turn the Republican administration made the point that the General was a genuine and sincere ally, even if the bottomline was the need to watch the ground reality carefully. And to all in Pakistan who have a nagging suspicion that the country will be dumped after the present campaign is over, the reassuring words came from none other than the U.S. President himself.

"I want to remind people from Pakistan that I didn't mention many world leaders in my State of the Union. But I mentioned President Musharraf for a reason. And hopefully that's an indication of my sincerity in developing a strong and meaningful relationship," Bush remarked, making the point that the U.S. was not looking for a "short-term dance" with Pakistan.

It is the long-term strategic relationship between the U.S. and Pakistan that should be of interest, as also concern, countries such as India. For long, the argument has been that Pakistan uses sophisticated weapons acquired from the U.S. against India. But this argument is unlikely to stop any longer-term plans the two sides may have.

Musharraf is very interested in getting the weapons supply pipeline flowing, but what hardware Washington will allow to be provided at this point of time remains to be seen. After all, the Bush administration, after making noises about India or Pakistan upping the ante at a time of high tension, cannot "add" to the existing environment. And high-flowing rhetoric would have been the order of the day even if Musharraf received only an "intent" to look at his request for F-16 fighter aircraft.

The Pakistan President did not come to the U.S. thinking that he will be escorted by a few squadrons of F-16s on his way back to Islamabad. But he will very much want this sophisticated aircraft - the stopped consignment now comprising old stocks sitting in hangars in some desert in Arizona. What exactly the Bush administration has told the General is a matter of speculation. "Not now," appears to be one; "down the road", is another.

For now Pakistan will have to be content with the promise of enhanced defence cooperation that will include a defence consultative group, release of spares that had been bottled up since the time of the sanctions following its 1998 nuclear tests; equipment for the purpose of maintaining a vigil at the borders with Afghanistan; and some $300 millions by way of reimbursement for its role in Operation Enduring Freedom in Afghanistan from October 2001 to January 2002.

With a debt to the U.S. of $3 billion, Pakistan had been hoping that the Bush administration may be inclined to write off a third of it. But considering that there is a process to be gone through on Capitol Hill, this was not easy even if the Republican government wished it to be so. But what Pakistan is actually looking for is the U.S.' "help" to meet its larger debts at the international level.

The much-anticipated break Pakistan got from the textile trade, either by way of increased quotas or a reduction in tariffs, did not come about. But this had more to do with U.S. domestic politics and the textile lobby than any disappointment with Islamabad on matters pertaining to the war on terrorism.

Much of what transpired between Musharraf and his hosts will of course never be made public. Looking from the outside, it appeared that Musharraf may have left somewhat giddy even if with little of anything else. But no one can blame the General for not trying especially on the substantive aspects of his single-issue agenda in foreign policy.

Of the Delhi tea and the Agra breakfast

India and Pakistan ought to publish a compilation of the July 2001 Agra drafts in order that the whole truth regarding the respective positions may be known.

WE know a lot about Indo-Pakistan summits in the distant past - in 1955, in 1960, and in 1966 in Tashkent - as well as more recent ones since Simla in 1972 right down to Lahore in 1999. The Agra Summit in July 2001 came so close to success that twice at his press conference in Agra on July 17 Minister for External Affairs Jaswant Singh said it was "not a failure". Indeed, "we will pick up the threads from the visit of the President of Pakistan". But we are told little from the Indian side about the causes of its failure.

Strangely, that very night in New Delhi, the Cabinet reversed the Minister's stand because, as The Hindu reported (July 19), Pakistan Foreign Minister Abdul Sattar had, at his press conference the same day (July 17), mentioned all the topics for a "sustained" dialogue, described the procedure and called the last Agra draft as a "valuable foundation" to build upon.

The spokesperson for the Ministry of External Affairs (MEA), Nirupama Rao, said: "No closure was reached on the text of an agreement. We will, therefore, have to begin again on the basis of the existing agreements, that is, the Simla Agreement and the Lahore Declaration, which are the cornerstones of India-Pakistan bilateral relations."

Inexplicably, all official statements black out the Islamabad Joint Statement of June 23, 1997, for a composite dialogue on eight topics, that is, seven others besides Kashmir. The MEA's compilation, India-Pakistan Relations, studiously omits it. So, strangely, does a journal of the Institute for Defence Studies and Analyses, Strategic Analysis, in its Special issue of October 2001 which appends 11 documents from 1947 to the Lahore Declaration.

Abdul Sattar's tabulation, on July 17, followed the Islamabad Statement of 1997: "valuable progress was made at Agra on evolving a structure for a sustained dialogue process that would take up Jammu and Kashmir, peace and security, and terrorism and drug-trafficking at the political level. Economic and commercial cooperation, Siachen, Wullar Barrage, Sir Creek and promotion of friendly exchanges in various levels would be addressed at the level of high officials."

Clearly the draft Agra Declaration took off from the Islamabad Joint Statement. The Times of India reported (July 21) that "the political level" that Sattar spoke of was the level of the Foreign Ministers. "Annual Summits and regular meetings of the Foreign Ministers were all packed into the nine-point draft agreement (the Declaration)."

Evidently, publication of the Agra drafts would blow sky high the falsehoods which the Government of India has been spreading to cover up the fact that L.K. Advani & Co overrode Prime Minister Atal Behari Vajpayee and Jaswant Singh and forced them to reject an unexceptionable accord; a draft that met all of India's concerns - cross-border terrorism, dialogue on all the issues on which the two sides differ (besides Kashmir) and respect for the Simla and Lahore accords.

Since a campaign of disinformation on Agra was launched, beginning with Vajpayee's fulminations at the Bharatiya Janata Party's National Executive on July 28, it is only appropriate that both governments should publish a compilation of the Agra drafts in order for the public to know the whole truth. The Government of India persistently gives false explanations for its debacle in Agra. It started with Jaswant Singh's list of Pakistan's triple offences at his press conference in Agra on July 17 - Pakistan's "unifocal" approach on the centrality of the Kashmir issue; its stand on "the existing compacts of Simla and Lahore" (implying that it rejects them); and "cross-border terrorism".

In his Independence Day speech, Vajpayee alleged that President Pervez Musharraf "came here with a single-point agenda - to make India accept Pakistan's terms on Kashmir". Why not publish his draft to prove this? In Agra the exercise was not about settling Kashmir or any other issue but about establishing an institutionalised dialogue on all the issues; Kashmir was only one of them. Vajpayee said that Musharraf "wanted us to forget the Simla Agreement and the Lahore Declaration... He kept on describing cross-border terrorism as 'jehad' and freedom struggle."

The propaganda barrage continued. On February 8, 2002, the Indian Express reported Vajpayee's speech in Dehra Dun in which he said that Pakistan's "obsession with Kashmir led to the failure of talks. We offered them trade and business, but they were insistent on Kashmir".

As it happened, most fortuitously this writer received that day in Chennai, at his insistent request, a copy of a document which explodes these falsehoods besides the one that it was General Musharraf's breakfast which ruined the Indian government's appetite for compromise. The request was triggered by Frontline's Editor N. Ram's mention of the notes he had made of the informal exchange of views over tea with President Musharraf on July 14, 2001, at Pakistan House in New Delhi, the residence of its High Commissioner Ashraf Jehangir Qazi, in company with a group labelled by the media as "Indian intellectuals".

The meeting was attended by close to 20 persons, including former Prime Ministers V.P. Singh and I.K. Gujral, Admiral (retd.) L. Ramdas, former Chief of the Naval Staff, academics including Aijaz Ahmad and Bhabani Sengupta, Lt. Gen. V.R. Raghavan, and a few journalists including N. Ram, Kuldip Nayar and C. Raja Mohan. This meeting went on for an hour and was followed by General Musharraf's much briefer meeting with the Hurriyat leaders, and immediately after that by the tea party hosted by the Pakistan High Commissioner. Musharraf accorded his consent to N. Ram for publication of the notes. He, in turn, has permitted me to draw on them for this article.

This was General Musharraf's first substantive discussion during his visit. He was forthcoming and seemed to hold back little, N. Ram noted, either on his own or when questioned. "He seemed to reveal what was on his mind and, also, his negotiating pitch. My detailed notes on what he said were of much interest to political leaders I met subsequently that day, at the tea party and in the Rashtrapati Bhavan banquet."

The contents of the document were remarkable in the meticulous care with which it was written with an obvious concern for accuracy which the nuances reflected. That was but to be expected. But what astonished one was the fact that it differed not one bit from what Musharraf said at the breakfast meeting in Agra on July 16 of which so much fuss is still being made. One columnist went so far as to complain that Musharraf "crawled over Vajpayee". Evidently, unlike this writer, that columnist has a poor opinion of Vajpayee.

The accompanying table of comparison between the fare which the General provided over tea in Delhi and what he served to his guests in Agra is based on direct quotes for the most part.

On all the three topics that vexed Vajpayee and Jaswant Singh, as they later claimed, Musharraf's remarks in Agra on July 16 were no different from what he had said in Delhi on July 14. At the President's banquet, N. Ram was asked by quite a few people for his detailed notes of the meeting over tea. He records that he briefed a range of India's political leaders, including senior Ministers, on the Pakistan President's observations. Vajpayee was well aware of what Musharraf had said at the tea in Delhi when he met him in Agra. Negotiations between Jaswant Singh and Abdul Sattar proceeded smoothly well after the breakfast meeting. At his press conference in Islamabad on July 20 and repeatedly thereafter Musharraf kept proposing his three-step formula and "the tandem" approach at the tea. To a question whether on Kashmir he expected any kind of "substantive breakthrough" or whether the breakthrough would be "producedural," General Mushrraf notes that it will be a little premature if I tell you what I have in mind when I go to Agra tomorrow (for the official talks with Prime Minister Vajpayee). But I can say the breakthrough (we hope will come) won't be just procedural and cosmetic. I look forward to a substantive breakthrough."

Implicit in his oft-repeated proposal to "negate (that is, eliminate) certain solutions", which are non-starters, is a broad hint that he would not press for a plebiscite. He likewise expects India to go beyond "stated positions" - Kashmir is "not negotiable" at all; is not a "dispute" and the LoC as has is etc. Musharraf is clearly aiming at a via media between the status quo and the plebiscite. That is a challenge to dilpomatic creativity.

Another broad hint thrown in Delhi as well as Agra is the "indirect" effect of progress in the Kashmir parleys on militancy. Read: it will subside; for, he will have something to show by way of results.

The reference to "freedom fighters" came in response to a pointed, albeit legitimate, question. It was juxtaposed to what militants are called in India ("terrorists") and their different characterisation in Pakistan. Musharraf had in mind "a substantive breakthrough" at the end of an institutionalised dialogue - as had Nawaz Sharif and Vajpayee through the back channel in 1999.

The man had come to India determined to succeed. On July 28, Vajpayee said gleefully that he had been sent back empty handed. Musharraf and Abdul Sattar both regretted that no time was allowed for further discussion. A closure was abruptly declared. In Shakespeare's plays the jester is the one who proclaims the truth. Laloo Prasad Yadav is no jester; only a shrewd man with a gift for puncturing pomposity. He spoke the truth when he said that it is against our culture to send a guest away at midnight.

Had Agra been allowed to succeed, the post-WTC scene in South Asia would have been radically different. The tensions would have subsided. MPs should demand that the Agra texts be made public now by the government. That is the practice which Nehru followed. That is the practice in international diplomacy.

1. Centrality of Kashmir

"Kashmir is the core issue... Let this be recognised".

2. Need for compromise:

"The road ahead needs compromise from both sides. By this I don't mean one-sided compromises. 'Give and take' is involved if you want to improve the situation. We know about the internal problems of India and the internal problems of Pakistan. We need to rise above these problems. This needs boldness, courage, statesmanship."

3. Shimla & Lahore Accords:

"It has been made out that I have rejected the Shimla Accord and the Lahore Declaration. There can't be anything further than the truth than this. I said the Shimla Accord and the Lahore Declaration haven't moved ahead to bring about normalisation. I didn't say anything about rejection."

(Earlier that day, Foreign Secretary Inamul Haque instantly contradicted Jaswant Singh's charge that Pakistan was showing "selectivity" in adherence to accords (The Hindu, July 15, 2001).

4. Issues other than Kashmir:

To a question by N.Ram about the interpretation of his statement on arrival, which suggests that only a resolution of the Kashmir dispute will lead to "full normalisation", General Musharraf responds: "This is another misperception about what I said". It is "absolutely wrong" to say that his stand is that nothing can move forward unless the Kashmir issue is resolved, "But what I said was, 'Kashmir is the core issue.' My English is not good. Let us find another word, some other adjective (for 'core'). What I mean is that this is the issue on which we have fought wars, which has come in the way of peaceful and amicable relations between Pakistan and India. Let this be recognised. I have nothing against taking up other issues in tandem. What I am against is this. 1) You can't take up other issues at the cost of the Kashmir issue. You have to include Kashmir (in any meaningful effort to normalise and improve India-Pakistan relations) 2) Having taken up various issues in tandem, we cannot move ahead only on those issues and leave the Kashmir issue behind.... Lets take the other issues along." To a question noting that if Pakistan had "core concerns" on Kashmir, India had its concerns (vis-a-vis Pakistan) and should not these also be taken up, General Musharraf responds: "Why not? Everything must move in tandem."

5. The process for a a solution:

"Step I, I feel, is the initiation of dialogue. We have taken this step. The second is: we must recognize Kashmir as an issue, as the issue that has been in the way of peaceful and normal relations between India and Pakistan over more than 50 years. Let's recognize this frankly and honestly. The third is: a structure for solving it, may be a time-frame even."

6. Terrorist violence in Kashmir:

Progress in the talks on Kashmir would have "an indirect bearing on the militancy (in the part of Kashmir with India)."

7. The Nuclear Question:

V.P. Singh asked, "We are both nuclear powers. How do we reduce the scope of accidents, of mishaps, of miscalculation?" Musharraf agrees that the implications of nuclear weaponisation by India and Pakistan need to be addressed. To a follow-up question by N. Ram on what kind of measures he is prepared to discuss with India to end the nuclear stand-off between India and Pakistan and whether he is willing to talk about agreements for non-deployment and non-induction of nuclear weapons, General Musharraf responds that on this issue, "It is better to be blunt. I think that on this issue, these things have generally been initiated by India and we have had to react. On the blasts, on the deployment. Once after India did that, we have reacted, starting raising forces. We can agree to any regime of nuclear restraint, of reducing the risks." Asked specifically whether he will be willing to discuss an agreement (with India) on non-deployment and non-induction of nuclear weapons, he answers: "Why not?"

1. Centrality of Kashmir

"Let's not remain in any illusion that the main issue confronting us is Kashmir... That is the reality on the ground whether we like it or not."

2. Need for compromise:

"If we keep sticking to our own positions rigidly we cannot move for ward. So, therefore there is a degree of flexibility, open-mindedness, understanding of each other's problems, that is the pre-requisite for any forward movement."

3. Shimla & Lahore Accords: No question on this point was asked in Agra. 4. Issues other than Kashmir:

"Can we equally today start on something which is to do with non- Kashmir, also in action?

A. "Yes, certainly. Again I reiterate, absolutely. We can address all issues, having identified the main issue but then another suspicion in Pakistan is that they always involve us in other issues, brushing the main issues aside and then start leading others. This happened with Dr. Mahboob-ul-Haque. He came here with President Zia.... All issues must make progress. You cannot, no leader in Pakistan can allow the sidelining of Kashmir for the sake of economy and confidence building and nuclear and everything. They have to progress in tandem. There has to be a relationship to keep progressing on all issues together."

5. The process for a a solution:

Let's go step by step. Step one was the initiation of the dialogue and again I would like to give all the credit to Prime Minister Vajpayee for his statesmanship, for having invited me... Now step two. I feel this acceptance that Kashmir is an issue, it must be resolved, and may I say when I say it must be resolved obviously there are three parties to it. It is Pakistan, India and also Kashmiris... So this acceptance of the main issue is step two. One can then, after entering into dialogue, move further... maybe at the step two one could negate certain solutions if possible. Obviously national consensus will be required. Can we negate certain solutions that these are not the solutions? Would one keep saying stated positions and all that, let's leave this... in the area that we are left with, are the possibilities. So, I think these are the steps. Step one we have taken. Step two, I would say, can be taken today. Step three can be taken later and step four will be more later.

6. Terrorist violence in Kashmir:

Q: "Is your commitment to the absence of violence or the non-use of violence conditional upon progress or are you committed to a non-use of violence irrespective of whether we hear good news in four hours or not?"

A. That is. We are not encouraging any violence in Kashmir. This is an indigenous freedom struggle going on. You keep calling it terrorism and violence. We in Pakistan, keep calling it a freedom struggle. Who is right, who is wrong? We keep saying that there are atrocities and repression against the civilians by the Indian army of over 600,000 people. So where do we land up? Yes, these are issues which must be addressed. These issues, I am sure, and all the issues, whether it is the repression by the Indian forces which we say and the cross border terrorism which is always mentioned from this side. In tandem everything proceeds further with the progress on Kashmir. That is how I feel because I am sure the progress on Kashmir will certainly have its effects, and indirect effects, on whatever is happening in Kashmir."

Q: "In order to stop the bloodshed whether the Government of Pakistan will take initiative or not? This is the basic concern of the media.

A: "Exactly, this is the whole thing. Tell me about the bloodshed, on both sides as a result of which army men are being killed, civilians are being killed. Can this be stopped? Why is this happening? This is happening because of the Kashmir dispute. Can anyone expect this bloodshed to stop and yet expect the Kashmir dispute to stay intact. Is this realistic? Ok. Ok. I am saying this so that it should end. It should end, absolutely... But it will end only when we will go hand in hand, expand the issues and go towards a solution."

7. The Nuclear Question: No question was asked on this topic in Agra.

Back from the brink?

ESSAY other

The NDA government's perception of war as an option stems from the shifts in domestic distributions of power, a misperception regarding the place of Pakistan in U.S. strategic designs and the related delusion about India's own importance in the U.S.-Israeli design for South-West and Central Asia.

AIJAZ AHMAD WE live in dangerous times.

The United States declares an infinite, planetary war ("a task that never ends," President Bush called it), and India and Pakistan immediately start competing in a bid to show which among them is the more loyal member of the coalition conjured up in favour of this war. The invasion and occupation of Afghanistan was for the U.S. a point of culmination of a process that began with the Gulf war and the destruction of much of Iraq which has already cost that country well over a million lives, but also the first stage of a more permanent war that might involve numerous countries ranging from Iraq to the Philippines. The U.S. is now in the process of consolidating a ring of military bases in southwestern Asia and the Caspian states, to capture oil resources estimated to be worth over a trillion dollars and to choke both Russia and China militarily. Yet, all that the Indian and Pakistani governments, speaking in the name of the Vedas and the Koran, care for is which of the two embassies shall have relatively more clout in Kabul, in the court of the U.S.-appointed Hamid Karzai, who is not even a warlord but merely a former employee of Unocal, a middling energy corporation with pipeline interests in that unfortunate country. He is the perfect henchman for George Bush, who himself represents oil and tobacco interests.

A murderous but inept terrorist attack on the Indian Parliament building can bring more than a million soldiers, representing nation-states comprising a quarter of humanity, to a full-scale mobilisation on a war-footing, raising the possibility of all of us going up in a ball of nuclear fire, but in ways that make it difficult to tell between serious intent and mere posturing. Both nations then look to the U.S. to prevent them from doing what sane people would shrink from even contemplating. Help me get the Indians to talk to me about Kashmir, General Pervez Musharraf pleads with the U.S., since it is on your orders that I am dismantling my jehadi outfits there. The Indian government enters a competing plea: please get Pakistan to give us a face-saving device so that we can step back from the war we have threatened and for which we have moved 800,000 soldiers to the front because the posturing, expensive as it is, plays well in the Uttar Pradesh elections. Colin Powell, the U.S. Secretary of State, smiles, mutters a phrase to assuage Pakistani sentiments, another to please Indian ears, then gets down to the serious business of sorting out with Dick Cheney, Vice-President, and Donald Rumsfeld, Secretary of Defence, the pros and cons of invading Iraq, the pros and cons of allowing Ariel Sharon to kill Yasser Arafat, and so on.

Innocent, sleepy policemen get killed in the streets of Kolkata, in a shootout in which religious extremists seemed to have been hired by organised crime to settle a dispute with the local police, and the Federal Bureau of Investigation (FBI), an intelligence agency designed to function strictly on U.S. soil, suddenly takes charge of getting the chief suspect, a man of Indian origin, extradited from a third country to India. That a U.S. intelligence agency designed for strictly domestic purposes starts using India as its own turf and meddling in its international relations seems to bother no one. 'Islamic extremism' has become a bogey that far too many people feel pressed to use, in ways that the Left Front in West Bengal, for example, may yet have to pay for in the coming panchayat elections - perhaps even beyond, if the mentality takes hold.

Ayaz Amir, the Pakistani commentator with a gift for the striking phrase, has called his country "a banana republic without the bananas". That goes a long way in explaining the abjectness with which General Musharraf has been doing the U.S. bidding. Once the U.S. decided to take charge of Afghanistan directly, Musharraf was quick to realise that he was left with few bargaining chips; that the strategy that Pakistan's dictators, diplomats, spooks and commanders had been fashioning for three decades was a shambles, irretrievably; and that all he now had was what Pakistan has always had - the advantage of a mere geographical location, close to China, Russia, and oceans of oil to the west and north of it.

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That is his first "banana": the geo-political location. Then there are little patches of land: when the Americans started calculating the flying distances for their bombing raids on Kabul and Kandahar, bases in Sind and Baluchistan turned out to be much closer than any point in India, and Musharraf turned over more and more to the U.S., including portions of the Karachi airport. We shall return to this matter.

Pakistan actually has more "bananas" to offer than Ayaz Amir makes out in that colourful phrase, not to speak of the fact that it is not in the nature of "banana republics" to be republics at all, as is amply testified in Musharraf's insistence that even though he shall hold elections he will not himself contest in them and shall nevertheless remain at the helm of affairs in his country.

The problem with what India has become under the Bharatiya Janata Party - and the National Democratic Alliance, which punctually allows itself to be used as the proverbial fig leaf - is that it is turning itself, unnecessarily and quite voluntarily, into a banana republic. However, it has too many bananas to see what it is actually becoming. The abject haste with which India endorsed Bush's proposed National Missile Defence (NMD) plan, well before his own European allies or any other country on the planet had done so, testifies to this will to be almost as loyal to the king as the king himself. When the U.S. set out to assemble its coalition for the "war against terror with a global reach", India was among the very first to seek membership and offer its own facilities. It was actually left to the U.S. to decide that Indian facilities were not terribly useful to it for the assault on Afghanistan.

Clients with delusions of grandeur can be at times more dangerous than those who know themselves to be mere clients - without the delusions. This contrast was quite evident, from the beginning, in the way the recent - and still ongoing - military mobilisations were portrayed by the two countries, domestically and internationally. Even if the largest military mobilisation in peacetime history of the past 50 years which India ordered was a bluff, it had to be carried out in a way that could credibly show India's readiness to go to war. So, an aggressive posture and extremist rhetoric was an inevitable part of the design, and sections of the Indian media, addicted now to sensationalism of the worst kind, obliged by harping on the theme of readiness. By the same token, Pakistan was able to portray its own answering mobilisation as being merely defensive in nature. More crucially, it had actually started cracking down on the Islamicist establishment well before the threat of war from India came, and Musharraf therefore had a wide latitude in portraying further crackdowns quite differently at home and abroad. Domestically, he was able to portray all that as simply a continuation of a policy that was already in place, while his inaction on India's list of 20 could also be portrayed as his standing tall against Indian pressure. So far as the domestic situation in Pakistan was concerned, Indian mobilisation only served to unite the Pakistani population behind a self-appointed President who had been under great pressure on the question of delayed democratisation, not to speak of the armed forces which quickly grouped around their chief even though his crackdown on the jehadi establishment had been unpopular with sections of the officers' corps.

INTERNATIONALLY, on the other hand, Musharraf could argue that he was taking strong action to suppress the groupings that had attacked the Indian Parliament building, while continuing to seek comprehensive peace with India despite India's aggressive posturing. His striding up to shake Atal Behari Vajpayee's hand at the SAARC (South Asian Association for Regional Cooperation) meeting in Kathmandu, when the latter was refusing even to talk to him, was seen around the world on BBC and CNN. More substantively, and at the height of the eyeball-to-eyeball mobilisations all across the Indo-Pakistan border, Musharraf became the first head of state in South Asia to offer wholesale de-nuclearisation of the subcontinent: not just a moratorium on further nuclear testing or nuclear weapons production but de-nuclearisation as such. The Indian government failed to respond and the Indian media in general greatly underplayed even the fact, let alone the magnitude and import, of the offer. In context, then, there was broad sympathy, within Pakistan and abroad, for his view that the onus for de-escalation on the borders was on India since India was the one to resort to the escalation in the first place.

It was quite clear from the beginning that India was overplaying its hand, mostly for domestic and demagogic purposes. That a terrorist attack on the Indian Parliament building was a crime of immense magnitude was self-evident, as were the potential consequences of the act. However, the culpability of the Jaish-e-Muhammad (JeM) and the Lashkar-e-Toiba notwithstanding, it was inconceivable that the government of Pakistan could have possibly ordered it (see "Pakistan's time of reckoning", Frontline, February 1). No responsible leader there could have taken the risk of being found out - by India's own very considerable intelligence sources, by the global surveillance network of the U.S., or both. Pakistani Generals understand India's military superiority, in conventional warfare as much as in the matter of nuclear capability. They would have understood quite clearly that ordering a terrorist attack on the Indian Parliament building in these days of "war against terrorism" - and by the chief Islamicist organisations, at that - was tantamount to signing a death warrant for themselves, and possibly for the territorial unity of their country as well. That was the one circumstance in which the U.S. would have condoned whatever means of revenge India chose, tacitly at least. This circumstantial reality precludes the possibility that terrorism on the premises of the Indian Parliament did not have official Pakistani sanction.

And yet, in ordering the largest mobilisation in peacetime history in the last half a century, the Indian government acted as if it had proof of precisely such an authorisation. This was strange, considering that neither the Indian intelligence services nor any of the foreign ones had produced any such proof or even any credible evidence demonstrating a larger conspiracy behind that group of desperados that actually carried out the attack. Threatening war against Pakistan for an act that was probably designed to undermine the authority of the current Pakistan government was somewhat like Israel punishing Yasser Arafat for every suicide bombing carried out by the same Hamas that has always sought to undermine his authority in the first place.

But why? Part of the answer of course lies in the very dangerous instability that America's unilateralist war-mongering has introduced into the world's interstate system. If the U.S. can launch an attack anywhere in the world in the name of fighting a "war against terrorism" and if Sharon can be given a free hand to bomb, kill and expel whoever he wishes and as many as he wishes, again in the name of his own local "war against terrorism", then what prevents the Indian Army from crossing international borders on similar grounds? Indeed, the combination of an urgent demand that a certain number of individuals be handed over forthwith and the accumulation of massive military force on the borders with threats of imminent war was itself reminiscent of the earlier U.S. demand that the Taliban either hand over Osama bin Laden and other leaders of Al Qaeda or face invasion and annihilation.

THERE are only two possibilities. One is that the scale of the military mobilisation and the unbridled rhetoric which went with it were, from start to finish, a mere bluff, which is how Pakistan has by and large treated it. If this was the case, it was transparent, pointless, extraordinarily expensive and counterproductive in the sense that it showed up India as an unnecessarily aggressive paper tiger. The next time the tiger emits such a huge growl, it will actually have to draw blood in order merely to be believed at all. Meanwhile, it is also perfectly plausible that those who could make money out of the purchase of coffins for soldiers saw even greater profits in these extravagant war-mongering expenditures.

The other possibility is that the ruling establishment in New Delhi actually believed - perhaps still believes - that it has the licence to conduct such a war. Now, the very idea that this kind of unilateralist option is at all available to India, if seriously held, would be proof of a considerable delusion of grandeur. Ordinarily one would imagine that no responsible government could possibly nurse such delusions. However, what one hears from secondary sources as to the kinds of discussions that are going on in the halls of power in New Delhi seems to suggest that the same forces which prevented progress in Agra and made sure that the Summit would fail are also the forces which do at times contemplate that kind of unilateral military action. If so, the delusion is likely to be fed with a series of misperceptions.

The first misperception would relate to the relative strengths of the two military establishments, and the import of that imbalance. Pakistan is weaker but its weakness cannot be compared, even by the wildest stretch of imagination, to that of the Taliban's Afghanistan or Yasser Arafat's emasculated little Palestinian Authority in the Occupied Territories; India is not the United States, nor, relative to its adversary, an Israel. That Pakistan's military capability is much inferior both in conventional and nuclear terms is undeniable. The advantages of such asymmetry can itself lead, however, to dangerous delusions in hawkish and ideologically fevered minds. That India can fight a winnable war, or that it can dictate terms by laying siege to Lahore or slicing into Sind, is an implausible idea. In a situation where war cannot be extended beyond a few days or even a week or two, opposing forces do not have to have strict parity; it is sufficient for the lesser power that it commands enough resources to create facts unacceptable to the other side, and Pakistan does have that kind of strength even in conventional terms. And there is of course the nuclear factor which, if a war actually breaks out, cannot be neutralised through diplomatic pressure alone. The pressure would rather be on India not to press the weaker adversary to that point.

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Secondly, the international environment is today much less conducive than ever before to war-making by regionally ambitious medium-sized powers, especially the ones which have nuclear weapons. Aside from Israel, which has always been a special case, unilateralism is above all and by definition a privilege of the 'sole superpower'. For the rest, unilaterism is allowed either in local conflicts that have no global significance, as in some cases in Sub-Saharan Africa, or, more circumspectly and only in some cases, where the constituted nation-states use military force against territories and populations which they claim as their own but which rebel against them (Chechnya for Russia or Kashmir for India, but not Kosovo for Yugoslavia or Taiwan for China). Pakistan, for example, was not allowed occupation of territory even in Kargil even though the U.S. itself recognises it as disputed territory. Nothing would internationalise Kashmir as quickly as an Indian incursion across the international frontier, and Kashmir (a "nuclear flashpoint" in U.S. parlance) is too important to be left to the Generals of either side.

That particular asymmetry in the military balance and this very international environment have both existed for some years, certainly since the Pokhran explosions, within the region and in the context of the increasing unilateralism in U.S. strategies through the past decade.

What, then, has changed for war to be considered a realistic option? Three shifts are notable: shifts in domestic distributions of power, a huge misperception regarding the place of Pakistan in American strategic designs, and, as a corollary to that misperception, a sense that India's own strategic importance in the U.S.-Israeli plans for South-west and Central Asia is now great enough to earn India a free hand in its dealings with Pakistan, more or less as Sharon has been given a free hand in relation to the Palestinian Authority.

The domestic situation is somewhat paradoxical. With parts of Mamata Banerjee's mass base shifting back toward the Congress(I), thus weakening her bargaining power in relation to the BJP, and with the Telegu Desam Party making explicit alliances with the BJP at the local levels in Andhra Pradesh, not to speak of George Fernandes having been fully incorporated into the designs of the Rashtriya Swayamsevak Sangh (RSS), there is now a strong feeling within the Sangh fraternity that no significant opposition will come forth from the main constituents of the NDA regardless of what the BJP does domestically or internationally.

Within the BJP, meanwhile, the balance of power seems to be shifting away from Vajpayee and more toward the nexus controlled by L.K. Advani. Indeed, the recent trips made by Advani and Fernandes to the U.S. had the air of job interviews, while, domestically, any real war of succession may well incline the competing aspirants to even closer alignment with the hard core of the RSS. On the other hand, the BJP itself seems to be losing ground in a number of States and the temptation, therefore, is to retrieve a position of strength by playing the temple card for specific sections of the constituency and the patriotism card for the country as a whole. Nothing unites an electorate behind the existing rulers as a war, even a limited one, with a neighbour that is feared and despised in equal measure. No wonder the war-mongering noises have coincided with a renewal of the temple agitation. Again, there is a nice, predictable division of labour between the BJP and Vishwa Hindu Parishad (VHP).

As regards Pakistan, India seems to pay far more attention to short-term shifts in the configuration of forces than to long-term strategic realities. When Pakistan became the front line state for the recent U.S. operations in Afghanistan and was rewarded with substantial economic concessions, there was fear that India's newly gained centrality in U.S. designs for the region had been eclipsed. Then Pakistan made the blunder of not breaking with the Taliban (perhaps because too many of its own jehadis and soldiers were trapped in Taliban-controlled territory) and the U.S. reneged on the promise of not permitting the Northern Alliance to take the cities as the Taliban collapsed. In view of those short-term tensions, India persuaded itself that Pakistan would no longer enjoy any considerable importance in the evolving U.S. plans; all sections of Indian political opinion insisted that no elements from within the Taliban be permitted to join the new dispensation, because the Northern Alliance, no less thuggish, was in any case comprised of thugs that India had supported. With the Pakistani position collapsing in Afghanistan and its clients in Jammu and Kashmir despondent and in disarray, the Indian government seems to have calculated that it could use the terrorist attack on the Parliament building to force a final separation between Pakistan and the U.S.

As a mature bourgeois society, however, the U.S. does not change its long-term strategic perspective from one event to another. Its only fundamental problem with Pakistan was that the latter had continued to support and expand the jehadi groupings even after they had turned anti-American and that those groups were deeply connected with the Taliban, Osama's network and so on. This problem disappeared as soon as Musharraf assured it that he was going to suppress those groups even if that weakened his position in Kashmir; for the rest, the Americans also knew that full suppression of such groups takes a lot of time, and they were willing to wait so long as the process did begin in earnest and American intelligence itself was given a role in it.

This relative tolerance also comes from the fact that Pakistan is important for the U.S. on several counts. They know that no stable government is possible in Afghanistan unless the Afghani Pushtuns feel that they have been given a proper share in power, and that every Afghani Pushtun leader must also seek blessings from that half of the Pushtun population that lives in Pakistan and whose leaders occupy positions of power and influence there. Without backing from Peshawar, which necessarily passes through Islamabad, no Pushtun leader can feel safe in Kabul, especially as he is bound to be in perpetual conflict with a whole array of warlords of various ethnic stripes.

PAKISTAN has indeed had a major role in Afghanistan for over two decades now, in collusion with the U.S. Once the surviving remnants of the Taliban have been eliminated and the question of the Pakistani jehadis is settled, there is no reason why the U.S. cannot use those same Pakistani military personnel and civilian technicians and managers, nor any reason why the likes of Karzai cannot do a flourishing business with Pakistan. After all, the U.S. itself broke decisively with the Taliban, and even Osama, only a couple of months before bombing them, and Saudi Arabia continued to recognise the Taliban regime as the legitimate government of Afghanistan until well after September 11. That Pakistan was so intimately involved with them is hardly an unforgettable stigma. This is what Bush means when he now says that Pakistan shall play a "major role" in the reconstruction of Afghanistan. If Musharraf can get such a bonanza for them, the Pakistani bourgeoisie is likely to forget all about democracy and bestow 'greatness' upon him.

Then there is the question of the pipeline. Building one through Afghanistan is the more expensive option and bringing oil from Central Asia to the Red Sea, to be then re-transported to Europe and North America, is undoubtedly a very roundabout way of using that oil. However, building a pipeline through Afghanistan is also the surest way to turn that oil away from regions where Russia continues to compete for influence and active economic control. If Afghanistan does become sufficiently stable for the building of a pipeline to become a militarily feasible option, Pakistan again emerges as the key country that can enable that oil to bypass Iran as well. Pakistan is thus very important in the emerging oil economy of the region. And, of course, China continues to treat Pakistan as a key strategic ally.

Beyond that, and next only to Turkey which in any case identifies itself more with the North Atlantic Treaty Organisation (NATO) and the European Union (E.U.) than with the Islamic states, Pakistan has the most sophisticated techno-managerial intelligentsia and military personnel in the entire Muslim world, arguably more so than even Egypt. Pakistan's military and economic involvement already extends to a dozen Arab countries, especially the Gulf sheikhdoms. The U.S. is unlikely to overlook this reality. In India, people are in the habit of looking at Pakistan only in relation to India. In reality, its strengths and strategic importance have little to do with South Asia and much more to do with West and Central Asia, not to speak of its proximity to Russia and China. For China, surely, Pakistan serves as something of a corridor between India and Russia.

It is in view of all these factors that the U.S. has determined its current policy toward Pakistan. Its strategic and economic interests in India are too extensive now for it ever again to accord preferential treatment to Pakistan in relation, specifically, to India. For the rest, Pakistan is indeed back in favour in Washington. One no longer hears that it is under military rule. Instead, Musharraf and Karzai were the two heads of state in the Third World that came in for special praise in Bush's State of the Union speech in January. Musharraf was then given the red carpet treatment during his recent visit to Washington, with Bush describing him as a "strategic ally" and a "partner", and Rumsfeld saying that the military-to-military relationship between the two countries shall now return to the level of earlier decades. Musharraf has been promised that one billion of the $2.8 billion bilateral debt to the U.S. shall be written off and preferential treatment shall be given in the assignment of multilateral aid and a whole range of trade relationships. One can assume that the U.S. bases shall now stay in Pakistan as they will in the Central Asian states, and, in return, Pakistan's economic interests in Afghanistan and Central Asia shall be protected.

All in all, Pakistan is too important a country for the U.S. to allow its stability to be undermined to any significant degree. This has nothing to do with how important India has become in the imperial calculations. So far as the respective bilateral relationships with the U.S. are concerned, one does not go down because the other has gone up. The two countries are assigned different positions in strategic designs and divisions of labour in the overall imperial system, and only dependents and clients nurse the illusion that, with enough services rendered, they shall emerge as the permanent favourites to the exclusion of others.

It is time for the BJP-led government to stop bluffing others and deluding itself. It is somewhat pathetic that no one but themselves finds such bluffs and delusions credible. Meanwhile, the decline in the jehadi menace should not be construed as if the Indian government now has a free hand in Jammu and Kashmir to do as it wishes. Frontline (March 1) published the text of an extraordinary interview that A.G. Noorani recently conducted with Sartaj Aziz, the former Foreign Minister of Pakistan, which spells out, for the first time in public, the terms on which Pakistan has been willing to move away from its historic and maximalist positions. Those terms need not be acceptable to either India or the people of Jammu and Kashmir but India does need to abandon its war-mongering brinksmanship and its delusions that the time has come to dictate terms to all other parties concerned. With the decline of jehad India has a historic opportunity to reverse the terrible trends of the past decade or more, meet flexibility with flexibility. It now needs to explore new and imaginative solutions leading to lasting peace, not consider the war that the more irresponsible elements in government seem to be contemplating.

A looming threat

Trade unions react strongly to the move to amend the IDA in order to make layoffs and retrenchment easier than at present.

THE contentious issue of amending sections of the Industrial Disputes Act (IDA), 1947, facilitating lay-offs as part of the ongoing process of labour reforms was cleared by the Union Cabinet on February 22, the day after polling concluded in the Uttar Pradesh Assembly elections. This was no mere coincidence. Immediately after the announcement of the Cabinet decision, all Central trade unions, including the Bharatiya Mazdoor Sangh (BMS), voiced their protest against the move.

Thus, once again, without waiting for the report of the Second National Commission on Labour (NCL), the tripartite body involving trade unions, the government took a decision that would impact on the lives of the working class. The next day, the Prime Minister, addressing a seminar marking the golden jubilee of the Employees State Insurance Scheme, emphasised that "social security cannot, in the post-liberalisation environment, continue to mean exclusively state-funded and state-administered security schemes".

As expected, the Cabinet decision invited strong responses. While Labour Minister Sharad Yadav reportedly opposed the Bill in its amended form, the Shiv Sena, an important constituent of the ruling National Democratic Alliance government, threatened to walk out of the alliance unless the decision was reconsidered. The Shiv Sena supremo Bal Thackeray declared that the party may join hands with the Left parties and call for a nationwide strike. The BMS, at its 13th national conference in Thiruvananthapuram, took a similar position. Its founder Dattopant Thengadi, addressing the conference, said that the Central government had sacrificed the interests of the working class in its pursuit of globalisation. The amendments, he said, would make it easier for company managements to lay off workers and close down industrial units on the pretext that they were economically unviable.

The implications of the amendments are manifold. Chapter V-B of the IDA placed certain procedural restraints on employers in the matter of lay-offs, retrenchment and closure. The abolition of this chapter would ensure that units employing up to 1,000 workers can be shut down without the need to seek clearance from the government. At present, such permission is not required in the case of units employing less than 100 workers. The Cabinet decision only echoes what has been recommended by the Group of Ministers headed by Planning Commission Deputy chairperson K.C. Pant. While the move to effect labour reforms was indicated by Finance Minister Yashwant Sinha in his Budget speech last year, sustained protests by trade unions, including the BMS, had stalled any such move.

Later in the year, the Task Force on Employment Opportunities headed by former Finance Secretary Montek Singh Ahluwalia, came up with the argument that rigid labour laws were hurdles in the way of employment generation.

The Cabinet decision is but a culmination of several interventions over the past one year to introduce changes in labour laws. Amendments to the Contract Labour (Abolition and Regulation) Act, 1970, and the Trade Unions Act, 1926, are also expected to be made. Trade unions argue that the majority of the units in the organised sector would be affected as there were very few companies that had an employee strength of more than 1,000 workers. The Centre of Indian Trade Unions (CITU), the All India Trade Union Congress (AITUC), the Indian National Trade Union Congress (INTUC), the Hind Mazdoor Sabha (HMS), the United Trade Union Congress (UTUC), the UTUC-Lenin Sarini, the All India Central Council Trade Unions (AICCTU) and the Trade Union Coordination Council (TUCC) have decided to observe a national protest day on March 14. On March 4, all trade unions, including the BMS, will meet to chart out a strategy.

D.L. Sachdeva, AITUC secretary, told Frontline that only 5 to 10 per cent of the industries would be left out if the limit to exempt industries from the I.D. Act was raised to 1,000 workers. He criticised the government for not waiting for the NCL's report, which was due on February 28 (it is learnt now that the Commission had sought an extension). "The NCL's work is now infructuous with the government going ahead and announcing these amendments," he said.

Referring to the proposed amendments to the IDA, Tapan Sen and W.R. Varadarajan, national secretaries of the CITU, said that initially employers had wanted the provisions of the Act made applicable to units employing 300 or more workers, as was the position in 1976. The government had gone even beyond that, raising it to 1,000. The Maharashtra government, incidentally, had amended its Industrial Tribunal Act to raise the ceiling from 100 to 300 workers. R.A. Mittal, national secretary of the HMS, said that with the amendment there would be a greater sense of insecurity.

Even the INTUC, whose support to the rest of the trade unions has not always been unconditional, given its flexible views on liberalisation, has now joined issue with the government regarding the amendments. G. Sanjiva Reddy, president of the INTUC, told Frontline that he had met the Prime Minister and suggested that the government wait for the NCL's report. The INTUC had asked for the compensation package for retrenchment to be raised from 45 days' wages for each year of service to 90 days. The INTUC has always seen liberalisation as an inevitable and finds little merit in protesting against it.

The amendments to the Act may well be the tip of the iceberg. Trade unions also want the Group of Ministers' observations on the Contract Labour Act. The notice period for strikes or lockouts in public utility services has been enhanced to 45 days, making flash strikes illegal. Section 22 of the I.D. Act deals with strikes and lockouts and the proposed amendment recommends a mandatory notice for strike in all cases and also the introduction of a system of strike ballot whereby a strike can be called only if it is supported by a qualifying majority of the workers. Tapan Sen said that all these measures were aimed at finishing off the trade union movement.

While trade unions are apprehensive that the Bill will be passed in the Lok Sabha, they are banking on the Congress(I) to defeat it in the Rajya Sabha. Unions feel that even if the Maharashtra pattern is pushed through and the amended Act allows for retrenchment and closure of units employing up to 300 workers instead of 1,000, it will not be acceptable to them. After all, that would mean neutralising the gains of their struggles over the past several decades.

The Agra Breakfast

other
1. Centrality of Kashmir

"Let's not remain in any illusion that the main issue confronting us is Kashmir... That is the reality on the ground whether we like it or not."

2. Need for compromise:

"If we keep sticking to our own positions rigidly we cannot move for

ward. So, therefore there is a degree of flexibility, open-mindedness, understanding of each other's problems, that is the pre-requisite for any forward movement."

3. Shimla & Lahore Accords: No question on this point was asked in Agra. 4. Issues other than Kashmir:

"Can we equally today start on something which is to do with non-

Kashmir, also in action?

A. "Yes, certainly. Again I reiterate, absolutely. We can address all issues, having identified the main issue but then another suspicion in Pakistan is that they always involve us in other issues, brushing the main issues aside and then start leading others. This happened with Dr. Mahboob-ul-Haque. He came here with President Zia.... All issues must make progress. You cannot, no leader in Pakistan can allow the sidelining of Kashmir for the sake of economy and confidence building and nuclear and everything. They have to progress in tandem. There has to be a relationship to keep progressing on all issues together."

5. The process for a a solution:

Let's go step by step. Step one was the initiation of the dialogue and

again I would like to give all the credit to Prime Minister Vajpayee for his statesmanship, for having invited me... Now step two. I feel this acceptance that Kashmir is an issue, it must be resolved, and may I say when I say it must be resolved obviously there are three parties to it. It is Pakistan, India and also Kashmiris... So this acceptance of the main issue is step two. One can then, after entering into dialogue, move further... maybe at the step two one could negate certain solutions if possible. Obviously national consensus will be required. Can we negate certain solutions that these are not the solutions? Would one keep saying stated positions and all that, let's leave this... in the area that we are left with, are the possibilities. So, I think these are the steps. Step one we have taken. Step two, I would say, can be taken today. Step three can be taken later and step four will be more later.

6. Terrorist violence in Kashmir:

Q: "Is your commitment to the absence of violence or the non-use

of violence conditional upon progress or are you committed to a non-use of violence irrespective of whether we hear good news in four hours or not?"

A. That is. We are not encouraging any violence in Kashmir. This is an indigenous freedom struggle going on. You keep calling it terrorism and violence. We in Pakistan, keep calling it a freedom struggle. Who is right, who is wrong? We keep saying that there are atrocities and repression against the civilians by the Indian army of over 600,000 people. So where do we land up? Yes, these are issues which must be addressed. These issues, I am sure, and all the issues, whether it is the repression by the Indian forces which we say and the cross border terrorism which is always mentioned from this side. In tandem everything proceeds further with the progress on Kashmir. That is how I feel because I am sure the progress on Kashmir will certainly have its effects, and indirect effects, on whatever is happening in Kashmir."

Q: "In order to stop the bloodshed whether the Government of Pakistan will take initiative or not? This is the basic concern of the media.

A: "Exactly, this is the whole thing. Tell me about the bloodshed, on both sides as a result of which army men are being killed, civilians are being killed. Can this be stopped? Why is this happening? This is happening because of the Kashmir dispute. Can anyone expect this bloodshed to stop and yet expect the Kashmir dispute to stay intact. Is this realistic? Ok. Ok. I am saying this so that it should end. It should end, absolutely... But it will end only when we will go hand in hand, expand the issues and go towards a solution."

7. The Nuclear Question: No question was asked on this topic in Agra.

The Delhi Text

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1. Centrality of Kashmir

"Kashmir is the core issue... Let this be recognised".

2. Need for compromise:

"The road ahead needs compromise from both sides. By this I don't mean one-sided compromises. 'Give and take' is involved if you want to improve the situation. We know about the internal problems of India and the internal problems of Pakistan. We need to rise above these problems. This needs boldness, courage, statesmanship."

3. Shimla & Lahore Accords:

"It has been made out that I have rejected the Shimla Accord and the Lahore Declaration. There can't be anything further than the truth than this. I said the Shimla Accord and the Lahore Declaration haven't moved ahead to bring about normalisation. I didn't say anything about rejection."

(Earlier that day, Foreign Secretary Inamul Haque instantly contradicted Jaswant Singh's charge that Pakistan was showing "selectivity" in adherence to accords (The Hindu, July 15, 2001).

4. Issues other than Kashmir:

To a question by N.Ram about the interpretation of his statement on arrival, which suggests that only a resolution of the Kashmir dispute will lead to "full normalisation", General Musharraf responds: "This is another misperception about what I said". It is "absolutely wrong" to say that his stand is that nothing can move forward unless the Kashmir issue is resolved, "But what I said was, 'Kashmir is the core issue.' My English is not good. Let us find another word, some other adjective (for 'core'). What I mean is that this is the issue on which we have fought wars, which has come in the way of peaceful and amicable relations between Pakistan and India. Let this be recognised. I have nothing against taking up other issues in tandem. What I am against is this. 1) You can't take up other issues at the cost of the Kashmir issue. You have to include Kashmir (in any meaningful effort to normalise and improve India-Pakistan relations) 2) Having taken up various issues in tandem, we cannot move ahead only on those issues and leave the Kashmir issue behind.... Lets take the other issues along." To a question noting that if Pakistan had "core concerns" on Kashmir, India had its concerns (vis-a-vis Pakistan) and should not these also be taken up, General Musharraf responds: "Why not? Everything must move in tandem."

5. The process for a a solution:

"Step I, I feel, is the initiation of dialogue. We have taken this step. The second is: we must recognize Kashmir as an issue, as the issue that has been in the way of peaceful and normal relations between India and Pakistan over more than 50 years. Let's recognize this frankly and honestly. The third is: a structure for solving it, may be a time-frame even."

6. Terrorist violence in Kashmir:

Progress in the talks on Kashmir would have "an indirect bearing on the militancy (in the part of Kashmir with India)."

7. The Nuclear Question:

V.P. Singh asked, "We are both nuclear powers. How do we reduce the scope of accidents, of mishaps, of miscalculation?" Musharraf agrees that the implications of nuclear weaponisation by India and Pakistan need to be addressed. To a follow-up question by N. Ram on what kind of measures he is prepared to discuss with India to end the nuclear stand-off between India and Pakistan and whether he is willing to talk about agreements for non-deployment and non-induction of nuclear weapons, General Musharraf responds that on this issue, "It is better to be blunt. I think that on this issue, these things have generally been initiated by India and we have had to react. On the blasts, on the deployment. Once after India did that, we have reacted, starting raising forces. We can agree to any regime of nuclear restraint, of reducing the risks."

Asked specifically whether he will be willing to discuss an agreement (with India) on non-deployment and non-induction of nuclear weapons, he answers: "Why not?"

The end of Savimbi

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IT was the kind of news that the African continent had been waiting for a long time. Since the Angolan government announced in the third week of February that UNITA leader Jonas Savimbi had been killed in action there have been spontaneous celebrations all over the country. The 66-year-old Savimbi met his bloody end in a remote part of Angola, 700 km east of Luanda, the capital.

Savimbi was undoubtedly a candidate for the title of the world's leading terrorist. The United States, however, did not accord him that privilege even after September 11, highlighting Washington's double standards on the issue. Many other non-decrepit personalities figure in the U.S. State Department's updated list of terrorist and terrorist organisations.

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Savimbi and his UNITA rebel movement were responsible for the death of more than a million Angolans. One-fourth of the Angolan population of 12 million lives as internal refugees, most of them in cities like Luanda. More than 40 per cent of the country's children are malnourished. The long-running civil war destroyed much of the educational system. The Angolan landscape is strewn with mines, most of it the handiwork of the rebels.

In recent months, UNITA rebels were responsible for a series of attacks on civilians. They attacked a train and massacred more than 300 innocent passengers late last year. Remote rural areas bore the brunt of UNITA hit-and-run attacks. Because of the intransigence and personal ambition of Savimbi, the country had not known peace since it gained independence in 1975. Angola had the potential to become one of the richest countries in the world, blessed as it is with phenomenal mineral and hydrocarbon deposits. Today, thanks mainly to UNITA's depredations, the country has been reduced to a basket case.

The main supporter of Savimbi and his UNITA movement was the U.S. Savimbi himself was a creation of the Central Intelligence Agency (CIA). He was hailed as a "freedom fighter" by President Ronald Reagan and accorded in the late 1980s a welcome reserved for visiting heads of state at the White House. His other main supporter was the apartheid regime in South Africa. Savimbi was reviled as a mercenary and a bandit throughout sub-Saharan Africa. In the 1970s and the 1980s UNITA and the South African Army made an audacious attempt to overthrow the legitimate government in Angola. It was the combined force of the Angolan army and a Cuban military force, which was in Angola at the invitation of the government, that thwarted the attempt. They inflicted a heavy military defeat on the South African Army in the historic battle of Cueto Cuenavale. That battle led to the withdrawal of South African troops from Angola and the signing of a broad internationally brokered agreement that led to Namibia's independence and the unravelling of the apartheid regime in South Africa.

But Savimbi lived to fight and spread mayhem for almost another decade and a half. The U.S. continued to back him almost until the mid-1990s and he had some very influential friends in the region, most notably Mobutu Sese Seko of Zaire. Authoritarian leaders in other African countries such as Togo, Burkina Faso and Ivory Coast, helped Savimbi, in exchange for diamonds and money. A United Nations report released two years ago documented the diamond smuggling and money-laundering activities of UNITA. That report forced multinationals such as De Beer's to stop buying diamonds smuggled out of Angola.

It was Savimbi's control over the lucrative diamond-yielding areas that helped him continue with his senseless war even after most of his erstwhile allies had either disappeared from the scene or stopped supporting him. The West withdrew military and diplomatic support after Savimbi reneged on the 1994 peace accord signed between him and President Eduardo dos Santos. An earlier peace accord in 1989 had provided Savimbi an honourable way to enter the political mainstream. Internationally supervised elections were held then and the government had agreed to share ministerial portfolios with the UNITA and integrate its personnel into the bureaucracy.

However, Savimbi re-ignited the civil war when he lost the presidential elections. The government in Luanda was caught napping as UNITA fighters opened new military fronts all over the country. The second international attempt at brokering peace was not successful either. Both UNITA and the Angolan Army were to disarm under U.N. supervision. While the government kept its commitment, Savimbi backtracked on his commitments. This helped UNITA to hold the upper hand between 1998 and 1999.

It is estimated that in the past five years, UNITA earned around $5 billion dollars through the illegal export of diamonds. But the tide turned irreversibly for Savimbi as a better-equipped and trained Angolan Army has had the upper hand for the past two years (Frontline, August 3, 2001). The fact that Savimbi no longer had bases outside Angola helped the Army. Until the mid-1990s, regimes in Africa that were the beneficiaries of Savimbi's largess provided UNITA with bases and safe passage. Today Angola is among the most influential countries in the region.

Senior Angolan officials had told this correspondent in the middle of last year in Luanda that their country was back on the road to reconstruction. Former associates of Savimbi who now hold senior positions in government had said that Savimbi's days were numbered. The government was successful in resisting pressure from the West to negotiate with Savimbi once again.

With Savimbi now out of the way, there are reasons to be optimistic about the future of Angola. Although the second-rung leaders of the UNITA are threatening to keep the fight going, it has nowhere to run to or hide now.

The Angolan government is not in a celebratory mood. It has instead emphasised that this is the time for renewed efforts at reconciliation. President Eduardo dos Santos has once again asked the remnants of UNITA to lay down arms. The government has offered to hold multi-party elections so that UNITA can legally participate in the democratic process. Dos Santos had said last year that he planned to bow out of office. A new generation of Angolans want to bring the curtain down on the gory past and start a new chapter.

John Cherian

A crippling blow for the BJP

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THE outcomes of the Assembly elections in four northern States, which account for one-fifth of India's Lok Sabha seats, confirm what was widely suspected - that the party of the Hindu Right that leads the coalition government at the Centre is in big political trouble. It is another matter that some pre-election public opinion surveys, notably the India Today and Aaj Tak-C-Voter poll, and even exit polls got it wrong, possibly for reasons associated with wishful thinking and political bias. Hyped up, virtually triumphant 'Mood of the Nation' opinion polls done as recently as in January this year and intimating the "Return of the Militant Hindu" seem to have fallen on their face on the Gangetic Plain.

The Bharatiya Janata Party and its allies have been routed in Uttar Pradesh and decisively defeated in Punjab, the new State of Uttaranchal, and Manipur. With these losses, the party finds itself in a pathetic situation in State capitals: of India's 28 States, the BJP will now wield power in merely four, only one of which, Gujarat, is a major State. The party's main national-level opponent, the Congress, will now rule in more than a dozen States, including some large States in both North and South India, and an assortment of regional parties, including two major BJP allies, alliances, and Left parties rule or will assume power in the other States. With political federalism asserting itself in a big way through the democratic process, the Centre's commitment to constitutional provisions and norms upholding federalism and State rights will be on fresh test. The institution of the Governor, appointed by the Centre ('in consultation' with the State's Chief Minister) and acting as the Centre's agent as a rule, will be watched even more closely than it was for its adherence to constitutionalism and fair play. The performance of Uttar Pradesh's Governor, who has a background as a Rashtriya Swayamsevak Sangh (RSS) functionary, will come under the microscope, especially after the constitutionally dubious statements he has made on Ministry formation in the State.

The BJP will also find its space for decision-making and policy-making severely reduced in the period ahead. Its say in who will be India's next President will also be seriously constrained. The best course for the ruling party as well as for all the others that matter in the polity would seem quickly to agree on ascertaining the wishes of India's outstanding and exemplary incumbent President and, if the answer is in the affirmative, offering him a second term.

THE debacle in India's most populous State, a base of communal mobilisation that served as the platform for the BJP's rise to power at the Centre, is a crippling blow from which the party will find it virtually impossible to recover before late-2004, when the fourteenth general election is due. Notwithstanding the enhanced militancy of the organisations of the Saffron Brigade, the Vishwa Hindu Parishad's threat to start building the Ram temple in Ayodhya on or around March 15 (regardless of what the law, the judiciary and the government say), and the sabre-rattling of the Vajpayee government on the India-Pakistan border, the evidence from the U.P. Assembly elections suggests that the masses of Hindu voters have responded no differently from voters from other communities. They have rejected, in impressive measure, the politics of communal mobilisation and jingoism, which goes hand in hand with extreme ineptitude in governance and policy-making on basic issues.

The decline in the BJP's vote-share by more than a dozen percentage points between 1996 and 2002 in India's heartland State sends out a powerful message that the ruling party's stock among the people is in hopeless decline. It appears that there is virtually no chance of the fallen stock recovering before the next general election. It will not be much of an exaggeration for political opponents to claim at this stage that the Vajpayee government has lost its legitimacy. All players, major, middling and minor, in the political system can be expected in the weeks and months ahead to respond to this message.

Crucially in U.P., the BJP now faces a dilemma - to make a bid to share power at any cost, or to sit in the opposition. Opting for the latter course means making a virtue of necessity. This may give the BJP a certain space for manoeuvre. It may allow the party more effectively to direct fire at its bugbear, the Samajwadi Party (S.P.) led by Mulayam Singh, as well as its main national opponent, the Congress. Aside from the challenge of putting together a majority in the 403-member Assembly, which inevitably means breaking the Bahujan Samaj Party (BSP) and possibly the Congress, a Mulayam Singh-led government will need to contend with an aggressive VHP mobilisation, which can be modulated to suit the situation. BJP tacticians claim that sitting back, letting the Governor examine his options, and allowing opportunity to the S.P. and the Congress either to come together or bicker and 'make a mess' of the inherently unstable situation makes tactical sense. This is indeed the course ostensibly chosen by the BJP's parliamentary board after several Sangh Parivar veterans publicly called for it. However, given the stakes in holding power in this battleground State, doing a deal with the formidable BSP spearheaded by the Dalit leader, Mayawati, holds attraction. Will the BJP be able to resist temptation?

THE economy, although technically still in growth mode, is going through a serious recessionary downslide. Aside from a fiscal deficit seriously out of line, the numbers are not looking good at all. Privatisation and liberalisation continue to be the mantras offered against all manner of economic troubles and ailments. In the midst of its economic and political troubles, the Union Cabinet has, with ham-handed timing, cleared a decision to amend the Industrial Disputes Act, 1947 to facilitate layoffs and retrenchment as part of its 'labour reform'. This sets up for the government a major confrontation with virtually all the trade union organisations in the country. The Shiv Sena's public threat to pull out of the National Democratic Alliance if the government does not reconsider its decision within a month, and Bal Thackeray's public announcement that the Sena is willing to join hands, if necessary, with leftist trade unions to fight the anti-worker move, is an early intimation of the trouble that lies ahead for the Vajpayee government on this critical issue.

"Being in the opposition is the best game in town," wrote a British statesman in the early nineteenth century. From now on, the opposition parties in India's Parliament and all those opposed to the anti-secular, anti-democratic, chauvinistic and anti-people policies of the government led by the Hindu Right will have tremendous opportunities to gain the upper hand and dictate terms in the polity.

Identity questions

The decisions of the Allahabad High Court and the Delhi High Court in two election-related cases raise questions about the Election Commission's role in maintaining the integrity of electoral rolls.

WHILE disposing of a public interest petition on February 11, a Division Bench of the Allahabad High Court, comprising Chief Justice Shyamal Kumar Sen and Justice S.R. Alam, held that a person who figures in the electoral roll cannot be denied the statutory right to vote merely on the ground that he or she does not possess any one of the 18 documents specified by the Election Commission (E.C.), in lieu of the Electors' Photo Identity Card (EPIC) that the E.C. has issued to some voters, for establishing identity.

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The court observed that the card was intended to facilitate the process of election in case of a challenge to the identity of an elector. Therefore, the court said that voters in Uttar Pradesh could produce before the Presiding Officer at the polling booths any valid document, even other than the 18 documents specified by the E.C., instead of the card, in order to establish their identity. The E.C. appealed against the High Court's judgment by means of a Special Leave Petition filed before the Supreme Court and obtained a stay on it on February 12.

Introduced in 1993 during the tenure of former Chief Election Commissioner T.N. Seshan, the card distribution to eligible voters has made slow progress in some States. Seshan even threatened to defer the holding of elections until all electors got their cards. However, faced with judicial challenge from States such as West Bengal, Bihar, and Orissa, the E.C. relented and told the Supreme Court that it would not stop any elections on the ground that the cards had not been supplied to all.

Seshan's successor M.S. Gill managed to make progress with the cards without risking the wrath of the judiciary. Acknowledging that it would not be desirable to make the production of the cards mandatory for voting, especially because the implementation of the scheme across the States was in various stages, starting with the Haryana Assembly elections in February 2000, the E.C. made it compulsory for every voter to prove his or her identity by producing either the card or any of several other specified documents. As there have been no serious complaints of voters having been denied the opportunity to exercise their franchise owing to this requirement, the E.C. continued the practice.

But the judgment of the Allahabad High Court is an indicator that the E.C.'s requirement might be flawed. On January 23, in view of the elections to the Uttar Pradesh Assembly, the E.C. first prescribed 16 alternative documents that would help establish one's identity. These included passports, driving licences, Permanent Account Number cards issued by the income-tax Department, identity cards issued to employees by the State or the Central government, public sector undertakings, local bodies, or private industrial houses, bank/kisan/post-office pass books, ration cards issued prior to January 1, 2001, Scheduled Caste/Scheduled Tribe/Other Backward Classes certificates, student identity cards, property documents, arms licences, conductor's licences, pension documents, ex-servicemen's widow or dependent certificates, railway or bus passes, certificates that prove physical handicap, and freedom fighter identity cards. On February 7, the E.C. added to the list items such as Photo Identity Cards issued by the Bar Council of the Allahabad High Court, and certificates of residence issued by village administrative officers.

It is obvious that the list is not exhaustive enough to enable all eligible voters, who might otherwise find their names in the electoral rolls, to exercise their franchise. Counsel for the E.C., S.P. Gupta, who had appeared before the Allahabad High Court, conceded that the alternative mode proposed by the E.C. was not exhaustive, and that some more details were to be prescribed if electors were not to be deprived of their voting rights.

According to official estimates, till July 2001, only 52 per cent of the eligible voters in Uttar Pradesh had been issued the cards. That leaves a huge section of voters who might have to produce any of the alternative documents in order to establish their identity at polling centres. There is reason to believe that the E.C. might not have considered the possibility of some voters being denied their right to vote, or choosing not to turn up at the polling booth, simply because they did not have the card or any one of the 18 documents.

For example, in the Kanakapura Lok Sabha byelection held on February 21, the E.C.'s identification requirements led to bizarre situations. Voters who did not possess any of the 18 documents made a beeline to a local cooperative bank to open accounts, with the intention of closing them after using their pass books to vote in the elections. There were also cases of electors whose names were spelt in different ways in ration cards and in electoral rolls. Again, in the case of voters belonging to the Lambani community, who number 1.85 lakhs in Kanakapura, illustrates the flaws in the E.C.'s requirement. The Lambanis are nomads and do not possess any kind of documents, let alone EPICs, which have not been issued to them.

The right to vote may be only a statutory right and not a fundamental right, but can the E.C. intervene here in the guise of checking impersonation? The number of voters effectively disenfranchised following the new requirements may not materially affect the outcome of the election so as to warrant the filing of an election petition, but the E.C. seems to have compromised the electoral process by insisting that the requirements be met.

The Allahabad High Court has pointed out that Section 28 of the Registration of Electoral Rules, 1961, clearly specifies the mode of identification of a voter. If the statute specifies that a particular procedure be followed, it is to be followed that way and in no other way, the court said.

The E.C. contended that its requirement was justified by virtue of Article 324 of the Constitution, and questioned the Allahabad High Court's powers to hear the matter once the notification for elections had been issued, in view of Article 329 (b).

Article 324 (1) vests the superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to Parliament, the State legislatures, and to the offices of President and Vice-President, in the E.C. The words "superintendence, direction and control" contained in Article 324 (1) have been interpreted by the Supreme Court to have a wide connotation so as to include therein such powers as are necessary for the effective holding of elections. This Article is intended to empower the E.C. to act in contingencies that are not provided for by law, and to pass necessary orders for the conduct of elections. In its judgment, the Allahabad High Court, citing a Supreme Court order, made it clear that Article 324 (1) was subject to the norms of fairness.

Under Article 329 (b), no election to Parliament or the State legislatures shall be questioned except by means of an election petition presented to a High Court under the Representation of the People's Act (RPA). The term "election" has been interpreted to include all steps and proceedings commencing from the date of notification till the date of declaration of the result. Thus, under this Article, if an election is called in to question, and this interrupts, obstructs, or protracts the election process, the invoking of the judicial remedy has to be postponed until after the elections, in order to facilitate the functioning of democracy.

However, the Supreme Court has held in an election appeal case that judicial intervention is allowable if the assistance of the court is sought to correct or smoothen election proceedings, to remove obstacles therein, or to preserve a vital piece of evidence if the same would be lost or destroyed or rendered irretrievable by the time the results are declared and the jurisdiction of the court is invoked.

In another case relating to the byelection to the Tamil Nadu Legislative Assembly from the Andipatti constituency held on January 21, the Delhi High Court dismissed a writ petition filed by the Dravida Munnetra Kazhagam candidate, 'Vaigai' Sekar, seeking the postponement of the election on the ground that many bogus voters had been enrolled. Justice Manmohan Sarin held that unless a clear-cut case was made out that there had been mala fide or arbitrary exercise of power by the E.C., the court had no jurisdiction to issue a directive, barred as it was under Article 329 (b).

This makes it clear that immunity from interference by the courts under Article 329 (b) once the election notification is issued till the declaration of results, is not an absolute one. The Judge endorsed the Commission's decision to postpone the byelections in the Saidapet and Vaniyambadi Assembly constituencies in Tamil Nadu, as it found some basis with regard to complaints of illegal additions having been made to the voters' lists (Frontline, March 1). Referring to a complaint that 17,000 bogus names had been included in the rolls, the Judge pointed out that the E.C. had verified the situation and had explained every aspect regarding redress of complaints.

However, the Judge gave the petitioner the liberty to file an election petition after the declaration of results if he felt that the electoral rolls in question had materially affected the results. Ironically, however, the grounds for declaring an election void as specified in Section 100 of the RPA - which can be invoked in an election petition - do not include the non-enrolment of eligible voters or the enrolment of ineligible voters. Observers, therefore, wonder whether the petitioner will then have no remedy at all.

Justice Sarin observed that it was likely that political parties, based on their own assessment of their prospects, might seek either to go through or defer elections. For this purpose, they could complain that electoral rolls were not properly prepared, he said.

Democratic processes should not be thwarted or permitted to be derailed on the basis of what may be termed as political opportunism, he remarked. If this proposition can be accepted, the E.C. might be equally wrong in entertaining complaints of irregularities in rolls after the announcement of the byelection schedule in the three Assembly constituencies, and postponing the polls in two of them.

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Oct 9,2020