EDITORIAL
CALL IT FRUSTRATION
The 23-group conglomerate
called APHC has been showing increasing signs of
frustration and indecision ever since the Central
Government announced unconditional unilateral cease fire
more than six months ago. Each reaction of the
conglomerate when analysed dispassionately speaks of its
ingrained vacillation. Until the day General Musharraf
announced his acceptance of Mr. Vajpayee's invitation to
come to Delhi, the Hurriyat leadership was under cast
iron impression that no summit meeting between the two
countries would be acceptable to Pakistan without either
preliminary or intermediary consultations with the
Hurriyat by New Delhi as well as Islamabad. At one stage,
the Hurriyat believing I n its self-created myth thought
that it would be called in by the two sides to mediate in
the tangle. But when General Musharraf announced his
willingness to come to Delhi, the Hurriyat suddenly found
itself cut to size. Now the wound has been inflicted it
must hang out its tongue to lick it. The licking has come
in the shape of its announcement of suspension of call
for anti-India activities. To an unsuspecting person, the
call could be taken as the Hurriyat's total controlof
situation and unquestioned popularity with the masses.
The facts are only the reverse of this situation.
Nobody will accept that
the purpose of calling for the suspension of anti-India
activities by themilitants stems from any sincere desire
of the Hurriyat. The Government of India never took
cognizance of Hurriyat's response to its invitation to
General Musharraf. It did not consider the Hurriyat
factor while flashing an invitation to the General. In
fact two developments forced a move on Hurriyat only to
have a face saving. One was the indication by the
Pakistani High Commission in New Delhi that the General
was unlikely to give an audience to the Hurriyat
leadership. The second was the General's rebuke to the
jihadi groups in Pakistan who have made it their creed to
go about spreading hate-India tirade. It has to be noted
that there is a belated thinking in Pakistani military
leadership a well as the echelons of bureaucracy that a
hate-India campaign causes harm to the Indian Muslim
minority more than to anybody else. We wish the Pakistani
rulers had understood this irrefutable truth much
earlier. India had been emphasizing this ground reality
time and again. But recalcitrant leadership in Pakistan
was averse to any logic on this count. Now that the
Indian Muslim leadership is coming out with a firm agenda
of strengthening India's secular dispensation and
national cohesion, its impact on Pakistani leadership is
discernible. Hurriyat has, unfortunately, never tried to
interact with the Indian Muslim leadership as real -
politick. Its one agenda programme has caused it serious
setback. In the statement of the Hurriyat, there is clear
indication that the people of Kashmir have not approved
its negative response to K.C. Pant mission. Hurriyat has
made no secret of the fact that is has distanced from the
common man. Its external mentors have sidelined the
organisation as redundant. Masses of Kashmir find the
Hurriyat serving no real purpose except that it waits for
a mundane incident here or thee so that it would come out
with a call for hartal and spewing of few venomous
utterances against India. A disillusioned organization,
the Hurriyat is now locked in a grim battle with its
survival. The people are pinning hope in the forthcoming
talks on Kashmir and other bilateral matters between
India and Pakistan. However, notwithstanding this
background scenario, the announcement of the Hurriyat may
be appreciated theoretically because peace is far better
than turmoil and issues can be discussed in an atmosphere
of peace. The Hurriyat will realise that its decision of
suspension of anti-India tirade brings some relief to the
people. A political party's role in peace is always much
more delicate than in war. Hurriyat must realise that
fighting a war is one thing but fighting for peace is a
much more difficult challenge.
GEELANI's ANTICS
Equally amusing is the
utterance of the Jamaati-Islami chief, Ali Shah. He has
told his cadres to stopwaging a hate campaign against
India. He brings in the Islamic injunction to say that
hating other faiths was not allowed in Islam. The Jammat
chief has been speaking too often and too much on the
Islamic character of Kashmir struggle. He knows that the
armed struggle against India in Kashmir has been
sustained all these years by inducting the element of
faith into it. Otherwise, there would not be a single
Kashmiri youth willing to kill or get killed in the
process. The bane of Kashmir dissident leadership is that
whenever it talks of India it does not come out of the
Hindu cocoon, and whenever it talks about Pakistan it
does not come out of Muslim cocoon. It never took full
cognizance of 15 or 20 per cent of Muslims as the
important component of contemporary Indian society. It
does not take into account the growth of Muslims from
bare 7 crores in 1947 to more than 15 crores (according
to some 20 crores) in 2001 in India. It does not speak of
Hindu population havingdwindled from a little less than
one crore in 1947 to bare 1.50 lakh in 2001. Yet Geelani
has no qualms of conscience in speaking about
"Indian atrocities".
Geelani's rebuke to the
jihadis has come close at the heels of a similar remark
by the Pakistani General. But there are two different
situations and circumstances. While the jihadis are
posing a serious challenge to the person and power of
General Musharraf, no such is likely to visit Geelani.
What then has prompted him to deviate from his hard-line
course and take on the jihad's? It is true that the
General has chosen his words carefully. The wording is
mild but the content is forceful. What is true of
Hurriyat collectively, is also true of Geelani
individually. Both are finding themselves dragged to the
sidelines and would like to maintain a stance at lest not
to be thrown out as junk. Geelani's statement is more for
the consumption of General Musharraf than for the
hate-India campaigners on this or that side of the LoC.
These considerations
apart, in principle one should welcome the utterances of
Mr. Geelani that denounce the hate-campaign against a
people, a country or a faith. We appreciate that Geelani
supports his decrying of such a campaign as contravening
the principles of Islamic faith. There are many strong
exhortations in the holy book of the Muslim that lay
stress on brotherhood and tolerance of the religious
views of others. We hope that Mr. Geelani will also
interpret the Quranic injunctions against the killing of
innocent persons, against vandalising the property of
non-Muslims, against denial of rights to women. Much good
will accrue to common man by publicising such laudable
and glorious principles of the Islamic faith.
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In
UN Charter, Self-determination is not a
right
By Ashok
Bhan
As prime
minister Atal Behari Vajpayee and Chief
Executive General Pervez Musharraf are
getting ready for their first ever
summit, several discordant voices are
being heard, some muted, some loud and
some strident in quarters that are always
known to be inimical to peace.
The
refrain is familiar and harks back to old
times. Even at the recent session of the
UN Commission on Human Rights (UNHRC) in
Geneva, some delegations from Pakistan
and Pakistan occupied Kashmir voiced
similar views. Since we have come a long
way from the day the British left the
sub-continent after creating. Pakistan,
it is time to put the ghosts of the past
to sleep once and for all.
There is
urgency for such an exercise and it
brooks no delay because even Gen
Musharraf, while advocating a plebiscite
like all his predecessors, makes it clear
that Kashmiri nationalism is profound
dream and that there is ''no room for the
people of Kashmir to vote for
independence''.
Let us get
the facts straight Jammu and Kashmir was
an independent state ruled by Maharaja
Hari Singh on July 18, 1947, the day the
British Parliament passed the Indian
Independence Act. Under the new law, the
suzerainty of the British Crown over
Indian states in British India lapsed and
the rulers received the option to opt for
either of the two domains by executing
instruments of accession. Hari Singh
chose to accede to India.
Governor
General Lord Mountbatten accepted the
instrument of accession from the Kashmir
ruler but said, ''It's my government's
wish that as soon as law and order have
been restored in Kashmir and its soil
cleared of the invader (the) question of
this State's accession should be settled
by a reference to the people.''
Mountbatten
did not say how the people's wishes
should be ascertained. He only favoured
hearing the people's voice. Eminently
sensible step. It was keeping in line
with the spirit of the times and what
India always stood for. He had put a
rider to realise the goal. It is yet to
be removed after all these years. The
soil of Jammu and Kashmir has not been
cleared of the invader. Pakistan occupied
Kashmir (PoK) still exists.
The wishes
of the people were ascertained,
nevertheless. How? Elections were held on
the basis of adult franchise in August
1951 to constitute the Constituent
Assembly of Jammu and Kashmir. The
elected representatives met on November
5, 1951 to start drafting the
Constitution of the state. One of their
steps was ratification of the accession
of Jammu and Kashmir to the Indian Union
and approval of section 3 (Jammu and
Kashmir Constitution), which says, ''The
States shall be an integral part of Union
of India''. It was a unanimous decision.
Alastair
Lamb in Kashmir, A Disputed Legacy,
observes, ''the fairness of the elections
(to the Constituent Assembly) was
certainly open to challenge,'' primarily
because National Conference of Sheikh
Abdullah had won all the seats and notes
that these elections were never
challenged, not even the adoption of the
Constitution of Jammu and Kashmir.
Also an
established fact is that the legitimacy
of the state constitution has never been
questioned. Not even when members of the
banned. All Jammu and Kashmir Plebiscite
Front (AJKPF) challenged section 24 (AA)
of the J&K Representation of People
Act, 1957. This law was enacted pursuant
to and under the State constitution,
which declared, ''State of Jammu and
Kashmir is and shall be an integral part
of the Union of India.''
The
Sheikh-Indira accord (1975) expressly
states, ''The State of Jammu and Kashmir,
which is a constituent unit of the Union
of India, shall, in its relations with
the Union, continue to be governed by
Article 370 of the Constitution of
India,'' People ratified the accord in
the elections held in 1977.
Jurisprudentially and politically, the
wishes of the people, as a sign quo
non-to the instrument of accession have
thus been legitimately and duly
ascertained. Doctrine of factum valet
applies, therefore.
In a coup
d'etat case concerning Grenada, the Privy
Council observed, ''Where general
elections pursuant to the provisions of a
Constitution were, in fact, held and a
new Parliament sworn in, it had to be
regarded as the legitimate Parliament of
Grenada''. (Mitchell & Ors Vs DPP and
another, 1986, Law Reports of
Commonwealth).
There is
international convention devoted to the
right of self-determination and the
application of the will of the people
concerned. For most part, provisions
concerning self-determination are
scattered and are to be found here and
there in a few international human rights
treaties. A reference to this right
figures in the organisational charter of
the United Nations, which is considered
as the World Constitution of sorts.
At least,
two UN General Assembly resolutions
address the question exclusively. The
Declaration on the Granting of Colonial
Countries and Peoples (1960) called for a
universal end to colonialism. The second
resolution adopted in 1970 was
Declaration on Principles of
International Law Concerning. Friendly
Relations and Cooperation Among States.
It broadly reiterates the main points of
the 1960 document, and pits the right of
self-determination against the
countervailing principle of territorial
integrity.
UN charter
defines the principle of
self-determination as being applicable to
colonial situations rather than to cases
involving secession from a sovereign
state. While examining the dispute over
Aaland Islands, a committee of jurists
(1920) said positive international law
did not recognise the right of
self-determination of people to separate
themselves from the state to which they
belonged.
There is
no set pattern on how the right to
self-determination is to be exercised. In
the Western Sahara case, for instance,
the International Court of Justice (ICJ)
insisted, ''The validity of the principle
of self-determination, defined as the
need to pay regard to the freely
expressed will of the people, is not
affected by the fact that in certain
cases the UN General Assembly has
dispensed with the requirement of
consulting the inhabitants of a given
territory''.
General
Assembly resolutions - 742 (VIII) of
1953, 1540(XV) of 1960, 2625(XXV) of 1970
have one unambiguous message. That is
self-determination may be achieved even
without the attainment of independence.
Article 73 of the UN chapter, for
instance, makes no specific mention of
independence as the end of
self-determination or as an alternative
to self-government. A proposal to insert
a reference to ''independence'' in the
Article came up when the charter was
being drafted (at San Francisco) but it
was not pursued, as it was withdrawn.
Interestingly,
the UN charter makes an explicit mention
of the right of self-determination only
twice in the course of its 19 chapters
and 111 articles.
First, as
a principle underlying the UN purpose of
developing friendly relations.
Second, as
an underlying principle to promotion of
human rights.
While on
the subject of colonies and trust
territories, the charter (chapter XI)
avoids any mention of self-determination.
It speaks vaguely, instead of
self-government and is padded with
roseate language. Member states are
advised to exercise
''good-neighbourliness' towards
non-self-governing people.'
The
point is the UN charter and global
conventions in vogue do not accord the
principle of self-determination the
status of a right in any significant way.
This question has no relvance to Jammu
and Kashmir, where, as pointed out at the
outset, the doctrine of factum valet
applies.
Because,
the people of this princely state
exercised their right of
self-determination as a quick follow-up
to the instrument of accession.
(The
author is a Supreme Court advocate)
--Syndicate
Features
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Women
emancipation
By Uma
Joshi
As the
world's largest democra- cy, India has
been continuous- l ex perimenting with a
number of organisations and structure to
achieve gender equality. The State is now
seen as the prime mover in bringing about
social change and it is charged with the
responsibility of ensuring the
fundamental rights to equality of the
sexes and to do away with sex
discrimination (Articles 14 and 15 of the
Constitution). The replacement of
institutional structures and formations
from time to time, their modifications,
renewal as well as their organic growth
have come about as responses to emerging
concepts of women's issues.
In the
last five decades or so, development
planning for women has straddled theories
as wide as welfare, development, equity,
efficiency and empowerment. The
institutional structures have undergone
changes in response to these evolving
concepts. These have changed from welfare
to empowerment and beyond, in response to
experiences of social reality at the
field level. The State first saw women as
a ''handicapped' category and as
appropriate recipients of welfare doles.
Today, the State has accepted women's
empowerment, women as active agents,
participating in and guiding their own
development.
Even so,
the extreme reticence of our women- a
euphemism for the voicelessness into
which they are thrust- a euphemism for
the voicelessness into which they are
thrust- is an upshot of the kind of
feminine culture we have fostered
affecting the course of justice. The
answer to all problems of social
injustices lies in the victims' own
self-enlightenment. They need to be
liberated from themselves.
At the
same time, the inferior status of women
in large segments of the Indian society
cannot be rasied without opening up
opportunities for independent employment
and income for them. There is, however, a
contradiction in Indian social life.
While the State has been busy writing
tomes on the status of women, there has
also been a ruthless attempt to put in
place an economic and social system that
could ultimately lead to even greater
impoverishment of women. The result has
been that despite the progressive
rhetoric, the great majority of women,
mainly in rural areas, have remained as
marginalised as ever.
The main
impediments in women's development have
been mainly preoccupation with unplanned
family without respite in physical
workload, lack of education, social
prejudices along with the lack of
independent economic status. Since women
continue to be among the most vulnerable
members of the family, their economic
emancipation with necessary safeguards
should constitute the family-centered
poverty alleviation strategy. But
traditional attitudes prevent a correct
appreciation of the meaningful role of
women in the economic field. The same
traditional perspective not only glosses
over the unequal deal women get but finds
nothing wrong with the arrangement.
Though the
Constitution provides for equality
between the sexes with special protection
for women and children, Indians in their
family life have been governed by
personal and religious laws which fail to
give women their due. These laws have
relegated Indian women to an inferior
status- both legal and social.
The
example of China, the most populous and
developing country needs to be emulated
by us. Women-power is China's greatest
human resources. Even among the elderly
or the disabled, there is no idle hand.
Half of China's one billion are women,
which means that there are 500 million
women who power China's ongoing
modernisation programmes. Women carry
heavy baggage at the airports, they till
fields, alongside the men, manage private
restaurants, drive cabs, supervise banks,
run government ministries and factories
and so on. Everywhere in China, women are
in the forefront of development.
Sadly
enough, the legal, economic and political
means to fight all these evils are kept
out of the women's reach. How many women
known that sexual harassment or violence
at home or workplace can be redressed by
law. unfortunately, the prospect of
reserving one-third of the seats in
legislatures have become an anathema to
many even though at the grassroots levels
of administration, it has been found that
women are addressing the unarticulated
issues and concerns that dog them. The
remedy lies in education, right from
birth, to develop the correct psyche in
both girls and boys. Unless there is a
change in the thinking process of entire
society, these evils would be perpetrated
down the generations. It should be the
fundamental duty of every citizen to
denounce practices derogatory to women.
Justice V
R Krishna Iyer has made a plea that the
Constitution should be amended as it was
biased against women. He has sharply
criticised the National Commission for
Women saying that it had failed in
achieving its aim. It is functioning as a
post office, having no powers to take any
action against those who harass women. He
has, therefore, advocated punitive powers
to the Commission to make it more
effective.
To
conclude, even though a number of
legislative measures have been passed in
India since independence for the welfare
of women and children, they have failed
to make an impact on the life of the girl
child and women folk in general. This is
because of the lack of social and
cultural support. The socio-religious and
cultural influences are so strong, both
physically and mentally, that even with
education and influences from outside, a
girl/woman is not free to think of
herself as an individual, by and large.
It is a sad commentary on our society
that the girl child has always remained
sinned against.
It is not
easy to change deep-seated cultural
values or to alter traditions that
perpetuate discrimination. And, law by
itself is not enough. It is only an
instrument which must be effectively
used. There has to be a social will to
change. An active reform movement, if
accompanied by legal reforms properly
enforced, can transform our society so as
to bring harmony among all. Today,
women's plight is compounded by their
ignorance of rights and the general
reluctance to seek legal remedies even if
they are aware of them. This voluntary
surrender is the single biggest reason
why women suffer the ignominy of dowry
that continues to make marriage an ordeal
or a death trap for many of them.
Indians in
their daily life must recognise that
times have changed. Our womenfolk now
demand equal rights in all spheres of
life. Therefore, any kind of mental or
physical cruelty is liable to be
challenged by them.
More than
the use of law, however, the society
needs to educate the wrong-doers so that
all human beings respect one another
irrespective of their sex. Indian society
has undergone many cultural changes in
the past. This challenge will set the
pace for further development in our
society if it is tackled properly and
with circumspection by both men and
women. It is imperative that our women's
organisations become much more active
than what they have been hitherto in
getting our women a fair deal in all
respects.
PTI
Feature
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Nepal:
Mountain Women on the Agenda
By Anita Anand
Twenty women from
Africa, Asia, Europe, Latin and North America
concluded a three-day meeting in Kathmandu during
which they drafted a two-year plan of action
which they called 'Mountain Women's Agenda'.
The meeting
proposed an international gathering in May 2002
to be held in Nepal, which will bring together
almost 300 participants -- mountain women,
non-governmental organisations (NGOs), mountain
entrepreneurs, researchers, parliamentarians,
senior government officials, funding agencies and
media representatives. The participants will be
from about 70 countries, representing the world's
major mountain ranges, especially the
marginalised communities.
The focus of the
proposed meeting would be to show the strength
and commitment of mountain women in making a
positive contribution to local and national
economies. Towards this, discussions, activities
and events will highlight and showcase practical
aspects of mountain life -- stories, songs,
dances, foods, crafts, textiles, traditional
knowledge, as well as efforts to make
constructive change.
The meeting will
also address issues of concern such as legal and
political rights, health and well being,
conservation of traditional wisdom and natural
resources, wome 's labour and opportunities for
entrepreneurship.
The Mountain
Women's Agenda will be part of many activities
during 2002, which was designated International
Year of the Mountains (IMY) by a United Nations
resolution in November 1998, based on an
initiative from Kyrgyzstan. The Food and
Agriculture Organisation (FAO) of the UN has been
appointed the lead agency in collaboration with
governments, NGOs, and other UN agencies.
The May 2002
meeting will be organised by a secretariat
located at the Nepal based International Centre
for Integrated Mountain Development (ICIMOD) and
the Mountain Forum, a network founded in 1995 and
its nodes in all regions active worldwide. The
idea for a meeting to focus specifically on women
in the IYM was first mooted at a meeting of the
Mountain Forum Council in Cusco, Peru last year.
The Action Plan of
the Mountain Women's Agenda includes establishing
a Steering Committee, selected from the women
attending the meeting, which would guide the work
of the Secretariat based at ICIMOD. Regional
focal points would identify mountain women's
groups and build networks. They would prioritise
areas for action, document promising women's
initiatives through video, radio and oral
testimonies.
Interactive
databases are planned, as well as an e-conference
with regional moderators and NGO gateways to
bring in marginalised women's voices. Financial
commitments have been made by FAO, International
Fund for Agriculture and Development (IFAD), and
the UN Development Fund for
Women (UNIFEM),
South Asia Regional Office. ICIMOD and the
Steering Committee will be seeking further funds
to enable the proposed plan of action to be
carried out.
Why an
International Year of Mountains? The concern is
not new. In the last decade of the 20th century,
the UN hosted a series of international
conferences, to bring together collective wisdom
and concerns on issues facing humankind.
The 1992 UN
Conference on Environment and Development (UNCED)
held in Rio de Janeiro, Brazil (or the Earth
Summit as it was popularly called), in its final
document, Agenda 21, devoted an entire chapter on
sustainable mountain development. It highlighted
the urgency of action, focusing on two areas:
generating and strengthening knowledge on the
ecology and sustainable development of mountain
systems; and promoting integrated watershed
development and alternative livelihood
opportunities. The FAO was appointed Task Manager
of this work.
Three years later,
at the UN Fourth World Conference on Women in
Beijing, China, the Platform for Action, the
document adopted by 184 countries also recognised
the value and marginalisation of mountain women.
How much of the world is mountain area?
Cartographic compilations show that 48 per cent
of the world's total terrestrial surface lies
above 500 m; 27 per cent above 1,000 m and 11 per
cent above 2,000 m. These mountain areas contain
high biological diversity, often of global
relevance. They are important centres of crop
diversity, a key factor in agriculture.
Several issues of
importance arise with regard to mountain areas.
Due to the very nature of the terrain, all
land-use activities are disadvantage compared to
the lowlands, bringing livelihood and
environmental problems into centre-stage.
Mountains often constitute geographical and
political borders and can be sites of conflict,
often owing to their natural resources and
strategic relevance.
Because of their
remoteness and inaccessibility, they are
sometimes places for refuge of political
opposition groups and fringe movements. The
remoteness has enabled protection of areas as
well as diversity. But much of this is changing,
as the outside world comes in closer, through
media, traffic with the plains and lack of paid
work. All these changes affect women, doubly so.
The 2002 gathering
of the Mountain Women's Agenda hopes to provide a
platform to discuss all this and more. And, when
the Secretary General ofthe United Nations, Kofi
Annan, launches the International Year of
Mountains in New York on December 8, 2001, women
will be on the agenda. (WFS)
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Repeating
the mistake
By Bharat Jhunjhunwala
The economy is
sinking again, just at it did in 1991. The
Government is hung up on controlling inflation
and refuses to create demand in the market. As a
result investment is falling and growth is
sliding. Such mental blocks seems to recur in the
Finance Ministry periodically. The Ministry had
developed a similar hang up in 1991 when it
refused to devalue the rupee. The result, then,
had been the Balance of Payments crisis. It is
time for the Ministry to recall its actions and
their consequences.
In 1989 the
economy was growing at a brisk pace. Our GDP grew
at the rate of an unprecedented 10.5 percent in
1988-89 followed by 6.7 and 5.6 percent in the
next two years. This achievement of much maligned
pre-reform years has yet to be repeated. Our
external debt nearly trebled from 33.8 billion
dollars in 1984-85 to 91.2 billion dollars in
1990-91. In 1989-90 alone our Government borrowed
a whopping 19.1 billion dollars.
This was a fine
strategy. The borrowed money was, in a good
measure, invested in TV towers and telephone
exchanges and that had led to economic growth.
The difficulty,
however, was that interest and principal amounts
had to be paid. In ordinary circumstances this
should have happened spontaneously. Some of the
goods that were produced in this high growth
scenario could have been exported and the money
used to repay the interest. If the Government had
borrowed to build a canal, the additional milk
produced in that area could be exported to pay
the interest and the principal. It was only
necessary to devalue to rupee sufficiently to
give sufficient fillip to our exports.
But the Finance
Ministry had developed a mental block then. It
committed itself to maintaining a high value of
the rupee. It did not see the necessity of
devaluation. Instead of pushing exports to earn
the dollars and pay the interest, it used up the
forex reserves to do the same. Our exports
remained flat. The result was that our dollar
earnings were stagnant while our burden of
interest payments increased and we landed
ourselves into a Balance of Payments crisis. The
Ministry had to then pawn the nation's gold in
order to tide over the difficulty. Manmohan Singh
had the courage to face this reality of
overvalued rupee. He undertook a drastic
devaluation, our exports increased and we
retrieved the gold.
The basically
correct strategy of borrowing abroad of finance
growth was turned on its head by the refusal of
the Ministry to undertake a parallel devaluation
of the rupee. The crisis became the opening which
was used by the IMF to open India to private
foreign investment. The IMF did not as much
efficiency of Government expenditures. The IMF
strategy was to encourage Government of India to
waste its money and use that paucity to create an
inroad for foreign investors.
The IMF dictated
that the Government would have to reduce its
fiscal deficit. The Government was forced,
therefore, to cut its expenditures. It had to
stop printing notes to build canals so that milk
production could increase. Instead it relied on
foreign investment to build the canals. The rest
is history. Foreign investors did not build the
canals and the growth rate has never again
attained the 10.5 percent of 1998-89.
The Finance
Ministry appears to have developed a similar
mental block once again. This time it is
inflation. We had three continuous years of 7
percent - plus growth rate in 1994-97. In 1996-97
the economy was growing at a brisk pace of 7.8
percent. There was a dip in 1997-98 due to the
fallout of the Asian crisis but we need not go
into the detail here. The growth rate been
neither good nor bad thereafter. It has remained
moderate and declining at 6.6, 6.4 and 6.0
percent respectively in the last three years.
This half-revival
of growth has been financed by opening of the
economy to foreign trade - IT in particular.
While some of our domestic industries are under
pressure from imports, others are doing well on
the export front. This was a fine strategy. The
opening of the Indian economy has led to growth
in our more efficient sectors.
The difficulty,
however, is that such growth cannot sustain
without continuous public investments in
infrastructure, in particular. In ordinary
circumstances his should have happened
spontaneously. Some of additional taxes that are
collected could have been invested in the
building of canals, highways and ports. But high
taxes would have slowed down the economy.
Therefore, the Ministry has adopted the correct
strategy of continuous reduction and
simplification of the tax rates.
India has,
thankfully, always had low tax rates. High rates
lead to greater tax evasion. The strategy adopted
by the Finance Ministry in the past -- both in
the pre-and post reform periods -- was to print
notes to make do for the low taxes. We have had a
history of moderate levels of fiscal deficit.
These printed notes act like an across -
the-board tax on the economy.
The value of
rupees in the hands of the people declines in the
same proportion as the Government prints new
notes. Say 1000 rupees were chasing 100 kilo of
wheat in the market. The Government printed notes
worth 100 rupees. Now the 1100 rupees would be
chasing the 100 kilo of wheat. The price of wheat
will go up from Rs. 10 to Rs. 11 per kilo. The
people, with their 1000 rupees, would now be able
to buy only 90 kilo wheat. The 10 kilo wheat is
the indirect tax on the people due to the
printing of money.
If the Government
had printed notes to build the canal the
investment in the economy would have continued.
But the Finance Ministry again developed a mental
block. It refused to print notes afraid as it was
of inflation. The result has been that productive
expenditures of the Government are down.It is no
longer building canals. The savings of the public
sector have declined from 2.1 percent in 1988-89
to (-) 1.2 percent in 1999-2000.
The Ministry
apparently does not see the necessity of making
public investments. It has controlled inflation
which is fine indeed. But it should have also cut
unproductive expenditures on the salaries and
pensions and used that money for maintaining
productive investments in infrastructure. Unable
to do so, it should have borne through some
inflation and maintained the pace of public
investments. The result of the failure to do so
has been the slowdown in the economy. Industrial
production is down. Investment in capital goods
and infrastructure is down. Our growth has been
continuously falling. The basically correct
strategy of opening foreign trade has been turned
on its head by the refusal of the Ministry to
undertake a parallel expansion in public
investments and bear some inflation.
The Ministry
should realize that mental blocks are harmful.
The failure to devalue led to the crisis in 1991.
The refusal to bear some inflation is killing the
economy now. The Finance Minister in both case
was Yashwant Sinha.
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