As an intellectual fountainhead and founder of what is termed as “Hindu nationalism,” Vinayak Damodar Savarkar has emerged as one of the most controversial Indian political thinkers of the 20th Century. His writings on Hindutva have generated a great deal of attention for long and he has been eulogized and demonized in equal meausre for being the ideologue of Hindutva. In this paper, I explore the role and contribution of Savarkar as a revolutionary figure and briefly interpret the impact of his philosophy and writings on India’s revolutionary movement. The interpretations that we have had of Indian revolutionary thought are situated almost always within a Western Marxist lineage. Hence it becomes difficult for historians to accept that Savarkar was both a revolutionary and someone who also contributed to the making of a revolutionary thought. It would not be, in my opinion, an exaggeration to state that any history of revolutionary thought in early twentieth century India must examine the role of Savarkar’s works. Savarkar’s revolutionary inspiration was Italian political theorist Guiseppe Mazzini, rather than Karl Marx and other thinkers of the Marxist ideology. Savarkar used history as a tool and believed in writing about the contributions of past revolutionaries to stir and motivate individuals into armed fight against colonial injustices. He never wielded a weapon himself, but argued instead that writing histories was a necessary step in overthrowing colonial empires.

The important platform for pan-India anti-colonial voice had been the Indian National Congress, founded in 1885. But by the time of 1905 and the proposed Partition of Bengal, we see a distinct schism develop within the Congress wherein several nationalist leaders were becoming increasingly impatient with the attitude and responses of the Congress to the colonial power.

I argue here that the roots of this division in ideology could be traced back to the 1857 uprising, after which a diverse group comprising intellectuals, poets, mystics, philosophers, novelists, reformers, and spiritual leaders from around the country cultivated a distinctly Hindu anti-colonial nationalist discourse that combined inward spiritual development with external political freedom. This ideology emerged from the angst that despite her ancient culture and civilization, India had allowed herself to be defeated by a foreign country with a far inferior civilization. The spread of western attitudes among the small but growing middle class in urban colonial India only made matters more urgent. Mythological and historical imageries gave inspiration-­‐ be it, an exiled ruler like Lord Rama, a teacher of duty like Lord Krishna, the heroic guerilla chieftain Chhatrapati Shivaji who conquered the might of the Mughals; and to this was added the symbolism of the India as a chained and captive mother beseeching her young sons to rescue her. These powerful iconographies inspired an entire generation of Indians into action.

The moderates under leaders such as Gopalkrishna Gokhale favoured a regionally restricted peaceful protest and talks, to resolve colonial domination of India. This was stoutly opposed by the ‘extremists’ such as Lala Lajpat Rai, Bipin Chandra Pal and Bal Gangadhar Tilak, who denounced the Bengal partition in the strongest terms and spearheaded the nationwide Swadeshi or self-rule movement. Savarkar was a young undergraduate law student then and had come to the attention of the nationalists, especially Bal Gangadhar Tilak who considered Savarkar as his protégé, with his fiery speeches against partition. His affiliation with the extreme wing of nationalists was apparent even from his school days when, after being deeply affected by the execution of the Chapekar Brothers of Poona for assassinating British officials, he organized a secret revolutionary society called Rashtrabhakta Samuha, which later became the ‘Mitra Mela’ or the society of Friends in 1901 in his home town Nasik. There arefew original documents concerning this society because the members destroyed them all to prevent them falling into the hands of the British.

Savarkar believed in turning history and historical words into a tool or political weapon. He insisted that members of the Mitra Mela read works dealing with major historical figures, biographies of Mazzini, Garibaldi, Napoleon

Bonaparte. His dream was to produce an Indian nationalist, even among the villagers, who had a historical and revolutionary consciousness that was educated and inspired by these global revolutionary leaders.

Tilak recommended Savarkar’s name to that great colossus for all young Indian nationalists, Shyamji Krishna Varma, who gave scholarships to Indian students involved in revolutionary activities, to come and study in Europe. Shyamji had founded a monthly called the Indian Sociologist in 1905 that produced critical essays on the colonial government of India. He owned a house in Highgate called India House, which became a hostel of sorts for Indian students and turned into the hotbed for young Indian revolutionaries, many of whom were inspired by the movements taking place in Russia, Italy and other parts of Europe. The India House became a confluence of several leaders of the times which included, along with Savarkar, stalwarts such as Bhai Paramananda, Lala Hardayal, Virendranath Chattopadhyay, VVS Aiyar, Gyanchand Varma, Madame Bhikaji Cama, P.M. Bapat (Senapati), PT Acharya, WV Phadke, Madanlal Dhingra, Dr Rajan, KVR Swami, Shukla, Sukhsagar Dutta, Sikandar Hyat Khan, Asaf Ali, Khan of Nabha etc. 1 They held weekly meetings and celebrated anniversaries of great Indian heroes. The Scotland Yard that tracked their every movement within and outside London placed these young students under intense surveillance. 2

It was in 1906, that Savarkar left for London and immediately got involved in anti-colonial revolutionary activities from there. He worked with Shyamji Krishnavarma and other students to form a secret underground revolutionary society called the ‘Abhinav Bharat Society’. All members were required to take an oath declaring their personal commitment to the revolutionary objectives of the Society:

1 See Dhananjay Keer, Veer Savarkar

2 Detailed account of the surveillance of Indian revolutionaries is given by Richard Popplewell (1988), The Surveillance of Indian revolutionaries in GreatBritain and on the Continent, 1905–14, Intelligence and National Security, 3:1, 56-­‐76,

I solemnly and sincerely swear that I shall from this moment do everything in my power to fight for independence…convinced that swarajya can never be attained except by the waging of a bloody and relentless war against the foreigner…and with this object, I join the Abhinav Bharat, the revolutionary society for all Hindustan.3

Within six months of reaching London, he translated Mazzini’s biography to Marathi. Over the next two years from 1908 to 1909, he completed his own monumental and meticulously researched history from the British Library archives of original East India Company documents, on the 1857 uprising terming it as “India’s First War of Independence.” He dismissed all the colonial arguments about the causes of 1857 of English historians of the greased cartridges, the economic motives of the elite or the doctrine of lapse etc. and instead powerfully argued that a nationalist ideology was what motivated the uprising and that it led to the end of Hindu-Muslim enmity towards achievement of a common cause. “Can any sane man,” he asked, “maintain that an all embracing Revolution could have taken place without a principle to move it? Could the vast tidal wave from Peshawar to Calcutta have risen in blood without a fixed intention of throwing something by means of its force.”4 He writes about revolutions in general, thus:

Every revolution must have a fundamental principle…A revolutionary movement cannot be based on a flimsy and momentary grievance. It is always due to some all-­‐moving principle for which hundreds and thousands of men fight… The moving spirits of revolutions are deemed holy or unholy in proportion as the principle underlying them is beneficial or wicked…In history, the deeds of an individual or nation are judged by the character of the motive . . . To write a full history of a revolution means necessarily the tracing of all the events of that revolution back to their source-­‐ “the motive”.5

3 Vinayak Chaturvedi (2013) A Revolutionary’s Biography: The Case of V DSavarkar, Postcolonial Studies, 16.2, p 128.

4 Savarkar,The Indian War of Independence(1909), p 3. 5 Ibid.p 4.

The ‘motives’ for Savarkar that he describes above, rested on the dual principles of swarajya and swadharma, which he defines as the love of one’s country and the love of one’s religion, respectively. For him, these were the quintessential guiding principles for all revolutionaries, both in India and outside, and believed that without these principles a true revolution was not possible or feasible. The book did not call for widespread revolution, mayhem, or anarchist violence in India. He was not a reckless revolutionary, but a strategist who advised his followers to strike when the iron is hot. Savarkar, instead, intended to give India a history of her own, to change the subject of history from the colonial state to a national state. In his introduction to the book he made clear that ‘history’ did important work for a nation and a national community, as he recognized it had done for England. He was going to do the same for India, by challenging the popular English accounts of our history. An informant leaked themanuscript of this book to Scotland Yard, and the work was banned before it was even published. It was perhaps one of the only literary works of the world to have this rare distinction of being proscribed even before it was published!

It was Savarkar’s intellectual output on revolutions and his philosophy that scared the British Government a lot more than his actual revolutionary acts, which were significant, but not as much as is made of them. Even as Savarkar was engaged in reading or smuggling bomb-making manuals and guns into India, his literary output and consequent ideological reach were much more dangerous. His associates Madame Bhikaji Cama and Sardar Singh Rana were sent by him to represent India at the International Socialist Congress held on 22 August 1907 at Stuttgart in Germany. They unfurled the Indian flag of independence designed by Savarkar and wanted to move a resolution declaring British rule, as disastrous but could not. But Cama’s speech was fiery and she made a passionate case for freeing India.6 Total freedom is what they postulated and no collaborations negotiations etc as the moderates wanted. Savarkar dispatched members of the Abhinav Bharat from India House to Paris to learn about bomb making, and while he had grandiose plans for sending some members to Belgium, Switzerland and Germany for military training, they never

6 For details of all these revolutionary activities see Dhananjay Keer, VeerSavarkar

materialized. He did, however, make copies of bomb manuals, which he sent to India, along with a few pistols for political assassinations. These were used by several revolutionaries such as Khudiram Bose, Prafulla Chakravarti, Kanailal Dutt, Satyendra Bose and by a seventeen-year-old AnantKanhere to assassinate a colonial official in Nasik. When caught, Kanhere implicated, among others, the Savarkar family. As a result, Savakar’s older brother and some family friends were arrested and sentenced to transportation for life in the Andaman Islands. Savarkar’s younger brother was also arrested in connection with a different conspiracy case in the same year. Back in England, Savarkar and other members of India House were already under surveillance. Despite this, Savarkar managed to inspire Madanlal Dhingra to assassinate former Viceroy Lord Curzon, Lord Morley and British MP Lord Curzon Wyllie. He succeeded in killing Curzon Wyllie in 1909 and was put to trial and eventually hanged. In a moving article in BandeMataram that was started by Madame Cama, Lala Hardayal wrote: “In times tocome, when the British Empire in India shall have been reduced to dust and ashes, Dhingra’s monuments will adorn the squares of our chief towns, recalling to the memory of our children the noble life and noble death of one who laid down his life in a far-off land for the cause he loved so well.” 7

On 13 March 1910, Savarkar was arrested on multiple criminal charges, including ‘procuring and distributing arms’, ‘sedition’, and ‘waging war against the King Emperor of India’. The unspoken fear in all the surveillance documents is that sedition and its effects were the real threat the colonial police had to contain. In 1911, the government opted to send Savarkar to India for his trial, rather than holding it in Britain. However, when the ship carrying Savarkar temporarily docked at Marseilles, France, Savarkar attempted to escape, jumping off the ship and swimming to shore. Unfortunately he was caught due to the treachery of an insider and was eventually sent back to India, tried and later given the maximum sentence of two transportations for life to the Kala Pani Cellular Jail in Andamans, totaling 50 years! Despite passing the law examination, he was never called by the Bench to practice and his degrees were all withdrawn once he was deported to Andamans. Till his conditional release in 1924, he was put to the greatest human tortures at Kala Pani, which are

7 Dhananjay Keer, Veer Savarkar, Chapter 4

horrifying to say the least. 8

C.A. Bayly suggests that intellectuals, like Savarkar, do not really fit into neat classifications of ‘Right or Left’, which, in any case, were probably ‘anachronistic’ for this period9 . In other words, ideas were circulated and received along multiple political trajectories forming complex ‘rhizomal networks’ on a global scale.10 And, because these networks generally functioned ‘underground’ and were classified as ‘criminal’ by states and empires, fathoming the intricate connections that made up the contemporary intellectual economy is often herculean.11

Quite curiously, Savarkar wrote a biography of himself as a revolutionary, written in the pseudo-name of Chitragupta, the mythical accountant of Yamaraj the Lord of Death, entitled “Life of Barrister Savarkar”. In other words, for Savarkar, just like works such as the history of 1857 or later his seminal work, Hindu Pad Padshahi on Maratha history, writing his own biography was meant toinfluence and inspire fellow-revolutionaries. Not surprisingly, the British government immediately banned the text, stating it to be a seditious text. But the book did manage to find light of day into the hands of sympathizers across the political spectrum, though in all its multiple reprints no one ever came to know who the author was. Savarkar also chose never to make this public till the time of his death in 1966 and even after India’s independence in 1947. It was only in the 1987 edition, in the preface that it was revealed that Chitragupta was none other than Savarkar and it was the penname he used. Almost every page has a reference to him as a “leader of the revolution.”

8 See Savarkar’s My Transportation for Life for details of the tortures in the

9 Bayly, Recovering Liberties, p 311. 10 Anderson, Under Three Flags, p 4.
11 Maia Ramnath,Haj to Utopia: How the Ghadar Movement Charted Global
Radicalism and Attempted to Overthrow the British Empire, Berkeley: Universityof California Press, 2011; and Daniel Bru ̈ckenhaus, The‘ TransnationalSurveillance of Anti-­‐Colonialist Movements in Western Europe, 1905-­‐1945’, unpublished PhD thesis, Yale University, 201

But interestingly, Vinayak Chaturvedi mentions that in an interview in 1976, Durga Das Khanna, former Chairman of the Punjab Legislative Council and himself a revolutionary, described how when he was interviewed by Bhagat Singh and Sukhdev Thapar for admission into the Hindustan Socialist Republican Association (HSRA), he was specifically asked by Bhagat Singh if he had read this book ‘Life of Barrister Savarkar’. So it almost seemed like an entry criteria for the HSRA recruits! Bhagat Singh is supposed to have been personally influenced immensely by Savarkar’s work on the 1857 Revolution as well. Copies of the book were found with almost all the members of the Lahore Conspiracy Case in the 1930s. 12

In conclusion, Savarkar’s own words summarize his philosophy of a revolution and its objectives:

Whenever the natural process of national and political evolution is violently suppressed by the forces of wrong, then revolution must step in as a natural reaction and therefore ought to be welcomed as the only effective instrument to re-enthrone Truth and Right. You rule by bayonets and under these circumstances it is a mockery to talk of constitutional agitation when no constitution exists at all. But it would be worse than a mockery, even a crime to talk of revolution when there is a constitution that allows the fullest and freest development of a nation. Only because you deny us a gun, we pick up a pistol. Only because you deny us light, we gather in darkness to compass means to knock out the fetters that hold our Mother down.13

(This paper was presented by Dr. VikramSampath at the national seminar on ‘Revisisting Indian Independence Movement’ organised by India Foundation at New Delhi on 18th March, 2017.Dr. Vikram Sampath is a Bangalore based author/historian/political commentator, Sahitya Akademi award winner, and Founder-Director of the Archive of Indian Music and the Bangalore Literature Festival)

(This article was published in July-August 2017 issue of India Foundation Journal.)

12 Vinayak Chaturvedi (2013) A revolutionary’s biography: the case of V D Savarkar, Postcolonial Studies, 16:2, 124-­‐139

13 Dhananjay Keer, Veer Savarkar, p 63

References

Bakhle, Janaki. ‘Savarkar (1883-­‐1966), Sedition and Surveillance: The Rule of Law

Bayly, C .A. Recovering Liberties: Indian Thought in the Age of Liberalism and

Chaturvedi, Vinayak. (2013) “A Revolutionary’s Biography: The Case of V D

Chitragupta. Life of Barrister Savarkar. Madras: B G Paul & Company Publishers, 1926.

Keer, Dhananjay. Veer Savarkar. Bombay: Popular Prakashan, 1988.

Savarkar, Vinayak Damodar. Indian War of Independence (1909). Delhi, 1986, 10th edn.

—. My Transportation for Life, Selected Works of Veer Savarkar Vol 2, Chandigarh: Abhishek Publishers, 200

What lies at the philosophical core of India’s struggle for freedom from British rule? What were Bankim Chandra Chattopadhyay’s, Vivekananda’s and Aurobindo’s thoughts about the idea of the ‘mother’?
These three men and their idea or image of the ‘mother’ are deeply, indeed irretrievably, intertwined in India’s struggle for freedom against British colonial rule. This has rarely ever been spoken about or studied because of the spiritual connotations of their beliefs but it is impossible to really understand the philosophical underpinnings of the Indian independence movement without understanding the subtle interplay of these philosophies which were most profoundly understood by Mahatma Gandhi and which he used to turn a tired, elite petitioning body, the Congress, into a mass movement for India’s freedom from colonial rule.
The Indian National Movement is seen as a momentous political campaign which concluded with a grand, if pyrrhic, victory with the division of the land.It is often said that the imagination of the nation called India began in 1947 but it was perhaps in a sense the conclusion (and not the beginning) of the original nation imagined, the Bharat of yore, which ended in 1947, breaking up into today’s South Asia.
To understand the spirit of this imagination, then, is to understand the philosophical pillars on which it stood, indeed stands. To contemplate these foundations we could delve into writings of antiquity but for the narrow purpose of this article, I wish to draw a simple, more contemporary straight line connecting the founding philosophies of what a struggle for freedom really means from the publication of Ananda Math to Swami Vivekananda’s 1893 appearance in Chicago and his subsequent short life till 1902, and the teachings of Rishi Aurobindo, who, born as he was in 1872, was in a sense the final inheritor of this philosophical tradition.
Ananda Math, the story of forest-dwelling ascetics, by Bankim Chandra Chattopadhyay, holds within it the seminal song of freedom in India, VandeMataram (the root of the word Vande, that is ‘Vand’, of course, comes from references in the Rig Veda, and it means ‘to pay homage’). In seeing the nation in the form of bounteous mother, it carries within it an ancient liturgical tradition of reverence of the nature, of its munificent gifts, and the worship of sacred geographies. As Harvard’s Diana Eck has reminded us, it is through the footsteps of pilgrims, walking from shrine to shrine, that the ‘civilisational state’ (a term first used by the Chinese scholar Zhang Weiwei in context to China, but which is equally, if not more so, applicable to India) of Bharat was first imagined.
It is VandeMataram that Rabindranath Tagore sang at the 1896 Calcutta session of the Congress. When BikajiCama made the first version of the Indian national flag in Stuttgart in Germany in 1907, it had VandeMataram written in the middle band. LalaLajpatRai started a journal called VandeMataram from Lahore. HiralalSen made India’s first political film in 1905 which ended with the chant. MatanginiHazra’s last words as she was shot to death by the British were VandeMataram.
All of Vivekananda’s references to his country talk about the idea of the mother, taken of course also from the worship of his spiritual master Ramakrishna Paramhansa who sang incessantly to the Mother Goddess Kali. In fact, Vivekananda started the tradition of referring to women as ‘mother’ which continues in the Ramakrishna Mission even today. In a letter from America, Vivekananda writes that when he began to refer to women as mother in the West, a lot of women were astonished, some even offended! But that idea of depiction remained resonant and true. It was the source for sustenance for revolutionaries of that time, including Vivekananda. In 1946, in Guwahati, Mahatama Gandhi urged that “Jai Hind should not replace VandeMataram”. He reminded everyone present that VandeMataram was being sung since the inception of the Congress. He supported the Jai Hind greeting, but suggested that this greeting should not be to the exclusion of VandeMataram.
Vivekananda’s youngest brother, BhupendranathDutta, who turned to militant nationalism, “regarded Vivekananda as one of the direct sponsors of militant nationalism” against the British Raj. Vivekananda himself is known to have said that Bengal was “in need of bomb and bomb alone”. There is also some evidence that Vivekananda wanted to gather and rouse the princely states against the British. He even met ‘Sir Hiram Maxim, the bomb-maker’ to that end but realised that the country was not ready for such an armed revolt against the colonial rule at that time. He told the revolutionary Jyotindranath Mukherjee, aka BaghaJatin, “India’s political freedom was essential for the spiritual fulfillment of mankind”.
Aurobindo is the direct inheritor of this tradition. Not least because his is one of the most famous translations of VandeMataram to English. Little wonder, then, that it is Aurobindo, who wrote so movingly about the Indian Renaissance, gave India and its independence movement the concept, in June 1907, of “legitimate patriotism”.
He said: “If it is patriotic for an Englishman to say, as their greatest poet has said, that this England never did nor shall lie at the proud feet of a conqueror, why should it be unpatriotic and seditious for an Indian to give expression to a similar sentiment? If it is highly patriotic for a Roman “to die in defence of his father’s ashes and the temples of his gods”, why should it be madness and senseless folly for an Indian to be stirred by a similar impulse? If “self-defence is the bulwark of all rights”, as Lord Byron has said, why should an Indian journalist be charged with an attempt to incite violence when he asks his countrymen of East Bengal to defend the honour of their women at any cost? If Campbell is right in saying that virtue is the spouse of liberty, why should an Indian be exposed to the menace of siege-guns when entering on a legitimate and lawful struggle for the recovery of his lost freedom? If each noble aim repressed by long control expires at last or feebly mans the soul, why should not our countrymen benefit by the advice of Goldsmith and begin to chafe at the attempt to prolong this alien control? If Tennyson is justified in taking pride in his country which freemen till, which sober-suited Freedom chose, where girt with friends or foes, a man may speak the thing he will, where freedom slowly broadens down from precedent to precedent, why should it be criminal on the part of an Indian to imagine a similar future for the land of his birth?”
Aurobindo’s spiritual consort, the French ascetic MirraAlfassa, of course took the name of The Mother.
It is, then, my argument that the spirit, indeed the reverberating core, of the Indian National Movement lies in this tale of three mothers as defined by Bankim Chandra Chattopadhyay’sAnanda Math, Swami Vivekananda and Rishi Aurobindo. If you will allow me a humorous aside  - as every Indian knows, there is no freedom without the mother.
(This is the summary of the talk delivered by HindolSengupta, Editor-at-large, Fortune India at the national seminar on “Revisiting Indian Independence Moment” organized by India Foundation at New Delhi on 18th March 2017.)
(This article is published in the July-August 2017 issue of India Foundation Journal.)

India has turned to South East Asia to accelerate national economic development. Of late, South East Asia has become a pivotal foreign policy priority for the Indian government. It is worth recollecting thatIndia embarked on a historic Policy of Economic Reforms in 1991 and subsequently on its Look East Policy (LEP) – a dynamic foreign policy initiative which sent out a strong and positive signal indicating the country’s genuine interest in forging strategic and economic cooperation with South East Asian countries.The policy, referred to as LEP,aimed to enhance infrastructural development and expansion of transportation network inorder to bring better connectivity to the Northeast region, with the twin objectives of a) providing better security and b) facilitating developmental process. However, since the inception of this initiative, there has been no significant and visible forward movement. This stagnation, therefore, has resulted in Prime Minister Narendra Modi giving further impetus by kick-starting the innovative policy of ‘Acting East’, whichis complementary to India’s Asia Policy that seeks to galvanise relations with the economically vibrant region.

Within the region, China has become more assertive vis-a-vis its territorial claims in the oil and gas – rich South China Sea which is also a major international maritime trade route. The US President Donald Trump has given mixed signals about his commitment to the region, thereby creating strategic uncertainties and putting a question mark over the ability of the US to be the leader here . In the face of the political challenges confronting East Asia and the increasing uncertainty in the relations among the major powers, there has been a greater demand for India to play an increased security role in the region. At the same time, India also needs to give a strong signal about its commitment to a long term presence in the Asia Pacific.

The year 2017 marks 50 years of ASEAN’s existence, 25 years of ASEAN-India Dialogue Partnership, 15 years of India’s Summit Level interaction with ASEAN and 5 years of India-ASEAN Strategic Partnership. The Plan of Action (POA) 2016 – 2020 to sustain the India-ASEAN Partnership for ‘Peace, Progress and Shared Prosperity’ focuses on political and security cooperation, economic cooperation and socio-cultural cooperation. India has been actively associated with security cooperation initiatives of the ASEAN nations plus Australia, China, Japan, New Zealand, Republic of Korea, Russia and the United States through the ASEAN Regional Forum (ARF), the ASEAN Defence Ministers’ Meeting (ADMM) and the Expanded ASEAN Maritime Forum (EAMF). India established a Diplomatic Mission to ASEAN (2015) to widen and deepen the India-ASEAN Strategic Partnership. The way India contributes to building a dynamic strategic equilibrium and power equation in the Asia-Pacific region through bilateral and multilateral institutional frameworks stands testimony to its commitment to building a viable ASEAN-centric security architecture .

Enhancing connectivity is crucial to deepening India’s diplomatic, economic and cultural ties with the extended neighbourhood. India has advocated fast-tracking a host of connectivity projects that will accelerate regional integration and endorsed the Master Plan on ASEAN Plus Connectivity (MPAC). Geopolitical considerations dictate India to open up the North Eastern Region to South East Asia and capitalise on enhanced connectivity through land, water and air routes. The Act East Policy envisages that North East Region (NER) must be developed with adequate infrastructure and human resource capital in order to facilitate people-to-people contacts on social, cultural, academic and economic platforms. The idea is about physical connectivity to be complemented with soft connectivity. The connectivity projects like the Asian Highway and Trans-Asian Railway shall be complemented by cross-border transport projects, includingIndia-Myanmar-Thailand Trilateral Highway and Kaladan Multimodal Transit Transport Project, linking India and Southeast Asia. Increasing the maritime and air connectivity between India and ASEAN, transforming the connectivity corridors into economic corridors, and extension of India – Myanmar – Thailand trilateral Highway to Cambodia, Laos and Viet Nam will facilitate movement of passenger and cargo vehicles across the region. Asian Development Bank (ADB) is funding the connectivity projects in India’s Northeast, including the Imphal-Moreh (NH39) highway. Construction of railway from Jiribam to Imphal via Tupul is expected to be completed by 2017.It would be quite feasible to build an economic zone around Moreh (India) and Tamu (Myanmar) border area which is the junction of the land connectivity corridors. With connectivity advantage and access to markets, such economic zone can convert one of Asia’s laggard regions into a versatile growth centre. Development of economic corridors in the region will help attract investment and stimulate economic growth in India’s southern and north eastern regions, Myanmar and Cambodia, Laos, Myanmar and Vietnam (CLMV) countries. Strong backend integration through multimodal links between the eastern, north eastern and south eastern parts of India is essential to reap the benefits of India-ASEAN integration. It is important to make the soft side of connectivity, such as harmonisation of the political, legal and regulatory regimes between India and ASEAN, go together with the development of hard connectivity. Prime Minister Narendra Modi displayed a foreign policy master stroke by announcing a “Line of Credit of USD 1 billion to promote projects that support physical and digital connectivity between India and ASEAN and a Project Development Fund with a corpus of INR 500 crore to develop manufacturing hubs in CLMV countries at the 13th ASEAN-India Summit held in Malaysia in November 2015. It is the way forward for regional trade and economic partnership between the two sides.

ASEAN-India trade and investment relations have been growing steadily. ASEAN is India’s 4th largest trading partner, accounting for 10.2percentof India’s total trade. India is ASEAN’s 7th largest trading partner. As per data maintained by Department of Economic Affairs (DEA), Foreign Direct Investment (FDI) flows from ASEAN into India between April 2000 and May 2016 was estimated at USD 49.40 billion, while outflows from India to ASEAN countries, from April 2007 to March 2015, was about USD 38.67 billion. The ASEAN-India Agreements on Trade in Service and Investments came into force on 1 July, 2015. Both ASEAN and India are also working on enhancing private sector engagement. India and ASEAN need to develop and implement a comprehensive trade facilitation programme that aim at simplifying, harmonising, and standardising trade and integrating customs processes. The External Affairs Minister while informing the Parliament about Prime Minister Narendra Modi’s proactive and innovative policy of ‘Act East’ stressed that India needs access to capital, technology, energy, markets, a peaceful neighbourhood and a global trading system .

The Act East Policy can significantly factor in ending the geographical isolation of India’s North Eastern Region and transforming it into a bridgehead for India to the booming ASEAN markets. Given the economic potential as well as the geo-political importance of the region vis-a-vis a dynamic South East Asia, New Delhi’s perception of the North East has changed. The focus is now on economic development and addressing ‘trust deficit’ rather than seeking military solution to restore stability in the region. The opening up of the landlocked NER economically to ASEAN countries is considered as a potent means of conflict transformation. The fact that there is a growing people-to-people interaction and congruence of strategic interests as wellwill go a long way in the global effort to enhance regional integration. In essence, India chants the connectivity ‘mantra’ to galvanise relations with ASEAN. Connectivity is much more than geographical and physical. What sustains India’s relations with ASEAN are (soft) ‘cultural and spiritual connections, grounded in history and a shared civilizational space’.

(Dr.ShristiPukhremis a Senior Research Fellow at India Foundation.)

(This article is carried in the July-August 2017 issue of India Foundation Journal.)

Introduction
In an increasingly flat and un-safe world, defence Research and Development (R&D) delivers technological superiority over the adversaries, reduces import dependencies andaugments the capabilities of the forces to fight and deter threats. In India, the scene in defence R&D remains bleak, largely due to low levels of investment, lack of private sector participation, poor work culture in state owned R&D laboratories and absence of an innovation eco-system. This has led to skepticism on India’s ability to be a military super power and a global force in defence technology.

The annual report published by the US-China Economic and Security Review Commission in 2016, highlights Beijing’s power projection development and warns that once fully developed, the weapons and forces could contribute to a regional conflict in places like the South China and East China seas. The report also states that, “China will try to strengthen its traditional war-fighting capabilities against weaker neighbours.” This is of concern to India as the result of future battles will favour the one which has a technological edge over its adversary and Beijing is way ahead of India in this regard. It is thus important for India to invest in defence R&D and develop asymmetric warfare capabilities to meet possible Chinese aggression.
In India, defence R&D has been largely controlled by state owned enterprises like DRDO and BEL. The sheer number of failures and the cost and time over runs of many crucial projects have overshadowed few stunning successes that these enterprises have had over the years. Under the guise of security and secrecy, the institutions have escaped answering questions raised on its priorities and inefficiencies. In particular, DRDO has been on the critic’s anvil for having, on most occasions, failed to provide timely delivery of crucial systems to the armed forces. A performance audit of India’s R&D effort is called for which hopefully would lead to re-assessing and re-aligning R&D activities within the country and re-shaping of R&D institutions. Concurrent efforts are needed in creating an eco-system that understands the need to innovate and has the capability to do so. This paper looks into the R&D models used by the US and China and attempts to suggest ways in which the best practices can be integrated into our present R&D set up
.
Defence R&D in USA
Research and Engineering(R&E) enterprise of the Department of Defence (DOD) forms the backbone of US forces’ technological superiority. It comprises of military departments and their laboratories, all DOD R&D product centers and laboratories, defence agencies like Defence Advanced Research Projects Agency(DARPA), Defence Threat Reduction Agency(DTRA) and Missile Development Agency(MDA), Federally Funded Research and Development Centers (FFRDC), University affiliations, industry partners and the laboratories of the allied governments.
The federal government owns 42 R&D centers called Federally Funded Research and Development Centers or FFRDCs. They are public-private partnerships and conduct research for the US government under its sponsorship. While some are managed by the federal government itself, most of them are contracted to universities, industrial firms or non-profit organisations. FFRDCs are intentionally kept outside the government to avail management flexibility to attract and retain high quality scientists and engineers.
The US DOD also has a Research, Development, Testing and Evaluation program called RDT&E program. It is intended to finance research performed by contractors and government installations.The program aims to develop equipment, material, computer applications and knowledge and technological base that helps build a defence product. The RDT&E financial appropriations are divided separately for the three services and one separate category has been instituted for other defence agencies. The appropriations are available for 2 years’ time and have an incremental funding policy. Each RDT&E appropriation is subdivided into seven budget activities (BAs): BA-1 Basic Research, BA-2 Applied Research, BA-3 Advance Technology Development, BA-4 Advance Component Development and Prototype (ACD&P), BA-5 System Development and Demonstration (SDD), BA-6 RDT&E Management Support, and BA-7 Operational System Development.
The priorities of RDT&E programme should also be taken stock here. Table 1 shows the percentage of the appropriations in each of the seven budget activities between 2013 – 2015. The programme spends more than two third of the allotted budget in development and demonstrations of systems, which is termed Weapons Development Activity(WDA), while only 3 percent is spent on basic research. It is also to be noted here that while the federal government finances RDT&E programmes, the prerogative to award grants solely rests with the subdivided categories.

Budget Activity % spending of the total RDT&E budget
Basic Research 3.0
Applied Research, 7.1
Advance Technology Development 7.9
Advance Component Development and Prototype (ACD&P) 19.4
System Development and Demonstration 17.4
RDT&E Management Support 6.6
Operational System Development 38.9

Table 1: % Spending of the RDT&E Budget in different Budget Activities. (Adopted from DoD’s President’s Budget for FY 2013-15)
A special program called “Reliance” looks into technologies that serve more than one service agency and thus enhance joint-war fighting capabilities,. “Reliance” has created 17 portfolios called Communities of Interest (CoI). Each such community comprises of eminent academicians, scientists and engineers belonging to a specific technological area. Few examples of CoI portfolios are Advanced Electronics, Materials and Manufacturing processes, Cyber, Counter Weapons of Mass destruction, Electronic warfare, Energy and Power Technologies, Autonomy etc. The CoIs are collecting, coordinating and aligning the technical capabilities, requirements, gaps, opportunities and priorities for their respective portfolios. This information forms the basis for a detailed Technological Roadmap which helps the leadership to identify and understand the under/over investments and avoid duplication of technologies. The structure and brief objectives of each group is highlighted in Fig 1.

Fig 1: Structure in a CoI portfolio.

The technologyresources for scientists and engineers working across DOD labs is made available by Defence Technology Information Centre(DTIC). DTIC serves the DODcommunity as the largest central resource for DOD and governmentfundedscientific, technical, engineering, and business related information. It helps to build on previous research,development, and operational experience, and thus reduces duplication. The set up helps build collaborations among the scientific community and leverages on available expertise and experience.
A special mention has to be made about Defence Advanced Research Projects Agency (DARPA). DARPA is mandated to find and fund high pay-off projects that are disruptive and has the potential to create technological surprises.

The Chinese Model
The Chinese R&D and innovation saw a sudden splurge starting this millennia. China is now second in the list of nations with highest R&D spending and has got direct relation to its pursuance of technological superiority over the United States. It has become successful in changing its reputation from a labour intensive, low-cost manufacturing hub to an indigenous, self-sustaining and innovation driven economy. So how did China change its perception, priorities, and made room for innovation and R&D?
The 1998 Ministerial Reforms and Reorganisations were aimed to reduce enterprises dependency on state funds, make them more efficient, and, eventually, profitable and self-sustaining. The result was that better equipment started emerging from key defence sectors and there were two key parameters, which led to this result. Firstly, the government kept increasing the allocation of defence budget for weapons acquisitions. Between 1997 and 2003, the increase was as high as 153 percent. Such a steep increase was bound to increase the industrial output. Secondly, the Chinese firms had limited but consistent access to foreign equipment, especially from Russia and Israel. This access assisted few companies to copy-produce military systems and integrate high-end technology into their production lines.
Chinese firms follow two approaches for defence equipment manufacturing. First is the “Good Enough” approach and second, “Gold-plated” approach. The first one follows creating “low-cost-lower tech” versions of their foreign counterparts. The Chinese realise that it would be too costly to attempt to acquire the capability and produce advanced weapon systems in every possible category. Instead, they intend to focus on making breakthroughs only in certain key areas. The equipment produced with this approach, although cheap qualitatively, meet the needs of People’s Liberation Army, which has fielded them in high volumes.The second approach involves indigenously designing and developing sophisticated high technology systems to match that of advanced nations. To employ this strategy, the Chinese seek to acquire high end technology from foreign suppliers and simultaneously evolve knowledge base in the same domain through consistent basic and applied research in National S&T institutesand affiliated universities.
China has in place two agencies for regulation. These are the StateAdministration for Science, Technology and Industry for National Defence(SASTIND) and Civil–Military Integration Promotion Department (CMIPD). CMIPD is mandated to work primarily towards civil-military integration and develops integrated standards for civil and military equipment. SASTIND’s primary responsibilities include drafting guidelines, policies, laws and regulations related to science, technology and industry for national defense.
Like US, China has promulgated few policy directives to boost R&D. The state run enterprises are required to invest at least 3 percent annual revenues in R&D. It has also imposed an upper cap of profits restricting the companies to quote exorbitant prices for defence acquisitions. Like DTIC in USA, China has created Information Analysis and Dissemination (IAD) system. It is specifically tasked to gather all open source information on foreign products for technology assimilation and concept refinement. Recently China also spoke of its intention to create a DARPA like institution for PLA.
What Should India Do
In the long list of things that have to be changed, a comprehensive Science & Technology Policy, which sets up S&T and defence priorities in clear terms, would be a good start. Along with the institutional changes, there is a need to create an innovation eco-system for defence related R&D. The envisaged eco-system must find synergies with the National Security Strategy and the Nation’s S&T policy. Few recommendations to bring about the desired changes are as follows.
• Aim & Arm: Identify the most potent threats and evolve strategies to mitigate them. Threat severity must be weighed and the technologies that can help deter these threats must be sought for acquisitions.The technologies that we build must try to close gaps in our security.
• Defence Inclusive S&T Policy:Like in US and China, the STI policy must be evolved in conjunction with the defence strategy of the nation. A subcommittee has to be set up for each of the R&D areas that are mentioned in STI policy of 2013, and must be tasked to find critical technologies relevant to that area. Ways must be explored to draw a link between the chosen technologies and the security needs of the nation. Efforts must be coordinated to gain global leadership in these frontiers of science. Technology Information, Forecasting and Assessment Council (TIFAC), Department of Science and Technology, is now workingto develop a Technology Vision 2035 document. A quick scan of the website will tell you that Defence is still treated exclusive of the Science and Technology policy of our nation. Department of S&T will have to learn its lessons from the past and seek to develop a coherent and comprehensive S&T policy.
• Identify “Critical-to-Security” Technologies: India should seek global leadership in only select areas that are “Critical-to-Security”. Global domination in every category is not feasible given the baseline at which India has to start. Although DRDO has specified a large number of thrust areas through its Research Boards, there seems to be no clear list of areas with high priority and low priority. Further, the thrust areas are too academic in nature and give an impression that the outcome will be research papers and not actual products. “Critical-to-Security” technologies must be more immediate and macroscopic. Efforts must be then channelised and coordinated to develop the same. (For Israel, “Critical-to-Security” was Missiles and Anti-Missile technology; for China it has been Maritime Surveillance and Security)
• Communities of Interest:Based on “Critical-to-Security” technologies, sub-domains or “Communities Of Interest” should be created on the lines of US. A Steering Committee having top scientists, engineers and academicians relevant to that domain must be entrusted to develop plans and proposals to prioritise technologies at a sub-system level and steer the technology towards a realisable product.
• Civil-Military Integration (CMI) Policy: In the last decade, both USA and China have relied on the dual use technologies to meet growing needs of its forces in much quicker time. The Dual-use Application Program(DuAP) in US and Civil–Military Integration Promotion Department (CMIPD) in China have become successful models for civil-military integration. Since FDI in defence calls for deeper scrutiny, India can start promoting FDI in non-defence R&D and then leverage on the technologies that emanate from such ventures. For example, Indian mobile companies can be asked to work on radio and satellite communication devices, since they find close overlap with their area of business. The CMI policy will eventually create an alternative to DRDO, bring competition into play and compel each stake holder to continuously innovate and beat each other in price and sophistication.
• Directed and Increased R&D investment: Fig 2 shows spending on R&D by different nations as percentage of their GDP. While countries like South Korea and Japan are making investments in excess of 3 percent of their GDP, India has been spending less than 1 percent of its GDP in R&D. It is imperative for India to increase the investments and do so in technologies that are ‘critical-to-security’ as identified by the competent authority.

Fig 2: Spending on R&D as % of their GDP [13]
• Human Resource:Human capital is an indispensable pillar in building a strong R&D base and must be addressed with full seriousness. Firstly, the role of educational institutions in this effort has to be clearly stated. The thrust areas of the DRDO research boards must be made as Optional Courses in Universities and relevant research must be awarded appropriate credits. A program similar to IRAD can be envisaged to encourage participation in defence programs. Not just educational institutions, but also the industry will have to share the responsibility in creating a good quality human resource. DRDO and industry in general will have to develop the talent on campus and then acquire them. The armed forces must carry out a nation-wide campaign to highlight the conditions and difficulties in a war zone and inspire talented youth to contribute to national security. The Centre of Excellence started by DRDO in various universities should be given more autonomy and made to function on the lines of FFRDCs. Concurrent efforts must also be made to retain the talent while trying to attract the new ones.Government may also seek to make changes to the Recruitment and Assessment Board, since, going by DRDO’s own admission, is not being able to recruit quality scientists and engineers.
• Approach to Design: Trying to build a Product ‘X’ of world class sophistication from the word go has its own advantages and disadvantages. For a nation like India,the disadvantage being the high developmental costs and long development cycle. India must follow ‘Build-Capitalise-Improvise’ doctrine in its R&D endeavours with focus on building medium quality parts to understand the magnitude of design effort, the technology gaps and the scale of productions. In technologies that are not so critical, we must try to emulate the ‘Good enough’ approach. Indian scientists and engineers must see if the said technology has sufficient benefits, has no critical problems and its benefits sufficiently outweigh the problems. In a globalised world, it is wise to forge strategic collaborations with other nations to not only share the technology but also the development cost. The Russians built the Su-30 with the help of French and Israeli avionics. The Joint Strike Fighter F-35 has as many as 12 partnering nations. So, India, like it did in the case of Bramhos, must seek foreign partners of both technical and strategic importance. It should simultaneously develop its own capabilities by basic and applied research, technology assimilation and eventually becoming self-reliant. In projects of high stake, the agencies must develop sound knowledge of the product fundamentals and create testing procedures to reduce technology risks.
• Government Support:A strong backing from the government is a pre-requisite for R&D success. While the aim of investing in R&D is to bring in new or better products, increase usability, sales, profits and ultimately use the same profits to invest in R&D, and create an innovation driven economy, it also creates many jobs. There are inherent risks associated with R&D activities and failures should not clog the funding, with the government having to differentiate between non-performers and failures of performers.
• National Defence Research Repository (NDRR):On the lines of DTIC in US, and IAD in China, we must create an online repository for information dissemination of research related to defence technology. National Data Sharing and Accessibility Policy (NSDAP), hosted by Department of Science & Technology doesn’t speak anything exclusively about the Defence Sector. Such a repository will not only help government in tracking and avoid funding for duplication of technologies, but will also help different researchers collaborate seamlessly and build on their individual expertise and experiences. The non-strategic data will also help university students to get a firsthand impression of defence technology, which may well be a source of inspiration.
• Defence Offset Policy: Departing from the obligatory nature of the offset policy, India must forge long-term strategic partnerships with foreign firms. Data may move at the speed of light but decisions on technology transfer move at the speed of trust. India will have to shed customer-buyer relation and become more of a business partner. Only then, firms will see Defence R&D as a viable avenue for discharging the offset obligation. Meanwhile, India will have to put in place a robust mechanism for the protection of Intellectual Property Rights (IPR).
• Structural Changes:Taking cue from ISRO, which directly reports to PMO, Chairman DRDO must directly report to the RakshaMantri to avoid bureaucratic delays. Further, the decision of government in refusing to create a DARPA like entity in India must also be reconsidered.
In the age of rapid technological obsolesce, whether DRDO is working hard or otherwise does not matter. What matters is if the efforts put by DRDO are adequate to beat the global competition. The measures taken up by government are at present inadequate to move a system that has stayed dormant for decades. How this is to change will be the defining challenge in times ahead and is a mammoth task. However, no amount of difficulty should discourage a nation that aspires and has the ability to be the best. As Victor Hugo said, “There is one thing stronger than all the armies in the world, and that is an idea whose time has come.”

(Keertivardhan Joshi is a Fellow, CSIR-National Aerospace Laboratories, Bangalore)

(This article is carried in the July-August 2017 issue of India Foundation Journal.)

Public-Private Partnership has been adopted as the main route for implementation of the road projects in the country especially in National Highways Development Programme (NHDP) and is expected to finance the major share of ambitious road construction/upgradations projects in India, both by the Central andState governments.
According to National Highway Act, 1956, National Highways are owned, constructed, maintained and operated by the Central government via National Highways Authority of India (NHAI). This Act was amended in 1995 to allow for private participation. Now a private entity too can construct and operate highways and can also levy user charges on the commuters to cover up their costs and earn profits. The Government of India first laid down basic principles and guidelines for the PPP in a cabinet decision of 1997 . In 2000, Cabinet Committee on Economic Affairs approved the first phase of NHDP with a major emphasis on promoting PPP. Two models were preferred above all-BOT-Toll and BOT-Annuity. The third alternative was Special Purpose Vehicle (SPV), which was to be used in the case where former two models failed to attract private investments. Recently, a hybrid annuity model has been introduced as well. However, there are several pitfalls in this approach which must be avoided.
The growth of PPPs began in the 80s with the advocacy of greater role of the private player and limiting the role of the state to that of a facilitator. A major emphasis was placed upon cutting the public expenditure to restrict the size of the fiscal deficit. It is argued that higher fiscal deficit lead to destabilising effects for the economy due to higher inflation and higher interest payment due to expanding public debt. Also, that higher public spending ‘crowd outs’ the private investments due to increasing interest rates. Therefore, PPP in infrastructure was seen as the mechanism of not only reducing resource constraint facing the government in bridging the infrastructure gap, but in bringing in innovative financial and management techniques in the sector, which increases efficiency while rationalising the costs.
It also ensures an optimum risk allocation system . The high degree of the economic externality of public infrastructure, and the commercial and socio-economic risks involved in developing and operating them has made it difficult to appropriate returns from infrastructure investments. The long gestation period of infrastructure projects also requires sustainable financial and operational capacity. Therefore, there is some reluctance in both the public and private sectors to absorb all the costs and assume all the risks of building and operating these assets alone. Since the risk of performance of the projects is passed on to the private sector, PPP leads to better risk assessment and cost estimation which is done on the basis of economic considerations alone .
Even though there are arguments for PPP, there are major concerns regarding its viability and effectiveness especially in the road sector, which requires significantly large investment for an extended period. The first problem arises with the issue of financing PPP projects and cost recovery. Who will be in charge of the cost recovery from the projects whose gains due to their public nature are often indivisible? Since investment in a highway project is indivisible and colossal, fixed charges form the major component of the costs of providing the road services. When gains from a highway project are purely economic and accrue only to users with no externality present, the toll rate cannot exceed the marginal benefit from road services with the result that despite tolling, consumer surplus may be substantial. Thus, though the net economic benefits from a road project are positive, it may not be commercially viable .
It leads to a condition where the quantum of the private investment is less than the optimal level. It means that even the criterion of private profitability cannot be the only parameter for judging the investment in the roads sector. The problem becomes even more acute in the case of a developing country like India where there are high positive externalities associated with the road construction . It promotes inter-regional trade, stimulates the local economy, helps in the exploitation of local resources and can aid in the division of labor and specialisation . Since much of such gains cannot be captured through tolls, the gap between the socially optimal and commercially viable levels of investment in highways tend to be lower than required.
Apart from making the scale of capital outlay lower than the socially optimal level, the aforementioned economic and social factors also cause serious distortions in the composition of investment. Under private commercial considerations, the dice is heavily loaded against projects which a) promote basic social, as against purely economic, objectives, b) result in economic gains which cannot be appropriated through user charges and c) trigger with a time lag a cumulative process of regional or national economic development. Thus, we see that private investors are more than happy to undertake the projects against negative grants for brownfield projects connecting major cities and industrial areas. However, few would like to take up greenfield projects in backward regions or remote regions like the northeast, which have a higher cost-benefit ratio than the former.
The government, thus, is forced to enact policies for neutralising bias in private investment. It bears the pre-construction costs like project feasibility study, land acquisition, environment clearance and other costs. It launches various schemes like viability gap funding, tax exemptions period and duty-free imports of equipment. The tax exemptions are given to financial institutions involved in financing road projects, borrowing abroad is eased, and mostly government also gives upfront grants for specific projects . These concessions negate the basic arguments for PPP i.e. it will reduce the burden on public funds. On the other hand, it becomes difficult to calculate whether the total cost of the road construction has increased due to such concessions to the private sector. Duty rebates on inputs and interest subsidies erode allocative efficiency and give rise to the deadweight loss for the economy.
The solution to this dilemma is to change the approach towards highways construction. There is no reason to make highway construction incumbent upon the inflow of the private sector. The government must be willing to undertake the projects on its own when the private sector shows no interest. It will send a strong signal to the market about the determination of the government to undertake road projects and in the end, will boost investor sentiment. The government should focus on developing a long-term debt market and fixing the health of the financial sector of the country because a major impediment to the participation of the private sector is the lack of access to long-term finance at reasonable rate.
By simplifying rules and regulations in the financial and banking industry and adopting transparency and predictability in the highway sector policy framework, the government will be able to facilitate the private sector inflows more than the often illogical concessions & financial incentives . Also, there are several other major problems in the PPP projects like unfair concessions in the form of guaranteed rate of return, no competition clauses, manipulative toll fixing .
Therefore, proper mechanisms must be evolved to avoid repetition of such mistakes. It calls for a threefold approach: capacity building in the government departments and technical training of the personnel, standardisation of the procedures for the award of contract and concessions, with enough regional flexibility to reduce arbitrariness and lastly a clearly defined penalty for private and government officials engaged in unfair practices. An efficient mechanism for audit and performance appraisal needs to be evolved. It needs to stressed that the goal of the highway policy should be to provide world-class infrastructure at the lowest possible economic cost rather than following any model or approach as a matter of faith.
(AbhinavPrakash is an assistant professor of economics at Zakir Husain Delhi College (E), Delhi University.)
(This article is carried in the July-August 2017 issue of India Foundation Journal.)

The ancient Holy Puya of Meitei (Holy Book of Meetei) predicted “Nongpok Thong Hangani”, which means “The eastern gate will open”. This prediction in the Holy Puya could not have been truer when the Government of India formulated ‘Look-East Policy’ initiated by Prime Minister P.V. Narasimha Rao (1991-1996) and rigorously pursued by the successive administrations of Atal Behari Vajpayee (1998-2004) and Manmohan Singh (2004-2014). Under the leadership of Prime Minister Narendra Modi, the new government of India has made its relations with East Asian neighbors, a foreign policy priority by proposing a new outlook calling it the Act East Policy. India’s Look East Policy which started as an economic engagement with its eastern neighbors, turned into a tool for forging strategic partnership and security cooperation by the following governments. The so-called Act East Policy driven through North-East India and Myanmar has now become the centre of geo-economics and geo-politics.

Strategic Importance of North-East India

North-East India, comprising of eight states, has almost ninety five percent of its boundaries as international borders – surrounded by China, Nepal and Bhutan in the North, Bangladesh in the South-west and Myanmar in the East. In the past history, the mighty Himalayas in the north always kept India physically aloof from China. In the North-east, treacherous terrain, militia and ethnic tensions made it impossible to cross over and connect with China via Myanmar. On the return of democracy in Myanmar, almost after half a century of military rule and civil war, Myanmar is now set to open up to the world with democratic values and is showing an intent on improving trade and commerce relations.
Interestingly, in the past colonial times, when Burma was part of British India, British Indian government underestimated the strategic importance of Burma before the World War 2. It was when the fascist Imperial Japanese forces swept across China and rest of Asia and reached the borders of Burma, that the British forces realized that the threat is real now with the possibility of infiltration into the Jewel of the British Crown – British India. British-Indian forces retreated from Burma abandoning strategic Mandalay and defended from Imphal Valley and Kohima. In recent times, the British have declared the Battles of Imphal and Kohima as the ‘Fiercest Battles’ fought in the history of World War 2. The lesson that modern India needs to learn from the ‘mistake’ British-India committed is that North-East India should be defended militarily as well as economically with Myanmar as our first line of defense or a level playing field by upholding admirable diplomatic and trade relations.

Understanding Myanmar – New Crossroad of Asia

Myanmar (name changed in 1989 from Burma) is a country with a population of more than 60 million which neighbours North-East India inhabited by 50 million people. Myanmar is the direct land bridge for India to Thailand, Laos and China and indirect link to Cambodia, Vietnam and Malaysia. Modern India needs to recognize that Myanmar is extremely important as a land bridge to reach out to the rest of ASEAN countries and is a level playing field for India and China to exercise their influence. Fascinatingly, many Indian immigrants lived in Myanmar in the 20th century and were later cast out with the onset of civil war and military takeover on 2 March, 1962 by General Ne Win. However, in early 1980s, in spite of the military rule in Burma and the isolation it faced from the world, Chinese businessmen took first mover advantage and started investing in the Northern states of Kachin and Shan, leaving long lasting impression on Myanmar, that will be later seen as economic progress as well as political interference. In the past history, whatever has happened in China spilled over to Myanmar. The increasing Chinese influence and interference has often been met with resistance and backlash by the Burmese. With the onset of democratic reforms between 2011-15 and the win for National League for Democracy in 2015 elections, Myanmar is prepared to open up to the rest of world under the proficient leadership of Aung San Suu Kyi. While Myanmar has always experienced Chinese investment and political interference, the country has always looked up to India for its historical connections like Buddhism, Indian wisdom and its democratic values.
The peace process framed by the BJP-led government in the North-East India is bearing positive results. The diplomatic relations extended to the then military Junta government has also helped in reducing the insurgency activities around the international borders. The intent of Prime Minister Narendra Modi’s ‘Act East Policy’ can be gauged in the BJP’s election win in the states of Assam, Arunachal Pradesh, Nagaland and Manipur. History will be made when the Indian Railways reach Imphal and further connection to Myanmar will make Tran-Asian Railway a reality. The India-Myanmar-Thailand Trilateral highway through Moreh in Manipur will further connect Laos, Cambodia and Vietnam, to be known as East-West Economic Corridor. Kaladan-Multi Modal Transit Transport will connect seaport of Kolkata with Sittwe seaport and then through Kaladan river route, from Palethwa (Myanmar) to the North-Eastern state of Mizoram.

Role of Skill Development in India’s ‘Act East Policy’

In this backdrop of history, politics, economics and connectivity in North-east India and Myanmar, Indian Government must not only focus on geo-economics but also have a clear geo-political strategy to contain neighbouring China and to boost trade and security cooperation with ASEAN countries. By design, it helps India gain a dominant influence in the Indian Ocean Rim. With the future that India is envisioning, it becomes pertinent to factor in relevant functions that support India’s ‘Act East Policy’. One function that will add great impetus to India’s ‘Act East Policy’ is Skill Development, undertaken by the Ministry of Skill Development & Entrepreneurship, Government of India.
With the Trans-Asian Railway and the India-Myanmar- Thailand Trilateral highway through Moreh in Manipur nearing completion, India foresees a colossal boost in trade and commerce making North-East India, the next big economic corridor connecting India to ASEAN countries and China. In the light of this development, NE states need to develop an ambitious yet meaningful Skill Development and Employment Plan for its youth, taking into account what development will take place at its international borders in the next 40 to 50 years.
We must recognize that unemployment is at the core of all issues in North-East India. Three levels of Skill Development and Employment plan can be formulated: – (1) Develop skills among the North-East youth, which are needed across the world specially in service industries like Tourism & Hospitality, Retail and IT & IT-enabled services. Initially, these skills can be exported outside the North-East and later, as the industries develop in the North-East, they can be absorbed into local employment. (2) Nature has gifted rich flora and fauna to the North-East region and the region could become a hub for developing agriculture, horticulture, floriculture, and food processing. There is a huge potential to create local enterprises and local employment around these sectors. (3) As the trade & commerce boom in North-East India through connectivity with ASEAN and China, youth of the region need to get skilled in relevant trades to support the cross-border trade and business. Mammoth skill training initiatives should be taken up in the fields of Logistics and Warehousing, Cold Storage, Railways, Highways, Mining, Oil and Gas, Heavy Vehicle Driving, Business Management and Banking & Finance. These three levels of Skill Development and Employment plan can only be realized by forming an efficient and effective State Skill Mission in each of the states in North-east India; primarily in the states sharing international ‘trade’ borders with Myanmar; namely, Manipur and Mizoram. In order to deliver quality training of international standards, state-of-the-art infrastructure in the form of ‘Multi-Skill Training Centers’ should be built in North East India. The Multi-Skill Training centers need to have ‘Language Labs’ to deliver training on Burmese and Mandarin, which will be of immense help in penetrating business and maintaining diplomatic relations with Myanmar. ‘Skill India’ mission can play a vital role in preparing the youth of North-East India for the drastic positive changes that ‘Act East India’ will bring to the region.
Myanmar is the land bridge for North-east India to the Bay of Bengal, Andaman Sea and the Indian Ocean and is also a country India needs to compete for with China. North-east India is Myanmar’s neighbour and will remain so. Therefore, North-East India is logistically best placed for India to consider any activity in Myanmar or other ASEAN countries. Since 1980s, Chinese influence is deeply entrenched in the Burmese society either through business or political interference. Often the dominant influence and Chinese spillover onto Myanmar have been met with backlash by the Burmese from time to time. Myanmar definitely enjoys business investment by China but not at the cost of political interference. On the other hand, Myanmar is keen to counter-balance China’s influence by reaching out to India. The wisdom for India is that India needs to understand the ‘fears’ and ‘desires’ of Myanmar. This may be the ‘key’ to the success for India’s “Act East Policy”.
(Lairenjam Niranjan Singh is director of JCRE Skill Solutions and working towards skilling the youth & solving unemployment in North-East India.)
(This article is carried in the July-August 2017 issue of India Foundation Journal.)

In an recent article “The End of An Era For White Men” by David Rothkopf in FOREIGN POLICY Journal (Dated 01 Feb 2016) there is the historic admission of steady global dominance of western world.

It states:-

“While men had a great run from the rise of the Greeks to the birth of western based global empires – they have controlled much of the world sought to. So much of history is a consequence of decisions made by and at the behest of the white guys in-charge’.

 The learned author adds:-

“Several factors are contributing to make this historic moment a watershed in global history. ….. …. ….. ….. While the planet earth has always been home to great non-white civilisations, such societies have ebbed and flowed in relative importance. Today it is clear that these emerging societies, namely China and India are on the rise.”

 In context of above, what our Hon’ble Home Minister Shri Rajnath Singh had stated sometime back that Maharana Pratap of Udaipur deserves to be titled “The Great”; it quintessentially sounds logical and convincing.

Interestingly, historians world over have not yet found as to which august body (or a group of individuals) had constructed the qualifying requirements for the title “The Great”. And, also who (and when) the title(s) were conferred on the selected few. Just to mention some of them:-

• Alexander The Great (of Macedonia)
• Constantine The Great (of Byzantium Empire)
• Peter The Great (of Russia)
• Fredrick The Great (of Germany)
• Ashoka The Great (of India)
• Akbar The Great (of India)

Interestingly, commentary on the traditional belief in the decline of greatness; THOMAS CARLYLE laments in his classics “Heroes, Heroworship And The HEROICS IN HISTORY (1841)” that “Napoleon was our last Great man”. He also singles out the lone social fact that “Greatness has been equated with fame and the fame could not be made overnight”.

Delving deep into the dynamics of above stated “Greatness” conferred on heroes of yester-years; shouldn’t we presume that it was the western media which was on the beck and call of European world conquerors that played the trick. History is testimony to the fact that whenever civilisations preferred convenience, they spelt their downfall. Dr. Radha Krishnan had once said “India was never conquered from “without”; it was always from “within” that it was subdued”. Third world countries have not only lost on battle-fields but also on brand/image projections. Maharana Pratap’s case is to be viewed through the above prism.

Battle of Haldighati (fought on 21^st June 1576) with Raja Man Singh as Commander-in-Chief of Mughal army and Maharana Pratap of Udaipur leading conglomerate of Rajput warriors – the episode is well documented. The outcome of the clash is known to students of history. Mewar army was routed in the final run. General Sagat Singh of Indian army (hero of Bangladesh’s liberation: 1971 India-Pak war) has attributed Mughal army’s success to their superior artillery.

A moot point is that Pratap could not be captured and his flight from battle-field was orchestrated by his faithful(s) – for yet another day to settle scores with the Mughals. It is also on record that Emperor Akbar had refused to meet Raja Man Singh and Asaf Khan while expressing his dissatisfaction over the results. On this subject, we have the last word from eminent history scholar Prof. G.N. Sharma. He states:-

“The Kachhawaha General (Raja Man Singh) had failed either to kill or capture the Rana. Hence Haldighati was a barren victory for the Mughals”.

 The Battle of Haldighati has immortalised Maharana Pratap as a warrior of freedom and pride. Amongst the Mughal Kings, Akbar rose to dizzy heights of greatness and the title “AKBAR THE GREAT” is well deserved. But Maharana Pratap’s rugged defiance against Mughal rule qualifies him as fountain-head of liberty and self-rule. It wasn’t easy – those were the times when consequences of not towing the diktat of an Emperor could bring-in untold miseries; Maharana Pratap who epitomised exemplary courage and indomitable spirit had outrightly rejected the olive branch. He toiled hard for decades – post-Haldighati clash, practicing guerilla tactics against the adversary and refused to compromise with freedom.

There are some unsung heroes of Battle of Haldighati.

1. Jhala (Bida) Man – who had assisted Maharana Pratap in moving to a place of safety (in this manouvre he got killed).
2. Hakim Khan Sur – The Afghan General and a loyalist. He was a strategist and warrior of repute. (Not much literature is available on him).
3. Bhama Shah – He was the financier who greatly helped Maharana Pratap during his “exile” after the Battle of Haldighati.
4. Rana Punja – The Bhil Chieftain – his band of followers had inflicted severe blows on enemy flanks. His generosity towards Rana Pratap in providing “men and material”, assistance during “war and peace” periods with Mughals is well known.

It is said that “History has been unfair to its heroes, leaving ordinary men to decide the difference between posterity and oblivion”.

For the six eminent luminaries viz. Rani Gaidinliu, Lala Lajpat Rai, Tatya Tope, Maharana Pratap, Shri Bhisham Sahni and Sage Chaitanya Mahaprabhu; the recent initiative in constituting an Implementation Committee on Commemoration under the Ministry of Culture is worth mention.

Govt. of India’s effort to “resurrect” heroic images from our hoary past are well-meaning. Maharana Pratap of Mewar richly deserves the title “The Great”. One is reminded of Martin Luther King Jr.’s words “The Arc of moral Universe is long, but it bends towards Justice”. Yes, we are talking about Justice for recognition to a great Indian warrior Maharana Pratap.

Gp Capt DC Bakshi, VSM, IAF (retd.)

Introduction: Power to Tax and Sovereignty

 

Power to levy taxes has been universally acknowledged as an essential attribute of sovereignty. Cooley in his Book on Taxation – Volume-1 (4th Edn.) in Chapter-2, recognises the power of taxation to be inherent in a sovereign State. The power, says Cooley, is inherent in the people and is meant to recover a contribution of money or other property in accordance with some reasonable rule or apportionment for the purpose of defraying public expenses.

In Commissioner of Income Tax, Udiapur, Rajasthan v. MCdowell and Co. Ltd. (2009) 10 SCC 755, the Supreme Court observed as follows:

“(iv)  As an incident of sovereignty and in the nature of compulsory exaction, a liability founded on principle of contract cannot be a “tax” in its technical sense as an impost, general, local or special.”

Further, a tax is a compulsory exaction of money for general public good and is defined as under by Thomas M. Cooley in his book The Law of Taxation at page 61(Clark A. Nichols ed., 4th ed. 1924) as follows:

 “Taxes are the enforced proportional contributions from persons and property, levied by the state by virtue of its sovereignty for the support of government and for all public needs. This definition of taxes, often referred to as “Cooley’s definition,” has been quoted and endorsed, or approved, expressly or otherwise, by many different courts. While this definition of taxes characterizes them as ‘contributions’, other definitions refer to them as ‘imposts’, ‘duty or impost’, ‘charges’, ‘burdens’, or ‘exactions’, ; but these variations in phraseology are of no practical importance.”

GST and the World

 

Prior to the implementation of the Goods and Service Tax (GST), there were several indirect taxes which were being levied at different levels of the supply chain. The implementation of the GST has resulted in the merger of indirect taxes (central as well as state) thereby making the GST an umbrella tax, which would facilitate Indian Businesses compete globally. GST is inter-alia structured for efficient tax collection, seamless inter-state movement of goods and reduction of the number of indirect taxation departments such as VAT, Excise, Service Tax, etc which resulted in glitches and undue delays.

 

France was the first country to implement GST to reduce tax-evasion in 1954. Since then, more than 160 countries have implemented GST with some countries having Dual-GST (e.g. Brazil, Canada etc.) model i.e. Federal GST and State GST. India has chosen the Canadian model of dual GST i.e. CGST and SGST or IGST in case of inter-state transport of goods or provision of services.

In Canada, the GST is known as Federal Goods and Service Tax and Harmonized Sales Tax which is being implemented since 1991. A table made below provides a comparison of scheme of GST in India and the prevailing schemes in Canada, Singapore and Malaysia.

Particulars	India	Singapore	Canada	Malaysia
Name of the Law relating to Taxation of Goods and Services	Goods and Services Tax	Goods and Service Tax	Federal Goods and Service Tax & Harmonized Sales Tax	Goods and Service Tax
Threshold exemption limit	20 Lakhs (10 Lakhs for NE States)	Singapore $ 1 million (Approx Rs. 4.8 crore)	Canadian $ 30,000 (Approx Rs. 15.6 lakhs in INR)	MYR 500,000 (Approx Rs. 75 lakhs)
Standard Rate	0% (for food staples), 5%, 12%, 18% and 28%(+cess for luxury items)	7% Reduced rates- Zero rated, exempt.	GST 5% and HST varies from 0% to 15%	6%
Liability arises on	Accrual basis: Issue of invoice OR Receipt of payment -earlier	Accrual Basis: Issue of invoice OR Receipt of payment OR Supply – earliest Cash  basis:(T/O upto SGD$1mn): Payment	Accrual basis: The date of issue of invoice OR the date of receipt of payment- earlier.	Accrual Basis: Delivery of goods OR Issue of invoice OR Receipt of payment
Exempt services	Manufacture of exempted goods or Provision of exempted services (which have been notified such as rent from residential accommodation)	Real estate, Financial services, Residential rental	Real estate, Financial Services, Rent (Residence), Charities, Health, Education	Basic food, Health Transportation, Residential property, Agricultural land

 

Therefore, GST model across the commonwealth countries are similar with some variations with respect to the rates and threshold limits, which may be economy specific.

 

GST in India: Biggest Economic Reform since Independence

 

GST is a single tax that simplifies the giant tax structure by supporting and enhancing the economic growth of a country, and is levied on the supply of goods and services, right from the manufacturer to the consumer. GST is a destination i.e. final consumption based tax regime, however, credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer would thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. To the credit of the Finance Minister and the GST Council, the efficient input tax credit system ensures that there is no cascading of taxes i.e. taxes on tax paid on inputs that go into manufacture of goods.

 

In order to avoid the payment of multiple taxes such as excise duty and service tax at Central level and VAT at the State level, GST has unified indirect taxes and created a uniform market throughout the country. Integration of various taxes into a GST system has brought about an effective cross-utilization of credits. The current system taxes production, whereas the GST will aim to tax final consumption. The following taxes have been subsumed in the GST:

At the Central level, Central Excise Duty, Additional Excise Duty, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs.

At the State level, State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling.

There are following benefits of the GST:

• Two-tiered One-Country-One-Tax regime.
• Subsuming indirect taxes at the centre and the state level.
• Widen the tax regime by covering goods and services and make it transparent.
• Benefit to the manufacturing sector from cascading effect of taxes, thus by improve the cost-competitiveness of goods and services.
• Bring down the prices of goods and services and thus by, increase consumption.
• It would create business-friendly environment, thus by increase tax-GDP ratio thereby enhancing the ease of doing business in India.
• Direct benefit to Manufacturing: Logistics and More Employment – The manufacturing sector has great importance for many developing countries. India’s manufacturing sector has complex tax structure with only 16% share in GDP, India’s manufacturing sector has been close to stagnant for the last two decades. India has shifted itself from an agricultural economy to a manufacturing and service economy. The direct benefit in the hand of manufacturers and logistic companies, warehousing facilitators rather than industries. GST will bring slight change in prices & tax burden on consumers. It will reduce the transit time by which more efficiency will be and benefiting manufactures. Further, logistics sectors would benefit after implementation of GST, reducing compliance cost, dropping number of warehouse and allowing tax credit across the supply chain. Almost all the sector would have indirect benefit from it and expand their operation that will create a more employment.
• Under GST, without costs on Inter-state movement of goods (CST or Entry taxes) and change in the point of taxation to be the consumer, businesses shall have greater flexibility to muster and re-design their supply chains thereby optimizing their logistic cost. Since sellers are also likely to get benefit from changes, Companies ought to negotiate and get benefit on Input Prices.

Conclusion: Challenges ahead

 

The most critical challenge in the implementation of the GST would be the IT transformation that is required to be made by the businesses and their respective organisations. Technical systems would have to be in synchronisation with the scheme of GST as monthly returns would have to be filed electronically. Secondly, since the threshold exemption limit has been kept low, SME’s and small traders may be would have to compete aggressively. However, with time it would be the SMEs and small traders who would benefit the most from the implementation of the GST, and lastly, the intended revenue collection would depend on the strict implementation in letter and spirit of the GST Act and allied Rules.  

 

(Sagar Suri is an advocate practicing at the High Court of Delhi and Supreme Court of India.)

We have been hearing about India’s developing debt crisis for a while now. News reports also listed top defaulters.

Insolvency or Bankruptcy are terms which are usually used interchangeably for a situation of a person or a corporate when they are unable to repay their debts. Bankruptcy is the legal adjudication of Insolvency which is a factual scenario. Insolvency can occur due to a set of factors which include, slowdown of the cash flow, poorly managed cash system, increase in cash expenditures, etc. The reasons for insolvency are important, as the specific rights are allowed for the creditor to be exercised against the entity which is insolvent in any legal system.

The Indian insolvency law recently went through an overhaul with the government notifying most of the provisions of the new Insolvency and Bankruptcy Code (IBC) earlier this year. The Indian Law is one of the better drafted legislations if we compare it globally and has borrowed best practices from both UK and the USA. The new Law was passed, enacted and notified at a break neck speed.

Last month Reserve Bank of India was armed with a set of powers by the Government to identify and initiate proceedings, through the respective banks, against defaulters under the Code. These powers flow through an amendment to the Banking Regulation Act, which adds Sections 35AA and 35AB to the Act.

Though any set of Insolvency laws in any jurisdiction are not a debt recovery tool per se but they certainly play an important role in promoting credit discipline at large. India’s debt problem is concentrated to a few entities as has been pointed out by the RBI. As per the RBI only 12 NPA accounts account for 25% of the total NPAs by volume. The gross bad debt of the Indian banking system as of March, was at Rs 7.11 lakh crore, which means the 12 accounts would be responsible for about Rs 1.78 lakh crore.Recently the Finance Minister, Arun Jaitely remarked that the whole NPA problem is only limited 20-30 accounts and is not spread to large number of accounts.

The RBI will in all probability recommend the respective commercial banks to initiate proceedings under the IBC against these 12 accounts. This move has drawn an international applause, including a praise from the international credit rating agency Moody’s too.

This is a valid point considering the proceedings under the code can’t go beyond 180 days which are stretchable upto 270 days at the most. Time is of essence for the resolution of this problem because the debt is growing day by day. There is a counter argument to this, that the time limit may actually force the corporate into liquidation. This is a very flawed argument. Insolvency is not necessarily the worst outcome in the current situation and in fact it is probably the best solution. The corporates which we are dealing with here, most probably have already been subject to multiple restructuring through various schemes of RBI like Strategic debt restructuring, S4A, 5/25 etc. Hence, insolvency under the IBC is not that bad afterall, since the banks and the creditors will atleast be able to recover a part of their credit. This will certainly help them improve their asset quality which is under tremendous amount of stress right now.

Had there been no IBC, the resolution of each case would atleast take 4 years, which has been India’s average of resolving Insolvency in the recent past.

Given the knowledge of the cancer of debt, surgery shouldn’t be a problem if we are prepared to take bold decisions. All top 20-30 accounts in fact can be subjected to IBC proceedings. Even if they result in a 40% of haircut by the banks on an average, 60% of the money gets back to the banks which can be used for their recapitalisation.

If we start now with the resolution of the first 12 accounts, as recommended by the RBI, the judicial proceedings can be done within a year and the rest 10-15 accounts or so in the next year. The amendment in the Banking Regulation Act is very critical here. The creditors, which being the banks, anyways don’t need a sanction or a permission from the RBI to initiate proceedings under IBC, as per its provisions. What happens in practical situations is that the defaulter is a person who is politically connected and pressurizes the bank administration to not proceed and usually succeeds in doing it. Now after the amendment it is the RBI can be authorized by the Central Government to direct the banks to initiate proceedings under the IBC. This way the bank administration can escape any political pressure which is usually the problem.

Due to a small number of NPA accounts accounting for the major NPA by volume, our debt problem is still a problem only and not a crisis. For the sake of comparison, the sub-prime crises in the USA, involved a large number of accounts and hence became unmanageable and ultimately resulted in global recession. India’s debt problem therefore can be effectively resolved or at least contained by effective implementation of the IBC. The priority here should be saving the banks and an impending debt crises and not saving a few corporates.

(Raghav Pandey is a Research Scholar at School of Humanities, IIT, Mumbai.)