Coal India success and after

The government can justifiably feel a sense of relief at the success of the recent round of Coal India Limited (CIL) disinvestment which has brought in some much-needed funds to its anaemic coffers. In what was the biggest equity offering ever in the country, the offer for sale of 10 per cent of its stake in CIL fetched the government a whopping Rs.24,557 crore, more than half of the budgeted proceeds of Rs.43,425 crore from disinvestment this fiscal year. To put the CIL sale in perspective, the government had managed to raise just Rs.1,719 crore until now in this fiscal through the sale of shares in Steel Authority of India. If the government is to keep its promise of keeping the fiscal deficit at 4.1 per cent of GDP in 2014-15, achieving the budgeted revenues from disinvestment is crucial. The budgeted fiscal deficit for the entire year was exceeded in the first nine months until December 2014 since tax revenues did not grow at the expected pace. The government will also have to look at non-tax revenues such as from disinvestment to fill the fiscal hole. Hence the spectrum auction, coming up in March, and the disinvestment in other PSUs such as ONGC and NHPC, assume great importance.

The CIL disinvestment may not have been so successful but for some generous help from domestic institutional investors, particularly insurance companies. As much as Rs.11,360 crore, which is half of the total sum raised, came from insurance companies led by the LIC, with the latter accounting for a bulk of the applications in this category. Of course, the LIC may have seen genuine promise in CIL while investing its money. Yet, this is nothing more than money moving from one hand of the government to the other given that the LIC is wholly owned by the Centre. Of course, foreign institutional investors (FIIs) have also put in Rs.5,919 crore in the CIL offer, which is encouraging. The government would do well to reappraise the entire disinvestment programme which has so far, disappointingly, amounted to nothing more than selling off a few pieces of family silver to tide over difficult times. What is required is a privatisation programme whose objective will not merely be to raise funds for the exchequer but to reform the public sector space. The government should identify public sector units that are languishing for want of capital and technology and bring in strategic private partners to rejuvenate them. The trade unions too will be on board to support such schemes that will safeguard jobs in these companies. Eventually, the Central government should divest itself of enterprises in sectors such as steel and cement production, focussing instead on improving social services such as health care and education.

Cruel and unusual

On January 30, the U.S. State of Ohio postponed all the seven executions scheduled for 2015 to procure a different anaesthetic drug and develop a new protocol to execute death row convicts using lethal injection. The announcement came three weeks after the State decided not to use a controversial anaesthetic, Midazolam, and two days after the U.S. Supreme Court stayed the execution of three Oklahoma death row convicts using the same drug. Midazolam is used to put a convict to sleep before other drugs are injected to stop the heart. Though the intent behind using the anaesthetic is to reduce pain when another injected drug causes death, the outcome has been nothing but disastrous. Last year, the unproven anaesthetic failed to completely sedate prisoners, resulting in a few prolonged and possibly excruciatingly painful executions in Ohio and Arizona. For instance, in January last year, it took 26 long minutes of “choking, gasping and writhing” before a convict in Ohio died in a bungled execution. That the experimental anaesthetic drug was chosen not on the basis of scientific merit but information available on an unreliable Internet website, reveals the downright callousness involved and the mindless pursuit of executions. In 2011, when European countries banned the export of sodium thiopental and other anaesthetic drugs used in executions and a sole American manufacturer halted sodium thiopental production, many States turned to compounding pharmacies, which are beyond the purview of the Food and Drug Administration, for the supply of untested and unreliable drugs.

There is no scientific basis to support the effectiveness of lethal injections using different drugs with randomly chosen dosages and questionable quality and administered using varied protocols: Ohio has a two-drug protocol while Oklahoma has a three-drug regimen. Another vital issue that makes the method highly repugnant is the failure to administer the drugs into a vein. Such a fiasco in April 2014 led to a convict in Oklahoma remaining alive for 43 minutes, often “writhing in pain” and “breathing heavily” before dying of a heart attack. The botched executions clearly demonstrate that the punishment very often ends up being disproportionate to the crime, thus violating the Eighth Amendment ban on cruel and unusual punishment. If capital punishment by itself is abhorrent and has no place in a modern society, executing prisoners using lethal injections is outright barbaric. The U.S. has the dubious distinction of being a country with one of the largest number of executions in the world. Ironically, 13 States account for almost all the executions; 18 States and the District of Columbia have repealed it.

On expected lines

A fortnight after surprising the markets with a 0.25 percentage point cut in benchmark interest rates, the Reserve Bank of India has opted for a standstill policy on rates in its bimonthly monetary policy review, which is along expected lines. When it cut rates on January 15, the RBI had clearly said that any further easing would be contingent upon data confirming the disinflationary trend and sustained high-quality fiscal consolidation. Given that there has been no significant development on either front, the central bank has decided to maintain an unchanged stance on interest rates. However, to improve liquidity, and in line with its policy of lowering the Statutory Liquidity Ratio to increase availability of funds for infrastructure lending, the RBI has reduced SLR by 0.50 percentage points to 21.50 per cent. This is expected to release about Rs.45,000 crore into the system. While the RBI is doing its bit to reduce lending cost and increase funds availability, banks seem reluctant to pass on the benefit to borrowers. After the RBI reduced rates last fortnight, only a couple of banks have so far attempted to reduce their lending rates. Though the transmission of policy rates by banks is always sluggish in the down-cycle, the current reluctance by banks is striking and is a direct result of the strain caused on their balance-sheets by non-performing assets (NPAs).

Meanwhile, the RBI’s bias towards further easing of rates is very clear, but the downward momentum will be determined by the pace of disinflation and the government’s fiscal stance in the coming Budget. Though inflationary expectations are at their lowest in 21 months, the risks stem from the traditional upswing in food prices at the onset of summer, the progress of the monsoon and a turnaround in global crude oil prices that have already rebounded from their lows in the last couple of days. The RBI will also be closely watching the government’s fiscal math and its commitment to keep the deficit within targeted levels. While the current account deficit is projected at a very comfortable 1.3 per cent of GDP for 2014-15, exports could suffer in the coming months thanks to the problems in the eurozone, which is India’s largest trading partner. The central bank also has reasons to be wary about the effects of the quantitative easing programme of the European Central Bank on India’s financial and currency markets. The projection of 6.5 per cent growth in GDP in 2015-16 is realistic, but a lot depends on the return of investment momentum and increase in consumption, both of which are sluggish at this point in time. Cautious optimism could well be the catchphrase to describe the country’s economic prospects in the near-term.

Terrorism threatens Japan

The purported beheading by Islamic State (IS) of two Japanese journalists, and its warning that Japan would be one of its military targets in future, pose a challenge to Prime Minister Shinzo Abe’s government. Its impact would perhaps mark a critical shift in Japanese foreign policy and public opinion. Japan has largely been insulated from international terrorism in the past decade and radical Islam has little or almost nil hold in the country. Japan’s pacifism is embodied in its Constitution of 1946, through which it has renounced war and outlawed belligerent responses to international disputes. Japan does not maintain an army with war potential, except for the de facto Japan Self-Defence Forces (JSDF) that is intended to maintain peace and order. With a pacifist foreign policy that strongly distances itself from militaristic ventures, why is Japan now a target of Islamic terrorism?

The fact is that Japan’s foreign policy has been undergoing several changes in the past few years. Prime Minister Abe, a conservative-nationalist, has been gradually rewriting the pacifist Constitution, especially since his 2012 re-election. The defence budget was considerably enhanced, the ban on arms exports was lifted and the capabilities of the JSDF were expanded. A reinterpretation of Article 9 of the Constitution now allows Japan to use force to defend its allies under attack. Also, Japan’s relations with the Middle East are becoming more central — and controversial. Being a resource-poor country, it is one of the largest importers of crude oil from the region. Political stability in the Middle East is in Japan’s own interests. Mr. Abe, during his recent visits to Egypt, Jordan, Lebanon, Israel and Palestine, pledged $200 million in non-military aid for countries fighting IS. He also promised humanitarian and infrastructure assistance for those fighting terrorism, as well as for refugees displaced from Syria and Iraq following IS activity. Mr. Abe’s attempts to gain prominence on the international stage by playing a bigger role in the West’s counter-terrorism policy has clearly drawn bitter reactions from IS, as reflected in the outrageous beheadings. With the widespread shock at these recent events, the Japanese public will be faced with important questions on how to judge Prime Minister Abe’s proactive and gradually militarised foreign policy. Regardless, Mr. Abe has unequivocally stated that the country “will not give in to terrorism” and will “work alongside the international community to make them pay for their sins.” It is evident that Japan’s emerging foreign policy is in for some testing times.

End the ambivalence

Bharatiya Janata Party president Amit Shah did well to try and quell the controversy over the demands for dropping the words ‘secular’ and ‘socialist’ from the Preamble of the Constitution. In his interview to The Hindu, he could not have been more unequivocal: “The BJP believes that the Preamble, as it stands today, should remain. There is no need to change it.” What is now needed is for Prime Minister Narendra Modi to endorse his political aide, Mr. Shah, and give a public assurance on retaining the two words, to remove any doubt about the stance of the government on this issue. The point of concern is not whether India needed the word in the Preamble to be secular, but as noted in The Hindu’s editorial, “A needless controversy” (February 2, 2015), the disconcerting signal that the dropping of the word would send to the minorities of the country. While there is little doubt that Mr. Shah’s thoughts on the subject are aligned with those of Mr. Modi, the Prime Minister can make a big difference by distancing his government from the controversy fanned by the BJP’s far right ally, the Shiv Sena. Otherwise, Ministers and party functionaries would feel free to stoke fresh controversies of this nature every now and then.

While Mr. Shah seemed keen to end the controversy over any change to the Preamble, he did not think the political storm over the ghar vapsi programme undertaken by Hindutva outfits would derail the development agenda of the government. Indeed, the BJP president was intent on using the heat generated by the programme of reconversion to Hinduism as an excuse to push for a specific law on banning forcible religious conversion. Mr. Shah, while defending U.S. President Barack Obama’s speech on religious freedom in India, stuck to the Hindutva line that conversion is a problem, and sought support for an anti-conversion legislation without seeing a need for any further debate on the subject. Actually, the divergence within the BJP on these crucial issues is becoming increasingly evident with Union Home Minister Rajnath Singh saying that ghar vapsi had no place in India, even while describing Mr. Obama’s remarks on religious divides in the country as “unfortunate”. This is another reason why Mr. Modi must step in with an assurance that his government has no plans to bring in changes to the Preamble, or to encourage communally divisive politics. Without his intervention, the government and the party will appear to be speaking in different voices on issues of national importance. Development cannot bloom miraculously on a separate track insulated from the subversive political challenges of the day.

An ICBM becomes more versatile

India’s intercontinental ballistic missile, Agni V, has been turned into an even more potent weapon of war. On Saturday, the Defence Research and Development Organisation (DRDO) demonstrated that this missile, capable of sending a nuclear warhead to targets over 5,000 km away — thereby bringing much of China within its reach — could be launched from a truck-mounted canister. The ability to move ballistic missiles around makes it difficult for an enemy to locate and destroy them. Placed in canisters, the missiles can be easily transported and launched with great rapidity in all sorts of weather conditions. The canisters have another advantage as well — they make decoys possible. While these large truck-borne missile containers can be detected by spy satellites passing overhead and may well be noticed by observers on the ground, it will be impossible to tell those that actually carry missiles from ones that are empty. Thus, any attempt at a first strike to take out India’s nuclear-armed missiles becomes far more uncertain and therefore a risky undertaking for any adversary.

However, launching a missile from a canister is more difficult, especially when it involves a large missile like the Agni V. The missile must be ejected from the container, using a gas generator, before its first stage can be ignited. Although the DRDO had previously carried out canister launches with the BrahMos supersonic cruise missile and the 700-km-range Shourya missile, launching the Agni V in a similar fashion was still a considerable technological challenge. Hurling this 17-metre-long, 50-tonne missile clear of its container requires far greater force, which must be provided by large amounts of gas produced very rapidly. In doing so, neither the missile nor its launch system should be damaged. Saturday’s flawless launch shows that the country’s defence scientists have indeed mastered this complex technology. Three successive Agni V flight tests have gone without a hitch over the last three years and DRDO officials say the missile will be ready for induction into service after just one more trial, which will be carried out later this year. However, India’s strategic planners will need to bear in mind the fact that Pakistan and China have deployed nuclear weapons on their missiles in a way that goes beyond conventional nuclear deterrence. Rather, their strategy appears to create ambiguities over the escalation of a conventional conflict into a nuclear one. Consequently, enhancement of this country’s long-range ballistic missile capabilities must go hand-in-hand with proper planning to deal with situations that might lead to such apocalyptic weapons of mass destruction being launched.

A needless controversy

Union Minister and Bharatiya Janata Party leader Ravi Shankar Prasad calling for a national debate on whether the words “socialist” and “secular” should continue to be part of the Preamble to the Constitution in the wake of the controversy over the Central government using a “watermark of the original Preamble” in advertisements released in the print media on the occasion of Republic Day — which did not have those words — has set off a debate on a constitutional amendment made during the period of the Emergency. It followed the Shiv Sena’s demand that the two key words be dropped altogether from the amended Preamble. In conceptually adding the words to the Preamble by means of the Constitution (42nd Amendment) Act, 1976, wherein the words “Sovereign Democratic Republic” were substituted with “Sovereign Socialist Secular Democratic Republic”, the Statement of Objects and Reasons appended to that Bill said it was to “spell out expressly the high ideals of socialism, secularism and the integrity of the nation, to make the directive principles more comprehensive and give them precedence over those fundamental rights which have been allowed to be relied upon to frustrate socio-economic reforms for implementing the directive principles.” That the working of the Constitution shows shortcomings, that the insertion of these two words was done during the period of the Emergency under Prime Minister Indira Gandhi and that the Indian ethos is ‘inherently secular’, making the inclusion redundant, are the main arguments put forward by the ruling dispensation now.

As many legal pundits have convincingly shown, the Preamble embodies the “basic philosophy and fundamental values on which the Constitution is based”. The inclusion of the words “socialist” and “secular” is best seen as an explication of the ideals modern India has drawn directly from the freedom struggle. Upendra Baxi, citing the great constitutional historian Granville Austin — despite his differences with him — recalls how the “roots of the directive principles” could be traced to the 1931 Karachi Congress resolution, and to the “two streams of socialist and nationalist sentiments in India that had been flowing ever faster since the late 1920s.” Even the Morarji Desai-led Janata Party government, in which the Jan Sangh was a constituent, did not think it necessary to delist these two words when they enacted the 44th Amendment to nullify the objectionable features introduced in the 42nd Amendment Act. Political scientists also emphasise that in the S.R. Bommai case, the Supreme Court held that “secularism is an integral part” of the Constitution’s basic structure. With or without the amended Preamble, the Indian Constitution will remain secular, but the signal the dropping of the words would send will be disconcerting to the minorities.

Sanitation in schools

The inequities in infrastructure could not be starker. While several schools continue to deny the most basic sanitation facilities for poorer children, a select band of them dangle air-conditioned classrooms and dormitories and other accessories before the more affluent ones. Repeated knuckle-rapping by the Supreme Court over the years has evidently had little effect on State administrations, as the case of Andhra Pradesh and Telangana illustrates. In October 2012, the Court had issued orders for the building of toilets in all schools within six months. That stricture was a sequel to a similar kind of intervention the year before. The Supreme Court had stepped in yet again last year, but to little avail. Matters have got no further in 2015. In this latest instance, a two-judge Bench has been constrained to spell out to the governments of the two neighbouring States as to what type of structures were acceptable as safe and clean toilets. That is proof enough that official specifications were violated both in letter and spirit. Such complacency on the part of the authorities would hopefully be history given the increase in funding for the purpose ever since Prime Minister Narendra Modi’s Independence day address.

Not unrelated to the situation in schools is the equally callous attitude of many States with respect to the enforcement of the ban on manual scavenging that was legislated over two decades ago. Underlying the indignity heaped on public sanitation workers, as well as the insanitary conditions in schools, is a mindset of complete denial; that, if anything, compounds the problem. The detrimental long-term effects, especially upon girls, of prolonged lack of access to toilets have been well-documented. Where facilities exist, they are effectively rendered dysfunctional because of the most unhygienic conditions in which they are invariably found. This aspect may be linked also to the ratio of toilet facility to user of 1:40 for girls and 1:80 for boys, as per norms laid down by the Union Ministry of Drinking Water and Sanitation. Conversely, the UNICEF standard provides one toilet for 25 girls and a toilet and urinal for 80 boys. The adoption of best practices in one area would critically influence behaviour with respect to other health and sanitation indicators. Schools thus play a pivotal role in inculcating clean and healthy habits among children, families and the wider community. Chief Minister N. Chandrababu Naidu is a torch-bearer of the country’s information and technology revolution. His counterpart in Telangana, K. Chandrasekhar Rao, won statehood on a promise of development for the people. They have both committed themselves to realising Mr. Modi’s mission of Swachh Bharat. They have their task cut out. A toilet is not a luxury — not for human beings.