~ 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.

~ By Raghav Pandey

Prime Minister Narendra Modi’s recent visit to Bangladesh has added several new dimensions to the already flourishing bilateral relations between India and Bangladesh. History is witness to the fact that both the countries have generally shared a good relationship ever since Bangladesh came into being, although there have been periods of turbulence. The recent visit of PM Modi saw 22 agreements being signed between the two countries; this renewed upsurge is considered the watershed moment in the history of bilateral relations between the two countries.

The most significant factor which makes this visit stand out is the ratification of the long pending land boundary agreement. This has been a significant achievement considering the fact that this issue has been long outstanding and was actually inherited by Bangladesh at birth.

In addition to the above there were 20 other agreements signed which are of mutual benefit to both the countries. To begin with, an agreement between the Bangladesh Insurance Development and Regulatory Authority (IDRA) and Life Insurance Corporation now allows this Public Sector Undertaking of India to do business in Bangladesh as a joint venture which will be known as LIC Bangladesh Ltd. A similar proposal by the LIC was rejected two years earlier by the IDRA.

It is also pertinent to note that Bangladesh has recently featured in the list of eleven countries that are predicted to economically match the BRICS countries during the course of the 21^st century by Goldman Sachs. Bangladesh even while having a lower per capita GDP income than India has performed much better on social indicators. For instance the fertility rate of Bangladesh is almost at the replacement rate which effectively means that Bangladesh is headed towards a stable population.

Hence Bangladesh presents to us a model of economy where qualitative social output is possible with lesser per capita income. This model presents to the world an opportunity of tremendous economic growth. It would be pertinent to remember that a major portion of Bangladesh’s economy is driven by foreign investment.

Armed with a ‘neighbourhood first’ policy and resolute political will, India is on the right path to effectively facilitate the business potential of its friendly neighbour. The two countries renewed the bilateral trade agreement and inter alia inked a Memorandum of Understanding on Use of Chittagong and Mongla Ports, by the virtue of which, Indian vessels can now ship cargo directly to these ports, which can then be taken to Bangladesh and even North Eastern part of India. At present the position is such that the cargo is routed through Colombo or Singapore ports and hence there is no direct accessibility which ultimately contributes to the increase in cost of trading.

A memorandum of understanding on blue economy and maritime cooperation in the Bay of Bengal and the Indian Ocean was also was signed to boost cooperation in regional waters which will focus on skill development, capacity building, pollution response, tsunami and cyclone warning and fishing etc. India has a huge knowledge base backed with tremendous resources in the field of marine bio-technology unlike Bangladesh, and Dhaka hopes to benefit from this MoU in terms of knowledge sharing.

Both the countries also renewed a protocol on inland water transit and trade which will bring about a new system in accordance with the policy of World trade Organisation (WTO). There were two agreements signed for starting trans-border international bus services on the Dhaka-Shillong-Guwahati and Kolkata-Dhaka-Agartala routes. The primary beneficiaries of these agreements will be the people of the north-eastern states of India who are literally landlocked. The buses will significantly reduce the time taken to travel and will also promote tourism in the north-eastern states. This, to a great extent, allows transit through Bangladesh without saying so.

The field of security also saw MoUs being signed. The Coast Guards of both the countries pledged to prevent human trafficking and the smuggling and circulation of fake currency. These agreements were signed primarily in the backdrop of the incidents where militants have attacked India and sought refuge in Bangladesh. It is pertinent to note that, right after Sheikh Hasina took charge in 2009, her government has cracked down on such elements and handed over four terrorists to India who were wanted in India for organising attacks in North East India.

With a series of trade and investment agreements, India promised a $2 billion credit facility for Bangladesh which is to be utilised for infrastructure, power, health and education projects. This credit line is in addition to the already existing $1 billion credit facility between the two countries. The present bilateral trade between the two countries amounts to $6.5 billion but there is a huge trade imbalance, which favours India. The aim of these agreements is to balance that very deficit, by setting up industries in Bangladesh. The other MoU in line with this objective is on exclusive Indian economic zones in Bangladesh. This is also the first time a neighbouring country has allowed India such zones exclusively for Indian firms and hence Dhaka deserves accolades for the same.

In the field of power, Prime Minister Modi has pledged India’s support to Bangladesh in its goal of achieving an installed capacity of 24,000 megawatts (MW) by 2021. Towards this, Reliance Power has signed an agreement with the state run Bangladesh Power Development Board to produce 3,000 MW of electricity at a cost of $3 billion.

Other noticeable agreements were signed between the Bangladesh Standards and Testing Institution and Bureau of Indian Standards on cooperation in standardization. The Bangladesh Submarine Cable Company Limited and Bharat Sanchar Nagar Limited also signed an agreement for leasing international bandwidth for internet at Akhaura and by the University of Dhaka.

This visit and the subsequent agreements most certainly reaffirms the commitment made by both the countries to each other in Indo-Bangladeshi Treaty of Friendship, Cooperation and Peace in 1972 immediately after the independence of Bangladesh. This visit has strengthened the linkages between the countries and this, in times, will lead to South Asian outreach towards South East Asia, through India’s North East, which could be a huge positive for the economy of this entire region.

In the past India’s relations with Bangladesh have swayed with the government in Dhaka, it is essential to make the close ties and cooperation irreversible, so that the relationship thrives irrespective of the parties in power, both in New Delhi and Dhaka. It is therefore essential that the common man should start deriving benefits from the agreements signed and people to people contact between the two countries must increase and the economies must get intertwined so as to enable the populace of the two countries to enjoy the fruits of development.  This will make the close cooperation between the two countries immune to political uncertainties, which often prevail in South Asia.

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

~ By Alok Bansal and Anjana Deepthi

In the early hours of 09 June 2015, when a group of soldiers from 21 Para Commandoes, a special force of the Indian Army carried out operations against terrorist camps along Myanmar border, it was a clear proclamation to the world that the terrorists and enemies of India could no longer hope to be safe, by just going across India’s borders. The operation, which was carried out with the cooperation of Myanmar Armed Forces, was a stupendous success. It eliminated around 50 insurgents at two different locations along Nagaland and Manipur border, without any injury to the security forces. The camps targeted, were Kanglei Yawol Kanna Lup (KYKL) camp along Manipur border and the National Socialist Council of Nagaland- Khaplang (NSCN-K) camp along Nagaland border. This surgical operation was in response to the ambush on Indian Army in Chandel District of Manipur on 04 June 2015, where 18 soldiers of the 6th Dogra Regiment were killed and 11 others were injured. The United Liberation Front of Western South East Asia (UNLFW) a conglomerate of North Eastern insurgent groups led by NSCN-K had claimed responsibility for the attack on Indian Army.

By responding so soon and in an alien and densely forested environment, the special forces of the Indian Army have clearly shown the capability to carry out such swift and lethal operations. It was always known that the Indian Army had such a capability, but what this operation has clearly shown is that the new dispensation in India also had the political will to retaliate against any attacks on its troops, citizens and property. It clearly showed that the Government of India was not willing to remain silent against such attacks. The operation has hugely boosted the morale of Indian security forces and has shown to the global community that a new India has arrived on the horizon, which could not be taken lightly. It showed to the world that India is unwilling to be bullied by non-state actors and suffer the consequences of cross-border terrorism.

Colonel Rajyavardhan Singh Rathore, the Minister of State for Information & Broadcasting, aptly conveyed the message that, it was not a game of Kabaddi, where an opponent could feel safe, just because he had crossed the line. This was clearly a signal to India’s other neighbours, some of which have been harbouring terrorists and sponsoring cross-border attacks. The Minister also confirmed that the operation took place with the cooperation and coordination of Myanmar. Although, the attack was entirely carried out by the Indian Army, the government and the Army in Myanmar was kept in the loop. The attack has opened a new chapter in India’s counter insurgency operations and will ensure that the non-state actors, especially in India’s North East will think many times before launching an attack on Indian citizens or security forces. In the past the modus operandi of these terrorists was to carry out an attack and cross the border. Once across they felt secure and could relax and recuperate. However, they would no longer be able to do so and feel safe across the borders.

North East of India has for long been a neglected area and the infrastructure in the borders has been abysmal. This gives the locals in the border areas of most of the North East states a feeling that they are ignored and no interest is shown by any political party towards their development and upliftment. This provides many of these underground movements space to thrive and grow. The recent successful visit of the Prime Minister to Dhaka and establishment of Bangladesh, Bhutan, India and Nepal (BBIN) transport connectivity, will transform this region and make it a hub of activity. This has frightened the insurgent groups, who realise that the development and growth of this region, through which Asian Highway and Railways will traverse to connect South Asia with South East Asia, will make them irrelevant. This has led to a sudden spurt in their activities.

The operation has also highlighted the efficiency of our intelligence agencies, whose good work is often not recognised due to the clandestine nature of their work. The immediate trigger for the operations was the intelligence reports that the rebels were planning many more attacks on Indian soil and a group of insurgents had also reached India through the porous borders to carry out these strikes.

Some people believe that such operations should not have been publicised, as these are primarily covert operations, but they seem to forget that this is a change. After decades of inactivity the government has decided to strike and this needed to be announced. And this could have only been done when Indian troops were operating in conjunction with a friendly country like Myanmar. In future, the modus operandi could be different, with an element of deniability thrown in. This operation has forced India’s enemies to sit up and take notice of Indian intent and capabilities. The resultant unease was clearly evident in resolutions being passed against India in state assemblies and parliament in Pakistan.

Alok Bansal is the Director of India Foundation; Anjana Deepthi is a Research Associate with India Foundation. The views expressed are their own.

~ By Sudarshan Ramabadran

Undoubtedly, one of the hallmarks of the present Prime Minister Narendra Modi led Government has been the discernible transformation in the foreign policy front. India has admirably transformed from pursuing a hesitant foreign policy for over six decades to a proactive and purposeful foreign policy in positioning herself as an emerging global superpower. Special emphasis has been witnessed in the form of the ‘Neighbourhood First Policy’, which has been armed with the goal of regional co-operation.

Subject experts debating and discussing the growth chart of South Asian countries have always argued and reasoned that South Asian countries have increasingly acknowledged that the regional approaches and common actions are essential to accomplish their development goals. This is the very purpose for SAARC to come into being. There are several benefits for regional cooperation, namely, a country’s economic system becomes regionally interconnected, speeds up economic growth, enables the fight to eliminate poverty and ensures generation of employment opportunities. Position papers have always focussed on the fact that countries like Nepal, Afghanistan and Bhutan often find it difficult to fund the large infrastructural projects making a regional approach more attractive. Study has also pointed out that South Asian governments have recently given greater attention to regional and global linkages. Countries like Bangladesh, Nepal and Bhutan have emphasized on regional connectivity in their respective policy decisions.

It is in this context that Prime Minister Narendra Modi elucidated his vision in his first ever address at the SAARC summit, wherein he stressed on the need to integrate the SAARC countries on four vital pillars rail, road, power and transit :

“Today goods travel from one Punjab to another Punjab through Delhi, Mumbai, Dubai and Karachi – making the travel eleven times longer and the cost four times more. India too has its share of its responsibility – because of our size and location. I know that many of your goods have to do a Parikrama of India to reach their destinations. Just think of what we are doing to our consumers and to the environment. We must shrink the distance between our producers and consumers and resort to using the direct routes of trade. I know India has to lead, we will do our part, I hope each of you will too.”

True to these words at the previous SAARC summit, efforts on behalf of PM Modi and the Government of India have never ceased; the Prime Minister’s recent visit to Bangladesh gave birth to the much needed SAARC sub-regional development plan, which has been in the offing from the 2010 SAARC Summit. In specific, the recent signing of the Coastal Shipping agreement between India and Bangladesh integrates Nepal and Bhutan and eventually leads to boosting economic co-operation, bilateral trade and most significantly people-to-people contacts. The agreement which was actually forged between India and Bangladesh in 2010 but signed now, serves as a critical stepping stone for opening connectivity, not only between Bangladesh and India, but also with Bhutan and Nepal, helping identify the most efficient regional and international transport routes. Yes, the successful forward movement of the sub regional grouping of Bangladesh, Bhutan, India and Nepal (BBIN) has made connectivity its priority in the form of the Coastal Shipping Agreement.

Soon after the signing of the agreement, India’s Foreign Secretary S. Jaishankar outlined the importance of such a coastal agreement with Bangladesh, “We see this as really a very key understanding that would allow us to use our common bay and each other’s waterways for movement of cargo. As of now, the bulk of our trade takes place across the land border, and to the extent that we have sea trade this is done through distant ports. The goods are taken to distant ports and then they are reloaded into feeder vessels which then bring them into Chittagong. What this Coastal Shipping Agreement would do is basically enable the direct regular movement of ships between India and Bangladesh, which would bring the shipping time down from 30 to 40 days on average to seven to 10 days.”, he said

India’s trade with Bangladesh has grown rapidly during the past few years. Bangladesh is now India’s largest trade partner in South Asia. As per the agreement, the opening up of the coastal route between India and Bangladesh is expected to provide an alternative route for the transportation of Exim (Export-Import) cargo between the two countries. Exim trade between India and Bangladesh would be benefited by way of reduction in freight charges. It will also improve the utilization of port capacities of Indian ports and open up new opportunity for Indian coastal vessels. It will also help in decongestion of roads especially at the Land custom stations and integrated check posts at the Indo-Bangladesh boarder.

The agreement also allows Bangladesh to engage with Nepal and Bhutan in the sphere of bilateral trade. This is one of the most vital takeaways from the BBIN agreement; improved connectivity will help increase in bilateral trade across the 4 countries which in turn will help the countries reap the benefits of growth. Indian Prime Minister’s commitment to ease of doing business and speeding up of infrastructure facilities in the borders will only add to India’s consistent and continuous efforts of maximizing India’s trade ties with her immediate neighbours.

At the 16th SAARC Summit in Thimphu, Bhutan in 2010, member countries declared 2010-2020 as the ―Decade of Intra-regional Connectivity in SAARC. They unanimously acknowledged the importance of developing transport infrastructure and transit facilities, especially for the landlocked countries as a means to promoting intra-SAARC trade. This agreement is a significant achievement to achieve the objective of intra-regional connectivity.

The Coastal Shipping Agreement integrating BBIN is a meaningful step initiated by India in realising the ancient virtue of Vasudhaiva Kutumbakam – the entire world is one family. This also reiterates how by operating on the 5 pristine pillars, namely Samman – Dignity and honour, Samvad – greater engagement and dialogue, Samriddhi – Shared prosperity, Suraksha – regional and global security and Sanskriti evam Sabhyata – cultural and civilizational linkages, as outlined in the BJP’s Foreign policy resolution adopted in the party’s national executive meeting, the Government is blending foreign policy with national economic development. Finally, here is a concrete measure that has given new vigour to PM Modi’s strong belief in the shared future of our neighbourhood – Together we grow!

Sudarshan Ramabadran is a Research Associate with India Foundation. The views expressed are his own.