New Series Estimates of National Income, Consumption Expenditure, Saving and Capital Formation (Base Year 2011-12)

The Ministry of Statistics & Programme Implementation has released the new series of national accounts, revising the base year from 2004-05 to 2011-12. The base year of national accounts was last revised in January 2010. 2.         Base year revisions differ from annual revisions in National Accounts primarily because of nature of changes. In annual revisions, changes are made only on the basis of updated data becoming available without making any changes in the conceptual framework or using any new data source, to ensure strict comparison over years. In case of base year revisions, apart from a shift in the reference year for measuring the real growth, conceptual changes, as recommended by the international guidelines, are incorporated.  Further, statistical changes like revisions in the methodology of compilation, adoption of latest classification systems, and, inclusion of new and recent data sources are also made.  Changes are also made in the presentation of estimates to improve ease of understanding for analysis and facilitate international comparability. 3.         Improvements as noted above, especially incorporation of new datasets, have resulted in a correction in the level of GDP, which is likely to affect a wide range of indicators where it is used as a reference point: for instance, trends in public expenditure, taxes and public sector debt that are conventionally analysed in terms of their ratios to nominal GDP. It may be noted that the level of revision in the present base revision is not large enough to affect any of these ratios significantly. 4.         Users are requested to note that Gross Domestic Product (GDP) at factor cost will no longer be discussed in the press releases. As is the practice internationally, industry-wise estimates will be presented as Gross Value Added (GVA) at basic prices, while ‘GDP at market prices’ will henceforth be referred to as GDP. Estimates of GVA at factor cost (earlier called GDP at factor cost) can be compiled by using the estimates of GVA at basic prices and production taxes less subsidies as given in Statement 3.1 of this note. For the years 2011-12, 2012-13 and 2013-14, GVA at factor cost have been compiled and are presented in Statements 10.1 & 10.2. 5.         A brief note on the conceptual and statistical changes made in the new series, and its effect on the key estimates are given in Annex. A short publication giving more details of the revision shall be made available in public domain by the last week of February 2015. 6.         The salient features of the key macro-economic aggregates are indicated in the following paragraphs. Gross Domestic Product 7.         GDP for the base year 2011-12 is estimated as Rs. 88.3 lakh crore. Nominal GDP or GDP at current prices for the year 2012-13 is estimated as Rs. 99.9 lakh crore while that for the year 2013-14 is estimated as Rs. 113.5 lakh crore, exhibiting a growth of 13.1 percent and 13.6 percent during the years 2012-13 and 2013-14 respectively. 8.         Real GDP or GDP at constant (2011-12) prices stands at Rs.92.8 lakh crore and Rs.99.2 lakh crore, respectively for the years 2012-13 and 2013-14, showing growth of 5.1 percent during 2012-13, and 6.9 percent during 2013-14. Industry-wise Analysis 9.         The percentage changes in the Gross Value Added (GVA) at basic prices in different sectors of the economy are presented in Statements 4.1 and 4.2. At the aggregate level, nominal GVA at basic prices increased by 13.2 percent during 2013-14, as against 12.9 percent during 2012-13 (Statement 1.1). In terms of real GVA, i.e., GVA at constant (2011-12) basic prices, there has been a growth of 6.6 percent in 2013-14, as against growth of 4.9 percent in 2012-13. 10.       The growth in GVA during 2013-14 has been higher than that in 2012-13 due to higher growth in ‘trade & repair services’ (14.3%), ‘communication and services related to broadcasting’ (13.4%), ‘other services’ (10.7%), ‘agriculture, forestry and fishing’ (3.7%), ‘construction’ (2.5%) and ‘public administration & defence’ (4.9%). Net National Income 11.       Nominal Net National Income (NNI) for the year 2011-12 stands at Rs. 78.5 lakh crore, while the estimates for the years 2012-13 and 2013-14 are Rs. 88.4 lakh crore and Rs. 100.6 lakh crore, showing an increase of 12.7 percent and 13.7 percent during 2012-13 and 2013-14 rsepectively. Gross National Disposable Income 12.       Gross National Disposable Income (GNDI) at current prices is estimated as Rs.90.6 lakh crore for the year 2011-12, while the estimates for the years 2012-13 and 2013-14 stand at 102.2 lakh crore and Rs.116.0 lakh crore, respectively. Saving 13.       Gross Saving during 2011-12 is estimated as Rs.29.9 lakh crore, and the estimates for the years 2012-13 and 2013-14 are Rs. 31.8 lakh crore and Rs. 34.8 lakh crore respectively. Rate of Saving to GNDI for the years 2011-12, 2012-13 and 2013-14 is estimated as 33.0 percent, 31.1 percent and 30.0 percent respectively. 14.       The highest contributor to the Gross Saving is the household sector, with a share of 59.4 percent in the year 2013-14. However, the share has declined from 67.3 percent in 2011-12 and 63.4 percent in 2012-13. This decline can be attributed to the decline in household savings in physical assets, which has declined from Rs.13.4 lakh crore in 2011-12 to Rs. 12.1 lakh crore in 2013-14. On the other hand, the share of Non-Financial Corporations has increased from 29.3 percent in 2011-12 to 34.5 percent in 2013-14. The share of Financial Corporations has been around 9 percent in all these years, while the dis-saving of General Government has decreased from 5.4 percent in 2011-12 to 3.2 percent in 2013-14. Capital Formation 15.       Gross Capital Formation (GCF) at current and constant prices is estimated by two approaches – (i) through flow of funds, derived as Gross Saving plus net capital inflow from abroad; and (ii) by the commodity flow approach, derived by the type of assets. The estimates of GCF through the flow of funds approach are treated as the firmer estimates, and the difference between the two approaches is taken as “errors and omissions”. However, GCF by industry of use and by institutional sectors does not include “valuables”, and therefore, these estimates are lower than the estimates available from commodity flow. 16.       Gross Capital Formation (GCF) at current prices is estimated as Rs. 33.7 lakh crore for the year 2011-12, while the estimates for both the years 2012-13 and 2013-14 stand at Rs. 36.6 lakh crore. Since GCF did not increase during 2013-14, the rate to GDP declined during the year to 32.3 percent as against 36.6 during 2012-13. The rate of GCF to GDP excluding valuables stands at 33.9 percent and 31 percent during 2012-13 and 2013-14 respectively. The rate of capital formation in the years 2011-12 to 2013-14 has been higher than the rate of saving because of net capital inflow from Rest of the World (ROW). 17.       In terms of the share to the total GCF (at current prices), the highest contributor is Non-Financial Corporations, with the share rising steadily from 46.6 percent in 2011-12 to 51.5 percent in 2013-14. Share of household sector in GCF is also significant, which has declined from 42 percent in 2011-12 to 34.2 percent in 2013-14. The share of General Government in GCF has increased from 10 percent in 2011-12 to 13.2 percent in 2013-14. 18.       The rate of Gross Capital Formation at constant (2011-12) prices has decreased from 37.2 in 2012-13 to 33.4 in 2013-14. 19.       Within the Gross Capital Formation at current prices, the Gross Fixed Capital Formation (GFCF) amounted to Rs. 33.7 lakh crore in 2013-14 as against Rs. 31.4 lakh crore and Rs. 29.7 lakh crore in 2012-13 and 2011-12 respectively.  The change in stocks of inventories, at current prices, decreased from Rs. 2.2 lakh crore in 2011-12 to Rs. 1.8 lakh crore in 2013-14, while the valuables decreased from Rs. 2.5 lakh crore in 2011-12  to Rs. 1.5 lakh crore in 2013-14. Consumption Expenditure 20.       Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs. 50.9 lakh crore for the base year 2011-12, increasing to Rs. 58.8 lakh crore in 2012-13 and further to Rs. 67.7 lakh crore in 2013-14. In terms of GDP, the rates of PFCE at current prices during 2011-12, 2012-13 and 2013-14 are estimated at 57.6 percent, 58.8 percent and 59.7 percent respectively. 21.       At constant (2011-12) prices, the PFCE is estimated at Rs. 53.7 lakh crore and Rs. 57.0 lakh crore for the years 2012-13 and 2013-14 respectively. The corresponding rates of PFCE for the years 2012-13 and 2013-14 are 57.9 percent and 57.5 percent respectively. 22.       Government Final Consumption Expenditure (GFCE) is estimated at Rs. 9.9 lakh crore for the year 2011-12. The estimates of GFCE at current prices for the years 2012-13 and 2013-14 stand at Rs. 10.9 lakh crore and Rs. 12.8 lakh crore, respectively. At constant (2011-12) prices, the estimates of GFCE for the years 2012-13 and 2013-14 stand at Rs. 10.0 lakh crore and Rs. 10.9 lakh crore respectively. Estimates at per capita level 23.       For the purpose of estimation of Per Capita Income and Per Capita PFCE, Population Projections compiled on the basis of Census 2011 have been used. Per Capita Income at current prices, estimated as Per Capita Net National Income at current prices, is estimated at Rs. 64316, Rs. 71593 and Rs. 80388 for the years 2011-12, 2012-13 and 2013-14 respectively.  Correspondingly, Per Capita PFCE at current prices, for the years 2011-12, 2012-13 and 2013-14 is estimated as Rs. 41728, Rs. 47572 and Rs. 54133, respectively. 24.       Details of these estimates are available in Statements 1-10 appended with this Press Note. 25.       The upcoming releases on GDP are indicated below:         i.            Advance Estimates for the year 2014-15 alongwith quarterly estimates for Q1, Q2 and Q3 of 2014-15 on February 9, 2015; and       ii.            Provisional Estimates for the year 2014-15 alongwith estimates for all the four quarters of the year on May 29, 2015.

The new entente with the U.S

The Obama visit is so overwhelming a development that it has hardly evoked dissent. Not since India signed the peace and friendship treaty with the Soviet Union has New Delhi aligned itself so closely with a great power. Anti-Americanism, once the conventional wisdom of the Indian elite, seems almost antediluvian today

Robert Blackwill, former Ambassador of the United States and Harvard academic, used to often recount at his dinner roundtables in New Delhi’s Roosevelt House an intriguing story about how he was persuaded to take up the job. In 2001, President George W. Bush called him to his ranch in Texas and said: “Bob, imagine: India, a billion people, a democracy, 150 million Muslims and no Al Qaeda. Wow!” More than a decade after President Bush’s first exclamation, India-U.S. relations have truly reached their ‘wow’ moment.

President Barack Obama’s visit is so obvious a watershed in India’s foreign policy, and so overwhelming a development, that voices of dissent are mute or feeble. Not since India signed the treaty of peace, friendship and cooperation with the Soviet Union in 1971 has New Delhi aligned itself so closely with a great power. More important, outside the Left, both within India and in the U.S. the consensus across the mainstream of political opinion favours stronger relations between the two countries. Anti-Americanism, once the conventional wisdom of the Indian elite, seems almost antediluvian today.

Behind the change

The reason for the drastic change in the geostrategic outlook can be summarised quickly. The 1971 treaty was a response to the continuing U.S. tilt towards Pakistan and the beginnings of a Washington-Beijing entente (President Richard Nixon’s then National Security Advisor, Henry Kissinger, went secretly to Beijing via Islamabad a month before India signed the treaty with the Soviet Union). In contrast, in 2015, it is the prospect of a powerful, belligerent and potentially hegemonic China in the Indo-Pacific region that is helping to cement the relationship. While this may seem like a parsimonious explanation, it is rooted in an understanding of the manner in which great powers, rising powers and emerging powers have responded to changes in the balance of power in the international system since the Peace of Westphalia in 1648.

Clearly, the pièce de résistance of the Obama visit has been removing the final hurdles in the civilian nuclear agreement to pave the way for its commercialisation, almost a decade after Prime Minister Manmohan Singh and President Bush first issued a joint statement, in July 2005, on civilian nuclear cooperation. As we know, two sticking points were holding up an agreement: differences over liability in case of a nuclear accident, and over administrative arrangements governing the transfer of nuclear materials to India.

Consider first the latter. For more than a year, the U.S. has refused to accept an Indian draft agreement that was based on the sound principle that New Delhi would be accountable only for the totality of nuclear material supplied to it, and under the safeguards of the International Atomic Energy Agency (IAEA). Given India’s closed fuel cycle, allowing nuclear material from different countries to be tracked and audited separately could be unnecessarily intrusive and could undermine the confidentiality of its nuclear programme. While the Canadians saw reason and accepted India’s draft in 2012, the non-proliferation lobby in Washington seemed to have had the upper hand as the political leadership seemed reluctant to take a call even though it was against the letter and spirit of the 123 agreement: the fundamental basis of the civil nuclear agreement between India and the U.S.

Nuclear liability issue

The deal has been done only because President Obama has now put his personal weight behind it, to marginalise those who still see India’s nuclear programme through the prism of Washington’s non-proliferation policies of the 1990s towards New Delhi. With the U.S. accepting the Canadian model, it will be easier for India to negotiate with Japan and Australia, the other two countries still holding out for tracking and audit of nuclear material based on national flags. Hopefully, the deal will pave the way for GE, Westinghouse and other leading businesses in the nuclear industry to begin commercial operations in India.

Similarly, on the issue of nuclear liability, where American companies were concerned by the unlimited liability they could face in case of a nuclear accident under Sections 17(b) and 46 of the Indian Civil Liability for Nuclear Damage Act of 2010, a compromise seems to have been found.

New Delhi has agreed to create a publicly funded insurance pool and the Attorney General of India is likely to issue an explanatory memorandum on Section 46 which will potentially clarify the limits of tort claims by accident victims against the suppliers of nuclear reactors. The latter, however, as Indian officials have said, is still a work in progress. Given the collective national memory of the Bhopal gas tragedy, this could still stir a public controversy if the limits are in absolute terms. Rather, the claims could be linked to compensations offered contemporaneously to victims of industrial accidents in the U.S.

The vision statement

No less important is the commitment of President Obama and his team to support India’s membership of international export control regimes, including the Nuclear Suppliers Group, the Wassenaar Arrangement, the Australia Group, and the Missile Technology Control Regime that will help to further mainstream India’s nuclear programme. Given that similar promises have been made in the past, it is important that India uses the goodwill of the Obama visit to ensure that Washington presses for this to happen as soon as possible — despite the obvious reluctance of some members of these regimes.

The media focus has been on the nuclear issue — yet the U.S.-India Joint Strategic Vision for the Asia-Pacific and Indian Ocean Region is no less significant. It is a major advance on the early initiatives made during last September’s Obama-Modi summit in Washington. Indeed, given India’s traditional strategic caution, the vision statement could be even seen as radical by its standards. Shorn of the homilies, the vision statement has three significant features.

The first is the clear link between economic prosperity and security, and the critical importance of freedom of the seas in the region. The statement could not be more explicit: “We affirm the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea.”

Second is the commitment to the United Nations Convention on the Law of the Sea and to “pursue resolution of territorial and maritime disputes through all peaceful means, in accordance with universally recognized principles of international law.”

Third is the agreement to work with other countries to better respond to diplomatic, economic and security challenges in the region. The five-year vision includes strengthening regional dialogues, making trilateral consultations with third countries in the region more robust, deepening regional integration, strengthening regional forums, and exploring additional multilateral opportunities for engagement.

China factor

While India has traditionally favoured a policy of deep engagement with all major powers, the special relationship with the U.S. today, especially the “vision” statement, is rooted in great apprehensions in New Delhi about China’s aggressive “peripheral diplomacy,” particularly after the intrusions in Chumar during President Xi Jinping’s visit to India last year. That the new Chinese leadership had abandoned Deng Xiaoping’s ‘24 Character Strategy’ of biding time, hiding its capacities and not attracting attention has been clear for some time now, but what is intriguing is that Beijing has managed to alienate nearly all its neighbours, except North Korea and Pakistan, by its malevolence. Not surprisingly, a rising China is a cause of trepidation in most capitals of the world today. Will Beijing now introspect and recalibrate? For it must realise that New Delhi’s closeness to Washington is also a function of its strategic distance from Beijing.

In late 2005, amidst the negotiations over the civil nuclear agreement with the U.S., Dr. Singh, appointed a task force on global strategic developments headed by the doyen of India’s strategic thinking, K. Subrahmanyam. As a member of the task force, I remember the meetings essentially became a series of inspiring lectures by Mr. Subrahmanyam on geopolitics. Mr. Subrahmanyam was an architect of many of India’s key strategic decisions, including the policy that led to the creation of Bangladesh, the Indo-Soviet treaty, as well as the nuclear tests of 1998. But throughout the meetings, Mr. Subrahmanyam, with a mind as agile as that of a restless teenage prodigy, would emphasise the importance of arriving at a modus vivendi with the U.S., the overriding importance of the nuclear deal, how it was in Washington’s own interest to support a rising India and how New Delhi should grab that opportunity. As the United States and India finally “recognise” each other and promise to realise each other’s potential, the new entente between the two countries is a fitting tribute to the legacy of India’s modern-day Chanakya, just days after his 86th birthday.

Charles Townes, Nobel winner for co-inventing laser, dies aged 99

Townes shared the 1964 Nobel Prize in physics with Russian physicists Aleksandr M. Prokhorov and Nicolai G. Basov.

Charles H. Townes’ inspiration for the predecessor of the laser came to him while sitting on a park bench, waiting for a restaurant to open for breakfast.

On the tranquil morning hours of April 26, 1951, Townes scribbled a theory on scrap paper that would lead to the laser, the invention he’s known for and which transformed everyday life and led to other scientific discoveries.

Townes, who was also known for his strong religious faith, famously compared that moment to a religious revelation.

The 99-year-old Nobel Prize-winning physicist died on Thursday.

In 1954, his theory was realised when Townes and his students developed the laser’s predecessor, the maser (microwave amplification by stimulated emission of radiation).

“I realised there would be many applications for the laser,” Townes told Esquire magazine in 2001, “but it never occurred to me we’d get such power from it.”

The laser paved the way for other scientific discoveries that revolutionize everything from medicine to manufacturing, including DVD players, gun sights, printers, computer networks, metal cutters, tattoo removal and vision correction.

“Charlie Townes had an enormous impact on physics and society in general,” Steven Boggs, the chairman of the physics department at Berkeley, said Wednesday.

Townes shared the 1964 Nobel Prize in physics with Russian physicists Aleksandr M. Prokhorov and Nicolai G. Basov.

A devoted member of the United Church of Christ, Townes drew praise and scepticism later in his career with speeches and essays investigating the similarities between science and religion.

“Science tries to understand what our universe is like and how it works, including us humans,” Townes wrote in 2005 upon being awarded the Templeton Prize worth more than $1.5 million for his contributions in “affirming life’s spiritual dimension.”

“My own view is that, while science and religion may seem different, they have many similarities, and should interact and enlighten each other,” he wrote.

Born on July 28, 1915, in Greenville, South Carolina, Townes found his calling during his sophomore year at Furman University and went on to earn a master’s degree from Duke University in physics and a doctorate at the California Institute of Technology.

Demonstrating that masers could be made to operate in optical and infrared capacities, Townes and his brother-in-law, the late Stanford professor Arthur L. Schawlow, jointly published a theory in 1958 on the feasibility of optical and infrared masers, or lasers.

A laser controls the way that energised atoms release photons, or light particles.

“I feel that very rarely have I done any work in my life,” he told Esquire. “I have a good time. I’m exploring. I’m playing a game, solving puzzles, and having fun, and for some reason people have been willing to pay me for it.”

Townes is survived by his wife and four daughters, Linda Rosenwein, Ellen Townes-Anderson, Carla Kessler, and Holly Townes.

Takeaways from the Obama visit

Twenty years ago, the talking points of U.S. policy were to ‘cap and eventually eliminate’ the subcontinent’s nuclear programmes. Now, to have the U.S. President at the Republic Day parade in 2015 while negotiators worked out ways to operationalise civil nuclear cooperation shows how far India-U.S. ties have progressed

The rain during the Republic Day parade apart, United States President Barack Obama’s visit to India was a near-perfect one. Indeed, his sojourn is likely to be viewed as one of the most important and defining moments in the history of India-U.S. relations.

The pomp and symbolism of Mr. Obama being the first U.S. President to attend the parade was expected. But the substance of the visit, particularly its focus on defence and strategic cooperation, confirms that both Mr. Obama and Prime Minister Narendra Modi are serious about bolstering ties.

Progress on strategic agenda

The most significant achievement was the progress made in military and defence cooperation. The renewal of the 10-year framework for the U.S.-India Defence Relationship; the announcement of joint projects, including the co-production of unmanned aerial vehicles (UAVs) and specialised equipment for military transport aircraft; the establishment of contact groups to explore co-development of jet engine technology and aircraft carrier systems, and the decision to upgrade bilateral, annual naval exercises represent substantive steps that will deepen the defence partnership.

The establishment of a hotline between the two leaders and their national security advisers are also an indicator of the two countries taking ties to a deeper, strategic level.

“U.S. companies are apparently still studying the Indian proposal for a nuclear insurance pool to mitigate investment risks, so it may be too early to claim victory on the civil nuclear front.”

The forward movement on civil nuclear issues was a surprise, given the antagonistic position of the Bharatiya Janata Party (BJP) towards the civil nuclear deal when it was in the Opposition. But details on the “breakthrough understanding” are sparse. And Mr. Obama has himself acknowledged that U.S. companies will have the final say on whether India’s proposal for an insurance pool will be sufficient to mitigate investment risks in light of Indian legislation that holds suppliers liable for damages in the event of a nuclear accident. The companies are apparently still studying the proposal, so it may be too early to claim victory on the civil nuclear front.

Nonetheless, U.S. officials seem to appreciate the effort India’s negotiators are making in trying to resolve the civil nuclear deadlock. Many were sceptical that Mr. Modi would invest much political capital in trying to move the deal forward since it was initiated under the previous government headed by Dr. Manmohan Singh. The time and the attention the Indian side has devoted in trying to resolve differences over the nuclear liability issue shows that the Modi government is taking ownership of the deal.

China factor

Forming the backdrop of progress on India-U.S. defence and strategic ties is undoubtedly the military and economic rise of China. The Joint Statement’s call for freedom of navigation and overflight, especially in the South China Sea, should be viewed as a veiled reference to Chinese assertiveness in the region.

By demonstrating that China is very much on his mind, Mr. Modi has reportedly raised the idea of reviving the Quad (security collaboration between Australia, India, Japan and the U.S.). Shinzo Abe, during his previous stint as Prime Minister of Japan, proposed the idea of the Quad almost nine years ago. The four countries backed away from the proposal when China raised strong objections. Mr. Modi’s mention of the Quad may have been aimed at convincing China to back down from its assertive position with regard to their border disputes. Chinese President Xi Jinping’s visit to India in September 2014 was overshadowed by border tensions provoked by unusual movements of Chinese soldiers along the disputed frontier in northern Kashmir.

Incidentally, the Washington-based Heritage Foundation will join the Delhi-based Vivekananda International Foundation, the Australian Strategic Policy Institute, the Tokyo Foundation, and the Jakarta-based Habibie Center in Bali, Indonesia, next week for a Track II Quad-Plus dialogue to discuss ways to enhance cooperation in defence, regional security and counterterrorism.

China has reacted warily to Mr. Obama’s visit to India. In a commentary that ran in a state-owned Chinese newspaper, its author cautioned India not to fall into America’s “trap” of trying to counter China.

Counterterrorism cooperation

The two sides advanced their counterterrorism dialogue and recommitted to cooperating against Pakistan-based groups such as the Lashkar-e-Taiba (LeT). There is confusion about whether Pakistan is cracking down on the LeT front organisation, Jamaat-ud-Dawa (JuD), led by the LeT founder, Hafiz Mohammad Saeed.

The Pakistani media reported last week that Islamabad had frozen JuD assets and banned its leaders from international travel. But Hafiz Saeed’s recent announcement of the JuD launching a new ambulance service in Karachi, shows that the organisation is not feeling much heat from the government’s purported actions.

Washington should push Pakistan to try in the newly established military courts, the seven LeT members in Pakistani custody for their alleged involvement in the 2008 Mumbai attacks. Pakistan has set up these special military courts to overcome weaknesses in the civilian court system in dealing with terrorist cases. One major problem has been the ability of terrorists to intimidate civilian lawyers and judges in order to influence the system in their favour.

Washington has not adequately leveraged its aid and influence in Pakistan to convince the authorities to crack down on terrorist groups that focus on attacking India, but also pose an international threat. The U.S.’s increased willingness to work with India to target these groups is welcome, but not enough.

Until Washington makes clear that it places the threat from LeT on a par with that from al-Qaeda, Pakistani military and intelligence services will continue to allow the LeT and the JuD to operate relatively freely.

Women’s rights, religious freedom

On the final day of the visit, Mr. Obama’s speech, which focussed on women’s rights and religious freedom, was appropriate. The treatment of women in India has garnered a great deal of attention in the last couple of years, especially following wide media coverage after a brutal gang rape on a bus in New Delhi in December 2012 that left the young woman dead.

The issue of religious freedom has also come in the spotlight following reports of mass ceremonies where Muslims and Christians are being converted to Hinduism. Parliament was paralysed for several days last month when reports surfaced that a BJP leader planned to hold one of these ceremonies on Christmas Day (December 25). Eventually the group organising the event agreed to cancel it.

Amid the controversy, some BJP leaders have proposed passing a national anti-conversion law — legislation purportedly aimed at preventing forced conversions. But India’s religious minorities worry that such laws would be used to harass or intimidate them. There is also concern that allowing law enforcement or judicial authorities to determine whether a conversion has been forced or manipulated allows the state to intervene too heavily in religious matters that involve personal and ethical choices.

Mr. Modi has stayed away from communal politicking and has signalled that he is more interested in focussing on his economic agenda, rather than in pursuing Hindutva policies. He has taken steps to reach out to the Muslim community. For instance, during his first speech to Parliament last June, he said it was unacceptable that the Muslim minority often lagged behind the rest of the country in socio-economic terms.

But he needs to reaffirm his commitment to religious freedom and show that he is not beholden to those pushing a hardline Hindutva agenda. Failing to do so could harm the BJP government’s international reputation and dampen India-U.S. ties.

As a young diplomat heading to South Asia nearly 20 years ago, I remember being coached with very specific talking points on U.S. policy, which was to “cap, roll back, and eventually eliminate” the nuclear programmes of both India and Pakistan. To now see the U.S. President at a spectacular parade where India’s strategic weapons capabilities were on full display, while U.S. and Indian negotiators hashed out ways to operationalise civil nuclear cooperation, vividly illustrates just how far the relationship has progressed in recent years.

The Joint Statement released during the visit is notable for its length, spelling out several achievements in the relationship but also detailing the work that lies ahead. The India-U.S. collaboration that now stretches across a broad array of issues and the vision set forth by the two leaders shows that we are no longer striving for a strategic partnership. We have arrived at one.

The patent puzzle Indian licensing of patented drugs is a win-win

Most of the policy issues discussed to take forward the "Make in India" campaign centre around removing domestic roadblocks that hamper manufacturing. In the case of pharmaceuticals, however, the hurdles are unusual. India has an advantage in making drugs - both generic and underpatent - cheaply, and this has resulted in their widespread global use through both regular exports and smuggling. Particularly sought after are newer products for treating non-communicable diseases like cancer that make an enormous difference in the quality of care. However, significant barriers to the manufacture and trade in pharmaceuticals still constrict the sector's growth.

Around a decade ago, then United States president George W Bush's emergency plan for AIDS relief procured and delivered antiretroviral drugs (virtually all generics and many made in India) to several African countries cheaply. Today, buyers' clubs have sprung up all over the world to smuggle in cheap copies of new cures manufactured mostly in India. Some of those involved have been prosecuted, including in China, as those drugs have not been certified by the respective country regulators. In India, the pharma company NATCO, after a celebrated court battle, secured the compulsory licence to manufacture a drug for the treatment of a type of cancer. On the other hand, drug consignments of Indian firms headed for South America have been seized in the past in the Netherlands during transshipment. Meanwhile, the proportion of counterfeits in Indian-made drugs in Africa has been abnormally and worryingly high, a continuing indication of holes in Indian companies' quality control.

Indian law has been designed to address the practice of "evergreening", extending the life of a patent by coming up with a new form of a known substance that does not improve efficacy. The right to allow the manufacture of a patented drug through compulsory licensing on public health grounds involves the payment of royalty, though far less than what a manufacturer can earn elsewhere. In the United States, prices are 50 per cent higher than what even European governments are able to negotiate for procurement for their public health services. United States manufacturers blame the high prices on the complexities of modern chemistry and high cost of securing regulatory approval; naturally, firms charge what they can and must. But if a patented drug that is too expensive for developing countries can be licensed to low-cost competent firms, then that, after all, adds to the global revenue of patent-holders through royalties. Developed economies have competent policing, so that the entry of such low-cost products meant for the global poor can be stopped at their borders. There is, of course, the fear among patent-holders that such practices, if permitted in one country, will set a bad example (countries like India, Brazil and Thailand will learn from each other) and soon there will be a demand for cutting prices in the United States also.

Reforming FCI or cutting back food security?

The Shanta Kumar Committee on restructuring FCI has suggested the reach of the National Food Security Act be curtailed to 40 per cent of the population

The National Democratic Alliance government set up the high-level Shanta Kumar Committee to restructure and reform the state-owned Food Corporation of India. Instead, the panel ended up providing a road map to restructure the entire farming and food security policy of the government. In doing so, the panel has re-ignited the debate that ran like a fire in a pine forest through the entire second tenure of the United Progressive Alliance government: should the National Food Security Act be as minimalistic as possible or should it be an expansive reform of the existing public distribution system?

The Shanta Kumar Committee has made many recommendations on changing what FCI does and how it does it. But it is the big-ticket recommendations on food security that stretch the terms of reference given to the panel to the limits. The panel suggests that in the medium term, the country should move towards cash transfers instead of distributing subsidised grain through FCI. This would also mean that the government's role of buying grain from the farmers at minimum support price will be substantially reduced.

In the short run, the panel has suggested that the National Food Security Act be curtailed. Instead of providing subsidised grain to at least 67 per cent of the population across the country, the law should provide 7 kg of grain per person (instead of 5 kg) at a much lower subsidy to a maximum of 40 per cent of the population. Instead of rice being sold at Rs 3 per kg and wheat at Rs 2 per kg, the committee has recommended that this price should be half of the minimum support price provided to farmers - that works out to a three-to-four time increase in the price of grain provided to the poor.

The panel headed by senior Bharatiya Janata Party leader Shanta Kumar has moved substantially away from the promises the party made in its 2014 election manifesto as well as its position on the floor of Parliament when the National Food Security Bill was debated. BJP said in its manifesto that " it has always held that 'universal food security' is integral to national security. BJP will take steps to ensure that the benefits of the scheme reach the common man and that the right to food does not remain an Act on paper or political rhetoric."

Several BJP Members of Parliament, including Finance Minister Arun Jaitley, had earlier berated the bill for spreading the social security net to fewer people than what was required. Some had even asked for universalisation of the scheme along the lines the Right to Food campaign (closely associated with some of the National Advisory Council members) had advocated.

Even Prime Minister Narendra Modi, then the BJP chief minister of Gujarat, had hit out at the National Food Security Act for being less beneficial than being marketed by the UPA government. Before the Bill was passed, he had said, "The method of selecting beneficiaries has been that you set the criteria, do a survey and then identify who the deserving families are for the scheme. Your food security Bill is such that you have already decided a cap on the number of the beneficiaries. And now you are forcing this cap on the states and telling them to find families who fit into this upper limit. This reverse sequence will never let this scheme become a success."

He was then referring to the UPA government's decision to provide subsidy under the National Food Security Act to 67 per cent of the population. The states were left to provide subsidy to any extra beneficiaries they chose to bring under the ambit of the Bill.

Taking a U-turn
The Shanta Kumar Committee has recommended just the reverse of what Modi as Gujarat chief minister had said. It too has advised an artificial cap imposed by the Centre and suggested the number of beneficiaries be restricted to below 40 per cent of the country's population.

In fact, the Right to Food campaign has claimed the panel's recommendations, if accepted, would lead to the NDA government imposing a de-facto poverty line of Rs 29.2 per day per person of expenditure in rural India to determine the limit on number of beneficiaries of the scheme, crimping the scope of the Food Security Act. In other words, their calculations based on the latest National Sample Survey data, suggest that any individual spending more than Rs 29.2 per day in rural India and Rs 46.75 per day in urban India would not be eligible for benefits under the Food Security Act.

Shanta Kumar has justified his change of stance, claiming BJP had just supported it because Parliamentary elections were around the corner. Media reports have quoted Kumar as saying, "When the Act came in Parliament, many thought 67 per cent coverage was quite high. But you know the political situation ahead of the elections. None of the political parties would have let the Act cover 67 per cent of population if the elections were not around that time...The opposition would have got a point against us. We knew our government was coming and we would correct it."

In effect, Shanta Kumar has suggested that BJP's postures and positions during elections are set to be different than its intent once it's in saddle at the Centre. But the Union government itself has not said so or made any comment on how it views the report. What it has done is delay the implementation of the food security law through questionable executive orders even as the Socio-Economic Caste Census runs behind schedule by several years now. The survey was to be the new basis for identifying the poor beneficiaries. Without it, the existing lists of beneficiaries dating back more than a decade remain the base on which the new beneficiaries are added.

The Right to Food campaign, the Left parties and the Congress see the Shanta Kumar report as a Trojan Horse set up to attack the food security law rather than bring about mere reforms in FCI. The imprint of economist Ashok Gulati, member on the Shanta Kumar panel, is hard to miss in the report. In the UPA regime as the head of the Commission for Agricultural Costs and Prices, which recommends the minimum support price for farmers, Gulati had expressed the same views through various official discussion papers. At that time, Gulati had fallen on the side of the divide that lost the battle as the Congress party went ahead with the National Food Security Act.

Whether Shanta Kumar's report and Gulati's vision find traction this time in the government will depend on how differently Modi acts as prime minister compared to the ideas he professed on food security as the chief minister of Gujarat.

Three other foreign secretaries who quit or were sacked

Sujatha Singh's isn't the first head to roll; Jagat Mehta, A P Venkateswaran and S K Singh were three others who had to demit office before their time

Sujatha Singh is the fourth instance of a foreign secretary of India to have either been asked to quit or sacked. Singh was removed six months before her two year tenure was to end. The Appointments Committee of the Cabinet, that took the decision to cut short her tenure, used the word “curtail” advisedly. For Singh, born in July 1954, was past her retirement age.

The other three instances of foreign secretaries to have been sacked or signaled to resign took place when they were yet to retire, or so claim former diplomats. Jagat Mehta in 1980, A P Venkateswaran in 1987 and S K Singh in 1990 are the three other examples of serving foreign secretaries being sacked or asked to quit before the end of their terms/reaching superannuation.



Sujatha Singh is also the third top official to be sacked by the Narendra Modi government. In the other two instances, the officials were on extended tenures.

The government removed Special Protection Group chief K Durga Prasad in end November. Prasad was on extension, his tenure having ended earlier that month. Prasad had dismissed speculation that his ouster had anything to do with Prime Minister Modi’s estranged wife Jashodaben having filed a Right to Information application about the security cover being provided to her.

In mid-January, Defence Minister Manohar Parrikar removed the chief of Defence Research and Development Organisation (DRDO) Avinash Chander. Parrikar said the organisation needed a younger man as its head. The Appointments Committee of the Cabinet ended Chander’s contract 16 months before it was to conclude. Chander was on a two year extension given to him by the Modi government.

Three foreign secretaries who quit/ were sacked

Jagat Mehta, 1979: Mehta, one of the most respected officers to serve in the Indian Foreign Service, was sacked months before he was to retire. Prime Minister Charan Singh, with Atal Bihari Vajpayee as his Foreign Minister, felt Mehta had brought in changes in India’s policies towards Pakistan, US and China that had hurt India’s interests. It was also felt that he damaged India’s standing at the Lusaka Commonwealth Heads of Government Meeting, CHOGM in 1979, by promoting his own candidature for the post of the secretary general of the Commonwealth. According to former diplomat T P Sreenivasan, Mehta took the moral responsibility for the fiasco that had more to do with “inept” handling of the issue at the political level. Mehta resigned, but was asked to stay on and later dismissed when his replacement arrived.

A P Venkateswaran, 1987: Prime Minister Rajiv Gandhi literally sacked Venkateswaran during his annual press conference. Venkateswaran had publicly termed the sending of the Indian Peace Keeping Force (IPKF) to Sri Lanka a mistake. When asked to respond to this by a Pakistani journalist, Gandhi famously said: Soon, you will be talking to a new foreign secretary. Venkateswaran returned to his office and resigned.

S K Singh, 1990: Singh was appointed the foreign secretary in the last months of the Rajiv Gandhi government. But life became difficult when V P Singh government took over after the Lok Sabha elections in end-1989. External Affairs Minister Inder Kumar Gujral and S K Singh hadn’t been on the best of terms when Gujral was the ambassador to Moscow in late 1970s, while S K Singh dealt with administration in Delhi. He was asked to quit months before his retirement, with Muchkund Dubey appointed the new foreign secretary.