EDITORIAL

OPERATION VIJAY

Stand of Pak Foreign Minister during his talks with his Indian counterpart has been on anticipated lines.There are no surprises or any proposal that is not already known. The visit was on the request of Pakistan to which India acceded to satisfy world opinion in favour of this country as peace-loving and doing anything for preserving peace in the sub-continent. But enough of political momentum had already been built up in the nation because of highly inhuman and brutalised killing of 6 soldiers returned to us. Delhiites were angry and went in for massive protests during Aziz's visit. No Government worth its salt could afford any accolades for the visitor from across the border. Jaswant Singh had already set the tone even before his visit that nothing else but two issues are to be discussed. First, mercenaries and Pak soldiers must go back to the other side of LoC and second Pakistan must book and punish those who killed Indian soldiers while in Pak custody in gross violation of international norms. To be precise timing of returning bodies in such mutilated condition by Pak Army was meant to sabotage the tasks. ...more

Price restraint can
lead  to recession

By S. V. Vaidyanathan

The traditional wisdom on price fluctuations is summed up by the saying.....more

Chinese bid to build influence upon Afghan ruins

By D K Arora

The Chinese have begun in right earnest the reconstruction of   war-ravaged....more

Chinese looming shadow over the subcontinent

By Prof. K.N. Pandita

Pakistan’s Kargil intrusion is likely to attain significance in the current geopolitical ......more

Indo-Pak stand-off
reflects Islamabad's Kashmir policy

By N. B. Menon

Kargil has emerged as an im portant icon of Indo-Pak stand-off over the  ....more

EDITORIAL

OPERATION VIJAY

Stand of Pak Foreign Minister during his talks with his Indian counterpart has been on anticipated lines.There are no surprises or any proposal that is not already known. The visit was on the request of Pakistan to which India acceded to satisfy world opinion in favour of this country as peace-loving and doing anything for preserving peace in the sub-continent. But enough of political momentum had already been built up in the nation because of highly inhuman and brutalised killing of 6 soldiers returned to us. Delhiites were angry and went in for massive protests during Aziz's visit. No Government worth its salt could afford any accolades for the visitor from across the border. Jaswant Singh had already set the tone even before his visit that nothing else but two issues are to be discussed. First, mercenaries and Pak soldiers must go back to the other side of LoC and second Pakistan must book and punish those who killed Indian soldiers while in Pak custody in gross violation of international norms. To be precise timing of returning bodies in such mutilated condition by Pak Army was meant to sabotage the tasks. They could have denied having any soldier captured by them or killed in their captivity. This action obviously generated enough of heat in the country to deny Aziz even a joint picture on TV or any shake-hand.

Pakistan as usual insisted on its stand that LoC might have been demarcated on maps but surely not on the ground. To that extent it needs to be redemarcated which in other words justifies intrusion. Second point raised by him was that Kargil is only small chapter of Kashmir issue and unless Kashmir is resolved, this type of fireworks would go on as has been the case all these years. Terrorists have been coming and going and Kargil is no different story.

Difference lies only in strong reaction from India this time which has led to escalation of the hostile situation. Third aspect mentioned by him is that Pakistan does not know who the intruders are and how they have come as 'freedom fighters' have been there particularly during the last decade in every part of J&K fighting for their natural rights. Fourth, he wants India to stop air strikes to defuse the situation as also artillery fire on the other side of LoC so that conductive environs are created for de-escalation of the conflict.

India, on the other hand, insisted on talking only about Kargil sector and demanded that Pakistan undo the aggression and recall all mercenaries and Pak regulars forthwith. That would automatically defuse the volatile situation. Jaswant Singh refused to let Pakistan link it with Kashmir issue for which separate forum is already created under Lahore Declaration. Second point insisted by him during the talks was to punish all those involved in brutal and most inhuman killing of six Indian soldiers in Pak captivity.Aziz sidetracked the issue by telling that Pak Army has not killed them thereby implying that it was the job of 'Mujahideen', 'freedom fighters' or whatever one likes to call them. This is candid admission that they were indeed killed in custody. If 'freedom fighters' had done the heinous act how comes they went in the hands of Pak Army who returned the bodies.

So the talks end. One cannot call it deadlocked. Nor there is any proposal to talk again. The million dollar question is what next? Operation Vijay is on and it will go on until last of the intruder has been killed or evicted from our soil. This leads to more ponderables. Even as per our own estimates around 700 intruders are yet entrenched in the troubled sectors and that many more posts held by them are yet to be captured. Further, our side insists that no time frame can be given for this type of operation due to highly treacherous terrain and the entire retrieval action has to be so planned asto minimise losses amongst our valiant jawans. One can accept it as good military logic. But there is the million dollar question wide open if Pakistan decides to induct its Air Force in support of the mercenaries and Pak regulars that are being gradually cornered. It is equally possible that even ground reinforcements might be sent by Pak garrison at Askardu which is already reinforced with full mountain division. Yet again there is every possibility of Pakistan repeating Kargil in some other vulnerable sectors if only to reduce the pressure on its forces in Kargil-Drass sector. One expects that these eventualities have been taken into account by our side both politically and militarily.

On the political implications of Kargil operations, the more it prolongs the better Pakistan case for international intervention. True, western nations have not supported Pak uptil now and they have all asked her to withdraw its infiltrators from this side of LoC and respect LoC. Pakistan Army and ISI have been independent of Pak political leadership and obviously these two are in no mood to relent. They have already dictated to Aziz and Nawaz asto what is to be talked in Delhi as revealed by intercepts of messages. Cessation of Kargil intrusion would be great setback to them and it is very difficult for them to absorb this shock. To that extent further trouble from Pak side in Kargil-Drass sector and opening of new fronts in other sector cannot be ruled out which in real terms imply elongation of Operation Vijay. It has also adverse ramifications for those handling the present situation as election is just three months away.

Then, there is that possibility full scale war which both countries now claim to be prepared for. If it has not happened thus far it is precisely due to nuclear deterrent possessed by both countries and fear of mutual destruction as never before. India however is on strong wicket because of its depth while Pakistan fears total obliteration from world map. To that extent one expects that conflict will remain confined to J&K areas only.

Lastly, in a well informed balanced panel discussion many noted defence experts have given their opinion. They mince no words while describing Indian defence policy as 'totally defensive defence policy'. This according to them needs to be revered to become 'offensive defence policy' and preparations thereof must begin in right earnest. This can also be equated with 'reactive' policy rather than 'pro-active' policy That explains why Pakistan consistently maintains hostile postures against a country which is seven times larger than Pakistan. Another question is that if Pakistan does not recognise sanctity of LoC why India should not do the same to it for better bargaining power in the overall context. It was mentioned several years back that unless rate of elimination is more than rate of infiltration, insurgency goes on. India has failed to construct barbed war under persistent Pak firing. It first allows the intruders to come in and then go about the arduous task of tackling them. You got to be planning in a manner that engages them on the other side of LoC and abort all their attempts to infiltrate and capture vital heights. As long as Pakistan persists in hostile stand, India shall be well-advised to put the Lahore Declaration on the back-burner as its spirit is already killed by Pakistan. Bus ride to Dacca is also not necessary. Friendly Government in Nepal now should be asked to wind up ISI launching pads from Nepalese soil. All this and much more should go on even as Pak shell are fired very near the PM's helped in Kargil. 'Operation Vijay' must be completed fast enough. So that Pak mischief is contained.

Price restraint can lead to recession

By S. V. Vaidyanathan

The traditional wisdom on price fluctuations is summed up by the saying "Prices go up only to fall." This traditional saying became extinct long ago as prices hardly fall once they go up. In fact they continue to surge month after month.

Accordingly, even the authorities, who used to swear by the objective of maintaining relative price stability, have begun to redefine their objective in this regard. Now the objective is neither to bring down the increased prices nor prevent further increase. It is confined merely to prevent further acceleration in the pace of these price increases.

>From this yardstick, the reports that have been pouring in recent weeks about the deceleration in the pace of increase in wholesale price indices must have gladdened the authorities. It was not for one week, but for six consecutive weeks that the deceleration continued. With this successive declines, the annual inflation rate is reported to have reached a low of 3.7 per cent for the week ended May 8, 1999. This rate of inflation, incidentally, is the lowest during the last 84 weeks.

The government can take some comfort from this development as it was observed to be pilloried for the acceleration in the annual inflation rate only seven months ago. It may be recalled that the price rise emerged as a major election issue in the assembly elections held at that time.

If an opinion poll is taken, it is likely that most of the people will place maintenance of price stability on the top as compared to the objectives of growth and eradication of unemployment. This is understandable as benefits of growth process reach the households only gradually and the generation of employment opportunities is a matter of concern only for the unemployed. However, the price rise will have adverse effects on all classes of people. Thus, the hypothesis that the electoral results were influenced by the price behaviour couldn't be rejected.

Besides, the deceleration in the pace of inflation rate at this time of the year is somewhat unusual. Traditionally, the first half of the fiscal is characterised by price spurts. That is why, the accent of monetary and credit policy of the RBI for this period is usually directed towards restricting both availability as well as the demand for funds. Thus the restraint on price increase attained at this juncture should be deemed as unusual.

Though this development must have gratified the government, it is difficult to explain the current restraint in price rise in terms of any specific policy measures initiated by the authorities. The traditional explanation of price accelerations and decelerations doesn't hold good, as the pace of monetary expansion in recent months was no less than in the last couple of years. Similarly, the government cannot claim to have contained the fiscal deficit either.

Traditionally, these are the two magnitudes that are supposed to have vital bearing on the behaviour of prices. The authorities, the RBI and the government, have sought to contain the growth in these magnitudes precisely because of their belief in this posited relationship. It is another matter that they haven't had a success in attaining the targets in this regard.

This failure in policy instruments didn't matter for the authorities, as the goal of containing inflation rate was attained somehow.

But does it really not matter how this price restraint has come about despite the failure of the posited theoretical relationship? We cannot really afford to wink at this failure as inflation rate control is not the only objective of economic policy. There are equally important -- if not more important objectives of realising the potential rate of growth as well as of reducing poverty by generating employment.

True, opinion surveys do not reflect these priorities correctly. This is because of the ill-designed questionnaires. If the respondent is probed further as to whether he would still accord inflation control top priority if methods of controlling price rise were to entail job loss to any of his family members, the response could be quite different.

When there is no trade-off among different goals the decision making becomes trivial. It is the duty of economists, to clarify these trade-offs, so as to facilitate an informed decision making.

Let us not beat about the bush. In the context of rupture in the posited relationship between acceleration of money supply and the inflation rate, is it not reasonable to explore whether the factors that led to a slowdown in the economy were not the same that certained the price spurt?

As pointed out by Keynes, it is the level of effective demand that determines the output level in the economy at any time. Given the price level the growth rate of output is determined by the growth rate in nominal effective demand. To the extent of price rise, a given increase in nominal effective demand may not result in commensurate growth in output. This is because some of the effective demand is used up by price rise, and thus, not available for absorption of output.

The failure of effective demand to grow at a satisfactory rate can potentially contain the inflation rate as well as curb output. The trade-off between the output growth and inflation, however, can vary over time depending upon the circumstances. But, the crucial point to be noted here is that both the observed tardy growth in output as well as the deceleration in the inflation rate could be attributed to the failure of growth in effective demand.

The failure of increase in effective demand, according to Keynesian scheme, is due to the failure of growth in autonomous investment. The investment multiplier provides the link between autonomous investment and the effective demand.

As autonomous investment is independent of the level of effective demand, the direction of influence is always from the former to the latter; but not vice versa. Public investment, exports as well as agricultural output and incomes can be deemed as constituting elements of autonomous investment.

There is not much doubt about the decline in public investment in realterms ever since the successive governments accepted fiscal deficit target as the defining element in the budget. But growth in agricultural incomes as well as in exports helped to compensate the adverse impact of fall in public investment.

As regards the falling levels of public investment, the decline in exports resulted in a tardy growth in effective demand since 1996-97. The fall in agricultural incomes, though caused by the fall the output in 1995-96, got further accentuated by the government's policy of restraining the price rise in agricultural produce.

The configuration of these three factors led to an onset of industrial sluggishness and slowdown in economy. It is these factors which underlie the recent price restraint. Then should we welcome this deceleration in inflation rate? INAV

Indo-Pak stand-off reflects Islamabad's Kashmir policy

By N. B. Menon

Kargil has emerged as an im portant icon of Indo-Pak stand-off over the vexed Kashmir imbroglio. Pakistan has used and explored the possible uses of the valleys, gullies, river beds, grazier-tracks and watersheds for infiltrating terrorists in Jammu and Kashmir, with a view to perpetuating its proxy war. It is another Operation Gibraltar, a miniature one. This audacious repetition is a sounding mission, to gauge Indian preparedness and reaction to a Taliban type putsch. It has added a new dimension to Pakistan's military strategy and objectives in Jammu and Kashmir The Pakistan triumvirate -- the Army, ISI and the SSG (Special ServicesGroup) -- with or without the connivance of the elected Government has fired the first salvo, in the form of infiltrating Taliban mercenaries through a vulnerable sector of the LoC. This is different from pushing in mercenaries in the Vale of Kashmir and in Hindu-dominated districts in Jammu region. It highlights the beginning of a new tactical thrust towards bringing about drastic changes in the LoC, pushing Pakistan's claim deeper inside India's strategically important offensive and defensive positions.

A successful experiment in Kargil would have provided Pakistan with immense flexibility to adopt the methodology in other sectors of the line of control. Pakistan's push in Doda, Udhampur and Rajouri sectors in 1997-98 was aimed at bringing about demographic changes in the Hindu majority districts of Jammu. That was a dress rehearsal for re-floating the Dixon Plan of 'regional plebiscite.' It is not known what nom-deguerre Pakistan has assigned to the audacious operation, but in essence, it is much more complicated than operation Gibraltar.

A new outfit, Tehrik-I-Jihad, which is supposed to be based at Muzaffarabad (PoK), has claimed responsibility for pushing in the latest Taliban mercenary groups. A Tehrik leader has claimed that its volunteers have not been affected by Indian air strike and they are well entrenched and capable of disrupting Indian supplies to Siachen and Ladakh. The Tehrik-Jihad is a cobbled-up front floated by the ISI and SSG.

The daring operation, which aims at cutting off Leh-Srinagar national highway and pushing forward the LoC to Pakistan's advantage was planned long before the Indian Prime Minister had taken the sentimental bus ride to Lahore. Afghan war veterans, Talibans, assorted Pakistani regulars and SSG commandos were commandeered at Satpara camps, jointly operated by Pakistan army, ISI and the SSG.

Located south of Skardu Brigade headquarters, Satpara is an important staging centre for the Mujaheedins. Skardu, Khapalu and Dansam forward locations of the Pakistan Army have traditionally been functioning as bases and staging theatres for the Siachen salient. One should not lose sight of the significance of at least two visits by the Chief of Pakistan Army to Skardu and other forward bases just before his forces started shelling Indian positions and pushing in the terrorists.

The mercenary Talibans were imparted specialised training in high-altitude warfare, ground-holding and fox-holed guerrilla tactics. Later in mid-April, approximately 200 of these motivated mercenaries, with sprinklings of regulars and SSG personnel, were shifted in smaller batches nearer to the LoC. The mercenaries were provided with high-altitude clothing, snow-scooter, ground-to-air missiles, GPMG, light anti-aircraft guns (LAAG), rocket launchers, Stinger missiles etc.

Only on May 12, after an aerial survey, the Indian Army realised the magnitude of the infiltration and the depth of the Pakistani gameplan.

Pakistan had, by that time, pushed in about 800 mercenaries in the Kargil-Dras-Batalik and Mushko valley areas. The infiltrators had entrenched themselves in higher ridges, occupied the abandoned Indian positions and fortifications in the "areas not held during peak winter."

What had possibly gone wrong? Why was India caught napping? It's natural to blame the terrain, heavy snow, thin Indian deployment and lack of intelligence. The terrain and adverse weather conditions are equally applicable to the Indian as well as Pakistani forces and the hired mercenaries. Summer has set in early this year and heavy-snow layers in the affected zone have been receding very fast.

Indian intelligence agencies, RAW, IB and the DMI who maintain dug-in listening in observation posts along the LoC failed to harvest their assets. These assets, normally village chiefs and traditional transborder scouts, who maintain linkages with their counterparts in Pak-occupied Kashmir generally hibernate in deep winter and are reactivated from early April onwards.

Leh is also an important listening post of Indian formations. The commanding heights and sophisticated equipment provide Indian spooks with excellent access to Pakistan signal traffic. However, this winter of Lahore bonhomie had lulled the intelligence operators. These lapses point fingers at gaping holes in India's intelligence monitoring and interpretation capabilities.

The ground forces alone cannot oversee the vast tract of rugged and inhospitable terrain between Drass and Batalik. Appropriate fusion of civilian and military intelligence agencies can help building up a sustainable defence strategy for the thin lifeline between Leh and Srinagar and the precarious LoC near Kargil. Unfortunately such ground level cooperation and collage making artistry are non-existent.

Pakistan, besides being credited with a religious ideology, had cooked up a geopolitical ideology too way back in 1993. Chaudhri Rahmat Ali and his group of Muslim intellectuals had devised the name Pakistan. K in Pakistan always stood for Kashmir. This was echoed by M. A. Jinnah on May 17, 1947 in his letter to Lord Mountbatten: "The derivation of the word Pakistan-P for Punjab; and A for Afghan (Pathan or N. W. F. P.); K for Kashmir; I for nothing because that letter was not in Urdu; S for Sind and Tan for the last syllable for Baluchistan."

Jinnah, a consummate politician did not envisage that the non-existent I would become an obsession with his successors, I standing for India. K for Kargil too is intricately related to Pakistan's Kashmir policy. Especially its policy towards the Northern Territories of the former Kingdom of Jammu & Kashmir.

The Gilgit Lease, which the Government of India had contracted with the Maharaja of Kashmir, was supposed to lapse with the Transfer of Power. The British Secretary of State had agreed with Lord Mountbatten that the Gilgit Lease and its dependencies should be returned to the Kashmir Crown.

Jawaharlal Nehru had concurred with the idea. But M. A. Jinnah studiedly declined to accept this position. Pakistan used convoluted deceit and conspiracy in stirring the Poonch-Jagir rebellion followed by a bigger deceit in Gilgit. As the Indian troops succeeded in breaking the back of Pakistani offensive in Kashmir valley, on November 3, 1947 Major W. Brown, commander of the Gilgit Scouts betrayed the authority and sovereignty of the Maharaja of Kashmir and declared merger of the Northern Tract of Gilgit and its dependencies with Pakistan.

Pakistan wrapped up 1947 with the Gilgit region, Baltistan and part of Poonch Jagir and Mirpur (Azad Kashmir) in its pocket.

By retaining Kargil India managed to maintain adequate but tenuous linkages between Ladakh and Srinagar valley and access to the eastern sector of the northern tracts of Ladakh. Strategically speaking loss of Kargil should give Pakistan immense strategic and tractical advantage over India in Ladakh sector. With Kargil and Batalik features in its pocket Pakistan can derive added strategic advantages over the yet undefined LoC between Karakoram and Khapalu valley. Obviously greater parts of Ladakh will become untenable. Indian hold on Kashmir minus the Kargil-Drass-Batalik salients would finally shut all windows to the Northern Territories of Jammu and Kashmir. Indian claim on the whole of Kashmir as its integral and inalienable part will suffer serious erosion.

Kargil-Drass-Batalik segment of the LoC, therefore, is a strategically important salient, vital to Pakistan's military and political objectives in Jammu and Kashmir. Pakistan campaign of 1999 is required to be viewed in the light of its strategic and tactical thrusts of 1947-48 and later day offensives in 1965, 1971 and continuous poaching adventure thereafter. INAV