.


EDITORIAL

Promote Professionalism

The report of SOG personnel (Special Operations Group of State Police) becoming law unto themselves is quite mind-boggling and awe-inspiring. That SOG becomes instrumental in facilitating looting and extortions is something quite unpardonable. That SOG allows its uniforms and AK-47 to be used for such clandestine and destructive extra-curricular activities is out and out criminal and anti-national act. It is just but one of the 37 similar acts of the last few years which stands mostly attributed to be the handiwork of ‘unidentified militants’. It now transpires that most of this looting spree has been facilitated by none other than the specially trained and equipped counter-insurgent group of the State Police named SOG. True, this force has many achievements to its credit as regards good success rate in counter-insurgency operations either on its own or in league with central security forces. It is equally true that this elite force has been created to ultimately take over and replace para-military forces in the State. But one bad act brings entire State into disrepute even as State police as a whole gets ignominous label of being suspect in the eyes of the people....more

ISC Meet

Standing Committee of the Inter State Council (ISC) held its 8th meeting mainly to discuss and prepare agenda for the full ISC meeting in relation to the Sarkaria Commission report. During the meeting many ...more

Holding Pakistan
responsible

By Daya Sagar
Deafening blast in bus No. JK01B may not still sound to the Deaf. The noon of 10-8-2000 was no different for the "Unaware" innocent in Srinagar city.....
more

Madan Lal Dhingra

By K K Khullar
I maintain that if it is patriotic in an Englishman to fight against the Germans, if they were to occupy this country, it is much more justifiable and patriotic in my case to fight against the English.. I hold the English people responsible for the murder of eighty millions of my countrymen...
more

Urbanisation in India

By Shubashish Mitra
Urbanisation has come to stay in India--with grim forebod-ing. The four decades between 1951 and 1991 saw a two-fold increase in the population, from 361 million to 844 million. By 1991 we had a urban India of 217.7 million from 62.4 million in 1951.....
.more

Rupee turns full circle

By K R Sudhaman
Highly volatile and falling ru-pee exchange rate has forced the Government to press the panic button and Reserve Bank seems to have had little choice than to send SOS to corporates to speed up Foreign Exchange repatriation as the Indian currency becomes the cheapest in world touching nearly Rs 36 to a Dollar.......
.more

EDITORIAL

Promote Professionalism

The report of SOG personnel (Special Operations Group of State Police) becoming law unto themselves is quite mind-boggling and awe-inspiring. That SOG becomes instrumental in facilitating looting and extortions is something quite unpardonable. That SOG allows its uniforms and AK-47 to be used for such clandestine and destructive extra-curricular activities is out and out criminal and anti-national act. It is just but one of the 37 similar acts of the last few years which stands mostly attributed to be the handiwork of ‘unidentified militants’. It now transpires that most of this looting spree has been facilitated by none other than the specially trained and equipped counter-insurgent group of the State Police named SOG. True, this force has many achievements to its credit as regards good success rate in counter-insurgency operations either on its own or in league with central security forces. It is equally true that this elite force has been created to ultimately take over and replace para-military forces in the State. But one bad act brings entire State into disrepute even as State police as a whole gets ignominous label of being suspect in the eyes of the people. When belted persons become dacoits it bids ominously for the State.

It is recalled that some other gory incidents came to the notice of the Chief Minister like unloading certain persons from moving vehicles by force and indulging in other ‘goonda acts’. It was in the wake of such bad news that CM ordered putting SOG under the control of district police chiefs rather than leaving them to outperform even the ultras. In reality however SOG continues to be under dual control. Technically, the SOG personnel remain under the DGP (Operations) although as per CM's orders they got to be functioning under the respective district police chiefs. This dual control needs to be removed for accountability and better coordination. This is essential because dacoits can also become abettors of insurgency. After all, some personnel of SOG elite force have resorted to looting, abducting and extortions for making fast buck. If the same money comes from ISI instead they could be ever willing takers for it. Men of any belted service derive their motivation and strength from nationalism, sense of dedication and discipline. All these three elements are conspicous by their absence if one goes by the reports of sundry misdeeds and indisciplined acts. In the latest case of looting the truck, the consignee happens to be none other the nephew of officiating Chief Minister Ghulam Mohi-ud-Din Shah. When kith and kins of the CM could be targeted, fate of hapless citizens can best be imagined. Today they have looted full truckload worth Rs. 50 lakh of goods. Tomorrow they would enter house of any law-abiding citizen or even VIP and do what mercenaries have been doing i.e. rapes, abductions, extortions and killings besides looting and that too with official uniforms and AK-47 supplied by the SOG. In public esteem there is no difference between performers of such heinous acts, be they militants or belted men of the elite force. It is insult to the uniform and very humiliating to the service as a whole. Such acts cannot be condoned and severest possible punishment is called for to have deterrent effect.

In the given situation, it is certain that some thing is amiss in the SOG. There is the imperative need of upgrading their training which inter-alia must include human rights and conditioning to nationalism. They should not only respect law of the land but also offer willing protection to life and property of the citizens. This is besides the weapons skills and commando training so essential for counter-insurgency operations. Much more than these coordination and answerability to single head is indispensable. There is no room for dual control. Any ambiguity in such functional control must end. It would be keenly watched asto what deterrent action Government takes against such personnel who have become law unto themselves and somewhat privy to the ongoing insurgency as far as abductions, extortions and looting is concerned. In this context courtmartialling of one Major of the army for similar acts and award of deterrent punishment needs to be emulated. In our State however one is yet to see any cop substantially punished for such abuse of the uniform and weapons.

ISC Meet

Standing Committee of the Inter State Council (ISC) held its 8th meeting mainly to discuss and prepare agenda for the full ISC meeting in relation to the Sarkaria Commission report. During the meeting many crucial aspects of Centre-State relations have been discussed threadbare. There is hardly any consensus on any issue other than referring the unresolved ones to the full meeting of the ISC. First issue of transferring residuary powers to the concurrent list did not find favour because Constitutional fathers deliberated on it extensively. That is why instead of Federation it was declared as Indian Union. This was so because States should prosper but in the process Centre must not become weak under any circumstances. If residuary powers go on the concurrent lists there is the danger States becoming too much challenging and in the process weaken the Centre. It is one thing to devolve more financial powers; it is quite another to do so for legislative power. The second point relates to appointment of Governors with the mandatory consultation with State Governments. Advani is agreeable to have constitutional amendment for incorporation of the same but with the rider that ultimate decision as regards choice of the Governor rests with the Centre. Governor is the Central representative who oversees that State Governments function as per the Constitution. If they are State appointees or those pliant to the State there is indeed no need for office of the Governor itself. The third point relates to the much debated Article 356 repeal. This issue is as much elusive today as it was during Congress or UF rule. Imposition of Presidents rule in State where there is failure of the Constitution is already made very stringent. It cannot be imposed for the love of it anymore. There is recommendation of the Governor, consideration by the cabinet, approval by the President, clearance by Parliament within six months of the imposition of Presidents rule. There is the additional rider from the Apex Court ruling in the Bommai case that assembly must be kept in animated suspension until all other constitutional requirements have been fully met. In other words revival of the assembly and re-installation of the dismissed Government is permissible if any of the parameters fail to withstand legal scrutiny. Such re-installation has indeed taken place in two largest populated States namely UP and Bihar in the recent past. The fourth issue relates to have bicameral houses. These are abolished in Punjab and Tamil Nadu. Now these very State Governments have passed resolutions in assembly seeking revival of Legislative Councils (Upper Houses). The Government wants that such abolition or creation of upper house must not be left to the whims and fancies of any State Government and there must be some provision in place which does not fiddle with it so frequently. Fifth, Commission of Enquiry Act is agreed to be amended in as much as Central Government will have to consult the State Government whenever Commission is sought to be appointed against any State Government Minister. Lastly, some States wanted to run their own broadcasting stations. The Centre rejects it outrightly as the these are likely to become mouth-pieces of the ruling party in the respective States. With this, ISC has disposed of 234 recommendations of the Sarkaria Commission on Centre-State relations. Only 13 recommendations relating to emergency powers of the Centre are left for which an expert committee headed by George Fernandes is already at work.

Holding Pakistan responsible

By Daya Sagar

Deafening blast in bus No. JK01B may not still sound to the Deaf. The noon of 10-8-2000 was no different for the "Unaware" innocent in Srinagar city than the fore-noon of 1-8-2000 for "Highly" guarded Amarnath Pilgrims in Pahalgam. The blast occured inside a J&K Bank Car and near Kothibagh Police Station at 12.30 Hours just within 48 Hrs. of Syed Salahuddin lifting the Hizbul Ceasefire. This speaks a lot on the claims and warnings as made & issued by the Indian Prime Minister and his Government.

Indian Government has been accusing Pakistan every next day from the moment the first round was fired by the insurgents on the innocent Indian people.

Mr Atal Behari Vajpayee has lost no time in "Condemning the dastardly" act and in a statement (10-8-2000) has termed it as an act of terror planned and executed at the behest of Pakistan. This has been said many a time but what the Government of India plans to do to Pakistan, must know the innocent police constable & the unknown brick kiln labourer who was blown off or shot dead away from his home.

Security position in J&K is totally under illusion. Police cadres have grown many folds. The prime security positions in Para Military Forces and J&K Police are held by Government of India Cadres. For any miscalculation, hence, all responsibility lies with Government of India since the dedication & efficiency has to flow from the leading cadres in any police force; and Indian Police Cadres, have today the best of service positions but appear to have failed to lead and guide the lower Cadres. Police Medals and Crowns have grown over the years at no less a pace than the "Blasts".

Stories are nicely constructed after a massacre or often a few days before some important festivals like Deepawali or Idd or Independence Day boasting of efficiency & knowledge of Prime Police Cadres. But some one will have to say no to this and silence those who rush to media with condemnations rather than killing the "condemned".

Mr Vajpayee needs to provide Security to "Indians" in Kashmir rather than providing adequate medical assistance to those blown off.

When it is the question of the security of the territories of India and the life of innocent people of J&K, the responsibility is only of the Government of India where the enemy from across the borders is involved. State Government cannot be so simply held responsible for this since the prime tools to State Chief Minister are provided only by the Government of India, and for such issues the Government of India has to directly involved.

Matters being subjects of State or Subjects of Union should not remain bottlenecks. A State (J&K) where the Hindu has totally deserted the Crown of India (Kashmir valley) since 1989, the innocent labourer has been butchered while in sleep or resting after day's hard labour, Amarnath Pilgrims have been killed under tight security, Muslims attempting to look at the Tri-colour are blasted and a militant groups like Hizbul Mujahideen challenges the might of Indian security has enough for the Government of India to decide on eliminating the seeds of the enemy.

And so, what after Atal Behari Vajpayee holding Pakistan responsible for blasts of 10/8/2000.

It was in March, 1994 when Wali Mohammed Itoo (Ex. Speaker of J&K Legislative Assembly) was mercilessly shot dead while returning from a Masjid in Jammu. And then one unknown Gullum Itoo and his son Fayaz Itoo were shot dead at Hyatpora in Chadoora on 18/3/1994, since then the blood has been spilled unchecked. Killers have gone unchecked showering bullets on the people of J&K where as the people at the helm of affairs have only been prompt in condemning the killers and saying Bravo to the kids of those killed. Story tellers have to be checked now at all costs otherwise "Bravo" will simply follow the kids of the kids.

Stories are not the need of the day. May it be Lashkar-e-Toiba or Hizbul or KLF or JKLF, the citizens are not concerned with the "identity", what they want is that who has been punished and hanged for killing the innocent and fracturing the Hindu-Muslim fabric of J&K. People should rather boy-cott such story tellers.

When we cannot protect the common man, where is the need for flying squad and red light flickering starred cars. Rather a Red Light officer costs another ten jawans to grace and protect him.

The fate of talks with Hizbul-Mujahideen and their cease-fire was already known to those who could have been a bit of reasonable understanding. It was too much beyond the truth to expect Government of India to sit with Pakistan across the table with Kashmir (J&K) as an accepted item of disputed accession between the two. And the militants were out to simply look for some honourable way for securing a general amnesty to escape penal action and secure some share in managing local affairs of J&K. Fears rested only in the intentions of Pakistan and some elite amongst local Kashmiri leaders who over last five decades have allowed the doubts on good intentions of India to subside as well as misinformed the Kashmiri commons (particularly Muslims) to expoit the Indian Government, any other environment would have made their future not that easy.

Madan Lal Dhingra

By K K Khullar

I maintain that if it is patriotic in an Englishman to fight against the Germans, if they were to occupy this country, it is much more justifiable and patriotic in my case to fight against the English.. I hold the English people responsible for the murder of eighty millions of my countrymen, Indians, I mean in the last fifty years. And they are also responsible for taking away 100,000,000 pounds every year from India to this country (England). I also hold them responsible for the hangings and deportations of my countrymen.. Just as Germans have no right to occupy their country, so the English people have no right to occupy India'.

This is the statement of a 22-year old Engineering Indian student studying in London University, in the Old Bailey Court, charged with the murder of Six Curzon Wylie, Political ADC to the Secretary of State for India, Lord Moreley.

Madanlal Dhingra continued in his statement, ''I believe that a nation held down by foreign bayonets is in a perpetual state of War. Since open battle is rendered impossible to a disarmed race, I attacked by surprise. Since guns were denied to me, I held forth my pistol and fired. Poor in health and intellect, a son like me has nothing to offer except his own blood, to my Mother. So I have sacrificed the same on her altar. The only lesson required in India at present is to learn how to die, and the only way to teach it is by dying ourselves. therefore I die in the glory of my martyrdom. My only prayer to God is that I may be reborn of the same Mother, and may re-die in the same sacred cause till the cause is successful. Vande Matram'. These words should be prescribed as text for the growing children, like the Gattysburg Address of Abraham Lincoln, the cry of French Revolution: Liberty, Equality and Fraternity. Madanlal Dhingra died on the gallows so that his countrymen in India may live. Dhingra had ceased to be a man. He was a movement.

Madanlal Dhingra was born in 1887. He was the seventh child of his parents. His father, Sahib Ditta Mal was an Eye-surgeon. He had worked in various capacities a Physician to Maharaja Pratap Singh of J&K. He was a Civil Surgeon at Hissar, Amritsar and Gurdaspur. For his meritorious service he was awarded the title of 'Rai Sahib' by the British Government. He held a high position in the Punjab aristocracy which he was very proud of.

Madanlal had his schooling in Amritsar. For sometime he had worked in the Kalka-Simla tonga Service. In May 1906, his father sent him to study Mechanical Engineering in the University College, London University. Madanlal was rated as a brilliant student.

During his stay in London, he used to visit, quite often, India House Library and attended its functions. There he came in contact with Veer Savarkar and Syhamaji Krishna Verma.

In 1907 when he had no accommodation anywhere in London, he stayed in the India House for month. That month was the turning point of his life. During that period he came very close to Veer Savarkar who administered him the Oath of Allegiance as member of his revolutionary secret society called 'Abhinav Bharat Samastha'. There he got his shooting training. He practised it every day, even on the day he shot dead his victim, Sir Curzon Wylie.

On the night of July 1, 1909 there was a function in the Jehangir House of the Institute of Imperial Studies, London at India office. A large number of Indians, retired British Civil Servants and public men were invited. It was the concluding item of the function, a part of the Annual Day Programme of the Indian National Association. The Music Session was just over when Sir Curzon Wylie entered the Hall with his wife. Madanlal saw them from a distance, and greeted Wylie.

Madanlal wore an English suit and a blue turban. Quietly he brought out his revolver from the inner pocket of his coat and fired five shots right in Wylie's face. Wylie died without a shriek. The background music suddenly stopped. A Parsi doctor who tried to save Wylie died from Madanlal's sixth bullet. His name was Cowas Khurshedji Lalkaka.

Madanlal told the court later that he did not wilfully kill Lalkaka. 'I saw him advancing, he caught hold of me and I only fired in self-defence.

Madanlal made absolutely no effort to escape or conceal his identity. In the melee his turban fell off, and when other people ran to safety he raised his voice and announced loudly that no one should fear him for he had accomplished his job. When someone called 'murderer' he objected an said he was a patriot working for the emancipation of his Motherland from the alien yoke. Betraying no sign of nervousness he argued with the crowd: 'I am perfectly justified in what I have done. The English would have done the same thing had the Germans been in occupation of England. Incidentally Veer Savarkar was not in London that day having gone to Reading on a private business.

Madanlal was over-powered by police and arrested. He was kept in police custody for seven days. Dhingra's most glorious hour was his trail which began on July 10, 1909 at the Old Bailey criminal court. When the British Magistrate asked him whether he wished to make any statement, he brought out a prepared text from his pocket and read it aloud amidst persistent refusals and repeated commands for 'Order'. 'I do not want to say anything in defence of myself, but simply to prove the justification of my deed. As for myself I do not think any English court has any authority to convict me or detain me in prison or to pass sentence of death on me'.

'This is the reason I did not have any counsel to defend me'.

On 23rd July he was tried for murder of Curzon Wylie and sentenced to death by hanging. It was also decided to send him to the gallows 25 days later on August 17, 1909. Strangely enough the deate of hanging was decided by the court which is not correct. That is purely an administrative matter. When the Judge finished reading out his judgement, Madanlal raised his voice and said: 'I am proud to have the honour of laying down my humble life for my country. But remember that we shall have our time in days to come'.

The irish press hailed Madanlal as a hero. Mrs Annie Besant did it lkewise. Virendranath Chattopadhya started a monthly magazine in Madan's memory. Madame Cama printed it in Berlin. It was called 'Madan Talwar' (Madan's Sword). Soon it became the mouthpiece of the revolutionaries.

Praising the heorism of Dhingra, W S Blunt, author of 'My Diaries' (1900-14) published in 1919 says: 'No Christian martyr ever faced his judges more fiercely or with greater dignity than Dhingra. Surprisingly even Lloyd George and Winston Churchill praised Dhingra's patriotism. According to Lala Hardyal, the Founder of the Ghadar Party in USA, Dhingra reminded us of the medieval Rajputs and the Sikhs who loved death.

Dhingra's body was not handed over to Sarvarkar who made a written request. It was buried in the Pentonville Cemetry. At the time of digging out the remains of Shaheed Udham Singh, Dhingra's 'missing' grave was accidentally identified. His ashes were brought to India on December 13, 1976.

Dhingra's act was not an isolated phenomenon, it was part and parcel, in fact culmination, of the revolutionary movement which became very intense in the early quarter of the last century. In the words of Lala Hardyal: 'Dhingra has behaved, at each stage of his trial like a hero of ancient times. In time to come when the British Empire in India shall have been reduced to dust and ashes, Dhingra's monument will adorn the squares of our chief towns, recalling the memory of our children to the noble life and the more noble death of his who laid down his life in the fare-off land for the cause he loved so well'.

Dhingra anticipate Bhagat Singh by 20 years. He spearheaded the first Youth Movement in India.

PTI Feature

Urbanisation in India

By Shubashish Mitra

Urbanisation has come to stay in India--with grim forebod-ing. The four decades between 1951 and 1991 saw a two-fold increase in the population, from 361 million to 844 million. By 1991 we had a urban India of 217.7 million from 62.4 million in 1951.

One feature of India's urbanisation is the increasing metropolitanisation, that is, growth in the number and size of cities with more than a million population. There were only five metropolitan cities at the time of Independence. The number gradually increased to 12 to 1981. There was a quantum jump in the decade of 90s when the number of metropolitan cities increased to 23 (in fact 24, if Thane is counted separately) with a population of over 70 million accounts for 32.5 per cent of the urban population.

The National Commission on Urbanisation (NCU) has estimated that by 2001 the urban share will be 35 per cent accounting for a population size of 350 million and that there would be 40 metropolitan cities (41 if Chandigarh Urban Region is included). A United Nations study on Human Settlements has shown that by 2005 the population size of India would be about 1228.8 million and the urban population size would be 658 million- larger than the estimated rural population that time.

A matter of serious concern is that geologically and geographically India has 57 per cent of its land prone to one or the other kind of natural disasters. An economy too sluggish to develop infrastructure to keep pace with dynamics of urban growth and inability of cities to sustain migration and urban growth appear to have narrowed down the gap between natural and man-made disasters.

Man's intervention in ecological system has led to landslides, floods and even storms and cyclones. Human modification of eco-systems and urban expansion at the cost of natural resources have triggered a number of disasters in the past. Deforestation of hillsides, cutting of roads in hilly areas and other human modifications of the eco-system have made human settlements vulnerable to disasters like floods, landslides and drought. The human contribution to Orissa's recent super -cyclone may be a case in point.

Experts in the state-owned Housing and Urban Development Corporation (HUDCO) warn that if the present trends of growth continue, it will take a heavy toll on natural resources leading to resource degradation and making the country more vulnerable to disasters.

Indian monsoon, wreacking disasters in large parts of the country every year, leave both people and government agencies struggling to cope with the widespread devastation. Bearing the worst brunt are the states of Uttar Pradesh, Bihar, West Bengal and Assam where over 2,000 people have been reported dead last year, eight million rendered homeless and property worth of Rs 50 crore damaged.

Parts of Maharashtra and Gujarat too were flooded. Floods in Gujarat followed the killer cyclone in Kandla a year back and despite these bitter experiences, government has failed to formulate a comprehensive disaster management policy which can predict an impending crisis and help better coordination among state agencies.

The lower income families are the most vulnerable. Poor people migrate to urban areas to eke out a living, leading to mushrooming slums and shanties in environment far less than appropriate for human dwelling. In Delhi around 2.5 lakh people live in slums which have mushroomed in the flood-prone plains of River Yamuna. It has been noticed that on an average the slums and squatters' population has been increasing at more than double the general growth rate of the population of the cities.

While about 20 per cent of the urban households do not have any access to safe drinking water, there is no sanitation worth the name for 52 per cent of the urban population and toilet facilities are available to only about 24 per cent.

With respect to the disposal of solid wate, the position is even more depressing. Even the most conservative estimates suggest that at least 28 per cent of the urban waste is allowed to decompose and puterfy on the roadside providing breeding ground for pests, flies, mosquitoes and cockroaches. This is a major health hazard.

Vehicular transport is another major problem because the network is so poor that a commercial vehicle runs, on an average, 225 Km per day while in the developed countries it does more than double this mileage. Despite manifold problems in urban areas, densities in urban settlements are much larger due to scarcity of land and shortage of infrastructure. This factor render these agglomerations more vulnerable as the number of casualties per disaster would be much more than in less dense areas.

Frequent disaster which occur on a colossal scale in the Himalayan region and the Deccan Plateau may be attributed to inadequacies of basic urban amenities and lack of a disaster management policy. On an average 56 million people are affected every year and over 5,000 die while the average economic loss is an estimated 1,646 billion US Dollars a year in India.

Statistics show that floods hit over 11.2 per cent of the country's total area. About 28 per cent of the total cultivable land is drought prone and of the 7,516-KM coastline, high velocity killer cyclones ravage the East coast states of Orissa and Andhra Pradesh frequently.

As the poor are forced to deplete resources to survive the degradation of the environment further impoverishes them. When this downward spiral becomes extreme, they are forced to move to ecologically fragile lands. In the absence of a comprehensive disaster management policy India hurtles from disaster to mega-disaster.

Experts suggest that such a policy should aim at shifting relief and rehabilitation to a development mode and involve the affected stake holders. According to official estimates, which are highly conservative, the present shortage of houses is about 25 million units. Still we have the dubious distinction of having the highest congestion rate in the world--about 19 per cent of the Indian families live in less than 10 square metres of space and about 44 per cent of families in the urban areas live in one-room dwellings.

A World Bank study has revealed that the polluted air in Indian cities is causing premature death of about 40,000 persons every year. The extent of water pollution can be guaged from the state of rivers which are hardly distinguishable from vast urban gutters. Describing the present scenario as ''depressing'', Urban Development Minister Jagmohan at the recent Economic Editors' Conference in New Delhi observed that for a better land-scape, a change should be brought about in the mind-scape.

PTI Feature

Rupee turns full circle

By K R Sudhaman

Highly volatile and falling ru-pee exchange rate has forced the Government to press the panic button and Reserve Bank seems to have had little choice than to send SOS to corporates to speed up Foreign Exchange repatriation as the Indian currency becomes the cheapest in world touching nearly Rs 36 to a Dollar.

Reserve Bank Governor Bimal Jalan airdashed to Delhi twice as the downslide of rupee during the second week of August sent jitters to Government forcing it to step-in to direct Indian Corporates to repatriate speedily their proceeds of the American Depository Receipts and External Commercial Borrowings.

Also acting tough RBI ordered dollar denominated Export Earners Foreign Currency Scheme account holders to convert 50 per cent of their account into rupees by Aug 23 to prop up the Indian currency value.

Finance Minister has however stoutly defended the Central Bank's action saying it has done extremely well in handling the situation by curbing excessive speculation to check volatility. He maintains the rupee depreciation is a temporary phenomenon which is manageable. Though the situation is difficult there is no cause for panic. He also ruled out any immediate hike in interest rates in the face of sharp depreciation of the rupee. The interest rates which was reduced by 200 basis points in March this year has already been raised by 100 basis points. So at the moment, the situation does not warant any further increase in interest rates, he said.

Sinha who was grilled by members of parliament during a discussion on rupee in the Lok Sabha recently sought to allay fears of the members that there was a crisis of confidence and that the situation has risen due to external factor. He explained that United States had increased interest rates recently due to which dollars were flowing into that country from all over the world including India. This had led to downslide of not only the rupee but several other currencies like Euro and Pound Sterling.

While the rupee had depreciated by 5.13 per cent, the Euro by 9.16 per cent and Pound Sterling, 10.17 per cent he said. The only thin line of worry is the quantum rise in the oil import bill which had gone up steeply due to a sharp rise in the international prices of crude to 33 Dollars a barrel.

He did not subscribe to the members view that the rupee may touch Rs 50 to a dollar by this year end saying "let us not give-in to prophets of doom and soothsayers." He said the RBI policy was two-pronged -- to contain excessive speculation and build adequate foreign exchange reserves to meet genuine demand of importers.

He asserted that the market correction in the exchange rate would also offset some of the competitive disadvantages arising from sharp depreciation of currencies of India's competitiors in South Asia and neighbouring countries. "This is expected to help our exports, the growth of which had faltered in recent years.

It was true that the rupee had depreciated against dollar during the last nine weeks or so but it was equally true that the rupee had sharply appreciated or remained stable against currencies of its other major trading partners in Europe, UK and Japan.

The rupee appreciation was also expected to restrain imports and would help strengthen the country's efforts at cost effective import substitution.

The explanation given by Sinha sounds quite plausible. But it is also a fact that Reserve Bank has been a bit casual in its approach as it never bothered to gauge why Foreign Exchange reserves were not improving especially when the country was witnessing a sustained export growth of about 30 per cent in the last two or three months. Apparently the Indian corporates were parking their ADR proceeds and export earnings abroad sending shockwaves in the Indian Foreign Exchange Markets and forcing the RBI to intervene albeit a bit late.

Notwithstanding the sharp fall in Rupee, the sluggish Foreign Direct Investment, balooning expenditure and delay in disinvestment seems to have gripped the Government. This resulted in Prime Minister convening an emergent meeting of this economic ministers including Finance Minister Yashwant Sinha and Commerce and Industry Minister Murasoli Maran to chalk out a strategy to hasten the reform process that has remained sluggish in the last couple of months.

The rupee value to a dollar has fallen sharply from Rs 43.61 in April to a record low of Rs 46.04 on Aug 12. It was hovering around 45.89 to Rs 45.95 now. The depreciation of over five per cent in a matter of five months is rather unusual. Despite the corrective measures undertaken by the Central Bank including a jack up in bank rate by one percentage point from seven per cent to either per cent has not yet stablised the rupee value.

The temporary phenomenon seems to be rather prolonged one and the foreign exchange reserves have depleted by two billion dollars which could certainly be a cause for worry. Sinha, however, maintains that there is no reason to panic as economic fundamentals are strong and the country was expected to end the year with a growth of at least 6.5 per cent in the wake of industrial recovery and good export growth of nearly 30 per cent in the first quarter of this year.

He also maintains that the foreign exchange reserves were quite confortable at around 35 billion dollars which was sufficient to meet seven months imports

Sinha may be confident of tiding over the situation but one is reminded of the example of Brazil whose foreign exchange reserves came down sharply from 75 billion dollars to 30 billion dollars within a fortnight of currency crisis in 1998-99.

One does not expect such a situation to arise in India as we do not have capital account convertibility. But we could not afford to be complacent and allow the volatility to persist for a long time as it could turn out to be dangerous.

Oil prices and the import bill has doubled to over 16 billion dollars. A developing country like India is bound to be affected more by oil prices than the economies of South Korea, or Philippines or Chile. Further total trade imports are up by 23.3 per cent during April-June compared to the corresponding period last year.

Ther very fact that RBI has not been successful to stem the downslide indicate that it has not been successful in dealing with the volatile situation. The actions seem to be more of a panic reaction. There seems to be no defind objectives.

It is time there is a rethinking in RBI's objectives so as to lay greater stress on growth. It ought to have clearer picture on what are the requirements of the economy and how the exchange rate and monetary policy can help to achieve them. Neither inflation control nor the strength of the rupee be the answer to deal with the present situation.

Yet another lesson from the sharp depreciation of rupee is that no amount of the fall in rupee value to dollar is going to compensate for the deficiencies of India's export items as long as the basket remain small and narrow. It is regrettable while the rupee is not getting any support from exporters, whereas they expect 6-10 per cent depreciation every year.

Sinha has however pooh-poohed this criticism saying Government has taken long-term measures and these included forestering macro economic stability, pursuit or rapid growth of output and productivity, regular monitoring of developments in the balance of payments and institution of appropriate policy measures to keep the current account deficit within sustainable levels.

But is is also a fact that Foreign direct investment is continuing at its tricle pace because of Government inaction. Besides Fiscal deficit has not yet been reined in.

There is widespread concern among industries about the disinvestment programme, which has remained a virtual nonstarter this year despite Government announcing a grandiose plan to divest its equity in 33 Psus including strategic sale in Air India and Indian Airlines.

A separate Disinvestment Department was set up this year to hasten what it call big ticket disinvestment programme. But the only think that has happened in the department is change of Minister in a matter of months.

With Industrial production still continuing to be sluggish, it was time Government contemplated drastic steps to bring about an economic recovery. But so far there has been no such sign from the Government.

With the reform process continuing to be slow and the sluggishness in industry persisting, one wonders how long the economic fundamentals will remain strong as claimed by the Government.

In such a scenario if the rupee value is not stabilised rapdily, the situation could become alarming hitting hard the economic recoveryprocess. So it is fitness of things that RBI took drastic measures to deal with volatility of rupee.

PTI Feature

 



|
home | state | national | business | editorial | advertisement | sports |
|
international | weather | mailbag | suggestions | search |
subscribe | send mail |