The dynamics of inequality

Occupational and geographic mobility across the region are bridging income and consumption-related disparities, says the World Bank report, ‘Addressing Inequality in South Asia’. The findings accordingly underscore the role of urbanisation and private sector participation as being critical to mitigating socio-economic disadvantages. Inequality should be understood in terms of monetary and non-monetary dimensions of well-being, contends the report. The share of the poorest 40 per cent of households in total consumption shows that inequality in South Asia is moderate by international standards. The comparison is valid even though estimates elsewhere are based on income per capita. Significantly, but not surprisingly, economic mobility of the recent decades has proved beneficial to the population at large, cutting across traditional divides and challenging stereotypes. This finding, if anything, underscores the positive effects of legal safeguards for the protection of minorities. Indeed, monetary inequality of enormous significance is manifested in India’s highly disproportionate billionaire wealth, amounting to 12 per cent of gross domestic product in 2012. The ratio is considerably large even compared with other countries at a similar level of economic development, says the report.

Conversely, non-monetary indices of well-being pertain to opportunities available to people in the early years, outcomes during adulthood and support systems through the life-cycle. Thus, although it is not the poorest region, South Asia accounts for some of the worst human development outcomes in basic education and health care. Besides the highest rates of infant and child mortality that prevail in many parts of the region, more than 50 per cent of poor children below five years of age in Bangladesh and Nepal are stunted; the proportion for India is over 60 per cent. Pervasive tax avoidance and regressive fuel and electricity subsidies are primarily responsible for the inadequate provisioning of public services. Of no insignificant value is the non-dogmatic stance the report adopts on a fundamental moral question such as inequality. Drawing upon influential academic debates in economics and philosophy, the study argues that the rewards linked to hard work and entrepreneurship serve as incentives to give one’s best and enhance overall well-being. It would be fair to infer that non-monetary inequalities are arbitrary and potentially more detrimental to economic growth over the long term. To bring such ideas into the public and political mainstream would enhance the quality of the debate, and further consolidate contemporary competitive electoral democracies.

Jaishankar replaces Sujatha Singh as Foreign Secretary

In a surprise move, the government has appointed Dr. S. Jaishankar as the new Foreign Secretary, replacing Sujatha Singh about seven months before her tenure comes to an end. Sources say that Mr. Jaishankar was chosen for his role in rebuilding India-U.S. ties after the Devyani Khobragade incident, capped by the visit of U.S. President Barack Obama to New Delhi this week.

Senior officials told The Hindu that Prime Minister Narendra Modi had been particularly impressed by Mr. Jaishankar’s handling of his visit to the U.S. in September and had been keen to retain him. He was due to retire on January 31 this year, which pushed the timing of the decision.

Mr. Jaishankar is in Delhi for consultations after the Obama visit, and while confirming the news to The Hindu, made no comment.

According to the notification on the Department of Personnel and Training website (DoPT) that was posted late last night, the Appointments Committee “approved the curtailment of tenure” of the current Foreign Secretary Sujata Singh.

Ms. Singh had been given an extension which would have seen her tenure in normal course to August 31 this year. August 31st this year. Sources confirmed that after the notification, Ms. Singh has put in her papers and sought voluntary retirement. It is also unclear whether the sudden move will upset other officers in the Ministry of External Affairs, in the manner the surprise appointment of the foreign secretary Shiv Shankar Menon that had seen several officers resign in protest in 2006, did.

Diplomats who preferred not to be named said Mr. Jaishankar is respected for his achievements in the service. Prior to his assignment in Washington, Mr. Jaishankar had served as Ambassador to China, and was credited by former PM Dr. Manmohan Singh for his deft handling of tensions between New Delhi and Beijing over the LAC in 2013.

He was India’s longest serving Ambassador to China, and his appointment will be seen as a positive sign for India-China relations. Significantly, as Joint Secretary in charge of the Americas in the years 2004-2007, he was also one of the architects of the Indo-U.S. nuclear deal that saw a “breakthrough” in progress during Mr. Obama’s visit.

Mr. Jaishankar was posted in Tokyo prior to 2000, where he met his wife Kiyoko. His father Dr. K. Subrahmanyam was India’s most prominent defence strategist, and advised several governments as the long-time Director of the Institute of Defence and Strategic Analysis.

Mr. Jaishankar’s replacement of Sujatha Singh is an interesting twist, given they were both in the running for foreign secretary when Ms. Singh won the post in 2013. Officials in the then PMO said that while Mr. Jaishankar was Dr. Singh’s choice, he was overruled at the time, primarily due to Ms. Singh’s seniority. “It is good that merit and experience rather than just seniority is being considered in high level appointments,” former media advisor and a close associate of Dr. Jaishankar, Sanjaya Baru toldThe Hindu.

Special Purpose Vehicle to be formed for setting up Sewerage Treatment Plants in Ganga cities

Senior Ministers discuss Namami Ganga Action Plans Schedule drawn up for stakeholder consultations

The Ministry of Urban Development has proposed to set up a Special Purpose Vehicle (SPV) for setting up and maintenance of Sewerage Treatment Plans (STPs) in all the 118 cities and towns located along the River Ganga in a time bound manner to check pollution of the river. The SPV will ensure that demand-supply gap in respect of sewerage treatment in urban areas will be met in line with timeframe for cleaning the River Ganga. This proposal was made at a review meeting on Namami Ganga today. The meeting held in Nirman Bhawan was attended by Minister of urban Development Shri M.Venkaiah Naidu, Minister of Water Resources, River Development and Ganga Rejuvenation Ms.Uma Bharati, Minister of Drinking Water & Sanitation Shri Birendra Singh, Minister of Environment, Forests and Climate Change Shri Prakash Javadekar and Minister of Tourism & Culture Dr.Mahesh Sharma and Secretaries of respective ministries. The Ministers discussed Action Plans for treatment of sewerage with timelines, rehabilitation of dysfunctional and sub-optimal STPs, plans for bridging mismatch between existing treatment capacity and the demand, capacity building of urban local bodies, modernization of existing crematoria, adoption of innovative technologies developed by BARC and IITs etc. As against the sewerage treatment requirement of 3,847 million litres per day in all the 118 cities and towns in 2015 and the estimated demand of 4,773 MLD in 2030, the present available capacity is only 879 MLD while another 1,263 MLD capacity is under construction. The gap in demand and supply is 1,852 MLD at current demand and 2,664 MLD at 2030 demand. Shri M.Venkaiah Naidu said that all the six state governments will be consulted and taken on board before going ahead with setting up of STPs as required to treat urban sewerage. To begin with, 56 cities and towns that accounts for about 80% of sewerage generation will be focused in the first phase. He further said that necessary action for setting up SPV will soon be taken. He said that STP capacity would be augmented to meet the 2030 demand. The Ministers have noted that the provisions of existing Environment Protection Act are not adequate to address the issue of industrial affluents being discharged into Ganga River and the same needs to be revisited. As a part of stakeholder consultations, a meeting of representatives of all 195 industrial units located alongside Ganga river will be held next month by the Ministry of Environment, Forests & Climate Change followed by a meeting of Municipal Commissioners of all the 118 cities and towns on 17th February. State-wise consultations will be held in March, 2015. Today’s meeting was held in pursuance of the suggestion of the PMO to work out time bound action plans focusing on primary components of Ganga pollution viz., liquid waste from urban and rural areas and industrial effluent discharge.

LCA TEJAS Achieved Yet another Accomplishment

With three consecutive start-ups of its engine after overnight soak in extreme cold(around -15ºC) conditions of Laddakh winter, that too without any external assistance, Tejas, the Indian Light Combat Aircraft has achieved yet another and a rare distinction. Starting the fighter aircraft under such extreme condition without any external assistance or heating is a technology challenge. The requirements become further stringent when the starting is to be done three times consecutively with a partially charged battery. Team LCA led by AERD&C of HAL, and members from ADA, NFTC, IAF, CEMILAC and DGAQA have succeeded in achieving this. “The team LCA has achieved a technological breakthrough”, stated Dr. PS Subramanyam PGD (CA) & Director, ADA. The engine starter is developed indigenously by HAL Aero Engine Research and Design Centre (AERDC), Bangalore. Prior to aircraft tests, the Jet Fuel Starter (JFS) was extensively tested on test rig to meet starting conditions across the operating altitudes including Leh (10,700 ft.) and Khardungla (18300 ft.). The control software of JFS was fine tuned to work at all operating altitudes with no adjustments from cockpit. GE-F404-IN20 engine start up control schedule was also varied with several control patches to establish reliable start.

Semiconductor Wafer Fabrication (FAB) manufacturing facilities in the country

Reconstitution of Empowered Committee regarding setting up of Semiconductor Wafer Fabrication (FAB) manufacturing facilities in the country

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved to reconstitute the Empowered Committee to setup the Semiconductor Wafer Fabrication (FAB) projects, with the following composition: a) Dr. V.K. Saraswat, Member, NITI Aayog ….. Chairman b) Dr. K. Radhakrishnan, Former Chairman, Indian Space Research Organisation c) Secretary, Department of Expenditure d) Secretary, Department of Industrial Policy and Promotion e) Dr. M.J. Zarabi, Former CMD, Semiconductor Complex Ltd. (SCL) - Technical Expert f) Prof. Narendra Krishna Karmarkar, Distinguished Visiting Professor, IIT-Bombay g) Secretary, Department of Electronics and Information Technology - Member Convener h) Empowered Committee may co-opt any other experts Background  The Government had in 2011 constituted an Empowered Committee to identify technology and investors and to recommend incentives to be provided to set up two FAB facilities in the country. This Committee submitted its recommendations to the Government. Based on the recommendations of the Empowered Committee, the Union Cabinet accorded approval for establishing two FAB manufacturing facilities by two consortia, one led by M/s Jaiprakash Associates Ltd. along with M/s IBM (USA) and M/s Tower Jazz (Israel) and the other led by M/s. HSMC Technologies India Pvt. Ltd. along with M/s ST Microelectronics (France/Italy) and M/s Silterra (Malaysia); and authorized the Empowered Committee to take all decisions to implement the FAB projects in furtherance of the decision of the Cabinet Letters of Intent have been issued to the two consortia on 19.03.2014 for setting up FAB facilities in India. The setting up of Semiconductor Wafer Fabrication units is a critical pillar required to promote Electronics System Design and Manufacturing in India which will stimulate the flow of capital and technology, create employment opportunities, help higher value addition in the electronic products manufactured in India, reduce dependence on imports, and lead to innovation.

Why persist with nuclear power?

The path-breaking 2006 India-United States agreement on civilian nuclear cooperation, which had been gathering dust because of the subsequent Indian law on nuclear liability, appears to have been taken off the shelf. One of the key agreements finalised during United States President Barack Obama’s Republic Day visit, it has four elements. India will not change its nuclear liability law; instead, it will create a government fund to address claims resulting from an accident. India will also take a fresh look at the provision of its law that permits claims made under tort law for damages caused; and the United States has given up its demand to track material supplied under the peaceful nuclear programme.

Only very broad features have been outlined and, hopefully, when the details become known the Indian government will not be found to have given away where it matters. If a negative picture does eventually emerge from the details, then the question will be — what for? The Bharatiya Janata Party has high stakes, as India being a nuclear power is close to its heart — and the status becomes meaningful not just when it has the bomb but when it also has a smooth nuclear power programme and is able to join bodies like the Nuclear Suppliers Group. That – and the final prize, a permanent seat at the United Nations Security Council – will happen only if the United States government is well disposed, after being able to help its firms sell nuclear power reactors worth billions of dollars to India. But they will not do so if the liability for an accident finally comes to rest on their doorsteps.

The overall reality regarding nuclear accidents is that they can cause huge damage and if power plant suppliers (American) and operators (Indian) are to be liable for claims for damages by third parties who have been harmed, these could drive both bankrupt. The size of such claims has prompted many governments, including the United States, to share the risk and the fund promised by India moves in that direction. The issue is if the Rs 1,500 crore of public money (to be put up by the nationalised insurance companies and the Indian government) to create an insurance cover for claims is not enough, then will there be a recourse to the plant suppliers? If there isn’t, and a disaster takes place, then India and its people will be left holding the baby. That will be a repeat of Bhopal — and the Indian law is the result of the memory of the great injustice done to its victims.

The case for Indian insistence on leaving intact its liability law, one of the firmest in the world, rests on United States courts’ willingness to listen to damages claimed from suppliers in the case of the Three Mile Island and Fukushima accidents, as Siddharth Varadarajan has pointed out. It is also worth asking how a car is so different from a nuclear power plant. Not only have enormous claims been allowed by United States courts for injuries caused by defective cars, United States regulators move well before victims’ claims can be pronounced upon by civilian courts. Toyota has been fined a phenomenal $1.2 billion, and investigations have been started against General Motors. The best way to ensure that equipment is designed to be safe is to raise the cost of malfunction, both through government fines for criminal neglect and court-determined civilian claims.

The key issue is if damages caused by nuclear accidents can be so huge, why go for nuclear power? It begins with the idea of a macho India that has the bomb and the persistence with nuclear power feeds into it. On the other hand, Japan after the Fukushima accident shut down all its nuclear reactors — and when they start reopening later this year, four years after the shutdown, not all of them will do so. Some will reach 40 years and will be decommissioned, a costly process. In the aftermath of the Fukushima accident Germany decided to close all its nuclear power plants by 2022. “Nuclear power [has] too many inherent risks to inflict it on us and our children,” said the German commission that went into the “ethics of nuclear power” after Fukushima.

Investment costs for nuclear power, at Rs 6-8 crore a megawatt, are about the same as for thermal power. The cost of grid-connected solar power is rapidly approaching that of thermal power. All sensible nations should work towards a combination of wind, solar and gas-based power (these plants are least polluting and can be quickly started and shut down to meet gaps). The good news is that the United States has also promised to help create a huge solar power capacity whose technology is maturing rapidly.

As for possessing a bomb, it does not enhance security. Pakistan followed quickly in India’s footsteps with its own nuclear tests in 1998 so that India’s superiority in conventional defence capability was replaced with parity in nuclear capability.

After the nuclear step, the big leap

For the new Modi-Obama vision to succeed, India would need a more agile management of its international engagement on the economic and political sides considering the fact that the two leaders have agreed to elevate their strategic dialogue to include strategy and commerce

It is a measure of how important the India-United States civil nuclear agreement was to the bilateral relationship that even Prime Minister Narendra Modi has said that it constitutes the “centrepiece” of the strategic partnership between the two great democracies. However, the U.S. President Barack Obama’s visit to India this weekend was not about that “centrepiece” but about the entire mantle.

Tying up the loose ends of the Indian nuclear liability law was about completing unfinished business. It was also about regaining U.S. trust. After all, the George Bush administration helped legitimise India’s status as a nuclear weapons power and expected, in exchange, at least some of the business that would then get generated. The liability law that India then enacted was viewed as an act of bad faith. The trust that successive Prime Ministers, from P.V. Narasimha Rao onwards, injected into the relationship was wasted away by this one act of Indian doublespeak.

Political doublespeak

To return the relationship to where it was in 2008, when the U.S. secured the approval of the Nuclear Suppliers Group for India’s nuclear programme, it was necessary to clear the air on the liability law. In short, the nuclear stuff that hogged the headlines all through the weekend was just the ribbon that had to be cut for Mr. Obama and Mr. Modi to then move on. Move on they did. The real outcome of the visit is captured in the statements on their bilateral Strategic Vision and the Declaration of Friendship.

What the entire nuclear deal episode captures, however, is the price we pay for our political doublespeak. As Prime Minister, Dr. Manmohan Singh would often say that a political party’s view on policy should not be judged by what it says when in Opposition, but by what it does when in government. So, even though it was the Bharatiya Janata Party (BJP), under the leadership of Prime Minister Atal Bihari Vajpayee, that took the “first steps” and the “next steps” towards a strategic partnership with the U.S., the same BJP opposed the India-U.S. civil nuclear energy agreement under the leadership of Lal Krishna Advani, when he was Leader of the Opposition.

Ironically, it is Sushma Swaraj who, in 2010, reportedly picked up the phone and called the CPI(M)’s Sitaram Yechury, striking an alliance with the Left to demand changes to the original nuclear liability law, who has had to now help find a way out of the impasse she helped create.

But then, the Advani BJP’s objection to the nuclear deal was not based on genuine concerns about strategic autonomy and the future of the nuclear programme. When Dr. Singh managed to win over Mr. Vajpayee’s National Security Advisor, the late Brajesh Mishra, and the leadership of the Department of Atomic Energy, the Advani BJP’s game became clear. It was in fact seeking to oust the Manmohan Singh government, not really block the nuclear deal.

Back on track

Given that the BJP in office today is not the Advani BJP, but the Narendra Modi BJP and given that Mr. Modi was never an enthusiastic supporter of the Advani group’s ambition to seize power, he would have had no problem endorsing the deal that Dr. Singh struck and getting on with business. That is precisely what he has done. In six quick months he has cleared the cobwebs and revived what seemed to have become a moribund relationship during Dr. Singh’s second term.

The weakening of Dr. Singh’s prime ministership also coincided with domestic distractions for the U.S. President. The post-2008 economic crisis not only forced Mr. Obama to cosy up to China, but his Afghanistan strategy took him closer to Pakistan. India felt abandoned. It took the decisive victory of Mr. Modi, in May 2014, and a new reassessment of a post-Modi India by Mr. Obama, for the deal to be back on track.

Mr. Modi has understood the strategic significance of the nuclear deal; that it was not just about building nuclear power plants but, as he put it so eloquently on Saturday, the “centrepiece” of a strategic partnership. The wayward course of the nuclear deal only underscores the importance of strong domestic political leadership for success on the external front. A ‘strong’ Dr. Singh clinched the deal in 2008, a weakened one failed to deliver on it. A ‘strong’ successor has now completed the project.

The new ‘mantle’

The new ‘mantle’ is now defined by the joint statement issued by Mr. Obama and Mr. Modi, which has to be read within the wider framework of bilateral relations defined by the Declaration of Friendship and the Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region. While the media, quite understandably, remained focussed on the “centrepiece,” a new mantle has now been put in place defined by these Vision and Friendship statements.

The vision defining the new partnership captures the geopolitical view that the key to India’s rise as a global player is “inclusive economic development” at home. It is also in India’s interest, as well as that of the U.S., to establish a rules-based system of global economic governance and a rules-based security architecture.

Critics of the U.S.-India partnership, and there would be many in both countries, tend to assess the new understanding within the paradigm of outdated Cold War thinking. India-baiters in the U.S. would chastise Mr. Obama for giving India too much strategic space with no assurance of any alliance being offered in exchange. Critics of the U.S. in India will charge Mr. Modi with bartering away India’s strategic autonomy and its “independent foreign policy.”

Both would be wrong. The reality is that both Mr. Obama and Mr. Modi have come to terms with the reality of the new world order, in which they see their partnership as strengthening a global economic and security architecture that would benefit both. In that sense, the three documents issued by the two leaders in New Delhi offer a realistic assessment of the existing power equation between the two interlocutors, on the one hand, and between them and other major powers, like Russia and China, on the other.

Time for hard work

Going forward, the U.S. and India will work more closely together but will also be able to offer each other a wider margin for individual manoeuvre. Thus, for example, the U.S. may not be averse to India’s present level of engagement of Russia and China, just as India would be more understanding of U.S. relations with China and Pakistan. This new way of approaching the bilateral relationship within a larger global context would enable the two leaders to avoid the “zero-sum-game” trap in the regional context.

All this calls for a much more mature handling of Indian foreign policy and of India’s many strategic partnerships. Mr. Modi has demonstrated that he has the wit and wisdom to pull it off — being friendly with Vladimir Putin even as he hugs Barack Obama. But it is not an easy act to sustain, especially when difficult forks are reached and a choice has to be made one way or another. The art of diplomacy lies in avoiding such dilemmas.

For the new Modi-Obama vision to succeed, India would need a much more alert and agile management of its international engagement on the economic and political side, specially considering the fact that the two leaders have agreed to elevate their strategic dialogue to a strategic and commercial dialogue.

This would require much greater inter-ministerial coordination at the bilateral, regional and global levels. India cannot continue with the contradiction of the past wherein one ministry would be seeking favours from a country while another ministry would be poking it in the eye or cocking a snook.

As Superman’s uncle tells him when he discovers the newly acquired powers of his young nephew, with great power comes great responsibility. One can extend that argument and suggest that in fact the quest for great power entails even greater responsibility. Once a nation has arrived at a new equilibrium of power, it can afford to make mistakes and get away. But the journey to that new status is fraught and the path is replete with slippery slopes.