That was the ever-alert home minister in November 2006. The minister of defence has been no less alert. On March 9 2007, he was asked in the Lok Sabha, whether “the intelligence agencies have warned about the possibility of terrorists trying to infiltrate through the sea route or trying to target our offshore installations?” He answered, “Yes, sir. There are reports about terrorists of various tanzeems being imparted training and likelihood of their infiltration through sea routes…” He was asked whether “maritime terrorism, gun-running, drug-trafficking and piracy are major threats that India is facing from the sea borders of the country?” His answer? “Yes, sir.”

On May 9 2007, the home minister was asked in the Rajya Sabha, whether “it is a fact that there are strong apprehensions of terrorist threats to the country through the sea route?” “As per available reports,” he answered, “Pak based terrorist groups, particularly LeT, have been exploring possibilities of induction of manpower and terrorist hardware through the sea route…” On December 8, 2007, the National Security Adviser, M.K. Narayanan, was educating the world at the 4th Regional Security Summit organised by the International Institute of Strategic Studies, the Manama Dialogue. “According to our intelligence reports,” he confided to the assembled sheikhs and experts, “there are now certain new schools that are now being established on the Pakistan-Afghanistan border, which now specialise in the training of an international brigade of terrorists to fight in many climes. According to our information, recruits from 14 to 15 countries have been identified as amongst the trainees there… Training has become extremely rigorous — it is almost frightening in nature… Studies are being carried out about important targets, with regard to vulnerability, accessibility, poor security, absence of proper counter-terrorism measures, etc. The sea route, in particular, is becoming the chosen route for carrying out many attacks, even on land. References to this are to be found replete in current terrorist literature.” “Given India’s experience in dealing with terrorism,” he added, “I would like to therefore sound a note of warning, that there is no scope for complacency…”

On March 11, 2008, A.K. Antony addressed the “International Maritime Search and Rescue Conference,” in Delhi. He warned the delegates of “dangers of Terror attacks from the sea in the region.” In the course of his address, Antony admitted that the Coast Guard faces shortage of manpower as well as hardware. But “necessary steps are being taken to strengthen the search and rescue infrastructure of the Indian Coast Guard…” On November 13, 2008, just a fortnight before the assaults at Mumbai, Manmohan Singh warned the BIMSTEC summit, “Terrorism and threats from the sea continue to challenge the authority of the state…”

By now it was time for Shivraj Patil to address yet another meeting of the DGs and IGs of Police. Thus on November 22, 2008, that is literally on the eve of the attacks in Mumbai, he told the police chiefs, “To control terrorism in the hinterland, we have to see that infiltration of terrorists from other countries does not take place through the sea routes and through the borders between India and friendly countries. The coastlines also have to be guarded through Navy, Coast Guard and coastal police. The states’ special branches and the CID should identify the persons forming part of the sleeper cells and lodging in cities and towns and studying in educational institutions and working in industries and professions…”

And four days later, the terrorists, using the exact same sea route, do the exact same thing that these worthies have been warning others about. Are they consultants to Government or ones running the government? Is their job to issue warnings to others or to see that the warnings are acted upon? Warning given, the job is done. But that is the fate of warnings in this system. After all, that very sea route was used to smuggle explosives for the blasts across Bombay in 1993. Were those blasts not warning enough?

Seven years later —in 2000 — the warning and lesson were made explicit yet again. Four task forces were set up in the wake of the Kargil war. The one on border management warned, “The long coastline with its inadequate policing makes it easy to land arms and explosives at isolated spots on the coast.” It recalled that this is exactly how explosives were smuggled into Maharashtra in 1993. “The situation, if anything, has worsened over the years with the activities of the ISI becoming more widespread along the coast particularly by extension into the coast of Kerala… Such coastal areas must be particularly kept under surveillance.”

There is space here to cite just one example. The task force pointed out that the ISI had started using the Lakshadweep archipelago as a major staging point for smuggling arms and personnel into India. The agency used smugglers and their networks — like Dawood Ibrahim and his tentacles — and their routes for doing so. These dons and their networks were given shelter and support in return for helping the agency with its operations against India.

Now, Lakhsdweep has 36 islands. Ten of these are inhabited. Talking of one of these islands — Suheli — the task force pointed out that, sea vessels of smugglers apart, “there have been instances of twin rotor helicopters (of the kind used by militaries) landing at Suheli Island and spotting of unidentified helicopters flying over the waters around the islands…” And what were we doing? “Intelligence gathering in the islands,” the task force recorded, “is carried out by one inspector, one sub inspector, one head constable and three constables working in the special branch at Kavaratti” — just one of the 36 islands. “Intelligence gathering in all other islands is carried out by one head constable/constable who reports to the OIC (the officer in charge) of the police station who in turn passes it on to the inspector (special branch) at Kavaratti.” Please read that again: 36 islands; one inspector, one sub inspector, one head constable and three constables on the main island; and one head constable/constable for all the remaining 35 islands…

What has happened since, what is the position today, I ask the person who has held the highest posts in intelligence. Exactly what it was then, he says, with one difference. With the upgradation of all posts, the inspector (special branch) at Kavaratti is now designated not as officer in charge, but as joint assistant director or deputy central intelligence officer depending on his cadre. As for the other recommendations — patrolling, setting up sensors, and a host of others things are as they were.

And we are surprised!

I can multiply such examples by the score at no notice at all. Recalling just one thing will be sufficient. When, during a debate on national security in the Rajya Sabha, I began citing such passages from the report of this task force, shouts went up from the Congress, “But this is a secret report… How has he got it?… How is he citing it?…” Shivraj Patil remained his composed self, eventually chiding me with the sagacity which even terrorists have by now come to associate with him.

Things to do. First, act on recommendations that are made by committees you set up. Second, that will not happen unless we send a better type into legislatures and, thence, to governments. When we select leaders who treat the police as their private army; when we select leaders for whom investigating agencies are instruments to fix rivals or let off allies, don’t expect the police and agencies to suddenly turn around and forestall terrorists.

Third, remember that little can be achieved unless every aspect of governance, is brought up to par. You can’t have a first-rate commando force and a third rate magistracy. You can’t have defence and intelligence personnel who will nab terrorists and courts that will let them off, or, better still, enable them to live off the treasury as state guests for years. And that excellence must reach down to that “head constable/constable” level. When K.P.S. Gill reconquered Punjab for the country, he did so by strengthening and invigorating the local thana.

Fourth, that is only one part of the explanation. A weakened and confused society explains as much — and the responsibility lies as much with those who have dissipated national resolve, who have made nationalism a dirty word. That set includes the media as much as politicians. Sixty-seventy thousand killed by terrorism and we are still debating whether we should have a federal investigating agency. Sixty-seventy thousand killed by terrorists and we are still debating whether we should have a special law to bring them to book.

Of course, we must have the agency. Of course, we must have the sternest law in the world. But having the law is not enough. We must enforce it. One side of the picture is that, to pander to its vote bank among Muslims, the government has been withholding sanction to the law passed by the Gujarat assembly — even though that law is the exact replica of the law that its own party’s government has passed in adjacent Maharashtra. The other side is that, as the Maharashtra government does not use the law it has, those who will give shelter and support to terrorists give them with abandon — you just have to think of the quantum of weapons that the terrorists brought in; the detailed local knowledge they had — of the spot at which to land their boats, of the location of the building in which Jews and Israelis were staying, of the insides of the hotels, to see that they could not have executed their plans without the most extensive local help, help given over months.

And enforcing the law means carrying out sentences that the law provides. The parliament of India is attacked, guards are killed; one of the killers is tried and convicted, the sentence is confirmed by the Supreme Court, and, eight years after the assault, his “papers are still being processed,” indeed there are signature campaigns against executing the sentence. Given these circumstances, the best thing for a terrorist to succeed in his mission, and then get caught. He will get the best lawyers to defend him. He will get judges who are ever so solicitous about his rights, ever so finicky about procedures. And, of course, he will get activists to shoot off press statements on his behalf. Lawyers better, judges more solicitous, activists more articulate and better networked than any in his own country.

But for any of this to happen, the society has to be clear in its mind. This is, it has for 20 years been, war. It can be won only by overwhelming the adversary — not by running after the terrorist, as K.P.S. Gill says, but by out-running him, indeed by over-running him. Not an eye for an eye. For an eye, both eyes. Not a tooth for a tooth. For a tooth, the whole jaw. Human rights? Yes, we will respect the human rights of the terrorists and their sponsors and their local supporters to the extent that they respect the human rights of our people.

Finally, have a clear realisation of the condition of the society and state of Pakistan. Unless you come across evidence that the nature of the state and society of Pakistan has changed, it is idiotic to put faith in the profession of this ruler or that. Remember Musharraf’s “Main naya dil leyke aayaa hun”? Taliban and Al Qaeda are not the cause of the state of Pakistan. They are the result of the Talibanisation of Pakistani society and state.

Where do you think, and by whom do you think are the teachers instructed to ensure that students from class 1 onwards “recognise the importance of jihad”; to ensure that they “must be aware of the blessings of jihad”; to ensure that they “create yearning for jihad in his heart”; to ensure that they develop “love and aspiration for jihad, tabligh, shahadat, sacrifice, ghazi, shaheed”? Where do you think, and by whom are teachers instructed to ensure that students from kindergarten onwards learn to “make speeches on jihad and shahadat”, and are “judged on their spirit while making speeches on jihad”? Do you think these are instructions issued by the Islamic fundamentalists to maulvis in madrasas? They are instructions given by the government of Pakistan through official circulars to principals and teachers in government schools of Pakistan.

You didn’t know that? Exactly. That is a large part of the problem. You will find reams of these and other facts in the 2002 report edited by Pakistani academics, A.H. Nayyar and Ahmed Salim, and published by the Sustainable Development Institute, Islamabad, ‘The Subtle Subversion: The state of curricula and textbooks in Pakistan, Urdu, English, Social Studies and Civics’. Get on to the Internet, download and read the report from www.sdpi.org. Here is a part of the problem that you can solve by yourself.

As for the rest of the problem,as we can no longer rely on Shivraj Patil, we are compelled to continue to rely on the one who has been for the government as a whole, what Shivraj Patil has been for the home ministry — that is, the prime minister, Manmohan Singh.

The writer is a Rajya Sabha MP from the BJP

The Indian Express ::::Posted: Oct 20, 2008 at 0018 hrs IST

Transcript of the interview

•My guest this week is an editor, author and economist, apart from being my friend and guide. Circumstances have changed quite a lot since we spoke last.

Thank you. There were great success stories. And the Maruti issues were oversubscribed 70 times. It has been a great success after that.

•There is so much talk about buying us out of the market or selling us out of the market.

“But have we no rights to proclaim our faith, to preach Gospel? You are the editor of such a large news-paper. You express your views on issues. Do we not have the same right?” It was Bishop George Anathil, of Indore, the Chairman of the Commission for Proclamation of the Catholic Bishops Conference of India.

It so happens that I am not the editor but the twice-dismissed editor of such a large newspaper! And I would certainly stand for the right of every Bishop to speak his mind, assuming of course that he too would not cavil at being dismissed!!

In any case, no one is suggesting that missionaries should not have the right to proclaim the truth as they see it. I was talking about conversions – about how these did not harmonise with the doctrine the Church has now acknowledged, namely the possibility of salvation in every religion; about the need to heed the great anger which is building up against conversions; and about the need therefore to join in giving the State and the courts the authority to examine whether force or fraud or allurement have been used in any case to secure the conversion.

The analogy which Bishop Anathil drew between the right to free speech and the right to practice and propagate one’s religion is actually a good one: the freedom of religion guaranteed by Article 25 and 26 should be subject to the same sort of restrictions as is a secular right like freedom of speech. Article 19(2) lists the grounds on which the right of speech can be regulated. These are much wider than the grounds mentioned in Article 25 and 26.

Furthermore, the courts have, to take one instance, specifically held that the administration of ‘minority institutions’ under Article 29 and 30 cannot be regulated on the ground that the regulation is required in the national interest.

In a secular country why should the right to practise and propagate religion not be subjected to the same sorts of perimeters as apply to other secular rights? In a country the very survival of which is in such jeopardy, in a country the territorial integrity of which is being assailed by murderous campaigns stoked in the name of religion, why should the right to practice and propagate religion not be subject to the requirements of the security of the State, to the national interest?

It is for these reasons that in A Secular Agenda I have urged that the right to religion must be placed, exactly as Bishop Anathil’s analogy suggests, at par with, and no higher than other secular rights.

“I have a comment, more than a question,” Bishop Patrick D’Souza of Varanasi observed. “I know that Gandhiji said those things about the motives behind missionary services etc. But schools and hospitals set up by Christian missionaries are everywhere. If there was any truth in this view, all of India would by now have become Christian. This has not happened. Is not the accusation itself motivated?”

My own experience would point to what you say: I studied at a college set by Christian missionaries, no one ever tried to convert me. But against that, and against what you say, we must put what the missionaries who talked to Gandhiji acknowledged. They too were truthful, and they stated in terms that the ultimate motive, or inspiration if you like, which informed such work was to convert people to Christianity. Even more important, there are the basic premises of the Church to which I drew attention earlier: that there is one Truth, that it has been revealed to the one and only Son of God, that it is in one Book etc. A missionary cannot but subscribe to these premises. And one who subscribes to them cannot but have one overriding objective: to save souls by bringing them into the Church.

Today, spurred by the new “Liberation Theology,” the Church is spurring the movements among so-called Dalits etc. But many of the leaders you have patronised by way of helping “Dalits” speak with poison in their tongue. They advocate hatred. They have been eulogizing Bhindranwale. Now, when you patronise them, why do you cavil at the charge that you are patronising them? How can you escape the constructive responsibility for the consequences of the hatred they are spreading? In a word: if you feel that you just must work among such groups because as Christian missionaries you have both some special responsibility and some special message for such groups, hold them to the means of Jesus, of Gandhi.

“Your view that religious questions should only be addressed to those who can decide, I found patronising,” a participant observed. “There is the presumption behind it that the tribals etc. are not in a position to understand these matters. But in working among them, I find that they get the central point very quickly.”

Would you concede the same discerment to “Dalits” who have “relapsed” back to Hinduism — that they too are able to assess things? Or is it that only those who see the point of Christianity are in a position to assess religious questions, and not the others?

As for presumptions, look at the premise behind the entire work of the Church in tribal areas. The tribals are leading a perfectly normal life with the help of their own religion, are they not? When you go in to convert them, are you not being presumptuous — are you not presuming that you and the Church know better than them what is good for them?

“You were educated in a Christian College,” Archbishop Alphonsus Mathias of Bangalore remarked. “What aspects of Jesus strike you?”

That he was prepared to suffer so much, that he was prepared to suffer to the end for truth. That no bitterness entered his heart even when he had been nailed to the Cross. That, when he saw wrong, he spoke so clearly — as to the Pharisees in the temple.

“No, I mean: What is your opinion about the Christian claim that Jesus is the incarnate God?”

I have not the capacity to judge such a claim. But as, for the sorts of reasons I mentioned, I am not yet able to believe in God as He has been pictured to us — All Powerful, All Knowing, All Compassionate — I am not able to conceive of that God incarnating Himself.

“In one of your recent articles you wrote about nanotechnology and the rest” said a participant. “What role do you think religious organisations have in such an age?”

To remind us about, to educate us to the inner-directed search. That is the pearl of great price which the religious traditions, specially the religious traditions of India have preserved through the millennia. That is what religious organisations should direct their efforts to.

As we dispersed for tea, the exchange continued, as did the banter: “He knows more about Christianity than your students,” Archbishop Mathias of Bangal ore told Bishop D’Souza of Pune, teasing him and me. “He knows more about Christianity,” said the latter who overseas one of the best seminaries in our country, “than many of our professors!”…

The things I had been saying were hardly the things that the Archbishop, the Bishops and the scholars assembled there agreed with, they were certainly not the things that they would find agreeable. But they heard me out in pin-drop silence, and with unbroken patience. They told me unambiguously that they did not agree with what I had said. Several of their observations left no doubt that they were put out by what I had said. But they pasted no motive. They were courteous and the very models of dignity and decorum throughout.

I left feeling I had been among friends.

If only we could learn at least this one thing from them: If we could only learn how to disagree, how much better off our country would be.

The Observer
March 4, 1994

Saturday, October 18, 2008

Yet, the people here were sought to be fooled – we have got the Americans to promise us “uninterrupted fuel supplies”. Indeed, the insinuation went further – it was almost as if fuel supplies could not now be stopped under any circumstances. In answer to question 15 and again in answer to question 18, the US Government states that only if fuel supply is interrupted for no fault of India, shall the US assist in resuming it. Thus, if some US firm fails to live up to its commitment to supply fuel, or if there is some disruption in global markets, the US will chip in. But if, for instance, we test; or we default in the account we keep of uranium we import, mine and use; or if we default on any of the numerous conditions prescribed in the 123 Agreement, the Hyde Act, the agreement with the IAEA, as well as under the guidelines of the NSG, and, as a result, fuel supply is stopped, the US will most emphatically not step in to restore fuel supplies.

Similarly, while we have been fed the fiction that the US has agreed to our building “strategic reserves” of fuel so that our reactors are not subjected to the Tarapur experience, twice in this document — from answers to questions 19 and 20 — we learn that there is no assurance to this effect. That India can secure fuel only, as the Obama amendment in the Hyde Act provides, for “reasonable operational requirements”. Not just that. The replies reveal that what this phrase – “reasonable operational requirements” – implies is not clear at all!

Manmohan Singh has repeatedly asserted that, in the event fuel supplies are interrupted or other difficulties are created, India has the right to take “corrective measures”. What is this magic bullet, we have wanted to know. Of course, there has been no answer. The US Congress asked Bush’s officials the same question. What does the Indian PM mean by “corrective measures”? The suggestion has been that, if things don’t turn out to our satisfaction, we can always withdraw our reactors from safeguards.

Published in Indian Express : Sep 06, 2008 at 0157 hrs IST

But why now? Why on the eve of the NSG meeting in Vienna?” — the cry went up. Entirely predictably: when they can’t deal with the facts of a disclosure, the embarrassed always demand, “But why now?” Should we not, on the contrary, be grateful that, at least at this penultimate hour, someone has awakened us to what the Government is bartering away in Vienna? Is there an inauspicious time for being awakened to the facts? “The secret letter has been revealed by a known opponent of the nuclear deal,” they say — as if the fact that the person disclosing the document is a known opponent of the deal, in some way dilutes the veracity of the text! And this from a newspaper that discloses secret documents every other week! But clauses apart, even a fool can see through the lie in that: does the Hyde Act apply to the Americans or not? That is all that is required for the consequences listed in the Act to follow. Suppose we test. What are the Americans bound to do in return by law? Both by the Hyde Act as well as the original Atomic Energy Act of 1954, they must immediately cease all nuclear commerce with India. By both these Acts as well as the guidelines of the NSG, they must ensure that every other member of the NSG also ceases all nuclear cooperation with India. In a word, by the laws that apply to them, the Americans have to bring upon us the full weight of sanctions. What comfort is it that the sanctions fall upon us by laws applicable to them and not applicable to us?

That simple and brutal fact is compounded by the 123 Agreement. In Question 3, the US Congress asks the Bush administration, “Does the Administration believe that the nuclear cooperation agreement with India overrides the Hyde Act regarding any apparent conflicts, discrepancies, or inconsistencies? Does this include provisions in the Hyde Act which do not appear in the nuclear cooperation agreement?” In turn, the Bush administration says that the 123 agreement “is in full conformity with the Hyde Act,” that it is “consistent with the legal requirements of both the Hyde Act and the Atomic Energy Act” — both of them, incidentally, require that, to take just one example, the agreement be terminated forthwith the moment India conducts a test, even for “peaceful purposes”.

The prime minister has said over and over again that the cooperation shall be “full”, that it shall cover all aspects of the full nuclear cycle. In particular, that India shall have full access to “sensitive technologies”. Anything less, Manmohan Singh has said again and again, shall be inconsistent with the statement he had signed with Bush, and India shall not accept such a dilution. Persons like me have pointed out from the beginning that this just cannot be the case, that the Americans have an unambiguous policy in this regard, a policy that has been reiterated personally by Bush as well as by the US Congress — namely, that countries like India shall not be given access to technologies for enrichment, reprocessing or heavy water production. Manmohan Singh has gone on repeating, “Full means full”.

And as proof, the government’s propagandists have been pointing to Article 5(2) of the 123 Agreement. This clause in fact is just a sleight of words. It says that these “sensitive technologies… may be transferred to India under this agreement pursuant to an amendment to this agreement.” Even then, the clause clearly records, the transfer “will be subject to the Parties’ respective applicable laws, regulations and license policies.” Hence, three conditions: (a) “may be”; (b) “pursuant to an amendment to this agreement”; and (c) “subject to the Parties’ respective applicable laws, regulations and license policies.” In spite of this, the Government’s propagandists have kept repeating that India has won access to these sensitive technologies.

In its answers to not one but six questions (questions 4 to 9) from the US Congress, Bush’s administration says six times, that the sensitive technologies will not be transferred and that there is no proposal at all to amend the 123 Agreement!

Similarly, government spokesmen have maintained that our right to reprocess spent fuel has been recognised. Indeed, Manmohan Singh himself has said that our reprocessing rights have been recognized so much so that they shall be “permanent”. The answers to questions 26 and 29, as indeed Articles 11 and 12 of the 123 Agreement itself, indicate that we shall be able to reprocess the spent fuel only in a facility (a) set up at our cost; (b) under IAEA oversight; (c) and only in accordance with “arrangements and procedures” to which the US agrees. As for the right being “permanent”, the answer to question 44 gives the lie. The answer does not just reiterate that the “arrangements and procedures” under which the reprocessing may be done shall have to be agreed to by the US; it says, “the proposed arrangements and procedures with India will provide for withdrawal of reprocessing consent.” Permanent?

Manmohan Singh has insisted all along that India shall not accept any oversight or inspections other than what it shall agree to under the “India specific safeguards” in its agreement with the IAEA. Persons like me drew attention to the stern and absolutely unambiguous statements of Condoleezza Rice; to the report of the joint committee of the US Congress; as well as to the provisions of the Hyde Act, which specifically provided that India shall have to accept “fallback safeguards” – that is, should, in the judgment of the IAEA or the US, the IAEA be unable to perform its inspections adequately, the US shall have the right to institute inspections and other measures of oversight through other agencies – its own or those of some other international bodies. Even as it was asserting the contrary, Manmohan Singh’s Government, agreed to have these additional inspections and restrictions through Articles 10 and 16(3) of the 123 Agreement. All that was done was that instead of the US inspectors being called “inspectors”, they were called “experts”. Through these clauses, India agreed to ensure for them the fullest access to sites and data that they wanted to inspect.

In its answers to questions 10 to 13, the US administration has reiterated four times that, yes, there shall be these additional fallback safeguards and inspections. Not just that, the administration tells the US Congress that, in addition to pledging that it is accepting IAEA safeguards and inspections in perpetuity, the Indian government “fully appreciates that paragraph 1 of Article 10 of the Agreement does not limit the safeguards required by the Agreement to Agency (that is, IAEA) safeguards.” In a word, while we were being told the exact opposite — “We shall not allow American inspectors to roam around our facilities” — the Manmohan Singh government had accepted that very roaming around.

“But there is nothing new in the US Administration letter to the Congress,” say the spokesmen of the government, and its apologists in the media. Actually, that very fact, as we shall soon see, makes things all the worse. Indeed, the American ambassador, David Mulford, has been more specific: he has said that the letter that the administration sent to the US Congress contains nothing that has not already been shared with the Indian government. In a word, the government has known all these facts all along, and has yet continued to assert its falsehoods to the contrary for months on end. The US administration letter, in fact, reveals more: on point after point, it reveals that the Indian government, while asserting falsehoods to the contrary here in India, has not just been in the know of what the Americans were extracting, it agreed with the construction the Americans had put on the clauses in question.

“Falsehoods” is the right word, make no mistake.

“The Hyde Act does not apply to us,” government spokesmen have been insisting. “We are bound by the 123 Agreement alone.” Indeed, as recently as July 2 this year, the prime minister’s office asserted, “the 123 Agreement clearly overrides the Hyde Act and this position would be clear to anyone going through the provisions.” That is patent nonsense. Article 2 of the 123 Agreement provides that in implementing it, the two countries shall be governed by, among other things, their “national laws”. What are the national laws of the US in this regard? The Atomic Energy Act of 1954 and the Hyde Act. Does the Hyde Act apply or not?

How credible are the Bhartiya Janta Party’s concerns about the 123 agreement and the NSG waiver? Those are the key issues Karan Thapar explored on the Devil’s Advocate with one of the parties most outspoken critics Arun Shourie.

Karan Thapar: Let’s start with your central objection that the 123 agreement traps India into Hyde Act which will end up emasculating and crippling its nuclear deterrent. Now that India has got a waiver from the Nuclear Suppliers Group (NSG) and can trade with countries like France and Russia, hasn’t the 123 become irrelevant and, therefore, haven’t your concerns and objections become academic?

Arun Shourie: Each time something happens, we say let’s wait for the next one. This is to be seen as a chakravyuh, as an architecture. There are certain things in the Hyde Act, the123 agreement, the IAEA protocol, and there are certain thing in the additional protocols, which are yet to come, which has already been specified in the Hyde Act. In the NSG waiver, there are three other things, so it is all to be taken as a part of architecture.

NSG waiver in the end says that if any member country of the NSG is satisfied that conditions have arisen that it must stop nuclear commerce with India, then all countries should act in accordance of Paragraph 16 of the NSG guidelines.

Karan Thapar: This was in your series of articles in The Indian Express and I’m afraid you’re wrong. You’re referring to Paragraph 3e of the NSG waiver. Paragraph 3e doesn’t say this at all. All Paragraph 3e says is that NSG countries are required to consult and contact on the implementation of the waiver. It does not go as far as you’re suggesting

Karan Thapar: And that does not specify that all countries would stop just because one has stopped. Your interpretation is not just wrong but it is, forgive me, exaggerated.

Arun Shourie: It’s not either. It is exactly the interpretation of the Americans themselves. It is the assurance they have given to their Congress.

Karan Thapar: I’m afraid you’re wrong. The American Ambassador speaking to the Network 18 programme Indian Tonight on Wednesday made it crystal clear that Paragraph 3e does not amount to your interpretation. It doesn’t even amount to a periodic review. It is simply a process of contact and consultation on the implementation of the waiver.

Arun Shourie: That is not what the US Government has told the US Congress. Mr Mulford’s statement should be seen in that context.

Karan Thapar: Forgive me, the US government has not as yet communicated with the US Congress about the NSG waiver at all.

Arun Shourie: No, please understand what they have said in their record of their answers to questions of 45…

Karan Thapar: But that’s not in connection with the NSG waiver. That at best has a connection with the 123. The NSG waiver only happened last Saturday. Paragraph 16 doesn’t lead to automatic termination. I’m afraid your interpretation is a part of the confusion that’s entered into the debate.

Arun Shourie: That’s not the case at all. You’re spreading confusion. You please read the text once.

Karan Thapar: I have read the text. I have researched it thoroughly before I came here. I double-checked with the American Ambassador when he was here on Wednesday. I double-checked with the Indian authorities. No one believes that your interpretation of that paragraph is correct. That’s why I’m saying to you that your concerns emanate from the 123 but now with the NSG coming into place, the 123 is irrelevant. Therefore, your concerns have become academic and irrelevant.

Arun Shourie: Absolutely not. Paragraph 16 of the NSG guidelines provides as follows: “In the event that one or more suppliers believe that there has been a violation of supplier/recipient understanding avoid acting in a manner that could prejudice measure that maybe adopted in response to such a violation.”

Karan Thapar: That does not mean that they have to act in a particular way. Once again you’re over-interpreting.

Arun Shourie: You don’t see the implication of all this?

Karan Thapar: I do — you’re over-interpreting. You’re seeing the worst possible interpretation that is based upon a misunderstanding, perhaps, I would even say, a wilful misunderstanding.

Arun Shourie: That is absolute bunk and nonsense and you’re using words that are not justified by the text. Text clearly says exactly what the Hyde Act has said — if America terminates the trade if it believes India has not acted according to the Hyde Act…

Karan Thapar: For the 123, not the NSG. You’re confusing the two.

Arun Shourie: No. The two are part of an architecture. You have raised these nonsensical words such as exaggerated and wilful misunderstanding…

Karan Thapar: Explain to me why you think that the NSG allows for the whole of the NSG terminating the trade ties because one country terminates. It is against the NSG guidelines…

Arun Shourie: That is not the case. The US government is obliged to ensure under clause 16 of the guideline that if it terminates its commerce with India all other countries will coordinate.

Karan Thapar: That’s Hyde Act you’re talking about. You’re now interpolating that into the NSG guidelines. The NSG is not subject to the Hyde Act. NSG has its own rules. Individual countries of the NSG don’t observe the Hyde Act regulations and stipulations. You’re reading one into the other.

Arun Shourie: … because they are part of an architecture. We have gone to the NSG and the IAEA as a consequence of the 123 and the Hyde Act.

Karan Thapar: I accept that but the essential point you’re missing and, this is the one I want to emphasise, is that now that we’ve got the NSG waiver, the 123 has become academic and irrelevant. If India chooses not to go ahead with the 123, the Americans will be angry and will deem us to as ungrateful but we would have opened a window to unfettered commerce with the NSG, particularly with countries like Russia and France who are not going to accept America’s regulation s on their head.

Arun Shourie: If that were the case, Russia and France would have already entered into nuclear commerce with us despite American blockade.

Karan Thapar: We are the country that has held back. They are keen to go ahead. Their ambassadors have communicated that much to us.

Arun Shourie: That’s only now.

Karan Thapar: No, it was earlier.

Arun Shourie: That is since the statement of the Prime Minister in February 2007 in regard to the four plants that Russia was prepared to give us. We raised the maintenance question — that you went to Russia and the Russians said that the agreement was ready, then why did you not sign it.

Karan Thapar: As a gratitude to America so that they had an even plain field for their companies. It wasn’t because of any legality.

Arun Shourie: That is what I’m trying to say. This is from February 2007. The sanctions we had on Uranium 20 years before that were only of America. But we could not go to France and Russia.

Karan Thapar: The NSG waiver has ended the experience of 30 years. That’s a significant step. What I’m saying is that people may believe or disbelieve your concerns with the 123. They may be valid, they may be invalid but now that that waiver has opened up opportunity for trade with the NSG countries, your concerns with the 123 and the Hyde Act are overtaken and hence irrelevant because they don’t apply to the NSG.

Arun Shourie: When the 123 agreement came you said ‘oh but the Hyde Act is irrelevant.’ Now that the NSG waiver has come, 123 has become irrelevant.

Karan Thapar: That’s because 123 and Hyde Act don’t affect NSG countries. They are separate, sovereign countries.

Arun Shourie: No. It’s a part of the architecture and India will have to pay the consequences after this waiver, as Germany and Japan have said.

Karan Thapar: Let me quote to you the leading non-proliferation authority, Daryl G Kimball of the Arms Control Association in America. He’s made it absolutely crystal clear that the restrictions of the Hyde Act have not been incorporated in any shape and form into the NSG. The Bush administration resisted efforts to incorporate in the NSG waiver the same restriction and conditions on nuclear trade that are mandatory to US law. Now I come back to my point: your concerns about the 123 are academic because they don’t apply to the NSG. The NSG has opened a new window which doesn’t have the same

restrictions and it actually makes up for the deficiencies of the 123.

Arun Shourie: Till yesterday you were saying there are no deficiencies in the 123 and that my interpretation of the Hyde Act is overblown. Now you’re saying all that is academic and NSG is all that counts. That’s not my interpretation. We can go on in circles about this.

Karan Thapar: The NSG waiver doesn’t put any restriction on fuel supply or assurances or upon the size of strategic deterrent that India can develop.

Arun Shourie: We were told the opposite — the NSG waiver will provide for a positive statement about India building strategic reserve, and that IAEA protocol will provide for India taking corrective steps in case…

Karan Thapar: It does permit corrective steps. The IAEA protocol in its preamble does permit corrective steps for India but it doesn’t specify what they are. By definition, corrective steps are something you can’t specify because then you lose the sovereignty of defining them.

Arun Shourie: When we quoted the preamble of the Hyde Act, everybody said the preamble is non binding, but in the IAEA safeguards you say they are binding.

Karan Thapar: In the case of the Hyde Act, George Bush in his signing statement in December 2006 specified that he would not honour and go by section 103 and the preamble. He said so and that’s why people argued that it’s not binding.

Arun Shourie: Again, another complete distortion. Bush’s signing statement had two points that in regard to foreign policy and seeking the determination of American foreign policy to an international body like NSG he would not give up US presidential powers

Karan Thapar: And he would therefore not implement section 103.

Arun Shourie: What is section 103?

Karan Thapar: The one that we’re talking about.

Arun Shourie: Not at all.

Karan Thapar: Yes. The whole of interpretation of the Hyde Act is irrelevant to the NSG

Arun Shourie: You are making assertions about the Hyde Act which are absolute bunk.

Karan Thapar: The NSG has given India fuel assurances. There is no bar on the size of strategic reserve. It gives India unlimited access under NSG concerns to non proliferation and enrichment technologies. It also allows India the right to reprocess. All of those were deemed to be deficiencies by some analysts — deficiencies in the 123 that have been taken care of by the NSG.

Arun Shourie: You are just completely fabricating things which are not there in the guidelines at all. Where is this bit about unlimited supplies in the NSG guidelines?

Karan Thapar: There is no bar. The NSG waiver permits India access to fuel supplies without restriction, it permits India to develop strategic reserves without limitation, it permits India access to proliferation technologies that are so defined to do with enrichment and reprocessing.

Arun Shourie: You are completely lying through your teeth to your viewers.

Karan Thapar: The point is — there is no bar on them. This is a waiver which is an exemption.

Arun Shourie: Karan this is your technique; you slip in your words and mislead the viewers.

Karan Thapar: Do you still believe that your concerns which are limited to the Hyde Act and the 123 apply to NSG countries, which are not subject to the Hyde Act or the 123? Do you still believe it?

Arun Shourie: Absolutely.

Karan Thapar: They have no sovereignty?

Arun Shourie: The NSG will work as a club. It says it will coordinate its efforts. Article 16 of the guideline specifies that they must coordinate their efforts. If one country is satisfied that conditions have arisen in which there has been a violation by the recipient country, they will all coordinate the effort.

Karan Thapar: Let’s come to the politics behind your concerns with the nuclear deal. For many people, the BJP is the architect of the relationship with America, which is today culminating in the Indo-US nuclear deal. Yet today, by some amazing transformation, the BJP has converted itself into the principal opponent to its own vision for the future.

Arun Shourie: BJP is the architect of strategic relationship, not of strategic subservience, and we believe that this architecture puts us in a position in which we would have to accept the American umbrella…

Karan Thapar: America’s aim is to make India strategically subservient. Is it a trap that America has set for India?

Arun Shourie: Of course.

Karan Thapar: Atal Bihari Vajpayee was the man who called America India’s natural ally. And today you’re saying that America has set a trap for its natural ally?

Arun Shourie: It is an ally and you have to be very cautious with this ally. Just see what they have made of Pakistan and several other countries.

Karan Thapar: Middle class supporters were exultant when the waiver was granted. Today you are putting yourself in opposition to them.

Arun Shourie: Are you the only one who understands the middle class? Don’t we know about the middle class? It will have consequences for the next three decades and we believe that it does subordinate India in a strategic relationship which is just a first step.

Karan Thapar: Isn’t it interesting that you’re arguing the same point which the CPM in China raised? So is BJP on the side of China when it comes to Indo-US nuclear deal?

Arun Shourie: You can get the CPM fellows and ask them that aren’t they ashamed of the fact that they are arguing the same thing as BJP. Is this even an argument?

Karan Thapar: Why does China not want the deal to go through? They believe that it would give India an opening which should be resisted. You seem to be arguing China’s case for them.

Arun Shourie: I’m arguing that in my view we have a great threat from China and we can not rely on the US umbrella to face it we have to strong independently.

Karan Thapar: Do you have no second thoughts about your criticism on the NSG waiver? You may be right about the Hyde Act, you may be right about the 123, but are you still critical on the NSG waiver?

Arun Shourie: Of course not.

Karan Thapar: Arun Shourie, a pleasure talking to you.

Arun Shourie: Thanks.

Twenty to twenty-five years ago, even 10 years ago, few of us had heard of Information Technology. Today, exports from this industry are worth $10 billion – that is, over Rs. 45,000 crore a year. That figure is 20 per cent of our total exports.

In spite of the fact that each of the markets to which we supply IT software and solutions has been in the trough of recession for years, IT exports have grown by 26 per cent this year.

Infosys had not even been born 25 years ago. Wipro was a company selling vegetable oil. Indeed, other than the ”Tata” in Tata Consultancy Services, there is scarcely a name in the IT industry that was known then.

And guess what the average age is in the industry? Just 26 and a half! These 26/27-year-olds have changed the world’s perception of India. It’s not just a country of snake-charmers; it’s a country against which protectionist walls have to be erected. Of course, we can also charm snakes.

And not just, to pluck a phrase of Malcolm Muggeridge, snakes in snakes’ clothing!

And these 26-year-olds are changing India’s perception also of itself: that India can; that, therefore, we should face the world with confidence.

That is the situation in activity after activity. We lament the fact that, while we are ahead in software, we have lost out to China in IT hardware. That is true – as of the moment. We shooed away firms like Motorola when they approached us in the early 1990s for facilities to set up manufacturing operations in India. China welcomed them, it wooed them, it created every conceivable facility for hardware firms from Japan, of course, but also from Taiwan, a country at which 400 of its missiles are aimed. It has thereby leapt ahead.

But the game is hardly over. That world-class hardware can be produced in India is evident. How many of us would have heard of Moser-Baer? Located in unprepossessing Noida, it is the world’s third largest optical media manufacturer, and the lowest-cost producer of CD-Recorders. Its exports are close to Rs. 1,000 crore.

The firm sells data-storage products to seven of the world’s top 10 CD-R producers. And it produces them so efficiently that, to shield themselves, European competitors had to file an anti-dumping case to stop and penalize its exports to Europe. Moser-Baer fought on its own. And won.

A firm most of us have not heard of. A firm that is manufacturing products at the cutting edge of technology. A firm exporting Rs. 1,000 crore of products that require the utmost precision and technological sophistication. A firm that European firms fear.

And equally important – the very international fora that our ideologues shout are instruments of exploitation hold against European firms, and in favour of this Indian firm.

There is more. Moser-Baer has acquired Capco Luxembourg, a firm that owns 49 per cent of a Netherlands-based CD-R distributor. And it has set up Glyphics Media Inc. in the United States-for markets in North and South America. And here we are being made to shiver at the thought that foreign firms are about to swallow us!

Heard of Tandon Electronics? Its exports of electronic hardware are close to Rs. 4,000 crore!

At a moment’s notice, my friends Amit Mitra of FICCI and Tarun Das of CII send me particulars of firm after firm, in sector after sector, that has broken new ground. A sample:

• Fifteen of the world’s major automobile manufacturers are now obtaining components from Indian firms.
• Just last year, exports of auto-components were $375 million. This year they are close to $1.5 billion. Estimates indicate they will reach $15 billion within six to seven years.
• Hero Honda is now the largest manufacturer of motorcycles in the world-with an output of 17 lakh motorcycles a year.
• One lakh Indica cars of the Tatas are to be marketed in Europe by Rover, one of the United Kingdom’s most prestigious auto-manufacturers under its – that is, Rover’s – brand name.
• Bharat Forge has the world’s largest single-location forging facility – of 1.2 lakh tonnes per annum. Its client list includes Toyota, Honda, Volvo, Cummins, Daimler Chrysler. It has been chosen as a supplier of small forging parts for Toyota’s global transmission parts’ sourcing hub in Bangalore.
• Asian Paints has production facilities in 22 countries spread across five continents. It has recently acquired Berger International, which gives it access to 11 countries, and SCIB Chemical SAE in Egypt. Asian Paints is the market leader in 11 of the 22 countries in which it is present, including India.
• Hindustan Inks has the world’s largest single stream, fully integrated ink plant, of 1 lakh tonnes per annum capacity, at Vapi, Gujarat. It has a manufacturing plant and a 100 per cent subsidiary in the US. It has another 100 per cent subsidiary in Austria.
• For two years running, General Motors has awarded Sundaram Clayton its ‘Best Supplier Award’; the volumes it sources out of India are growing every year.
  
• Ford has presented the ‘Gold World Excellence Award’ to Cooper Tyres.
• Essel Propack is the world’s largest laminated tube manufacturer. It has a manufacturing presence in 11 countries including China, a global manufacturing share of 25 per cent, and caters to all of P&G’s laminated tube requirements in the US, and 40 per cent of Unilever’s.
  
• Aston Martin, one of the world’s most expensive car brands, has contracted prototyping its latest luxury sports car to an India-based designer. This would be the cheapest car to roll out of Aston Martin’s stable.
• Maruti has been the preferred supplier of small cars under the Suzuki brand for Europe. Suzuki has now decided to make India its manufacturing, export and research hub outside Japan.
• Hyundai Motors India is about to become the parent Hyundai Motors Corporation’s global small car hub. In 2003, HMC will source 25,000 Santros from HMI’s plant in India. By 2010 HMI is targeted to supply half a million cars to HMC.

It was only in 1999 that HMI got its first outsourcing contract and already, in 2003, 20 per cent of its sales will be what it supplies as an outsourcing hub. It is exporting cars to Indonesia, Algeria, Morocco, Columbia, Nepal, Sri Lanka and Bangladesh.

• Ford India got its first outsourcing contract in 2000. Within 3 years outsourcing accounts for 35 per cent of its sales. Ford India supplies to Mexico, Brazil and China. The parent Ford is sourcing close to $40 million worth of components from India, and plans to increase these in the coming years.

Ford India is already the sole manufacturing and supply base for Ikon cars and components. These are being exported to Mexico, China and Africa.

• Toyota Kirloskar Motors chose India over competitive destinations like Philippines and China for setting up a new project to source transmissions as this option proved more economical.
  
• Europe’s leading tractor maker, Renault, has chosen International Tractors (ITL) as its sole global sourcing hub for 40 to 85 horsepower tractors.
• Tyco Electronics India bagged its first outsourcing contract in 1998-99. So successful has it been that components and products others have contracted from it already account for 50 per cent of its total sales. It supplies to the parent, Tyco Europe.
• TISCO is today the lowest cost producer of hot-rolled steel in the world.
• TVS Motor Company has been awarded the coveted Deming Prize for Total Quality Management. Many of the largest of organizations, even American ones-like GE-have not managed that recognition yet!

India’s pharmaceutical industry has come to be feared as much as its infotech industry. It is already worth $ 6.5 billion and it has been growing at 8-10 per cent a year. It’s the fourth largest pharmaceutical industry in terms of volumes and 13th in value. Its exports have crossed $2 billion, and have increased by 30 per cent in the past five years. India is among the top five manufacturers of bulk drugs.

Even more telling is another figure. We are always being frightened, ”Multinational drug companies are about to takeover.” In 1971 the share of these MNCs in the Indian market was 75 per cent. Today it’s 35 per cent!

There’s another feature we should bear in mind: India’s strengths are becoming evident across the technology spectrum:

• We are among the three countries in the world that have built supercomputers on their own, the US and Japan being the other two: two months ago, the fourth generation PARAM supercomputer was inaugurated in Bangalore.
• We are among six countries in the world that launch satellites. We launch some of our own satellites of course; we have launched satellites for others too, among them such countries as Germany and Belgium. We have the largest set of remote sensing satellites. Our INSAT system is also among the world’s largest domestic satellite communication systems.

At the other end:

• India is one of the world’s largest diamond cutting and polishing centres. CLSA estimates nine of every 10 stones sold in the world pass through India.
• Trade of Indian medicinal plants has crossed Rs. 4,000 crore.

Here is proof positive that liberalization has indeed worked. ”By opening the economy before giving it a chance to become competitive, we have thrown our industry to the wolves,” it used to be said. Quite the contrary. The success in exports, in fields such as IT in which competition is fierce, in which technological change is fast as lightning, success in auto-components, in pharmaceuticals shows that our industry has fought back, it has become competitive.

Remember all that shouting about Chinese batteries a year ago? ”Markets are closing down, thousands are being thrown out of their meagre businesses, and factory after factory has shut down.” That was the shouting just a few months ago.

Where are those batteries from China? Yes, trade with China has grown-by 104% in the past year. But according to figures of the Chinese Government, in the first five months of 2003, India has amassed a surplus in its trade with China, a surplus of close to half a billion dollars.

And China is just an instance. Exports as a whole, and in the face of an unrelenting recession in the West, have grown by 19 per cent in the year. In a word, what committees upon committees with their piles of recommendations would not have achieved, being actually exposed to actual competition has.

Our foreign exchange reserves are at an all-time high-$82 billion. We have announced that we will not be taking aid from a string of countries.

• We are giving aid to 10 or 11 countries
• We are pre-paying our debt.
• We have just ”loaned” $300 million to the IMF!

How distant the days when we used to wait anxiously for the announcement about what the Aid India Club meeting in Paris had decided to give us.

But there is the other side-equally telling. Why is it that so few among us know even the elementary facts about these successes? Why is it that so much of public, specifically political, discourse, when it is not whining is just wailing?

PART II

India’s new world, of unlimited opportunities
Dated August 19, 2003

The problems that have bedeviled Japanese banks are well known – the quicksand of ”directed lending”, NPAs, and the rest – as is the way these problems have been at the heart of Japan’s inability to pull itself out of the trough for over a decade. The Long Term Credit Bank of Japan, the giant LTCB, followed the same trajectory as other banks, except that it has suddenly, in just two years, shot out of the pack.

LTCB was established in 1952. It was one of the principal financiers of Japan’s phenomenal industrialization after World War II. As the 1990s rolled on, its troubles became deeper and deeper. It went bankrupt. To prevent the collapse from bringing down other parts of the banking sector, the Government had no alternative but to nationalize the bank. That was in 1998.

The bank continued to hemorrhage. Soon, in June 2000, it had to be sold to a consortium of international investors. That was a thunderclap for Japan – this was the largest organization that had to be sold to foreigners. The bank was renamed the Shinsei Bank.

In just two years, it has turned around, even as others are still in the morass of old problems. It turns out that Indian professionals – a thousand of them from Nucleus Software Exports, Mphasis, Polaris, i-Flex Solutions and Wipro – have played a crucial role in transforming the bank: they are the ones who have completely re-engineered the bank’s processes, they are the ones who have reorganized the bank’s operations around a completely new, modern business model.

And they have done it all in record time, and with record economy: the new, transformed retail bank has been launched within one year instead of the anticipated three; implementation costs have been 90 per cent less than estimated; a range of new financial products has been launched that are better than what competitors are giving; hardware too has been drastically downsized. When I was in Tokyo a few weeks ago to open Indian IT fair, the success of these professionals in rehabilitating the Shinsei Bank was the talk of the banking and IT community in Japan.

What is it that Indians could bring to this task that, say, Chinese software firms could not? The Indians could not just write software for different functions and transactions that the staff of the bank had to perform – the Chinese too could have done this: China also has a very large software industry that today caters to its domestic IT market, a market which is many times that in India.

The Indians could bring to bear on the task expertise in a host of other domains – for instance, knowledge of financial markets, of modern commercial banking, of accountancy – and thereby provide not just software but complete solutions, from software to hardware to completely new business models.

Similarly, high-end Indian garment industry can avail of not just cheaper labour. In addition it can tap into our fashion designers. Is it any surprise then that Wal-Mart sources $1 billion worth of goods – that is, half of its apparel – from India? That GAP sources $500-600 million from India? That Hilfiger sources $100 million?

The point is the successes we have encountered above are not fortuitous. India has a score of strengths that others do not.

Cost is one of them. Nor is it a marginal advantage. Indeed, the difference between the cost at which we can provide services and many commodities of comparable quality and what those cost in the developed world is so vast that, should those firms and economies shut themselves out from our supplies, they are the ones who will be severely disadvantaged, they are the ones who will be making themselves un-competitive.

• Indian IT firms provide world-class services at one-tenth what the same services would cost in the United States.
• An MBA costs about $5,000 in India. In the US, an MBA costs around $120,000.
• Developing a new automobile model in the US costs about $1 billion. Indica and Scorpio have been designed, developed and produced totally in India. They have been acclaimed abroad, and found to be up to international standards. The cost of designing them? Less than half what the design would cost in the US.
• In an important address – you will find it in FICCI’s publication, Unleashing India’s True Potential: CEO’s Vision of the Future – M.S. Banga, Chairman, Hindustan Lever, and reports results of inquiries that the company made. In spite of high power costs, high interest rates, it found that the capital costs of setting up plants in India to produce an item like toothpaste for Levers worldwide were just 35 per cent of what its sister companies in the US and Europe would have to spend. And the conversion costs were just 15 per cent. In tea bags they were just a quarter of what they would be in the US.

Sourcing already accounts for about half of Hindustan Lever’s exports of Rs. 1,500 crore a year. But Banga surmised, by being just the hub from which Levers’ units worldwide would source their requirements of such goods, Hindustan Lever could build up a business of $1 billion a year – that is Rs. 5,000 thousand crore a year. Moreover, as it would be marketing directly to these companies, it would save on the costs of reaching, winning, retaining the individual customer.

• Surgery: Arvind Netralaya performs a cataract operation, including the cost of the lens, for $12; that very operation costs about $1,500 in the US. A bypass surgery in India costs around Rs. 40,000; in the US it can cost anything upwards of Rs. 6 lakhs. The cost of open-heart surgery in the UK or the US can be anywhere between Rs. 15 lakhs and Rs. 35 lakhs as against Rs. 1.5 lakh to Rs.5 lakhs in the best of hospitals in India. The cost differentials in more complicated surgeries – liver and kidney transplants, etc – are even higher.
  

Brains are another strength – far, far more important than material resources in several sunrise activities. Most would have been surprised to read recent accounts in magazines such as Business World of India being looked upon as a research hub by company after choosy company. FICCI’s list includes:

• Over 70 MNCs, including Delphi, Eli Lilly, General Electric, Hewlett Packard, Heinz and DaimlerChrysler, have set up R&D facilities in India in the past five years. Together with laboratories set up before 1997, 100 of the Fortune 500 have set up R&D facilities in India. By contrast, only 33 of the Business Week 1000 companies have R&D centres in China.
• The scale of these operations also tells the tale. Just four years ago, Intel had a mere 10 persons working in India; today it has over 1,000. GE’s John F Welch Technology Center in Bangalore is the company’s largest outside the US. With an investment of $60 million, it employs 1,600 researchers. GE’s R&D centre in China by contrast employs only 100.

The Indian centre devotes 20 per cent of its resources to fundamental research having a five to 10 year horizon in areas like nanotechnology, hydrogen energy, photonics and advanced propulsion. With 17 clinical trials (10 of them global), the Eli Lilly research facility at Gurgaon is its largest in Asia and the third largest in the world.

• GE Medical in Bangalore has developed a high resolution-imaging machine for angiography to meet GE’s entire global requirement. It has also developed a portable ultrasound scanner that is exported around the world from Bangalore.
• Two-thirds of GE Plastics’ 300-member research team in India is doing fundamental research on molecules. GE Plastics has contributed to the development of a family of polycarbonates of engineering plastics that are being used in auto headlamps and CDs. It has also developed heat resistant monomers for applications in aircraft bodies and high-end medical equipment.
• GE Motors India has developed an almost noiseless motor for GE’s most sophisticated washing machine lines in the US; it is the sole sourcing point for a million of these motors every year.
• Monsanto has been in India for over 50 years. After examining China and India, it set up its first non-US research facility in Bangalore in 1998. This facility is responsible for Monsanto’s R&D for Asia. The company is researching ”promoters” – accelerators that improve crop productivity.
• Whirlpool’s Pune Research Lab develops refrigerators and air conditioners for Asia (including China) and Australia. Forty per cent of this facility’s resources are devoted to its core research on global projects.
• The DaimlerChrysler Research Centre in Bangalore is engaged in fundamental and applied research in avionics, simulation and software development.
• HP Labs India has built a prototype that can scan handwritten mail through a small handheld device instead of a scanner. It has also built the prototype of a computer for unsophisticated users.

You can extend the list many times over by just following our business newspapers and magazines for a week. Moreover, while youthful professionals and entrepreneurs have been adding these sinews, the most far-reaching structural change has taken place:

• The proportion living below the poverty line has fallen from 36 per cent to 27 per cent.
• The balance of power between state and society in the economic sphere has been overturned: the dismantling of the license-quota raj, the transfer of power to regulators in one sector after another.

Indeed, not a week passes and there is yet another advance in economic management. One reason these changes do not get adequate notice is that, many of the structures having been set up, the improvements are now in the details. Those who are acquainted with economic policy and administration know that each of these improvements will have far-reaching consequences as the years go by. But as the improvements are in the details, most of us miss their significance.

As a result of such steps, many of the handicaps that hobbled our entrepreneurs have been eased in the past few years. Initiatives in different, seemingly distant fields have reached fruition. And the effect is not additive, it is multiplicative:

• The turnaround time in our ports used to be eight to 10 days; it is now four-and-a-half days.
• As recently as 1999, our telecom infrastructure could provide a bandwidth of only 155 Mbps; today it is able to provide terabit capacity, that is, 75,000 times what could be provided just four years ago. Within a year or so, as the fibre optic network being laid by various enterprises gets in place, it will not matter whether your office is in San Jose, California or in any of 300 cities in India.
• Till the other day we used to be in awe of the rate of expansion of mobile phones in China – a million a month. In the past two months these have increased in India by almost 1.5 million a month.
• Long distance telephone tariffs have fallen by two-thirds in five years.
• Tariffs for data transmission have fallen by 80 per cent in three years.
• The work done by the far-sighted people who set up what seemed at that time such an esoteric institution, one oriented to the rich elite, the National Institute of Design has borne fruit. Today graduates of that fine institution help design cell phones, CAT-scan and MRI machines …

Other handicaps too have been eased. Interest rates have come down drastically, foreign exchange restrictions for business purposes are as good as non-existent…

On the other side is the fact that the developed world will increasingly require services and personnel from a country such as India. We are the ones who have to be swift enough to prepare for and grab the opportunities:

• Various studies conclude (you will find them summarized in the All India Management Association’s India’s New Opportunity – 2020) that the workforce of developed countries will fall short by 32 to 39 million by 2020. In the US alone the shortfall is expected to be between 8.2 and 14.3 million.
• The proportion of the aged to persons in working age is shooting up precipitously in developed countries from Germany to Japan.

Such developments provide excellent opportunities for India – for services that have to be provided in situ such as nursing and care for the elderly, for services such as surgery that can be provided to residents of those countries upon their coming here. In fact, there are opportunities in a host of new services of an even higher order, and ones that exist not in the future but right now:

• Higher, specially medical and engineering education: educating an MBA to world standards costs $9000 in India; in the US that degree of education costs $30,000.
• Editing, composing, formatting text, from books to newspapers: a sub-editor costs an American paper $25,000; in India an excellent substitute can be employed for $5,200. The editor of an Indian paper told the proprietor of a leading British paper the other day he could edit the latter’s paper for merely the amount that the latter’s publication spent on renting the space occupied by sub-editors in the publication.
• Printing and binding books: Hong Kong and Singapore, which had taken a leap in this regard, have become high-cost centres.
• India has exactly the same order of cost-cum-competence advantage in professions like law, accountancy, design, engineering, tax consultancy, financial services of all kinds.
• In software itself, though there have been the most conspicuous successes, the field is limited only by our imagination – in that IT fair in Tokyo that I mentioned, I saw fine text-to-voice software that has been developed by a small software unit in Lucknow. It was receiving excellent reception in Japan. It can be used to quickly produce audio versions of books upon books for the visually impaired.

Thus, on the one side the opportunities are unlimited; on the other we have incomparable advantages for grasping them. But as has been said, ”When opportunity knocks, some complain about the noise.”

Software engineers or cyber coolies? runs the headline of a newspaper feature. In the US a software engineer earns $21 an hour, in India even the leading companies pay him only $2, runs the text. Is this not exploitation? it asks.

Now a salary of Rs. 100 an hour is excellent for someone living and working in India. Why throw away the advantage? Look at it the other way. China has accumulated its huge pile of foreign exchange reserves – over $280 billion – not by high-technology exports. It has accumulated them by flooding the world with low-technology items – leather, leather products, garments, toys … And it has used the advantage of lower cost – and perfectly disciplined labour – to the hilt.

China’s achievement we gape at: ”How have they become the manufacturing hub of the world?” we ask. But our advantage – in some senses the very same advantage China has put to such good use – we want to throw away.

Keep these foreign accounting firms out, proclaim our accountants at a high-profile function. They have been involved in frauds abroad. On that reasoning, shouldn’t we bar our own accounting firms also? After all, frauds in our banks, in our stock markets, the way so many of our firms that have run up NPAs are then able to extract bail-out packages from financial institutions, could such things have happened if our accounting firms had been doing their job?

And there is the other point: we want their accountants and lawyers to be kept out, but they must open their doors to our IT professionals! As the title of one of Jairam Ramesh’s monographs ran, Yankee Go Home – But Take Me with You!

Why not look upon the opportunities positively? Why not institute courses in our law colleges on Germany’s legal system, in the accounting systems of the US and thereby capture the markets there? Why not multiply the number of nurses we train, and have them learn Japanese? Why not enable private firms to open world-class universities in India, and thereby become educators to the world?

Part III

This is India’s moment, can we grasp it?
Dated August 17, 2003

On the one hand, we have unbounded opportunities and incomparable advantages to seize them. On the other, there is the fate that will surely befall us if we falter. Unemployment will reach such proportions that social unrest will become unmanageable. Similarly, if the rates of growth of India and China continue to differ by the margins of the past 15 years, within the next 15 years the Chinese economy will be six times that of India. And the consequences will be worse than we can imagine.

Economic strength is itself power. To take one instance, because China has been able to attract so many more to invest than we have, China today is able to mobilize so many more-American firms, for instance-as lobbyists to advance its interests.

Moreover, economic strength gives China the wherewithal to go in for comprehensive modernization of its armed forces. Indeed, that there is so much talk of China’s economic transformation obscures what China is already doing, what its economic modernization already enables it to do in the military sphere.

Will a China six times stronger than India not administer another slap at us? Indeed, will it have to administer a slap? Will an India dwarfed to that extent not learn to pay heed to China’s interests subliminally?

Now it is nobody’s case that China is free of problems. Quite the contrary. The achievements-the incredible infrastructure built in Shanghai, for instance-themselves remind us of problems it may be storing up: this infrastructure has been built by getting the country’s banks to lend money to the special purpose vehicles that were created for building the projects. But everything has to be paid for in economics: what is the rate of return of these projects today, and how does it compare with what is needed to repay the investments?

There is moreover a fundamental issue. The 21st century is going to be the century of knowledge-of its continuous unraveling and of its continuous application. One of the central lessons of the 20th century is that where the state is pervasive, creativity does not flourish. The Chinese have indeed transformed their state. But it remains pervasive. How will they ensure creativity-of the kind, say, youngsters in our IT firms have displayed?

So we have many things working for us. In many ways, this is India’s moment, even vis a vis China. For the first time, observers have begun to voice questions in public about China-its statistics; the fact, for instance, as a German investor said recently at a conference I was deputed to attend, that, ”If you want your factory to come up quickly, go to China; if you want to make money, go to India.” On the other side, everyone’s noticing Indians make a mark in every sphere: writers, scientists, doctors, IT, cricket, beauty pageants, chess…

So it is the moment for India. It is a moment. But, it is only a moment. What should we do to ensure we grasp it?

First, we should begin to notice what is happening around us. We have become what an American author calls ”Negaholics”-addicted to the negative, as an alcoholic is to drink. Ever so many of us are unaware of even the elementary examples that have been listed above.

Nor is that the result merely of inattention. We look for, we latch on to the negative; even if some achievement breaks on to our mental screen it does not percolate into our awareness, we do not see that it is part of a pattern, that it is not an isolated fluke. Indeed, our instinct is not to believe evidence of that accomplishment.

Remember how eager many commentators were to find fault with NSS data that established a steep decline in proportions living below the poverty line? These are symptoms of a habit. Remember the exercise that books on creative thinking recommend? Is there much blue around you? You would not have noticed much. Now make an effort to look only for blue things around you. You will notice so many that, though they were lying around, had not registered.

It is especially important that those who are in public life-who hold public office, who participate in public discourse-break out of this addiction to the negative. Because of my work, I have had occasion to travel abroad several times in the past two-three years. Each time I have been struck by the contrast between the way India is looked upon abroad, and the way we look upon it here. There is an equally telling symptom here at home-there is much greater confidence in the Indian industrial class than there is in the rhetoric of politicians who ostensibly are shouting on behalf of and to save that industry!

The result is our discourse continues to be mired in fear, so many of us just keep repeating slogans of 30 years ago. We should listen to the new India.

Next we should be alert to what the critics of reform are doing where they are in power. In New Delhi, the CPI(M) shouts against even the slightest attempt to reform-for instance, privatize – a public sector unit, they bring woe upon anyone who may say that repeated revival attempts having failed, such and such firm has to be shut down.

But in West Bengal the state government has already shut down two state-owned units, it is disinvesting 10 more. It’s just that the state government does not talk of ”disinvestment”; it says it is just turning the firm over to a joint venture partner!

Remember Ajit Jogi’s hysterics over Balco? Remember his threat ”Should anyone from Sterlite enter Chattisgarh, we will break his legs”? Since then his refrain is ”Sterlite is scripting the success-story of Chattisgarh”! More important, he is today the leader in public sector reform! Including privatization! The Indian Express reports he has already closed thirty-seven public sector units.

Remember all that shouting, ”Why are you selling profit-making companies?” The Housing Board-HUDAC-Jogi has just closed down has been a profitable concern, reports The Indian Express. Remember all that shouting ”But the land of Balco is itself worth Rs. 1,000 crores”? Reporting about that Housing Board, the Express correspondent writes from Raipur, ”The assets … also include some prime properties and a land bank of approximately 600 acres of land. In Raipur itself, HUDAC owns 300 acres of prime land near Tatibandha-an upcoming commercial area. Bhilai and Durg towns are also key urban towns where HUDAC had purchased land … Other assets, according to the HUDAC balance sheet, include hundreds of unsold HIG, MIG, LIG and EWS houses, shops in urban complexes and other properties…”

A simple rule of self-denial among political parties would help: ”Do not block another party from doing what your own party is doing where it is in power.” As parties are unlikely to deny themselves even this much, journalists and others should bring the rule into being in effect: keep an eye on what the party is doing where it is in power, recall what it was doing when it was in power and, each time the party tries to stop a rival from prosecuting a reform, broadcast those facts, grill its leaders on them.

There is a more intractable problem-a central dissociation between democracy as we know it in India and what is needed for rapid growth.

All change involves dislocation. And this is where the strengths of yesterday become the handicaps of today. BSNL has one of the world’s most extensive networks of copper-wire. But people are switching to wireless telephony. Every time there is a proposal for new technology, our first thought is, ”But what will happen to the thousands of crores that have been sunk into that network?”

Nor is the drag confined to governments. As BSNL has been purchasing copper wire worth Rs. 2,000 to 4,000 crore every year, 30 or more companies have come up that can survive only if BSNL continues to purchase copper wire! Their owners and the workers employed in them too would rather that the switchover to new technologies is slower.

That is how over the decades the Civil Aviation Policy becomes the policy for Air India rather than for India. That is how our finances get sucked into quicksand-that is how we continue to ”protect” existing producers of wheat and rice with ever higher minimum support prices even as government godowns overflow with stocks, and even though we know that these support prices are in fact preventing the crop diversification that other programs of government are trying to promote; that is how a state like Maharashtra brings its finances to the brink by continuing subsidies to sugar growers; that is how over the years we squander Rs. 10,000 or 15,000 crores keeping obsolete mills of the National Textile Corporation (NTC) on artificial respirators rather than using the money to modernize the textile industry; that is how we continue to guarantee procurement of tobacco, of all things, even as we spend crores admonishing people to abjure it; that is how, ostensibly to protect existing tenants, we continue rent control laws, thereby discourage investment in housing and thus ensure both housing shortage and urban decay.

We block voice-over-internet for long, we set the police upon youngsters who have begun using the technology; for years we won’t allow personnel of IT firms to avail of the Closed User Group facility-lest the revenues of BSNL get affected … It is as if we were to block the introduction of the automobile to protect carpenters who are making tongas. Without doubt, one of the reasons West Germany and Japan forged ahead of the United Kingdom after World War II was that the entire industrial stock of those two countries had been bombed out of existence while that of the latter had survived.

In the end, all such efforts fail. One cannot block technology any more than one can block time: in the end Bangladesh has had to close down the largest jute mill in the world, in the end we are having to close down NTC mills … But over the years we ensure our country’s progress is slowed down, and our governmental finances are brought to the brink.

The problem becomes all the more acute in a democracy, all the more so in what we have made of democracy. The electorate has been so fractured by caste and the rest that it does not respond to national issues. To attain office and retain it, therefore, parties have to aggregate votes, section by section. Each section liable to be dislocated by change-the tobacco farmer no less than the textile mill owner and the powerloom operator-is able to suborn parties and politicians to block that change.

Of course, in due time a constituency will arise of those who have benefited from the change-the IT professionals, the ones who will prosper if only we were to allow our entrepreneurs to set up institutions of higher learning … But they are in the womb of the future. And the ones who will be dislocated are ones who will defeat the party today. As the horizon of political parties seldom extends beyond the forthcoming election, even a bit of aggressive shouting can ensure that reform is deferred.

There is another factor that confounds everyone into submission. All politicians are nervous-witness our nerves before every reshuffle! Politicians faced with elections are more so. And no one quite knows what issues are on the people’s mind. So the moment a step is mooted, everyone can, and does, proclaim, ”Not just now, elections are round the corner. People will turn against us.”

Was disinvestment an issue in any of the elections during the past five years? If free power could have won elections, how come the Akalis in Punjab, the DMK in Tamil Nadu were swept away? I well remember a meeting in a state on the eve of elections there, and what was being said ”on the sidelines’, ”Please get (the chief minister) to abolish (a local tax) … If only it is removed, we will sweep the urban areas.” It was abolished. The urban areas swept away the alliance.

There isn’t much that can be done about the politicians’ nervousness, except to go on pointing out reforms are not the issue they are made out to be: internal bickering has brought defeat to parties not issues like disinvestment or tariffs.

But the problem-the dislocations that change will cause-is real and we have to attend to it. Four things can help.

We should multiply outlays on activities that will engage large numbers, and are things that we should be doing in any case. The Planning Commission has prepared three first-rate reports, for instance-on biofuels, on bamboo cultivation and products, and on medicinal plants. Each of these can engage millions. As can organic farming, diversification into vegetables and fruit and floriculture. As can water harvesting.

When activities like these flourish, incomes will multiply, nutrition will improve, fewer will flock to urban slums. Indeed, through them the country would register gains even in foreign exchange-outlays on biofuels would save on imported crude; organic farming, medicinal plants would bring foreign exchange.

Similarly, projects that entail huge earthworks-the Prime Minister’s Quadrilateral and gram sadak projects, the linking of rivers-can absorb millions who may be dislocated and at the same time unleash the country’s productive potential. They are the real social security that will cushion our people.

But the main solutions lie, as usual, not in the economic realm. They lie in political arrangements, in discourse. We must reduce the frequency of elections: schedule elections, as the vice-president and the deputy prime minister have proposed, to state assemblies and to the Lok Sabha simultaneously; fixed terms for legislatures even as individual ministers can be voted away for dereliction.

Even before such changes are put into effect, and even after they have been instituted, we have to make everyone see that change cannot be blocked. The more we succeed within India in delaying it, the greater the lead that others will get over us. Schemes to rehabilitate and reposition workers or farmers who may be dislocated must, of course, be devised and executed. But the project or technology must not be blocked.

Soon enough that project will have to be executed in any case; soon that technology will come to be adopted. Time will have been lost. Resources that could have been used for modernization of that enterprise, that industry, for the prosperity of that very region would have been wasted in keeping that obsolete technology or enterprise ”alive”.

And we must with evidence induce everyone to see that more often than not the resources needed to take care of and re-equip those who will be dislocated are embedded in the obsolete enterprises themselves. Look at the land NTC’s mills have in Mumbai. If only the government would be allowed to sell it, more than enough would be available to retrain and re-equip every single worker in those mills, as well as to modernize the mills that are to survive.

Not the details of economic policy-that is not where the impediments lie. The way we look at things, our discourse, the drag of interests that are vested in the way things are-these are what we need to change.

By: Shri. Arun Shourie

To listen:
Arun Shourie (English, 32.16 min)

To download: Arun Shourie | Cho Ramaswamy

Courtesy:http://bseshadri.blogspot.com/

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