Saturday, 30 January 2016
Friday, 29 January 2016
India’s ‘Look East’ and ‘Act East’ Policies Reviewed 2016
India’s ‘Look East ‘Policy was impelled by economic and political imperatives whereas India’s ‘Act East ‘Policy was impelled by India’s strategic imperatives to establish its strategic footprints in South East Asia, a region where India has had established its footprints centuries back and where China has been muscling-in its way for decades.
Requires noting is the fact that while India’s visionary Prime Minister P V Narasimha initiated the ‘Look East’ Policy in the year 1992. India’s ‘Act East’ Policy has taken substantive shape in declaratory terms only with the advent of Prime Minister Modi’s regime. More notably, India’s ‘Act East’ Policy was not only impelled by India’s own strategic imperatives but also a call by United States and Indo Pacific countries that India’s ascendant strategic profile warranted India should also implement an ‘Act East’ Policy to emerge as a net provider of security in this vital region.
The picture obtaining in 2016 is that India is engaged in an integrated and seamless implementation of both its ‘Look East’ and ‘Act East’ policy befitting its emerging power profile. However India cannot rest complacently on its oars and expect that the momentum gained would enable a further smooth sailing ahead.
China looks with disfavour on India’s ‘Act East’ Policy implementation because China believes that South East Asia and the Western Pacific littoral is China’s strategic backyard and India has no business in interloping into the region. China can therefore be expected to indulge in some deft manoeuvring in limiting India’s growing influence especially enlisting countries like Indonesia, Laos and Cambodia and possibly Thailand also.
Comparatively, India under Prime Minister Modi has been successful in establishing a Special Strategic Partnership with Japan and strategic partnerships with South Korea and the Philippines. India also has a strong and traditional Strategic Partnership with Vietnam where defence and security relationships are being substantially being reinforced.
Notably, India’s ‘Act East’ Policy strengthening of defence and security relationships coincides and rests on Indo Pacific countries which constitute the Outer Perimeter of United States security ring of defence of Continental United States. It may just be coincidental arising from these countries similar strategic concerns on China’s not so peaceful rise endangering regional security.
Strategically fortuitous is the emerging strategic reality that portends well for the future stability and security of Indo Pacific Asia is the growing strategic congruencies of India with the United States, Japan, Vietnam and Australia. While this does not portend the emergence of a military alliance of these strategically like-minded nations but it is a strong pointer that despite the absence of a formal military alliance structure there exists strategic space for a loose military cooperative framework. This itself puts in place an existential strategic counterweight of balancing a China bent on crafting a China-centric order in Indo Pacific Asia.
In Indo Pacific Asia, in the years to come, India would be expected to play a significant role upholding the security and stability of the region. Leadership roles do not come cheaply or handed on the platter and India should not expect that it’s ‘Act East’ Policy by itself would rhetorically endow it with a salient leadership role. It comes with a price and the price that India would have to pay in this direction is to stand firmly upto China both in the context of the China-India military confrontation but more importantly in measuring upto Indo Pacific nations expectation that it stands upto China in the interest of overall security and stability of Indo Pacific Asia. This is the salient concluding observation that emerges if India is really to achieve the intended end-aims of its ‘Act East’ Policy.
China’s Economic Slowdown& Its Strategic and Military Implications
China’s much hyped economic bubble has finally burst with its recent stock-markets crash and now the annual growth rates which were in double digits earlier slipping to just 6-7% leaving in its wake serious strategic and military implications for China’s ‘Giant Leap’ to emerge as a Superpower.
China in view of its serious economic challenges and its attendant political and strategic implications needs to seriously introspect for a change of strategic directions if it does not want to be sucked into the same trap as the former Soviet Union leading to its eventual disintegration. Arms race with the United States and a huge debt-ridden economy led to disintegration of the Former Soviet Union.
China’s economy admittedly is not in a meltdown state with China’s leaders trying to reset China’s economic strategies with the large trillion dollars financial reserves at its disposal. However, the big question is whether China’s economic slowdown is reversible and whether political and strategic space is available to Chinese leaders to bring about a reversal of the economic slowdown and bring back the Chinese economic growth to double-digits rates as before.
Admittedly, it may not be a meltdown at this stage but it also cannot be dismissed outright that these may be the opening scenes of what can ultimately turn-out to be a meltdown. Why I make this assertion is that an economic slowdown of Chinese economy would confront Chinese leadership with grave challenges of subsidising their aspirations for emergence as a global Superpower contending with United States from limited resources and the graver challenge of rising unemployment and domestic discontent.
This finds reflection in my latest Book” CHINA-INDIA MILITARY CONFRONTATION: 21ST CENTURY PERSPECTIVES” which has a Chapter on “China’s Giant Leap for Superpower Status & Its Geopolitical Implications”.
China’s economic slowdown and its implications has been the subject of avid debate in US think-tanks for the last few months and virtually everyone agrees that China has a serious and grave challenge ahead. Recently, Professor Lee of the Hudson Institute gave an impressive articulation in Australia. Some of the more notable conclusions that Professor Lee made are (1) Chinese economic slowdown presents an existential challenge to the Chinese Communist Party (2) Days of Chinese double-digit economic growth are now a thing of the past (3) Chinese economic slowdown will have the psychological impact of paralysis in Chinese policy-making (4) China is not a driver of global economy. Economic slowdown adds serious challenges to Chinese leadership as time is not on China’s side.
With the Chinese income tax payers’ base reported to amounting to only2% or so, the Chinese economy has largely been driven by massive foreign investments. Slowdown in any nation’s economic growth invariably results in flight of foreign direct investments and while not much information is currently surfacing on this account, the fact is that such a possibility exists. In the case of China, what counts is not only the not so optimistic forecasts of China’s economic revival but also the loss of global trust in China’s economic resilience, China’s record of not being a responsible stakeholder in global stability and security becomes a double-edged danger when added to the implicit perception in which China’s not so satisfactory record of financial manipulations of its currency is added
Without going too much in Chinese flawed economic and financial policies and the reasons arising from thereof, the main theme of this Paper is to analyse the strategic and military implications that would arise from a slowdown of the Chinese economy and on China’s powerful rise. The analysis is being done at a macro-level so as to provide food for thought for the strategic community.
Strategic Implications of China’s Economic Slowdown
Perceptionaly, the most significant strategic hit that China will face is the denting of its much-hyped American mythification that China is well on the way to emerges as a Superpower, though not necessarily a responsible one.
In the words of Bonnie S Glaser and her Associate in a November 2015 CSIS piece the point stands made that: “Despite being widely recognised as the most powerful emerging country in the world, China’s international position rests upon untested foundations. Unlike other leading countries whose national strength emanates from the confluence of military, economic, social and geopolitical vectors, Chinese power is inexorably tied to the expansion of the Chinese Economy”. With such a given it is inevitable that the meteoric rise of Chinese military power, so far unrestrained, would now feel the challenge of brakes being applied as Chinese leaders juggle around the division of their budget between military power and providing safety fuses for domestic unrest brought about by an economy on a slowdown.
On the global plane, the above will have a direct impact on China’s ambitions to attain strategic and military equivalence with the United States or at least reduce the differentials of Chinese power with that of the United States. Conversely, the United States strategic pivot to Asia Pacific and rebalancing its Forces in the Pacific will be better placed to take on the Chinese military challenge with resources getting limited to reinforce its military capabilities.
Another major strategic hit that China is likely to face is its switch of its Grand Strategy as spelt out in China’s Military Strategy Document 2015 which signalled that China would switch from a predominantly Land Warfare Strategy to a Strategy of Maritime Predominance and Power Projection in Distant Seas. With a squeeze on Chinese defence budget, it is quite likely that the switch in Chinese Grand Strategy gets impaired.
Chinese Economic Slowdown & its Impact on China’s Core Interests
China in recent years has designated Taiwan, the South China Sea and Tibet as China’s “Core Interests” to be defended by force, if challenged on these issues..
It remains to be seen as to how and with what intensity China can safeguard its “Core Interests” with a decline in defence budgets and reduction of force projection capabilities. But a dilution of China’s military effectiveness and military capacities for military brinkmanship is a very much a possibility.
China’s Economic Slowdown and Its Military Implications
This aspect is too wide a subject and needs a comprehensive analysis of a host of factors. Suffice it to say that in the limited scope of this Paper, the most notable point is that since the entire edifice of Chinese rising power and the Communist Party’s iron control on China’s domestic political control depends on the military power and effectiveness of China’s Armed Forces, there exist serious implications here.
Here again a serious challenge awaits the Chinese political leadership in terms of proportionate distribution of restricted defence allocations. China’s domestic discontent is likely to grow and when this is coupled with the emerging widespread discontent on China’s peripheries like Xinjiang and Tibet, Chin would have to divert greater resources for the Chinese Peoples Armed Police. Conversely this would result in lesser resources for the PLA’s all three wings.
In terms of China’s Core Interests’ two of these Core Interests of Taiwan and South China Sea would require greater Chinese naval and air force power, which can come only at the cost of China’s Land Armies.
Concluding Observations
Two major observations need to be made in conclusion. The first is that in terms of Asia Pacific security and stability which was endangered seriously by China’s unrestrained military rise, the potency of the emerging China Threat is likely to stand relatively diluted.
Secondly, the United States needs to reset its China-policies of China-Appeasement at all costs. China will increasingly be less of insurance for American strategic interests’ vis-à-vis Russia.
- See more at: http://www.southasiaanalysis.org/node/1931#sthash.o2FHE8P8.dpuf
COP21: The Toothless Paris Agreement
After two weeks of intense negotiations in Paris, 196 nations signed what is being hailed as a ‘landmark’ deal to limit carbon emissions, restrict the rise in global temperatures to below 20C of pre-industrial levels, and make the world economy carbon neutral by the second half of the century. But how effective can an accord, which aims to assuage the concerns of diverse countries with diverse agendas, be especially when the commitments that have been made are voluntary?
Unsurprisingly, there is more scepticism than optimism that governments will do the needful to transform their fossil fuel-dependent economies to ones that use more sustainable and cleaner energy resources.
For instance, a recent New York Times article reported that Chinese state owned companies have undertaken, and have commenced, the construction of coal-fired power plants in 27 countries across the developing world with loans from the Chinese Exim Bank. The report also stated that Beijing is in fact encouraging its state-owned firms to go out and seek projects in neighbouring countries in order to offset declining profits at home due to a glut in domestic coal-fired plants, increase demand for Chinese steel and bind the Chinese economy more closely with its neighbours. In fact, coal-based plants account for 68 per cent of the generation capacity built by China in the rest of Asia, and that figure is set to increase.1
The developed countries too cannot be exempted from blame. Although West European countries are cutting down on coal consumption, their eastern counterparts, in what is being alluded to as a new “coal curtain”, are increasing both output and consumption. For example, while Poland and the Czech Republic have announced an expansion in production of their domestic coal reserves, other European nations are also investing in new coal production and generation capacity. Even Germany, which is at the forefront of steering Europe’s shift to renewable energy, seems to be caught in the horns of a dilemma between protecting some 21,000 coal sector-based jobs and cutting emissions from coal-based plants. But after pledging to close down its nuclear reactors by 2022, it may have to depend on coal, which provides more than a fourth of its electricity, for filling the gap vacated by nuclear energy.
Therefore, the biggest, and possibly the only, success of the COP21 summit is that a deal was signed at all. To elaborate, first, because of US pressure, the Intended Nationally Determined Contributions (INDCs) and emission reduction targets will now be voluntary, with each country allowed to set its own target. Accordingly, large emitters like the US have pledged to reduce emissions by 26 to 28 per cent by 2025 from 2005 levels; the European Union has committed to a 40 per cent cut in emissions from 1990 levels by 2030; and China has pledged to peak its greenhouse gas (GHG) emissions by 2030 and cut CO2 emissions by 60 to 65 per cent from 2005 levels. Given that the world will use 900 of the remaining 1000 Gigatonnes of carbon by 2030, of which half will be used by China, the US and the EU, what space does that leave for other developing countries including India?
Second, the Agreement facilitates developed countries profiting from carbon trading. Article 6, paragraphs 3 and 4, without even mentioning markets, introduced a provision called Internationally Transferred Mitigation Outcome (ITMO), which is an enhanced version of the Clean Development Mechanism (CDM) and Joint Implementation. This benefits the developed West to make profits by not only using carbon trading for profits but also endorses the inclusion of ITMOs in Nationally Determined Contributions.
The third, and perhaps the most contentious issue, is the provision regarding the financing mechanism. Article 9, paragraph 3 states that “the developed countries intend to continue their existing collective mobilisation goal through 2025” and that prior to that, the COP “shall set a new collective quantified goal from a floor of USD 100 billion per year, taking into account the needs and priorities of developing countries.” The fact that a similar commitment of providing USD 100 billion towards the Green Climate Fund was made as far back as November 2010 at COP16, a commitment which the developed countries have yet to deliver on, induces cynicism about the latter’s intention to deliver on any financial obligation.
Lastly, the fact that the developed countries succeeded in making all commitments non-binding, makes the Paris Agreement almost toothless. As charted out in Article 21, the agreement will take effect if it is ratified by more than 55 per cent of nations or nations that are responsible for 55 per cent of global emissions. However, Article 28 goes further in diluting any responsibility accruing to the developed world by stating that “At any time after three years from the date on which this Agreement has entered into force for a Party, that Party may withdraw from this Agreement by giving written notification to the Depositary.”
If India can take any comfort from the summit it is only the fact that it was successful in ensuring that it deflected pressure on setting a date for capping its emissions, thereby giving it the space to develop. India has promised to reduce its emissions by 33 to 35 per cent by 2030 from 2005 levels. It has in fact made it clear that while it was committed to hike its renewable energy portfolio seven-fold by 2022, which includes besides solar and wind portfolios, hydro and nuclear energy as well, it would not only double its coal output by 2020 but would also continue to rely on coal for decades thereafter due to its abundant reserves of the resource and because it is the cheapest source of energy. Moreover, as Piyush Goyal (in charge of the ministries of coal, power, and renewable energy) noted, India with 17 per cent of the world’s population contributed only 2.5 per cent to global GHG emissions as against the developed countries’ contribution of over a fifth of GHG emissions with just five per cent of the world’s population. More importantly, India has also successfully prevented the inclusion of developing countries from making mandatory financial contributions to the global finance pool. As a result, any financial and technical assistance that India provides to other developing countries will be voluntary.
Given all this, to put it in the words of James Hansen, the father of climate change, “It’s a fraud really, a fake. It’s just worthless words. There is no action, just promises. As long as fossil fuels appear to be the cheapest fuels out there, they will be continued to be burned.”2
MYANMAR: Is the long drawn Peace Process coming to a Halt?
The peace process that was started by the Thein Sein Government in August 2011 has come to a dead end with the conclusion of the five day Union Peace Conference (marking the beginning of a long-sought political dialogue) held at Naypyidaw from 12-16 January, 2016. One of the proposals approved in this conference was that the political dialogue must conclude within the next three to five years.
Vice President Sai Mauk Kham said, in his closing remarks at this Union Peace Conference, that documentation of all discussions throughout the conference will be handed over to the new government when it assumes power (The Irrawaddy – January 18, 2016).
Aung San Suu Kyi was however critical of this peace process and the so called Nationwide Ceasefire Agreement (NCA) because the pact was not inclusive. She said “now we are ready to lead the peace process, because we have the power invested in the mandate given to us by the people and ethnic minorities” – (Mizzima – 17 January, 2016).
The cooperation of the army is of paramount importance for this peace process to be successful. In this connection it is significant that Gen Tin Maung Win at the end of the peace conference said that “the Tatmadaw was ready and willing to co-operate with Suu Kyi in the continuation of the Peace Process (DVB – 15 January, 2016).
Background
Myanmar has been ravaged by a civil war (perhaps the longest in world history) which has lasted over six decades since independence (1948).
The Panglong Agreement signed on 12 February 1947 between Gen Aung San and the leaders of the Kachin, Shan and the Chin ethnic groups paved the way for independence (1948) and creation of a federal state with the option for ethnic minorities to secede from the union after 10 years from independence.
The agreement was laid to rest along with Aung San (assassinated in July 1947) as the civilian and military governments from 1948 considered a federal set up will disintegrate the nation and hence started marginalising the ethnics and tackling them militarily. This has resulted in this ongoing civil war.
The differences and diversities of the ethnic groups by way of religion, language, ethnicity strength, ideology and the large distances between the areas occupied by these groups have been exploited by the Myanmar Army in attacking them piece-meal and by adopting the strategy of “divide and rule”. Thus the civil war has been kept on a low key over the years.
The approximate demarcation of the areas occupied by the ethnic groups is shown in the map attached at Appendix A to this paper.
Two rounds of bilateral ceasefire agreements between the government and ethnic armed groups, the first between 1989 and1997 and the second during 2011-12 had also brought a temporary lull in the civil war. By these ceasefires, the army has managed to weaken these groups without addressing their demands. Moreover, some of those agreements were broken by the Tatmadaw (Myanmar armed forces) or the rebel groups resulting in the continuation of the civil war till date.
It was only in June 2013, the Thein Sein Government decided upon having a nationwide (multilateral) ceasefire agreement. Though such an agreement was signed in October 2015 it cannot be truly called a nationwide ceasefire agreement as the majority of ethnic armed groups including the major ones declined to sign that agreement.
The Government and the Peace Process
The Peace Process began in 2011, when President Thein Sein called upon the ethnic armed groups to hold peace talks initially at the state level and then at the centre. A committee of law-makers managed to get bilateral ceasefire agreements with some groups while U Aung Min, a cabinet minister, with his team concluded some ceasefire agreements with some rebel groups in the eastern part of the country.
In 2012, two committees were formed – the Union Peace-making Central Committee under the leadership of the President and the Union Peace-making work Committee under the leadership of the Vice President. Subsequently these two committees were merged into one with U Aung Min, a cabinet minister, as the Chief Negotiator.
The Myanmar Peace Centre was established in November 2012 (as part of an agreement with the Norway-led Peace Support Donor Group) as a semi-governmental set-up to assist the two government peace committees and to act as the nodal point for all matters pertaining to the peace process.
The Government then gave its framework for the process in an eight-point peace plan which among other things included the proposal for ethnic groups to form political parties to further their demands.
The government also allowed the ethnic groups to have discussions among themselves both within the country and in locations in the neighbouring countries.
The government also reneged on its earlier firm stand to accept the demand of the ethnics for the term “federation” to be included in the draft ceasefire agreement.
After a number of informal and formal rounds of talks between the government and the ethnic armed groups, the first draft of a single-text Nationwide Ceasefire Agreement (NCA) was agreed upon and signed on 31 March 2015 by representatives of the government and ethnic groups. There were a few more rounds of talks on amendments proposed by the ethnic groups to the draft approved in March 2015. Similarly after many postponements of the date for signing of the Nationwide Ceasefire Agreement (NCA), it was eventually signed on 15 October, 2015 amid much fanfare and in the presence of a large gathering which included representatives of political parties and foreign observers. The absence of Aung San Suu Kyi, the main opposition leader, from the signing ceremony was conspicuous.
The list of Ethnic Armed Groups that have signed the agreement and the list of the non-signatories are attached at Appendix B to this paper.
Ethnic Armed Groups
Since the military government took over in 1962, the policy of Burmanisation resulting in open discrimination of ethnic minority groups in matters of culture, education, language and religion has only prolonged the civil war till date.
The ethnic groups have tried time and again to establish an alliance to work for their rights and autonomy but have failed on most occasions. In February 2011 an umbrella group called the United Nationalities Federal Council was formed to represent the ethnic groups which also had differences with the Working Group for Ethnic Coordination (WGEC) in deciding on the modalities for talks with the Government.
Under pressure from the Government the Kachin Independence Organisation, which had not entered into a ceasefire agreement (since the last one was broken in 2011), agreed to become a part of the peace process and attended the talks held at Myitkyina from 08-10 October 2013.
A KIO sponsored four day conference was held at Laiza (KIO HQ) from 30 October to 02 November 2013 which was attended by 18 Armed groups. The salient feature was the formation of a 13 member committee called the “Nationwide Ceasefire Coordination Team (NCCT)” for further negotiations with the government.
The next round of talks was held at Myitkyina on 04-05 November 2013 between the government and the NCCT where the ethnic groups presented their 11 point proposal while the government gave out their 15 point proposal for arriving at a nationwide ceasefire.
The ethnic groups had a number follow up meetings (to study the government proposals) of which the ones held at Law Khee Lah from 20-25 January, 2014 and the second from 02-09 June 2015 were significant. In the first meeting the most contentious issues were discussed and their stand communicated to the government. In the second, a negotiating committee called the Senior Delegation for Nationwide Ceasefire Negotiations was constituted which had taken over the responsibilities of the NCCT.
In the conference held at Myanmar Peace Centre, Yangon on 08-09 March, 2014 a joint committee with an equal number of members from the government agencies and the ethnic groups was formed to draft a nationwide ceasefire agreement.
However, differences continued to crop up within the ethnic armed groups in the proposals arrived at, in the modalities of the negotiations, and even in the terminology used in the draft. It is also pertinent to note that the biggest ethnic armed group United Wa State Army (UWSA) and its ally National Democratic Alliance Army (NDAA) did not even participate in any of these talks.
Finally, only 8 of the 15 Ethnic Armed Groups that were involved in the talks signed the Nationwide Ceasefire Agreement on October 15, 2015. Of the 8 groups that signed the agreement the only important group is the Karen National Union/ Karen National Liberal Army (KNU/KNLA) with an estimated strength of 4000 to 5000 armed soldiers. Of the groups that did not sign the NCA, the significant ones are the UWSA (20-30000 armed soldiers) and the Kachin Independence Organisation (8-10000) soldiers.
Both the government and the Tatmadaw opposed the signing of the NCA by three armed groups as they were involved in fighting with the Tatmadaw in early 2015.They are:
Myanmar National Democratic Alliance (Kokang)
Ta’ang National Army
Arakan Army.
Interestingly the non-signatories of the NCA attended a summit hosted by the United Wa State Army (UWSA) at its HQ Pangshang from 01-03 November 2015 to discuss building cooperation among the non-signatories and plan their strategy to approach the new government which will be in power by March 2016. Some analysts suspected China’s blessings for this meet.
The Armed Forces
In the initial stages, the Army was not cooperating with the government in the peace process. It was involved in regular clashes with the Kachin Independence Army (KIA) since June 2011 and continued with the military actions escalating to the use of artillery and air power. Despite orders from the government to stop fighting (in December 2011) the army was involved in skirmishes even while peace talks with the government and the KIA were in progress.
Perhaps for the first time Lt Gen Myint Soe was part of the government delegation in the talks held at Myitkyina in November 2013. At the end of the talks he reportedly said that the Tatmadaw cannot accept the idea of a federal army as proposed by the ethnic groups in the talks. Since then the Army representatives have been attending all the talks held with the ethnic armed groups.
The Army, in the talks with the ethnic groups and in the media, have always been harping on its six point plan. The six points demand that ethnic groups:
- have a “genuine wish” for peace
- keep any promises they make in the peace process
- refrain from exploiting peace agreements
- must not be a burden on the people
- follow the rule of law in Burma
- respect the Burmese military-drafted 2008 Constitution.
“During the negotiations, Burma Army officials maintained that military integration meant disarmament, demobilisation and reintegration (DDR), while ethnic armed organisations saw the process of integration as security sector reform (SSR) which has wider implications than DDR and includes a whole range of reforms including of the judiciary and the police”. Dr.Sai Oo-The Irrawaddy, July 13, 2015.
C-in-C Sr. Gen. Min Aung Hlaing and his Deputy Vice Senior General Soe Win signed the Nationwide ceasefire Agreement on October 15, 2015 on behalf of the Tatmadaw.
Sr. Gen Min Aung Hlaing in an address to the press council on 25 January 2016, has promised greater transparency throughout the peace process and said that the military was working closely with the government and the parliament to ensure the rule of law and urged the media to remain “positive”.
Conclusion
The signing of a Nationwide Ceasefire Agreement is just the first phase and perhaps the easiest of the peace process. The hard part comes when political dialogue is initiated.
President Thein Sein has rushed through this peace process in order to finalise it before November 2015 elections even when a majority of the ethnic groups had not acceded to it.
Some Analysts feel that the peace process is flawed and that the political dialogue or agreement should have preceded the ceasefire and not the other way as it has been done now.
The 2008 Constitution in its present form is the biggest hurdle for the peace process as it stipulates that all armed forces in the union shall be under the command of the defence services, which is unacceptable to the ethnic groups. Besides it precludes a federal structure of the union which is the main demand of the ethnics.
The peace process as and when it fructifies will definitely be a set back for the Tatmadaw as it will reduce its importance. Hence its reluctance in the peace process is understandable.
China was involved (2012- 2013) in hosting the peace talks between KIA and the Myanmar government at Ruili (in Yunnan close to Myanmar border) as well as in sending observers to the talks perhaps to preclude the US from taking this initiative. Prior to signing of the NCA in October 2015 media reports indicated that China has influenced ethnic troops close to its borders, particularly the UWSA not to sign the NCA, though this has been denied by China. For its own strategic interests, China will continue to exert pressure on the Myanmar government through these groups.
Ethnic Armed groups that have not signed the NCA are perhaps hoping that the new government will be more amenable in looking after their interests than the present one.
To carry forward the peace process, the new government has an uphill task in that it has to adopt a fresh strategy and start afresh if it has to lure the non-signatories of the NCA to come into the fold.
As of now the Peace Process has come to a state of hibernation.
- See more at: http://www.southasiaanalysis.org/node/1935#sthash.yInnRrPl.dpuf
Facebook’s Free Basics: A Digital Apartheid
One ‘narrow’ way of analyzing the Facebook craze: it is a medium which essentially caters for two sets of people; one, who are keen to know what is happening others’ lives and two, who are keen to tell (flaunt) others about what is happening in their lives’! Over a period of time owners and administrators of Facebook have realized that there are other people in the world apart from these two categories, who are keen to use Facebook for its various useful apps (applications). Presently, many from the developing and least developed parts of the world do not have access to the internet. Hence, Facebook is keen to bring these ‘deprived’ people under an internet umbrella, largely controlled by them. Since, their target population is from the developing world, Facebook is found using internet philanthropy as a medium (read façade) to attract this new clientele with a concealed ‘profit’ agenda.
Internet.org was born during August 2013, when Facebook collaborated with some big businesses in mobile telephony like Samsung, Ericsson, and Nokia to provide affordable access to selected internet services with an aim to make internet available to underdeveloped, needy and poor states. Mostly, the states under this scheme were from parts of Africa, South America, Southeast and South Asia. Facebook claimed that they are providing internet services to the ‘have-nots’ via mobile telephony and Internet.org apps. However, they were handpicking internet services, thus leading to restricted access to the full potential of internet. To start with, it was immoral on the part of Facebook to use the word internet to describe their ‘apps’. This provided a wrong sense to the users who believed that they would be able to access the entire ‘spectrum’ of internet. The foremost criticism Internet.org received was about compromising on Net Neutrality. Net Neutrality allows the internet user to have full access to all content and applications irrespective of the source. It is about ensuring that there is no intentional effort to provide access to limited information by blocking particular products or websites (barring illegal sites). It is also about ensuring that no favoritism takes place in that various websites are accessible at the same speed. The idea is to treat all data as equal.
Since Internet.org faced disapproval from many quarters and came to be derided as a the “walled garden”, the Facebook has taken a corrective measure and has renamed it as Free Basics since September 2015, with a promise that there would be no filters to block any information. Facebook has claimed yet again that it is trying to provide ‘some’ connectivity to the internet deprived class. This implies that even now it is not the user but Facebook that would have a final say in what an individual would have access to. It has been reported that the mobile app of Free Basics features less than a 100th of the approximately 1 billion websites. Eventually, Facebook only acts as a gatekeeper and provides internet access based on its own terms and conditions (inclusive of pricing).
Free Basics actually leads to converting the internet, which is supposed to be a global public good, into a ‘controlled’ platform. For some this even amounts to compromising on their ‘human rights’. It may be noted that there is an increasing desire globally to associate internet availability with basic human rights and some discussion to that effect has taken place in the United Nations too . Presently, hosting a website and reading or downloading from website is a free process and there are no rules controlling it. Net neutrality is a must to maintain status quo. There is a growing fear that major business corporations could take over internet related services fully and this could impact governance, business, data availability, knowledge, scientific research, innovation, technology development etc. Presently, the basic problem is that there is no law on Net Neutrality.
Facebook is not the only entity trying to make the internet a saleable commodity, there are others too and they are trying to tap into the Indian market. India is a developing country with limited people (approximately 20%) having access to internet. Naturally, this is a large potential market and all efforts are on to grab this market. However, Facebook and others seem to have overlooked the fact that India may be developing country, but is an Information Technology (IT) powerhouse and one of the most ‘digitally conscious’ countries in the world. Hence, even though various market driven internet platforms have been launched in India, they face a significant amount of criticism and resistance.
To checkmate Facebook’s internet services plans, Airtel has launched (April 2015) its new Zero marketing platform that allows users to access apps of participating app developers at zero data charges. They have found support from companies like Flipkart. However, free access is limited to specific web portals and already some pricing scheme has been put in place. More importantly, various new and innovative technologies are also being offered to ensure that internet reaches the people in India’s inaccessible areas like desserts, mountains, glaciers, jungles etc. For example, Google is proposing to launch Project Loon, an experiment wherein air balloons would be used to beam internet down to remote locations. Private entrepreneurs like Space X would be using satellites to create an internet offering of their own. Facebook is proposing to use drone technology to ensure that internet reaches to signal shadow areas too. There are all innovative, workable and useful technologies; however they would be launched only if they serve the commercial interests of the companies, and would still deny full spectrum open internet accessibility.
It is important to appreciate that internet has multiple users and defence forces are one of them. Modern day warfare has significant dependence on internet. In a limited sense, the ongoing ‘battle’ may be about Free Basics but, the real challenge is to ensure that Indian armed forces which mostly operate in inhospitable regions do not get bogged down with a private agency providing limited internet services. The dream of ‘Digital India’ is also about ensuring that Indian armed forces are able to harmonise the Net Centric Warfare capabilities in the 21st century. Internet is critical to transform Net Centric Warfare concepts into operational capabilities. Naturally, they cannot afford to operate in a ‘controlled’ internet space.
Starting up India
Earlier this month, the prime minister announced the details of the Startup India initiative, which had been presaged in earlier speeches and policy actions, but emerged now as a full-fledged 19-point action plan. Despite the laundry-list approach, Startup India is relatively focused and well-targeted, especially when compared to larger visions such as Make in India and Digital India. The key elements of Startup India, in my view, are the plans to improve (that is, to lighten) regulation of start-ups that fit certain categories of innovativeness (though that may require some new bureaucratic machinery) and to give them tax breaks. Some have expressed scepticism about whether these policies will be implemented well, but there is hope, as I explain later in this column.
Importantly, Startup India may be the foundation for getting some traction with the two larger initiatives, since new enterprises that innovate in manufacturing or services are likely to rely in some way on digital technologies. Indeed, if Startup India registers some successes, it may provide the blueprint for more general changes in how business is conducted in India, and especially in the regulatory and legal environment. Those more general changes will require legislative modifications that can face political headwinds, but the hope is that successes from Startup India will change political attitudes.
In a sense, the origins of Startup India go back to what may turn out to be one of the most significant events in modern Indian history. The rise of Infosys, in particular, showed that middle class Indians with an appropriate education could work as a team to build a world-class business organisation from scratch. Moreover, this was done without having to play the rent-seeking game so often required of Indian businesses because of government policies. There were other early information technology (IT) successes, of course, and there are other examples of Indian businessmen and women who have built great organisations in similar ways, but Infosys remains a canonical example. In recent years, it has sometimes looked like India was regressing to a model of business dependent on government favours (the stifling model of crony capitalism), so Startup India may provide an opportunity to recharge the Infosys model.
The fact that India’s canonical start-up story came in IT is also significant. I remember at the time a British academic lamenting that the economic model was one of “techno-coolies,” while others harped on the narrowness of IT as a contributor to the economy. In fact, both these negative views, typical of some of India’s old intelligentsia, proved dramatically wrong. IT firms upgraded their capabilities to stay globally competitive, and their business models and reputations spilled over into a host of IT-enabled services, and then beyond those into other areas of the economy. Indeed, IT is proving to be the basis of a fundamental shift in the way all manner of market institutions are organised as well as changing the organisation of firms themselves. In all of this, India can position itself well to take advantage of the likely technological drivers of growth in the 21st century.
None of this is going to be automatic, of course, and one cannot get carried away with grand visions that have no substantive implementation plans to back them up. The two key inputs for Startup India are going to be financial capital and human capital. For the first, there is already a blueprint. Narayana Murthy, the first CEO of Infosys, chaired the Alternative Investment Policy Advisory Committee of the Securities and Exchange Board of India, which gave its recommendations less than a week after the public launch of Startup India. This report clearly and in detail provides recommendations for reconfiguring tax policies for the sources of financial capital for startups, including angel investors, venture capital, and private equity. There are also important suggestions for relaxing restrictions on who can invest in start-ups at various stages. Large organisations can certainly handle the risks involved, since they have the scale to diversify effectively.
As in so many aspects of the Indian economy, the greatest challenge will be in building human capital, that is, education and skilling. In the case, of start-ups, the new incubators and research parks will help, but there has to be greater attention to overhauling India’s higher education sector to bring it closer to the global frontier, so that students are able to experiment and innovate as part of their education, and have access to top quality teachers and mentors. Creating programs to bring in temporary talent from other countries to fill these roles seems to be the only way to have access to the needed human capital in the short run.
There is much else that needs to be done in fine-tuning Startup India to make it significant and successful, but its very existence marks an approach to economic development that would have been unimaginable a couple of decades ago. That in itself is cause for hope.
Thursday, 28 January 2016
The stained steel frame
The sensational arrest, by the Central Bureau of Investigation (CBI) on January 18, of the Regional Provident Fund (PF) Commissioner, Chennai, and some of his staff, as also a few private individuals belonging to a group of educational institutions in the city, does not surprise me. The episode is very much part of a pattern that became established a few decades ago — the escalation of corruption from the bottom of the bureaucratic hierarchy to its higher echelons. A sum of Rs.14.5 lakh was recovered from the PF Commissioner when he was trapped accepting a bribe in consideration of favours shown to the administrators of a Chennai-based educational trust, which runs a deemed university offering medical, dental and engineering courses. This comes against the background of CBI investigations against senior Indian Administrative Service (IAS) officers, and arrests of top public sector bank, customs as well as income tax officials. Relevant to recall here is the case of an IAS couple of Madhya Pradesh, hauled up a few years ago for being found in possession of property and bank accounts worth several crores of rupees. They were subsequently dismissed from the IAS. What is apparent in all these happenings is a growing fearlessness of the law in segments of the bureaucracy, giving rise to the impression that whatever has been done by governments and courts till now does not deter the daring offender, who does not mind being named and shamed. Unchecked, this trend could lead to a total erosion of public confidence in bureaucratic fairness and objectivity.
The rot begins at the top
It is sad that the levels of integrity of public servants are plummeting rapidly at a time when the Union government is in the process of implementing the recommendations of the Seventh Pay Commission, that would bring to every Central employee at least a 15-20 per cent rise in emoluments. The rapaciousness that is evident in critical sections of the civil service therefore lends strength to the popular belief that it is greed rather than need that impels many in the bureaucracy to resort to extortion and unabashed corruption.
The common man should therefore be asking the question as to how any increase in the wages of government employees was justified at all in the context of the continued high levels of corruption in the civil service. Also, what can be done to increase deterrence so that government officials at all levels are made to be afraid of punitive action that would not only embarrass them but also invite the ire of their own kith and kin?
While we should worry about the lack of integrity in the whole civil service, what is depressing is that the higher echelons are not setting an example to those below. It is lamentable that corruption among the elitist All India Services (IAS, Indian Police Service, Indian Forest Service) has shown no signs of abating, despite the many checks and balances introduced by successive governments.
The Prevention of Corruption Act (PCA), 1988 and its subsequent amendments have had only a marginal impact. One aspect of the problem is the well known, unethical conduct of those holding ministerial positions. Their unabashed browbeating of senior government officials, particularly those at the level of secretary, is certainly a factor. But then, if the latter cave in to ministerial pressure, they have only themselves to blame. What is even more obnoxious is that some of them are known to join in to share the loot accruing to a minister! The inability to stand up to ministerial pressure is one thing, but to benefit squarely from the misdeeds of those in the political firmament is an entirely different proposition.
Near-immunity for bureaucrats
I quite appreciate the plea for protecting the honest senior government official, who should be able to discharge his duties without fear or favour. I am also quite aware of some investigating agencies like the Central Bureau of Investigation (CBI) and State Vigilance Directorates sometimes hounding a few straightforward officers on flimsy grounds at the instance of a minister annoyed with an honest official for refusing to fall in line with a dishonest decision. It is this desire for transparency and objectivity that saw the issue of the Single Directive by the Union government, which required government permission to the investigating agency to initiate a preliminary inquiry against an official at the level of joint secretary and above. However well-meaning this directive was, it did result in certain licentious conduct by a few in the higher bureaucracy. The directive was struck down by the Supreme Court of India in the hawala case (1997) as unconstitutional. However, from a purely executive order, it became law through an appropriate provision, both in the Central Vigilance Commission Act, 2003 and the Delhi Special Police Establishment (DSPE) Act, 1946, from which, incidentally, the CBI derives its powers to investigate. In 2014, on a challenge by Subramanian Swamy and the Centre for Public Interest Litigation, the Supreme Court struck down the Single Directive — as embodied in Section 6A of the DSPE Act — as discriminatory and violative of the constitutional principle of equality before the law.
Any fresh attempt to give life to the Single Directive through legal subterfuge under pressure from the senior bureaucracy will only send the wrong signal to those pursuing graft at the very top in government. In a large number of States, known for high levels of corruption, the anti-corruption directorates still require government permission to proceed even on a preliminary inquiry against a senior officer. This mandatory provision protects and preserves the unholy nexus between a dishonest minister and the secretary to the department the former presides over.
The requirement of government sanction to prosecute an official found by an investigating agency to have violated the PCA or the Indian Penal Code (IPC) has similarly blunted endeavours to bring an erring official to book. While I admit that an application of mind at the government level — after an agency has established guilt through assiduous investigation — is required to prevent miscarriage of justice, many ministries and State governments are known to have misused this in order to protect dishonest officials who had either misbehaved on their own or in concert with a minister. A downright refusal to sanction prosecution or dilatory tactics in taking a decision on the matter encourages permissiveness. Courts have come down on this rather heavily. After repeated expression of displeasure by the Supreme Court on the matter, the Union government has proposed an amendment to the PCA, making a decision mandatory within three months of a request for sanction. When this amendment is approved by Parliament, one can expect expeditious disposal of requests by investigating agencies.
Punitive action as deterrent
One effective step to stem bureaucratic dishonesty is to deny to the offender benefits of living on proceeds of corruption. While bank accounts suspected to have been parking places for illegal income can be frozen by an investigating agency, enough has not been done in respect of immovable properties acquired by an unscrupulous official. The Criminal Law Amendment Ordinance, 1944, permits attachment of property believed to have been purchased with the help of illegally obtained money. Such property will be forfeited under a judicial order to the state by an accused convicted under the PCA, to the extent determined by the criminal court that has convicted him. Such acts of attachment and forfeiture lend some deterrence to prevent corrupt civil servants from converting ill-gotten wealth into various forms of property. Increasing resort to this kind of punitive action could be a disincentive to buying property out of tainted money.
In the final analysis, the fight against corruption in public service is extremely problem-ridden, because the canker has spread to the higher echelons of the civil service. The hands of investigating agencies have been tied not only by non-cooperation at levels that matter, but also by legal constraints. Very little can be done to substantially alter the unfortunate situation. Stronger legislation to plug the loopholes in the current law — an amendment to this effect is in the pipeline — is not the answer. Political will combined with greater courage on the part of senior officials to stand up to unethical pressure from above can do a lot to stem the rot. Public vigilance coupled with media support will help greatly.
False alarm on China
The prospect of an economic meltdown in China has been sending tremors through global financial markets at the start of 2016. Yet, such fears are overblown. While turmoil in Chinese equity and currency markets should not be taken lightly, the country continues to make encouraging headway on structural adjustments in its real economy.
This mismatch between progress in economic rebalancing and setbacks in financial reforms must ultimately be resolved as China now enters a critical phase in its transition to a new growth model. But it does not spell imminent crisis.
Consistent with China’s long experience in central planning, it continues to excel at industrial re-engineering. Trends in 2015 were a case in point: The 8.3% expansion in the services sector outstripped that of the once-dominant manufacturing and construction sectors, which together grew by just 6% last year. The so-called tertiary sector rose to 50.5% of Chinese GDP in 2015, well in excess of the 47% share targeted in 2011, when the 12th Five-Year Plan, was adopted, and fully ten percentage points larger than the 40.5% share of secondary-sector activities (manufacturing and construction).
This significant shift in China’s economic structure is vitally important to the country’s consumer-led rebalancing strategy. Services development underpins urban employment opportunities, a key building block of personal income generation. With Chinese services requiring about 30% more jobs per unit of output than manufacturing and construction, combined, the tertiary sector’s relative strength has played an important role in limiting unemployment and preventing social instability—long China’s greatest fear. On the contrary, even in the face of decelerating GDP growth, urban job creation hit 11 million in 2015, above the government’s target of 10 million and a slight increase from 10.7 million in 2014.
The bad news is that China’s impressive headway on restructuring its real economy has been accompanied by significant setbacks for its financial agenda—namely, the bursting of an equity bubble, a poorly handled shift in currency policy, and an exodus of financial capital. These are hardly inconsequential developments—especially for a country that must eventually align its financial infrastructure with a market-based consumer society. In the end, China will never succeed if it does not bring its financial reforms into closer sync with its rebalancing strategy for the real economy.
Capital-market reforms—especially the development of more robust equity and bond markets to augment a long dominant bank-centric system of credit intermediation—are critical to this objective. Yet, in the aftermath of the stock-market bubble, the equity-funding alternative is all but dead for the foreseeable future. For that reason alone, China’s recent financial-sector setbacks are especially disappointing.
But setbacks and crises are not the same thing. The good news is that China’s massive reservoir of foreign-exchange reserves provides it with an important buffer against a classic currency and liquidity crisis. To be sure, China’s reserves have fallen enormously—by $700 billion—in the last 19 months. Given China’s recent build-up of dollar-denominated liabilities, which the Bank for International Settlements currently places at around $1 trillion (for short- and long-term debt, combined), external vulnerability can hardly be ignored. But, at $3.3 trillion in December 2015, China’s reserves are still enough to cover more than four times its short-term external debt—well in excess of the widely accepted rule of thumb that a country should still be able to fund all of its short-term foreign liabilities in the event that it is unable to borrow in international markets.
Of course, this cushion would effectively vanish in six years if foreign reserves were to continue falling at the same $500 billion annual rate recorded in 2015. This was precisely the greatest fear during the Asian financial crisis of the late 1990s, when China was widely expected to follow other so-called East Asian miracle economies that had run out of reserves in the midst of a contagious attack on their currencies. But if it didn’t happen then, it certainly won’t happen now: China’s foreign-exchange reserves today are 23 times higher than the $140 billion held in 1997-98.
Moreover, China continues to run a large current-account surplus, in contrast to the outsize external deficits that proved so problematic for other Asian economies in the late 1990s.
Still, fear persists that if capital flight were to intensify, China would ultimately be powerless to stop it. Nothing could be further from the truth. China’s institutional memory runs deep when it comes to crises and their consequences.
That is especially the case concerning the experience of the late 1990s, when Chinese leaders saw firsthand how a run on reserves and a related currency collapse can wreak havoc on seemingly invincible economies. In fact, it was that realisation, coupled with a steadfast fixation on stability, that prompted China to focus urgently on amassing the largest reservoir of foreign-exchange reserves in modern history. While the authorities have no desire to close the capital account after having taken several important steps to open it in recent years, they would most certainly rethink this position if capital flight were to become a more serious threat.
Yes, China has stumbled in the recent implementation of many of its financial reforms. The equity-market fiasco is especially glaring in this regard, as was the failure to clarify official intentions regarding the August 2015 shift in exchange-rate policy. These missteps should not be taken lightly—especially in light of China’s high-profile commitment to market-based reforms. But they are a far cry from the crisis that many believe is now at hand.
Roach, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of Unbalanced: The Codependency of America and China
Absolute freedom of speech
Ever since Amartya Sen named his book on the nature of public discourse in India The Argumentative Indian, it has become axiomatic to refer to Indians in this manner. There is room for many views in the Indian mansion, and each can be expressed openly and without fear; such is the belief. If that were the limited meaning of the term, then the debate with which the Jaipur Literature Festival concluded on Monday was a resounding success. The audience on the front lawns of the Diggi Palace exceeded a few thousand, and raucous though the debate was, it ended peacefully and with good cheer. But the noise it generated—at times far louder than at many cricket stadiums during Test matches these days—showed what has become of India.
The motion being debated was whether freedom of speech should be absolute. Speaking for the motion were Kapil Mishra, a minister in the Delhi cabinet; Palanimuthu Sivakami, the Dalit novelist and politician from Tamil Nadu; Madhu Trehan, the pioneering journalist who runs the website Newslaundry; and myself. Speaking against the motion were the freshly-minted Padma Bhushan, actor Anupam Kher; former diplomat and Rajya Sabha MP Pavan Varma; and that debater for all seasons, Suhel Seth. We had one more panellist than our rivals; we said freedom of speech was absolute; and yet we lost when the audience was asked to raise hands and vote for the side that had won.
The debate’s outcome was preordained the moment it began. Both Kher and Mishra used the stage to turn the occasion into a political rally rather than a forum for debate. You could argue that Mishra did so in response to Kher, but once Kher came on stage and posed for the cameras, it was clear that the debate wouldn’t be of words, but of gestures. While Trehan bleeped parts of words or phrases she spoke to make the point that censors treat audiences as infants, Kher in fact upheld freedom of speech—he used a common misogynist abuse hurled routinely on Indian streets, but which some, like myself, avoid using in public or private. Kher’s point, however, was not to defend free speech, but to make the point that India is a free country, and you can say what you want. And yet, when Mishra and others from my side spoke, Kher raised both his hands as if he were a music conductor, and on cue, many in the vast audience began to shout repeatedly, “Modi, Modi.” Kher smiled, looking satisfied.
We lost, and that’s fine. But it made me wonder about how deep a society’s commitment to free speech is. For those in the audience who shouted down speakers they didn’t like will themselves get shouted down when the tide turns. A society will not advance if it does not tolerate alternative views, and which wants one view to prevail—because the loud ones consider that view to be reasonable, because it accepts things as they are, because it reinforces existing social norms. It will remain mired where it is; it will believe the illusion that it has found the way, that it is the freest in the world.
All the laws that restrict freedom of expression in India—sections 153A, 295A and 66A (which may resurface one day—don’t trust any government to concede powers permanently to the courts or the people), as well as the reasonable restrictions to free speech under Article 19(2), (which Varma enumerated during the debate as if all those restrictions were somehow for our good), are there because politicians want them and many Indians are happy to live with such restrictions. Actually, the understanding many Indians have is slightly nuanced: they want full freedom of expression for themselves, but not for views they oppose. They are prompt in pointing out abusive speeches from others and return the favour louder, assuming that loudness makes up for content. That generates heat, not light.
To be sure, freedom of expression does not mean the other side has an obligation to listen. But it also does not mean that the other side can be shouted down. Indeed, someone will say something that you consider obscene, tasteless, offensive or insulting to something or someone you revere. But what you revere is strong enough not to get hurt, and what’s distasteful to you may be nourishment for others. This applies beyond speech—to what we eat, drink, think, who we wish to love, and how we wish to lead our lives.
The Indian mansion is meant to be large enough for all views, even those that some consider foolish. Shouting down other voices is cowardly. Conceding our freedoms to loud mobs—majoritarian or not—takes India further from the idea of the republic it celebrated on Tuesday. And further too from that heaven of freedom in which Rabindranath Tagore wanted India to awake.
Delivering benefits to the poor
One of the biggest challenges for the finance minister in the upcoming budget is to increase spending in rural areas. The challenge is not only to increase the quantum of money delivered through various subsidies, along with employment generation programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme, but also ensure that the benefits reach the poor.
The challenge of efficiently delivering government benefits to the large mass of poor farmers and the working population in rural areas is crucial to the revival of the rural economy at a time when it is clearly in stress.
The necessity of increasing such expenditure during times of rural distress and otherwise is not challenged even by those who find such subsidies regressive. However, a large and influential lobby does exist, arguing against such spending on account of leakages. Although definitive data on leakages in most such schemes is not available except for the public distribution system, the good news is that PDS leakages have come down substantially in the last decade.
The news on the other big subsidy element, the petroleum subsidy, is also positive, with the government managing to do away with subsidies on petrol and diesel. So much so that these fuels are now sources of substantial revenue to the government after the collapse in global petroleum prices. The remaining components of the petroleum subsidy—liquefied petroleum gas and kerosene—are also showing signs of reduction, partly as a result of declining consumption of kerosene and partly because of the fall in crude prices.
While leakages are no reason for reducing spending on these programmes given the current situation, there is a need to fix the delivery mechanism. Essentially, the issue revolves around three questions: What to deliver? Whom to deliver to? How to deliver?
Of these, there has been definitive movement by the government on ‘how to deliver’. The focus on the trinity of JAM (Jan Dhan accounts, Aadhaar and Mobile) is essentially to fix the mechanisms of delivery of subsidies to beneficiaries. But given their nature, this exercise is more likely to be successful for benefits delivered in cash, although the same mechanism is also useful for delivery of benefits in kind. However, the focus on direct benefit transfers has meant that other aspects of subsidy delivery have largely been ignored or made slower progress.
The most important among these is ‘whom to deliver to’. This has been a vexed issue for more than a decade now, ever since the government decided to shift to targeted PDS. The issue of identification of beneficiaries is not only crucial for implementing the National Food Security Act (NFSA) but also for other schemes such as social pensions.
On this front, the socioeconomic caste census (SECC) has not been used in many states for beneficiary identification. While there are concerns on the quality of SECC data, most states that are using the SECC for beneficiary identification have found the data to be fairly reliable. Bihar is a notable example where the use of SECC data for beneficiary identification has led to reduction in exclusion errors for the NFSA. However, the use of different methodologies and criteria of identification by state governments means that there is no clarity on either the criteria for identification of beneficiaries or the extent of exclusion and inclusion errors in these lists. In some of the states, the list in use is the below poverty line census of 2002, which is known for its errors of targeting.
While the SECC is useful for beneficiary identification for social sector schemes, it is not sufficient as far as identification of beneficiaries for delivery of subsidies in agriculture is concerned. Since the agricultural sector receives various forms of subsidy, designing error-free methods of identification is a must.
This is essential due to the large number of absentee landowners and because a significant amount of land is cultivated under unrecorded tenancy. Attempts by the agriculture department of Uttar Pradesh to use a model of cash transfers in lieu of product-linked subsidy in case of seeds clearly showed high levels of exclusion.
The final issue of ‘what to deliver’, although linked to reforms in the other two issues of ‘whom to deliver to’ and ‘how to deliver’, is essentially a political economy question. Andhra Pradesh has clearly shown that once the delivery mechanism is fixed with correct identification of beneficiaries, it does not matter whether the subsidy is given in cash or in kind. While the Andhra model was successful in reducing leakages in cash transfers, it also worked in the case of PDS where the benefits were given in kind. Moreover, PDS is a good example where states such as Tamil Nadu, Odisha and Chhattisgarh have shown success in eliminating leakages with in-kind transfers. Unfortunately, instead of focusing on implementing the NFSA throughout the country using these success stories, the focus of the government is on shifting to cash transfers.
But the issue of cash-versus-kind is not one that can be resolved by just fixing the delivery mechanism. This is a question which requires an understanding of the efficiency of the transfers, not just from a technocratic approach of leakages, but also on what works better for the intended purpose. There is now sufficient evidence to suggest that subsidies delivered in kind for food-related schemes deliver more in terms of nutritional intake compared with similar amounts delivered in cash. The same may be true for subsidies in agriculture where product-linked subsidies may be required till such time as there is some evidence to suggest otherwise.
Any hasty attempt to shift to cash transfers may only end up excluding a large majority of needy farmers from the few benefits they receive. At a time when the agricultural sector is suffering from the twin problems of drought and global commodity price deflation, any attempt to reduce subsidies will be detrimental to the economy. The need of the hour is not just to augment efforts to fix the broken delivery mechanism but also to increase spending in rural areas on these programmes.
Wednesday, 27 January 2016
Hidden hunger and the Indian health story
According to the World Health Organization (WHO), there are three goals a country’s health system must aim for: to improve health, to be responsive to legitimate demands of the population and to ensure no one is at risk of serious financial losses because of ill health. Given this framework, the fourth National Food Health Survey (NFHS-4) released last week gives India plenty of reasons to cheer.
The extensive survey, covering 13 states and two Union territories, shows improvement on a number of parameters—total fertility ratio, infant mortality rate, under-five mortality rate, percentage of institutional births, nutritional status of children and increased reach of Janani Suraksha Yojana (a safe motherhood intervention) and health insurance.
However, a number of areas of concern remain.
Despite the declining percentage of the number of women and children suffering from anaemia in the past few years, the high absolute numbers are worrying. Incidentally, anaemia accounts for 20% of the maternal deaths that take place in the country. According to the Rapid Survey on Children, 2013-14, around 40% of India’s children under the age of five are stunted (low height-for-age), nearly 15% are wasted (low weight-for-height) and 30% are underweight (low weight-for-age).
Over the years, India has implemented numerous health-related schemes. The Integrated Child Development Scheme was started in 1975 to look into the health and well-being of mothers and children. The National Mid-Day Meal Scheme, the National Rural Health Mission and the Public Distribution System have had overlapping nutrition objectives. The National Nutritional Anaemia Prophylaxis Programme meant to maintain the adequate amount of iron and folate in expecting lactating mothers, children from aged 1-5 and anaemic adolescents was implemented as early as 1970.
Unfortunately, efforts to spread awareness and widen the reach of these programmes progressed at a snail’s pace and supply of low-quality food and drugs as well as leakages due to corruption remained inherent in the system. The infamous incidents of midday meals poisoning children cast these latter problems in sharp relief.
Taking its cue from NFHS-4 and the recently published India Health Report and Global Nutrition Report, the Indian health system needs to address its structural and operational deficiencies. In the latter instance, millets and fortified food should be incorporated in midday meals to tackle the problem of hidden hunger (micronutrient deficiency). Fortification enhances the nutrients present in salt, rice, wheat, milk and so forth, and millets have higher nutrient levels than cereals.
An independent system for quality checks and outsourcing of activities like midday meals to private companies is also necessary here.
Currently, laboratories designated to execute a quality check on samples from schools every month consistently fail to do so. And stocking food, monitoring cooking, serving and maintaining records compromise the productive time of the faculty.
The broader structural issues are as crucial. Take the complicated issue of funding. India has time and again been criticized for allocating a meagre 1% of GDP (gross domestic product) for health in its annual budget. This does not, however, account for state expenditure in the sector. And health spending should be about more efficient utilization of funds rather than just a higher quantum of funds.
Efficiency measures actual output against standard expected output. WHO has time and again mentioned that it is possible to get better value for money in the health sector. The per capita availability of inputs like the number of primary health centers, doctors, infrastructure like number of hospital beds and institutionalized deliveries are significant variables for enhancing efficiency.
But the lack of comprehensive, state-level localized information—a necessity in a country where human development indicators vary widely across states—is a major obstacle in working out the necessary policy measures for doing so.
NFHS-4 is an extensive, well-timed survey, but phase two of the project, which covers the rest of the states, is yet to be completed. Until then the country is left to derive the estimates of its health demands from a 10-year-old data set.
Hopefully, a joint initiative by the Indian Council of Medical Research and the health ministry, among others, to gather state-specific data with the first set of data estimates to be released this year will help in some measure.
If India has to reap its demographic dividend in an ageing world, it should have its citizens hale and healthy. As the world’s first ever anatomist Herophilus once remarked, “When health is absent, wisdom cannot reveal itself, art cannot manifest, strength cannot fight, wealth becomes useless, and intelligence cannot be applied.”
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