Evidently, BJP's spin - doctors are already at work, and they have at least partly succeeded in putting doubts into people's minds on the 'Bihar fiasco'. If they are to be believed -- and there are enough gullible souls around -- it was one big drama that the party staged in the North Indian State, with the willing participation of George Fernandes and company, to send out a message or two to the South Indian Queen, Jayalalitha Jayaram. There was no real intenton to get the Laloo- Rabri Government out of the way.

If that were so, you can applaud the great new heights the Indian polity has climbed over the years. Remember the last time George Fernandes was in the big league on Presidential intervention in States. That was when he was a senior number of the Morarji Desai -- led Janata Party Government at the Centre in 1977. That was also when he raised the slogan, 'Sign, or resign' when acting President B. D. Jatti took as much time for returning the Cabinet recommendation for dismissing nine State Governments, as K R Narayanan has taken for returning the proposal on one.

The nation has to thank President Narayanan for his taking a principled decision under difficult circumstances. It's not only the decision that mattered, but even the methodology he has since adopted, when the likes of Murli Manohar Joshi were short of threatening the Head of the State with premature and premeditated decision on sending back the President's veto, if it came to that. By letting things cool down over a few days, and sending out clear signals as to which way the pendulum would swing, he also prepared the nation on what to expect. With the result, when he returned the Cabinet's recommendation, the nation's mood was overwhelmingly against what the likes of Joshi, and Fernandes, possibly, might have bargained for.

'Spin-doctoring' public opinion through the media has been the BJP's contribution to Indian polity, just as 'stone - walling' and 'disinformation campaign' were the 'twenty-first generation' borrowed ideas of a Rajiv Gandhi, earlier. Not that the 'Sangh parivar' needed to import anything of the kind, but apologists liberalisation of the BJP kind can still tell their friends from the Swadeshi Jagran Manch that there is something to the learnt from the West. The latter, in turn, can say that whatever the West has to offer is all half-baked, of the 'Clinton cover-up variety', and the 'Swadeshi' types had done a better job of marketing the 'Ayodhya controversy'. Article 370 and the like.

That way, Article 356 is not Article 370, as the BJP would have liked to believe. At least the Supreme Court, in the Bommai case, and President Narayanan since then have proved that. Not just once, but once all over again, in the case of the latter, and the nation has to thank the BJP and Prime Minister Vajpayee, for that. It's not Narayanan who alone matters in but, the very office of the President of India. A future President from now on will think twice before sacking a State Government, after president Narayanan has thought twice for them in less than a year.

There is a substance in the argument that the Vajpayee Government's case on Bihar is week, at best. There is no denying that the law and order situation in Bihar is bad. But two questions beg for answers: One, when was law and order situation better in the State? Two, how is it different from the situation prevailing in other states, including those ruled by the BJP? Be it public peace, corruption, or any other constitutional crisis that could warrant Central intervention, it could, and should, apply as much to Maharashtra, Rajasthan, Gujarat, Delhi and UP, as much as to Bihar.

This, leaving alone Andhra Pradesh and Jammu and Kashmir, where terrorism of the Naxalites and the ISI kinds are at their peak, now as ever. If law and order is the issue, then it's time our lawmakers did something about it. Maybe there is justification for the continuance of Article 356 -- maybe not -- but when law and order alone is in question, it should be made the Centre's responsibility to rush to the aid of the State Governments, when it finds that things are wanting.

Even the Rajiv Gandhi assassination took place only when Tamil Nadu was under President's rule, after the DMK State Government had been sacked, citing the very same 'LTTE presence' as the cause. Interestingly, at least in this case there is no documented evidence in the form of Jain Commission reports that the Central intelligence agencies had failed to predict the assassination when there was intercepted information on its imminent occurrence. Who then is to sack the Central Government for its lapse? After all, the Supreme Court has held that the Union of India cannot function without a Cabinet with the Prime Minister as its head, in the case of 'U.N.R. Rao vs Indira Gandhi.'

How could the BJP leadership think of Narayanan applying a different yardstick to Uttar Pradesh, when the BJP wished, and another to Bihar now, as the BJP again wished? Is it one more way for the BJP to replace the Congress (I) at the centre-stage of national politics?

By putting down his reservations to the proposed Bihar sacking in back and white, Narayanan has also laid down the ground rules to be followed by a future President. It would also serve as a reminder for the likes of Murli Manohar Joshi who could threaten a future President with sending back the dismissal proposal if the Head of State returned it. Maybe the President has little freedom under Article 74 to reject a Cabinet proposal outright in such circumstances, yet, his reservations in the first place serve as substantive material for the Supreme Court to Judge upon.

Once a reservation, always a reservation, any mandatory presidential approval of a Cabinet decision of the kind notwithstanding. That is if the Supreme Court had not intervened by then, to rewrite Article 74, as well. If the President has found enough justification for returning the 'Bihar proposal', he has also saved the high office a lot more of additional embarrassment that might have attended on his sacking the Rabri Devi Ministry. Given the mood of the BJP's allies not to mention the national mood, it would not have been out of place for the President to presume that the proclamation might have been defeated in Parliament, when placed within two months, as laid down by the Supreme Court in the 'Bommai case.'

If anything, the President has done the BJP good turn, and they have to thank him for that. By returning the Cabinet recommendation, he has defused for them a crisis that was brewing in the ruling coalition that could have exposed the clinks in the Government's armour, as none else had done. That includes 'Jayalalitha's tantrums'. After the 'Bezbaruah affair', the BJP could have found none else but itself to bear its cross the 'Bihar fiasco'. With the result, the likes of Jayalalitha would have found cause enough to justify their stand. Whatever be the other fallouts, the 'Bihar fiasco' has proved one thing. The BJP cannot take its allies for granted.

Now, Bihar has proved that the BJP as the coalition leader has to set the ground rules, like getting the approval of the coordination committee, before putting any partisan decision into action. Which is only good for coalition politics, which in turn dictates politics in this country. There is political fallout of the 'Bihar episode' that's as much important as its constitutional propriety and moral objectivity.

In a single stroke, the BJP leadership has done for them, what the Mulayam Yadavs, Laloo Yadavs and the Jayalalithas of the world could not achieve in the last six months. The party has succeeded in pushing the Congress (I) opposition into the willing hands of the regional parties, who in the past have made a mince-meat of an evolving situation to their uneven advantage.

The factors officially claimed for losses include weak credit appraisal, non-compliance or wilful default. Other excuses for such losses, which are also due to collusion between the lender and the borrower, are preponderance of certain traditional industries in the portfolios of certain banks, natural calamities, policy and technological changes, labour problems, high incidence of sickness of industries, non-availability of raw materials and other factors which are not in the control of lending banks. But with the experience of over 20 years as nationalised banks, these factors were well within their knowledge.

The fact remains that banks are still elitist-oriented and prefer to deal with people who despite their being well off choose to dishonour their obligations. Otherwise, how it is that industries become sick, but not the industrialists. A critical analysis will show that the policies at present followed by the banks have led to wastage of resources, apart from widespread corruption at various levels. During discussion with junior level and middle level bankers, it was explained to me that they were quite often forced to act against the best interests of the bank.

One former Union Minister, from North-East wanted loans to be extended to known defaulters who were not in a position to use the same except for personal consumption and not for the purposes for which the loan was to be given. When the local M.P., who was a minister, was told that the bank's guideline or RBI instructions did not cover such loans, the bank manager became the subject of derision. Next day, the chairman of the Bank telephoned the small fry (Bank manager) that he better act as per the instructions of the MP, if he wanted to remain in service. The manager told me that since his promotion was due, he had to comply. Still, when he went for his promotional interview, the chairman of the bank who was on the board remarked: Mr Chatterjee, your negative attitude has been a liability for the bank. You have been tactless in dealing with the politicians.''

In another case of misuse of his office, the chairman went on merrily sanctioning and writing off the loans given on the recommendations of the politicians about ten years back. The result was that he kept on getting extensions after extensions, despite the opposition of the Finance Minister. Ultimately, nemesis caught up with him and his cronies, who had to face the music in the form of their arrest and humiliation.

The easy availability of credit and whopping losses suffered by the banks in the form of Non-Paying Accounts only shows that the country is not resourceless or poor. It only shows that "weak appraisal,'' in the words of Reserve Bank of India, becomes a perverse incentive to cheat the banks of its money. Occasionally and generally, the banks themselves abetted such losses. Otherwise, how it is possible to explain that the average Non-Paying Accounts or Non-Paying Assets of the nationalised banks work out to 18% and in case of some banks as high as 30%.

Probably, the same policy is followed by some nations, but in respect of their trade deficit only. The largest trade deficit in the world is that of the United States of America, which stands at 219.7 billion dollars, followed by the United Kingdom with $27.0 billion and Spain $19.3 billion for the last 12 months. Fortunately, this is not so with the rest of the world, which believes in balanced budget.

What most countries like India want is trade and not aid. Japan has a trade surplus of $111.2 billion, Germany $73.5 billion, China $45 billion, France29.4 billion. It is expected that if you have the trade deficit, your currency would be weak. But a strong US $ defies normal logic.

The principle of reciprocity in trade has broken down. Which is the most appropriate way to deal with the situation in our country and what will protect our vital interests is something that we only have to devise and to discover. The normal response to such a situation is domestic protectionism. Protectionism in one form or the other is applied either through threat of sanctions or other penalties or for not following the international copyrights or intellectual property rights laws. It is insisted upon by those countries, which stand to make the maximum money through it.

Self-interest is the ruling interest in all nations and India is not the first country in the world to protect its industries and commerce. Neither will it be the last. What we need is our own programme, where there will be a consistency of policy so that right signals go to both domestic and foreign investor that the ground rules and level playing field is clear and transparent.

The laws should be simple and clear and it should be easier for a common citizen to comply with them. Once a colleague, who always used to have his income tax returns prepared from the serving officials of the tax department got a notice that his return was wrong and he better pay more than what he had paid. He was foxed and when he confronted his friend, who was himself an Income Tax Commissioner, he was told that the form had been filled by an inspector. His asked the Commissioner to check it himself so that he pays whatever is required to be paid in time.

The Commissioner told him; "It is too complicated for me, even I cannot fill it correctly. Only inspectors dealing with the subject know the correct way.'' So much for the tax bureaucrats. The tax bureaucracy, like the rest, has been ever expanding, though 95% tax revenue is collected voluntarily.

Finance Ministers of the country officially get to know what the bureaucrats want them to know. Whenever a Finance Minister has tried to do some reforms in simplifying or rationalising the tax bureaucracy, he has literally been bludgeoned into setting up some committee or commissions to look into the problem. More than two dozens such bodies have been set up since Independence. Most of them stated the obvious, about the dishonesty or greed of some taxpayers in not paying their dues to the Government. The result was ineffective legislation and over Rs. 30,000 crores locked up in tax disputes and litigation.

To get out of the web of its creation, the Government has come out with another amnesty scheme so that instead of wasting time, as the biggest litigant, it realises some cash for development. But is all the money going for development? Alas, the answer is 'no.' It looks as if the Governments collect revenue only for paying to the bureaucracy. A small state like Goa with a population of 12 lakhs has 42 thousand Government employees. In other words, every 28th Goan is a Government employee. Himachal Pradesh with a population of just 32 lakhs has over 75,000 Government employees or one out of the 40 citizens is drawing his salary from the Government.

Successive weak Governments in order to win the vote banks have capitulated to both reasonable and unreasonable demands from all sectors. Now an impression is there that you can get anything conceded with a threat of strike apart from enlisting political support. This augurs ill for good governance. No amount of foreign investment or rhetoric can bail us out. It is we as a nation, through the Government of the day, who have to take unpleasant decisions for moving forward and ensuring minimum basics for our people. Otherwise, the writing on the wall is clear.-CNF

Challenges of globalisation

By Navin Chandra Joshi

Prime Minister Atal Behari Vajpayee recently outlined a seven-point programme to revive the economy in the face of an increasingly difficult and uncertain international environment. The strategy aims at achieving a seven per cent GDP growth, ten percent rise in industrial production and 15 to 20 per cent increase in exports.

Claiming that India has overcome the impact of sanctions, the Prime Minister told the first meeting of the Advisory Council on Trade and Industry, that the country's economy has inherent resilience and strength.

India, China and Taiwan would be among the few countries to show positive growth in the Asian region in 1998-99, he said.

The success of the Resurgent India Bonds has demonstrated that the Non-Resident Indians have full faith in the strength of Indian economy. In his view, in the context of a depressed world market, marked by economic crisis in South East Asia, Japan and Russia, a GDP growth of around six per cent with single digit inflation, satisfactory agricultural output, stable reserves and signs of further industrial revival were by any reckoning no mean achievement.

The first element of the seven-point programme is to rekindle the spirit of enterprise. Measures need to be adopted which will dispel lingering fears and fortify confidence. The country must also focus on a comprehensive strategy to deal with the debilitating impact of a global meltdown. It is also necessary to demonstrate that India has attractive economic prospects for domestic and foreign investors.

There has to be focus on measures which can enhance the productivity and competitiveness of Indian corporates to face the increasing challenges of globalisation. There must be sufficient emphasis on ways to reach a higher growth path and steps to increase investment in infrastructure, as also on revival of the capital market.

Public enterprises need to be restructured for greater efficiency and productivity while continuing the disinvestment of their shares through a transparent mechanism.

The Government's communication strategy needs to be refreshed. The fruits of development should get percolated to the grassroots for alleviating poverty. There is need to invest in and foster knowledge through skills and improving quality of life index as contained in the World Development Report.

Finally, a strategy is needed which can enable a GDP growth of seven per cent per annum for the next three years and thereafter eight per cent, 10 per cent industrial growth and 12 to 13 per cent later on, while exports to grow at 15 to 20 per cent, along with a level of high employment. As such, there is need for partnership and trust between industry and the Government. There is also need to jointly embark on a course of action to bring about a revival of the economy.

It would also be pertinent to note that the most outstanding event during ther last fifty years of India's independence has been the economic reforms initiated in July, 1991. Since then, the Indian economy has witnessed a sea-change--a shift from a mixed but controlled, centrally planned, command economy to a free, competitive, market-oriented one with a thrust towards globalisation.

There are diverse views on the critical issues pertaining to agriculture, energy and external sector. Prof K N Raj, eminent economist, has noted that we had enormous problems in the first 15 to 20 years, primarily because of the difficulties faced initially in raising the output of foodgrains. "But once the agricultural breakthrough came in the 1970s, first in wheat production and then in rice, everything changed completely. From then on, the Indian economy began to follow, more or less, the perspective we had set out. Looking back, we have done much better than we thought was possible.''

In the context of our growing population and agricultural productivity remaining almost stagnant, noted agricultural scientist M S Swaminathan observes that about 20 per cent of our population suffers from endemic hunger. Many more, particularly women and children, suffer from micronutrient deficiencies. The rate of growth in non-farm employment is not adequate to provide the needed livelihood opportunities.

Modern industry generally promotes jobless economic growth. In his view, we have to rely on crop and animal husbandry, fisheries, forestry, agro-forestry and agro-based industries for achieving the needed livelihood and food security. Nehru's statement "everything else can wait but not agriculture'' is even more relevant today than when he said it 50 years ago.

Dr Swaminathan goes on to add that "The year 1998 marks the bicentenary of Thomas Malthus's essay on population. The global population in 1798 was 930 million, much less than India's current population. Yet, Malthus was concerned about the human capability to increase food production to a level required to meet the needs of the growing population to a level required to meet the needs of the growing population. Fortunately, science and technology, coupled with appropriate public policies, have so far helped to keep the Malthusian fear of widespread famines at bay. But as we approach the beginning of a new millennium, there is apprehension that Malthusian predictions may yet come true.''

In the infrastructural sector, power position presents the most grim picture. By the turn of the century, power generation would be around 91, 190 MW as per the projections made, but still there would be a peak shortage of 30 per cent by that time considering the growing demand for energy due to industrialisation.

Even the entry of the private sector for generating electricity is not likely to retrieve the situation immediately as power projects have a long gestation period of five to seven years in the case of thermal plants and seven to nine years for hydel projects. Power being a highly capital intensive industry, unless continuous large investments are made, which presently is nine per cent annually, it would be difficult to improve the situation.

Therefore, in the current economic reforms package, there is need for setting up a National Power Grid by integrating the existing grids to ensure smooth and uniform power supply in different parts of the country. The integration of regional grids should be in such a manner that the surplus power generated in a region or a State is passed on to the power starved States or other regions. This would call for strengthening and improving the regional power grids and progressively integrating them through inter-State transmission lines and central sector transmission projects which cut across State boundaries.

Also important is the need to lay down adequate emphasis on improved technologies by oil-consuming industries and the transport sector. It is necessary to harness all the present energy supply options, including nuclear energy and to develop renewable energy sources such as wind and hydro-power.

Increasing research and development in the energy sector should be promoted. While India is the lowest consumer of energy in the world, it is here that wastage of energy is the highest and it is attributed mainly to lack of modern fuel, efficient equipment, absence of energy management and a culture of saving and conservation.

What is more, today the question to ponder is: Will India's programme of economic liberalisation run into an energy trap? Perhaps, not. With the increasing emphasis on harnessing power from various sources and neighbouring countries, it can be hoped that energy management would be given the top priority in the continuing process of India's economic reforms.

Today, the fundamentals of the Indian economy in general and more particularly in relation to the external sector, are strong and the economy possesses the capacity and the resource availability to grow around seven per cent per annum in a sustained way. Ironically, it is the high and sustained growth of the East Asian economies that has focussed on the advantages of openness to a country both in terms of trade and capital flows.

While India's current account deficit as a proportion of the GDP has almost been falling and is presently around one per cent only, foreign exchange reserves have continued to increase. Rightly, therefore, a modest level of the current account deficit and a calibrated composition of capital flows, including low level of short-term debt, have always been the guiding factors of our economic strategy.

Overall the performance of the Indian economy in the post reform period has been highly satisfactory. Finance Minister Yashwant Sinha recently said the Government would not let the fiscal deficit go beyond 5.6 per cent of GDP, as projected in the current year's budget. While the Government has to consider a number of innovative measures with regard to public sector disinvestment, there is utter need to keep expenditure under tight control.

Although direct tax collections have shown buoyancy, every effort should be made to keep inflation within single digit. It is encouraging that on the external debt front, India has never defaulted on any of its debt repayment or reneged on its international obligations since independence. Even in difficult times the country did not ask for rescheduling of its debt repayments.

Just on this basis it can be said that India is a very safe destination for foreign investors. All said and done, we must make use of any external capital that comes into the country only for productive purpose, choosing the fields of investment with great care. --PTI