~ By Sakshi Suri

The 2016-17 railway budget presented by Suresh Prabhu, Union Minister for Railways, pleases everyone from the common man to the business elites and environment activists. This ‘growth-oriented’ budget is a combination of popular schemes that prioritize customer experience and efficiency, along with new initiatives that align with PM Modi’s ‘Make in India’ aspirations to promote job creation and public-private sector collaboration.

Amongst other things, this no-tariff-hike budget has increased quotas for women and elderly travellers, promised Wifi connectivity at 400 stations by next year, initiated better catering services by expanding choice of cuisines offered on board, and implemented the ‘Swacch Bharat’ initiative by adding 17,000 bio-toilets and additional toilets in 475 stations before the close of this financial year. While there are several finer features of this budget that demand scrutiny, the key features of this year’s railway budget are highlighted below.

Railway Industry to act as India’s Growth Engine

Prabhu’s railway budget provides a huge boost to the ‘Make in India’ initiative by creating direct and indirect employment and business opportunities in the railway sector. The opening of two new locomotive factories with an order book of Rs. 40,000 crore will provide jobs for low-skilled workers, even as the ambitious plan to electrify 1,600 km of railway lines this year, and an additional 2,000 km next year will generate jobs for both, high-skilled engineers and low-skilled workers.

Additionally, the proposal to set up Wifi at 400 stations across India has paved the way for new partnerships between Indian and foreign companies: Google, a global tech giant and Railtel, an Indian PSU which owns pan-India fibre optic networks, have collaborated in order to provide wide coverage and high capacity internet services on several major stations, starting with the Mumbai Central station where testing has already concluded. Not only have such partnerships ushered in an era of unprecedented foreign investment, but the creation of jobs and exchange of ideas might also facilitate India’s transformation from a technological processing centre to a technological innovation hub.

In addition to luring foreign investors, Prabhu has favourably engaged domestic players to fund many of its commercially viable projects. The minister realistically understands that the Gross Budgetary Support (GBS) from the Finance Ministry is unlikely to meet all of Railway’s expectations, hence he has highlighted the need to depend on the External Budgetary Resources (EBR) for execution of capacity augmentation projects. LIC (Life Insurance Corporation of India) has agreed to invest Rs. 1.5 lakh crore over period of five years, and he is hopeful that other such projects can be executed through joint ventures with respective state governments. Co-operation between domestic players can be harder to achieve and manage, but it truly embodies the PM’s ‘Make In India’ vision by curtailing India’s dependence on international markets and circumstances.

Lastly, in addition to creating significant job opportunities through the implementation of the aforementioned projects, this year’s budget also supports ancillary business activity through the introduction of double-decker trains on business travel routes, and a special purpose vehicle built for the Ahmadabad-Mumbai high speed corridor. These initiatives buttress the government’s plan of furthering growth in the business sector, in addition to generating high revenues through increased fares of these special air-conditioned luxury trains.

Transparency and Regulations in Railways

Perhaps the most unique feature of this year’s budget is the government’s singular intention to introduce and enforce greater transparency within the railway sector. Prabhu’s pragmatic decision to create an independent railway regulator that decides tariffs and investment proposals is critical to winning the confidence of both domestic and international private investors who have previously been wary of corruption in government ranks. The Railway Minister is in the midst of finalizing the proposals for a proper overseeing mechanism and a draft bill can be expected after discussions with relevant stakeholders.

Accordingly, Prabhu has also encouraged the use of ‘social media’ to enhance transparency and access to citizens. This budget also aims to shift the entire recruitment process online to ensure greater visibility, transparency and fairness in the hiring process.

The minister has acknowledged the need to organize the Railways’ assets by en-cashing opportunities to monetize current assets. To this extent, the minister spoke about the creation of a holding company that will help to increase rail revenue by the right investments of its current assets, including the companies it owns. This clear, organized and transparent approach ensures that the Railways capitalize on all such opportunities that help to maximize revenue without burdening the end customer.

Safety, Security and the Environment

In his speech, Suresh Prabhu congratulated the Railways for a better safety record than last year (accidents are down 20% since last year), but added that more needs to be done. This year’s budget aims to eliminate all unmanned level crossings by the year 2020 and install CCTV cameras at all major stations through a phased approach.

The budget has also recognized the safety and security of women as one of its key goals: 33% reservation has been provided for women in the reserved categories in catering units, an All India 24/7 helpline number (182) has been launched for women to assault or harassment, and potential availability of baby food, hot milk and changing boards for young mothers has been announced in order to mitigate the difficulties faced by women travellers.

In the context of ensuring the safety of the planet, this budget has introduced several ground-breaking green initiatives including the installation of bio-toilets, LED lighting on stations, installation of solar micro-grids at remote railway stations, and timely energy audits that will help to check India’s carbon footprint.

Looking forward

This year’s pragmatic rail budget echoes the government’s intent to transform Railways as a crucial engine for economic growth that is capable of moving the nation towards a manufacturing economy. However, some questions about the feasibility and success of such cost-intensive projects loom large. Without a hike in fares, will the minister be able to justify the balance sheet of the railways, particularly in the face of a massive spending burden on account of 7th Pay Commission? The lower fuel cost and new sources of investments from private partners might help to alleviate some concerns, but would these adequately generate revenues of the order of Rs.1,84,820 crores, and increase the operating ratio to 92% as envisaged by the minister?

Overall, this year’s railway budget has plenty for everyone across all sections of society. The budget has potential to overhaul Indian railways through several small-stage and balanced reforms, rather than grandiose plans and enterprises. However, the fundamental challenge lies on the implementation-front, where the minister will have to walk a tight rope to balance finances with aspirations.

Sakshi Suri is a research intern at India Foundation. The views expressed are her own. 

~ By Kanchan Gupta

Hundred and twenty-seven people, innocent civilians, men and women, possibly children too, were massacred in cold blood in Paris on the night of Friday, 13th of November 2015 . Suicide bombers blew themselves up, terrorists with Kalashnikovs roamed the streets killing people at cafes, soccer fans at a packed stadium were targeted and the audience at a concert sprayed with bullets.

In separate messages, some of the grotesquely congratulatory, Daesh, or the Islamic State, has claimed responsibility for the multiple attacks in at least six different places in France’s capital city. Police have told media that eight terrorists died in the coordinated attacks: seven of them suicide bombers, the eighth a gunman with an assault rifle.

Many more are likely to have been involved. Some of the terrorists involved in the slaughter may have escaped, making use of the confusion and chaos. There would be others who provided logistical support. Hunting them down, smoking them out of the Muslim immigrant ghettoes that now dominate Paris’s suburbs would be like looking for a needle in a haystack.

Meanwhile, reports from Germany suggest Islamists in Ms Angela Merkel’s haven for Arab hoardes washing up on Europe’s shores could have been involved in Friday’s nightmare-turned-real. A 51-year-old immigrant was arrested by German police when they found his car packed with bombs and other weapons of death and destruction. Interrogation has revealed he was on his way to Paris.

If the German connection proves true, this won’t be the first time Germany is found to have nurtured, under its benign liberal gaze, Islamists on a terror mission. Many of the 9/11 mass killers came from Germany too. Clearly lessons that should have been learnt were ignored. Nobody tolerates Murderous Islamism like the liberal West, with Ms Merkel’s Germany showing the way.

Soon after he was evacuated from the stadium targeted by terrorists, where he was watching the disrupted soccer match, France’s President Francois Hollande was understandably enraged and horrified by the enormity of the crime and promised retribution. “We will lead the fight. We will be merciless,” he said, declaring a state of emergency.

On Saturday, addressing a shocked nation, he elaborated on that promise. Friday’s carnage was “an act of war.” The attacks on a stadium, concert hall and Paris cafe diners, he said, were “committed by a terrorist army, the Islamic State group, a jihadist army, against France, against the values that we defend everywhere in the world, against what we are: A free country that means something to the whole planet. France will be merciless toward the barbarians of Islamic State group. France will act by all means anywhere, inside or outside the country.”

Strong words.Very strong words, indeed. But it would be foolish to believe that the barbarians who plotted the massacre, the terrorist army, the Islamic State, are shivering in their baggy pants or looking for places to hide, cowering in fear. After being chased out of Sinjar by a determined Peshmerga force, they needed to demonstrate their might, and they have. First it was the twin suicide bombings in Beirut’s suburbs that killed 37 Lebanese, then the multiple attacks in Paris.

True, this is not the first time Europe is discovering the horrors of terrorism. In March 2004 Spain witnessed the Madrid train bombings that left 191 commuters dead. In July 2005 it was London’s turn when suicide bombers killed 52 commuters, targeting a bus and two Underground trains. In January this year Charlie Hebdo’s offices were attacked, killing 12 people.

In between we had the 9/11 attacks of 2001 that left 2,977 people dead as the Twin Towers were blown to smithereens. And there were the 2008 attacks on Mumbai, claiming 266 lives. There other attacks too. Killing a few here, another few there. In Pakistan, the incubator and cradle of jihadi terror, the safest of havens for terrorists wanted globally for crimes against humanity, 132 school children were shot dead in Peshawar, making not the least difference to its sponsorship of terror.

We can rail and rant. We can threaten to wage war. We can promise extermination. But all that adds up to a big, fat zero. The US-led War on Terror meandered into disastrous misadventurism to settle personal slight and scores. Washington’s hypocrisy did not end with unwarranted regime change in Iraq and unsettling Assad in Syria. It extended to mollycoddling Pakistan and gifting Rawalpindi’s military-ISI-jihad enterprise with arms and dollars.

Security experts (everybody is one) have been quick to point out that there are remarkable similarities between the bloodletting in Mumbai and Paris. If we look hard enough, there is remarkable similarity between all acts of terrorism: they are committed by terrorists.

The US and its European allies are welcome to believe otherwise, but there are no good terrorists and bad terrorists. Drawing such distinctions to further American and European interests cannot but rebound, and rebound with hideous consequences. There are no, you see, good kafirs and bad kafirs. Everybody, including believers who refuse to concede Islam faces a monstrous problem, is fair game for jihadis.

Mr Hollande would do well to pause and ponder as France and the civilised world grieve for those who died Friday evening. He must accept, as must Europe and America, that the West has utterly, totally, unquestionably failed to respond to the threat posed by Islamic radicalism, of which the Islamic State is a fearsome manifestation. The spurious air strikes at Islamic State targets by a bogus coalition are a telling example.

The world still awaits a Comprehensive Convention on International Terrorism. It cannot be decided upon because the Organisation of Islamic Countries won’t let terrorism be defined. Instead, they want the UN to mandate any criticism of Islam and Islamism as Islamophobia. Resolutions of the UN Security Council, especially Resolution 1373, are violated with impunity as the West twiddles it thumbs or, worse, turns an indulgent Nelson’s eye. Such is the determination to fight terror.

The world slept as Boko Haram let loose a reign of terror. The world slept as Israel was haunted by Palestinian terror. The world slept as the Islamic State went about recreating the Caliphate. The world slept as India was hit again and again, inflicted a thousand cuts by a terrorist state fattened on American dollars. The world slept as Islamism’s blood-stained crescent waxed and human values waned.

In recent times the world has woken up twice. First, when Russia’s President Vladimir Putin called America’s bluff and took the battle to the Islamic State’s doors. And now as France counts its dead. With such knowledge, what forgiveness?

Kanchan Gupta is a Senior Journalist. The views expressed are his own. 

(Disclaimer : This article first appeared in the Pioneer)

~ By Varsha Gupta

“The country’s first priority is generating employment for the youth of the country”, said Prime Minister Modi on 15 July 2015, at the launch of the “Skill India Mission”. The statement sums up the need of the hour, when almost 65 per cent of Indian population is below 35 years of age, which constitutes the potential workforce. The situation demands immediate action from the government to utilise this manpower to propel the economy to greater heights and not allow them to languish aimlessly, making them potential recruits for anti-national outfits. Skill India Mission, therefore, seeks to create “structures and mechanisms to nurture youngsters, enabling them to find employment” and to live a life of dignity.

The ambitious Skill Development Mission primarily aims to impart skills to more than 40 crore young people by the year 2022. It will not only make the youth capable of earning the bread and butter for their family but would also instil in them with a sense of self-confidence and respect, and would enthuse fresh energy into the country. The vision statement of the Mission quite aptly summarises its daunting aim which is “to create an ecosystem of empowerment by skilling on a large scale and speed with high standards so as to ensure sustainable livelihoods and to place India in the comity of front ranking entrepreneurial and innovative nations”.

Schemes under the mission

The Skill India Mission, launched under the leadership of Rajiv Pratap Rudy, Union minister of State (Independent Charge) for Skill Development & Entrepreneurship, introduces two major schemes.

The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme that will be implemented through the National Skill Development Corporation (NSDC). It is the outcome-based skill training scheme which seeks to train around 24 lakh youths to enable them to earn their livelihood. Under this scheme, the trainees would be trained, assessed and duly certified as per international standards through various government approved industrial training centres, polytechnic institutes, schools and colleges. The successful implementation of this scheme would lead to the generation of new skilled workforce that would neutralise the excessive demand for manpower in the key sectors over the next five to seven years.

The second key scheme, the Skill Loan Scheme, will help the Indian youth to overcome financial hurdles in their training. The Government, under this scheme, would provide loan facilities ranging from Rs 5,000 to Rs 1.5 Lakh to the interested candidates who would express their interest to enrol themselves in the skill development programme. For the people who were not able to get the adequate training as per their interest due to financial burden, this initiative would act as a hopeful encouragement as they would now be able to overcome the burden with ease.

Other useful initiative launched by the government under the Skill India Mission includes “Udaan”. Udaan is a ‘Special Industry Initiative for Jammu & Kashmir ‘ that will focus on the enhancement of the employability of the unemployed youth of the region by providing them certified skill training from accredited training institutes. The implementation of this scheme would provide the much needed exposure to the unemployed youth of the State in leading companies, thus enabling rich talent of the State to compete in the corporate world.

Entrepreneurship

One of the most promising features of the Skill India Mission, the ambitious brainchild of the BJP-led NDA Government, is the provision of opportunities for entrepreneurship. The Modi Govt. has been successful in realising the fact that it is practically not possible to provide jobs for all. There is a dire need to turn some proportion of the skilled workforce into skilful entrepreneurs who would be then able to generate employment for others. The Prime Minister, in his speech at the launch of Skill India Mission, aptly said, “We want opportunities to increase. That is why we have not restricted ourselves to skills, we have focussed on entrepreneurship.” To do this, an entrepreneurship development scheme is presently being formulated by the Ministry of Skill Development and Entrepreneurship. This scheme will not only help in generation of new businesses but it will also smoothen up the process of starting new business ventures.

Make in India

The skill development schemes will compliment the other successfully launched programmes of Govt. of India like “Make in India”, “Digital India”, “Swachh Bharat Abhiyaan” and “100 Smart Cities”. These schemes, though would lead to a significant increment in the manpower requirement of the country, but these schemes would also lead to an increased demand of new skills. There will be a higher need of jobs like sweepers, welders, artisans, drivers, plumbers, security guards, cable operators, electricians, masons, mobile retailers, vendors, traders, etc. On the other hand, there will be the creation of new skilled jobs like social media planner, cyber-security officer, architects, transport planners, and many more.

Presently, only 4.69 percent of the total workforce of India is formally skilled which is considerably low in comparison with 80 per cent in Japan, 75 per cent in Germany, 68 per cent in the UK and 52 per cent in the USA. The implementation of Skill India Mission with its robust framework will bridge the gap between the workforce and the industrial employers. The mission will not only boost the employability and efficiency of the Indian youths but it would also enhance the economic growth in the companies. Moreover, the new highly skilled workforce would also encourage and invite international companies to set up their manufacturing units in India which would in turn generate new employment opportunities in the country.

Overview

In the coming years, India will face a huge demand for skilled manpower. Rudy pointed out that “The Infrastructure development industry alone would require more than 10 crore people over the next five years; clothing and textile industry would require 1.4 crore people; and building and construction industry, on the other hand would require around 3.5 crore skilled manpower.” This proves that India would soon be a dire need of skilled workforce and the government must fulfil it.

However, this would be a daunting task for the government as a number of challenges stand in the way of proper implementation of the Skill Development mission. Some of the major challenges in the current skill development framework include inadequacy of infrastructure, lack of certified trainers, lack of focus on the qualitative outcomes and lack of appropriate vocational opportunities in the present education system. All of these have to be countered keeping in mind the present situation of the nation and the future requirements with regard to skill development and entrepreneurship. The Skill Development Mission must stand to the test of implementation to make India “the largest provider of skilled workforce to the world”.

Varsha Gupta is a Research Associate at India Foundation. The views expressed are her own. 

~ By Bhushan Kumar

With a roaring lion in its backdrop, Make in India (MII) – one of PM Modi’s most ambitious program – was launched almost 10 months ago. Aimed at giving a thrust to 25 key manufacturing sectors (including automobiles and pharmaceuticals), MII has an underlying theme of promoting green and advanced manufacturing. Naturally, this entails a huge opportunity for job creation and skill development across these sectors and their allied industries. There has been a strong voice of support from various sections of the organized sector in this regard; however, things have moved at a snail’s pace and not much has been achieved on-the-ground in this direction over this period. Perhaps, looking at this program merely for improving India’s manufacturing methodologies could be myopic and limiting its true potential. Instead, MII’s true objectives have to juxtapose with India’s brand globally. MII has to be seen more as a ‘value chain management’ program than merely a mode for attracting further capital investment.

Manufacturing sector has always been an Achilles’ heel for the Indian lawmakers. From Nehru’s time of laying of industrial foundation to India’s decades of license-permit raj and Narasimha Rao’s era of liberalization, this sector has continued to be in a constant cycle of troughs and crests. Giving it a fresh lease of life after the demise of UPA-2 and with a view to make India the global manufacturing hub, PM Modi has tried to leverage on his experience of Vibrant Gujarat by unveiling the MII scheme. As mentioned elsewhere, this scheme is towards making the environment congenial for these sectors to flourish and take the next decisive step in improving their health. Strong and clear signals across the verticals of the Government and the bureaucracy have accompanied the implementation of the MII program. And the industry has responded equally encouragingly.

A series of organizations have publicly supported the cause and pledged their efforts to this goal. However, a past trend of such blink-a-miss show of hands provides fodder for the critics of MII. The Economic Freedom of the States of India 2013 report, put together by the Cato Institute and Indicus Analytic, estimated that the Indian average for what is basically a promise-to-projects metric comes out to about 6 percent: which means, that in the states evaluated in 2010-11, only 6 percent of all the amount promised actually turned into investment. Mere investment proposals or securing expressions of interest will continue to make hollow news headlines. What is it that can raise this realization rate to relatively acceptable levels, under the MII regime?

Perhaps the answer lies in the fair gap between the intention of the Government and the comprehension of the market players. The market players continue to believe that MII is limited to play of numbers on capital investment tables, and increasing the immediate job opportunities. This, in the author’s opinion is lack of foresight and discernment. What the Government intends through MII is not a mere increase in flow of capital investments into various greenfield and brownfield projects. Instead, the Government is concerned with creating a base, where the highest value addition happens within the geographical boundaries of this vast nation.

With a colonial hangover, India has over decades been a major exporter of resources. Having regard to the economics of value chain, it can be seen that India has always been at the losing end of this process. Taking a leaf out of China’s meteoric economic rise, Modi has clearly understood the dynamics in play on the global platform. With the MII programme in place, this Government intends to promote the adoption of various links of the value chain within India. Apart from enhancing the much needed foreign exchange reserves, it will contribute to the development of a very strong and dependable brand: India.

A question arises as to how a brand would be developed by mere vertical integration. Ask any of the India Brand Equity Foundation (IBEF) officials, and they will tell you that it is never about manufacturing alone. The answer can be sought by asking the markets for examples. Look at any of the large conglomerates in India (ITC, Mahindra) or across the world (ABB, Unilever), and one knows why India must replicate this across sectors to re-engineer its own brand. A Calvin Klein brand may get its products manufactured in the Asian countries, but it is the brand that enjoys the highest share of the value, in the entire process of manufacture.

It is exactly also the reason why a product ‘Made in USA’ or ‘Made in Taiwan’ catches more attention than ‘Made in India’, even two decades after economic liberalization. By creating a wide portfolio of value additions and ensuring highest standards in the manufacturing processes, a brand will have to be gradually woven in India’s economic fabric. In due course, there will be a noticeable upliftment of the entire industry, causing great benefits to its allied industries as well.

A growth in the vertical integrations will have far reaching consequences to allied industries, which play the role of the indispensable walking stick. Take for instance: an excellent initiative in this direction could perhaps be bringing the manufacturing of shipment containers to India (as was recently indicated by a senior government official). Currently, manufacturing contributes to 50% of India’s exports, and a smart investment in allied industries such as container manufacturing, will definitely help in retaining the value within the country leading to an overall economic boost.

Obviously, this solution is easier said than implemented. Sifting through the bureaucratic shackles and getting environment clearances are reasons for widespread angst.

To raise the turnaround ratio between promises and projects, and to cause a systemic change for achieving an economic freedom, an intense fervour is needed in this direction. If the Government intends to make even the actors at the bottom of pyramid active participants in this huge brand building exercise called MII, it must spread the intent of MII – and not merely limit itself to the operational implementation. India needs to build a brand that is not merely a product of a catchy design or logo, but a result of reliable and consistent value addition process.

Bhushan Kumar is a Young India Fellow (2014-2015) at the Ashoka University. The views expressed are his own. 

~ By Priyang Pandey

Black money is a term used for monetary transactions that evade taxation by avoiding the usual banking system; these transactions tend to create a parallel economy within the existing economic ecosystem. These transactions however do not contribute to the national income. As per reports, the size of India’s black money economy is estimated between 23 to 26 percent of the GDP. Black money being unaccounted becomes a major source of corruption and for many criminal and anti national activities including acts of terrorism, drug trafficking etc. Consequently, it poses a grave threat to national security. In view of this, large stockpiles of currency notes with private parties also enables anti-India powers to print fake currency notes and circulate them with impunity.

The NDA government before coming to power had come with a solemn commitment to fight the nefarious evil of black money. Consequently, in the very first cabinet meeting of the Government, an SIT (special investigation team) was constituted to look into the cases of black money stashed abroad in various tax havens. However, in addition to this, a significant step towards fighting black money was the introduction of ‘Prime Minister’s Jan Dhan Yojana’ (PMJDY), a financial inclusion scheme with a mission based approach for providing a bank account to every household in India. The scheme facilitated opening of bank accounts for marginalised sections of the society, who hitherto had no access to banking facilities.

As per the official data, the actual target achieved was much more than the set target of 15 crore accounts till 26^th January, 2015. PMJDY accounts   have been offered with the zero balance facility; but the excitement of new account holders turned this into a huge pool of Rs. 19,990.52 crore which by itself is a landmark achievement. PMJDY also offers a Ru-pay debit card to every account holder, this is to familiarise people with card transactions, so that more and more people use banking channels to make their routine transactions. Financial inclusion by all means is a significant step towards the full-fledged war against corruption and black money.

Curbing and eliminating black money needs strong political will power as well as a dedicated approach. There were many half baked steps taken by the previous Governments to contain corruption and act on the black money issue, but they all failed to attain their primary objective. There may have been many reasons for the failure, but there is a need to fight back with a target based approach. In the past many anti-corruption crusaders have talked about demonetising higher denomination currency notes, with the obvious intention of pushing people to use banking channels.  However, these steps were often opposed on the premise that the rural and marginalised sections of our society do not have access to banking channels. However, after the success of PMJDY, the government can intend to go ahead with the demonetisation of higher value currency notes, once people become more familiar with the modus operandi of their respective accounts. RBI has already taken the first step by demonetising currency notes printed before 2005. This will also prevent circulation of counterfeit currency, as most of the fake currency is printed in higher denominations, so as to make it economically beneficial. ISI has for long been printing fake Indian currency notes and this has been used to promote various anti-national activities within India.

PMJDY will also allow the government to pay money for various schemes run by the government, as well as for the subsidies, directly to the beneficiaries, thereby eliminating middlemen who by itself are a major source of corruption. Direct cash subsidy transfer has proved to be a major initiative to make the subsidy model leak proof, as well as to ensure that subsidies are not given to those who do not deserve.

Use of credit/Debit cards helps in making all cash transactions transparent. According to a survey, only 14 per cent Indians hold credit cards. Only 2 per cent spend more than Rs 18000 per month, this accounts for an average expenditure of around Rs. 350 per month per person. If these figures are correct, not more than 8 per cent of India’s income is spent through credit cards. That is too small a number to check black money. It is therefore necessary for the government to incentivise card and banking transactions, so that people are attracted to use banking transactions over cash. It is expected that with the help of the recently launched Digital India initiative, a majority of account holders will now have the facility of branch-free banking through smart phones.  With some added incentives, it should be feasible to raise the proportion of online transactions. Recently the government decided to waive off the taxes incurred on card payments at some merchant outlets as well as websites like IRCTC, this may well be considered as a small step towards incentivising card or cash-less payments. However, the government may need to reduce service tax from card transactions to make its usage more attractive.

Recently, the government also launched MUDRA Bank to facilitate the financing of micro units or small scale entrepreneurs. As per the NSSO survey, 90 per cent of the non agricultural jobs are created by these micro units and small scale entrepreneurs. By extending easy loans through last mile financers, which in most of the cases are commercial banks; unit holders can be motivated to use the banking route as the only mode for monetary transactions. This step will lessen cash transactions substantially and the activity of these unit holders will come into the account for GDP calculation through the banking system. According to various reports, the inclusion of these micro units and small entrepreneurs in the national income will result in an overall increase of at least seven to nine percent in GDP.

To sum up, Jan Dhan Yojana, which has been a successful tool of financial inclusion can be used to draw people away from cash transactions and towards usage of various banking channels. This in times to come can greatly reduce corruption. By demonetising higher value currency notes, the government can eliminate a huge proportion of Black Money stashed in various vaults, both in India and abroad. Government needs to utilise the ability of its newly constituted think-tank ‘NITI Aayog’ as well as other agencies to ideate and come up with more efficient utilisation of huge addition of new account holders to the banking channels and utilise this tool of financial inclusion to curb corruption and eliminate black money, which has a major evil for India.

Priyang Pandey is a Research Associate with India Foundation. The views expressed are his own. 

~ By Alok Bansal

Iran and six Western powers led by the United States reached a historic agreement on 14 July 2015. The agreement ends decades of Iran’s isolation, while significantly limiting Iran’s ability to produce a nuclear weapon. The deal clinched after 18 consecutive days of discussions, brought an end to the negotiations that were going on for last 20 months. The agreement has for the time being capped Iran’s capacity to acquire a nuclear weapon, without overtly denigrating Iran or hurting its national pride and dignity. It has been projected as the biggest diplomatic achievement of Obama Presidency and has enormous implications for the entire globe including India.

The agreement drastically reduces Iran’s stockpile of low enriched uranium for 15 years, by directing it to ship 98 per cent of its current holdings abroad, the most likely destination being Russia. In addition Iran has been asked to reduce its centrifuges by two third. These two actions will extend the time taken for Iran to make a nuclear bomb form two to three months at present to one year, should it decide to abandon the accord. The agreement based on verification, grants Iran sovereign rights to develop nuclear energy after satisfying the international community that it has no plans to build a nuclear bomb. Accordingly, there are no restrictions on Iran to produce nuclear fuel after 15 years and it can carry out research on advanced centrifuges after eight years. International Atomic Energy Agency (IAEA) safeguards will remain in perpetuity and so will be the verification process by IAEA inspectors on all the nuclear facilities of Iran. It has also agreed for the time being to a ban on designing warheads and carrying out tests with detonators and nuclear triggers that could lead to nuclear weapons in future.

The agreement will allow Iran to boost up its petroleum production and ameliorate the sufferings of its population. Consequently, there were jubilations on the streets of Tehran as soon as the news about the agreement was disseminated. Crippling sanctions had led to devaluation of Iranian Rial leading to massive inflation and shortages of essential goods including medicines. Ordinary citizens in Iran believe that the deal will create jobs and usher in better days. Iran has also been permitted to import and export conventional arms as well as pursue its guided missile programme, after five and eight years respectively. President Hassan Rouhani, who was elected in 2013 on an agenda of freeing Iran from sanctions, claimed that the agreement was the culmination of Iranian people’s prayers. There is no doubt that such an agreement was virtually impossible under the previous hawkish government in Tehran.

Iran was the second largest producer of crude before the sanctions set in and its return to the global petroleum market will result in lowering of crude prices. This will help to boost the global economy and be especially beneficial to the energy deficit developing countries like India. However, the biggest impact of this deal has been on the security environment and as expected there has been disquiet amongst the Arab regimes in the Persian Gulf as well as in Israel, whose Prime Minister has called it a ‘historic mistake’ that would create a terrorist superpower with nuclear weapons. An objective analysis indicates that this deal will enable the western world to collaborate with Iran and Iraq to take on the Islamic State (IS) as well as the Al Qaeda and its affiliates, which possibly pose the greatest long term danger to global peace an security. Thus the agreement has the potential to make the globe more secure and peaceful; in the process it could strengthen Bashar al Assad in Syria and Houthis in Yemen. However, it also gives an opportunity to bring in democratic reforms both in Syria and Yemen. This may upset some of the Arab states, who are known to propagate an extremist version of Islam and abhor secular and democratic regimes.

From India’s point of view, the agreement is extremely significant. India’s strained relations with Pakistan and China in the past, ensure that Iran provides the only access to Afghanistan and Central Asia. Geo-political imperatives of India mandate good relations with Iran if it wants to have any role in Afghanistan or Central Asia. In the past India and Iran have collaborated against Taliban in Afghanistan and may need to collaborate against the growing menace of IS and various affiliates of Al Qaeda. Iran also provides India the shortest access to the vast energy resources of the Caspian basin and the Caucasus region. The growing Indian economy not only requires the vast untapped markets of central Eurasian landmass, but also needs newer sources of energy supplies. In the past cooperation between India and Iran was severely hampered due to sanctions that were in force.

Iran possesses 10 per cent of world’s proven oil reserves and approximately 15 per cent of global gas reserves. Despite having the second largest reserves of natural gas in the world, Iran has not been able to exploit them optimally and thus its exports are fairly limited. There are therefore strong complementarities between India and Iran. Indian investment, technology and markets can enable Iran to develop its gas reserves, which could be used to quench the growing thirst for energy in India. Iran’s energy resources provide one of closest and cheapest energy resource available to fuel India’s growth and India has been considering North South Transport Corridor and Iran-Pakistan-India (IPI) gas pipeline to meet its energy requirements. After the agreement, India can look at this pipeline afresh to resolve its energy crisis. Iran also does not have adequate refining capacity and In spite of its enormous oil reserves, imports approximately one third of its consumption. On the other hand, India today has excess refining capacity and is a net exporter of petroleum products. Indian refineries in the private sector, which are unable to market their products locally, sustain themselves by exporting them to Iran. In the past, some of them had to curtail their exports due to sanctions; the agreement will provide a fillip to their exports to Iran.

As India has lot of stakes in the success of this agreement, it should actively work to ensure that the agreement succeeds. The agreement has a provision of re-imposing sanctions against Iran, if it violates the provisions. New Delhi must ensure that such a situation does not arise. Both Iran and the West trust it and it can therefore play the role of an honest broker. Similarly, the US congress dominated by the Republicans may vote against the deal, although President Obama has promised to veto any congressional opposition, it may be in New Delhi’s interest to use its newly acquired clout on the Capitol Hill to lobby for this significant agreement.

~ By Kanu Agrawal

‘Importance of Bilateral Investment Treaties’

In a fast paced, technologically driven globalized world, foreign investment plays a crucial role in the progress of most developing countries. The role of foreign investment becomes more complex, as it mostly takes place from ‘developed’ economies to the ‘developing’ economies. There are basic social, political and transactional differences between domestic investment and foreign investment, which provides the latter with increased scrutiny and attention. The basic jurisprudential point where the conflicts emerge are the methods through which foreign investment takes place and the control that the host-state wants to exert over the investors. The investors seek mechanisms to protect their investments and are reluctant to take the increased risks that come with bringing their resources in a legally and politically turbulent foreign country. To address such concerns, several mechanisms have been developed to reduce the uncertainties associated with investing in such countries by providing assurances and security to foreign investors. In fact the need to regulate trade and provide protection was what prompted the parties at first to enter into Bilateral Investment Treaties (BITs). These bilateral investment treaties are international contracts between two sovereign states where they guarantee each other protection of investments, fair treatment, mechanism to resolve disputes and the provision dealing with other technicalities like expropriation and repatriation.

When a dispute takes place between a developing nation and a foreign investor, the respective international investment tribunal, which derives its powers from the BITs, becomes the disputes resolvers. The International Centre for Settlement of Investment Disputes resolves disputes for most countries of Europe, South and North America and some countries of Asia; it was established through a special multilateral treaty between these nations. Although, India is not a party to the Convention establishing the Centre, its jurisprudence and membership is likely to become a bone of contention for India in the future.  Presently, the investor state tribunals concerning India gain legitimacy from the dispute settlement clauses in the BITs between the investor’s home state and India. These settlement clauses are inserted to provide protection to the investors in matters where the agreed economic standard in the BITs has been breached by the host country.

‘Model BIT and Negotiations’

In the modern era, the negotiations in entering new treaties happen on the basis of the Model BITs released by different countries. The Model BITs must be considered as the starting point for negotiations, based on which each country takes the deliberations further. The new Model BIT released by the Finance Ministry unsurprisingly makes significant departures from the principles enshrined in the earlier one, such as, to tilt the balance back in favor of securing India’s sovereign investment rights.

For the settlement of ‘investment disputes’ with a foreign investor, the new BIT provides for the establishment of an arbitral tribunal to be governed by the United Nations Commission on International Trade Law (UNCITRAL) model, but successfully protects the Indian judiciary’s turf by providing for the constitution of arbitral tribunal only after exhaustion of all domestic remedies, and with a prohibition that such a tribunal shall not review pre-decided judicial matters. The non-exhaustion of local remedies is one of the defining points, which protects the host nation’s sovereignty, with the basis argument being that a local legal system provides equality of treatment within the market and basically represents the risk a foreign investor shall take for seeking the enhanced profits as compared to its investment in its own state.

The new BIT makes a tectonic shift to an enterprise-based definition of investment by requiring a foreign enterprise to be constituted in India and to carry out ‘real and substantial operations’ along with employing ‘substantial number’ of employees in India with a long-term commitment of capital.

The Most Favoured Nation (MFN) clause, a creation of the developed countries which provides equal treatment to investors of a particular country in future in light of further treaties entered by the host country with other countries. On the face of it, the MFN clause seems be a novel and reasonable invention, but in practice it summarizes the biased regime and its one-sided direction. MFN clause proved a nemesis for the government in the case involving the White Industries o and Coal India.  An arbitral tribunal found the Republic of India guilty of violating the India-Australia bilateral investment treaty (BIT) and excluded tax dispute matters from its coverage.

 ‘Development’

There is one thing common in the Modi Government’s agenda and the debate surrounding the International Investment law experts, i.e., Development. Mr. Modi personally deserves a lot of credit to make the term an election agenda, which was a very welcome departure from the borderline communist and fundamentally populist election discourse in the country. While the term may understandably have varying political connotations depending upon on a party’s ideological affiliations and priorities, surprisingly, the term is quite an enigma even for legal experts.

Development as an international right has been frequently recognized in international human rights instruments, particularly the 1986 United Nations General Assembly Declaration on the Right to Development. While the justifiability of the right to development remains contested by governments and scholars, the binding quality of the right does not depend on its justifiability. There must be a necessitated push for the right to development, which would be similar to other international norms and must operate within the parameters of State sovereignty and investor protection.

The present regime of solving disputes between host nation and foreign investor represents an inherent disadvantage to the host nation and thus restraining these tribunals to take jurisdiction over the matter becomes imperative. ‘Development’ then becomes one of the most debated and contested criterion. The inclusion of development, even if not directly but through the inclusion of ‘real and substantial’ in the definition as a necessary criterion for any protection under the BIT is a much neglected but welcome move. The developing countries faction in the international investment dispute settlement regime have been fighting for this very provision for years and it represents the ideological central point of view around which debates take place around the world.

In conclusion, the new Model BIT is a welcome move and it would be interesting to see in which direction the Indo-US BIT moves, considering the renewed relationship and the diabolically opposite nature of the countries’ respective BITs.

Kanu Agrawal is a graduate of the National Law Institute University, Bhopal and is currently practicing law in Delhi. Views expressed are his own.

~ By Sanjay Paswan

The misplaced narrative being articulated by a section of the media and the intelligentsia on the effectiveness of the BJP led NDA Government in the Centre on the social sector front is indeed worrisome. By all means, the Government of India (GoI) is effectively exploring multiple facets of empowerment for the socially, politically and economically deprived sections of the society. This article makes certain observations about the steps taken by the present regime to achieve the pristine objective of social justice and holistic development of the last man in the village, which is reflective of the eternal commitment to the principles of Antyodaya.

Social Justice is a vital cornerstone of our constitution. Within the dichotomy of development and justice, one should not ignore the core responsibilities of the state. As far as development is solely concerned, non-state actors are sufficiently equipped with the resources and wherewithal to carry out developmental activities. Holistic inclusion can only be realized with the intervention of the state. It is here that there is an imperative need to revisit and rethink the role of the state. It is therefore opined that the State’s role is critical and should not be minimized. Disinvestment and abrupt privatization should be transparently debated and discussed as profit making and revenue generation leads to immense competition and ‘survival of the fittest’ syndrome. Socially, politically and economically deprived sections of the society may not be able to compete in the extremely demanding circumstances of the corporate world. Hence one of the paramount challenges is to create an amicable atmosphere to enable ease of doing business for these sections of the society.

The idea behind ‘Subaltern Entrepreneurship’ is to equip the subaltern skill base with the requisite support system comprising of financial and regulatory facilities. Through this article, the author recommends some ideas and suggestions to explore various avenues of empowerment beyond the conventional contours of the Constitution. One is aware of the fact that, government jobs are fast evaporating hence too much reliance on the government machinery might be a dangerous proposition. India has been traditional preservers of various skills such as shoe making, polishing etc. It is in the area of Skill development that one must evolve ways to match the existing skills sets amongst citizens with the ever increasing needs of the globalized world. It is also an appropriate time to think beyond redundant institutions such as National Scheduled Caste Finance Corporations etc. Policies facilitated by actions must ensure adequate representation of the weaker sections in co-operatives, corporates and civil societies through well-organized interfaces as well as through engagements at both institutional as well as at individual levels.

Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to the economically weaker and the lower-income segments of society. True to this, GoI has taken several initiatives on the social sector front, all of which are potentially game-changers in the realm of social sector policy canvas. Right-based legislations initiated by the erstwhile regime have proved to be a nightmare both in vision and implementation. Hence, instead of lofty ideals, an actionable policy armed with inclusive growth is the need of the hour.

The key initiatives undertaken by the Union Government for social and economic security have been enumerated below:-

• Prime Minister Jan Dhan Yojana. This is a very significant scheme that strives to end Financial Untouchability by ensuring that the economically weaker sections have access to bank accounts.

• Expansion of Social Security Net. This has been achieved through Pradhan Mantri Suraksha Bima Yojana (Accident Insurance), Atal Pension Yojana (Unorganized Sector) and Pradhan Mantri Jeevan Jyoti Yojana (Life Insurance), which provide social and economic security to the marginalised sections of the society.

• Institutional Support for Subaltern Entrepreneurship. This has been achieved through MUDRA Bank, to provide microfinance to entrepreneurs in rural hinterland of India.

• ‘Venture Capital Fund for Scheduled Caste Entrepreneurs’. The objective of this Scheme is to promote entrepreneurship among the Scheduled Castes and to provide concessional finance to them. The scheme would be implemented by the Industrial Finance Corporation of India (IFCI) Limited for which Rs. 200 crores has been allotted.

• Credit Enhancement Guarantee Scheme for the Scheduled Castes: The objective of the Scheme is to promote entrepreneurship amongst the scheduled castes and to facilitate concessional finances to them. A budget of Rs. 200 crores has been allocated to IFCI Limited to facilitate the scheme.

• Swachhta Udyami Yojana: As an integral part of ‘Swachh Bharat Abhiyan’ launched by the Prime Minister on 2nd October, 2014, the National Safai Karamcharis Finance & Development Corporation(NSFDC) has launched a new Scheme ‘Swachhta Udyami Yojana’ on 2nd October, 2014 for financing viable community toilet projects and sanitation related vehicles to collect garbage.

• Green Business Scheme: The scheme has been Started by NSFDC, with the aim of promoting green businesses to support sustainable livelihoods of Scheduled Castes and Safai Karamcharis. Financial assistance would be provided for those economic activities that could address the challenges of climate change, e.g., E-rickshaw, solar pumps and other instruments working on solar energy etc.

• Sanitary Mart Scheme. Launched in 2014-15, under the scheme, loans are provided to up to Rs. 15 Lakhs to Safai Karamcharis for construction of toilets/bio-degradable toilets.

These schemes clearly highlight that the present government is committed to the cause of upliftment of Dalits and other disadvantaged sections of the population. As outlined, various landmark initiatives have been initiated under the present regime to eliminate poverty and empower the weaker sections of the society. In addition to this, there are several specific pointers which the GoI could keep in mind while formulating policies towards achieving holistic empowerment of the socially, politically and economically weaker sections of the society in the days to come. Some of them are:

• Democratizing Skill Development. Opening of Industrial Training Institutions (ITI) at block level. Presently, every district in the nation is mandated to have one ITI each for rudimentary skill development like plumbing, electricity, hardware etc.

• Credit Accessibility for ITI trained workforce for encouraging start-ups.

• Market Accessibility for the first generation of ITI trained entrepreneurs by ensuring backward and forward linkages.

• Bharatiya Dalit Bank on the lines of Bharatiya Mahila Bank can be created to ensure hassle-free access to financial services. Funds from Scheduled Caste Sub-Plan can be annually earmarked for the functioning of BDB.

• National University for Dalit Studies (N.U.D.S) – Centre of Excellence can be established for undertaking studies on different dimensions of empowerment.

• National Legislation to prevent the illegal diversion of funds from the Scheduled Caste Sub-Plan like the one in Andhra Pradesh.

Dr. Sanjay Paswan is a former Union Minister and member of BJP National Executive Council. The views expressed are his own

~ By Raghav Pandey

In a democracy the ultimate citadel of power rests with the people. The government and its institutions derive their strength from its citizens and usually the agent of such delegation of power is a well drafted Constitution. The Legislature and the Executive in the Indian constitutional setup, hence derive their powers from the democratic mandate by virtue of being elected by the people. Other key institutions like the bureaucracy get legitimacy from the powers delegated to them by the executive.

It is pertinent to note that the judiciary functions independently, in accordance with Montesquieu’s theory of separation of the three wings of the government, namely, the Legislature, Executive and the Judiciary. The function which is earmarked for the judiciary is adjudication of laws but difficulty arises, because in many of the disputes which come up before the judiciary, the executive itself is a party. Hence, independence of judiciary is a crucial necessity for the healthy functioning of a democratic state. On the other hand, the executive has the democratic legitimacy to govern the country. Hence the judicial appointments have long been a subject of debate, as there has always been a need to strike a balance between democratic legitimacy and judicial independence. The United States (US) of America and the United Kingdom are amongst the two longest functioning democracies in the world and hence it is pertinent to examine their models of judicial appointments.

In the US, the method of judicial appointments is pretty straightforward, where the President of the US nominates the Supreme Court Justices, Court of Appeals Judges, and District Court Judges, who are then ratified by the Senate after along hearing. In this way the appointments gain legitimacy from a democratically elected head of the state, as well as from the upper house, where each state is represented equally. In this system a discernible drawback is that, the judge by the virtue of being appointed by the President may carry a bias in favour of the President and his party. The US Constitution seeks to get over it by appointing a judge for life, i.e. till he voluntarily retires or dies in office. This ensures that once appointed, it is virtually impossible to remove a judge, which allows him complete freedom.

In the UK,where the parliament was all supreme and the House of Lords was the highest judicial body for centuries, the system was changed in the year 2005 by the Constitutional Reform Act 2005, which established the Supreme Court,which formally started functioning in the year 2009.The function of judicial appointment in the UK is now performed by the Judicial Appointments Commission. The JAC consists of 15 members out of which 12 are selected through a transparent competition and 3 are judicial members.

The Indian situation is therefore quite unique in terms of judicial appointments. The Constitution under Article 124 (2) provides that “Every Judge of the Supreme Court shall be appointed by the President by warrant under his hand and seal after consultation with such of the Judges of the Supreme Court and of the High Courts in the States as the President may deem necessary….” The word ‘President’ wherever mentioned in the Constitution is subject to the provisions of Article 74 which broadly provides that the President shall always act in aid and advise of the Prime Minister and the Council of Ministers and has no discretion to act in his personal capacity.

These provisions were dealt with by the Supreme Court of India in the following three cases – S. P. Gupta v. Union of India – 1981 (also known as the Judges’ Transfer case), Supreme Court Advocates-on Record Association vs Union of India – 1993 and in Re Special Reference 1 of 1998, collectively known as the Three Judges Cases. The combined effect of these three cases is the evolution of the collegium system. The Supreme Court interpreted Article 124 (2) to be independent of Article 74 and favoured the setting up of a collegium of Chief Justice and senior judges of the Supreme Court, whose recommendation were made binding on the President. This made the Indian Supreme Court the most powerful apex court in the world as it was totally independent of the other branches of the government, in appointment of its own judges.

This made Indian judiciary lose its legitimacy and connect with the popular will. In the absence of any accountability or transparency, the collegium system nurtured judicial nepotism and allowed the dominance of the bar. Article 124 (3) (c) of the Constitution of India empowers the President to appoint an eminent jurist as the judge of the Supreme Court,but ironically there has not been a single appointment to the bench of Supreme Court under this category because of the dominance of the bar,which leaves little room for a good jurist to serve the apex court of India.

It is pertinent to note that UK abandoned its 700 year old tradition by enacting the constitutional reform for the establishment of Supreme Court. It is hence imperative for India also to act in a similar fashion and enact similar reforms, so that the judiciary is not completely out of sync with the popular will. It is with this requirement in mind that the new National Judicial Appointments Commission (NJAC) Act was enacted. The Indian NJAC will have the Chief Justice of India as the ex officio chairman of the commission, along with the two senior most judges of the Supreme Court as members. The commission will also have the Union Law Minister as an ex officio member and two eminent persons to be appointed by a committee consisting of CJI, the Prime Minister of India (PM) and the Leader of Opposition (LoP).

The above model of NJAC is possibly the best suited for the Indian constitutional setup because it provides legitimacy, where in the PM, LoP and the Law Minister, all three responsible to an elected legislature, have a significant say, besides the Judiciary. In this system, while the judiciary provides the legal expertise, so essential in the case of a judge, the other three members represent the popular will and derive legitimacy from being appointed by the democratic government.

The Indian NJAC model is remarkably better than the models functioning in both the US and the UK. In the US, there is no effective say of the Judiciary, and in the UK the say of the judiciary is quite limited. The vision of the Government of India in enacting the NJAC is appreciable in terms of the perfect balance it seeks to strike between the judiciary and the executive as well as between legitimacy and independence. The NJAC when it becomes functional will present to the world a model which could possibly be replicated by many other budding democracies in terms of Constitutional practices and ethics.

Raghav Pandey is a Research Associate with India Foundation. The views expressed are his own.

~ By Meena Singh Roy

In last one year, Prime Minister Narendra Modi has successfully accomplished India’s active foreign policy approach towards its neighbourhood, particularly in Nepal, Bhutan and Bangladesh. Equally significant have been his visits to United States, Japan, Canada, Australia, China and Mongolia, reflecting India’s activism in re-energizing relations with these countries. However, India’s extended neighbourhood, which is a vital region of importance for the country, is likely to get the much needed impetus during the upcoming week-long visit of Prime Minister Modi to five Central Asian Republics (CARs) starting from July 6, 2015. He will participate in the BRICS and SCO Summit in the Russian city of Ufa from July 9-10 and visit Uzbekistan and Kazakhstan before the Summit and later to Kyrgyzstan, Tajikistan and Turkmenistan. Prime Minister’s visit is likely to focus on energy cooperation, connectivity, regional security issues and enhancing India’s image by formulating a geostrategic development partnership with CARs.

The new geo-political changes in the region; emergence of new extremist groups like Islamic State and their wider implications for the region; increasing violence in Afghanistan and growing concern about return of extremist forces in Afghanistan; increasing influence and presence of China in Eurasia, changing regional power balance and emergence of new conflict zones in West Asia demand that New Delhi formulate innovative ways to engage Central and West Asian countries to address and manage this new situation. Given its strategic interests in the region and the need for greater economic and energy cooperation between South,Central and West Asian region, India needs to re-activate its policy towards its extended neighbourhood.

 It is in this context that the upcoming visit of Prime Minister Modi to Central Asia needs to be viewed. Both from Indian and Central Asian perspective, this visit will go a long way in advancing and cementing India’s relations with the CARs. After late Prime Minister Narasimha Rao’s visit in early 90s which became a major turning point in India-Central Asia relations, the forthcoming visit of Prime Minister Modi will be a significant one, as he will be the second Indian Prime Minister to visit all five countries, after former Prime Minister Jawaharlal Nehru’s June 1955 ground breaking tour of this region. In addition, this would be an important step in projecting India’s serious effort to cement its ties with all five Central Asian partners.

From the Central Asian perspective, the visit of the Indian Prime Minister will be much awaited and desired one. Absence of visits by the Indian Prime Minister to this region has created heartburns when compared with the frequent visits of the Chinese President to this region.  Therefore, the decision of PM Modi to visit all CARs provides a unique opportunity not only to ensure New Delhi’s renewed interest in the region but also to convey a vital message that India wishes to move from its ‘Connect Central Asia’ policy to ‘Act Central Asia’ policy which has been the mantra of the present Modi government. The visit could not have come at a better time.

The Central Asian region holds great significance for India, both in strategic and geo-economic sense. The region holds major hydrocarbon and gas reserves, which are much needed by India. In the last two decades, the Central Asian region has witnessed an unprecedented integration into global economic and political mainstream.The region has successfully expanded its influence in the global energy scene. Its geographical positioning makes it a land-bridge between Asia and Europe. In addition, despite global financial crisis, the economic outlook remains favorable for the Central Asian countries. In this new geo-political situation, the CARs are building bilateral strategic partnerships and cooperative arrangements at regional and global levels to address the emerging security and economic challenges. While countries like Kazakhstan, Uzbekistan and Turkmenistan are building partnership based on their own politico-economic strength, Tajikistan and Kyrgyzstan are working closely with Russia while exploring their options of cooperating with other major players as well. China has emerged as the key player in the region with offers of billions of dollars in loan to CARs to build energy and transport infrastructure. Russia, an important partner of CARs has also been working in close cooperation with China to enhance energy cooperation in light of its troubled relations with the West. In addition, one also witnesses increasing cooperation between Russia and Pakistan including close security and defence cooperation. In the backdrop of these new alignments and re-alignments in the region, and in the context of Central Asian countries wanting India to play a pro-active role, New Delhi has to not only act fast but also sustain this momentum of enhanced engagement to ensure and protect its interests.

Since, the visit by Indian PM has been a much awaited and anticipated one;there are many expectations from not only the regional countries but also from the observers of Central Asia in India. Perhaps, to meet the expectations from the region would be the biggest challenge for the PM. His primary task would be to build new relationships, and to protect and enhance India’s economic and commercial interests. So far, India has been successful in building political ties but has struggled to enhance economic and commercial ties. Its economic ties are the most unsatisfactory part of its overall good political relations with all CARs. India’s Trade with the region amounts to some us $1.6 billion as compared to China’s $50 billion.Its geographical connectivity with the region is still a major challenge.

 India because of its positive and benign image, its scientific and technological advancement, its strength in services and health sector and finally its economic potential enjoys a unique position to re-energise its current relations with the CARs. PM needs to take full advantage of India’s positive image, its historical and cultural ties to re-build stronger developmental partnership with the region. The key elements of India’s strategy towards this region could include:

• Developing a long-term innovative strategy to enhance engagement with the region, particularly in energy, transportation sector. Need to give further push to International North-South transport Corridor (INSTC).
• Embracing regionalism, besides bilateralism as a toolof its engagement with the Eurasian region. This would mean greater cooperation with China, Iran, Afghanistan, Pakistan and Russia in the regional context.
• Concentrating and supporting the Central Asian led regional groupings.
• Exploring prospects of cooperation between the CARs and the SAARC would go long way in augmenting cooperation between South and Central Asia.
• Capacity building in Central Asia to become the key area of India’s Central Asia policy.
• Encouraging big business houses’ involvement in Central Asian market.
• Announcing more fellowships for the Central Asian students and establishing additional Indian study centers in CARs and Central Asian study centers in India.
• Committing certain amount say $10 to 15 billion in next five years, to promote India-CARs engagement.

A successful visit of the PM will carve a new path for India to re-build strong and meaningful relations with the CARs.

Dr Meena Singh Roy is Research Fellow and Coordinator, West Asia Centre at Institute for Defence Studies and Analyses (IDSA). The views expressed are her own.

~ By Shakti Sinha

The attack on the Afghan parliament reflects the deteriorating security situation in that country. The withdrawal of foreign troops and strategic choices made by President Ghani seem to have emboldened the Taliban who have now started capturing territory and holding on to them, a change from their earlier tactics of inflicting damage and creating insecurity in the countryside. No doubt, the Afghan security forces are holding on, repulsing the attack on Parliament killing all attackers but their ability to ensure security and stability is questionable.

The Taliban offensive is clear from the figures of civilian casualties in the first three months of 2015, where anti-government forces were responsible for 73 percent of all casualties. Though the total casualties are up eight percent compared to last year, the civilian casualties from mortar and rocket fire have gone up by 43 percent to 266 (62 deaths, 204 injuries). In earlier years, IEDs and suicide bombs were overwhelming responsible for all civilian deaths. Clearly the Taliban have now emerged as a battle-field fighting force. Targeted assassinations are also on the rise undercutting government’s credibility and creating fear in the minds of the Taliban’s enemies.
President Ashraf Ghani came to power as a result of compromise brokered between him and Dr Abdullah, now his chief executive, by the US which broke the deadlock caused by the inconclusive elections marred by allegations of large scale irregularities. Once the agreement was reached, the Election Commission declared Dr Ghani the winner but till date final voting figures have not been released. The circumstances leading to, and the actual formation of this unusual governing arrangement, which goes beyond Constitutional provisions are factors responsible for the political quagmire looming over Afghanistan. The government has not had a smooth sailing, and had great difficulty first in agreeing on names of ministers, and then getting parliament to ratify its nominations. In fact, the crucial post of defence minister has been vacant for nine months, with two ‘failed’ nominees. The Taliban timed the parliament attack to coincide with second Vice President Sarwar Danish’s introduction to parliament of Masoom Stanekzai as the defence minister nominee.

President Ghani’s unexpected approach to Pakistan, through China and directly, was recognised as a high risk strategy. Ghani’s correct assumption was that there can be no peace in Afghanistan unless the Pakistan army was on board, but whether they can be won over is the question. The Pak army are seen alternatively as controlling the Taliban, using them as their ‘strategic asset’, or having leverage over them. And Ghani rightly assessed that only the Chinese have leverage over the Pakistan army. The Afghan government handed over anti-Pak army elements, who had been given shelter earlier. Army-to-army links at the Corp commanders’ level, coordinated patrols and operations, deputing Afghan military cadets for training in Pakistan etc have been operationalised. Recently, ISI and the Afghan intelligence agency (NDS) have signed an agreement to carry out joint counter-terrorists operations and for the training of NDS personnel in Pakistan though the NDS chief opposed the agreement. Perhaps few believed that the ISI will keep its end of the bargain. In fact, the Afghan intelligence spokesperson, Hassib Sediqqi, said that an ISI officer helped the Haqqani network, a Taliban affiliate, carry out the attack on parliament. According to him, the suicide car bomb was manufactured in Peshawar, and the NDS were aware of the impending attack as early as June 10th. Consequently they had beefed up security arrangements at the complex.
Despite such unilateral concessions by Afghanistan, there has been no peace dividend. Far from the Taliban ceasing attacks and coming over-ground to engage with the Afghan government, it has in fact stepped up its attacks. The Taliban have made a show of consulting with foreign governments, Afghan civil society etc., it has singularly refused to respond to the Afghan government’s offer for talks. Instead, recently they seized that strategically important Musa Qala district of North Helmand. Over the last week, after surrounding Afghan security forces, they have taken control over two districts in Kunduz province – Chardara and Dasht-i-Archi.
Besides, there are also reports of the emergence of the Islamic State (IS) in Afghanistan. The first reports that emerged in mid-2014 from Ghazni turned out to be false, but subsequently there have been a number of reports that disaffected Afghan insurgents have aligned with the IS, along with a number of Pakistani Taliban. Reportedly there have been a number of clashes between the Taliban and IS, though there could be a tendency to overestimate the latter’s strength. Many local government security chiefs cite the IS threat to be able to garner more resources, and small time ‘warlords’ claim allegiance to IS in order to increase their profile. Overall, the Taliban is too pervasive to allow the IS much space.
If these developments were not confusing enough, evidence is surfacing about an informal alliance between the Taliban and their former enemies, Iran. This is not the first time that Iran has supplied arms and ammunitions to the Taliban, against their common enemy, earlier the US and now, the IS. This tactical alliance is an act of brinkmanship, reflecting the extent to which different parties are prepared to go.
Constitutionally, Afghanistan faces a crisis. Parliament’s term is over but in the prevailing situation, elections are not possible. President Ghani has extended its term but is on shaky legal grounds. Inability to form a functional government for months led to paralysis in governance and severely tested the credibility of the agreement underpinning the government. Even at present the Supreme Court, the Attorney General’s office and the Constitutional Oversight Commission have acting heads. This inability to govern could easily morph into a test not just of credibility but of legitimacy, with questions being asked about the legality of the executive and the legislature, and even of the judiciary.
A deteriorating security environment, weakening economy as a result of draw down of development assistance and governance breakdown does not bode well for Afghanistan as well as its neighbourhood. Ghani’s gambit of trying to involve China to help stabilise seems dangerously close to failure. The question remains that were Afghanistan to implode, will its effects be limited to within its borders, or would it push the unravelling of its eastern neighbour?
What are India’s options? It cannot be seen opposing the Afghan outreach to Pakistan, lest it be seen as a spoiler, something Pakistan would be quick to pounce upon. For the outreach to succeed, unlikely as it seems, the Pak army would have to re-orient itself away from interfering in its neighbours or of using jihadis as strategic assets; a development India can only welcome. Meanwhile, India must strengthen its dialogue with all sections of Afghan society, using its development assistance in a transparent manner to maintain its reputation as a friend of the country. India represents a successful political and economic model and its importance as a reliable partner would override temporary setbacks. Meanwhile India should prepare for an implosion of Pakistan that should not be allowed to spiral out of control.

Shakti Sinha is Director, South Asian Institute for Strategic Affairs (SAISA), New Delhi. The views expressed are his own.