EDITORIAL

Our fourth pillar

The Pakistan Government should be congratulated for having thrown open Gilgit to Indian journalists who have recently visited the neighbouring country under the banner of the South Asian Free Media Association (SAFMA). By all yardsticks it is a good beginning. Nothing in the present era can remain hidden from public view for long: this is the age of Internet and satellites that have noticeably bridged the information gap. The fact is that attempts to put a lid on a region or an activity only lead to avoidable misgivings. We have seen that many reservations of the international diplomatic community and media fraternity about the genuineness of the electoral process in the State as a whole and the Valley in particular have been removed after both of them were encouraged to undertake on-the-spot visits in the 2002 Assembly polls. For us Gilgit continues to hold special fascination being a part of the undivided Jammu and Kashmir, as it had existed in 1947. It is the fourth region of the State --- the other three being Kashmir, Jammu and Ladakh --- but at the same time it is true that nobody born after the Partition had seen it. It had been out of bounds so far. Pakistan had carefully built an iron curtain around it at least so far as the people from other parts of the State including those under its occupation and this country were concerned. As a result Gilgit has acquired quite a dubious reputation: it has been known as the battlefield of superpowers notably before the collapse of the erstwhile Soviet Union. Even today it is believed that the United States and China are using an otherwise picturesque area for their own strategic purposes. Quite a few security analysts think that the US may have already built an airbase in Gilgit to which the Chinese have a trouble-free access because of a barter trade.........more

First President of India

By R K Bhatnagar

Long before the Gandhian era had set in the country a true Gandhian was born on December 3, 1884 in a small village in North Bihar. Jawaharlal Nehru, life long associate of Rajendra Prasad both in the struggle for independence and later in the Government after attaining independence described him as..........more

Saint of Goa

By Predhuman K Joseph Dhar

These days thousands are thronging to Goa irrespective of caste, colour, creed, sex, place of birth or religion to pay obeisance to the relics of Saint Francis Xavier which have been on exposition in the Basilica of Bom Jesus, .....more

Civil-Military relations

By Vinod Vedi

The reported decision to setup a "military tribunal" to adjudicate grievances of military personnel could well prove to be a retrograde step in civil-military relations if the intention is to remove from civilian purview any arrangement ........more

Use the surplus for
essential investments

By Sisir Basu

One of the positive aspects of India’s macro-economic landscape post-reforms has been the dramatic improvement in the external account. Economic policy-makers used to proudly announce that India’s forex........more

EDITORIAL

Our fourth pillar

The Pakistan Government should be congratulated for having thrown open Gilgit to Indian journalists who have recently visited the neighbouring country under the banner of the South Asian Free Media Association (SAFMA). By all yardsticks it is a good beginning. Nothing in the present era can remain hidden from public view for long: this is the age of Internet and satellites that have noticeably bridged the information gap. The fact is that attempts to put a lid on a region or an activity only lead to avoidable misgivings. We have seen that many reservations of the international diplomatic community and media fraternity about the genuineness of the electoral process in the State as a whole and the Valley in particular have been removed after both of them were encouraged to undertake on-the-spot visits in the 2002 Assembly polls. For us Gilgit continues to hold special fascination being a part of the undivided Jammu and Kashmir, as it had existed in 1947. It is the fourth region of the State --- the other three being Kashmir, Jammu and Ladakh --- but at the same time it is true that nobody born after the Partition had seen it. It had been out of bounds so far. Pakistan had carefully built an iron curtain around it at least so far as the people from other parts of the State including those under its occupation and this country were concerned. As a result Gilgit has acquired quite a dubious reputation: it has been known as the battlefield of superpowers notably before the collapse of the erstwhile Soviet Union. Even today it is believed that the United States and China are using an otherwise picturesque area for their own strategic purposes. Quite a few security analysts think that the US may have already built an airbase in Gilgit to which the Chinese have a trouble-free access because of a barter trade. Whatever that may be it is heartening that the majority of Indian journalists who visited what was once a forbidden territory belong to our part of the State. They have been really exposed to the region about which they had only read so far.

As a detailed report in this newspaper has highlighted Pakistan has been slow in addressing the grievances of the people of Gilgit. It is only recently that the neighbouring country has given some sort of representation to them in a legislative council meant for self-governance. For all practical purposes Islamabad controls the levers of power and administration in the region. Not surprisingly, therefore, there is resentment among the thinking sections of the people and also a palpable desire among some of them to break free from the current dispensation. The Shia majority nurses apprehensions about its future as a hangover of the repression it had faced under the Zia regime and certain parts of school textbooks which the members of the sect find totally offensive. China has clearly proved a useful ally of Pakistan in developing the region. Its goods flood local markets with the official approval. More importantly, the Chinese have assisted in the construction of the Karakuram highway through enchanting valleys along the Indus. It appears that the well-planned road is not being maintained properly. Nevertheless it is turning out to be the lifeline of Gilgit bringing in a large number of foreign tourists (their number though had declined in the immediate aftermath of 9/11). If watches kept in hotels along the highway are any indication most of the tourists come from the United Kingdom, China and Japan.

On the whole Gilgit is a captivating region just waiting for a major breakthrough on the global tourism map. Some of our security experts have advised that it should be allowed to develop with the concurrence of both India and Pakistan as an exquisite environmental park --- a peace zone. Maybe once its political fate, which is linked to that of the entire State, is finally settled Gilgit and its people would get their due denied to them for so long for no fault of theirs.

First President of India

By R K Bhatnagar

Long before the Gandhian era had set in the country a true Gandhian was born on December 3, 1884 in a small village in North Bihar. Jawaharlal Nehru, life long associate of Rajendra Prasad both in the struggle for independence and later in the Government after attaining independence described him as "Bharat - while truth looking at you through his eyes." "The Father of the Nation Mahatma Gandhi speaking of him said" There is atleast one man who would not hesitate to take the cup of poison from my hands." Such was this man of extra ordinary qualities.

Dr Rajendra Prasad with a peasant background had a brilliant academic Career. He obtained First class First in all the examinations he took. He joined the legal profession in Calcutta as junior lawyer to Khan Bahadur Shamsul Huda. He also joined the Congress and was soon elected to the AICC. Impressed by his brilliance, he was offered a teaching assignment in Law College in Calcutta. But he plunged wholeheartedly in freedom struggle and the service of the people. He was earning as much as Rupees four thousand every month when he gave up legal practice in 1920 at the call of Mahatma Gandhi.

He was in jail when on 15 January, 1934 the devastating earthquake occurred in Bihar. He was released two days later. Though ailing, he immediately undertook the task of raising funds and organizing relief. The fund sponsored by him swelled to over Viceroy's fund, despite his great influence, resources and prestige. Never in the history of India a single individual had organised relief to earthquake victims on such a grand scale in an efficient and effective manner. His early promise was sustained by the record of his services to the country and occupied positions of importance. As a matter of fact, name and office ran after him. He became the President of the Congress twice before independence. Later he was elected the President of the Constituent Assembly.

According to one of his colleagues his stewardship of the Constituent Assembly was exemplary. He guided controlled, but did so with such infinite patience, skill, grace and firmness that none had any sense of grievance but all felt that the discussions were held in full, free and frank and felt nothing to be desired. During the very first meeting of the Constituent Assembly, he had announced that though the Assembly worked under limitations it would outgrow those and function as a sovereign body recognizing no outside authority. The proceedings of the Constituent Assembly towards its closing meetings read like pages from a book of tributes and indicates how loved and respected he was by each section of the House. His qualities of man and matters came to fore.

His elevation to the Presidentship in 1950 came as a matter of course with some doubts in some quarters. Could a person who was temperamentally peasant, who lived and dressed like one, impress as the Head of the State of a big country like India.

Dr. Rajendra Prasad lived a life of utter simplicity. His performance as President in Rashtrapati Bhavan received admiration of one and all. The former President R. Venkataraman writing about him in "My Presidential Years" said that "Dr. Rajendra Prasad continued the practice of the Viceroys and visited Simla for one month every year. Not only this he started the practice of sojourn in Hyderabad to give an opportunity to the people in the South to meet him. Dr Rajendra Prasad never mixed religion with public life. He embodied the true Hindu concept of life. On the wall of his study and his bedroom in Rashtrapati Bhavan had his favourite couplet from Tulsi Ramayana Reading.

"Hariyai na himat. Visariyai Na Hari Ko Nam.

Jahi Vidhee Rakhiyai Rama Vahi Vidhee Rahiyee."

The English rendering said. "Have courage and do not lose touch with God, whatever role, he allots to you that you must fulfill. He walked humbly with God on the path that Destiny had shown him. During his visits to the holy places like Varanasi he bathed like a common man. Without any hitch, he could sit down on the floor with people and at times share their food. He was common man's President indeed.

His devotion to duty was unparallel. Way back in 1947, he could not attend the funeral of his son's wife, because his presence was required at Patna to curb communal riots. He puts his grief aside and tried to stop further killing of innocent people. Similarly (Jan. 25, 1960) his devoted sister, Bhagwati Devi, who has been both a sister and mother to him passed away. He sat near her death bed, numb with grief. After a couple of hours, the following day, on January 26 he went to Janpath to take the Republic Day Salute, Private grief gave way to public duty. Returning at noon, he took the dead body of his sister to the banks of the river Jamuna in Delhi for the last rites of cremation. In the evening, he was present again for the "At Home" hosted by him at Mughal Gardens. He acknowledged greetings from Vice-President Dr Radha Krishnan, PM Jawaharlal Nehru and diplomats with a smile.

After completing two terms of the President, Dr Rajendra Prasad moved to Patna in Sadaqat Ashram. His last days were days of agony. The Chinese aggression shattered him completely. He had apprehended the danger. He had thought of its possibility. But "perhaps those who thought otherwise knew were also shaken away by the naked aggression. His will was weakening. In a letter to one devoted to him, he wrote a month before his demise on February 28, 1963 with the word Ram Ram on his lips. He said "I have a feeling that the end is near end of the energy to do, end of existence. It was needed a very well served journey via British Viceroy's Jail, Viceroy's own Palace with Viceroy's own body-guards.

Saint of Goa

By Predhuman K Joseph Dhar

These days thousands are thronging to Goa irrespective of caste, colour, creed, sex, place of birth or religion to pay obeisance to the relics of Saint Francis Xavier which have been on exposition in the Basilica of Bom Jesus, Old Goa, since November 22,2004. Who is this great Saint? Yes, the one who answered by his actions the query of our Lord and Saviour Jesus Christ:"What does it profit a man to gain the whole world, if he suffer the loss of his own soul?"

This was also the question that Ignatius Loyola, the founder of the Order of Jesuits, asked a young Lecturer of Philosophy in the prestigious University of Paris. The young Lecturer was Francis Xavier born in Navarre (Spain) of rich and noble parents in 1506. In addition he had good looks, a good strong body, a good brain and a charming personality. He went to the famous University of Paris to study and in hardly three years he found himself on the teaching staff of the University. A good athlete, with his warm, charming personality he was soon one of the most popular men in the university.

Then he met Ignatius Loyola. Like Francis Xavier, Ignatius was also a Spanish nobleman, in fact an ex-army officer. While convalescing after a wound he had met God and underwent a complete change in life. Now he was in the process of forming a society of men who were completely devoted to God and were willing to go anywhere and do anything to serve God and men, as God directed. This was to be now well known Society of Jesus.

Francis was only 24 when Ignatius posed the question, referred to above, to him and the question of his friend did not create any waves in him. Life was too good, he felt, and with all his advantages he had the world at his feet. Why should he give it up? For what? However the fact remains: Mysterious are the ways of God. After about 6 months, Francis accepted an invitation by Ignatius and took part in some spiritual lessons. In 1534, in a place called Monmartra, Ignatius, Francis, Peter, Faber and 3 others took the vow of Chastity, Poverty and Obedience and also pledged to serve in any capacity the Pope thought fit.

In 1537,Xavier was ordained a priest in Venice. After that he served Venice, Bologna and Rome in different capacities. When the King of Portugal needed good priests to go to India, Francis Xavier was the first volunteer. He was not selected. One of those who were fell ill…. and Xavier went. On April 7,1541 boarded a ship from Lisbon travelling to India. He had the order with him as the Apostolic Delegate of India, but he kept the order with himself and served as an ordinary priest under the Portuguese Officers.

Life for Francis was none too a bed of roses in India. India was divided into a number of little and bigger kingdoms. Petty princes, struggling to preserve ancient privileges, to realise ambitions, freedom loving nobles hateful of Portuguese encroachments; the rival maharajas of Ceylon struggling for supremacy, all this is a background over which our servant of God walks, sometimes wearily, but always constant in Faith, high on hope and rich and deep in charity.

This disunity was but one of many difficulties with which Francis Xavier was to cope. There was the physical danger of dacoits resulting from the disunity, the danger from wild animals and snakes, and particularly the dreaded Python. The rugged terrain, far more difficult than his own Navarre back in Spain, offered no mean obstacle, but it was the subtropical climate that was his most severe physical trial. His difficulties were often increased by the behaviour of those who should have helped him the most---the Portuguese. They indulged in all sorts of vice-prostitution, alcoholism and other corrupt ways of life. Their behaviour was enough for an average Indian. Portuguese atrocities and Christianity were inextricably interwoven. Francis had a lot of unweaving to do. He severely came down upon them for their debaucheries and ungodly life, and so, instead of being helped by them, he was constantly troubled by them.

To counter all this, Francis, first was physically strong. Not all his sickness and mortifications had undermined the constitution, which made him in Paris. Francis did much more than keep just alive. Then he had to be physically brave. However supernatural his motives, there is no reason to doubt that this was a natural trait. In all his adventures, some were extremely risky, he never seems to have entertained the slightest notion of fear. He had immense moral courage: he was not afraid of accusing his own Portuguese ‘supporters’ or of attacking with bitter pen the more extraordinary outrages of some hostile rajahs in whose territory he might happen to be staying. extraordinary gifts won South India for Francis but that which Saint Paul, his predecessor, ranks above all such extraordinary gifts—CHARITY. It was his utter selflessness, his complete identification with the heart, if not mind, that won his susceptible Indian hearers, that must have won any hearers anywhere who were not deliberately malicious. They saw in his eyes, as he uttered his few words in their language, a burning love, a love of God and a love for them, that expressed itself in his anxiety for them, for their souls first, and then for their bodily sufferings.

Francis Xavier arrived in Goa on May 6, 1542.After presenting his credentials to the Bishop lost no time in visiting the hospital and three prisons of the city. He looked after the sick and preached the prisoners to abandon the sinful ways and tread the path of righteousness and good behaviour. But hours slaving for this scum of humanity--- the offscouring of all-did not detain him for other activities. He preached, he catechised, and with a sure instinct appealed to the children. After attracting an audience by ringing a bell down the streets, he sang the lessons, which he had rhymed and made the children sing them. For a singing people this was the perfect way of committing his words to their memory.

But Goa, despite its prisoners and lazaretto, could not contain Francis,El Devin Impaciente(the divine impatient one-as he was called). The Paravas—pearl fishers on the coast of East of Cape Comorin facing Ceylon—had been baptised hurriedly by Franciscan and secular priests. Left to their own devices, they lapsed into non-Christian ways. Would Francis go to reconvert them? Francis would and did. This land was indeed the unknown-wild, scorched, devil-haunted, that had never heard of Navarre or Lisbon or Paris or Rome.

These Paravas were, in the minds of their rulers, traitors to their country, so a troop of horsemen descended from kingdom further north to Harry them. Some were taken slaves, others fled to a rocky island nearby to die of hunger and exposure. Quite interestingly, the Portuguese representatives in the district sold the horses on which these raiders were mounted on to them. It says much for the moral courage of Francis and detachment that he could write afterwards, openly attacking him: "It would be better for the Captain’s reputation if he concerned himself more with Christians than with trading horses to that personage."

Immediately he took the sufferings of the Paravas on himself. He organised resistance to the raiders, wrote to the local king (a friend of the Portuguese governor) seeking for the protection of his friends, arranged for a small armed Portuguese ship to petrol the coast. He started collection for alms, and himself led the relief expedition to his poor stranded Paravas.Here we see a different Francis in crisis---the practical man of action, cool-headed, prudent, brave and one must admit, an excellent string puller. Like Saint Paul, a completely selfless man, he could be stern when necessary.

Francis Xavier worked very hard for 10 years in three countries—India, Malacca and Japan. He stayed with the poor and ate their food. His diet consisted of rice gruel, and flattened rice powder. He spent his days in studies and preaching and nights in praying. When he was given spiritual joy, he would say: "LORD ENOUGH!" But when he was confronted with sorrows and crosses. he would say, "MORE OF IT,LORD!MORE OF IT!"

Saint Francis Xavier wanted to go to China from Japan where he had been staying, but as ill luck would have it, when he was in the island of Sancian, 100 Km south west of Honkong, he succumbed to Typhoid and died peacefully there on December 2,1552.His body did not decay for a very long time. Even now it is not decayed significantly and is kept in the Basilica of Infant Jesus in Old Goa.His feast is celebrated on December 4 every year and his body to exposed for general public view every 10 years. Thousands of pilgrims assemble on his feast day at Goa to pay their prayerful respects to this great saint of the Indies more particularly of India.

Civil-Military relations

By Vinod Vedi

The reported decision to setup a "military tribunal" to adjudicate grievances of military personnel could well prove to be a retrograde step in civil-military relations if the intention is to remove from civilian purview any arrangement for an overview of military affairs.

Military establishment has been making the demand for a tribunal given the large number of cases of personnel seeking redressal in civilian courts.

The most celebrated is the recent judgement in the promotions case in the Indian Air Force. It needs to be understood at the outset that the gravamen of the case was the objection to the use of "discretionary marks" available to the selection board.

This had already been redressed during the pendency of the hearings in this particular case and the "discretionary marks" were reduced to 5 per cent from about 25 per cent at the time when the plaintiffs were denied promotion.

"Discretionary marks" have had a destructive and disruptive effect on the fabric of the Indian Air Force (IAF) since the mid 70s when the top brass decided to do some "deep selection" through the use of discretionary marks.

This led to turmoil then within the ranks of the IAF. Later the apparent disparity between pilots and technical staff in pay and allowances sparked off unseemly demonstrations.

These are essentially man-management issues and the armed forces chaff at the fact that many of those affected by adverse administrative decisions in promotions and postings have taken recourse to civil courts for redressal.

The other aspect is indiscipline, criminal and human rights issues. In recent times, particularly in the last three years, there have been exposes about corruption (the Tehelka tapes) in the military; fake encounters in as distant and separated places as Siachen glacier and Silchar (north-east India) indicate that the malaise is more deep-seated than is being acknowledged; human rights issues also in the north-east and in Jammu and Kashmir have tended to destroy the framework for counter-insurgency operations and have given the nation a bad name; and the failure to pinpoint responsibility for the Kargil fiasco which gives the impression that military personnel can get away with anything.

There is need to make a clear distinction between "service interest" and "national interest" and suppression of aberrations in the former cannot always be done by the touchstone of "national interests".

For example, it does not serve national interest to appear to cover up what happened in Manipur or the despicable act at Handwara in Jammu and Kashmir or demand that the media "lay off".

In a democracy, the executive, the judiciary, and the media are pillars that need to be preserved against any attempt by the one or the other to dominate or undermine the others. If such a tendency is allowed to gain ground then the alternative is praetorianism of the kind that has plagued some of our neighbours at different times of their history.

India has witnessed a clash between the civil and the military in the infamous episode of the Curzon-Kitchner conflict in pre-independence times in which the Commander-in-Chief prevailed over the Governor-General through machinations in Whitehall in London thereby dealing a blow to civil-military relations.

Post independence, India opted for the supremacy of the civil over the military. In military minds this has come to mean the bureaucracy being in pre-eminent position because of its proximity to the political class.

In an attempt to rectify this there has, in the past five years, been an effort to integrate the military headquarters with the Ministry of Defence. The raison d'etre given is that it would improve national security. …This could not be done without a clear enunciation of the role and responsibilities of the Defence Secretary (a civilian post) in the new dispensation so the Government of the day decided to upgrade the post to that of Principal Secretary but recent events point to the possibility that the post has been undermined by military insistence that certain activities like promotions remain strictly within the ambit of military headquarters.

The Defence Secretary has been put in a position where he rubber stamps what the military insists is within its private domain. Over the years the other pillar of democracy in India, the media, has also been undermined by blatant demands that it "lay off" in their reportage of aberrations with the military establishment.

It has been made to appear that reportage of such aberrations is against the national interest. It is in this context that demands for "military tribunal" to adjudicate problems that arise out of military man-management is an attempt to draw an iron curtain and keep things out of public view as they would if there are brought before civil courts.

In an attempt to prove transparency, media was allowed to cover the court-martial proceedings of the person who was charged with faking the encounters in Siachen. This does not really satisfy the need to prove transparency to its own cadres within the military particularly in promotions and postings.

There is something radically wrong if armed forces personnel need to take recourse to judicial redress either through the "normal channels" which leads all the way to the President of India who is the Supreme Commander of the armed forces or through civil courts.

This is indicative that transparency is inadequate in the internal working of the armed forces. In this milieu, a "military tribunal" could well turn out to be nothing better than a court martial in new camouflage.

If anything, there can be no better assurance of rectitude within the military establishment than the possibility that actions within it can come within the purview of the public domain. This is particularly true in the case of the fake encounters in Siachen.

An affidavit in a civil court gave the media an opportunity to dig deeper into the case and frequent revelations in the media forced the military headquarters to opt for media coverage of the court martial proceedings against those charged with faking the encounters.

The episode underscores the fact that military establishments would prefer to keep matters outside the public gaze on the ground that such exposure would undermine military morale and this be counter-productive to national interest.

On the contrary, public scrutiny can be a catharsis and a catalyst for improvement in military procedures as the issue of "discretionary marks" in promotions has proved.

They were reduced to five per cent only because of the frequent resort to civil courts for redressal and the role of the media in exposing the kind of rot that took nearly a quarter of a century to rectify since it was first discovered and reported by the media when top brass decided to resort to "deep selection" to supposedly improve the quality of those who are in the officer classes.

Fake encounters prove that the system in place is fatally flawed and it brings the nation to shame when officers need to resort to such tactics to improve their promotion prospects.

It cannot also be gain said that the military headquarters were not even aware (or willing to put in place procedures) that would identify corruption and root it out before national interests are damaged by scandals and scams like Bofors or find on its own those who fell foul with Tahelka.

What needs to be in place is an institution that would be both pre-emptive and palliative. It may be described as "military tribunal" but it would be most efficacious only when there are no in-built locks and barriers to prevent scrutiny by the public which pays for the military budget.

Already much damage has been done to the body politic by attempts to undermine such constitutional institutions like the Comptroller and Auditor General and the Central Vigilance Commissioner (CVC). It may well be more appropriate to give these two institutions more powers to oversee military procedures in real time instead of the dozens of years after the events as is the case now. (Syndicate Features)

Use the surplus for essential investments

By Sisir Basu

One of the positive aspects of India’s macro-economic landscape post-reforms has been the dramatic improvement in the external account. Economic policy-makers used to proudly announce that India’s forex reserves have crossed $100 billion. These have now crossed $120 billion.

It is another matter that these reserves, which are kept invested in debt and equity of developed countries, yield low returns compared to the marginal cost of raising loans abroad, which our corporate even now indulge in, as also the cost of our NRI deposits.

It is also worth remarking that we are not alone in the abundance of reserves. Many other Asian countries have, in the wake of globalisation, come to possess significantly large reserves. Japan with its more than $550 billion, China with $514 billion, South Korea with $174 billion, and Taiwan with $174 billion are ahead of us.

That does not, of course, diminish the sense of achievement of our policy-makers, who have succeeded in unshackling India from the constraints of foreign exchange shortage, which had been with us for almost five decades since independence.

It is indeed, a remarkable achievement of our economic reforms, in that as a result of the reforms India has been able to plan its moves forward without fearing a forex squeeze, which was a feature of our economy till recently.

Doubts have been raised about whether this development is too good to last, assuming that it is a "blessing", albeit in disguise. Certain fears centre round the volatile nature of the sources of this bulge in our forex reserves.

The foreign institutional investors’ contribution to the reserves is around $32 billion. Whether FII investments are fair-weather friends and will exit the moment a crisis hits India has not been tested as yet. But considering the size of this source of our reserves, I feel the magnitude of reserves is not too high.

Foreign direct investment, which contributes nearly $30 billion to the total reserves, is inherently less volatile than foreign portfolio investment. By its very nature, it cannot move out easily. By the same token, it is difficult to acquire.

Recently, India has – fortunately, in the views of most observers – developed into a hospitable destination for foreign direct investment. We can expect it to contribute more to our rising reserves and incidentally lead to a win-lose situation in respect of overall returns. This is because FDI normally gets a return of above domestic (India) market rates of interest to the investor, which is a debit to the country’s account.

But the forex reserves are invested at rates of return that are well below these rates. This is a paradox, which seems inherent in our current abundance of riches unless we unlock the dilemma by increased imports, either to upgrade industries technologically or improve infrastructure, or both. But that takes us to other macroeconomic issues, which require to be dealt with separately.

Among the contributors to our strong balance of payments, the most prominent item is the rising inflow on account of invisible. A recent issue of the RBI Bulletin (October 2004) has invited some attention in this regard, especially as it presents data relating to the various items in regard to invisible from 2000-2001 to 2003-2004.

True, these figures had also been covered in RBI’s latest annual report, but the figures in the October bulletin have, for some reason, excited more interest to various observers.

A Table in the RBI’s bulletin (page S919) shows that the net receipts under invisible has risen from $9.7 billion in 2000-2002 to $26 billion in 2003-04. The growth under this head as a whole has been particularly sharp in the recent period.

The increase in total "invisible’ receipts in the three year period 2000-2001 to 2003-04 is, indeed, remarkable. These receipts have been from $32.5 billion to $52.98 billion. More important, the net receipts under invisible have gone up from $9.7 billion to $26.7 billion – a rise of nearly 300 per cent – or an average of 100 per cent per year.

The principal components of this dramatic jump are, of course, remittances from our non-resident Diaspora – growing from $13.3 billion in 2000-2001 to $23.2 billion in 2003-04 – an increase of nearly $10 billion in three years.

Equally, the software sector has seen net inflows burgeoning from $5.8 billion in 2000-01 to $11.7 billion in 2003-04 – a leap of nearly 100 per cent.

The figures of gross receipts under software are, however, only around $12 billion – well below what is estimated by sources such as Naascom. This requires reconciliation.

The tourism sector – while showing signs of expansion – has registered only marginal changes in net receipts, which stand at $0.6 to $0.7 billion.

The net receipts of forex earnings under the head "Transportation" have shown a rise in the three-year period from a negative figure of - $1.5 billion in 2000-01 to a positive inflow of $2.5 billion in 2003-04. This must reflect the increase in shipping earnings as well as better outturns in our ports.

The healthy situation on the forex reserve front also depends on the continuing good trends in invisible. Besides this, it is bolstered by the continuing inflows on NRI deposits, FDI and FII. The fluctuations in respect of investment income need to be carefully analysed. They reflect the interest and dividend paid out as well as the returns on our reserves.

A detailed analysis may bring out the paradox of our abundance. But policy-makers may have to think hard about choices in respect of the various increments to reserves, except perhaps FDI, which has spillover effects in technology, productivity and market access policy.

They would have to factor in the high incremental costs of reserves, resulting from attracting FII investments and NRI deposits. Whether policy will turn out to be flexible enough to stem the inflows under these heads depends on how seriously the Government and the RBI view the quasi-fiscal costs of increasing reserves. It is true, however, that the structure of India’s BoP gives the lie to the impression that it is built up mainly out of FII, FDI and NRI deposits. At least in the recent period, it has been the surpluses contributed by invisibles, remaining after financing the balance of trade deflict.

This gives reason to hope that there is space for planning a foray into using the forex reserves for essential investments, particularly for infrastructure. The more attractive the infrastructure, the greater the inflow of FDI and FII and consequent addition to forex reserves. Such a virtuous cycle is indeed a consummation devoutly to be wished for. INAV

 



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