Daily Excelsior... Editorial

EDITORIAL

Answer them

Another reminder

Factional feuds
weakening Congress

MEN, MATTERS & MEMORIES

By M L Kotru

Prioritise liquidity management

By Ramesh Kanitkar

US response
to oil prices

By Sreedhar

The surging crude oil prices have brought in their own dynamics in the emerging global order. At one level all the developed countries were forced to rethink about the energy source material mix they should have to sustain their economies. The entire developed world also realizes that there is no substitute to crude oil in the immediate future, say the next two decades. The emergence of natural gas as an ..more

EDITORIAL

Answer them

The best answer to anger can't always be silence. Sometimes it has to be pacified through an eloquent response. All the more so when it is expressed by elected representatives with one voice regardless of their political affiliations. This city has indeed been exposed to an extremely rare event. Cutting across party lines the members of the Jammu Municipal Corporation (JMC) have taken out a procession through the streets to register their protest against discrimination by the Government. Their grouse is that their organisation although having the same status has been given fewer funds than its counterpart in Srinagar. The JMC got development funds worth Rs 2.96 crores during 2006-07, a sharp decline from Rs 4.20 crores it had received during 2005-06. During the current financial year the amount of the aid witnessed another drastic cut. It was brought down to a meagre Rs 1.80 crores but later it was enhanced to Rs 2.50 crores. In reality, however, only half of it has been released so far with only two months left for the financial year to end. On the other hand, the Srinagar Municipal Corporation (SMC) was given additional monetary help of Rs 1.50 crores in November-December last year. This was apart from the routine funds the SMC had got. In addition, the SMC also received money for streetlights both during 2006-07 and 2007-08. Going by the version of the JMC corporators it is obvious that no such bonanza was extended to them. Equally shocking is their revelation that resolutions passed by them are being treated with utter contempt. They have adopted about 70 resolutions during 2007-08. All of them have been referred to the Government for a decision. The Government has not responded to even one of them creating a feeling as if they have been thrown into dustbin. One of the resolutions sought reorganisation of the Corporation that was deemed necessary to enhance staff strength keeping in view the requirements of all 71 wards.

That Mayor Narinder Singh led the march along with Deputy Mayor Dharamveer Singh explains everything. The former belongs to the Congress and the latter to the National Conference. They were joined by their fellow corporators from their own parties as well those owing allegiance to the People's Democratic Party, which is a partner in the ruling coalition, Bharatiya Janata Party, Bahujan Samaj Party and the Shiv Sena besides independents. All of them have spoken together which shows the intensity of their sentiments. Before moving out of their office complex they held a joint meeting at which the Congress-PDP corporators faced embarrassment moments as they came under fire from those of opposition parties. They wanted to present a memorandum to Chief Minister Ghulam Nabi Azad but in his absence they handed it over to Chief Secretary B.R. Kundal.

It is in keeping with their dignity --- they are after all hailed as city fathers --- it is to be welcomed that corporators have been peaceful during the entire exercise. They have made this occasion thus one in which silence is more pronounced than speech. However, this is not the first time the emotion of discrimination has left a bad taste in this city and the region. There have been numerous agitations in the past seeking fair play. Some of them have been violent leading even to deaths in police firing. Why should an elected body like the Corporation be subjected to similar prejudiced treatment? One government after the other including the one serving at this moment has held out the promise of being reasonable to all regions. How can they be considered just when they make a distinction between even two Corporations? They have thus exposed themselves to the charge of simply paying a lip service to the noble concept of equality among regions. One must admire the local corporators for rising above petty party consideration in order to call a spade a spade. They owe it to the people to explain why they are not able to discharge their functions to everyone's satisfaction. In turn they deserve an answer from the Government to their apparently justified grievances. For our part we share the citizens' deep regret that despite having their chosen representatives in place they don't see any solution in sight to their basic civic problems.

Another reminder

Whenever there is a road mishap in our treacherous mountains we are reminded of being too ill equipped to handle a crisis situation. The injured in particular have to bleed more than they would have done had they got medical aid in time. In at least one recent accident some of them ended up bleeding to death. Why should we not draw lessons from these tragedies to invest our system with more sensitivity and efficiency? One knows that there is a Centrally-aided scheme to establish trauma centres on highways to look after accident victims. It appears that it is not being implemented in our part of the country. Why is it so? Each time there is a calamity, natural or man-made, in Doda, Poonch and Rajouri districts the sufferers are flown all the way from remote areas to this city for being given a healing touch. The delay in such instances can be fatal. To understand this simple logic one does not have to strain one's mental faculties. It is simply a matter of common sense. We should devise plans and provide funds for strengthening our district hospitals as well. It is the same old story that has been repeated in the case of the latest catastrophe in Doda district. Of course, the loss of as many as nine human lives is heart-rending. They have died when a mini bus carrying them skidded of the road and plunged into a deep gorge three kilometres from Pul Doda on Thursday. What is also sad is that about a dozen wounded travellers have been deprived of timely cure. The district administration had to contact the divisional headquarters for approaching the Air Force to arrange helicopters for airlifting them. This exercise in itself must have taken some time. The Air Force has risen to the occasion and as always neatly executed its part of the rescue operation.

The questions that have to be replied are about our relief mechanism. It suffers from a number of deficiencies. We should not only overcome them but also strengthen the medical dispensation in all respects. This will certainly ensure speedy application of balm to injured persons in far-flung territories. At the same time it will also come in handy for others who have to travel long distances for desired therapy.

Factional feuds weakening Congress

MEN, MATTERS & MEMORIES

By M L Kotru

Are we witnessing the beginning of the end of India's oldest political party ? Sacrilege, pure sacrilege any true-blooded partyman would protest. Nothing can destroy the party, not even ten BJP's, ten Mayawatis or a hundred Marxists, the man would foolhardily insist. There is no question of the party declining, let alone disappearing as long as the anchor of the Gandhi dynasty is there.

Yes, there is the question how is the party to be administered, a slightly more rational acolyte might-chip in. Unwittingly the man is putting his finger right where it is hurting the party most. It just appears to be unable to find a way of running its affair. Looking at the party headquarters in Janpath you would perhaps run away with the impression that everything is honky dory with flunkies fitting in and out of office rooms, each door flaunting the nameplate of one or the other functionary, portraits of the clan's presiding deity, Sonia Gandhi and her heir apparent Rahul Gandhi looking down on you with a most benign smile.

The truth of the Congress party's plight lies out there in the open away from Janpath and in the far corners of this vast land of ours. And the picture that you see as you look around yourself does not bode well. You see the party structure in the State's non-existent or on the verge of collapse. Even in the States where it rules, its organisation lies in ruins, consumed by factional feuds and very little to inspire confidence among the people or even among rank and file party workers. The process of division in fact goes right down the ranks. Party workers are known as ‘‘this Sahab's’’ or ‘‘that Sahab's’’ men; very few will say they are Congressmen. And the sahab on the ascendant does not must enjoy the mandatory ‘‘shabashi’’ of Sonia Gandhi.

From North east to Gujarat from Jammu and Kashmir to Kerala from Maharashtra to Andhra, let alone Uttar Pradesh, Madhya Pradesh, Rajasthan and Orissa, which the party has virtually given up on, the Congress is on a downslide. Ironically both in Andhra and Maharashtra, where the Congress is ruling, either independently or in a coalition, the party appears to be set on a suicidal course.

The Maharashtra Congress may be divided (even the legislature party) over the cotinuance in office of Chief Minister Deshmukh but who is to decide. Evidently, Sonia Gandhi, and she seems always to be working on strategies, not concerning the future of the party in the State, but which of the prospective replacements can be trusted by the dynasty. It may be a Sushil Kumar Shinde or who knows the unreliable for former Shiv Sena CM Narayan Rane. One would have expected the party headquarters to solve the Maharashtra puzzle in a manner that would in the short and long run help strengthen the party there. In the end though it may find itself playing second fiddle to partner Sharad Pawar's NCP or who knows even watching from the Opposition benches as a future Shiv Sena-BJP Government takes over.

Its performance as the ruling party and its future prospects are indeed bleak in Andhra as well. Chief Minister YSR Reddy has refused to grow into anything more than a faction leader. In Tamilnadu the party of C Rajagoplachan and K Kamaraj has learnt to live by hanging on to the coat tails of the regional parties. Its marginally better parliamentary poll performance in the State the last time over was the result mainly of a benign smile thrown at it by the DMK boss Karunanidhi. In Kerala where the party had a reasonably strong organizational base it stands as divided as never before, even after the old man Karunakaran's return to the fold.

The desperate attempt by the party heirarchy to somewhat retrieve the lost ground in Uttar Pradesh and Rajasthan must for the present remain a distant dream. The party predictably has fallen back on the dynasty to help a recovery by investing one of its ‘‘prime assets’’ in the process. Rahul Gandhi, the nation has been told, will be embarking on a countrywide yatra. It may perhaps not be a bad idea, but what is the yatra expected to achieve in the absence of an organisational structure. One can be sure that the States where Congress is in power will spare little effort to make the ‘‘yatra’’ a spectacular success but how would that help his party given that it has almost entirely lost its cadres.

The State party leaders everywhere have, borrowing a leaf from the dynasty's book, planted their men in places of influence and these blue-eyed boys spend most of their time in running down their ‘‘Saheb's’’ opponents within the party. The decline of the Congress Party these past few years has been palpable and I don't buy the line ‘‘we won this State or that’’ because of Soniaji's leadership.

The over-dependence on the dynasty from the days of Indira Gandhi has frankly resulted in the party withering from within, even as the political map of the country has virtually been rewritten. The party's role, its pan-Indian vision and its belief that the country's interests are intertwined with its own, has since been challenged by a broad mix of regional, caste and communal politics. From being an umbrella party, which represented all sections of society and all regions it now represents none.

A senior party leader and Cabinet Minister the other day bemoaned the fact that he grand old party was virtually rudderless. Speaking more in anguish than anything else he told me that it has become impossible even to broach subjects that might be unpalatable to some. Nobody is bothered, as he confided, to set the house in order vis a vis the party organisation, nor does it know how to respond to the challenge to its fading hegemony from regional, caste and communal politics. ‘‘Rahul is bright youngman but so thoroughly inexperienced. And unlike Rajiv in his initial stages Rahul is turning put to be a slow learner.’’

You can't expect him to revive a party which is almost paralyzed just now. Yes, it is paralyzed not just in physical terms, our thinking too seems to have paralysed. ‘‘He spoke of the days when Narsimha Rao had tried to reform the functioning of the party and how quickly he was forced to recognise the forces that were opposed to change and made to accept the Congress ‘‘reality’’. But Rao, my man said, had indeed tried to infuse new life into the party but was thwarted by those within. Surprisingly, in the era of Mayawatis and Mulayam Singhs the party has been unable to produce any leaders of its own who can take on the growing crop of aggressive regional leaders of other parties. In fact we hear talk now among Congressmen that the system, as it exists in the party today, actively discourages the grooming of new leaders both because they could be a challenge to the dynasty, importantly because they would diminish the clout of the coterie surrounding Sonia Gandhi and her son Rahul. The internal democratic process which used to throw up leaders both at the State and Central levels no longer exists. Instead the party must go by the all pervasive dynastical diktat which must in all cases prevail.

Prioritise liquidity management

By Ramesh Kanitkar

Belying widespread expectations in stock and financial markets, the Reserve Bank of India stuck to its set target of containing money supply and inflation by all measures and decided to maintain status quo on all interest rates. RBI Governor Dr. Y.V. Reddy making the third quarterly statement on monetary policy said that all rates repo (7.75 per cent), reverse repo (6 per cent) and CRR (7.5 per cent) would not change till 31 March 2008 after taking an elaborate review of domestic and international financial conditions.

The stance of the policy is to contain inflation close to five per cent while conditioning expectations in the range of 4 to 4.5 per cent. The GDP projection for the year 2007-08 too remains same at 8.5 per cent.

The rising international crude prices is a threat to domestic price stability putting inflation expectations at risk. Price of Indian basket of international crude has marked a sustained increase in the current FY 2007-08. In April-June price per barrel was $66.4, July-Sept $72.27, Oct-Dec $85.7 and as on 25 January 2008 it was $88.9 dollars per barrel.

In these circumstances liquidity management assumes priority through timely action. There are indications of upsurge in inflation. First, exclusion-based measures-that is Wholesale Price Index (WPI) excluding food and energy-place inflation higher than the headline, indicative of the underlying aggregate demand pressures. Second, disaggregated analysis suggests that the favourable effects of the cuts in petrol/diesel prices in 2006-07 which facilitated benign inflation conditions over the greater part of 2007-08 have ceased since December 2007. Prices of non-administered petroleum products like naphtha furnace oil, aviation oil etc. have increased in the range of 28 to 37 per cent.

Given these buffeting arguments, RBI Governor decided to leave the rising ball alone rather than offer a shot. Clearly, worries about inflationary pressures have triumphed over growth concerns, at least for the moment. But, even by doing nothing, Reddy has done two things. One, leaving the bouncer well alone marks a distinct shift from an earlier stance of aggressive tightening to one of holding operation. The RBI feels that despite the liquidity concerns in the domestic economy, watching the global developments unfold patiently has assumed greater importance in the current international context. Especially, since the twin impact of a blizzard of rate cuts and furious injection of liquidity by a host of central banks is not yet known.

It usually takes some time for interest rate actions to percolate down to the real economy; this, in conjunction with the massive doses of liquidity injected into the system by the central banks, is likely to have some impact on the real economy which will only unfold over time. The RBI would rather wait and figure out how this pans out over the next few weeks before taking any action. Also, governor Reddy perhaps feels that global coordinated action is not yet over and more cuts and liquidity infusions are probably on the way. Like a good card player, he has opted to keep his suit of trump cards close to his chest. He will show them only at the appropriate time, instead of precipitating premature action now.

The RBI Governor is known for surprising the markets. But, there are two other distinct signals-one overt and the other concealed-embedded in his policy document that could be construed as pointers to the future. First, the covert one. In its section on the impact of rising fuel prices on inflation, the RBI suddenly digresses into unfamiliar terrain-taxes levied by different countries on oil. The RBI goes on to say that most countries have reduced the tax component substantially to soften the blow arising from the pass-through of higher oil prices to consumers. Though there is no mention of India or any homily to the government, the message is not lost. Is the finance minister listening?

It is not easy to swim against the tide. It is not as though policy rates are cast in stone; the RBI always has the option of tweaking rates down the line if the situation demands it. The RBI should consider cutting rates if there is a sharp slowdown in industrial growth. The international situation following the subprime meltdown is still too uncertain; there is no knowing for sure whether, and to what extent, large-scale dollar inflows will resume. For the moment, then, it makes more sense to wait and watch. INAV

US response to oil prices

By Sreedhar

Other alternative energy source materials like nuclear power and non conventional energy source materials have remained a small percentage of the total global energy demand. Interestingly the emerging new economies of Asia are not complaining as much as the developed economies. For instance, both China and India are quietly observing the increased oil prices without resorting to any coercive diplomacy. These new emerging economies have made in roads into new markets where there is an abundance of oil and gas. The emergence of India's Oil and Natural Gas Commission as an important explorer of oil and gas in the international market is an indication of how the monopoly of western oil cartels is slowly getting changed. The oil exploration by Chinese and Indian companies in Sudan is another example. Similarly, the emergence of Myanmar and Bangladesh as sources of gas and oil is another indication of how the international oil market is undergoing a change.

No doubt some of the least developed economies in Africa and Latin America may undergo tremendous hardship. According to quick estimates the increased oil prices, say by $ 10 per barrel would translate into 1.5 percent cost to the gross domestic product of the world tourist economy.

In this backdrop some interesting developments are taking place in the global order. The otherwise mild Russia during the 1990s suddenly became defiant of the west. According to a Wall Street Journal report "oil money has galvanized the might of Russia under President Vladimir Putin. He has overseen a dramatic consolidation of power and rollback of democracy in Moscow, while sticking a thumb in the West's eye on issues ranging from independence for Kosovo to the U.S. bid to build an anti-Iran missile-defense system in Europe".

Similarly the Iranians have started defying the United State in every conceivable way. They apparently were being reassured of total support from the People's Republic of China. The emerging Sino-Iranian relations with an in depth economic relations have added a totally different picture in the Persian Gulf Region.

The Europeans too are not feeling comfortable about the US attitude in the Arab oil producing countries.

In this backdrop the question that needs to be address to is to what extent changing global crude oil prices will result in disturbing the uni-polarity of the global order. The US military action in Iraq initially had a demonstrative effect for a while on the entire Arab oil producing countries. The developments in Iraq indicate that the Iraqi oil industry has been quitely taken over by the MNCs of the west. This in turn would mean that the developed world, especially the members of the Organizations for Economic Co-operation and Development (countries of North America, Europe and Japan), have gained complete control over the second largest oil reserves in the world. The developments of the past few years in the Arab world, like Libya coming to peace with the west, indicate that the lone super power policies on crude oil have started paying some dividends.

Even with the troublesome Iran, the process of encirclement of that country by the US and its allies is in full swing. The NATO (North Atlantic Treaty Organisation) troops in Afghanistan, another neighbouring country of Iran, are one step in that direction. The recent reports coming from Washington D.C. indicate that the US is planning to take direct military action in Pakistan as a part of its war on terrorism. According to a report in New York Times there was a high power meeting in Washington D.C on January 4, 2008; and it was agreed in principle such an option should be seriously considered by the Bush administration. Such an action may mean getting directly involved in the safe havens of radical Islamic groups in Pakistan. But it would also mean sending a signal to Iran that they are physically present in another country in their neighbourhood. This would also mean that they can create problems to Iran at any time of their choice and timing.

In fact the incident of a confrontation between the US warships and Iranian patrol boats in the first week of January 2008 in Straits of Harmuz does show the mounting tensions between the two countries. In addition, the US President, George Bush during his week long visit to Persian Gulf Region said on January 13, 2008 that Iran as a country exporting terrorism all over the world.

In lieu of these developments it is becoming increasingly clear that the increased crude oil prices and the covert threat it is posing to the stability of the developed economies can be neutralized at super powers discretion. The Arab oil producing countries quest for equal terms in dealing with developed world, specially the US and its allies through increased oil prices will not be allowed to materialized in the near future. Now the question that will be confronting emerging global order is to what extend crude oil prices can be allowed to escalate in the spot market: and to what extend the disequilibrium between supply and demand will be allowed to continue. It appears the bottom line in this situation would be uninterrupted supply of crude oil at reasonable prices. Who will control the oil companies is not going to be subject matter for any major policy shift.

From the Indian perspective the Indian economy was able to absorb these increased crude oil prices without much difficulty. Market analysts feel that the demand for crude oil is increasing quiet sharply and may not the able to sustain this trend in medium term. In the retail market price structure 40 to 50 percent constitute various taxes imposed by the Government of India and the state governments. This cushion available in manipulating the taxes is enabling India to absorb the cost of increased crude oil prices in spot markets. In addition the supply/demand disequilibrium came at a time when India is reworking on its energy source material mix to sustain the demand for energy and accelerate the pace of economic development.

In addition, energy efficiency became the new watch word of the Indian economy. Like the rest of the world India is also working on promoting alternative fuels and curb burning of carbon based fuels.-CNF