Going beyond the ceremonial with NEPAL

Given Nepal’s scepticism over renewed engagement with India, Prime Minister Narendra Modi’s visit to the Himalayan nation should focus on the doables

The much discussed issue — the lack of high-level political engagement between India and Nepal — was back in focus with the three-day official visit of Sushma Swaraj, India’s External Affairs Minister, to Kathmandu. Although the foreign minister’s visit to Nepal during this period every year is almost a calendar event, its most important part was the revival of the Joint Commission (JC) after 23 years, and preparation for Prime Minister Narendra Modi’s upcoming visit to the country in early August after 17 years. The visit also demonstrated India’s desire to re-energise India-Nepal relationship in line with the Modi government’s efforts to breathe new life into India’s neighbourhood policy. Besides, it conveyed to the people of Nepal the primacy that the new government attaches to Nepal in its foreign policy.

Although India and Nepal have shared cordial and friendly ties without much tensions, there was a perception in Kathmandu that New Delhi no longer took the Himalayan country seriously. According to many observers in Nepal, this was evident from the one-way, high-level political visits from the Nepalese side during the last decade, which mostly went unreciprocated from the Indian side. Therefore, with the revival of the JC and talk of Mr. Modi’s visit to Nepal, there is a lot of hope in Kathmandu about a possible upswing in bilateral relations.

Most important, Ms Swaraj’s visit took place during a critical phase of political transition in Nepal — when the country is struggling to generate a political consensus to conclude the protracted exercise of drafting a new constitution. The second Constituent Assembly (CA) has so far not been able to address contentious issues like the nature of political system and federalism, like the first CA.

Competing narratives

Against this backdrop, there are mixed reactions in Nepal about India’s role in the constitution writing process. One narrative holds that since India facilitated the peace process in November 2005, it has a moral responsibility to ensure the successful conclusion of the process; India should not keep aloof at this crucial juncture when the differences among various political actors on the two contentious issues of federalism and nature of governance are widening. Some civil society groups believe that India should reuse its influence (as it did in 2005), and act as a ‘negotiator’ to resolve the political deadlock, and take the process forward.

The second narrative is that India continues to interfere in the internal affairs of Nepal and supports the efforts of the status-quoist forces to override the progressive elements, and adopt an antediluvian constitution without a consensus, through a majority. This may lead to unnecessary chaos and confusion and decelerate the process of transition. The advocates of this view also allege that India is doubly guilty of not letting any third country help the Nepalese political forces overcome the present crisis.

Although the first narrative acknowledges India’s efforts in 2005, and wants India to play the role of an honest mediator, the advocates of such a point of view are in a clear minority in Nepal. The inertial view of India as an overpowering bully, conspiring to micro-manage Nepal’s internal politics with the ultimate aim of establishing an acquiescing government in Kathmandu, persists.

Ms Swaraj began her trip by chairing the third JC. She also met President Ram Baran Yadav, Prime Minister Sushil Koirala and the Opposition leaders of Nepal. For the first time after 23 years, the high-level bilateral meeting covered a wide range of issues concerning both the countries. The JC discussed over six dozen bilateral issues and addressed most of them.

According to the joint statement, both the countries agreed to: update the Treaty of Peace and Friendship 1950; promote greater collaboration and cooperation in security related issues; cooperate in the agricultural sector and set up an agriculture university with Indian support; enhance bilateral trade and investment by relaxing the rules of origin requirements; simplify and streamline transit and customs related procedures; eliminate Technical Barriers to Trade and make Sanitary and Phyto Sanitary-related measures less stringent and lift quantitative restrictions on the export of Nepalese products to India; finalise the text of a Power Trade Agreement; work towards an early completion of the construction of the 132 kV Kataiya-Kusaha and 132 kV Raxaul-Parwanipur Transmission Line Projects; relax the requirement of Indian content for the road projects included in the $250 million LoC; and deepen cooperation in the tourism sector by connecting major tourist spots in Nepal and India.

During the meeting, India also agreed to construct an international cricket stadium at Pokhara; continue the Goitre Control programme; provide technical support for early operationalisation of the Bharat-Nepal Maitri Emergency and Trauma Centre, and increase scholarships for Nepalese students for higher studies in India.

Significantly, during her meeting with the Opposition leaders, Ms Swaraj gave the assurance that steps would be taken “to ensure continued discussions at the political level on bilateral issues, while underlining the need for building an atmosphere of trust between the two neighbours.” The Nepalese delegation reiterated its country’s support for India’s permanent membership in the United Nations Security Council and expressed similar views on major international issues affecting the developing countries, and the desire of the Nepalese leadership to work in close coordination with India in the international forum.

Given India’s poor record on the delivery front, there is scepticism in Kathmandu that, although the JC covered a wide gamut of issues, the outcome of the meeting is more ceremonial than real. Most of the pledges made by India in the joint statement are a reiteration of promises made by it over the years. Except for the construction of a stadium in Pokhara and the decision on deepening cooperation on tourism, nothing seems new in the statement.

Significantly, as per media reports, Nepalese officials made it clear during the talks that “there should be a political consensus in Nepal before a bilateral deal could be reached.” The negotiating parties also failed to set a timeline for completing the negotiations for Project Development Agreement and the Power Trade Agreement (PTA).

Trust deficit

Thus, despite the revival of the JC, trust deficit exists. And many issues agreed upon during the meeting would either be delayed, given the illusive consensus among the Nepalese political parties, or might not materialise at all. In fact, a meeting of the top three political parties on July 27 failed to take any decision over PTA, which was expected to be signed during Mr. Modi’s visit to Nepal. Given the lack of consensus among the Nepalese political parties on India’s role in the water and infrastructureprojects in Nepal, New Delhi may find it difficult to translate its promises in the joint statement into reality.

However, there were some positive developments on the Nepalese side. For the first time, perhaps, no controversial news has appeared in the Nepali media about an Indian leader’s visit (so far). There may, thus, be an appetite in Kathmandu to break fresh ground with India, although cynics in Nepal would caution that the anti-India lobby is reserving its venom for Mr. Modi’s visit.

It is important to ask whether India could have done better. The foreign minister could have picked up some doable issues to ensure the goodwill of the Nepalese people as well: for example, issues like declaring special trains for the Nepalese people from Delhi and Bangalore to the India-Nepal border; the exemption of Nepalese students and patients from paying in U.S. dollars during their treatment in Indian hospitals, and educational institutions; setting up India information centres in remote areas; setting up cold storage and grain storage in hill regions and marketing facilities for agro-based products; renovation of airport infrastructure in Nepal, especially the Terai region; vocational training institutes for women; easy transfer of remittance from India to Nepal through banking channels; joint research on the Himalayan eco-system and prevention of river pollution; and speeding up the completion of the Amlekhganj-Raxaul oil pipeline with Indian assistance.

Similarly, on tourism, we could have been more innovative, and proposed the linking of major tourist spots starting from those in northern India to Kailash Mansarovar in Tibet via Nepal — connecting Bodhgaya, Saranath, Kasi Bishwanath, Janakpur, Lumbini, Vindhyabasini & Mankamana in Pokhara, Pashupatinath and Muktinath.

One hopes some of these issues will figure during Mr. Modi’s upcoming visit to Nepal on 3-4 August. Focussing on the doables is a much better option.

Seeking a level playing field,controversy over csat

Does the new aptitude test introduced in the Civil Services prelims give a head start to English-speaking candidates and those from technical background?

Much has been made about India’s growing aspirational class, especially after it led the Bharatiya Janata Party to power at the Centre. Now it is a section of this aspirational class that is out on the streets, protesting against the Civil Services Aptitude Test (CSAT), conducted by the Union Public Service Commission (UPSC). The protesters, who are civil services aspirants from rural areas, have found this compulsory paper discriminatory. They argue that the test does not offer a level-playing field to candidates who are not fluent in English.

Introduced in 2011, CSAT tests comprehension, interpersonal skills including communication skills, logical reasoning and analytical ability, decision-making and problem-solving, general mental ability, basic numeracy, data interpretation and data sufficiency besides English comprehension skills (of class X level). While the “English language comprehension skills of Class X level” is a big deal for candidates from regional language-medium schools and colleges, central to the debate is the technical nature of CSAT.

This paper replaced the objective type “optional subject’’ which, along with the test on General Studies (GS), constituted the Preliminary Examination (Prelims) for over three decades. The old Prelims module was formulated as per the recommendation of the Committee on Recruitment Policy and Selection Methods (the Kothari Committee), which gave its report in 1976.

The Preliminary Examination, as per the Kothari Committee, was to be a screening test to identify serious candidates and “broaden the base of recruitment’’ so as to rid the services of the “elitist’’ tag it had acquired since its pre-Independence incarnate as the Indian Civil Services.

Read: UPSC issue figures in Rajya Sabha

Advantage engineers?

Till 2011, candidates could choose their “optional subject’’ for the Prelims from 23 listed subjects for this paper of 300 marks. The GS paper carried 150 marks. Under the new scheme, GS and CSAT are of 200 marks each.

Candidates from the humanities stream maintain that engineering students — particularly those from the Indian Institutes of Technology (IITs) — have a head start in CSAT because many of its components are part of their core training for four years.

This is somewhat borne out by what Ashish Tewari, professor of Aerospace Engineering at IIT Kanpur, wrote in an in-house publication on the issue of “Administrative Services as a Career Option for IITians’’ in 2000 when more and more products of the premier education system were taking the CSE. In some years, they constituted 40 per cent of those who cleared the exam; that too in the higher ranks.

In his article, Prof. Tewari said: “The Joint Entrance Examination [for IITs] endeavours to select 18-year-olds with superior analytical abilities … The JEE is tailored to provide challenging problems, most of which require some independent thought for solution in a timely manner … At the Institute, the Under Graduate curriculum aims to hone the problem solving abilities…’’

“This is what we are pitted against,” is the refrain of those opposed to CSAT, who argue that there is no gainsaying that the components are of Class X level as these skills are seldom imparted in government schools where the stress is on learning by rote. “Earlier, aptitude was tested for 15-20 marks in the GS paper but now, an entire paper carrying half the total marks of the Prelims is on aptitude. This takes many of us out of the race at the first stage itself,” is what they say.

“CSAT is now forcing many an aspirant to take coaching for even the Prelims,” said a candidate who did not want to be named for fear of being victimised, adding, “even then we are at a disadvantage because our language skills are not so good compared to those who have had an English-medium education, and ‘think-and-speak English’ as you people put it.”

Former Union Minister Y.K. Alagh — who headed the Committee which recommended CSAT in 2001 which was later picked up by the Second Administrative Reforms Commission in 2008 — told The Hindu: “The teaching shop industry will be redundant in the new set-up once experience is there and if the CSAT is well implemented. The new system is very recent and not fully understood. The CSAT has not been fully implemented in the sense of questions which are rural-urban neutral. UPSC has to ensure that.’’

According to him, CSAT should be structured to test capabilities. “The English requirement is no longer that of an essay of the Macaulay type but working conversation knowledge of the type in a foreign language teaching programme. To say that in the 21st Century, a child who has no understanding of bazaari angrezi is an ideal candidate for the Civil Services is not just ridiculous but pernicious.”

While aspirants concede that a working knowledge of English is necessary, their contention is that the nature of questions asked in CSAT is difficult to comprehend with their limited English language skills. While all components — barring the questions on English comprehension — are available in Hindi as well, those from the Hindi-medium complain that technical terms are translated literally, making them difficult to comprehend. A case in point is “laptop” which is mentioned as godhsur in Hindi.

Festering since 2011, the protests over CSAT intensified this year, primarily because of hopes that the new government may be more inclined to overturn a decision of its predecessor. Also, the batch profile of the 88th Foundation Course at the Lal Bahadur Shastri National Academy of Administration (LBSNAA), Mussoorie, shows a widening in the urban-rural divide, fuelling apprehensions among those already crying foul over CSAT.

In the 269-strong batch, 27.13 per cent had a rural background. In the 86th Foundation Course — for CSE 2010 — the rural background component was 29.3 per cent. While this drop is being attributed to CSAT, the profile of batches in the previous decade shows a significant drop in rural candidates even when the old Prelims format was in place. So, the reasons for this dip could lie elsewhere.

Not due to CSAT alone

Similarly, their use of data from UPSC annual reports to show a drop in the number of students taking the Mains examination in languages other than English as a result of language medium students failing because of CSAT does not stand scrutiny. There has been a downward trend over the past several years with English becoming the more preferred language for taking the examination.

If anything, CSE 2012 saw the number of students opting for Hindi in the Essay paper of the Mains go up to 1,956 from the earlier four year-low of 1,682 in 2011. The same trend cuts across Kannada, Tamil and Telugu; the three languages flagged by the protesters in one of their petitions.

With the admit cards now being issued for the Prelims and the government informing Parliament that it would not intervene to make UPSC stop the process, many aspirants are now working overtime to crack CSAT with the intention of going to court subsequently to at least seek a scaling of marks so that humanities students do not suffer. If nothing works, they may go for the jugular and seek the cancellation of UPSC’s notifications of CSE 2011, 2012 and 2013.

WTO brinkmanship

With grain silos spilling over, exports on the rise and an avowed market champion for prime minister, India’s threat to trash a global trade deal in the name of food security appears puzzling.

But government officials say Prime Minister Narendra Modi is prepared to brazen out global outrage to seize a historic chance to build a rural power base with his defence of farm subsidies and to banish memories of humiliating national food shortages.

Modi triumphed in a general election only two months ago, but polls are never far away in the world’s largest democracy and his Bharatiya Janata Party has its eyes already on new campaigns in the breadbowl states of Haryana and Maharashtra.

More than two-thirds of India’s 1.26 billion people live in rural areas and Modi’s party, traditionally stronger in cities, needs to secure more farmers’ votes to consolidate its power.

Party officials are confident New Delhi’s tough line at World Trade Organization talks in Geneva will accomplish that.

“A strong stance in Geneva sends a message to the farmers and poor people that unlike the (last government), Modi can take on the global powers to safeguard the interests of rural India,” said a party lawmaker, who declined to be named.

Modi’s government demanded a halt to a globally agreed timetable on new customs rules and said a permanent agreement on food stockpiling and subsidies must be in place at the same time, well ahead of a 2017 target agreed last December in Bali.

Critics say the brinkmanship threatens a deal that could add a trillion dollars to global wealth and create 21 million jobs.

With a key deadline on Thursday looking increasingly tricky, Modi risks alienating allies including the United States, whose top diplomat John Kerry is due in New Delhi on Wednesday for talks that will be held in the shadow of the dispute.

“We understand that a new government in office for fewer than 100 days is eager to evaluate any previous agreement and assure their electorate they are doing the right thing,” Diane Farrell, acting president of the U.S.-India Business Council told Reuters.

“At the same time, we have a high degree of hope that they will work with the WTO to find the appropriate accommodations  in order to sign on an agreement to the treaty,” she said.

ASSERTIVE INDIA

If India goes through with its threatened veto, critics say it would cripple WTO talks, hasten trade negotiations elsewhere – something that India opposes – and swiftly trigger trade disputes challenging India’s stockpiling policy.

But the gambit is paying off at home, where the opposition, industry chambers and many economists have welcomed India asserting itself more on the international stage.

“Modi, like any good strong leader, is committed to ‘India first’, that was his campaign,” said Samir Saran of the Observer Research Foundation think-tank.

India rejects international criticismby saying that it is responsible for the well-being of a quarter of the world’s poor and that its subsidy burden is vastly overestimated.

Current WTO rules limit subsidies to farmers in developing countries to 10 percent of the total value of agricultural produce based on 1986-88 prices.

New Delhi trade officials say India wants the formula to be adjusted for inflation and fears that if the Bali trade facilitation deal is signed by July 31 as planned, questions of stockpiling and subsidies will end up on the back burner.

But India has not formally raised the inflation-adjustment idea since the Bali summit in December.

India provides subsidised fertiliser and seeds to farmers and buys wheat and rice from them at fixed prices to boost output, build stocks for welfare plans and meet any emergency.

The incentives, coupled with good rains in recent years, have sent output soaring and state warehouses are overflowing.

As of July 1, India had 21.2 million tonnes of rice and 39.8 million tonnes of wheat stockpiled, more than double the respective buffer norms.

Yet India is determined to hold on to these vast reserves, partly due to painful memories of dependence on U.S. food aid in the 1960s. Also, as recently as 2006, India’s surpluses vanished after two years of drought and it was forced to import grains, sending global food prices rocketing.

Monsoon rains are expected to be below average this year.

“India cannot afford to rely on imports of rice and wheat as no one produces (enough) to feed a county of India’s size,” said a senior farm ministry official. “Two successive droughts in India will scare the world market and prices will surge in an unimaginable way.”

REFORMS STILL ON?

Government experts say nearly half of about 60 million tonnes of grains set aside for distribution at subsidized prices is siphoned off by corrupt officials, raising the question why India would burn bridges to defend such an inefficient system.

Still, some experts say India’s best choice might be simply to try to improve it since a change to cash transfer subsidies recommended by many economists would take years in a country with few rural banks.

India’s nation-sized states are working to fix the system of warehouses and ration shops that dates back to the famines of the 1960s, emulating simple solutions adopted by states which have dramatically cut waste and improved delivery.

“The public distribution system (PDS) has been making slow but steady improvement,” Peter Kenmore, the United Nations’ Food and Agriculture Representative in India, told Reuters.

“It is slow, sure, too slow, but basically the PDS is straightening out,” he said, adding that FAO’s position is that India’s food subsidies do not distort global markets.

RBI survey finds 47% of banking agents ‘untraceable’

The success of the government’s thrust on financial inclusion, which largely hinges on the role played by business correspondents (BCs), is faced with a harsh reality check.

A recent survey conducted by the RBI College for Agriculture Banking and the Consultative Group to Assist the Poor (CGAP) reveals that not only were a substantive number of banking agents untraceable, but that even among those found to be working, a significant number have never conducted even a single transaction.

According to the survey, which tried to contact 2,358 agents across 15 large states in the period between September and November 2013, only 53 per cent could be reached and the remaining 47 per cent could not be reached.

Even among those who could be reached, 198 (16 per cent of that) agents have not done a single transaction till date. Experts say that there is more of an account opening exercise that is currently going on rather than the real task of focussing on financial inclusion.

While the government and the RBI claims that they have over 2.2 lakh banking agents, experts say that the survey suggests that the quality of the same is terrible.

“Our assessment is that the Ministry of Finance and the RBI have relied far too heavily on a target-driven approach to financial inclusion, whereby the RBI mandates that banks open a minimum number of accounts in poor and rural areas. This has led to ‘card rampages’, with banks aggressively opening accounts to meet their targets, but investing little in establishing high-quality agent networks that encourage account usage,” said Daniel Radcliffe, senior program officer with the Bill & Melinda Gates Foundation, which is a member organisation of CGAP.

The survey also found out that the attrition rate of business correspondents is anywhere between 25 and 34 per cent per annum and that does raise a question mark on the sustainability of the existing model.

The agent activity is significantly lower in India relative to that in several African countries. While the median agent conducts only 9 transactions per day in India, those in Kenya do 62 and those in Tanzania and Uganda do 35 and 34 transactions, respectively.

In India the remuneration for the agents is also low and the median agent earns only $45 (Rs 2,700) per month, or $1.50 per day — well below the $5 break-even point seen in other markets. There are further issues in the same as the account opened through an agent takes 9 days for activation as compared to 3-5 minutes in East African markets.

The survey shows big loopholes in the existing network of agents of banking correspondents but in its exercise toextend banking services to remote areas the RBI recently permitted banks to appoint non-banking finance companies (NBFCs) as their business correspondents.

BCs are hired by banks to offer banking services in remote areas where they do not have branches and therefore the BCs act as agents of the parent bank. While RBI had allowed banks to use BCs to organise a network of customer service points in 2006, the number of banking agents grew to over 2.2 lakh till 2013. In a bid to further expand the scope of BCs, the Nachiket Mor committee had earlier this year suggested to include new entities as BCs.

For schools to be safe

On December 17, 2012, exactly a day after the Delhi gangrape case that shook the country, a three-year-old girl was taken to the toilet of  her play school in Delhi and raped by the owner-principal’s husband. She is not the only child violated in a space considered to be the safest space for children after their homes — the school. This ugly reality has come to light once again with a six-year-old being sexually abused in a school in Bangalore. Every report specified that it took place at an “elite school”, as if such incidents only take place among the poor and this was new. The reality is that child sexual abuse cuts across class, religion, education or ethnicity. It can happen anywhere, including within families. It is imperative that we recognise this and put checks and balances in place.

It is not as if sexual abuse in schools is a new phenomenon. If we look back at our own school days, there was likely a member of the staff who made us uncomfortable. Our discomfort was unaddressed then and this is the case even today, due to a conspiracy of silence around sexual violence and abuse. Abuse is reported even less in the case of schools because of the power relations between educational institutions and students, more so if the parents are poor and illiterate. So we must welcome that some parents are coming out to complain.

It is not easy for parents and children to find the courage to complain, given the cycle of violence they face. Many child survivors and their families are asked by landlords to vacate their homes. Instead of cooperating with children and helping them cope with the trauma, children are subtly pushed out of school. Changing schools is even harder. Traumatised by the abuse, most survivors fall behind in academics, making admission to another school difficult unless the principal is apprised of the circumstances and admission sought on sympathetic grounds, hoping confidentiality will be respected. The system of investigation and judicial process expects the child to recollect and repeat the sequence of events several times, leading to re-victimisation. Little surprise then that parents and child victims choose to keep quiet.

Despite new laws and stringent punishment, there is an increase in sexual crime and little deterrence. For instance, two years on, the December 17 case is still to be decided. We are told that the courts set up under the Protection of Children from Sexual Offences Act, 2012 (POCSO) are “special courts”, while those under the criminal amendment act of 2012are “fast-track courts”. Are special courts not meant to be fast track?

Poor investigation by the police, lack of adequate victim and witness protection, intrusive and unreliable medical examination, lack of special public prosecutors, poor quality of legal aid and, most importantly, a lack of courts having exclusive charge of POCSO cases are important factors affecting prosecution and resulting in poor conviction rates. Justice becomes more difficult as children do not have the proper legal vocabulary to express their agony, more so if the child has a disability.

With increased reporting of such incidents and the fear of a loss of reputation, school managements shy away from either admitting or taking responsibility. In many ways, child sexual abuse in schools is custodial rape, and hence an aggravated offence. This is clearly recognised by the POCSO act, which has a clause for mandatory reporting, supposedly introduced to address the reluctance of institutions to take responsibility. There must be mandatory standard protective protocols, whose violation would lead to penal action, to make schools safe.

The Delhi Commission for Protection of Child Rights (DCPCR) developed a set of guidelines for the prevention of child abuse last year. It lays down what schools must do to protect children from sexual abuse through protocols that need to be followed for the recruitment of staff, and details the capacity-building and child protection standards that need to be in place. Primary among them is the framing of a child protection policy applicable to all persons employed by the institution and even visitors. Most importantly, it calls for the setting up of a complaints mechanisms for children, parents and guardians, and appropriate training and orientation for them on the institution’s protection policy and mechanisms to complain.

Rule 31 of the Juvenile Justice (Care and Protection of Children) Rules, 2007 requires that every school and other educational institutions abide by guidelines issued by the Centre and the states for the prevention of sexual abuse of children. The Delhi government framed its own rules in 2009, as have some others. On February 13, 2013, in HAQ: Centre for Child Rights vs Union of India, the Delhi High Court directed the state to frame guidelines for effective implementation of Rule 31. Accordingly, the guidelines developed by the DCPCR were placed before the court. One year later, in February, further direction had to be sought from the court to ensure the notification of these guidelines by the lieutenant governor, and their circulation among stakeholders. Yet, most schools in Delhi remain unaware of them.

It is also time that we stopped being squeamish about sex and recognised that if children have to protect themselves, they need age-appropriate information. This has to come from both home and school.

How to be smart,JNNURM

At A time when the contours of the new scheme for 100 smart cities are being decided, it is important to look at what went wrong with the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), launched in 2005 to improve infrastructure and governance in cities. With an overall investment of more than Rs 1 lakh crore, it covered both small towns and big cities. Amid all the criticism of the scheme, it is imperative to look at what went right and what didn’t.

One of the major drawbacks of the JNNURM was that it focused too much on big cities, directing fewer funds towards small and medium ones. In principle, it was meant to include all cities/ towns as per the 2001 Census. One of the things it did right was provide funds for class V and VI towns, which have populations of less than 10,000 people. Though their share in resources was dismal, it started a process that could have been taken forward in the future.

Another criticism was that access to JNNURM funds was linked to the achievement of mandatory reforms. Many feel this kind of incentivising did not work because a number of states and cities refused to comply. The Centre had no choice but to release funds after being given assurances on paper. However, many states did comply. As of January 2014, states like Himachal Pradesh, Kerala and Tamil Nadu had completed 19 out of the 23 reforms. Others like J&K, Chhattisgarh and West Bengal had completed 16. Bigger cities like Delhi did not perform as well and managed to complete only 15 reforms but still received the highest funding under the JNNURM.

The constant dependence of urban local bodies (ULBs) on state or parastatal agencies was another criticism. The JNNURM was supposed to encourage the role of ULBs in project preparation and implementation. However, in practice, the role of the ULB was reduced to that of quiet spectator in some cases and appointing agency in others. The funding pattern did encourage cost-sharing between the Centre, state and ULBs. However, in some cases, smaller towns were unable to contribute their share of the project cost.

Underutilisation of funds was another issue. Since the smaller ULBs are not financially independent, implementing reforms can be difficult, which leads to delays in the release of funds. Also, since a number of smaller ULBs lack capacity, the funds, even when released, were not enough to realise their potential or utilised optimally. This leads to a vicious cycle of poor performance stemming from poor capacity and lack of funds.

Whilethe JNNURM is likely to be discontinued, the new concept of “smart cities” doesn’t hit the nail on the head either. As enunciated in the Union budget speech, the development of satellite towns and modernisation of existing mid-sized cities seems to be the plan. But this lacks consideration for small towns — class III to VI — that have populations lower than 49,999 and which account for 29 per cent of the total urban population. Many of these towns may not be near big cities but may actually possess enormous growth potential. Consider this, between 2001 and 2011, the population living in class I (1,00,000 and above) and class II (50,000-99,999) towns has increased by 27 and 20 per cent respectively. Whereas the population in class III (20,000-49,999) and class IV (10,000-19,999) towns has increased by 40 and 41 per cent respectively. Further, the population in class V (5,000-9,999) and class VI towns (less than 5,000) has doubled. This increase in small-town populations needs to be backed with investment to sustain urbanisation as it will contribute majorly to economic clusters.

The investment allocation for the 100 smart cities project, Rs 7,060 crore, is 6 per cent of the total estimated investment of the JNNURM. As of March 2012, the JNNURM covered 1,274 small towns and 65 big cities. In terms of both investment and coverage, the JNNURM was a much larger scheme. It had a definitive structure that got lost in implementation. What is needed is capacity building at the local level. Until ULBs are empowered to carry out their functions properly, no new scheme can achieve its objectives. When a large number of our cities struggle with even the delivery of basic services, creating technologically advanced cities may not be attacking the root of the problem. What is required is the equitable distribution of funds and resources to small and medium cities instead of identifying a few smart cities.

So many regulators

Much has been written about the leanness of Narendra Modi’s cabinet, constituted on the mantra of “minimum government, maximum governance”. This shift may mean a shrinking government, but it also means a changing role for it. In several markets, government intervention is necessary to enhance market performance. Government intervention affecting industry structure and behaviour takes two forms: regulation and antitrust.

Regulatory agencies and antitrust authorities are only two of the several institutional players defining the competitive environment. Regulators define ex ante a set of permissible business conduct for operators by regulating entry conditions, licensing requirements, tariff standards, access, control over price, quantity and quality, etc. Antitrust enforcers, in contrast, check ex post that anti-competitive conduct as identified by competition law is not pursued.

This diarchy of economic regulation is meant to be complementary and ensure the structural and behavioural competitiveness of the Indian economy. However, sectoral regulators, taking advantage of their overlapping jurisdiction with the Competition Commission of India (CCI), the antitrust agency, have continuously tried to chip at its mandate. This has resulted in regulatory parallelism amongst sectoral regulators and the CCI.

For instance, in August 2012, the Central Electricity Regulatory Commission (CERC) introduced draft regulations to grant itself the power to regulate anti-competitive agreements, abuse of dominant position and anti-competitive mergers (all in the CCI’s domain) in the electricity sector. Such efforts would virtually eliminate the CCI’s regulatory oversight, creating

a parallel and conflicting competition regime for the electricity sector. Further, the CERC’s exercise took place without any enabling legislation or legislative mandate, and was rooted using a residual clause under the CERC’s parent legislation, the Electricity Act, 2003. Interestingly, the CERC, which was created in 2003, only chose to legislate on this after the CCI had been made fully functional. The CERC has the mandate to promote competition in electricity markets by creating appropriate competitive and efficient market structures. However, it cannot usurp the jurisdiction of the CCI to ex-post regulate distortion of such competitive markets through such conduct.

The RBI has also attempted to curb the CCI’s regulatory jurisdiction. It has successfully lobbied the government to exempt mergers of failing banks from the purview of the CCI’s antitrust scrutiny, and wants compulsory mergers to be exempted from competition scrutiny. This is in spite of the fact that the Competition Act specifically mandates the CCI to consider “failing business” as a factor while evaluating mergers. Therefore, the exemption to failing banks is an exercise of regulatory redundancy. The RBI is the prudential regulator of banks, limiting their risk-taking, ensuring the safety of depositors’ funds and stability of the financial sector, while the CCI’s review of bank mergers is aimed at ensuring thatsuch mergers do not cause an appreciable adverse anti-competitive effect on the financial sector. The CCI is not a prudential regulator and the RBI is not a competition regulator, and both are required to complement each other.

The government intervened on behalf of the CCI to restrict such sectoral backlash and has proposed amendments to the Competition Act, which make it mandatory for sectoral regulators to refer to the CCI if the decision taken by such sectoral regulator raises any competition issue. However, such amendments have failed to see the light of day.

Defendants of anticompetitive complaints before the CCI have often taken advantage of such opportunistic behaviour to seek judicial intervention on the ground that the sectoral regulator and not the CCI has jurisdiction. The judiciary has also been less diligent in curbing such posturing and on numerous occasions, has stayed proceedings before the CCI on the pretext that such proceedings would allegedly impinge upon the regulatory jurisdiction of the applicable sectoral regulator. For example, the CCI has been stopped from investigating alleged anticompetitive practices of three state-owned oil marketing companies (OMCs) at the behest of the Delhi High Court, which has stayed multiple CCI proceedings against them.

In two separate actions before the CCI, the OMCs were charged with alleged acts of price collusion and denial of market access to private players. The CCI has the exclusive statutory mandate to investigate and regulate acts of cartelisation and price collusion; however, the OMCs approached the Delhi High Court and successfully stayed the proceedings on the pretext that the case fell under the jurisdiction of the Petroleum and Natural Gas Regulatory Board (PNGRB). Such efforts to oust the CCI’s jurisdiction have led to regulatory confusion and impeded its efforts to enhance competition.

The Supreme Court in Subrata Roy Sahara vs Union of India lamented the posturing antics of litigants aimed at forum shopping. It has stated that such antics result in cases “which ought to have been settled in no time at all, before the first court of incidence, [being] prolonged endlessly, for years and years, and from court to court, upto the highest court”. This message should not be lost on the high courts which, by admitting competition matters, contribute to prolonging a pattern of illegitimate claims that should be ideally settled by the CCI.

The new government needs to focus its reform agenda to address such regulatory duplicity to create a more enabling business environment for industry. A governance reform agenda built on the expectation that regulated markets will deliver growth requires such reforms to trickle down to the new-age independent sectoral regulators. Without eliminating regulatory chaos, delivering on the expectations of India’s polity will be difficult.