|E D I T O R I A L
P A G E
Friday, December 4, 1998
FROM BJP ROUT
fiscal strategy of armed forces
faces its final challenge
Hour of opportunity
READ the World Bank report on the developing countries. Remember the warnings (or advice, if you prefer) of India-friendly international investors. Listen to the noise from Washington about the early lifting of sanctions. Roll the three in the mind and a clear picture emerges: India has an opportunity waiting to be grabbed. And that too immediately. Here are the striking reasons. One, this country is likely to record a growth rate of about 5 per cent, compared to about 2 per cent in the rest of Asia, minus China. Proficiency in English, a reasonably sophisticated financial system, a vibrant legal structure and trained manpower at competitive wages should attract investment. The US sanctions in the immediate wake of the Pokhran tests drained foreign confidence and when that move is reversed, the last impediment will disappear. This is the objective situation and right gestures, quick and firm action and re-ordered priority should complete the picture. And this has to come from within the country, precisely from the government. It is true, the insurance self-goal does not inspire hope, but it also holds all the basic lessons in how to go about governing.
The so-called national political consensus on reforms is a half-myth, rather a half-truth. There are sharp and nearly irreconcilable difference on the extent and scope of reforms. The first task then is to identify the areas of agreement, fill in the details and secure firm commitments of support from major parties. In other words, the government should be ready to share both the credit and the responsibility. The rulers will be surprised how much they can achieve in a month or two in this way. Policies should not languish in some dusty file as policies; they should blossom into concrete actions. This was the near unanimous voice from the just concluded summit. Capital enters on the crest of sentiment and right now India has failed to generate this product. An agreement across the political barriers on a bunch of issues is what the doctor has ordered.
Of course, one can already
hear voices of dissent on some crucial components of
reforms. This is inevitable in a multi-party democracy,
facing a complex set of problems. But there are several
modes of trade-off. For instance, opposition can be muted
if the government commits itself to fight poverty,
illiteracy, lack of healthcare facilities and the like
within a tightly drawn timeframe. And as the World Bank
report points out, it should be right on top of the
agenda. Even the hostility towards the entry of the
private sector in insurance can be overcome if the
government frames foolproof rules to protect
premium-payers and sells it as the only safe avenue for
the middle class to keep its savings. Chronic no-sayers
can be silenced by the argument that their persistence
will only keep the door open for blade companies to
swindle the common man of his hard-earned money. A
sincere desire to stand by the poor and the wage-earner
is a great help. If that is hard to come by, why not fake
a change of heart and try to take the country forward?
That should come naturally to the Indian breed of
Signals from Bhopal
WELL begun is half done. At his first Press conference after becoming Chief Minister of Madhya Pradesh for a second term Mr Digvijay Singh identified the priorities of his government with rare clarity. The biggest source of his strength is his ability to laugh at himself which is not the same thing as trying to laugh away the shortcomings of ones administration. The Chief Minister admitted that during the election campaign he received brickbats for the poor condition of the roads in the State. Hopefully, the condition of the roads would improve during his second innings, if he sticks to the promise he made at the Press conference. The announcement that all Congress legislators and ministers would be required to declare their assets and source of income every year has an element of deja vu. During his first term several ministers were accused of indulging in corrupt practices and he was seen as trying to shield some of them. But the fact that a number of tainted ministers were denied tickets by the Congress high command suggests that he would have the support of the senior leaders in his campaign against corruption in public life. What is more important is that he now has the mandate to crack the whip for making the administration clean and transparent. Mr Digvijay Singh knows that the most important factor which helped the Congress retain power in Madhya Pradesh is the success of the institution of panchayati raj. Therefore, his promise to further decentralise power is good news for those who believe in grassroot democracy. However, the proposal to appoint a number of ministers without portfolio for overseeing development work in four or five districts, without curtailing the powers of the Zila Parishads, is not exactly new. Mr V.P. Singh as Chief Minister of Uttar Pradesh had tried something similar without much success. Of course, Mr V.P. Singh had the rare ability of turning a good idea into a disaster. His anti-dacoity campaign gave birth to Phoolan Devi and finally forced him to step down.
Perhaps, the most
important announcement made by Mr Digvijay Singh was his
decision to study the Andhra Pradesh model of
paperless administration. Madhya Pradesh has
vast untapped resources for attracting both domestic and
foreign investment. The reason why Andhra Pradesh has
become a prime destination for investors is the wise use
of technology by Chief Minister Chandrababu Naidu for
streamlining the administration. But the installation of
computers by itself cannot help improve the system of
administration if the bureaucrats do not mend their ways.
In this area too Mr Digvijay Singh has much to learn from
Mr Naidu because he has promised a more responsive and
responsible administration. In fact, he can offer his
panchayati raj model to Mr Naidu in return for
computer wisdom. Unfortunately, an issue on
which no questions were asked by the Press and no
reference made by the Chief Minister on his own, going by
media reports, is the plight of the survivors of the
Bhopal gas tragedy. It is pointless raking up the
reprehensible role of Union Carbide in providing adequate
compensation to the sufferers of the worlds worst
industrial disaster. However, the Chief Minister should
demand an explanation why the Red Cross dispensaries were
closed down, why only out-patient facility is available
at the 150-bed Indira Gandhi Hospital for women and
children sufferers. The same story of indifference is
repeated at the 540-bed Kamla Nehru Hospital. The Supreme
Court has expressed its displeasure over the tardy
distribution of compensation amount to the survivors and
the families of those who perished in the tragedy. The
Comptroller and Auditor General too is not happy with the
way the projects for providing medical relief and
financial assistance have been handled. Mr Digvijay Singh
gives the impression of being a sensitive leader. Then
why this indifference to the sufferings of the gas
LESSONS FROM BJP ROUT
IT is but natural that the Bharatiya Janata Party leadership is shell-shocked at the drubbing it has received at the hustings. The exercise of introspection in the party has already begun, though going by the public pronouncements of some of the BJP leaders, one is not yet certain whether the party has taken the defeat in the just concluded Assembly elections in the right spirit. This is mainly because the parties in power, invariably, put themselves on a high pedestal and in the process lose their grassroot contacts.
This happened to the Congress at the height of its glory under Indira Gandhi. The party leadership, for all practical purposes, conveniently overlooked the fact that its real strength came from the masses. The Congress grew as a mass organisation during the freedom struggle. Mahatma Gandhi, Jawaharlal Nehru and a host of other stalwarts could mobilise and hold the people together by keeping alive their mass contacts. They were all the while aware of the sufferings of ordinary citizens. The question of poverty and development was very much reflected in their personal and political philosophy. It is a different matter that they could never translate some of their thoughts into concrete plans of action. So, the critical areas of politico-administrative reforms remained unattended to, depriving the poor and the havenots of the fruits of development. Ironically, when Rajiv Gandhi, in 1985, lamented the fact that only 17 paise out of every rupee spent on development reached the common man, he was only being candid.
The moot point here is: has there been serious follow-up action to remove the snags in the implementation of development plans? It was not visible in the eighties. It is not visible now. If anything, things have only gone from bad to worse. There has, of course, been no dearth of tall claims, globalisation and liberalisation. Liberalisation for whom? Globalisation for what? I am not questioning the basics. My regret is that in our pursuit of global grandeur we have not cared to change the system for improving the lot of the people belonging to the lowest strata of society. Why should the major chunk of development funds be eaten away by overhead expenses and siphoned off by smart operators and corrupt politicians and officials?
This is, of course, a fundamental issue. But no government belonging to any school of political philosophy has cared to plug the loopholes in the system.
Indeed, the first major point which led to the rout of the BJP in the elections in the three Hindi speaking states is that it has not proved to be any different from the political parties which have ruled the country in the past. Of course, it had aroused high expectations among the educated middle class people who thought that the party would chart out a different course in power management and create a new order to build a stable and strong India in the long run. Looking closely at the party affairs, I feel the BJP today is nothing but a saffron version of the Congress.
The second reason for the BJP's downfall is the arrogance exhibited by some of its leaders like Mrs Sushma Swaraj, Dr Murli Manohar Joshi and Mr L.K. Advani. This may not be admitted by them. But I am saying this after viewing their performance from this side of the fence.
The third cause for the BJP's decline is its indifference to Indian sensitivities. It might sound ironical that the BJP leadership should be accused of neglect on this count. But the fact remains that because of their pet obsessions and misplaced priorities like temple building, they have often ignored the sentiments of the minorities, who too are part of the Indian mainstream.
In fact, the plurality of Indian society does call for varied responses to all issues and problems which, at least, some of the hardline leaders chose to overlook. Take the question of Vandemataram and Saraswati vandana. While I do not question the intentions behind the moves, the complex nature of Indian society makes it obligatory on the part of every responsible party to tread cautiously.
It is a pity that instead of clearing doubts about their intentions, some of the BJP leaders have only widened the chasm between the majority community and the minorities. In fact, this sensitive issue calls for honest introspection by the BJP leaders.
The fourth reason for the BJP's poor showing and this is a major cause is their utter lack of concern for the issues directly affecting the common citizens. The unprecedented rise in the prices of essential commodities, the deteriorating law and order situation, the poor management of water and power supply, especially in Delhi, fully exposed the party leadership. No wonder, the onion crisis only brought tears to the BJP leaders. Rightly or wrongly, the impression has gained ground that the BJP does not know how to manage a crisis. In tackling the onion crisis its leadership never acted in time. Even if it took some action, it was too little and too late.
In today's climate of rising expectations of the voters, they will certainly not like to put faith in those whom they think to be lacking in the basic skills of governance. During the worst days of the crisis, Mrs Sushma Swaraj only loved to offer tall promises of making onions available at Rs 5 a kg a promise which she never fulfilled. The moral here is that the BJP leadership can fool its followers for some time but not all the time.
The fifth reason for the setback caused to the party was the infighting within its ranks. We already know the growing gap between the BJP and the RSS. But what is disquieting is that their senior leaders have been working at cross purposes, especially in Delhi. And that too for grabbing the Chief Minister's chair. This has shattered the earlier image of the BJP as a disciplined party with a committed cadre. Mrs Sushma Swaraj herself admitted this fact when she remarked the other day that the infighting within her party led to the undoing of the BJP. This is a sad commentary on a party which at one stage showed some signs of promise.
The sixth reason for the party's rout was the poor quality of leadership. The impression has gained ground among the people that some small-time leaders within the BJP and the RSS ranks are not allowing Prime Minister Atal Behari Vajpayee to function firmly and decisively. Perhaps, he finds himself a prisoner of the circumstances. Rightly or wrongly, it is in the air that Mr L.K. Advani and Mr Atal Behari Vajpayee are not pulling on well. No party can sustain its image as a viable organisation if its leaders look like pulling in different directions. The weakening of the party leadership at the highest level has had a fallout at the middle and lower rungs of the BJP hierarchy.
The seventh reason got reflected in the way the allies bullied the Central leadership. Ms Jayalalitha could blackmail the Vajpayee government into submission on a number of occasions in matters she thought to be of her paramount interest. Even Ms Mamata Banerjee could bully it. Similar was the case with other allies. In popular belief it is accepted that the BJP can be bullied and that it is ever willing to compromise on any issue for the sake of retaining power at the Centre.
In the circumstances, how can the party evolve and project an independent identity of its own. A growing popular perception is that it is like any other political outfit ready to compromise and adjust even with the Jayalalithas and the Sukh Rams in the business of power. The politics of expediency may make or unmake individuals and parties but it cannot make a nation great.
My principal concern here is to provide a true mirror of the country's ground realities. It is easy to sell dreams for the next millennium. But false promises and gimmickry can hardly sustain the credibility of India's major political parties and their leaders.
The least that is required of the ruling politicians is that they should be honest with the people. For, the disparities and contrasts are so sharp that a number of bridges of understanding will have to be built to help us march from the 20th century to the 21st century. The BJP leaders' tragedy is that they have not even been able to keep the bridges of rapport with the people intact!
New fiscal strategy of armed
THE aim of the present Defence Minister, Mr George Fernandes, is to cut through the debilitating delays in the decision-making process of the Defence Ministry, especially where the welfare of troops is concerned. The Siachen episode would still be fresh in public memory, where bureaucrats could not understand the need for snow scooters and raised flimsy objections to their procurement without being aware of the ground realities. And all of this while our hardy troops were incurring unnecessary casualties, and any amount of representation by the Northern Army Commander or the Army Chief fell on deaf ears.
In the second half of 1995, an extract from a note sent to the Army Chief from the valley observed: Public moneys are being poured down the drain by people with increasing frequency. There are apparently no qualms felt in condoning such actions where crores are padded at will to projects with no accountability, while troops in the valley have actually offered to give up a certain percentage of their ration if funds were insufficient for bullet-proof jackets. Because of lack of sympathy by the powers that be, our troops had to adopt crude innovations like placing their bedrolls on the side of the vehicles and sand-bags on the floor of vehicles to protect themselves against fire from AK-47 and the use of machine guns and IEDs.
The new fiscal management policy introduced in September, 1998, is an attempt to remove these ills. The proposals which have been approved now had been lying in cold storage since 1990 when the Committee on Defence Expenditure (CDE) had made far-reaching recommendations. The main direction of these recommendations was the devolution of financial powers to the Service Chiefs and Army Commanders and their equivalents in other two services to promote quick response and accountability. All revenue expenditure except in certain areas was recommended to be within the purview of the Chiefs of Staff.
Any savings in approved budget provisions by a Service was to be made available to that Service to be re-appropriated to make good the existing void and to accelerate modernisation. A heavy rush towards the end of March to spend the available funds because they would lapse otherwise usually resulted in their uneconomic utilisation. Most of the recommendations of the CDE have been acted upon in the new fiscal policy.
A former Financial Adviser in the Ministry of Defence states in his book on the defence budget: Today the situation is rather bad where almost 25 per cent of the defence budget gets spent in March alone, and all the undesirable consequences of March rush are in evidence. The reserve fund must be activated again in the interest of better financial management and preventing wasteful expenditure.
The malaise got reflected in 1997-98 when during the last two weeks of March almost 80 per cent of the expenditure on modernisation was incurred. In fact, a portion of the budget was surrendered by the Army to avoid wasteful expenditure. Thus there is an urgent need for implementing the concept of a Defence Reserve Fund as advocated by a number of defence finance analysts.
The increased allocation of the budget to the Defence Research and Development Organisation, from Rs 1297 crore to Rs 1776 crore under the revenue head (a 37 per cent increase) and from Rs 698 crore to Rs 700 crore under the capital head (a marginal increase), does not reveal much. It can only be hoped that adequate funds will be earmarked for the development and induction of missiles.
However, such allocations are not transparent enough to indicate a move towards nuclearisation and the acquisition of an adequate number of missiles as part of delivery means. Additional funds (as stated by the Finance Minister), therefore, should be urgently sought for and allocated for the nuclear command and control infrastructure and the development of minimum nuclear deterrent.
Information technology (IT) is another area where attention has been paid in the new financial management strategy of the armed forces. Deputy Chiefs have been given powers to carry out transactions of Rs 1 crore (though somewhat meagre) in each case, thus giving in the importance it deserves. This also harmonises well with IT Plan-2008 of the nation in which the armed forces have been given the task for increased IT penetration of far-flung areas.
Thus the new fiscal strategy is a welcome step towards streamlining the management of finances in the defence forces with its focus on obtaining the value for money. However, a considerable amount of home work needs to be done for a balanced development of the armed forces within the economic constraints imposed by the competing demands of other important sectors of the national economy. INFA
AGE does not depend upon ones years but health and temperament. That is why some people never grow old while others are born old.
There is thus no need to sink in the blues when the shadows of middle age creep in as they bring their own lamps with it. This age signals mellowness and enables us to put off the worldly garments one by one, lightening our burden symbolically.
One is as old as one thinks. Ones life is coloured by ones own imagination. Think of the sprightly ones you have met or known. Are they bitter? Misery-manufacturers? The sore and sorry heads of society? Or the bright, the beaming and the bouncy? It is surely the latter with a twinkle in the eyes and rainbows in the heart. They spread sunshine in others life too.
French writer La Rouchefoucould has observed that old age is a tyrant forbidding pleasures of youth. Sunk in the blues, we forget that this tyrant forbids indulgence in the pleasures of youth only.
Each age has its own pleasures, but we blind ourselves to them, look before and after and pine for what is not. In childhood, we play with marbles, in youth passions. In ripe years, it ought to be meditations. The roles cannot be swapped. A man of 60 pretending to be 16 is a caricature of himself.
The twilight years are a pleasant plateau from which one can handle prickly problems better, be they about children or the world. One can cast a retrospective look at the debris of shattered dreams of rash youth, and look forward to a serene ripe age. It is not curtains down to mortality, its curtains up immortality.
Stormy passions have spent themselves. They no longer hiss, they softly kiss. The struggle for going up the greasy ladder of success which taxes physical and mental resources, is almost over. Even if the bank balance is not fat, the bank swells with time-wealth. New interests and equations give vigour, vim and vitality. Personally, I will rather be 60 for six years than 20 for one year.
Once we realise that calendar years matter but little the sagging spirits begin to soar and there is an all-important transformation in attitude to life. The morose become jovial, even-tempered, or at least less garrulous. This wards off morbidity and irritability.
The harmonious blend of light work and recreation, rest sans rust, makes down-the-hill as pleasurable as we had found it going up in our youth.
Happiness (which is a matter of perception) is not so much a final destination as a way of journeying. There is no point in hoarding all of it for a distant goal. It is better to look for it today along the way. It is not produced by big bits of fortune which seldom happen, but by little things that happen every hour, every day.
If, after, only, but are anti-life. They stem from attitude, not from age. We can look back with gratitude, forward with optimism. I have the happiness of the moment and what more can a mortal ask?, says George Gissing.
Dollar faces its final challenge
FOR the past over 60 years, the US dollar has held sway over the world. More so after the end of World War II when the USA became the sole creditor nation. But its hegemony is going to be challenged by the Euro, which is being launched on January 1, 1999, by the European Monetary Union (EMU).
It was not by choice that the dollar became an international currency. It was imposed on the world. Circumstances favoured the USA. At the Bretton Woods conference, the indigent world had no other choice. To make it palatable, the USA accepted the gold exchange standard. But as 90 per cent of the gold stock was already held by the USA, this was no concession. The dollar soon became the reserve currency taking on the attributes of gold.
As a result, the USA has derived immense benefits. It bought whatever it wanted from the world by paying in its own currency a privilege that is denied to other countries. The USA printed the dollar in billions as its trade deficit continued to rise. By the way, this helped the US citizens, too, for they were free from high taxes, a major factor in how they came to enjoy such a high standard of living.
Since the dollar was as good as gold in those days, it was accepted by all. Even today, the USA runs up huge trade deficits because the world continues to accept the dollar. And the IMF and the World Bank approve this US policy because it provides liquidity to world trade.
It has been pointed out by many that international currency should be beyond the control of a single nation or a group of nations. But the USA has ignored this dictum. And no one could challenge the USA, as it was the major creditor nation.
The challenge has now come from the European Union. No doubt, it has taken a long time. But better late than never. (The UK, Denmark and Sweden are yet to make up their minds.) The monetary policies pursued by the 11 members of the EU will now be taken over by the European Central Bank.
The launch of the Euro has great significance. For instance, the debt and equity markets of the 11 will now merge to form a single market, the second largest in the world after the USA. The Euro will be a stable currency unlike the dollar.
The EMU is well placed in comparison with the USA. It has a population of 300 million, 19.4 per cent of the world GNP, 18.6 per cent of world trade against the USAs population of 270 million, 19.6 per cent of the world GNP and 16.6 per cent of world trade.
Apart from being a medium of exchange, a currency is also a store of value. Nations held their reserves in dollar. But the share of the US dollar in foreign exchange reserves has declined from 80 per cent in 1975 to 50 per cent in early 1990s. In 1996 its share stood at 56 per cent, DM held 14.8 per cent, yen 8.1 per cent and ECU 7.8 per cent. A good part of the reserves will now be held in Euro.
Many East European currencies are likely to be pegged to the Euro. Bulgaria and Estonia have already done so. Many Francophone and North African states will eventually shift from the French franc to the Euro. As a dominant currency in one of the worlds largest trading blocs, the Euros role as an international investment, reserve and trading currency is expected to grow rapidly.
Two questions are being raised: 1) Will Euro ease out the dollar in international trade and finance; and 2) will the Euro be weak, strong, stable or unstable against the dollar? No definite answers can be given to any of these questions. But it is certain that the dollar will lose its supremacy. This will, in turn, reflect on its overall standing in the world.
But the dollar is still strong. In 1996 it had 48 per cent share of world trade (the US share of world trade was no more than 20 per cent), 37 per cent of world debt securities, 50 per cent of developing countries debt, 55 per cent of global forex reserves and 40 per cent of foreign exchange market. It still is the most liquid and acceptable currency. However, the dollar is unstable and has been the cause of great losses to the poorer countries, because the USA is the largest debtor in the world.
Naturally, many nations would like to switch over the Euro if it is able to achieve stability. If the Euro is stable and well-managed, it will gain an edge over the dollar.
The Euro offers other advantages. It is expected to reduce the cost of capital. It will provide an alternative to the US capital market. It will also create a more stable global financial system.
Euroland is a net creditor to the world with a combined current account surplus last year equivalent to $ 100 billion. This contrasts favourably with the chronic current account deficit of the USA, which since 1981 has been a net debtor nation. The new Euro bloc is expected to emerge as the worlds greatest trading power.
Both German and French currencies have gained against the dollar this year. Thus, the Euro is more likely to be stable to begin with.
While all indices seem to favour Euro, its future will greatly depend on how well it does in Asia. Traditionally Asia has favoured dollar for trade and reserves. Only 12 per cent of Asian reserves are held in European currencies. However, both China and Japan propose to raise their share of reserves in Euro.
At the height of the Asian currency crisis, ASEAN Ministers made a series of proposals to reduce the regions reliance on the dollar. Among them was the idea of using ASEAN currencies, especially the Singapore dollar, for intra-ASEAN trade. But this was shot down by the USA. Shows how arrogant the USA has been.
The key question is whether ASEAN firms invoice their trade in Euro. Perhaps they have no choice in the matter. Europe accounts for a third of ASEANs trade. But European firms have made it clear that they prefer to trade in Euro. How Hong Kong behaves its dollar is pegged to the US dollar will be crucial.
The Asian regions central banks currently hold most of their reserves in US dollars. This is expected to change. Already Asian promoters have developed strong links with Europe. Many Asian companies have raised funds through the European markets, while European banks have provided a significant share of bank loans to Asia.
The development of Euro and dollar bond markets will allow Asian borrowers to play the two markets off against each other a decisive advantage.
India must welcome the
launch of the Euro. About 13 per cent of Indias
external debt is in European currencies. India has
substantial trade with EU. With a stable Euro, there will
be little exchange instability risk. India must do
everything to free itself from its undue reliance on the
dollar. Indian banks must open up facilities for trade in
Wireless and crime
A wireless message to an outward bound steamer was effectively requisitioned by Scotland Yard to search for Samuel Gilbert, a Hatton Garden diamond merchant, who has now been brought up at Bow Street on a charge of unlawfully obtaining jewellery and cash by false pretences.
The prosecuting counsel stated that the accused sailed on the Highland Loch on April 4.
The wireless message
elicited that a man suspected to be Gilbert was aboard,
but the steamer arrived at Les Palmas too late for his
detention. He proceeded to Rio de Janeiro, but it was
impossible to get him until he arrived at Monts Video to
which place a Scotland Yard detective was specially sent
in pursuit and had now brought back Gilbert after a
13,000 miles of journey. The accused was remanded without
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