The great Game Folio: Russian Pipeline

RUSSIAN PIPELINE

The idea of an overland pipeline bringing hydrocarbons from Russia to India has been around for a while. Mooted under UPA rule, the proposal is gaining some traction with the NDA government. New Delhi and Moscow are looking for some big new projects to boost their stagnant commercial ties. Annual bilateral trade now hovers below a paltry $15 billion. Given the massive complementarities in the energy sector, the two sides rightly focus on making this the centrepiece of a stronger economic partnership in future.

Talks on Russian atomic reactor exports are making slow progress amidst the continuing differences over the application of India’s nuclear liability act. As India’s demand for oil and natural gas grows, the hydrocarbon sector presents itself as a major strategic opportunity. India already has $5bn invested in the Russian petroleum sector. India also imports crude oil worth nearly $200 million every year.

India would like to import a lot more and the idea of building a direct pipeline from Russia, therefore, has become an object of political interest in Delhi and Moscow. Further impetus for the project has come from a recent Russian deal with China to export natural gas worth $400bn over a 30-year period via a new pipeline. The idea is generating some excitement and is expected to figure in the bilateral talks between Prime Minister Narendra Modi and Russian President Vladimir Putin on the margins of the BRICS summit in Brazil.

LUCKLESS INDIA

It is easy drawing pipeline routes on the map. India knows that building them on the ground is not. For none of the pipeline projects that India has debated in the last two decades has taken off for reasons of costs, geopolitical and financial. There have been many proposals to build underwater pipelines from the Gulf to India; but cost considerations have put them on hold. Overland pipeline projects have been grounded mainly for geopolitical reasons. The plan to build the

Iran-Pakistan-India (IPI) pipeline has run into strong opposition from the United States, which remains opposed to any projects  involving Tehran.

India, Pakistan and Afghanistan have spent much time negotiating the TAPI pipeline that would have brought natural gas from Turkmenistan into the subcontinent. Given the security problems in the Af-Pak region, it has been hard selling the project to international bankers.

There was a plan to build a natural gas pipeline between Myanmar and India through Bangladesh. But the inability of Delhi and Dhaka to act fast saw Myanmar deciding to sell the gas to China. Beijing moved rapidly to build a twin pipeline system from the Bay of Bengal coast to the Yunnanprovince in southwestern China, just north of Myanmar.

Any Russian pipeline from Russia to India will have three possible routes into India. One is via Iran and Pakistan; another must traverse Afghanistan and Pakistan; and the third must come through China. The option of bringing them through Pakistan will face many of the same problems as the IPI and TAPI pipelines. The China option involves bringing the pipeline across the Great Himalayas and through the regions of Jammu and Kashmir that are part of the territorial dispute between Delhi
and Beijing.

LAHORE BECKONS

In a paradox, the only pipeline that could get off the ground in the near term is the one that would run out of India rather than into it. Delhi has been discussing with Islamabad for some time now plans to build a pipeline to the Punjab border to export liquefied natural gas to Pakistan.

Given the shortage of LNG infrastructure in Pakistan, it makes sense for Islamabad to import natural gas into Lahore from across the Radcliffe Line. In the budget presented to the Lok Sabha last week, Finance Minister Arun Jaitley exempted from customs duty the LNG that will be imported into India and then exported to Pakistan. Although this decision will cut the import costs for Islamabad, the Nawaz Sharif government may not have the freedom to act in Pakistan’s enlightened economic self-interest.

From the Indian perspective, though, the Modi government would be wise to focus on connecting India’s hydrocarbon grids
with those of the immediate neighbours. Given its vast coastline, Delhi should devote its attention for now to importing hydrocarbons by sea, investing in equity oil in Russia and other energy-rich countries, and concluding swap arrangements rather than grandiose transregional pipelines.

BRICS and bridges

The global financial architecture underpinned by the IMF and the World Bank has, for several decades, been in need of radical reform to remove its inherent deficiencies  —  for instance, its democratic deficit, exclusive reliance on the US dollar as an international reserve currency, inability to regulate the international financial market and the severe resource crunch it faces in dealing with crisis situations.

As members of the G-20, the BRICS countries played an important part in pulling the world economy back from the precipice after the 2008 crisis. They did this by maintaining the momentum of their own economic growth through the implementation of large rescue packages and by exerting pressure on the G-20 to mobilise additional resources, a large part of which went to developing countries. In the process, the resources of the IMF were enhanced from $250 billion to $750 billion and for the first time after the early 1970s, a general allocation of supplementary drawing rights was made. This brought closer to reality the long-cherished ambition of vastly enhancing the IMF’s resources to enable it to play its mandated role in the international monetary system and to create an international reserve currency as an alternative to the dollar.

The crisis also triggered intensive discussion on reform. Progress was made in reaching an agreement in 2009 on restructuring IMF quotas by bringing about a shift of 5 per cent from over-represented to under-represented member countries, thus raising the latter’s total quota to 48 per cent. This agreement, which is subject to ratification, has been languishing in the US Congress for the last five years. As a result, the next review of quotas, scheduled for January 2013 in order to further democratise the decision-making process inside the IMF, has been indefinitely postponed. Other reform proposals were never seriously pursued.

In this context, the initiative of the BRICS countries to establish a BRICS Development Bank (BDB) and put in place a contingency reserve arrangement (CRA) is significant. At their last summit in Durban, they agreed in principle to establish this institution. Now, an agreement has been reached on the objectives, functions, size of capital subscription, distribution among member countries, governance structure and operational mechanisms. It is hoped that the few differences that remained would have been resolved, and this initiative will be formally launched at the summit in Brazil.

There seems to be agreement that the BDB will have a total capital subscription of $50 billion, shared equally by the five member countries. Of this, the paid-up capital would be $10 billion. The initial capital of the CRA will be $100 billion, to be paid on call and not in advance. China’s share will be $41billion, that of Brazil, India and Russia, $18 billion each, and South Africa’s, $5 billion. The BDB will finance infrastructure and sustainable development projects of the BRICS and other emerging countries. The CRA will meet their short-term liquidity needs and forestall short-term liquidity pressure, strengthen financial stability and stabilise domestic currency. The fact that beneficiary countries will have access to an additional source of funding to tide over financial crises will increase investor confidence in their economies.

The BRICS countries have practical reasons to take this initiative. A study has estimated a gap of $1 trillion in financing infrastructure and sustainable development projects in emerging economies. The BDB is intended to bridge a part of this gap. Making the bank accessible to other emerging countries will strengthen solidarity, which is important to enhance the bargaining power of the BRICS in negotiations in global economic forums. The improved infrastructure in other developing countries will have a positive impact on attempts to forge stronger trade and economic ties. Capital subscriptions will help the BRICS diversify their options for reserve holdings. The BRICS have enhanced their foreign exchange reserves since 2008, and the availability of an alternative parking place in the form of short- and long-term loans to other developing countries should be regarded as a measure of fiscal prudence.

The BRICS know that they alone cannot change global monetary and financial systems. However, the BDB can help promote a more democratic and fair system of global financial governance. It cannot —  nor is it intended to — replace the World Bank and the IMF. But its potential impact on the global financial architecture cannot be ignored. It will complement, though on a modest scale, the World Bank, IMF and the regional development banks and regional contingency payment arrangements. In the process, it will contribute to the strengthening of the global financial architecture. It will also help the BRICS and other developing countries to strengthen their voice in the financial and monetary system. How successful they are in achieving these wider objectives will depend upon the scale and speed of the operation of the BDB and CRA.

Not budgeting for GST

he finance minister missed an opportunity to spell out the government’s views on its design.

The maiden budget of Finance Minister Arun Jaitley was presented amidst high expectations. After all, a decisive election mandate is always considered crucial to execute an economic rebound. However, such great expectations cannot be matched by a budget and what is possible for it to deliver, given that it is a short-term document. Given this limitation, the budget has excellently attempted to tackle the issues of an ailing economy inherited from the past government.

This budget aims to achieve three objectives: attaining a high growth rate for the economy, controlling inflation and achieving fiscal consolidation. To fulfil these objectives, Jaitley’s budget has followed the path of uplifting the economy in the short term and giving it direction in the long term.

The first priority of the budget is, therefore, to take steps to gradually repair and revive the economy so that it has the ability to shift to the fast growth-rate track in the medium term. In doing so, this budget makes an attempt to fulfil the expectations of the common man, domestic consumers and foreign investors. The budget provides some tax relief and expects an increase in consumer demand. It puts more money in the hands of the people by raising the exemption limit and the concession on housing loans and small savings.

It also attempts to create stability in the tax regime by suggesting abstinence from making retrospective amendments and proposing to set up a specialised committee in the tax administration to review disputes that have emerged from the Finance Act 2012. Similarly, the proposal to rationalise transfer pricing rules and the introduction of provisions for advance pricing will help in reviving investor sentiment.

The second priority is to boost growth drivers. Agriculture has been accorded high priority. Efforts will be made to develop supply chain linkages, ensure the reorientation of the state Agricultural Produce Market Committee acts to establish private markets, set up a price stabilisation fund and rejuvenate warehousing and cold storage facilities. The UPA flagship scheme, MGNREGA, has also been refurbished to link it to asset creation in the agricultural sector and to avoid waste.

The budget also focuses on various sectors in the short as well as long term. These include defence, infrastructure, health, education, textiles, road construction, food processing and tourism for employment generation through the skill development programme. To provide the requisite investment in some of these sectors, foreign direct investment up to 49 per cent is also proposed to be invited.

Finally, with regard to fiscal consolidation, the budget has

retained the fiscal deficit target at 4.1 per cent of GDP. With this in mind, the effort is to make savings on expenditure, for which an expenditure commission is planned to be set up.

The budget does confirm the intention of the government to get the Goods and Services Tax (GST) implemented at the earliest possible opportunity. In fact, in a TV interview after the presentation of the budget, the finance minister categorically stated that he has already twice met the empowered committee to discuss the concerns of the states. He has also stated that at present, the requisite money is not there for giving compensation for Central Sales Tax loss, but he would find an opportunity in the near future to take care of this aspect. It would have been a great plus if such an intention was reiterated in the budget speech. Further clarity was needed with regard to the concerns of the states, and about how the Centre intended to strike a balance between fiscal autonomy and harmonisation.

Similarly, consensus needs to be built about the design of the GST by taking into account the political economy of a federal democratic country, and the autonomy of its states. The finance minister, in his interview after the presentation of the budget, articulated his views regarding the coverage of the GST. According to him, the best design for the GST might not be introduced but a better one could be put in place even if the states want to exclude petroleum products from its coverage.

In this context, it is important that the Centre hammers in two points. First, there is a need to make the states understand that it would be to their advantage to not exclude petroleum products, even if the GST is not presently levied on these items. Excluding these items from the definition and coverage of the GST in the constitutional amendment bill will not provide any flexibility to levy the GST on these items in future, if and when the states may desire to do so. It would require another constitutional amendment to enable them to levy the GST on those items. What is to be taxed or not taxed, or what the coverage of the GST should be, is better left to the empowered committee or the proposed GST council. The Centre could invite academic think-tanks to make presentations before the empowered committee highlighting the pros and cons of including this in the definition of the GST, even if it is not listed in the present levy of the GST. Alternatively, the government should allow the empowered committee to develop a secretariat of its own to provide rigorous information and well thought-out analysis of the GST. This would help in sorting out some of the many issues regarding the design and implementation of the GST.

Second, this has to go hand-in-hand with an undertaking from the Centre that the GST will not be levied on these items, unless the same is cleared by the empowered committee. Itwould, however, have been better if the finance minister had spelt out these aspects in his budget speech.

Thus, the Modi government’s first budget strikes a balance between fiscal consolidation in the short term and a reform agenda to spur inclusive growth in the medium term.

Urbanising India

Prime Minister Narendra Modi’s government is fast-tracking policy decisions. In the sphere of urban development, “the government will build 100 cities focussed on specialised domains and equipped with world-class amenities. Integrated infrastructure will be rolled out in model towns to focus on cleanliness and sanitation. By the time the nation completes 75 years of its Independence, every family will have a pucca house with water connection, toilet facilities, 24x7 electricity supply and access.”

Very ambitious indeed! Urban Development Minister Venkaiah Naidu is working on a road map to take this agenda forward. Sensing big business opportunity, the global networking solutions company, Cisco Systems, wants to partner India in setting up smart cities and industrial corridors.

With the country fast heading towards a 50:50 rural-urban distribution of population slated for the middle of the present century, this ambition cannot be faulted. The question is whether there is required philosophical underpinning because cities are not mere buildings and amenities but meant for people with flesh and blood. With India’s urban population in a few decades exceeding the total of the USA and the European Union, this becomes critical.

Chandigarh was India’s first experience in planed urbanisation and I was the city’s administrator and estate director in the mid-Seventies. The ethos of the city was outlined by Prime Minister Jawaharlal Nehru when he visited the site in 1952 to dedicate the city to the people of India: “Let this be a new town, symbolic of the freedom of India, unfettered by the traditions of the past, an expression of the nation’s faith in the future.”

The ‘philosophy’ of Chandigarh was spelt out in 1959 by the expatriate architect Le Corbusier ~ “When the following operation has been started in the city; obtaining the money, buying of the necessary land, framing of the first by-laws permitting the beginning of construction, selling of the first plot, arriving of the first inhabitant, etc., etc., a phenomenon is born: it is the appreciation in the value of the piece of land. A game, a play, has begun. One can sell cheaply or at a high price; it depends on the kind of tactics and the strategy employed in the operation. One phrase must be affirmed: good urbanism makes money; bad urbanism loses money”.

Corbusier mixed up ‘urbanism’ with ‘real estate’ development for self-financing purposes. Pursuit of this ‘philosophy’ has made Chandigarh an elitist and exclusive habitat despite mid-course correction done in the mid-Seventies. A similar trend has been seen in the rest of India during the last few decades.

Urbanisation is basically the movement of population from rural to urban areas and the resulting increasing proportion of a population that resides in urban places. Urbanisation is a two-way process because it involves not only movement from village to cities and change from agricultural occupation to business, trade, service and profession but also change in the migrant’s attitudes, beliefs, values and behaviour patterns. Facilities like education, healthcare, employment avenues, civic facilities and social welfare are the reasons that are attracting people to urban areas.

Despite the looming tectonic shift towards urban habitat, this nation does not have an inclusive urban philosophy and political thought. Since urbanisation concerns people, their lives and livelihood, it should have a distinct character, culture and ethos. It was author Jeb Brugmann (2009) who truly defined ‘urbanism’ as “a way that builders, users and residents co-design, co-build, co-govern and combine their activities to support ways of production and living that develops their shared advantage.” India being a low-income economy, ‘urbanism’ should be the guiding philosophy.

‘Urban shared advantages’ are the three basic elements that make cities ‘magnets of productivity and prosperity’ ~ economies of density, scale and association. Density is the concentration of people and their activities that enhances the sheer efficiency by which an economic activity could be pursued. ‘Scale’ is the increase in the volume of any particular opportunity, producing what we call ‘economies of scale’ that makes activities attractive or services profitable. The scale and density of interactions among people with different interests, expertise and objectives then combine to create the third basic element ~ economy of association that exponentially increase the variety of ways and efficiency with which people can organise, work together, invent solutions and launch joint strategies for urban advantage.

Urbanisation in India does not get the leverage of these urban advantages to the full because it does not practise urbanism of inclusive and shared development. When communities self-organise ways of designing buildings, organising space, arranging urban functions, and governing development in wards and zones to make specific kinds of production very efficient, and specific kinds of living very affordable and productive, this is called “community-based urbanism.”

In urbanism, the focus shifts from opportunistic development of individual plots, buildings and gated-settlements to community-disciplined development of wards and zones with specialised strategies to secure social and economic advantage in the city. The informal sector, that contributes over 75/80 per cent of urban employment, which is now in the periphery of urban planning, would be mainstreamed and be at the core of such forms of urbanism.

The advantage of this approach is that its production of many micro and small-scale units and the mixing of units of different sizes to co-locate residential, commercial, and small manufacturing functions makes it accessible to low-income populations, and it creates efficient, productive, and governable units of the growing city. The disadvantage is that the approach tends to be based on incremental, cash-flow based building, and is therefore investment-poor. But this is not irresolvable.

As cities grow, inclusive urbanism gets abandoned giving place to commercial commodification ~ producing, selling and purchasing generic built-units (square-foot) adopting industrial batch production approach. This is the hallmark of today’s technology/globalisation-driven urbanisation which is both exclusive and expansionist, keeping majority of citizens away from the ‘development-stream’ and allocating scarce economic and environmental resources to the select few. This has become a common phenomenon in urban India under UPA rule and it appears that the NDA government is also moving in that direction, only faster.

Urbanisation sans urbanism makes cities ‘brick & mortar real estate’ entities rather than vibrant human settlements. Hence the present disjointed and disoriented urban governance system that has been the bane of sustainable and equitable spatial planning and development. Cities and urban habitats being ‘engines of economic growth’ need vibrancy if democratic and participatory decision-making is to take place. For this to happen, the philosophy of urbanism should be accompanied by political thought that is democratic, decentralised and participatory.

Legalising euthanasia be left for Parliament to debate and decide: Centre

The Centre today opposed in the Supreme Court the plea for legalising passive euthanasia by allowing a person in vegetative condition to die by withdrawing life-support systems, saying such issues should be debated and decided in Parliament and not by court.

Appearing before a five-judge Constitution Bench headed by Chief Justice R M Lodha, Attorney General Mukul Rohatgi opposed the petition and said that the issue should be left for the legislative body to decide.

The Centre also submitted that Law Commission in its reports had also opposed the idea of legalising euthanasia.

The bench, also comprising justices J S Khehar, J Chelameswar, A K Sikri, and R F Nariman, after a brief hearing asked the government to place Law reports before it and posted the case for hearing tomorrow when it will decide how to proceed with the case.

The bench was constituted to decide the contentious issue after a three-judge bench had on February 25 referred to case to larger bench to decide the issue saying it was extremely important to have a clear enunciation of law in view of inconsistent opinions in its previous judgement.

It had said that its earlier verdict of 2011 allowing passive euthanasia was delivered on a "wrong premise".

"In view of the inconsistent opinions rendered in Aruna Shanbaug case and also considering the important question of law involved which needs to be reflected in the light of social, legal, medical and constitutional perspective, it becomes extremely important to have a clear enunciation of law.

Thus, in our cogent opinion, the question of law involved requires careful consideration by a Constitution Bench of this Court for the benefit of humanity as a whole," the court had said.

The apex court had said that its earlier Constitution bench verdict, which was wrongly relied in Aruna Shanbaug case, had held that right to live with dignity will be inclusive of right to die with dignity but the judgement did not arrive at a conclusion for validity of euthanasia.

The direction had came on a PIL filed by NGO Common Cause which said when a medical expert opines that the person afflicted with terminal disease has reached a point of no return, then he should be given the right to refuse being put on life support system as otherwise it would only prolong his agony.

The NGO prayed for declaring right to die with dignity as a fundamental right and had sought direction to governments to adopt suitable procedures to ensure that the persons with deteriorated health or terminally ill should be able to execute living will & Attorney authorization termination of life.

The petitioner had contended that a person whose life was ebbing out should be allowed to die as the continuance of the life with the support system was an unnatural extension of the natural life span.

BRICS to create development bank, 'mini-IMF'

Leaders of the BRICS group of emerging powers meet on Tuesday to launch a new development bank and a reserve fund seen as counterweights to Western-led financial institutions.

Brazilian President Dilma Rousseff hosts the leaders of Russia, India, China and South Africa in Fortaleza on Tuesday before talks with South American leaders the next day in Brasilia.

The summit will mark the first face-to-face meeting between Prime Minister Narendra Modi and Chinese President Xi Jiping.

For Russian President Vladimir Putin, who visited Argentina and Cuba before coming to Brazil, the trip gives him a chance to hammer home his calls for a "multipolar" world amid tensions with the West over the Ukraine crisis.

"Together we should think about a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies," Putin told Russia's ITAR-TASS news agency.

Russia has been excluded from the G8 group of industrialized powers as punishment for its annexation of Crimea and perceived meddling in Ukraine.

The United States is threatening to impose new economic sanctions on Russia over accusations that it is backing pro-Moscow separatist rebels in eastern Ukraine.

'Mini IMF'
The summit comes as the economies of some BRICS countries, which together represent 40 percent of the world population and a fifth of the global economy, are cooling down. Russia and Brazil are expected to see growth of just one percent this year.

The five emerging nations unveiled in 2013 their plans to create the bank, which aims to rival the Washington-based World Bank while the reserve is seen as a "mini-IMF."

The creation of the bank will give a backbone to the BRICS, which is not a formal international organization, said Marcos Troyjo, Brazilian director of BRICLab research center at New York's Columbia University.

"They are only taking their first steps towards a platform for building consensus on international agenda items such as rules for international trade, joint action at the UN or the WTO," he told AFP, referring to the World Trade Organization.

The bank will have initial capital of $50 billion with each country contributing an equal share, while the reserve will have $100 billion at its disposal.

The bank is "key to foster growth for the BRICS countries," Brazilian industry and commerce minister Mauro Borges said.

For the fund, China will make the biggest contribution, $41 billion, followed by $18 billion from Brazil, India and Russia and $5 billion from South Africa.

Despite their agreement on the need for a bank, the five countries are split on where it should be headquartered.

Shanghai is seen as the frontrunner to host the bank but South Africa insists on having it in Johannesburg. New Delhi and Moscow are the other candidates.

The five nations are also negotiating who should hold the bank's rotating presidency first and the make-up of the board.

The talks in Fortaleza will open a series of marathon summits and bilateral meetings in Brazil.

After the BRICS meet with South American presidents in Brasilia on Wednesday, Xi will launch the China-Latin America forum, highlighting Beijing's growing interests in a region historically tied economically to the United States.

Xi will then travel to Argentina, Venezuela and Cuba.

Gandhiji's ideals not just past, also future, Chipko Movement taught world power of Ahimsa, says President

The President of India, Shri Pranab Mukherjee presented the Gandhi Peace Prize for the year 2013 to Shri Chandi Prasad Bhatt today (July 15, 2014) at a function at Rashtrapati Bhavan. Speaking on the occasion, the President said the Gandhi Peace Prize is an expression of our belief that the ideals that Gandhiji espoused are part of our collective living heritage. This heritage is deeply imbued with the idea of being ‘one people.’ It is a celebration of our diversity, our plural culture, our many languages, religions and different modes of life. This was the idea that moved those who strove for India’s freedom. Our deep and abiding commitment to democracy stems from this idea. We continue to be guided by these ideals; we remain committed to them not because it is our past, but because it is also our future. The President said we must always keep in mind that we are the Trustees of the heritage of Mahatma Gandhi. As Trustees, it is our sacred duty to preserve, protect and disseminate this heritage, which is truly a legacy of all humanity. In honouring Shri Bhatt, we honour all those countless women and men who became Trustees of the Nature and who through their embrace expanded our Swaraj. He praised Shri Bhatt for his dedicated, tireless and invaluable work for the conservation of the environment. The President said Shri Bhatt is a life-long Gandhian, devoted and far-sighted modern environmentalist of our time whose life has been his message. His work embodies a unique love, a love that has long since become universal. It is a love of Nature and Nature as encompassing entire creation. The Chipko movement started by him in 1973 followed the same method of peaceful and non-violent Satyagraha for the redressel of the legitimate rights of the hill people to collect wood and fodder and saving them from natural calamities owing to large scale deforestation. It highlights the unique responsibility of protecting creation that has been placed on human beings. The Chipko movement was and continues to be a movement of deep love. Love as enacted in the act of hugging trees. This action meant embracing Nature in all its diversity, bounty and munificence. It highlights the unique responsibility of protecting creation that has been placed on human beings. It is a movement of love against pulverising greed. The President said in Gandhiji’s words he had no use for economics without ethics. This simple injunction created a moral frame within which human ingenuity has to function. By placing ethics at the heart of economics, Gandhiji gave us an idea whose significance we have just begun to understand. Shri Bhatt’s movement is one of the finest examples of this idea of Trusteeship. Through his work, Shri Bhatt has reminded this nation and the world as a whole that we are responsible for the future as well. The President said Ahimsa is not just a method or an instrument. It requires recognition of the humanity of others, including the humanity of those we seek to challenge, including the State. It is an active force that embraces the other, eradicating the differences between I and Thou. Shri Bhatt’s movement showed the way of practising Ahmisa by physically embracing the endangered and the inanimate. Shri Bhatt has not only deepened our understanding of responsibility but also provided an object lesson to the world on the power of Ahimsa. The President said in 2019, we will mark 150th anniversary of Gandhiji’s birth, which we can truly celebrate by ending the indignity of homes without toilets and making a success of the Swachh Bharat Abhiyan announced by the Government to ensure hygiene, waste management and sanitation across the country