Farm Sector in India demands urgent attention

A new government is in place in New Delhi, with an absolute majority, which in itself, should give it enough courage to put in place reforms that will ramp up a slowing-down economy. The Prime Minister held a meeting attended by about 40 experts—economists, leaders in industry and agriculture, water resources, etc. as also the Minister for Commerce and Industry and the Minister of State for Statistics. The state of the economy has been a matter of concern, the economy growing at it’s slowest pace in the last 17 quarters (that is more than four years prior to 2018-2019). The growth percentage is down to 6.6% in the last quarter of 20181. The government also announced a third straight fall in growth to 5.8% in the first quarter of the financial year 2018-2019. This figure means that India is no longer the fastest growing economy, having ceded that place to China which grew at 6.4% in the first three months of 2019. India has thus fallen behind China for the first time in nearly two years. The data for unemployment is also not very encouraging with the statistics ministry stating that the unemployment rate was at 45-year high at 6.1%, for 2017-20182 , confirming the figure which was leaked to the Business Standard, which said it was the worst since 1972-73.

No sector beckons support as much as the farm sector does, because that is the life line of India. If rural India’s economy looks up, that acts as a strong precursor for the manufacturing sector and other allied services. Thus, one can definitely see a positive “ripple effect,” indeed, for the overall growth of India. When the agricultural economy slumps, the country’s growth engine nose dives that is the actual reality3. Nothing highlights this as much as the country-wide farmers’ agitation did, some months preceding the Lok Sabha election. Now an environmental disaster is looming large, caused by global warming. The United Nation’s Secretary General, Mr. Antonio Guterres, is convening a summit of the global heads of governments for a summit on global warming early September. In this connection, it would not be out of place to mention that my book, “Combating Global Warming: The Role of Crop Wild relatives For Food Security,” being published by Springer Global, is being launched just prior to the global summit, in New York, and all over the world. This simply speaks of the urgency of this matter. To be precise, water is at the center of this grave environmental hazard, because, rising ambient temperature will affect the water stored underground. In addition to this, the global warming could have catastrophic environmental effects. It has been estimated that nearly 1 billion people in the tropics, including India, could be affected by mosquito borne diseases like dengue and zika virus. A year round transmission in dengue can take place. India has witnessed this catastrophe, and, will witness it in the future as well, because of the unfolding global warming hazards in the country. To illustrate, the “water havoc” Kerala is an apt example. In August 2018, the State was lashed by heavy torrential rains, which was a new phenomenon for this region. The dams were full and overflowing, and, an ill-informed electricity minister ordered the dam shutters to be opened. This created a manmadedisaster rendering thousands to abandon their homes, and over 370 loss of lives. It was not that the state was caught by surprise. The Indian Meteorological Department (IMD) had provided adequate prior information of unprecedented rainfall and the issue had also been raised by the state’s Members of Parliament (MP), who had questioned in the Lok Sabha, the administration’s response measures if major flooding was to take place. It appears that the warnings were not heeded which led to inadequate response measures when Kerala was flooded. Larger issues of uncontrolled exploitation of natural resources and ignoring ecology were also raised by the MPs in Parliament4.

While unprecedented floods were seen in 2018, by mid June 2019, the delayed south west monsoon made it evident that a drinking water shortage would clearly appear. Tragically, all those “policy planners” in the government never had a clear plan to harvest the rain water and 99 per cent of the water received from the skies in August 2019, simply flowed into the Arabian sea, after causing enough havoc to human life. This brings us to the central question: is there a clear level headed water management policy in India? At the time of writing this article, India’s South West Monsoon rainfall is deficient by 43 per cent.

TABLE 1: DETAILS OF CROPPING PATTERNS


Note: Primary report on area (in lakh hectares) under kharif crops as on June 21, 2019
Important to note: The area covered under all crops is down, except for sugarcane, which is a water-guzzling crop, which will further aggravate the water crisis in India, as discussed in the article.

The President of India, during the inaugural session of the Parliament said that the government was aware of the farm crisis and it would invest Rs 25,000 crore to mitigate the woes of the farmers. In particular, he made a mention of the expansion of the Pradhan Mantri Kisan Samman Nidhi, an income support scheme, to all land owning farm families. Earlier, the scheme was only open to small and marginal farm families owning less than 2 hectares of land. The expansion of the scheme, in keeping with a BJP poll promise, would increase its annual allocation to Rs 90,000 crore from the previous Rs 72,000 crore. The President added that Rs 12,000 crore has already been disbursed during the last three months5. While the union government has expanded the PM-Kisan Samman Nidhi scheme to reach all farmers with great fanfare, only one in four of the intended beneficiaries have received the income support from the scheme so far, Agriculture Minister Narendra Tomar told the Rajya Sabha recently. With a long verification process delaying payments, the Centre has now announced that farmers will get benefits retrospectively from the time their names have been uploaded in the data base, rather than from the time the details are verified. This, indeed, is a relief to the poor farmers.

Reverting to the central question of water, one could look at Israel, carved out of large tracts of the desert in West Asia, where the Americans, French and British wished the Jews of Europe, principally Germany, to be settled, after the Second World War. The place was dry as dust. Look at Israel now, seven decades hence. It produces the best orange in the world, “Jaffa” and the system of drip and sprinkler irrigation was the brain child of Israel’s hydrologists. But the neighboring Arabs held tract, is still as dry as dust. The country has world’s best desalinization plant. Prime Minister Modi visited the country two years ago and, while a lot was said and written about the visit in the newspapers, no joint package in water management and desalinization project has been put in place in India. Why? The same is true of water rich Kerala. Almost a decade ago, when an LDF government was ruling the state, a delegation was sent to Israel “to study” water management. A decade later, nothing is seen on the ground.

The new government will have to face three major challenges in the long run. First and foremost would be to end the water woes of the perennially drought-prone areas. In India, agriculture, to a large extent, is still rain fed. Intensive irrigation systems are confined to only States like Punjab and Andhra Pradesh. Take the case of the Bt cotton in Maharashtra. If it has failed in the Vidharbha region, leading to thousands of suicides by the cotton farmers, it is because of failed rains, because, the Bt cotton needs copious water to produce well6. And, in the dry season, starting August-September, when cotton is sown, the land is parched, and, if the North-East monsoon fails, the cotton crop simply withers. Vidharbha can turn into a dust bowl. The Pradhan Mantri Krishi Sinchayee Yojana was formulated to enable completion of 99 projects by 2019. Yet, 93 projects remain uncompleted7. On account of assured prices for paddy and sugarcane, farmers continue to grow these water-guzzling crops, even in regions unsuitable for them. When the NDA government came to power in 2014, very disappointingly, it did not do enough to encourage farmers from switching from the perennial paddy-wheat rotation to other crops, and also, in between them to grow soil-nitrogen (fertility enhancing element) enriching legume crops, such as, sesbania, sunhemp, glyricidia etc., to replenish the degraded soils of fertility, in the “green revolution” belt of Punjab, Haryana and Western Uttar Pradesh. Similarly, India continues to produce more sugarcane thus more sugar than what domestic consumption requires, but, sugar price is higher here than in the global market, clearly pointing an accusing finger to the dirty politics of sugar barons and the sugar lobby. It should be noted that the World Trade Organization has questioned subsidy to sugarcane farmers.

The next challenge would be on marketing of agricultural produce. It is high time India thought of a “Common Market” for agricultural produce, like the European Common Market of the European Union. Take for example the price of an agricultural produce like grapes. When one travels from Northern Belgium to southernmost tip of Spain, the price of grape would not vary more than one Euro a kilo. On the contrary, in India, it can vary by as much as Rs. 40-50 a kilo when we move from grape producing states like Madhya Pradesh or Maharashtra to down South in Chennai or Kerala. The difference is simply gobbled up by the middlemen, and, the actual grape farmers are cheated. An “Indian Common Market” would solve all these problems. Of course Delhi and State governments will have to join hands to make the venture a success. It would be the best gift to the Indian farmer, at first, and, to the consumer, at large. More than a decade and a half have elapsed since the Model Agricultural Produce Market Committee Act came into being, but, New Delhi has failed to persuade States to adopt it. New Delhi brought forth the State/UT Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act 2017, yet, it is still in limbo.

Perhaps no other factor is of more concern than the question of minimum support price (MSP) for agricultural produce. In principle, it has been agreed by New Delhi that the MSP would be 50 per cent more than what it costs for the farmer to produce a crop. This was effective since kharif 2018. But, procurement was so very tardy that millions of farmers were left uncovered, and, remained deprived of the benefit. A tardy procurement policy led to this dismal situation. This was one reason why farmers began to dump their produce on roads as a sign of protest. Most poor and marginal farmers felt cheated.

Before concluding this article, I would like to touch upon two aspects of Indian agriculture that is of utmost importance. First, the role of intelligent and sustainable soil management, and, second, the place of genetically modified crops in Indian agriculture. With respect to soil management, global agriculture, in particular Indian agriculture, is at a crossroads. The highly soil extractive farming, euphemistically known as the “green revolution” has run out of steam and has taken a terrible toll on our soil resources. Of the 328.73 million hectares of India’s geographical area, as much as 120.40 million hectares have now degraded soil, thanks to the mindless use of chemical fertilizers and pesticides. Punjab, the “cradle” of the green revolution is the best example. There are hundreds of acres there where even a blade of grass will not grow. The mindless use of chemical fertilizers, primarily urea, has degraded the soil, polluted the ground water, loading excess nitrate residues making ground water non-potable and the indiscriminate use of pesticides and weedicides has led to many environmental hazards, leading even to the large scale incidence of cancer. The Gurdaspur district is the prime example of this.

The term “green revolution” is, ironically, coined by a scientist of the United States Department of Agriculture (USDA) Dr William Gaud, who later became the Director of USAID (United States Aid for International Development), albeit, an American organization with a political intent to influence the developing nations on the Asian continent and poorly developed nations on the African continent. Henry Kissinger, the former United States Secretary of State and National Security Advisor under the presidential administrations of Richard Nixon and Gerald Ford, often would say, “Control oil and you control nations; control food you control people”. Hence the idea behind the “green revolution” was to control food production, and, thus, indirectly Indians. India was the prime target to put in place a farming technology that was similar to the “Land Grant Pattern,”practiced in the USA. The technology centered on a high input of chemical fertilizers to boost the crop yield of both rice and wheat, where the “miracle dwarf” varieties developed overseas, at CIMMYT (Center For Maize and Wheat Research, Mexico) and IRRI (International Rice Research Institute, at Los Banos, Laguna, in The Philippines) played a major role. Both are arms of the Consultative Group for International Agricultural Research, (CGIAR), a primarily US funded “research” grouping with a hidden political mandate to influence the developing and poorly developed nations. In India we have the International Crops Research Institute for Semi-Arid Tropics, (ICRISAT), in Patancheru, Andhra Pradesh, which has a research mandate of its own, apart from the Indian Council of Agricultural Research, New Delhi. We have such similar institutions in other parts of the developing and poorly developed regions, as well. The State of Punjab played a pivotal role in the green revolution campaign.

This author, who had an opportunity to interact with a high level delegation of Indian agricultural scientists during the World Soil Science Congress held at Hamburg, Germany, had warned that the Indian “green revolution” would no more be sustainable as the Indian soil resources were fast getting degraded. By early eighties the green revolution fell on its face, yields of both wheat and rice were fast plummeting in Punjab as there was a steep decline in soil carbon, the repository of soil fertility. Admittedly, for a short time, India produced a massive increase in grain yield, but, the environmental cost was heavy. It is in this context a revolutionary soil management technique, now globally known as “The Nutrient Buffer Power Concept” began to make a tremendous positive impact on global farming.

Space would not permit to explain the science behind the concept, for which the foundation was laid while author held the prestigious Senior Fellowship of the world renowned Alexander von Humboldt Research Foundation, The Federal Republic of Germany, and affiliated to the very prestigious Institute of Plant Nutrition, Giessen, at the Justus von Liebig University, named after Justus von Liebig, the father of modern soil science. The author received a further scientific impetus to test his concept when in 1982 he was named as Professor, National Science Foundation, The Royal Society, Belgium. He could further examine the validity of the concept when he was selected as Professor and Head of the Department of Agriculture and Soil Sciences at The University Centre, The Republic of Cameroon, further buttressed when late Nelson Mandela invited him as Senior Professor to build a Faculty of Agriculture at the University of Fort Hare, Alice, his alma mater in The Republic of South Africa, from where the great Statesman launched his anti-apartheid struggle. The above invitations gave the author an opportunity to test the validity of his concept in different crops, such as, wheat, maize, rye, white clover etc., in different parts of the world. The Indian Council of Agricultural Research invited the author as Distinguished Visiting scientist to be located at the Indian Institute Spices Research (IISR) in Calicut, Kerala State, where he could successfully test the validity of his concept on Black pepper and Cardamom. Thus the author could test the validity of the concept in a string of crops in Europe, Africa and Asia (both South India and Central Turkey). He has been invited to many countries, all over the world, to present his concept in international conferences, workshops and symposia. Currently he has been nominated for the prestigious 2019 Norman Borlaug Award for Excellence in Crop Nutrition Research instituted by the International Association for Fertilizer Industry. It is this author’s conviction that exclusive organic farming will not be the right answer to sustain Indian agriculture. Chemical fertilizers will be needed to be used, but how much and how best to use, to augment the native nutrient supplying power of the soil so that appropriate fertilizer recommendations can be made, can be found in the concept, which has resulted in this author receiving a string of international awards, including the Swadeshi Sastra Puraskar, of the Swadeshi Science Movement of the Government of India, for developing this revolutionary soil management concept.

The second aspect in this article is about the relevance of genetically modified crops for Indian agriculture. It is the author’s deep conviction that the GM crops are loaded with many inherent risks and problems and totally unsuited to Indian Farming. There are inherent problems like the glyphosate toxicity—a great health hazard. Glyphosate has been banned in many countries8 and is found in chemical herbicidal sprays used in the cultivation of “Herbicide Tolerant” crops like Bt brinjal, which has been clandestinely cultivated in India – the recent example of what happened in Haryana9.

The Bt cotton is a total failure. As early as 2002, when the Genetic Engineering Approval (then Approval now Appraisal) Committee (GEAC) okayed the first Bt cotton, this author had vehemently opposed it. But, he was over ruled. The recent farmer experience in Punjab, Haryana and Vidharbha region is ample testimony to this10. In sum, I would conclude, Modi government has its hands full, and, it must start urgently with agriculture, lest five years hence, Indians, again complain that the promises during the election were not honored

Prof KP Nair is an internationally acclaimed agricultural scientist, formerly Professor, National Science Foundation, The Royal Society, Belgium & Senior Fellow, Alexander von Humboldt Research Foundation, The Federal Republic of Germany. He can be reached at drkppnair@gmail.com

References:

1https://www.businesstoday.in/current/economy-politics/indias-gdp-grows-at-66pct-in-q3-retains-fastest-growing-economy-tag/story/323275.html
2https://economictimes.indiatimes.com/jobs/indias-unemployment-rate-hit-6-1-in-2017-18/articleshow/69598640.cms?from=mdr
3Dash, LN, World Bank and Economic Development of India, APH Publishing Corporation, New Delhi, p128.
4Jha, Ramanath, Lessons from Kerala Floods, ORF Online, available at https://www.orfonline.org/expert-speak/43550-lessons-from-kerala-floods/
5https://presidentofindia.nic.in/speeches-detail.htm?683
6Venkat, Vidya, “Bt Cotton responsible for suicides in rain-fed areas, says study”, available at https://www.thehindu.com/news/national/bt-cotton-responsible-for-suicides-in-rainfed-areas-says-study/article7337684.ece
7 https://www.dnaindia.com/india/report-8214-irrigation-projects-remain-incomplete-parliamentary-panel-2639369
8 https://www.baumhedlundlaw.com/toxic-tort-law/monsanto-roundup-lawsuit/where-is-glyphosate-banned/
9Aga, Aniket, Serious concerns over Bt brinjal, available at https://www.thehindu.com/opinion/op-ed/serious-concerns-over-bt-brinjal/article28022577.ece
10A report submitted to Department of Agriculture & Cooperation, Ministry of Agriculture, Government of India, Global Agri System (Katra Group) may be read to consider the relative merits and demerits of impact of use of Bt cotton. The report is available at http://re.indiaenvironmentportal.org.in/files/file/Final%20Report%20%20-%20BT%20Cotton.pdf

Implementation of the Ethanol Blended Petrol Programme in India and its Policy Outcomes

The Ethanol Blended Petrol (EBP) Programme was launched in India in January 2003 with an aim to promote the use of alternative and environmentally friendly fuels that reduce import dependency for energy requirements. Moreover, it had the ability to help sick, non performing sugar mills stuck in a rut of over production and globally saturated sugar prices, which in turn could help clear long pending cane payments to farmers. Another important criterion for introducing the EBP Programme in India was India’s commitment to reduce its carbon footprint in accordance with various international climate treaties. Hence, when initiated, this programme had the unique potential to affect more than one sector of the country’s economy, i.e., from agriculture to manufacturing and to other overarching pillars of environment, self-sufficiency and forex savings. It was also believed that it could help under recovering public sector undertakings in the oil and gas sector. If executed correctly, this programme would not only give a much needed boost to the industry and the value addition chain, but also directly to the farmer in terms of timely payments and the final consumer who could end up paying up to Rupees 3 per litre less for petrol1.

Ethanol is usually produced from sugarcane molasses, cane juice, maize, wheat and other grains having a high starch content. The science behind blending ethanol with petrol is that since the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions of carbon monoxide and carbon dioxide by up to 30 percent. Moreover, it cleans the dirt from the engine’s pipes and chamberswhilealsoacting as an anti-knockingagentwhich reduces engineknocking. Comparedtoonlypetrol, ethanolblendedpetrolburnscleaner, therebyreducingtheoccurrence of environmentalpollution and sinceitisproducedfromplantsthatharnessthepower of thesun, ethanolisclassified as a renewablebio fuel2. Ethanol blended fuel is widely used in Brazil, USA and Europe, where cars run on blends of upwards of 10 percent. In fact, Brazil, a world leader in ethanol blended fuel since 1976, today has a legal blend ratio of around 25 percent ethanol and 75 percent gasoline3. India started its experiment with ethanol blended fuel in 2001, and today has a blend ratio of 6.20 percent (as of June 2019), a quantum leap forward from 0.67 percent in 2012-13, 1.53 percent in 2013-14, 2.33 percent in 2014-15, 3.51 percent in 2015-16, and 4.22 percent in 2017-184. Growing steadily, the target as highlighted in the new National Policy on Biofuels 2018 of the government is to achieve 10 percent ethanol blending with petrol by 2022 and 20 percent blending by 20305. To ensure the success of this policy the Government of India has recently initiated a variety of reforms so as to encourage sugar mills and distilleries to produce more ethanol. With better coordination among the OMCs (oil marketing companies), soft loans for capacity building, construction of distillation units for sugar mills and the growing investor interest in standalone ethanol distilleries, the annual ethanol production capacity is expected to grow from the current 3550 million litres to 6000-7000 million litres in the next three years6. However, even with this doubled capacity, the quantity of ethanol required to meet the target of 2022 would still fall short by a substantial margin. The larger question, therefore, is whether we can augment our production capabilities to the required level, and in doing so what other policy changes would have to be brought about so as to protect the interest of the farmers, manage the available food stock, given ample time to the auto industry to incorporate minor changes to the fuel delivery system in the engine and also be considerate of any environmental challenges.

Evolution of Ethanol Blended Fuel in India

Pilot projects and testing on EBP began in India in 2001 at three locations before the EBP Programme was officially launched in 2003 as part of the National Auto Fuel Policy 2003 that mandated 5 percent ethanol blending for retailers selling petrol in 9 States and 4 Union Territories on a trial basis. Later on, in November 2006, this programme was rolled out for the entire country (barring Jammu & Kashmir and a few North Eastern States)7. It was estimated then that at 5 percent blending, India could reduce its import dependency of crude oil by up to 1.8 million barrels per annum8. However, during this time, the OMCs could only manage to blend less than 0.2 percent ethanol with petrol9. This was due to a number of factors:

● Firstly, oil companies have to store ethanol separately from petrol and blend it only before giving it to the retailer in the market. It took some amount of time before the OMCs were able build tanks to store ethanol at all the oil depots so as to increase their ethanol storage capacities.
● Secondly, the Central Government realised that not all State Governments were fully on board as some of the States, despite not having the legislative authority to do so, were charging interstate import and export fees for ethanol, which was making the process not feasible for the OMCs and other standalone distilleries. It took a couple of years, a few court cases and persuasion from the Centre to finally get the State Governments on board.
● Third, there was simply not enough production capacity in the country to meet the demand nor enough feed stock. OMCs were not able to get bids for more than 50 percent of the amount offered for purchase10.
● Fourth, despite there being an ever rising demand from OMCs it was simply not profitable for sugar mills and distilleries to divert molasses from manufacturing sugar (in the case of mills) or potable alcohol (in the case of distilleries) to manufacturing ethanol. Sugar (and in extension, molasses), being an essential commodity and an important cash crop from the point of view of farmers on which millions depend for their sustenance, has always had its price regulated, controlled and fixed by the government from season to season. With respect to ethanol, there was no such mechanism in place and therefore, mills diverting to ethanol were unable to compensate their revenue that they would have made from sugar or potable alcohol. Moreover, it was also not possible to link the price of ethanol to sugar, which as mentioned above, kept fluctuating because of political compulsions and the need to provide sugarcane farmers a fair and remunerative price for their produce.
● Lastly, in 2012 and 2013, two government notifications further aggravated the situation. A 2012 government notification directed that the procurement price of ethanol would be decided mutually by the OMCs and ethanol producing distilleries and then in July 2013 it was mandated that OMCs could only procure ethanol from domestic sources. In effect, this caused the price of ethanol to rise steeply, which eroded the economic feasibility of the EBP Programme11.

As a consequence, mills were unable to plan their ethanol production nor were oil companies able to finalise long term tenders with the distilleries. Thus, after its inception in 2001/2003, the EBP programme, in the years between 2004 and 2014 did not take off as expected, nor did it have the overarching, inter sectoral benefits as envisaged by policy makers. In order to understand why this policy failed initially it is important to understand that in this chain of production starting from the sugarcane farmers to sugar mills to ethanol distilleries to OMCs and retailers (not to forget the role of Central and State Governments, transporters and the auto industry), the Government of the day was not able to identify the key stakeholder,so as to first address and strengthen the weakest link in the chain in order to setup a well-functioning upstream and downstream chain. In India, ethanol is mostly made from B-Heavy molasses, which is a byproduct of sugar refining, an industry which for innumerable reasons has been struggling and non-performing. In spite of India being the second largest producer and the largest consumer of sugar in the world12, sugar mills have been unable to be profitable over the last many years and as a result, the burden has been passed onto the sugarcane farmers, who at the start of 2014 had unpaid dues of upwards of ₹60,000 crore and payments delayed by an average of one to two years13. The unrest this caused in the very social fabric of the agriculture sector, especially in the sugarcane growing regions of western Uttar Pradesh, Karnataka and Maharashtra, was a cause of great worry. Many sugar mills were shutting down or declaring bankruptcy14. Farm incomes were not rising, there wasn’t enough cyclical money for farmers to buy seeds and implements for the next season and as sugarcane farmers started borrowing more (from formal as well as informal sources) without having the ability to pay back, many started getting stuck in debt traps. So much so, that in many sugarcane growing belts, hundreds of farmers were forced to cancel or reschedule weddings in their families and worst still, many others committed suicide15. The situation had come to a flashpoint wherein it was perhaps one major incident away from being a serious law and order problem which could cause widespread civic unrest.

In 2014, when the newly formed NDA government came to power, tackling this situation was one of their main concerns and an important poll promise that it had to deliver on. Many schemes were initiated so as to give an impetus to the sugar industry. Soft loans were provided to non performing mills and in many instances the government tried to lessen the load on sugar mills by directly transferring some amount of unpaid dues to the farmer’s bank accounts16. Meanwhile, State governments, universities and NGOs working in the farm sector tried to incentivise and increase awareness among farmers about the advantages of shifting from sugarcane to other crops, as a more diversified farm produce had better chances of recovering previous losses. However, due to sugarcane being a sturdy crop, that was able to thrive against many diseases and wild animals, apart from not being very labor intensive, these efforts had few takers. During this time, the government, in an emergency measure, increased the import duties on sugar to 100 percent and incentivised export by scrapping export duties of 20 percent to liquidate the excess sugar in the market17. A few other minor efforts were made at the State government level to further reduce the burden of non performing sugar mills being passed onto farmers. Expert groups also started exploring the possibility and advantages that could be derived from making sugar a differentially priced product, where the sale price of sugar would be determined by its end use. None of the above measures, however, were able to target the problem at its source i.e. the nonperformance of sugar mills. These steps, being more curative at the surface rather than surgical in nature, were unable to give the mills the economic push it needed to come out of its dire circumstances. It was under these conditions that the EBP Programme was re-looked at and an attempt was made to understand why this policy had failed to give the desired impetus to all its associated sectors.

Price Fixation and EBP Programme 2.0

It was realised over time that in the absence of a price fixation mechanism for ethanol (separate from linking the price of ethanol to sugar), it was simply not profitable for mills to produce ethanol or invest in building capacities for installation of distillation units. Moreover, some policy experts were of the opinion that the OMCs had a certain vested interest in not allowing the EBP Programmed to take off, as a rise in production capacities of domestically manufactured ethanol would eat into their profit margins as compared to when OMCs were importing ethanol for the same. In December 2014, it was decided to approach this problem in a threefold manner. First, to fix a remunerative price for procurement of ethanol based on distance and later on based on raw material utilised for production of said ethanol; two, to provide support to sugar mills and standalone distilleries to augment their production capabilities where they existed and create new ones where they didn’t18. Lastly, it was decided that a new policy on biofuels must be drafted by the Ministry of Petroleum and Natural Gas so as to create a blueprint for taking this policy into the future.

Thus, on 10 December 2014, in order to improve the availability of ethanol, the Government of India fixed the price of ethanol in the range of ₹48.5 to ₹49.5 based upon the distance of the distillery from the oil depots of the OMCs19. These rates, which were inclusive of all central and state levies, including transportation costs borne by the ethanol producers, encouraged movement of ethanol over longer distances and to states that did not possess distillation capabilities. Moreover, once this price was arrived at, it became profitable for ethanol distilleries to sell their produce to the OMCs. Next, the Central Government amended the Industries (Development and Regulation) Act, 1951 in 2016, which gave it complete control over production, movement and storage of ethanol20. The Central Government now had the power to implement a common EBP Programme in the entire country in consultation with the State Governments and other stakeholders. The government now started providing loans to sugar mills at subsidised rates (6 percent interest subsidy) for building ethanol distillation capacities through the Department of Food and Public Distribution. This scheme aimed to infuse ₹1332 crore for the same via the interest subvention route21. The scrutiny for meeting environmental regulations by existing sugar mills that wanted to set up distillation units was also simplified and fast tracked. The next major policy revamp came in 2018, when the Cabinet Committee on Economic Affairs fixed the remunerative price for ethanol based on the kind of raw material utilised for production of ethanol. Different prices were fixed for ethanol produced from C-Heavy molasses (₹43.46 per litre), B-Heavy molasses or partial sugarcane juice (₹52.43 per litre) and that from mills which would a 100 percent divert their sugarcane juice for the production of ethanol and thereby not produce any sugar (₹59.19 per litre). Similarly, the government also allowed and fixed the price of ethanol produced from damaged food grains at ₹47.13 per litre22. These rates, coupled with a reduction in the GST rates for ethanol for the EBP Programme from 18 percent to 5 percent23, suddenly made the manufacture of ethanol one of the most lucrative businesses in the country where profit margins reached around the 20 percent mark24, a level which is quite unimaginable in any economic venture of the day. To safeguard the interests of farmers and consumers of sugar (as an essential commodity), concessional loans for ethanol capacity building were only given to those sugar mills that had not defaulted on any previous government dues. Moreover, it was also mandated that mills met their levy sugar supply (the amount of sugar set aside from the total production for the Public Distribution System)25. During the same time, the Ministry of Petroleum and Natural Gas came out with a revised version of the National Policy on Biofuels. As part of this policy, ethanol produced from other non-food feedstock besides molasses, like cellulosic and ligno cellulosic materials including the petrochemical route, were allowed to be procured subject to meeting the relevant Bureau of Indian Standards (BIS) specifications. Similarly, another set of feedstock in the form of surplus food grains, corn, rotten potatoes etc. were allowed to be used for producing ethanol. Another important aspect of this policy was the vision of setting up second generation (2G) biofuel refineries that would be technologically superior and environmentally cleaner. Lastly, it increased the scope for commercialisation of biofuels by also introducing the concept of blending biodiesel in diesel through a biodiesel blending programme and similarly for bio-CNG, bio-methanol, bio-hydrogen and even bio-jet fuel etc. The major thrust of this policy was to ensure the availability of biofuels from an indigenous feedstock. A National Biomass Repository was created for the same to conduct an appraisal of biomass across the country26.

A Panacea for Sugarcane Farmers?

The introduction of this refined EBP programme has been most beneficial to the sugar mills and by extension,to the sugarcane farmers. There is an ever increasing demand for ethanol that can only be met by increasing the area under cultivation for sugarcane. Once all the mills setup ethanol distilling capabilities, they would turn over a new leaf and slowly start becoming profitable to run, which in turn, would allow them to make timely payments to cane farmers. Moreover, even if the sugar mills do not directly produce ethanol, the excess molasses they have to store, which eventually would spoil and rot owing to a limited shelf life of 6-7 months27, could now be sold to other standalone distilleries which would depend on them for their raw material in order to produce ethanol. By focusing on the weakest link in the chain, and removing hurdles for the development of sugar mills, the revamped EBP programme gives new life and a new future perspective to sugarcane farmers. It is important to understand here that the number of farmers growing sugarcane is not going to reduce anytime soon as farmers won’t leave growing sugarcane unless the distortion in the farm economy between sugarcane and other crops is corrected, or that gap is reduced. The challenge today for the farm sector is not the lack or inadequacy of food supply as India is today a surplus food producing country28. It is to get farmers the price they were promised, which is fair and sustainable for all stakeholders concerned. The EBP programme is an important step in that direction that has the potential to make sugarcane farming an attractive sector for large scale commercial farming, using modern tools and processes.

Challenges

There are a few challenges that remain for this programme to realise its full potential. Firstly, a few hurdles that prevent new companies from setting up standalone distilleries need to be addressed. It would not be possible to meet the required demand for ethanol with only the existing sugar mills that have distillation units or those that are building one. Entry into the market for new companies is difficult owing to a number of reasons. To begin with, companies must first submit their intent to setup a distillery to the State excise department (as alcohol and licensing for the same falls under the ambit of State Governments). Following this, they must separately take permission from Central Pollution Control Board (falling under the ambit of the Central Government) as distilleries are classified as ‘red’ industries, i.e., industries that cause maximum pollution. The process to obtain a NOC from the Pollution Control Board is a long and tedious one that takes upwards of 12-14 months if everything goes according to plan (owing to various public hearings that must be conducted at the site of the proposed distillery with local stakeholders). During this time, the company or individual is not allowed to start any work whatsoever, including civil work or building a boundary for the compound. As a result, it is only existing business houses that are able to take the risk of investing in a large plot of land without any guarantee that it would be approved by both the State and Central governments, not to mention the existence of rampant corruption in the excise departments of most states. Although, these systems are rightly in place to ensure that only compliant and environmentally conscious proprietors enter the industry, in effect it discourages new ventures for the same. Similarly, as more and more sugar mills build capacities to produce ethanol, there is predicted to be a serious shortage of molasses in the future29, the raw material required by standalone distilleries to function. Most mills would use up their own raw material and would not want to sell it to other competitors. Although, standalone distilleries may start using grains or other approved feedstock to produce ethanol in the future, in the present as there is no fixed price of procurement for ethanol produced from sources other than molasses and sugarcane juice, it is simply not feasible for them to function. One must also note at this point that the manufacture of ethanol from grains or sugarcane juice requires a slightly different technology which at present is at a very nascent stage in India and most don’t have access to the knowhow of doing the same.

From the point of view of the environment, a higher blend of EBP can cause a serious strain on the country’s water resources. To produce one litre of ethanol, more than 2500 litres of water is required30. This includes the rainwater at the root zone of ethanol producing plants like sugarcane, surface and ground water and fresh water to wash away pollutants.

The following table represents the amount of water footprint required by USA, Brazil and India in producing one litre of ethanol from their respective main feedstock:

[Source: M.M. Mekonnen & A.Y. Hoekstra, “The green, blue and grey water footprint of crops and derived crop products, Hydrology and Earth System Sciences, 15(5): 1577-1600”, Water Footprint Network, 2011.]

Here, India’s water footprint is not only higher than Brazil and the USA, but it also uses a far greater amount of surface and groundwater, which is the main source of water for the population’s daily requirements. This situation is further compounded by the fact that India’s groundwater level has been plummeting to dangerously low levels in recent years. Many areas around the NCR have already been classified as ‘red zones’31, meaning that the groundwater level there is so low that it must only be extracted for personal use and no commercial use whatsoever. To further understand the gravity of the problem, one must also consider that the level of blending in both the USA and Brazil (in double digits) was much higher than in India (approximately 0.5 percent) in 2011. If India is to achieve 20 percent, or even 10 percent blending by 2022, it needs to first very seriously address this problem and decrease its water usage through better irrigation practices.

Another important issue that will need to be addressed for the EBP to sustain itself in the future, is the way India will have to change its land use so as to increase the acreage for sugarcane production. At present, sugarcane only accounts for 3 percent of India’s net sown area32. Consider the following graph:

Net sown area for India for this analysis was taken as the average of the net sown area from 2010-11 to 2013-14 (Source: ‘Agriculture Statistics at a Glance 2016’ – Ministry of Agriculture And Farmers Welfare). Yield of sugarcane and molasses obtained per tonne of sugarcane was approximated for each calendar year to the sugar year beginning in the year before that. A tonne of molasses was assumed to produce 250 million litres of ethanol, as reported by ISMA to Standing Committee on Petroleum & Natural Gas.

[Source: Indian Sugar Mills Association (ISMA), Ministry of Agri& Farmers Welfare]

Here, we can see that based on a calculation of the extra area required for the 2010 to 2017 period, if India is to achieve a 10 percent blend ratio, it will have to bring in another 4 percent of its net sown area for sugarcane on top of the existing area. At 20 percent blends, this number rises to almost 10 percent. In effect, this would mean that one-tenth of the existing net sown area should be diverted for sugarcane production, which may put stress on other crops and has the potential to cause food prices to rise. It is therefore imperative that we make concentrated efforts to increase the sugarcane yield per acre through the use of modern farm practices.

Future Prospects

The EBP Programme is set to witness a major upward trajectory in the next few years to come and will be watched closely by policy enthusiasts and academics. In the current season (December 2018 – November 2019), India is already poised to achieve a record breaking 7.2 percent ethanol blending with petrol, well on track to meet its target of 10 percent in 202233. Although, there are a few serious environmental concerns that tarnish the EBP’s image as a source of clean fuel, these can be addressed in the coming months and years. From the point of view of auto companies, no major changes need to be made to car engines as we move from 5 to 10 percent blending and beyond. Only certain small parts of the engine (particularly rubber parts) have their lives reduced by 3 to 5 years (considering an average life cycle to be 20 years). These can be easily replaced and do not cost much. However, not all auto companies are convinced of the same and it will be some time before they are brought into the fold. Once the auto companies jump on the clean fuel bandwagon, we can expect to see a rise in flexible fuel vehicles being sold in India. These flex-fuel automobiles have the ability to run on more than one fuel, usually gasoline blended with either ethanol or methanol fuel, and both fuels are stored in the same common tank. One must also consider what sort of effect there will be on blended fuel processes with an impending global electric car boom. Although, many are of the opinion that electric vehicles would not be able to meet the entire demand and particularly with India, it is believed that the entry of practical and cost effective electric vehicles will be much later than in the rest of the world owing to a lack of necessary infrastructure support. However, regardless of the future scope of ethanol blended fuel in the world, it has come to India at a most opportune moment where there is great scope of advancement for businesses and farmers alike. Moreover, the lessons learnt from the implementation of this policy will be the prism through which we look at other future technologies as we further advance into the 21st century.

(*Praket Arya is a Senior Research Fellow at India Foundation. An economist by education, he is an alumnus of The University of Edinburgh, Scotland, and St. Xavier’s College, Mumbai. His research interests include Development Economics and the International Political Economy of the European Union and the Greater Eurasian Space.)

References:

1 Twesh Mishra, “10% ethanol blending with petrol can lower fuel price by ₹3/litre: Experts”, The Hindu Business Line, https://www.thehindubusinessline.com/economy/10-ethanol-blending-with-petrol-can-lower-fuel-price-by-3litre-experts/article25208320.ece, October 12, 2018.
2For details, see United Nations Environment Programme, “Towards Sustainable Production and Use of Resources: Assessing Bio fuels” ,https://web.archive.org/web/20091122133933/http://www.unep.fr/scp/rpanel/pdf/Assessing_Biofuels_Full_Report.pdf, October 16, 2009.
3For details, see Worldwatch Institute, “The Renewable Path to Energy Security”, https://images1.americanprogress.org/il80web20037/americanenergynow/AmericanEnergy.pdf, September 2006.
4Sanjeev Choudhary, “Ethanol blending in petrol rises to record 6.2%”, The Economic Times, https://economictimes.indiatimes.com/industry/energy/oil-gas/ethanol-blending-in-petrol-rises-to-record-6-2/articleshow/69962324.cms?from=mdr, June 26, 2019.
5 For details, see Ministry of Petroleum and Natural Gas Notification, “National Policy on Biofuels – 2018”, http://petroleum.nic.in/sites/default/files/biofuelpolicy2018_1.pdf, June 04, 2018.
6Dilip Kumar Jha, “India to achieve 7.2% of ethanol blending with petrol this season”, Business Standard, https://www.business-standard.com/article/economy-policy/india-to-achieve-7-2-of-ethanol-blending-with-petrol-this-season-119040300816_1.html, April 03, 2019.
7 For details, see Government of India, Report of the Expert Committee, “Auto fuel vision and policy 2025”, May 2014.
8Ibid.
9Government of India, Ministry of Consumer Affairs, Food & Public Distribution, “LokSabhaUnstarred Question 1652”, https://indiansugar.com/PDFS/ETHANOL_PRODUCTION.pdf, December 04, 2012.
10Government of India, Ministry of Consumer Affairs, Food & Public Distribution, “Lok Sabha Unstarred Question”, https://indiansugar.com/PDFS/ETHANOL_PRICING.docx, August 28, 2012.
11RajalakshmiNirmal, “Ethanol-blended petrol is a sweet deal”, The Hindu Business Line, https://www.thehindubusinessline.com/portfolio/commodity-analysis/ethanol-blended-petrol-is-a-sweet-deal/article26625076.ece, March 24, 2019.
12For details, see Deokate Tai Balasaheb, “India’s sugar trade: A fresh look”, Indira Gandhi Institute of Development Research, Mumbai, http://www.igidr.ac.in/pdf/publication/WP-2013-024.pdf, November 2013.
13 Government of India, Ministry of Consumer Affairs, Food & Public Distribution, “Lok Sabha Unstarred Question”, https://www.indiansugar.com/PDFS/SUGARCANE_ARREARS.pdf, March 28, 2017.
14PTI Muzaffarnagar, “Ten sugar mills to close operations in UP”, The Hindu Business Line, https://www.thehindubusinessline.com/economy/agri-business/Ten-sugar-mills-to-close-operations-in-UP/article20601386.ece, April 12, 2013.
15 Piyush Srivastava, “Debt-ridden Uttar Pradesh farmers reschedule weddings due to stalemate over sugarcane pricing”, India Today Group, https://www.indiatoday.in/india/north/story/stalemate-over-sugarcane-pricing-hits-debt-ridden-uttar-pradesh-farmers-in-wedding-season-219821-2013-12-06, December 06, 2013.
16 Aman Sharma, “After PM Modi mentions cane dues of Rs 10,000 cr in west UP, Yogi govt to clear half the dues by April 5”, The Economic Times, https://economictimes.indiatimes.com/news/elections/lok-sabha/uttar-pradesh/after-pm-modi-mentions-cane-dues-of-rs-10000-cr-in-west-up-yogi-govt-to-clear-half-the-dues-by-april-5/articleshow/68640580.cms, March 30, 2019.
17 PTI, “Government to consider hike in sugar import duty, cut export duty”, The Economic Times, https://economictimes.indiatimes.com/news/economy/policy/government-to-consider-hike-in-sugar-import-duty-cut-export-duty/articleshow/62557731.cms?from=mdr, January 18, 2018.
18Government of India, Ministry of Petroleum and Natural Gas, “Lok Sabha Unstarred Question”, https://indiansugar.com/PDFS/ETHANOL_BLENDING-_LS.pdf, March 05, 2018.
19The Hindu Business Line Bureau, “CCEA approves pricing mechanism for ethanol procurement by OMCs”, https://www.thehindubusinessline.com/news/CCEA-approves-pricing-mechanism-for-ethanol-procurement-by-OMCs/article20928467.ece, December 11, 2014.
20For details, see The Industries (Development and Regulation) Amendment Bill, 2015, http://www.prsindia.org/billtrack/the-industries-development-and-regulation-amendment-bill-2015-4087, May 10, 2016.
21Ibid.
22For details, see Cabinet Committee on Economic Affairs Notification, Press Information Bureau, Government of India, http://pib.gov.in/newsite/PrintRelease.aspx?relid=180220, June 27, 2018.
23 Twesh Mishra, “A GST boost for alternative fuels”, The Hindu Business Line, 23 https://www.thehindubusinessline.com/economy/policy/a-gst-boost-for-alternative-fuels/article24489001.ece, July 22, 2018.
24YashUpadhyaya, “Ethanol Begins To Cushion Sugar Makers Amid Supply Glut”, Bloomberg Quint, https://www.bloombergquint.com/business/ethanol-begins-to-cushion-sugar-makers-amid-supply-glut#gs.4ON346XN, February 07, 2019.
Government of India, Ministry of Consumer Affairs, Food & Public Distribution,
25 “LokSabhaUnstarred Question 2773”, https://indiansugar.com/PDFS/Ethanol_Pricing-LS.pdf, March 15, 2016.
26Ibid.
27Ibid.
28T N Ninan, “What’s behind India’s food mountains and the widening problem of plenty?”, The Business Standard, https://www.business-standard.com/article/opinion/what-s-behind-india-s-food-mountains-and-the-widening-problem-of-plenty-118072000342_1.html, July 20, 2018.
29Virendra Singh Rawat, “After sugar, glut in molasses churns a bitter brew for mills in UP”, The Business Standard, https://www.business-standard.com/article/markets/after-sugar-glut-in-molasses-churns-a-bitter-brew-for-mills-in-up-118052200406_1.html, May 24, 2018.
30 AbhishekJha, “Why ethanol blending in petrol might not work for India”, The Live Mint, https://www.livemint.com/Industry/RfNU5ZFXDRTrfUkl9lNMaL/Why-ethanol-blending-in-petrol-might-not-work-for-India.html, September 04, 2018.
31 For details, see Central Ground Water Board, “Ground Water Year Book 2015-2016”, http://cgwb.gov.in/Regions/GW-year-Books/GWYB-2015-16/GWYB%20Delhi%202015-16.pdf, September 2016.
32 For details, see Government of India, Ministry of Agriculture and Farmers Welfare, Directorate of Economics and Statistics, “Agriculture Statistics at a glance 2016”, https://eands.dacnet.nic.in/PDF/Glance-2016.pdf, March 2017.
33 Ibid.

Digitising the Indian Economy: A Roadmap for boosting financial inclusion and prosperity

“Our aim is to build a 5 trillion dollar economy.” Through these words, spoken a day after his newly sworn-in Government’s first full-budget was presented on 5 July 2019, Prime Minister Narendra Modi elucidated the aim set by the Government of India1. He further expressed his confidence in the 130 crore Indians and their efforts to catapult India’s economy to reach this target by 2024. A major factor that shall determine the attainment of this objective is the digitising of the Indian Economy. In 2017, Nandan Nilekani, former Chairman of the Unique Identification Authority of India (UIDAI), the institution that steers the Aadhaar platform and the centre-stage of the digital inclusion drive, stated that India is on the path of becoming data-rich within the next 3 years and that proactive policy measures can further the economic prosperity of the country2.

Digitisation: A Tool for Accelerating Growth

As we delve into the subject of digitisation and its effects on the economy, it is necessary to understand the concept of Digitisation. A discussion paper, published by the International Telecommunication Union (ITU)3 in the year 2017 refers to digitisations as ‘the transformations triggered by the massive adoption of digital technologies that generate,process, share and transfer information’.

The first two decades of the 21st century have witnessed how the use of technology has accelerated the growth and prosperity in human lives. The increasing penetration of smartphones and the consequent creation of gigantic quantities of Big Data has created unlimited opportunities for usage of technology to further human progress andcreate massive economic benefits for the world economies.The use of technology has allowed governments to take services to citizens efficiently and transparently. Technology has also enabled the use of social media to connect citizens and in the process has opened new avenues of economic opportunities. Christine Balagué, Vice-President of the French Conseil national du numérique (Le Monde, 23/08/2015), put forth a microcosm of these opportunities when she said, ‘any individual equipped with a mobile phone can now ‘become a producer, create services, or at least place services on offer’ for earning a little spare cash, making it through to the next salary payment, or topping up their benefits’.

Technology has created a systemic shift in the manner in which existing businesses are undertaken. In a wide range of sectors—logistics,industry, agriculture, communications, etc, digitisation has caused a metamorphosis in each of these fields. The rise of the world of mobile phone apps (applications), a phenomenon unthinkable even till two decades ago, has taken place due to the arrival of high quality and low cost internet, which coupled with smartphones have led to creation of a new set of ‘tech-preneuers’ who use technology as a basic platform to enhance their business activities and also create positive value-addition in the lives of their users.

In a research paper written on the subject, ‘Tackling the digitalization challenge: how to benefit from digitalization in practice’4 (Paivi and others, 2017), the potential benefits of digitalisation for internal efficiency were enunciated as follows:
• Improved business process efficiency, quality, and consistency via eliminating manual steps and gaining better accuracy.
• A better real-time view on operation and results, by integrating structured and unstructured data, providing better views on organisation data, and integrating data from other sources
• Better work satisfaction for employees through automation of routine work, thus freeing time to develop new skills.
• Improves compliance via standardisation of records and improves recovery via easier backups and distribution of storage.

Digitising the Indian Economy: Creating a Trillion Dollar Digital Economy

As the Indian economy marches ahead on the path of becoming a 5 trillion dollar economy, it becomes imperative to harness the power of technology and unleash the animal spirits of the millions of entrepreneurs in the country through the efficient use of technology. The Ministry of Electronics and Information Technology (MEITY), Government of India has undertaken an initiative of creating a ‘Trillion-Dollar Digital Economy’ in the country. In its report released on December 2018, it stated that India can create up to USD 1 trillion of economic value from the digital economy in 2025.5

The Government of India is also making strides in enhancing its cooperation with partner countries across the world to increase the use of technology for boosting trade and commerce, and connectivity between India and these nations. On a recent visit to France by Prime Minister Modi (August 2019), the two sides (India-France) were expected to explore new areas of cooperation such as artificial intelligence, supercomputing and developing digital technology among others.6

Understanding the significance attached to digitising the economy, the Government of India launched its flagship Digital India programme in the year 2015. The statement of intent was as under:

“To Transform the entire ecosystem of public services through the use of information technology, the Government of India has launched the Digital India programme with the vision to transform India into a digitally empowered society and knowledge economy.”7

Accordingly, the government has undertaken a series of measures to boost the process of digitising the economy in recent years. Some highlights are:
• The persistent efforts made towards making India’s economy a cashless economy (Cashless India) have led to a multi-fold increase in the digital transactions being undertaken in the country. The usage of platforms such as UPI (Unified Payment Interface) and the marquee mobile application for simplified, digital payments BHIM- Bharat Interface for Money has made digital mobile payments possible across the country. A large number of private mobile applications have also initially on their interface and now through the UPI interface been aggressively promoting the use of digital payments as a mode for payments for a wide range of services including bill payments, making person-to-person transfers as well as for making daily purchases among others.According to an ASSOCHAM-PWC India study report that came out in June 2019, digital payments in India will more than double to USD 135.2 billion in 2023 from USD 64.8 billion this year.8
• The JAM Trinity (Jan-Dhan, Aadhaar, Mobile) has been a cornerstone of the push made by the Government to enable a digital revolution in the country during the past five years. Over a billion-plus mobile connections which comprise of half a billion smartphones with low-cost internet coupled with a Jan-Dhan bank account in each household in the country along with the Aadhaar coverage to over 1.2 billion people 9 in the country (August 2019) have set the foundations for a digital revolution in the country.
• The country also witnessed a transformational change in its tax-structure as the Goods and Services Tax (GST) era ushered in the country two years ago. To create a ‘One Nation- One Tax- One Market’, the GST regime in the country, notwithstanding several technical and procedural issues with regards to its implementation, have greatly contributed to the ease of doing business in the country.
• Since 2014, the extensive focus has been laid on improving the Ease of Doing Business in India with a mission of bringing India among the top 50 countries in the World Bank’s Ease of Doing Business (EODB) rankings. As a result of these efforts, India’s position on this list has improved from 134th rank in 2014 to 77th rank in 2018 with consistent efforts still being made to achieve the target of breaking into the top 50 of this list10. Apart from focusing on the big picture reforms,the Government of India has also been undertaking a large number of small but impactful reforms (removal of requirement for attestation of documents, reforms for the MSME-Medium, Small and Microenterprises including providing credit within 24 hours to these units etc.) that shall go a long way in achieving the PM’s vision of ‘Minimum Government, Maximum Governance.’
• Through initiatives such as Start-up India, Stand-up India and providing credit to a large number of first-time borrowers (with a focus on female borrowers) through Mudra Loans, a concerted effort has been made to promote entrepreneurship in the country.Through novel initiatives such as the Atal Innovation Mission (AIM) and the creation of world-class research facilities and tinkering labs, the youth is being facilitated to execute their ideas and develop world-class products and services.

Strategies to Boost the Digital Economy in India:
The Discussion Paper for the Ministerial level Council Meeting held in 2017 on the subject: ‘Going Digital: Making the Transformation Work for Growth and Well-Being’11 requires governments to reach across traditional policy silos and different levels of government to develop a whole-of-government approach to policymaking. While many policies need to be considered, some key building blocks can be usefully distinguished, namely:

1. Building the Foundations for the Digital Transformation
2. Making the Digital Transformation Work for the Economy and Society
3. Policy Coherence and Strategy Development

In broad parlance, in an economy, the Government, citizens and business entities transact daily which leads to the creation of a wide range of economic activity. To boost the creation of a digital economy, it is necessary to further the efforts to infuse digitisation and enhance the effectiveness and efficiency of the activity between these stakeholders through the use of technology. These measures shall go a long way in deepening the roots of a digital economy in the country.

Following are the three broad credible strategies described along with the range of allied policy measures that can help in giving a fillip to the digital economy in the country:

1. Utilising Behavioural Economics for a Digital Economy

The Economic Survey 2019 elucidated the Government’s focus to utilise various facets of behavioural economics12 such as the concept of nudge to induce positive social transformation in the country. As a concept, nudge has been rigorously debated and results achieved through its usage discussed across various countries in the world. The ‘nudge theory’ is based on the premise that human beings, often need encouragement or intervention — a nudge — to get going and do what’s best for themselves or for the country or society at large.13 Swachh Bharat Mission has often been quoted as a compelling example in the Indian context as a successful example of the nudge theory whereby both tangible and intangible results could be achieved in the direction of making a cleaner India.

Efforts to further the objective of creating a digital economy can become the next possible avenue for utilising the concept of a nudge for ensuring the penetration of digital services in the economic sphere of the country. Following are some of the illustrations where nudge can be used to accelerate the pace of digitisation:

I. Default-isation of digital mode for transactions.

• Citizens and business entities possess an option to avail a government service in both physical and digital format for most services across the globe. Due to the limited penetration of digital services, there is a need to continue keeping the physical avenues open but that does not constrain policymakers from devising smart-tools and techniques using the concept of nudge that can further the habit of undertaking digital transactions among the citizens.
• A timely reminder to undertake periodic transactions (Registrar of Companies related paperwork, filing of tax-related forms, municipality services related documentation etc.) through emails, SMS;
• Expanding the scope of nudge communication done through ‘Save the Paper’ type messages for ATM receipts for a variety of digital transactions further reducing the use of paper even in existing digital transactions framework;
• Such efforts shall lead to not only enhancing the Ease of Living for the citizens which is a stated goal of the Central Government but also creating a transparent and effective system for imparting services to business entities and citizens alike.

II. Boosting Digital tools for making payments

• Digital payments bring a lot of advantages for both its users and the Government. The digital footprint of the transaction ensures that there is a verifiable trail that can be traced to its users thereby enhancing credibility and transparency in the economy. Moreover, the availability of a digital trail shall also lead to the creation of a robust tax net which can be seen in the case of GST through the GSTN (GST Network) which leads to broadening of the tax base in the country.
• Currently, the Government is imparting several incentives on using digital modes of payments. Payment applications such as the BHIM that run on the UPI interface provides a free-of-cost and effective means of making payments and transferring money up to the extent that a large section of society can undertake a majority of their transactions utilising the same. Measures such as introduction of digital financial literacy education in schools and creating a more conducive digital payments framework which has an appropriate incentive for both the banking institutions as well as the vendors providing the services etc. can play an important role in further boosting the digital payment ecosystem in the country.

2. Adopting an End-to-end Digitisation Framework

There is a need to create an approach of installing end-to-end digitisation (E2ED) framework in the country. This framework refers to the usage of technology to ensure the completion of an entire activity or a service in a digital mode at all levels with minimal human interface as possible. We often find a lot of Government services right from the municipality level to the Central Government to be available in a digital or an electronic format.E2ED framework helps in analysing the level of digitisation that has taken place in its current format. Focusing on two aspects of service delivery, the following are an illustrative list of various functions that are associated with the provision of the service:
• The request of service- availability of form, request initiation interface (Web, call, SMS, mail) etc.
• The provision of service- request making interface, request acceptance interface, the current status of the service management system, request completion information generator and manager

For a few services, the form is made available online but the same has to be submitted physically at a government office. In other cases, the status update system of the service is not created which leads to the creation of a human interface through frequent visits of the person intending to avail the service to a government office or the service intermediary. E2ED framework will be fully satisfied when all of the functions that are required to be fulfilled for availing service can be done in an electronic format. E2ED framework will ensure the elimination of the human interface which is considered to be one of the biggest causes of low-level corruption in the country.

OCR friendly India- OCR refers to the Optical Character Recognition (OCR), which is a format in which PDF documents get translated into a machine-readable format.The basic intent behind putting documents online is to ensure that paper is not wasted by taking physical copies. The non OCR documents do not give an option to make a search in the documents and hence it is as good as a photo or an image of the document thereby making it’s e-copy redundant. Government or business entity related forms, often running into multiple pages, become too tedious if they are uploaded in a non-OCR format as for every specific detail which otherwise could have been searched easily on the web, will not be possible as the document does not give that option.A small but a very important tool, OCR ensures that large sets of data that is uploaded on the internet become useful for researchers and citizens who are looking to find some meaningful information from the same. As a part of its efforts towards enhancing digitisation in providing government related services, the Government of Tripura initiated a drive in 2018 to ensure that all its documents are uploaded on its government websites in OCR format. A nation-wide movement to create an OCR friendly India,if initiated, can enhance citizen satisfaction, generating machine-readable Big Data-centric sets and also reduce paperwork and its subsequent effect on the ecology.

3. Creating a Robust Data Localisation Ecosystem

Data localisation has been an extremely sensitive and debated topic in the recent past in the country. The data generated in the country currently is passed on to the servers located in foreign locations and hence, they do not fall directly under the purview of the Indian laws per se. Digital Economy in India is also severely affected due to cyber frauds, security-related issues, thefts etc. More specifically, a large amount of data generated, some of which is sensitive to the national security and the cultural sensibilities of the Indian society on various social media platforms remain unscrutinised or partially scrutinised due to the lack of a data localisation ecosystem in the country. However, this issue does not only pose significant IT-related infrastructure issue but also has significant geo-strategic ramifications especially with respect to India-USA relations.

For a robust data localisation ecosystem in the country, robust data maintenance, storage and its security related apparatus must be put in place. High quality and low-cost internet are one of the foremost requirements as far as the creation of IT related infrastructure for data localisation in the country is concerned. During a start-up award function held on August 2019, Union Railway Minister of India, Shri Piyush Goyal said:

“More than 20% of the 20,000 startups are in tier 2 and 3 cities. All of this has been possible because we have taken fibre optics across India. The digital access in the last five years has been quick. From 357 km in 2014 to over 3 lakh km now, fibre optics connectivity is huge.”15

Dealing with this issue hence must be done sensibly without compromising the rights of the Indian internet users as also of the government to prosecute any wrongdoing in the country. The need of the hour is indeed to create such a framework in the country at the earliest. It will give a huge boost towards creating a safe and secured digital economy in the country.

Issues and Challenges

There are various issues with respect to the following:

Job Loss and Re-skilling.As changes take place in any system, it also leads to various legacy issues which must be dealt with carefully. The advent of the 4th Industrial Revolution and the Big Data has ensured that a lot of old-school job roles have now become extinct. However, there is also a large scale creation of new sets of jobs. The demographical supply of labour for both the jobs being lost and the jobs being created are posing serious challenges to nations across the world. Equally important is to pay attention to the significance of re-skilling and the role it can play to address this problem in society. In a country with the largest number of youth in the world, India continues to pose the single biggest challenge as far as the generation of meaningful employment in the economy is concerned.

Cybersecurity. As digital technologies have penetrated in the country at an exponential rate, there has also been a significant increase in the cybersecurity-related issues in the country. With the availability of low-cost smartphones laced with low-cost internet with good connectivity in the hinterland regions, cyber-crimes are no more an issue of merely urban regions. Providing a sound and secured cyber environment is a pre-requisite for the flourishing of trade and commerce on digital platforms in the country.

The Isolation of Human Touch.As machines take over nearly all forms of communication between humans, we witness an increasing sense of isolation being felt by humans especially the senior citizens in the society. The increase in the alarming nature of cases of depression among various sections of the society is a cause of the absence of the presence of human touch for these patients. The earlier physical forms of activity such as visiting a bank, shopping in local markets etc. has been overtaken by the world of mobile applications. Though it increases efficiency and also ostensibly provides services more effectively, there is a very large section of the society for whom such activities formed the core of their human interactions in society. This not so often discussed issue also holds tremendous significance while preparing a robust digital economy blueprint for the country.

Biography-

Jayraj Pandya is currently pursuing his Master’s in Advanced Global Studies at Science Po, Paris. Previously, Jayraj has served in official roles with different Ministries of the Government of India and with various state Governments assisting senior Ministers on subjects of policy and governance.

Conclusion

The objective of New India, focusing on creation of a prosperous nation with a robust economy is stated to be achieved by the year 2022. A rapidly growing Digital Economy shall play the role of a catalyst in achieving this objective and shall continue to give a boost to innovation, income and employment generation in the country.

References:
1https://www.narendramodi.in/text-of-pm-s-speech-at-bjp-membership-drive-in-varanasi-uttar-pradesh–545723
2https://www.thehindu.com/news/cities/bangalore/india-to-become-data-rich-in-3-years-says-nilekani/article19451698.ece
3https://www.itu.int/en/ITU-D/Conferences/GSR/Documents/GSR2017/Soc_Eco_impact_Digital_transformation_finalGSR.pdf
4http://www.sciencesphere.org/ijispm/archive/ijispm-050104.pdf
5https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1565669
6https://www.dailypioneer.com/2019/india/india–france-to-clear-roadmap-for-cyber-security-during-modi-visit.html
7https://www.digitalindia.gov.in/content/about-programme
8https://www.livemint.com/politics/policy/digital-payments-to-more-than-double-to-135-2-bn-by-2023-1560711978627.html
9https://uidai.gov.in/images/state-wise-aadhaar-saturation.pdf
10https://www.business-standard.com/article/economy-policy/ease-of-doing-business-ranking-india-cites-reforms-to-get-top-50-spot-119063000795_1.html
11https://www.oecd.org/mcm/documents/C-MIN-2017-4%20EN.pdf
12https://www.thehindubusinessline.com/economy/nudging-towards-positive-change/article28286102.ece
13Ibid
14https://www.narendramodi.in/pm-modi-south-african-president-cyril-ramaphosa-at-india-south-africa-business-forum-543165
15https://economictimes.indiatimes.com/articleshow/70808546.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

DESIGNING NEW AGE PUBLIC SECTOR ENTERPRISES

It is a well-known factthat leadingeconomies such as theUnited States, Europe and Japan,have established their dominance on a liberal economic model. They haveproved that governments cannot micromanage national resources and promote economic growth1. These economieshad adopted free-market systems, which translates to less regulation. On the other hand, we have the world’s fastest growing economies including China, where State-owned Enterprises (SOEs) play a significant role in economic growth . The Indian concept of State-owned Enterprises or Central Public Sector Enterprises (CPSEs) follow a hybrid model which fall between the Chinese model and the United States model.

Despite the trend toward privatisation over the past few decades, the role of State capitalism can no longer be ignored. It has been observed globally that State-owned Enterprises play a critical role in sectors such as natural resources, banking & finance, and utilities. In many countries, Governments have established SOEs in competitive industries, large scale manufacturing and service sector. Globally, State-owned Enterprises account for up to 40 percent of economic output, 5 percent of employment and 20 percent of investment in some economies2 .

Importance of State-owned Enterprises (SOEs) in BRIC economies

Source: OECD (2016), State-Owned Enterprises as Global Competitors: A Challenge or an Opportunity?

When we think of emerging economies, including the so-called BRIC countries i.e. Brazil, Russia, India and China, SOEs are playing a proactive role in the global market place.There is a growing importance of State-owned enterprises in the BRIC economies, which could be confirmed in relation to the world’s largest companies. Analysis of the Fortune –Global 2000 list indicates that the number of state-owned enterprises during the period 2005-2014, almost doubled. Data for South Africa was not available.

In 2014, out of 326 world’s largest SOEs, approximately 128 were headquartered in China and 13 in Hong Kong. A further observation is that 34 Indian SOEs, 7 Russian SOEs and 7 BrazilianSOEs, were also part of the list. This indicates that Federal Governments are now effectively managing an estimated 16 percent of the Fortune- Global 2000 companies. Many of these operate in mainstream sectors of economic importance such as banking & finance, manufacturing, oil & gas, metal & mining, public utilities etc., which play a vital role in international supply chains3 . The figures aboveindicate that among BRIC economies, after China, India has a large number of world’s biggest SOEs. However, their market size is smaller than comparable private Indian companies.

Role of State-owned Enterprises (SOEs) in India4

Since Independence, Public Sector enterprises have provided the much-needed momentum to India’s growth story. Indian Government at the time of the First Five Year Plan, established five Central Public Sector Enterprises (CPSEs) with a total investment of Rs 29 crore. They were established with the objective to meet broad economic objectives as well as meeting certain socio-economic obligations. Today there are approximately 339 CPSEs in the country with a total investment of Rs 13,73,412crore as on March 31, 2018.

Contribution to GDP

Source: Authors own calculation using data fromEconomic Survey of India 2018-19& Public Sector Enterprises Surveys

The above analysis indicates that there is an increase in the contribution of private sector in GDP and the share of CPSEs have fallen in the post reform period.The reduction in contribution may be probably because many business activities, which were earlier reserved for public sector, are now open for private sector. However, as per the Public Enterprises Survey 2017-18, CPSEs contribute to the Central Exchequer by way of dividends, interest on loans, and, payment of taxes and duties. An increase in the total contribution of CPSEs to the Central Exchequer from Rs. 275,840 crore in 2015-16 to Rs. 350,052 crorein 2017-18 was observed.

Employment Generation

Source: Economic Survey of India 2018-19

Although the latest data is not published by the Government, however, it is worth mentioning that the share of employment in Indian PSUs is higher than other indicators both at the beginning and the end of the analysed period. However, in 2012 the strength of women working in public sector stood at 18 percent as a comparison to private sector i.e. 24 percent.

Procurement from Micro & Small Enterprises (MSEs)

Source: Public Enterprises Survey 2017-18

From 2015 onwards, the Indian Government has mandated CPSEs to procure minimum 20 percent from Micro & Small Enterprises (MSEs) and has also earmarked a sub target of annual procurement of 4 percent from MSEs owned by scheduled casts and scheduled tribe enterprises. The trend is encouraging and as per the available data, in 2017-18, approximately 168 CPSEs made procurement of Rs161,652.98 crore from the private sector. Out of which Rs 24,226.51 crore was procured from the MSEs.

Financial Scorecard of CPSEs

Source: Economic Survey of India 2018-19

As per the available data, approximately one-third of CPSEs are making losses today. During 2017-18, BSNL, Air India and MTNL were the highest loss making CPSEs. During this period, the top ten-loss making CPSEs claimed 84.71 percent of the total losses incurred by total of 71 loss-making CPSEs. At the same time, IOCL, ONGC and NTPC were ranked the top profit making CPSEs. Out of 184 profit-making CPSEs, the share of top ten profit making CPSEs claimed 61.83 percent of the total profitable CPSEs.

Source: Economic Survey of India 2018-19

On analysing the profitability of CPSEs during 2008-2018, it was observed that the Average Annual Growth Rate (AAGR)of losses of Loss-making CPSEs was 10.4 percent. However, the AAGR of profitsof Profit-making CPSEs was only 5.8 percent. During the same period the Compounded Annual Growth Rate (CAGR) of losses of Loss-making CPSEs was recorded at 7.9 percent against the CAGR of 4.95 percent of profits of Profit-making CPSEs5.

Way Forward

India had established Public Sector Undertakings with a variety of public policy and social goals in mind. While many CPSEs are playing an important role in India’s development, still many CPSEs did not evolve with liberalisation and with the opening of Indian economy, lost ground very quickly to private sector. The reasons for the losses vary from enterprise-to-enterprise, which include micro level issues such no emphasis on modernisation, lack of business strategy, dependence on Government orders, high input cost etc.

It is true that profit margins of almost one-third of the CPSEs are under immense pressure in comparison to their private sector counterparts, which have become global businesses. Government of India’s concern for this issue is very much visible in the recent 2019-20 Union Budget speech of the Hon’ble Finance Minister of India where she mentioned that the government will undertake strategic disinvestment of select Public Sector Undertakings on priority. It was also announced that in view of the current macro-economic scenario, India will not only re-initiate the process of strategic disinvestment of the national carrier – Air India, but also, modify present policy of retaining 51 percent government stake in Indian State-owned Enterprises.

Against this backdrop,a strong view exists that Public Sector Enterprises serve broad macro-economic and social objectives, and hence should not be compared with corporate sector. Undoubtedly, they are generating employment more than private sector and creating necessary infrastructure for other stakeholders including big corporates, micro small enterprises and start-ups. The Government could consider divesting or closure of the loss making enterprises, which are not strategic in nature. At the same time, the government could establish more enterprises if they could fulfill the needs and aspirations of Indian citizens.

Although the scope of this article is limited to CPSEs, the following suggestions may also apply to departmental enterprises (railways and post), State-owned financial institutions (PSU banks and insurance companies) and State-owned Enterprises at State level.
Assessing the Need for Pubic Sector Enterprises
• In today’s world, which is governed by the principals of globalisation and rapidly changing technology, the Government may consider assessing the need for loss-making public-sector enterprises in every 3-year period. If they are not strategic in nature, then the decision to divest or closure could be taken at the earliest.

• At the same time, the Government could set-up new Public Sector enterprises if it fulfills the needs and aspirations of the Indian citizens.

• The board of a Public Sector Enterprise must be empowered to take various strategic decisions just like a board of a private sector company. In very limited cases, the matter should reach to the Ministry of Heavy Industries and Public Enterprises for approvals etc. This could support the CEO of the enterprise to undertake adequate business risk.

Distinguishing Strategic & Non-strategic Public Sector Enterprises

• NITI Aayogopined that CPSEs, which are serving national security purposes, sovereign or quasi-sovereign functions, could be categorized as ‘strategic’ and must be retained by the Indian Government.

• When we apply the aforesaid point of view on loss making CPSEs namely BSNL & MTNL, it is found that they address security needs in areas prone to insurgencies & conflict and at the same time help in connecting the rural areas with the mainland via its various projects and programmes such as BharatNet, Digital India programme, USOF etc.

• In Pharmaceutical sector, it will make sense for the government to consider closing or disinvesting loss making CPSEs, as indigenous private pharmaceutical companies are fully capable and competitive to serve the societal and Government needs.

Enhancing Autonomy for Efficient Functioning of Public Sector Enterprises
• The Government has given some operational freedom to various categories of profitable Public Sector Enterprises such as Ratnas, Maharatnas, Navratna and Mini-Ratna.

• Unless the Public Sector Enterprises are given the desired level of authority or independence in decision making especially in the matters of recruitment, procurement, or even in devising marketing strategy, they will not be able to compete in the current business environment.
Require Cautious Approach Towards Consolidation or Merger of Loss-making Public-Sector Sector Enterprises
• The Government’s efforts in past to merge two loss making entities –‘Indian Airlines’ and ‘Air India’ miserably failed6 . Furthermore, Government’s effort to merge a loss-makingentity i.e. Instrumentation Ltd. with a profit making BHEL did not materialize7 . However, the takeover of HSCL by NBCC is yielding some positive results8 .

• The policy makers are required to follow a cautious approach before taking any decision to merge Public Sector Enterprises, especially loss-making PSEs. It is very important to analyze all internal and external factors affecting the performance of the enterprises.
Fast Track Approvals and Support Required by Public-Sector Sector Enterprises from the Government
• It is a known fact that monetary support is required by the enterprises from the Government and any further delay in decision making from the Government of India could further deteriorate their performance.

• Government could consider developing standard operating procedures for various category of support required by the enterprises, such as technology up gradation, monetising assets, restructuring etc. This could fast track the process and help the enterprises to efficiently undertake business activities in a highly competitive business environment.
Technology Up gradation
• The Government could consider empanelment of technology experts or advisory firms, which could regularly undertake study of required technology up gradation in various Public Sector Enterprises, so that timely decision with respect to technology up gradation could be taken.
Human Resource Management
• Adequate steps to be taken by the Enterprises to make their human resource policies more market-based. This will motivate employees and drive profit and innovation at work.

• Furthermore, to motivate PSU employees, the Government could institute‘Best Practices Awards’ as well as regularly developing‘Compendium of Best Practices in PSUs’. In addition, efforts could be undertaken to replicate the best practices in various PSUs.
Diversification of Business Activities
• There are very limited case studies available to prove that diversification of business activities could support Public Sector Enterprises to become profitable. A loss-making PSU i.e. ‘Mecon Ltd’ turned profitable in 2017-18 as it diversified into infrastructure and energy sector. Earlier it was dealing in Metals only 9.

• Loss making CPSE such as Air India could consider diversifying into dedicated cargo & courier logistics, and digital aviation business to hedge the company from the risks of being in a pure aviation business. Its counterpart Spicejet is also exploring this option10 .
Monetising Assets of Loss-making Enterprises
• Currently, loss making enterprises cannot monetise their assets especially land & buildings at the premium location of the country and become profitable.

• A chronically loss-making Public Sector Enterprise will not gain much from sale of such assets being used for revival if its losses have mounted to very high levels and its products are technologically obsolete.

• In this scenario, the Government could create a ‘national fund’ and transfer the amount obtained through monetisation of assets of loss-making enterprises.
In conclusion, improving the performance of Public Sector Enterprises could be a complex task given the fact that many stakeholders are involved in their oversight and management. Many commissions and expert groups11 which were set-up by the Government have studied this issue in-depth and made various recommendations. In short, there is no dearth of information: the steps to be taken to revive the CPSEs are well known.

The challenge going forward is what could be done differently to implement the aforesaid suggestions or already known recommendations made by various experts. To deal with this challenge we could study the best practices existing among Indian public sector enterprises as well as State-owned Enterprises in BRICS and Commonwealth countries. The good practices could be replicated among CPSEs to improve their profitability and design new age public sector enterprises.

References:
1Bremmer, Ian. State Capitalism and the Crisis. Report. Mckinsey. 2009.
2Corporate Governance of State-Owned Enterprises: A Toolkit. Report. The World Bank. 2014.
3State-Owned Enterprises as Global Competitors: A Challenge or an Opportunity?.Report. Organisation for Economic Co-operation and Development (OECD). 2016.
4Public Enterprises Survey 2017-18. Publication. Department of Public Enterprises (DPE), Govt. of India. Vol. I.
Economic Survey of India 2018-19. Publication. Ministry of Finance, Govt. of India.
5Author’s own analysis using data from Economic Survey of India 2018-19
6Shukla, Geetanjali. “Anatomy of a Failed Merger.” Business Today, June 2012.
7Shaji, K. A. “Instrumentation Ltd. Not to Be Merged with BHEL.” The Hindu, April 24, 2015.
8Hindustan Steelworks Construction Ltd. (A subsidiary of NBCC) Annual Report 2017-18
9Mecon Ltd. Annual Report 2017-18
10 Raj, Yashwant. “SpiceJet Plans to Diversify beyond “pure Aviation” to Offset Fuel Price-related Risks.” Hindustan Times (Washington), July 13, 2018.
11Review of Loss Making CPSUs. Report. Parliamentary Standing Committee on Public Undertakings, LokSabha. December 2018.

K File: The Conspiracy of Silence

What can explain the fact that one of the most beautiful places on earth has been turned into a living hell? Much of the troubles faced by the state can be attributed in the initial years to the ambitions of two men—Maharaja Hari Singh, who was looking at ways and means to remain in power and Sheikh Abdullah, who was determined to oust the Maharaja and take over the reins of the state. The Maharaja acceded to India on 26 October 1947, following Pakistan backed tribal invasion of India. It was fortuitous that Indian forces, which were flown into Srinagar Airfield on the very next day, reached just in time to halt the raiders at the outskirts of Srinagar. Over the next 14 months, the Pakistani backed forces were pushed back, till a ceasefire was declared, leaving Pakistan in control of Gilgit-Baltistan and the region of Mirpur-Muzaffarabad. With minor modifications, this has, since the Simla Accord of 1972, been sanctified as the Line of Control.

Plenty of political shenanigans took place since the accession of the state to India on October 1948. But what is generally not known is how a small coterie of people, whom the author of K File: The Conspiracy of Silence, Mr Bashir Assad describes as the Mullah caste—the Geelanis, Muftis, Shah, Handanis, Naqshbandis, Andrabis, Bukharisetc, achieved a stranglehold over the state, dominating the state’s political landscape as well as its bureaucracy. This was the clan which moved into Kashmir from Arabia, and slowly established dominance over the original inhabitants of Kashmir. Today, this small group, representing just about 3 per cent of the Valleys Muslim population, has a stranglehold on the state’s politics and its bureaucratic structure. Surprisingly, this aspect of the politics of Kashmir has been so well hidden from the public gaze.

Article 370 was never a demand of the people of Jammu and Kashmir. It was not even the demand of Sheikh Abdullah! Why India’s first Prime Minister, Pt. Jawaharlal Nehru insisted on including it in the Constitution remains a mystery. DrBhimraoAmbedkar was vehemently imposed to the same and he made this known in no uncertain terms, while the Constitution was being drafted. That is why it was kept as a temporary provision. Would the history of the State have taken a different trajectory if such a provision had not been placed on the statute book? The answers can only be hypothetical. However, one thing cannot be denied. The seeds of separatism were sown with the inclusion of Article 370 in the Constitution. And later, with the promulgation of Article 35A through a Presidential Ordinance, free rein was given to the politicians of the Valley to keep the embers of a separatist philosophy alive.

These aspects are not covered in the book, which is rightly focussed on a singular theme; the radicalisation of a society that had absolutely no reason to take to that path. How is it that a society, which for millennia symbolised a culture of inclusiveness, now celebrates death through jihad as a means of gaining salvation? Why is death celebrated? Why is the word of the hate mongers and terror perpetrators taken as the truth? Why have the scholarly institutions of traditional Islamic jurisprudence been demolished in Kashmir? How and why have we allowed the youth of Jammu and Kashmir to be swayed by the force of a radical ideology which seeks the killing of those not conforming to the Muslim faith as a righteous act; which believes that it is a moral imperative to take up arms against the state; and which is ideologically primed to the extent of believing that laying down one’s life for the cause of jihad is an act that will win rewards in heaven? Once we find answers to these questions, we will be a step closer to understanding the causative factors of violence in the state of J&K. Only then, can we begin to look at policy options to address the alienation that has taken place.

Bashir Assad is a son of the soil. Born in South Kashmir and having being educated in a Madrassa, he was privy to every aspect of life in the state and thus is perhaps more competent than others to expound on the radicalisation that has swept through the Valley and destroyed its Sufi culture. Unknown to many,Assad has laid bare the fact that the spread of radicalisationin the state is linked to the growth of the Jamaat-e-Islami in Kashmir. The process started sometime in the mid-1960’s, when Maududi’s literature was first made available. It gained impetus after 1977, ostensibly with Pakistani backing—a throwback to the Pakistani defeat in the 1971 Liberation war. With the advent of armed insurgency in 1989, the process took on a menacing hue.

All these aspects are well covered in the book. Most alarmingly, while the government banned the Jamaat-e-Islami and its Falah-e Aam Trust (Educational Wing) in 1992, it simultaneously issued orders for the absorption of the teachers of Falah-e-Aam Trust in government schools. And thus began the onslaught of radical ideology on young and impressionable minds. It is incomprehensible to understand why this was done by the State. A charitable explanation is that the state leadership was naive. More likely however, is the possibility that they were complicit. Be that as it may, the result today is that the educational system has been taken over by a radicalised clergy and even government jobs are available only to those who support the Mullah caste. A small group of people, who had no Kashmiri roots and who comprise barely three per cent of the Muslim populace, are thus now ruling the roost.

Why did we allow this to happen? Both the Centre and the State must accept responsibility for the mess that has been created in Kashmir. The Mullahs mentioned earlier—the Geelanis, Muftis, Shah, Handanis, Naqshbandis, Andrabis, Bukharis et al, are the ones spearheading the Azadi narrative, and linking it with Islam. Thus the slogan—‘Azadikamatlabkya, La illahaillallha’. The factors which drive the terrorist movement in the state have been variously attributed in public discourse to poverty, a sense of alienation, joblessness, and many other factors. But the real cause, radicalisation of the minds of the youth, is rarely discussed. That is the nature of the secular state, where to speak of an issue in religious terms gets the individual labelled as communal! But unless the facet of radicalisation—something that has been ongoing for close to over five decades—is addressedpeace cannot return to the Valley.

Surprisingly, the Mullahs exhort the common Kashmiri, the original inhabitants of the land to make sacrifices for the cause. Yet they keep their children safely ensconced in other parts of India, where they receive a good education. These Mullahs have amassed fortunes in the name of the poor and have cornered political and administrative power. Their shackles need to be broken if Kashmir is to return to peace. The abrogation of Article 370 and 35A is but a first step in this direction. The road ahead is, however, going to be long and arduous one, but it is one that must be traversed.

Bashir Assad’s book must be read to understand the way the narrative has been shaped and exploited by a small group for their ends. It gives out a facet of Kashmir from the perspective of a son of the soil that has never before been penned, because of the risk to life and limb that such an account would invariably bring. It is thus a brave account, giving out in explicit detail how the Valley got radicalised and in the process, exposing the author and his family to great risk. The author appears to have a soft corner for Sheikh Abdullah and his brand of politics, but that is par for the course. There is also an oblique reference in passing, linking the growth of the Jamaat to the rising influence of the RSS. This may be the popular narrative in Kashmir but it is devoid of substance and is a mere rationalisation of the acts of the Jamaat. The radicalisation of the Valley was a deliberate act, well thought out and planned by a rabid clergy, supported from across the border and was not a result of internal causes. It is a sad reflection of our times, and of the state of India’s professed secularism, that this philosophy was not nipped in the bud and allowed to flourish till it had all but consumed the state.

For those looking at conflict resolution in the State of Jammu and Kashmir, post the dramatic revocation of the special status of the state on 5 August 2019, this book must be read. It provides an essential backdrop to understanding the situation in the Valley, which makes it an indispensable read for policymakers, think tanks, personnel form the Armed Forces, Police personnel and even the lay public. A few printers devils have entered into the book which otherwise has been well produced by Vitasta Publications. These need to be corrected in the next edition. Overall, a very brave book on Kashmir, for which the author must be commended.

China Ascendant

Reviewed by Devrath JhunJhunwala

The ‘rise’ of China has emerged as a major theme of inquiry within academic and policy-making echelons across the world. Every aspect of Chinese politics, economics and society has seen rapid changes as China seeks to position itself as the ‘hegemon’ of the world order. ‘China ascendant: Its rise and implications’ is yet another addition to the voluminous literature on the subject. Through a series of essays focusing on various aspects of China’s growth and its effects, the editor, Harsh V. Pant, through a series of skilfully arranged book chapters, presents a coherent picture of a rising China and its implications for India and the rest of the world. The book is rich in the fluid use of statistical data and political analysis and seeks to juxtapose China’s rise in relation to India, and in doing so, suggests policy options for dealing with China.

China’s penetration, diplomatically and economically, within the Indo-Pacific region is viewed as compromising Indian strategic objectives. Essays in the book portray Chinese growth as a challenge to India’s foreign policy objectives and look into response options in terms of Prime Minister Narendra Modi’s ‘Act East’ policy. It presents an unbiased factual study of the hard power asymmetry between India and China through key economic and military indicators, which bring out the fact that India still has a long way to go to match Chinese capabilities. To come to par with China on the economic and military front, would require huge financial outlays for many years, and a peaceful investment climate. In his book chapter titled ‘Can India counter emerging Chinese capabilities like stealth aircraft?’ Pushan Das bluntly states that Indian capabilities are limited. The chapters on Space Militarisation and Cyber Security once again emphasise the need for India to step up efforts in Research and Development (R&D), if India is ever to catch up with China on this score.

Beyond hard power projection, the book analyses Chinese involvement across the world, especially in South Asia. China’s growing relationships with countries such as Bangladesh, Sri Lanka and Afghanistan, traditional allies of India, are seen as solely for the benefit of China and describe economic dependency issues that could prove to weaken such nations. A key facet of this is Chinese presence in the Indian Ocean Region (IOR), which India has strategic interests in. China’s economic investments, military presence and diplomatic relations with nations in the IOR has raised concerns of Chinese intentions with respect to India, with the likelihood of China attempting a strategic encirclement of India. The IOR has been elaborated on as a key determinant of Chinese foreign policy goals with respect to India. With billions of dollars’ worth of goods and, more importantly, energy flowing through the IOR, both China and India see great strategic value in maintaining close ties with nations such as Sri Lanka, Maldives and Myanmar. India is unable to match Chinese economic inducements to these countries, but there is no reason why India should do so. There are other aspects which determine foreign policy which are India’s strengths such as soft power and a strong cultural connect, which India needs to exploit in its relations in the IOR.

The book devotes two chapters on Chinese naval power. ‘Sea Drones: Implications of the great underwater wall of China’ by Sylvia Mishra and ‘China’s naval power and prestige’ by Tuneer Mukherjee put forward the key instruments of such regional power projections. Both essays stress on growing technological development in both stealth and long-range weapon systems, especially with UUV’s (Unmanned Underwater Vehicle) with the Chinese navy. The need for a strict international code governing such modern naval technology is seen as a way to prevent Chinese challenges to national sovereignty of regional nations.

Building on South Asian affairs, a country that has been naturally focused on in the book is Pakistan, where China has found an opportunity to carry out a multitude of foreign policy objectives successfully. These include access to the Arabian Sea, a market for Chinese goods and a method to direct Indian attention away from wider regional issues. The China-Pakistan Economic Corridor (CPEC) is stressed as a massive undertaking that greatly enhances Chinese power in the region with little gross benefit to Pakistan. CPEC remains a concern for India as is the larger strategic partnership between China and Pakistan, the former using the latter as an instrument to keep India confined to the backwaters of South Asia and not emerge as a global power. The China-Pakistan axis also leads to the possibility of India being engaged in a two front war, and the same is discussed in detail in another book chapter by Abhijnan Raj titled “The sobering arithmetic of a two-front war”. The book thus places great emphasis on Chinese involvement in South Asia in an Indian context, viewing it as a potential threat for India and a growing imbalance in the status quo of the region. Diplomatic and strategic responses, notably ASEAN and BIMSTEC, are mentioned as possible counterweights.

Outside the South Asian region, China’s engagement with countries across the globe is viewed as an attempt by China to overturn the Western dominated world order. A Chinese policy deliberated upon is the Belt and Road Initiative (BRI), a key action by the Xi Jinping regime. The initiative, while stressing trade and investment, is seen as a Chinese tool for global engagement and relevance. Debt traps, strategic dependence and disregard for international law is often mentioned when criticising this policy. China’s involvement in South Asia, Africa, South America and even the Arctic through massive unmatched investments and trade relations demonstrates the wide reach of China as well as its desire to establish a China-centric world. China hopes to back such engagement with economic superiority, through its strengthening Yuan and a ‘digital silk road’ of supportive infrastructure. The book also delves into China’s abysmal record on human rights and respect for the law. The Uighur problem in the Xinjiang province of China as well as domestic repression is viewed as a clear cut example of China’s indifference towards international law, which makes a future China based world order not something that would be welcomed.

China’s economic growth and its success in bringing millions out of poverty is certainly a success story. While this has been achieved through the government’s protectionist regulations, and while China’s authoritarian capitalism is criticised for its inefficiencies and inequalities, it cannot be denied that the country has achieved great success in improving the lives of its citizens, for which it must be lauded. The growth in China is termed as “selective liberalisation” where pro-market policies are only implemented in sectors imperative to growth. This helped China gain both employment and productivity, leading to a compound growth of 13% between 1989 and 2017. The book also lays focus on climate change, a field that is now increasingly relevant in areas of politics, economics and society world-wide. China’s environmental protection laws are hailed as a great first step, for their strict enforcement and their reduction of smog in urban centres. Such ‘lessons’ are painted as vital for Indian society, one that suffers greatly from high levels of pollution. In addition to that, essays such as ‘China’s innovation boom: Lessons for India’ by Meghna Bal seeks to emulate Chinese success in India, nevertheless stressing the inability of India to match the central planning that China gained from. As a critique to Chinese planning, another book chapter titled ‘The mystery of China’s shrinking cities’ by Sayli Udas-Mankikar berates China’s cruel population redistribution policies in its megacities. Forced evictions, relocations and demolitions are portrayed as inhumane, leading to an aged population without economic opportunities and more expensive living conditions for those remaining. Economic analysis in the book, therefore, both cheers and criticises the China economic model, painting it as unstable in the long-run but one that India should seek to implement with appropriate modifications.

Harsh V. Pant as the Editor has done an exemplary job in putting together a series of articles in a coherent manner, which brings out with distinct clarity the role that China is likely to play in the world, while highlighting India’s response options. There will be both competition and cooperation in the India-China relationship and how India negotiates the challenges ahead, with respect to both its security and economic concerns will have to be watched. The book offers valuable insight into certain aspects of China’s politics, military and economic advancement and diplomatic outreach across the world, which makes it a valuable addition to those wishing to delve into the subject.

Kashmir Hysteria Grips Pakistan

Kashmir is all that Pakistan talks about these days. On 14 August, the day on which Great Britain created Pakistan in 1947, Imran Khan was in Muzaffarabad instigating Pakistan Occupied Kashmir (POK)“nationalists,” (the long-time adversaries of Pakistan), that India had snatched away Kashmir from them. He purported to convey through them a message to POK expatriates in the UK who responded by making a massive protest demonstration in front of the Indian Mission in London. The London police made a mock show of preventive measures.

Armed insurgency and ‘azadi (freedom) slogan were actually initiated by POK’s UK-based diaspora in the early 1980s on the behest of ISI. These criminals had kidnapped and murdered Ravindra Mhatre, the Indian Counsellor in Birmingham in 1982. In 1993, when JKLF had spread its fangs in the Valley, the PoK-based activists, under the leadership of Amanullah Khan, led a march to force entry into Kashmir Valley by violating the LoC. Apprehensive of JKLF carrying the day, and that Kashmiris would rally round freedom and not for accession to Pakistan, The Pakistan military stopped the JKLF marchers at Chakoti, a small village in POK near the LoC. Violence erupted and the Pakistan army opened fire on them in which 27 persons are reported to have been killed or seriously wounded. Since then, PoK “Kashmir nationalists” and Pakistan authorities have been locked in a seesaw relationship. But now, PoK expatriates have forgotten that bloodshed as well as the untold oppression unleashed by Pakistan on freedom fighters, intellectuals, ideologues, writers and media persons of PoK. Many of them were banished who sought asylum in western countries.

The Pakistani premier, MrImran Khan, made frantic telephone calls to President Trump raising alarm on India bringing certain constitutional and administrative reforms in Kashmir. Pakistan’s foreign minister made a jaunt to Beijing to secure China’s support at the Security Council where Pakistan lodged a complaint and called for an emergency meeting, which, however, did not materialise. Only a closed-door clueless meeting was held. Turkey’s President TayyipErdogan promised steadfast support without condemning India and the Malaysian Prime Minister, Tun Mahathir made only a lukewarm expression of concern. OIC second rung representatives passed the usual farcical resolution that finally goes to the dust bin and UAE as well as SAARC countries called it India’s internal affair.

Yes, China gave limited support, though she concentrated more on Ladakh and her border security concerns. But the world knows that China has no principled foreign policy. However, the Tiananmen Square carnage, trampling of the rights of Tibetans and suppression of Sunni Uighur Muslims of Xinjiang cannot be washed away that soon. Pakistan usually misleads the people in believing that Muslim countries support its Kashmir stand. But how the Muslim states reacted in the present case proves that what binds modern societies into the strings of a partnership are economic interests. China’s annual trade with India amounts to USD 95 billion compared to USD 13 billion with Pakistan. Turkey’s trade with India stands at USD 8.6 billion against USD 1 billion with Pakistan. Malaysia-India trade at USD 14 billion is 14 times more than the USD 1 billion of goods and services which Malaysia exchanges with Pakistan.[1]

On Pakistan creation day, Imran Khan chanted only India and Modi in his Muzaffarabad outburst. He could not get rid of the genie. At the UN, at its embassies and missions abroad, the talk is only about Kashmir. Pakistan foreign office shot SOS to perceived patrons and dubious international organisations shedding crocodile’s tears on India’s masterstroke in Kashmir and begging for intervention. People in Pakistan have gone hysterical about the bolt from the blue. But the reality is that Imran Khan and his foreign minister have demonstrated feigned hysterics only to lure the Pak Army into thinking that its hand-picked civilian government is doing all it can to carry forward its agenda. Some observers even say that Imran Khan’s decision of taking the COAS and the ISI boss along with him to Washington was taken because he had apprehensions of a military coup in his absence. The arrest and detention of some of the terrorist leaders including Hafiz Saeed, no doubt an eyewash, did not go well with the army.

Pakistan has downgraded diplomatic relations with India, stopped bilateral trade which is ridiculously insignificant and cancelled the Samjhauta and Thar Express. Frustration speaks loudly. It shows how Modi has gravely incapacitated Pakistan. All that remains of seven-decade-old Kashmir dispute is to fulfil the 1994 unanimous resolution of the Indian Parliament of taking back the area of the original State of Jammu and Kashmir under Pakistan’s illegal occupation since 1947. Pakistan must come forward and talk about its withdrawal from POK (Mirpur Muzaffarabad and GilgitBaltistan), and also persuade China not only to return the Aksai Chin area of original J&K State but also return to India the part of Shaksgam Valley that Pakistan ceded to China in 1963.

The state raised by Maharaja Gulab Singh in 1846 has finally integrated into the Indian Union. The Indian nation must pay tribute to that Dogra ruler, a great army commander and a visionary statesman. J&K’s communally oriented Constitution of 1956, and the entire separatist edifice is razed to the ground. The falsely constructed superficial notion of identity stands eroded, and only one identity—that of an Indian—remains valid henceforth.  Forget about its reversal of constitutional reform measures,attack on any part of the Union Territory means war, and the Defence Minister cleared all doubts about India’s determination to recover its territory now under illegal occupation of the neighbouring countries. In the context of how and when to take back, POK, India must, among other things, take into account the fierce opposition in POK to Pakistani domination. It is the moral duty of India to come to their rescue. Many political dissenting parties in PoK and G-B are willing to be the part of Indian Union. India must consolidate her position there and liberate the people of those areas from the shackles of Pak slavery.

As far as Pakistan’s accusation of India violating the defunct UNSC resolutions on Kashmir is concerned, we may remind Pakistan that she has repeatedly altered the status of the parts of Kashmir it controls, weakening its current protestations. In April 1949, Pakistan took over Gilgit-Baltistan (then called the ‘Northern Areas’) through an agreement with the government of Azad Kashmir and the political party, All Jammu and Kashmir Muslim Conference. No accredited representative from GB was party to this clandestine agreement.[2]

Recently, former Pakistani diplomat Husain Haqqani, who currently is the Director for South and Central Asia at Hudson Institute, wrote in one of his articles how in 1969 a Northern Areas Advisory Council (NAAC) was created in the region, followed by the Northern Areas Legislative Council (NALC) in 1994. Pakistan’s Ministry of Kashmir Affairs and Northern Areas retained all law-making powers until the 2009 Gilgit-Baltistan Empowerment and Self-Governance Order, which created an elected legislature and the office of the chief minister. According to him, Pakistan’s stance that the status of the princely state of Jammu and Kashmir was yet to be settled also did not come in the way of the 1963 Pakistan-China boundary agreement that resulted in China ceding some territory to Pakistan and Pakistan recognising Chinese sovereignty over hundreds of square kilometres of land in Northern Kashmir and Ladakh. He posits that in this scenario the Kashmiri separatist leadership now has three choices: it could take the matter to the Indian Supreme Court and argue that the decision violates Indian constitutional principles. This option has been exhausted with the Supreme Court declining to meddle in the administrative matters. Secondly, it could mobilise protests that could turn the Kashmir Valley into a South Asian West Bank, along with the misery that might bring for the Kashmiri people.[3]

In doing so, Pakistan cannot afford to ignore the Damocles sword hanging on her neck in the shape of UN’s Financial Action Task Force (FATF) warning of blacklisting Islamabad. The way India has taken preventive measures clearly indicates that New Delhi will not allow a theocratic region on the territory of the Indian Union.  If massive protests ensue and India puts them down with a heavy hand, one can expect denunciation of human rights violations from detractors of India. It can be argued that in today’s world, human rights violations have, regrettably, lost their salience as instigators of international pressure. In the case of Kashmir insurgency, no power has an iota of doubt that it is a jihadi terrorist movement aimed at breaking the Union. India’s show of the might of the state cannot be challenged by China with Tiananmen Square massacre hanging around her neck like an albatross.

Finally, it could try and see how to extract maximum advantage from the new order. This is the only right option for the dissidents in Kashmir and it depends on their vision how best they can put it into practice. In conclusion, a heavy responsibility devolves on Indian policy makers in the background of the fundamental reason of scrapping Article 370 and doing away with State’s special status. It is the responsibility of development, of growth of infrastructure, of providing employment and other reforms. India has no time to waste in executing these weighty tasks, for which huge private as well as public investments would be required.

(*The writer is the former Director of the Centre of Central Asian Studies, Kashmir University)

[1]Haqqani, Husain. “Pakistan Needs to Stop Thinking of Kashmir as an Unfinished Business of Partition.” By Husain Haqqani, www.hudson.org/research/15233-pakistan-needs-to-stop-thinking-of-kashmir-as-an-unfinished-business-of-partition.

[2] Ibid.

[3] Ibid.

UDAY 2.0 –Sequel in policymaking

Ministry of Power has just announced Ujjwal Discom Assurance Yojana (UDAY) 2.0 is under making. Like its predecessor, it is once again aimed at turning around operational & financial performance of distribution utilities in India. In film industry sequels to a hit movie is a common phenomenon, however their success again is depended on the script. It is early to say whether UDAY-I is a blockbuster or not (in terms of achieving its objective) but now UDAY II is on the floors. In this blog, I argue rather than providing ambitious targets in terms of tariff hike, in next five years Govt should focus on increasing quality & reliability of power. Once customers are accustomed to good quality power supply, they may not hesitate in paying actual tariffs

UDAY-I was launched by the Ministry of Power, Govt. of India on November 20, 2015, amidst much fanfare and hope that it will do what no other scheme could achieve i.e. bring about operational and financial turnaround in the State-owned Distribution Companies (DISCOMs). It was a tripartite agreement between the Central Govt. of India, State Govt. and State DISCOM whereby the respective state governments would take over 75% of the debt of the DISCOM’s in lieu of certain achievements to be made by the utilities. The two important achievements to be made by the end of FY 2018-19 were, a) reduction inAggregate Technical & Commercial loss (AT&C)to 15% and
b) reduction in gap between Average cost of supply (ACS) and Aggregate Revenue Required (ARR) to zero.

Table 1: ARR-ACS Gap for the FY 2018-19 (INR/Unit)


Source: UDAY portal (www.uday.gov.in)

[1] States like AP, Bihar & Rajasthan have signed MoU for each of their DISCOMs
[2] Negative indicates recovery from tariff would be more than the cost incurred

The above table shows data for ten states from UDAY portal (www.uday.gov.in). Only three states out of ten have managed to ensure that the gap between ACS and ARR is zero. In fact, in these three states gap is negative indicating DISCOMs revenue are higher than the cost. However, one should keep in mind that the number in ‘Actual’ column for FY 2018-19 indicate tariff determined based on certain projections (like sales and power purchase cost etc.) andfinals results would only be found out while truing-up (reconciliation) exercise for FY 2018-19 is taken up (should be done while determining tariff for FY 2020-21).
Seven out of ten states not meeting their target of reducing ACS-ARR gap should not be surprising considering tariff hike is still a political matter in India.As a thumb rule no tariff increase takes place in the states in the year of elections, for example, even though Madhya Pradesh and Chhattisgarh agreed to undertake tariff increase of 3% and 5% respectively in FY 2018-19, no increase happened in Madhya Pradesh and tariff was reduced by 3% in Chhattisgarhin the same year as elections were due.
Credit must be given to UDAY for trying to solve legacy problems through mixture of competitive federalism and state support (75% of DISCOM debts were taken over by respective State Govts.), however going forward it must also be pragmatic about politics around power tariff. Setting targets like reduction of AT&C losses to 15% in next five years is unwarranted asstates like Madhya Pradesh and Jharkhand have AT&C losses higher than 30%. Reducing it by half would require a massive capital investment (along with regular expenses such as O&M, employees etc,), which in turn would require tariff increase to a quantum which would not be politically feasible. On the other hand, not allowing such tariff increase would again create unmanageable liabilities in the commercial book of DISCOMs thereby maintaining the vicious cycle which it is trying to break from.
The popular Sharp magazine in one of its articles (dated 27 May, 2015) had given three rules for making movie sequels. First rule is ‘Don’t take your time’, second rule is ‘The same, only different’ and the third rule is ‘Dare to dream’. In all probability UDAY 2.0 would fulfil first and second rule, the challenge would be to fulfil the third rule. Can our policymakers dare to think of something which would ensure that in medium to long term, DISCOMs actually undergo financial and operational turn around?
One of the daring risks to take could be to follow what companies like Amazon or Flipkart do i.e. charge consumers less than what is required but at the same time provide high quality service so that when in near future prices are hiked consumers may not think twice in paying as they are satisfied with the services. This may not be the apt example in totality because these companies face competition pressures whereas the DISCOMs don’t since they are owned by the state governments. However, an analogy can be drawn from this i.e.keeping in mind that tariff increase beyond a certain limit is not politically feasible, UDAY 2.0 can focus towards increasing power reliability and quality and limit tariff increase to say 3-5% (so that consumers do not acquire the habit of not having tariff increase). Once consumers have enough confidence on government service delivery, they may not mind paying the ‘just tariff’. For example, residential consumers in Mumbai pay one of the highest tariffs in the country. Though there is a discontent post increase, yet they pay because power reliability and quality in Mumbai is the best in the country and consumers don’t face power cuts or have to buy power inverters. Further, improved service delivery would also bring efficiency ensuring reasonable tariff increase (Rajasthan DISCOMs in their FY 2018-19 tariff petition did not propose tariff increase and sought to increase revenue through cutting losses).
This is just one of the many ideas UDAY 2.0 can dare to dream of. The challenge is can they dare to dream of? Numerous bailout packages have been issued to DISCOMs in the past and UDAY 2.0 certainly won’t be the last. It is time to be pragmatic and understand there would be UDAY 3.0 or 4.0, however, it is important that each sequel builds onto the other hoping it is no more than a trilogy or a quartet.

*  Shashwat Kumar is a Predoctoral Fellow, Marie S. Curie European Training Network, H2020, Global India. He is based out of Institut Barcelona d’Estudis Internacionals, Barcelona (Spain)

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ABOLITION OF TRIPLE TALAQ: WHY A LAW WAS REQUIRED

July 31, 2019, will be remembered as the day when the democratic fabric of India was upheld and reaffirmed. After receiving the President of India’s assent, the Muslim women community were afforded protection from the incivility and regressive nature of talaq-e-biddat, also known as ‘instant triple talaq’ under the Muslim Women (Protection of Rights on Marriage) Act of 2019.

What is talaq-e-biddat? It is a type of divorce practiced under the Hanafi Sunni school of jurisprudence, where the husband can divorce his wife by communicating ‘talaq’ three times in one sitting. On completion of this communication, the marital tie is broken instantly and irrevocably. With the utterance of those words, the woman loses all her rights to the household and is rendered homeless. The absurdity and inherent inequality of practicing instant talaq is hidden from no one. The government is rightly being credited for not only addressing a topic as sensitive as personal laws for the Muslim community, but also for ensuring an effective redressal to a regressive practise. Unfortunately, the issue has taken a political hue, with some clerics seeing the passage of the Act not as a social issue and a fight for gender equality but as undue interference in the religious affairs of the Muslims. The hypocrisy of certain lawmakers also stood out. Mehbooba Mufti, a Muslim woman politician and the leader of a regional political party based in Kashmir, directed her party members to stage a walk out in the Upper House (RajyaSabha) when voting on the Bill took place. She later tweeted “…abstention is essentially a no vote.” Instead of registering dissent against the proposed bill in the parliament by voting against it, Mehbooba Mufti’s People’s Democratic Party (PDP) adopted the political gimmick of staging a walk out. This was political duplicity and subterfuge of an exceptionally high order, even for a regional party not known for political propriety.

Before India’s Parliament enacted the Muslim Women (Protection of Rights on Marriage) Act of 2019, pronouncing ‘talaq’ thrice in one sitting had the effect of immediate annulment of the marriage. This was in stark contrast to the practice of ‘talaq-ul-sunnat’ which requires pronouncing ‘talaq’ three times over a three month period. The three-month period of ‘iddat’ would commence after ‘talaq’ was pronounced for the first time. The marriage stood annulled only if ‘talaq’ was pronounced for the third time at the end of the said ‘iddat’ period. The rationale behind giving three months ‘iddat’ period was to safeguard the woman by providing a cushion against decisions taken on impulse, while also providing time for negotiation or reconciliation. An additional reason was to ensure that the woman is not pregnant as pregnancy could directly or indirectly affect the decision of divorce, issue of maintenance or custody. Instant triple talaq, on the other hand, instantly leaves the wife and in most cases the children, in a miserable and helpless situation.

Recent years have witnessed the growing popularity of social media as a means of communication. This became a bane to the victims of instant triple talaq as the husbands started resorting to means such as Messenger, WhatsApp, fax, email etc to seek divorce by sending ‘talaq’ thrice by message to the wife. It is regrettable that Muslim clerics not only validated the divorce given under instant triple talaq, but went on to validate even the ones given via text messages. In one incident, a Muslim woman along with her young children were thrown out of their residence by her husband in Tamil Nadu. When the wife protested, the husband simply uttered ‘talaq’ three times, and the hapless woman, along with her children were rendered homeless with limited recourse to justice. In another such incident, a Muslim woman was divorced through instant triple talaq to make way for a younger bride who could pay more dowry. Incidents like these not only reflect on the regressive nature of this obnoxious practice, but also denies to Muslim women, the rights guaranteed to all citizens in the Constitution of India.

There is no gainsaying the fact that under the Constitution of India, personal laws, i.e.laws dealing with marriage, inheritance, etc are entitled to certain latitude in practice. However, the same document as reflective of the collective will of the people and spirit of the nation becomes the guardian of equality. On August 22, 2017, Supreme Court in the Shayara Bano judgment declared the practice of instant triple talaq as violative of the Constitutional spirit and the fundamental right of equality under Article 14. Both the parties to the case agreed that the practice of ‘talaq-e-biddat’ is “bad in theology, but good in law.” When a phenomenon is governed by personal laws in consonance with religious doctrines, it is absurd to argue in favour of its validity when the very same religious doctrines consider it ‘bad’. When the believers of the same faith consider an otherwise socially repulsive practice as a sin, in broader framework continuing it is nothing short of violating both, constitutional and societal morality. The court while extensively examining the instant and irrevocable nature of talaq-e-biddat held that the arbitrariness of the practice where a Muslim man can “capriciously and whimsically” break a marital tie without “any attempt at reconciliation”, is violating right to equality and thus, is invalid in the eyes of the law.

The inhumane version of instant triple talaq has already been outlawed either directly or indirectly in many Islamic countries. In Algeria, Iraq, Libya, Kuwait, Morocco, Sudan, Tunisia, UAE and Yemen, where the official religion is Islam, there are effective laws in place wherein divorce under ‘talaq-e-biddat’ is invalid. Even secular states with majority sunni population such as Egypt, Jordan, Lebanon and Syria have express provisions for protecting Muslim woman from the incivility of instant triple talaq. In Southeast Asia, Indonesia, a country with six official religions including Islam, expressly mentions that divorce will be declared final only by the court. Malaysia, with Islam as its official religion, has written laws regulating the divorce under Islamic Family Law Act 1984. The said Act does not recognise instant triple talaq. The law in Philippines, while acknowledging the importance of reconciliation during the ‘iddat’ period, outlawed practice of instant triple talaq. Theocratic states of Bangladesh and Pakistan with Islam as the official religion have written laws detailing the procedure to be followed for a valid divorce.

It must be noted that the practice of ‘talaq-e-biddat’ despite being declared as unconstitutional by the Supreme Court of India in August 2017, continued unabated across the country. There was no deterrence attached to the unconstitutionality of the practice, which gave the Muslim male the leeway to continue with the practice with impunity. In order to protect Muslim women in India from this Damocles sword of harassment and summary abandonment, and to ensure deterrence against resorting to the practice of instant triple talaq, The Muslim Women (Protection of Rights on Marriage) Act of 2019, made the practice a criminal offence. Use of ‘talaq-e-biddat’ would now attract imprisonment which could extend to three years, a fine which would be decided by the court or both.

This move of providing a strong safeguard to victimised Muslim women, has raised the hackles of some in the Muslim clergy as also of some law makers, who are against the criminalisation of the practice. Some have viewed this legislation to protect Muslim women as anti-Islam and an assault on their religious practises, as guaranteed in Article 25 of the Constitution. This reasoning has been struck down by the Supreme Court of India, which had declared the practice of talaq-e-biddat or triple talaq as illegal, and held it to be not an essential religious practice.

A major inhumane fallout of the regressive practice of triple talaq is the resort to Nikah Halala which a divorced Muslim woman has to follow for reconciliation. Nikah Halala is a regressive custom which again discriminates against the female. If a divorced woman is to be reconciled with her former husband, she has to go through Nikah Halala. This means that she has to first marry another man and consummate the marriage with him. There is a waiting period up to the woman’s menses, after which the second husband gives a divorce, enabling her to marry her first husband. Victims of triple talaq have often been forced to undergo Nikah Halala, when they have been divorced by their husband in a moment of rage and later, the husband realising his error, wants her back. This has also become a tool for exploiting Muslim women, besides ridiculing her status as of being of little consequence. This was another reason why deterrence had to be built into the Muslim Women (Protection of Rights on Marriage) Act of 2019.

An instance reported in July 2018 revealed the horrific reality behind this practice. A woman was divorced multiple times and forced to consummate her marriage in the name of Nikah Halala with multiple men including her father-in-law and brother-in-law. On protesting against this nauseating behaviour, she was threatened not only to be declared as an outcast, but also threatened with her life. It is rumoured that Meena Kumari, the famous Bollywood actress of 1950s was also a victim of instant triple talaq and had to undergo Nikah Halala with the husband’s best friend. When asked about the incident, it is claimed that she said, “If in the name of religion, I have to handover my body to another man, then is there a difference between me and a sex worker?”. In the absence of any recorded evidence, it is possible that this event never took place. On the other hand, it is possible that it did, but considering the state of society in those times, it was kept under wraps. But regardless of the veracity or otherwise of the incident, such cruelty is not an uncommon occurrence and is reflective of the plight of Muslim women in India. That is why it becomes essential to see such practices as criminal offences and not just social evils. It ensures that a man respects the individuality of his wife and does not consider her to be an object that can be ridiculed or toyed around with as per his whims and fancies. It is important for men to realise that mere payment of a fine will not undo the agony a woman has to go through when she is left abandoned after a “manifestly arbitrary” pronunciation of ‘talaq’.

Talaq-ul-sunnat, as opposed to talaq-e-biddat gives the aggrieved Muslim woman time and space for reconciliation and negotiating the terms of divorce, including the maintenance. However, the instant and irrevocable nature of talaq-e-biddat immediately renders the Muslim woman helpless. In the backdrop of this reality, the criminalisation of instant triple talaq, while respecting the integrity of a woman, empowers her by providing the time and space to negotiate the terms on which to end the marriage. It is this criminalisation that fulfils the sociological goal of protecting and empowering the Muslim women community. Further, the law balances the rights of both, the aggrieved and the aggressor. Where the Muslim husband has the right to avail bail from a magistrate, the law also makes sure that the Muslim woman herself can file a complaint as can anybody related to her by blood or marriage. The law also ensures that upon the request of the aggrieved woman to a magistrate, the legal proceedings will be stopped and the dispute will be settled outside the set legal framework. The law has reiterated the right of the Muslim woman to seek subsistence allowance and custody of her children.

A similar rationale has been followed for criminalising another deplorable practice – that of dowry harassment. Over the years, thousands of women have been exploited, tortured and harassed on the pretext of dowry. In many reported cases the wife was tortured to death. It was the criminalisation of the act that deterred men and induced a behavioural change. It is nobody’s case that a legal framework facilitated a complete end to the practice of dowry harassment, but it did assist in vastly reducing the number of cases. Similarly, the triple talaq law, while creating a deterrence amongst Muslim men, will provide a legal recourse to safeguard the rights and dignity of Muslim women. A mere critique that law can be misused holds no ground when it is serving such a noble purpose.

Another critique that a jailed man will not be able to support and provide for the wife is nothing short of an absurdity. It is the irrational and unsupportive behaviour of the husband which has landed him in jail. Further, it is the responsibility of the courts to put in place a practical scheme for providing support to the Muslim woman when the husband is in jail. This is a responsibility that courts have been fulfilling since their inception not only in cases concerning rights of divorced woman, but every case involving right of the aggrieved party to receive compensation.

The exact number of triple talaq victims might not be available in the official records, but according to one of the petitioners in the Shayara Bano case, Bhartiya Muslim Mahila Andolan (BMMA), the number of reported cases is going down. Further, in an interview with a leading newspaper, the BMMA said that there has been a behavioural change where more men are now approaching the organisation for marriage counselling, where otherwise they could have resorted to the easier route of ‘triple talaq’. The Mumbai chapter of BMMA alone had received 31 complaints of oral triple talaq in 2016. After making it a criminal offence, the number of complaints went down to 6 in 2017 and 2 in 2018.

The law may be challenged for judicial scrutiny on the grounds of criminalisation. However, it is this deterrence created from imprisonment that has given hope and confidence to the Muslim women. A practice “bad in theology, but good in law” has been declared unconstitutional by the Supreme Court of the country. The impetus is now on Parliament as the representative of the collective conscience of the people, to motivate behavioural change in compliance with the legal provision while making sure the infrastructure to facilitate the said change is in place. The Muslim Women (Protection of Rights on Marriage) Act of 2019 is the manifestation of this infrastructure and conscience.

In Shayara Bano judgment, Supreme Court acknowledged that “…90 percent of the Sunni Muslims in India, belong to the Hanafi school, and that they have been adopting ‘talaq-e-biddat’ as a valid form of divorce, is also not a matter of dispute”. In a country where presumably 90 percent from a sub-community of Muslims constituting nearly 14 crore of the total population believe in the validity of instant triple talaq and regard it as an available option, it is but democratic to protect women from it, while also ensuring effective deterrence against such an abhorrent practice. The evils of patriarchy have always determined the contours of personal laws in India. However, over the decades, these evils have been reformed and codification has played an important role in this regard. It is important to consider that when the uncivil and barbaric nature of Muslim criminal law has been acknowledged and made inapplicable, the community itself should step up and reform the regressive nature of personal laws under Shariat. It is not to argue that the journey to empower Muslim women stops at criminalising instant triple talaq. There are many creases to be ironed out, but a strong policy action like this must not be downplayed. In the twenty-first century, it is unacceptable that a Muslim woman’s constitutional right to equality be held ransom to antediluvian and patriarchal personal laws. An inherently patriarchal practice cannot and should not be sustained in a world progressing towards gender equality.

References

(i) ShayaraBano vs. Union of India & Others (2017) 9 SCC 1, para 15.
(ii) @MehboobaMufti, 9:10 PM, Jul 30, 2019, available at https://twitter.com/MehboobaMufti/status/1156228065510318081?s=20
(iii) Supra note i, para 127.
(iv) Ibid, para 57.
(v) Ibid, para 28.
(vi) QaziFaraz Ahmad, July 16, 2018, “Woman Forced to Sleep With Father-in-law Under NikahHalala, Faces Death Threats for Speaking Out”, News18, available at https://www.news18.com/news/india/woman-forced-to-sleep-with-father-in-law-under-nikah-halala-faces-death-threats-for-speaking-out-1813621.html.
(vii) “Flashback: Did you know that MeenaKumari was also a victim of ‘triple talaq’?”, DNA India, Aug 22, 2017, available at https://www.dnaindia.com/bollywood/report-flashback-did-you-know-that-meena-kumari-was-also-a-victim-of-triple-talaq-2538427.
(viii) Zeeshan Shaikh, “’After ordinance, there has been a drop in number of women reporting triple talaq’: NoorjehanSafiaNiaz, co-founder of the Bhartiya Muslim MahilaAndolan, speaks to The Indian Express about the efficacy of the Muslim Women (Protection of Rights on Marriage) Bill, 2019 and the organisation’s fight to bring in a comprehensive law on Muslim marriage”, The Indian Express, June 17, 2019, available at https://indianexpress.com/article/india/triple-talaq-ordinance-supreme-ocurt-bhartiya-muslim-mahila-andolan-5783641/.
(ix) Supra note i, para 144.

Remembering the Heroes of Kargil

On 26 July 2019, the Indian nation, but more particularly the great Indian Army will commemorate the 20thanniversary of “Operation Vijay”, the code name of Kargil operations with the theme ‘Remember, Rejoice and Renew.’ Troops from three battalions will undertake expeditions to the peaks where their units had fought under impossible conditions (15000 to 18000 feet high peaks) to drive out Pakistani intruders. “We ‘remember’ our fallen heroes by revisiting their sacrifices which instils pride and respect. We ‘rejoice’ by celebrating the victory in Kargil and we ‘renew’ our resolve to safeguard the honour of the tricolour, an Army official said on the theme of this year’s celebration.

Pakistan’s Kargil adventure codenamed “Operation Badr” was planned in good time which included the construction of logistical supply routes. On more than one occasion, the army had given past Pakistani leaders (Zia ul Haq and Benazir Bhutto) similar proposals for infiltration in the Kargil region in the 1980s and 1990s, says General (Rtd) V.P Malik, the then Indian army chief.  However, the plans had been shelved for fear of drawing the nation into all-out war. Some analysts believe that the blueprint of attack was reactivated when Pervez Musharraf was appointed aschief of army staff in October 1998.

In a disclosure Nawaz Sharif, the then Prime Minister of Pakistan stated that he was unaware of the preparation of the intrusion, and it was an urgent phone call from Atal Bihari Vajpayee, his counterpart in India, that informed him about the situation. Responding to this, Musharraf asserted that the Prime Minister had been briefed on the Kargil operation 15 days ahead of Vajpayee’s journey to Lahore on February 20. Sharif had attributed the plan to Musharraf and “just two or three of his cronies”, a view shared by some Pakistani writers who have stated that only four generals, including Musharraf, knew of the plan.

In early May 1999, the Pakistan Army moved to occupy the Kargil posts, numbering around 130, and thus control the area and the highway linking Ladakh with the rest of the country.  It deployed the elite Special Services Group as well as four to seven battalions of the Northern Light Infantry (a paramilitary regiment not part of the regular Pakistani army at that time) backed by the jihadists from PoK and Punjab and Afghan mercenaries. Covertly or overtly, they set up bases on the vantage points of the Indian-controlled region.

Pakistan had opened heavy artillery fire across the Line of Control to provide cover for the infiltrators. A shepherd from Garkhon village, Tashi Namgyal, had first spotted the intruders at Jubar ridgeline in Batalik on May 3, 1999, and alerted the Army. He, along with two of his friends, had gone looking for a lost yak. While peering through his binoculars, he saw six Pakistani soldiers dressed in black Pathani outfits

Our army brought in about 250 artillery guns to clear the infiltrators in the posts that were in the line of sight. The Bofors field howitzer played a vital role and the IAF used laser-guided bombs to destroy well-entrenched positions of the Pakistani forces. It is estimated that in the war, nearly 700 intruders were killed by air action alone.

The Indian Navy also readied itself for an attempted blockade of Pakistani ports primarily Karachi port. Later on, Prime Minister of Pakistan Nawaz Sharif disclosed that Pakistan was left with just six days of fuel to sustain itself if a full-fledged war had broken out. As Pakistan found itself entwined in a tricky position, the army had covertly planned a nuclear strike on India. The US President, Bill Clinton issued a stern warning to Nawaz Sharif. Two months into the conflict, an estimated 75%–80% of the intruded area and nearly all high ground was back under Indian control.

Following the Washington Accord on July 4, where Sharif agreed to withdraw the Pakistani troops, most of the fighting came to a gradual halt. In spite of this, some of the militants still holed up did not wish to retreat, and the United Jihad Council (an umbrella for all extremist groups) rejected Pakistan’s plan for a climb-down, instead deciding to fight on. Following this, the Indian army launched its final attacks in the last week of July; as soon as the last of these Jihadists in the Drass subsector had been cleared, the fighting ceased on July 26. The day has since been marked as Kargil Vijay Diwas (Victory Day) in India. By the end of the war, India had resumed control of all territory south and east of the Line of Control, as was established in July 1972 as per the Shimla Accord.

The unparalleled bravery and fighting spirit exhibited by the Indian soldiers and officers can be gathered from the contents of the following paragraph from a PTI reportage; “ A treacherous ridgeline in the Batalik sector, Khalubar saw a major battle with 1/11 Gorkha Rifles leading the fight. Lt Manoj Kumar Pandey led the final assault and was awarded the country’s highest gallantry award Param Vir Chakra. The terrain of Batalik-Yaldor-Chorbatla sector is the most rugged after the Siachen Glacier, with heights ranging from 15,000 feet to 19,000 feet. The temperatures in winter range from minus 10-15 degrees Celsius on a sunny day to minus 35-40 degrees Celsius at night. Even in summer, the night temperatures hover around minus 5-10 degrees Celsius. In the heights of Kargil, The signs of the battles may have long obliterated, but the locals still vividly recall the Indian Army’s bravery. “We are proud of our Army which fought a deadly short war in these rugged, remote and inhospitable sectors and reclaimed all our posts,” a resident of Garkhon village in Batalik sector, TseringDolkar, told PTI”

Pakistan’s perspective

Pakistan’s first perspective of its Kargil misadventure in which a large number of her troops especially those of the Northern Light Infantry were killed besides many irregulars, isthat while there is broad consensus that Kargil-like operations are not viable in the current international environment, violence in various forms remains a legitimate—if not the only—means to achieve Pakistan’s political objectives in Kashmir.  Pakistan understands it paid heavily for its adventurism and the international community did not support the use of overt force to alter the status quo. Thus Islamabad has concluded that the use of Pakistani troops in Kargil invited political failure, and consequently, its incentive to repeat such an operation is verymeager.

The second perspective is that in the calculus of Pakistani Generals, their Kargil strategy of total secrecy of this conspiracy has succeeded in keeping the Pakistani state and the nation both in complete darkness about the ground reality of Kargil war. Pakistanis believe and so do their Kashmiri henchmen that Kargil war was part of Pakistan-sponsored so-called freedom movement in Kashmir.

The third perspective isthat Kargil-like operations are disavowed, but violence remains a legitimate tool to achieve political objectives. Given these constraints, Pakistan believes that one of its few remaining successful strategies is to “calibrate” the heat of the insurgency in Kashmir and possibly pressure India through the expansion of violence in other portions of India’s territory. Security managers and analysts widely concur that Pakistan will continue to support the insurgency in Kashmir, and some have suggested it could extend such operations to other parts of India. Incidentally, notice has to be taken of the recent statement of an ISIS operative that they have established twocentres of operation, one in South Kashmir and the other in Pakistan. A few days before the Ansar Ghazavatul Hind commander Zakir Musa was gunned down in South Kashmir he had said in a statement that they were fighting neither for the “Azadi” of Kashmir nor for Pakistan but for the Islamic Caliphate for which Kashmir was central.

The third and the most dangerous take of Pakistan from Kargil war is that ultimately not able to face India in a conventional war, Pakistan must not turn down the option of using the WMD. She has developed tactical local delivery of the dirty bomb. As we have seen in this paper, at one point of time in the Kargil war, Pakistan was thinking of using the WMD. US President Bill Clinton summoned andwarned the Pakistani Prime Minister.

While we are remembering and paying homage to our martyred soldiers on the Kargil Divas and are fondly acknowledging the sacrifices of our armed forces, we also need to remind our leaders and policy planners what take Pakistan has taken from the Kargil war and how the enemy is changing strategy of befriending inimical elements within our people for their nefarious designs. Kargil success should not make us complacent nor should we underestimate the known and unknown the Jaichands in our society.

(Prof. K.N. Pandita is the former Director of the Centre of Central Asian Studies, Kashmir University, Srinagar. Views expressed are personal.)

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Kargil: From Solitude to Surprise and Strategic Reckoning

Kargil is a small town located along the Suru River, a tributary of the Indus, in the Ladakh region. Historically, it served the purpose of transit and trading point between Skardu, Leh and Zanskar valley. Approximately 200 kilometres from Srinagar and situated on the Srinagar-Leh National Highway, the region is sparsely populated with diverse ethnic and religious groups. Isolated valleys, separated by some of the world’s highest mountains in the Himalayas, offer very tough living conditions.

Historical Context of Kargil War

Historically, Kashmir region has seen little peace as invaders have come in hordes, for plunder, loot and rape. Over time, large scale conversions have also taken place, which has changed the demography of the region. The partition of India and the subsequent accession of the state of J&K left behind its own legacy for the future generations to cope.

When partition took place, Pakistan laid claim to the princely states of Junagadh, Hyderabad and Jammu and Kashmir. As Pakistan bordered J&K, it tried to wrest the state by force, sending in hordes of armed invaders duly supported by elements of the Pakistan army. For India, it was the first bitter taste of things to come and the future did not bode well. Fearing rout of its people, Maharaja Hari Singh of Kashmir signed the “Instrument of Accession” with India, which enabled the Government of India to send in the Indian Army to restore the situation. The first unit of the Army was flown in to Srinagar airfield on 27 October 1947. The troops quickly moved out and made contact with the raiders who were on the outskirts of Srinagar. From then onwards, the raiders were steadily pushed back from the Kashmir valley.

The war however was far from over, with regions in Gilgit, Gurais, Skardu and Kargil still remaining under Pakistani control. Leh too was threatened and needed to be defended. Once again, the Indian Army played a stellar role. Leh airfield was captured by Indian troops by a small column sent under Major Prithi Chand. Under the command of Brigadier K.L. Atal, Lieutenant Colonel Rajinder Singh Sparrow deployed tanks on Zoji La Pass to open the Srinagar-Leh National Highway, a feat never attempted before by anyone in the world1. The problem of weak bridges was circumvented by removing the parts like turrets of the tanks and moving them on mules. By November 1948 the entire area was liberated. Since the matter was referred to the United Nations (UN), it established a Commission—United Nations Commission for India and Pakistan (UNCIP). On 21 April 1948, another resolution was passed to secure withdrawal of all Pakistanis and tribesmen from Jammu and Kashmir and the Government of India was requested to reduce its forces to the minimum strength, after which the circumstances for holding a plebiscite should be put into effect on the issue of accession to either India or Pakistan. In August 1948 a further resolution was adopted by UNCIP along similar lines.

There were three main clauses of the UN Resolution; the first was to accept and implement the ceasefire, the second was the withdrawal of all Pakistani troops and raiders from the entire State of Jammu and Kashmir and finally, both the countries were to reaffirm that the future of the State shall be determined in accordance with the will of the people. The Indian position on the issue remains clear – that the Instrument of Accession on 26 October 1947 gave the right to control the defence, communications and external affairs of the state to India and that the Pakistani aggression violated legal norms and ground realities.

The ceasefire came into effect from 1 January 1949, and was monitored by UN Military Observer Group India Pakistan (UNMOGIP). Approximately one-third of the J&K state remained with Pakistan, effectively dividing the state of J&K. Despite the UN Resolution, Pakistani troops and raiders continued to remain in occupied areas at many places. In the meantime, on 2 March 1948, Sheikh Abdullah was installed as Prime Minister and Maharaja was obliged to relinquish control of the state. First round of elections in Kashmir were held in 1951.

An understanding of the First J&K war is necessary because it highlighted the use by Pakistan of irregular troops, intermingled with regular forces for achieving military objectives. Pakistan’s penchant for using irregulars or nonmilitary means to attempt annexing Kashmir from India has continued since then. Terrorism from across the border and fomenting trouble in Kashmir are part of the same design. Operation TOPAC, Operation GIBRALTAR and GRANDSLAM were launched by Pakistan to annex Kashmir which involved riding on the back of militants or terrorists. The fourth round at Kargil in 1999 was yet another attempt in the same series and was a manifestation of continuing India-Pakistan hostilities over Kashmir.

Destabilisation of Kashmir in one form or the other has continued ever since the days of UN Resolution. India has been willing to resolve differences and towards this objective, the then Prime Minister of India, Shri Atal Behari Vajpayee, took the initiative and visited Pakistan from 20-21 February 1999, on the inaugural run of the Delhi-Lahore bus service in response to an invitation by the then Prime Minister of Pakistan, Muhammad Nawaz Sharif.2 Cordial discussions were held on the entire range of bilateral relations, regional cooperation within SAARC, and issues of international concern. Pakistan and India signed a Memorandum of Understanding on 21st February 1999, identifying measures aimed at promoting an environment of peace and security between the two countries and the two Prime Ministers signed the Lahore Declaration embodying their shared vision of peace and stability between the two countries and of progress and prosperity for their peoples.3

But, the peace seemed to be elusive and despite the overtures by the Indian Prime Minister, Pakistan continued with its old game. The bus from Lahore had not yet reached Delhi when the Pakistani Army, once again, began pushing in regular forces, disguised as militants, into the Kargil heights, catching the Indian establishment by surprise. This was to be a costly failure for India.

 Surprise and Detection of Intrusion

From a purely military point of view and taking into consideration the peculiar characteristics of the area, rugged, treacherous terrain and inhospitable climate, the area was divided into two separate parts based on the enemy threat and infiltration, namely the high threat and low threat areas. It was felt that any enemy movement into this area would be along the existing roads and tracks. Consequently, Indian deployment was based on this perception with strength varying according to the threat. The heavy snow accumulation along ridge lines made any movement impossible and hence the troops were deployed along various nalas and rivers to check infiltration during summers. Enemy intrusion to occupy heights and sustaining it during the harsh winters was considered impracticable and as such, the peaks were not patrolled. The planners of the operation in Pakistan took full advantage of this fact.

Pakistan’s Strategic Calculations

Intrusion in Kargil was a result of miscalculations of the Pakistani military elites who felt that the successful management of insurgency in Kashmir by the Indian Army was diluting their Kashmir cause. According to Sumit Ganguly4, an expert on India Pakistan relations, the planners were emboldened by Pakistan’s nuclear acquisition and resultant assumed annulment of Indian conventional superiority. Under the nuclear umbrella, Pakistani military decided to risk the intrusion in Kargil.

Kargil was chosen as it presented the opportunity to dominate the National Highway from Srinagar to Leh, a lifeline to Ladakh region which if denied would isolate Ladakh from Kashmir. If this was successfully implemented, holding Siachen would have become untenable. But, it was not to be; Pakistani military elites miscalculated the might of the Indian Army and the will of the people.

Pakistani diplomats denied any intrusion and presence of their army by the simple expedient of calling the infiltrators as militants who were not under their control. Dr. Shireen Mazari, from Islamabad Institute for Strategic Studies and others from Pakistan, gave several arguments during Kargil Conference held at Naval Postgraduate School in Monterey, California in 2002. The Indian side was led by Gen. V.P. Malik and the author too was in the Indian side. Participants from Pakistan argued that Kargil was the continuation of the five-decade old India-Pakistan dispute over Kashmir. According to them, a small number of senior officials in the Pakistan army planned the Kargil operation as a reaction to the Indian army’s forward military policy, which culminated in occupation of the Siachen Glacier in 1984. They contended that Pakistan’s military planners worked on the premise that occupation of un-held areas in Kargil would enable them to choke Indian defences in Leh and Siachen. Hence, it was the Siachen dispute that eventually spilled over into a new territorial dimension in 1999 – Pakistan army’s intended control over the Kargil heights.5

Pakistan further tried to mislead the world and the lies made progressively were proved wrong in time:

l   Initially Pakistan maintained that “Militants had infiltrated in Kargil and it was not a military intrusion.” Capture of Prisoners of War and the military equipment and personal diaries indicated Northern Light Infantry troops were dressed as Mujahideen who occupied the peaks. Pakistan denied Northern Light Infantry was part of regular army.

l   Subsequent lie was, “Kargil intrusion was an initiative taken by local military commanders who adventured to occupy a few places close to the LoC but found unheld peaks resulting into inching forward unopposed till they found themselves looking down at the National Highway around Kargil.”  In her recent publication Naseem Zehra maintains that, “Operation KP (Koh Paima), planned as a smooth, unhindered military operation in IHK, had turned into a Pakistan-India mountain battle of attrition. The die had been cast. Op Kargil had turned into the Battle of Kargil.”6

Kargil War

Kargil had been comparably peaceful with little or no incidents worth reporting taking place for long periods. Winter also meant vacating inaccessible posts for the season. Intelligence inputs did indicate some heightened activities across the LoC in this region but it did not raise any alarms and surprise and deception used by Pakistan was successful in taking advantage of it. Patrols in Batalik sector did notice some movement in the area when a shepherd corroborated having seen presence of foreign troops in Banju in the month of May 1999. Quick reaction teams and patrols were rushed to several places confirming the worst of the doubts.

Indian military commanders read the inputs and realised the gravity of the situation. Although the troops were rushed from within the available resources, it was not enough. The number of peaks that were occupied in Batalik, Yaldor, Kargil and Mashkoh was large. Conventional military wisdom is to apply 3:1 ratio of troops for attacking enemy in the plains but in the mountains and especially high altitudes, the ratio can go as high as 9:1.  It would take time to mobilise fighting echelons to arrive. Need for acclimatisation for few days compounded the situation. Attacks had to be launched soon to prevent the enemy firming up on the peaks. For a well coordinated attack, ground troops needed the support of the artillery and the Air Force.

Dynamics of War, Diplomacy and Indian Restraint

Strategy to deal with the situation presented a dynamic that needed swift and firm action but demanded restraint to be exercised. The movement of artillery across Zoji La would take time. Air effort could be provided immediately but the decision to use the Air Force against the militants and crossing of the LoC or violation of the Pakistan air space could only be taken with deliberations by the Centre as the situation could escalate and a localised battle could turn into a full-fledged war. A war between two nuclear-armed neighbours was a source of concern for the international community. Diplomacy thereafter went into overdrive. ‘Firm and swift response but with restraint’ became the mantra to deal with the situation.

Indian Air Force began participating in the operations from the end of May 1999. The intruders shot down an Indian helicopter in Dras area on 28 May and thereafter the IAF decided to launch airstrikes to degrade the well entrenched enemy on the peaks. During the operations, India lost two MiG 27 air crafts to hostile fire. One of the pilots, Flight Lieutenant K. Nachiketa was taken prisoner of war and the other, Squadron Leader Ajay Ahuja, unfortunately, did not survive.

The young soldiers of the Infantry displayed exemplary valour and grit and rose up once again to show their true mettle. The first breakthrough came at Tololing in Dras sector and thereafter, there was no looking back.7 An Israeli media man in Kargil commented that it was only the Indian Infantry who could breach the strong defences at such high altitudes under freezing conditions8. Pakistanis were first driven out of Dras, then Batalik, Yaldor, Chorbat La and Mashkoh. By the first week of July 1999, it was clear to Pakistan that a rout of their forces was complete if they continued to hold on to their positions.

Prime Minister of Pakistan, Nawaz Sharif flew to the United States on 4 July 1999 to seek US intervention and halt of Indian operations, but Indian diplomacy too was in an overdrive. None of the countries condemned India’s response; instead they tacitly approved it. Pakistan stood isolated and beaten very badly. Upon ceasefire Pakistani troops were allowed to withdraw. Pakistan violated ‘DGMO’s Understanding’ several times during their withdrawal. Operation Vijay in Kargil finally terminated on 26 July 1999.

Aftermath of the Kargil War

Loss of face in Kargil resulted in turmoil in Pakistan and a military coup awaited Nawaz Sharif on his return. General Pervez Musharraf took charge as the President of Pakistan. Pakistan Army was yet again exposed. Pakistan as a country had lost but the army in Pakistan had won in their designs to own a nation. The history of Pakistan would indicate that the prosperity of its people dips each time military rulers have usurped power and this time it was no exception. Pakistan’s economy has nosedived to such an extent that today, Pakistan is out with a begging bowl to survive. It is not difficult to conclude that the current realty is a direct outcome of military rule in Pakistan for long periods of time. Pakistani military officers have become the landlords of large tracts of land and the military has taken control of large corporations. Even though Kargil was a decisive diplomatic and military defeat of Pakistan, it has still not abandoned harbouring, mentoring and pushing terrorists across the LoC into Kashmir.

Strategic Reckoning

On the Indian side, the victory was euphoric but loss of lives and casualties was tragic. Indian Army had restored the pride of the country and Indian diplomacy had very successfully secured the international opinion in favour of the country. Introspection however was needed regarding the failure of intelligence that cost the nation gravely. The Government of India appointed a Kargil Review Committee (KRC) a few days after the Kargil war was over. The Report brought out grave deficiencies in India’s security management system, particularly in the areas of Intelligence and Border and Defence Management. Following the KRC Report, Prime Minister of India constituted a Group of Ministers (GoM) to go into the Report and formulate specific proposals for implementation.9

Based on the recommendations of the GoM, several issues pertaining to the national security, such as setting up of Integrated Defence Staff, efforts to integrate the intelligence agencies and having a full time National Security Advisor have been made or addressed. The progress on the organisational changes with respect to appointment of a Chief of Defence Staff (CDS) to provide single point military advice to the Government, to improve the jointness and resolve inter-service doctrinal, planning, policy and operational issues however remain.10 The pace of modernisation of defence forces has been slow and deficiencies in the inventories must be made up and the process is to be expedited. Kargil war threw up many security challenges but none of them could stand in front of the competence, courage and determination of the armed forces; will of the government, and the support of the nation.

(An Infantry Officer, Col Satish Tyagi (Retd) was commissioned in the RAJPUT Regiment and has taken part in the IPKF in Sri Lanka and in Operation Vijay in Kargil. He had authored “The Fourth Estate: A Force Multiplier for the Indian Army” post Kargil besides contributing several articles and his next book “Kargil: As It Happened; Eye Witness Accounts of the War” is due for release shortly.)

References:

1     Tyagi Satish, “Kargil: As It Happened-Eyewitness Accounts of the War”, USI of India: Speaking Tiger

2     https://mea.gov.in/in-focus-article.htm?18997/Lahore+Declaration+February+1999, Accessed on 23 May 2019.

3     https://mea.gov.in/in-focus-article.htm?18997/Lahore+Declaration+February+1999,  Accessed on 23 May 2019.

4     Interaction of author with Sumit Ganguly during the conference on “Asymmetric Conflict in South Asia: The Cause and Consequences of the 1999 Limited War in Kargil” at NPS, Monterey, CA, May 29 – June 1, 2002.

5     Author’s notes during the conference on “Asymmetric Conflict in South Asia: The Cause and Consequences of the 1999 Limited War in Kargil” at NPS, Monterey, CA, May 29 – June 1, 2002.

6     Naseem Zehra, “From Kargil to the Coup; the Events that Shook Pakistan”, www.bookmaza.com, PDF version circulated on Social Media .

7     Tyagi, SC, “Kargil As It Happened: Eyewitness Accounts of the War”, USI of India publication, Speaking Tiger.

8     Israeli media person interacted with the author in Batalik sector.

9     GoM Report on National Security.

10  “Defence planning remains tardy…inventories of the armed forces are deficient in many items even now”, Times of India, June 5, 2019

(This article is carried in the print edition of July-August 2019 issue of India Foundation Journal.)

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