Friday, August 31, 2012

Scarcity of Medical Practitioners in Rural India

Achieving universal health:

The Planning Commission’s draft 12th Plan for health has proposed increase in government health spending from one per cent to 1.58 per cent of GDP. The spending increase was rightly felt to be grossly inadequate to move India towards achieving universal health care.

Obstacles to achieving universal health care in India:

Scarcity of rural doctors:

The scarcity of rural doctors currently prevents the delivery of even basic clinical services to needy citizens. Simply spending more or changing the way health services are purchased will not solve this problem.

Urban-rural divides:

Indeed, our cities are abundant with all manner of clinics, diagnostic centres and hospitals. But having a qualified doctor nearby is a rarity for the vast majority of Indians who inhabit the country’s rural spaces.
According to the 2001 Census, there is a tenfold difference in the availability of qualified doctors between urban and rural areas i.e. one qualified doctor per 8,333 (885) people in rural (urban) areas of India.

Addressing this rural scarcity is fundamental to efforts for achieving universal health care in India.

Reasons behind the reluctance of doctors to serve in rural areas:

The professional and personal expectation of medical graduates is not compatible with the life of a rural doctor. Their ambition lies in becoming medical specialists. Once they specialize, the professional, income, lifestyle, and family life opportunities in cities make rural jobs unattractive. Moreover, with private medical schools and their high fees dominating medical education, it makes little sense for medical graduates to take up jobs that don’t offer them the opportunity to recover their investment.

The scarcity of rural doctors places an important responsibility on the government. However, its efforts to place government doctors in rural posts have been largely unsuccessful. For the hardship that rural doctors have to endure, government service offers relatively little in terms of remuneration, quality schooling for their children and a chance at a decent family life. Human resources in the State health services are also poorly managed.

For instance, there is little transparency about transfers and postings because they are a source of both corruption and political patronage in the health system. Absenteeism is another issue.

Prevailing Situations in abroad:

Interestingly, many high, middle, and low-income countries also face a scarcity of rural doctors. Many of them have ameliorated this problem by using non-physician clinicians to deliver basic health services. In the United States, the United Kingdom, many countries in Africa, and even in South Asia, individuals such as nurse-practitioners or medical assistants, who have some years of basic clinical training, perform many of the clinical functions normally expected of fully qualified doctors. In sub-Saharan Africa and many parts of Asia, clinical services in rural areas are possible only because of these non-physician clinicians. They provide a range of clinical functions, including basic clinical services, manage deliveries, caesarean sections and abortions. Importantly, assessments from a variety of settings have shown that they perform as well as doctors.

Non-physician clinicians in India:

At the time of India’s independence, licentiate medical practitioner (LMP)s, who underwent three years training, comprised nearly two-thirds of the qualified medical practitioners (the other one-third being doctors) and they mostly served in rural areas. LMPs were abolished after Independence but doctors never really occupied the space that LMPs vacated. Now, the shortage of rural doctors has forced some States to look towards non-physician clinicians for relief. Clinicians with around three years of clinical training currently serve at government rural health clinics in Chhattisgarh and Assam. Importantly, assessments of their performance in Chhattisgarh have shown them to be as competent as doctors for delivering basic clinical care. And because their training focuses on serving as rural clinicians and their career ambition is to have a government job, these clinicians, as the Chhattisgarh experience shows, have a greater likelihood of staying and serving in rural areas.

Suggestion to reduce scarcity of doctors in Rural India:

Providing the professional and personal expectations of doctors and Increases in salaries and management changes will attract adequate numbers.


The road to universal health care in India necessarily requires a serious assessment of basic problems that afflict the health system like the lack of human resources in rural areas. While this piece has focused on doctors, the rural scarcity of other health worker cadres such as nurses, lab technicians and pharmacists is equally acute and equally deserving of serious attention.

The experience of other countries and two States in India show that non-physician clinicians, whether they are three-year trained clinicians or nurse-practitioners, can be part of the solution.

Source: The Hindu

SAMEEKSHA- An Research Study of MGNREGA

In the midst of the debates that prevail in this country over the feasibility of the world’s largest public works programme, the MGNREGA Sameeksha — an anthology of independent research studies and analysis on the Mahatma Gandhi National Rural Employment Guarantee Act, from 2006-2012 — is a significant innovation to evaluate policy and delivery. In bringing out MGNREGA Sameeksha, a collection of critical independent voices, released in English and Hindi by the Prime Minister on July 14, the Ministry of Rural Development provides a platform for evaluation of a law designed to assist the most invisible in India’s political spectrum. The Sameeksha is not a ‘new’ study. As the introduction explains, it is “an analytical anthology of all major research studies done on MGNREGA that were published in academic journals or came out as stand-alone reports”.

Summary of findings

No department, from the social sector or otherwise, has published a summary of findings of all the independent research studies conducted on its major programmes. To do so asserts confidence in independent evaluations, and the wisdom that the government would do well to consider such views and analyses. Given India’s very poor record of rural development, it was important that the world’s largest employment programme be evaluated by credible institutions and researchers. By bringing a summary of findings of all the studies together, Sameeksha facilitates informed understanding, analysis, implementation, and reform where necessary.

Sameeksha is an initiative of Jairam Ramesh, Minister of Rural Development, edited by Planning Commission Member Mihir Shah and compiled by a team led by Neelakshi Mann and Varad Pande. To ensure academic merit, suitable coverage of major studies, and veracity of reportage, the anthology was refereed by two prominent academics/writers; economist Jean Dreze, and the editor of the Economic and Political Weekly, C. Rammanohar Reddy. This anthology is finally a tribute to the MGNREGA, and the millions of workers who have diligently struggled against poverty and unequal implementation, and even violence in some cases to access their rights.

Evaluating MGNREGA on the basis of rigorous research, rather than anecdotal evidence, offers a rational framework for improvement, and rejects irrational demands for closure. It also becomes the basis for more informed discussion to write articles, conduct television studio debates, and even design policy initiatives.

In the midst of ill-informed adverse criticism, this compendium gives us a set of answers based on fact and not opinion.

Continuing critical comments and assertions beg for answers. Has the MGNREGA really built assets, or has it just been a compendium of useless earth work? Has it created a lazy workforce that is affecting our work culture? Has it negatively affected agriculture by drying up the labour market? Has the MGNREGA become the biggest source of corruption in rural India? Has it failed to arrest distress migration? Has it helped household income, and reduced hunger in the poorest households?

These papers provide answers premised on detailed research or study. For instance, the oft-repeated aggressive assertion that MGNREGA does not build useful assets has been made without the support of any study to justify this claim. These assertions arise very often from fleeting visits to roadside worksites, with insufficient time for anything more than an anecdote. This off-the-cuff dismissal of “useless earth works” arises from a group which often lives on the other side of a fractured India, for whom mud and dirt become synonymous! It also raises the pertinent question of what indeed is a productive asset — a village tank that recharges 40 wells, or only a work of brick and mortar.

Sameeksha has a whole chapter dedicated to studies on asset creation which, by and large, show that sustainable assets have been created. A study of the best performing water harvesting assets in Bihar, Gujarat, Rajasthan, and Kerala for instance show the potential of these works where a majority of the assets studied had a return on investment of well over 100 per cent, with investment costs recovered in less than one year! Perception-based surveys, including those carried out by the National Sample Survey Organisation (NSSO) in three States showed that the vast majority of assets were being used, and the people found them useful.

Multiplier effect

This report should give policymakers and politicians a chance to take stock. Interestingly, the compendium effectively answers many of the basic criticisms of MGNREGA that have emanated from politicians and bureaucrats even within the system. The Prime Minister will hopefully acknowledge the findings contained in Sameeksha, and accept that MGNREGA is more than a lifeline for survival. Different studies have shown that it has provided livelihood and income security, decreased the incidence of poverty, increased food intake, reduced mental depression, positively affected health outcomes, and been successful as a self targeting scheme — as the poorest and most marginalised communities have sought work. In many States, it has decreased gender differential in wages, increased real wages accompanied by an increase in agricultural productivity and growth. This increase in agricultural productivity could be due to the watershed and water harvesting works, as well as the land development work on the fallow private lands of SC, ST and BPL families to make them productive. The studies do not bear out the assertion that MGNREGA has caused a shortage of farm labour. Importantly, some studies seem to indicate a significant multiplier effect on the rural economy suggesting, as the authors say, a need to study this aspect further.

The report also shows that there is poor implementation in many places. Average wages paid are lower than minimum wages; there is a distressing delay in the payment of wages; demand is not properly captured (an NSSO survey found 19 per cent of people who wanted work did not get it); dated receipts for work applications are not properly given; and the payment of unemployment allowance is a rarity. There is a shortage of staff, and there are many instances of irregular flow of funds. Non-compliance with proactive disclosure provisions such as muster rolls being available at worksites continues to be a problem in some States. As a result, leakages and corrupt practices continue to exist. While social audits in Andhra Pradesh have significantly increased awareness and identified fraud, Sameeksha notes that social audits are a facade in most other States.

Several initiatives have a mixed outcome. The Management Information System places the largest set of data of any public works programme in the public domain via the MGNREGA website, but States are still struggling to upload data online on a real-time basis. Ten crore bank and post office accounts have been opened, bringing about financial inclusion, and reduced corruption in wage payments, but the delay in payments through such accounts is a major cause of distress.

Many of these concerns obvious to those who work in rural India have been corroborated by the scope and rigour of academic research. The area specific outcomes have been no less significant. We have seen thanks to the MGNREGA offering alternative work, hundreds of bonded labour (Saheriya adivasis) in Rajasthan freed from generations of bondage. People have been saved from destitution in Uttar Pradesh, Bihar, Orissa, and Chhattisgarh, women have been empowered and are participating in huge numbers in Tamil Nadu, and the programme is even showing very positive results in “non-NREGA” States like Himachal Pradesh and Kerala.

Academic studies contextualise experience and anecdote, within the framework of critical factual analysis. Policymakers cannot brush these aside as irrelevant. Ironically, the report also reveals the many issues and areas that have not been researched. It exposes the missed opportunities of the academia to invest in detailed and widespread study of this very unique right, entitlement and programme. Perhaps this report can help be a force multiplier for the studies conducted so far, which in turn will encourage more research.

The MoRD has also invited the Comptroller and Auditor General to conduct a performance audit of MGNREGA, and mentor the social audit process. The CAG oversight should enable a detailed appraisal of the shortcomings in implementation. These kinds of partnerships must become a regular activity not only within one Ministry, but in the government. It will help improve implementation and could be a creative way in which governance could be improved with the help of modes of independent evaluation and public participation.

Source : The Hindu

Wednesday, August 29, 2012

Critical Analysis of Proposed amended Bill on Land Acquisition

Opinions that Supporting the Bill:

Acquiring Land:

There are arguments that since capital and labour are not acquired forcefully then neither should land. The argument seems valid on the face of it but land, unlike capital and labour, is not fungible. In other words, land is finite and immovable. Land for local needs cannot be substituted by the acquisition of land elsewhere. To illustrate; if a road has to be built to connect two towns then land at another location cannot be acquired for this purpose. To take such decisions the State, which is the ultimate arbitrator of public good, has to be vested with the power of eminent domain
At the same time, it is important to also acknowledge the myriad ways in which the doctrine of eminent domain as present in the 1894 law is sought to be significantly attenuated in the proposed new law. The State must have a role in acquisition given that land markets are highly imperfect in India and given that there are huge power and information asymmetries between the buyers and sellers of land.

No acquisition of agricultural land:

The argument for a complete ban on the acquisition of agricultural land without distinctions as to single or multi-crop is not a feasible suggestion as such a sweeping provision will create insurmountable obstructions to growth and development particularly in rural areas. Discretionary power provisions, especially in a law that can only be repealed by Parliament, have to be drafted with caution and in a manner that accommodates need for future growth of the area in question.

Each State in India faces unique development challenges and as several States represented before the Standing Committee, many of them regard industrialization as a key element of their strategy to generate employment. Keeping this in mind, the new Bill retains the restriction on acquisition of agricultural land but leaves the exact limits to be determined by each State in line with its own development priorities.

The Bill also makes it clear that acquisition of multi-crop land is only to be undertaken as a last resort and under “exceptional circumstances.” Furthermore if such land is indeed earmarked for acquisition then an equal plot of alternative land has to be delineated for agricultural purposes. In addition, the Bill provides for States to impose ceilings on such acquisitions taking place within the district as a unit.

Public purpose:

Not only does the new Bill define public purpose comprehensively it also qualifies it by establishing processes whereby such “public purpose” needs to be clearly and compellingly validated. The Social Impact Assessment Process is one where all those affected (including those whose livelihood has been impacted), including representatives from Panchayati Raj Institutions, are invited to deliberate as to whether public purpose is indeed served by such acquisition.

This is then vetted by an independent expert group and finally pronounced upon by the high level committee headed by the Chief Secretary of a State. These safeguards are compounded by the high quorum of consent required (80 per cent). None of these processes exist under the 1894 Act.


It is given the guarantee that none of those individuals whose land has been acquired shall be dispossessed unless alternatives, as enumerated in the Bill, are provided for (Section 37). No such protection, enshrined in a statute, has ever been afforded earlier.

Over five chapters and two entire Schedules have been dedicated to outlining elaborate processes for resettlement and rehabilitation. The Second Schedule in particular outlines the benefits (such as land for land, housing, employment and annuities) that shall accrue in addition to the one-time cash payments.

Opinions that against the Bill:

The Bill proposed by the Ministry of Rural Development (MoRD) is clinging on to a colonial legacy. The consent of the gram Sabhas, the community and people should be the precondition before any natural resource, land or mineral, is acquired.

Public purpose has been poorly defined “in a manner worse than in the British Act
Let the community put forth its vision and plan as per Article 243 of the Constitution; what is completely unacceptable is for the government to acquire land for private and PPP projects.

Saving agricultural land for food security and for the livelihood of crores in this country is a must for our survival.There should be complete ban on the acquisition of agricultural land without distinctions as to single or multi-crop.

The Bill is especially weak on rehabilitation. It suggests that “only cash” is being offered to ameliorate the impacts of acquisition and adds that “cash was offered by the British as well.

The rehabilitation provided by the Bill is certainly not fair, nor adequate for an alternative livelihood. Cash being no option, land for land as provided in the 2007 policy is also not in the amended bill. How can the government not have enough land for rehabilitation, when it can and does purchase thousands of acres of land for private corporations and entities? Also, why is no one talking about rehabilitation of those already displaced? Make the law applicable with retrospective effect and include all other Acts with the “acquisition” clause under the new Act.

The present Bill has gone through certain improvements based on our critique and the recommendations of the Standing Committee, yet it falls far short of what is required to protect natural and human resource-based communities and uphold truly democratic development planning. This is the view of the masses, not the corporate.

Tuesday, August 28, 2012

Energy Efficiency: Let’s start at home

Energy inefficient buildings impose a heavy burden on power supply. They inflate and skew urban energy requirements and contribute to the electricity crisis. Two recent reports published by UN-Habitat send a clear message to complacent Indian policymakers: energy saving solutions are imperative to sustain urban growth and the best place to begin is the building sector since it offers maximum potential for reduction and accounts for 40 per cent of worldwide energy use. In India, of the 7,02,144 GWh electricity annually consumed (IEA 2009), residences use about 20 per cent. Much of this could be easily reduced. Unintelligent design, poor choice of building materials and inefficient appliances have increased power consumption and thus demand. Large swathes of glass and aluminium, which have respectively 3.5 and 30 times more embodied energy than bricks, increase solar gain and consequently the cooling load of the buildings. Excessive concrete pavement combined with poor landscaping of cities has contributed to the creation of heat islands. This not only causes more climatic discomfort, but also adds to cooling-related electrical consumption. Poor fenestration designs have failed to take advantage of daylight and most of the artificial lighting solutions remain energy intensive.

Adopting Green Practices

By adopting green practices, buildings can reduce 29 per cent of their total energy consumption in a decade. For instance, The Energy and Resources Institute (TERI) has shown that a shaded roof and sensitively designed windows have the potential of annually saving 10 to 15 per cent of energy in air-conditioned buildings. Every unit of electricity saved, when factored by transmission loss, would amount to substantial monetary gain, and would cumulatively reduce energy supply investment. What has the Indian government done to take advantage of green building practices? In 2007, the Energy Conservation Building Code, meant to reduce energy consumption by about 1.7 billion units of electricity a year, was launched. Even after five years, this code remains a recommendatory provision and does not bind many buildings. Neither is it integrated with the National Building Code. State governments fare no better. City level regulations have ignored the energy performance of buildings. They are more concerned about the economics of real estate. It is time to make energy audits for large buildings mandatory and dovetail energy codes into local regulations. This is not difficult to achieve. TERI has demonstrated how to integrate green codes with the building byelaws of Bangalore city. What is required is will and wisdom.

Monday, August 27, 2012

Olympic events, shows that diversity and difference are not a barrier to progress but can be a driver of it

During this break in the action between the closing of the Olympic Games and the opening of the Paralympic Games in London this Wednesday, we have a unique opportunity to consider how both events can improve people’s lives and impact the world.

Some may see the Games only as a cut-throat competition where athletes put their bodies to the limit so they can hear their national anthem played over the loudspeakers, while fans dress in the bright colours of their home countries and count the medals won. However, underneath the bravado of each nation, behind the confident exterior of each athlete and beyond the commercial considerations, there lies the true spirit of the Olympic and Paralympic Games, which matches the fundamental values of the United Nations: tolerance, respect, equality, inclusion and peace.

On the field of play, athletes embody these values in a number of ways, from kicking the football out of bounds when a player is hurt to shaking hands or sharing hugs with opponents at the end of a race. Doing so, they show the true spirit of sport, competing on a fair and respectful basis. Athletes also stand for these values when serving as volunteers in their own communities, visiting developing nations throughout the world and serving as Goodwill Ambassadors for the U.N. and other organisations. We should applaud those athletes who have truly embraced their responsibilities as role models, leaders and agents for change, as they recognise how their celebrity status can be used to help make the world a better place.

Awareness needed

Athletes are not alone in their capacity to effect change, with the hosts of the Olympic and Paralympic Games also in a unique position to create a powerful global legacy. As host of the 2012 Games, the United Kingdom has embraced this opportunity to invest in the future of their country and the world with the “International Inspiration” programme. This programme has, according to the organisation, benefited over 12 million young people in 20 countries, and will continue to create sustainable social, economic and sporting legacies throughout the country and abroad. I commend the efforts of the U.K. government, the London Organising Committee and their partner organisation Unicef in setting the bar so high for future sporting events. The London Games have also been conceptualised as the “Games for Everyone,” where diversity and inclusion are celebrated and featured in the Olympic and Paralympic Games as well as in the legacy efforts. This publicity and support of diversity and inclusion sends a powerful message around the world that diversity and difference — be it in ethnicity, origin, lifestyle, religion or physical ability — is not a barrier to progress but can be a driver of it. Also, we could pleased that the U.K., which hosted a precursor of the Paralympic Games in 1948, the “Stoke Mandeville Games,” particularly emphasised the importance of the Paralympics. Although the Olympics and Paralympics are nowadays part of the single bid a city puts forward benefiting from economics of scale, still much needs to be done to reach equal prioritisation regarding sport for persons with disabilities. Stakeholders include international organisations, governments but also the media. With regard to the latter, in most countries coverage of Paralympic sport unfortunately still lags behind, while in some it does not exist at all. More public awareness is needed to change prevailing negative perceptions in society, including those towards persons with mental disabilities. In that connection, Special Olympics International and their World Games have made much progress in transforming prejudices and promoting the rights of athletes with mental disabilities for instance.

The United Nations has profound partnerships with the Olympic and Paralympic families, represented by the International Olympic Committee (IOC) and the International Paralympic Committee (IPC) respectively, as well as with the Special Olympics, which are all based on the understanding that development, inclusion and peace building goals can be achieved through sport.

Olympic Truce

The Olympic Truce is one example of this partnership. The Truce is a historic part of the Olympic Games; in ancient times, all warring parties laid down their weapons during the Games, providing relief in times of constant war. This tradition of the Olympic Truce was revived in 1993 by a U.N. Resolution, reminding the world that the peaceful spirit of the Games can be a stepping stone for advancing conflict prevention and peace building objectives.

This past year, the U.N. Resolution calling for the Olympic Truce for the 2012 London Games was adopted and co-sponsored by all of the 193 U.N. Member States, indicating the importance that the international community places on the value of sport for peace. While a concrete universal ceasefire was unfortunately not observed so far, with ongoing conflicts in Syria, Afghanistan, and other countries, the Olympic Truce remains a noble goal and a powerful reminder of the spirit, ideals and historic potential of the Games. The Truce also reaffirms the actions of many programmes and organisations working towards unity and reconciliation in communities around the world.

Other efforts in the United Nations to support and promote the values shared with the Olympic and Paralympic families include, just to name a few, the work of the U.N. Environment Programme on environmental protection and sustainability, the World Health Organisation’s contribution to disease prevention and control and the engagement of various U.N. organisations in the educational programme of the Youth Olympic Games.

One can also dream of the Games having an even greater impact; for there is no event in the world that has the power to bring so many people together, generating excitement and attention that can be harnessed for the good of humanity.

As part of this dream, The athletes becoming even more aware of their status as social role models and more involved in promoting peace as well as sustainable change. The gender equality and women’s rights making strides through ever-greater female participation in sports, from the grassroots up to the elite levels. The U.N. working even more closely with organising committees of large sporting events to fully harness the power of sport as a driving force towards a safer, more secure, more sustainable, more equitable future.

For now some of it is already reality, some is just possibility. But the efforts of those involved with the 2012 London Games is giving me hope that we are heading in the right direction. Encourage the future hosts of sporting events and sport organisations to take up the baton and ensure that every major sporting event leaves behind a sustainable legacy.

Sunday, August 26, 2012

An exercise to update capital market

The Securities and Exchange Board of India (SEBI) announced some important measures to “revitalise” the primary market and “re-energise” mutual funds. Though in its announcement SEBI has divided the various measures into two categories, it must be understood that what is being sought to be reformed is the capital market itself, comprising the intermediaries, investors and, of course, the regulators, including stock exchanges.

Reform measures can never be viewed in isolation — their broad objectives are always on strengthening the capital market and protecting its investors.

Another reason why compartmentalisation does not help arises from the fact that there is a substantial overlap in the reform measures applicable to the new issue market and mutual funds. Mutual funds channelise investor funds to the stock markets. So does the primary market. The difference, of course, is that investors in the primary market take on far greater risks compared to mutual funds, whose fund managers, with their presumed expertise, help investors in managing their risks to a large extent. It is for this reason that mutual funds have been officially recommended as the preferred choice of first time investors. The SEBI board’s recommendation to extend the Rajiv Gandhi Equity Savings Scheme, a budget-notified tax savings scheme, to mutual funds is to be welcomed. In fact, the scheme should have been confined to mutual fund investments only.

That said, there are specific measures to increase the penetration of mutual funds and incentivising their distribution network. Fungibility of Total Expense Ratio (TER) is allowed. This will help mutual fund manage their expenses better. In some cases, they can reward their distributors better.

There will be a simplification of the registration process of distributors. The base of mutual fund distributors will be expanded to include postal agents, retired government banks and certain others. SEBI will clarify as to what mutual fund products this newer category will distribute.

With a view to incentivising mutual funds to extend their coverage to beyond the top 15 tier cities, Asset Management Companies (AMCs) are allowed to charge additional TER of up to 30 basis points on funds collected from these centres, subject to certain conditions (new inflows from these places should be at least 30 per cent of the total inflows). Investors will, therefore, pay more. Mutual funds shall disclose in the half-yearly reports of their Trustees to mutual funds their efforts at tapping funds from centres other than the top 15. Their reports will include details such as opening of new branches in those areas.

To spur investor education, the industry should set apart a portion of the asset management fees annually for investor education campaigns. In one more significant move to expand the coverage of mutual funds to small investors who may not be tax payers, cash transactions up to Rs.20,000 are being allowed, subject to certain conditions.

By way of strengthening the regulatory framework, AMCs will make monthly disclosures on their websites. Distributors will set up a self-regulatory organisation. Mis-selling of mutual fund products will be deemed to be a fraudulent and unfair trade practice in terms of SEBI regulations.

Primary market

The thrust of the new reform measures is on enhancing retail participation. That has been the avowed SEBI objective for a long time. However, retail investors remain disillusioned with the primary market. It is highly unlikely that the ongoing fine-tuning of existing regulations and rules will help overcome the scepticism and persuade small investors to invest in IPOs (initial public offerings) in large numbers. Even so, it is worth noting that SEBI has been doing its best from time to time

An important new measure is to make the IPOs more accessible to retail investors through the existing network of brokers at more than 1,000 locations. The facility of ASBA (application supported by blocked amount) is also being extended through this mode. Under this, investors get to keep their money until allotment, which will also be speeded up. Banks are being asked to extend this facility to all branches in a phased manner.

The most headline-grabbing of the SEBI announcements is the one relating to the allotment process. Every retail applicant, irrespective of the application size, will be allotted a minimum bid lot, subject to availability of shares in aggregate. The minimum application size for all investors is also being increased to Rs.10,000-15,000 as against the existing Rs.5,000-7,000.

While other measures to facilitate capital-raising by the issuers have been announced, it is obvious that the regulatory focus is on enhancing market integrity and enhancing investor confidence. In that context, most of the new measures, though appearing to be just tinkering of existing rules, are really part of a larger process of bringing the Indian capital market and its regulation up to date. Investor confidence is bound to go up.

At the moment, however, regulatory initiatives can help only that much. It needs quality issues to drive the market forward.

Construction Industry and its Growth

In 2011-12, the Construction Industry, like most other sectors of the economy, could not completely insulate itself from the backlash emanating from the continuing economic downturn. Revenue growth was a muted 12 per cent, a far cry from the levels seen in the industry’s heydays in the last decade when hitherto unknown players — some of whom are currently industry leaders — rocketed themselves to fame in the capital market with astounding revenue and margin growth. The effects of the downturn were compounded in 2011-12 by a slowdown in capital investments.

The construction industry’s fortunes are linked closely to the pace of economic growth, with infrastructure (roads, airports and power) and industrial segments (automobiles, metals, textiles and oil & gas) being the primary drivers. Like other investment-cycle-linked sectors, the construction industry also has a high beta with respect to economic growth. During the last boom (2003-04 to 2007-08), the industry grew at a spectacular 29 per cent compounded annual growth rate (CAGR), propelled by large spends in infrastructure, particularly roads, airports and power. But with sharp decline in gross domestic product (GDP) growth — 5.5 per cent expected in 2012-13 — we expect the construction industry to grow at a mere 10 per cent in 2012-13.

Impacting margins

The major segments that will fuel growth include roads, urban infrastructure and power transmission. With close to 100 per cent construction intensity (proportion of construction in total project cost), the roads sector continues to be the highest contributor to revenues.

The structure of the industry, too, is gradually changing due to demand dynamics, and impacting player revenues and margins. In the past 10 years, the BOT (build-operate-transfer) model has found greater acceptance in infrastructure projects such as national highways, ports, airports and power generation units. (A BOT model is a public-private partnership wherein the investments to develop the project are made upfront by the developer, who also later operates it for a pre-determined period. At the end of this period, the project is transferred to the public entity.) As a result, the size of the BOT opportunity in construction is expected to only increase, and EPC (engineering, procurement and construction) players with an established BOT presence will garner a larger share of the business.

Because BOT projects require huge investments, only large and mid-size players will have the financial wherewithal to enter this space. The size of EPC contracts is also growing, which will make it even more difficult for small players to bag orders. The profile of the smaller players is, thus, getting restricted to sub-contracting work in key segments such as roads and power. Increasing mechanisation in the construction sector, particularly in the execution of road projects, is also working in favour of large players because most small players do not have the requisite machinery.

The profitability of construction companies has been under pressure in the past two years due to a host of other factors. For one, the share of lower-margin segments such as roads in the overall business has risen, with the increased opportunity that has unfolded.

Second, the level of competition in the industry has also mounted significantly in the past few years. This is amply reflected in the aggressive bidding seen in national highway road projects, which has adversely impacted margins. Third, commodity prices (prices of cement and steel, which are key raw materials used in construction) have risen by an average of 12 per cent in 2011-12. Lastly, base interest rates went up by close to 70-80 basis points in 2011-12 as compared to 2010-11. Crisil Research foresees a 0.5-1 percentage point fall in operating margins in 2012-13 to around 12 per cent. The fall in net margins will be even greater due to the higher interest burden because of the increase in working capital. In the past, large players have enjoyed better operating margins than small players. During 2007-08 to 2010-11, for instance, the operating margins of large players were around three percentage points higher than those of small players, and this differential trend will be sustained in future too.

Diversifying exposure

The financial muscle and technical competence of large players enable them to diversify their exposure into segments such as power, oil & gas, and ports, where the technical complexity involved is greater. This also translates into higher margins in these segments compared with a lower-margin segment such as roads. Consequently, smaller players have greater exposure to lower-margin segments such as roads and railways. This is in addition to these players being largely involved in sub-contracting work where margins are lower.

For players to ride out the rough times, and maybe even thrive, it is important to develop and effectively leverage financial strength and technical capabilities to be able to compete strongly in both EPC and BOT projects. Due to heightened competition and the fragmented nature of the industry, there will always be pressure on margins, but this can be obviated by improving cost and execution efficiencies and perhaps less aggressive bidding.

Friday, August 24, 2012


We are predominantly an agricultural economy, with the agricultural sector providing employment and subsistence to almost 70 per cent of the workforce. There have been some remarkable contributions from the agriculture sector to food grain production in the last six decades, when from a meagre 50 million tonnes in the 1950s, the country has been able to produce a record 241 million tonnes in 2010-2011. Despite these achievements, the condition of the farming community is pitiable considering that 70 per cent of our farmers are small and marginal, and there is a complete absence of pro-farmer/pro-agriculture policies which has led us to an environment of very severe agrarian distress.


In this situation, food security has been one of the main agendas of the Congress-led United Progressive Alliance government and also one that the government has been struggling with. There is a strong opinion among policymakers that biotechnology holds a lot of promise in achieving food security and that transgenic crops, especially, are a sustainable way forward. But given the opposition and controversies surrounding Genetically Modified (GM) crops and the differences of opinion among stakeholders, the Parliamentary Standing Committee on Agriculture decided to take on the mammoth task of an objective assessment of the pros and cons of introducing GM crops.

We expect the observations in our report to answer the big question on the role of GM crops in achieving food security. We hope the recommendations will be acted upon at the earliest. The committee felt this was all the more necessary in the light of the Prime Minister’s exhortation at the Indian Science Congress about the full utilisation of modern biotechnology for ensuring food security but without compromising on safety and regulatory aspects.


In India, the only commercialised GM crop is Bt cotton. Industry and the Central government have painted a picture of success about it — saying it has led to an increase in production and that the costs of cultivation have gone down. But the ground reality is starkly different. This was evident during the extensive interactions of the committee with farmers in different cotton growing regions around the country during study visits in March 2012.

Besides analysing the facts and figures provided by government agencies and listening to eminent cotton scientists, the committee’s consultation with farmers in Vidharbha helped us conclude that the Bt cotton saga is not as rosy as made out to be. In Vidharbha, the per-acre investment in cultivating traditional varieties, or even pre-Bt hybrids, could be less than Rs. 10,000. That was certainly the case until the first half of the previous decade. But for Bt cotton, even the un-irrigated farmer is spending upwards of Rs. 15,000-18,000 or even more per acre. And irrigated farmers complain of input costs exceeding Rs. 45,000 per acre. While the investment and acreage rose dramatically, the per acre yield and income did not increase in equal measure and actually fell after initial years. Indeed, the Union Agriculture Minister spoke of Vidharbha’s dismal yields on December 19, 2011 in the Rajya Sabha.

It was clear that at least for the rain-fed cotton farmers of our country, the introduction of Bt cotton offered no socio-economic benefits. On the contrary, it being a capital intensive practice, the investment of farmers increased manifold thus exposing them to greater risks due to massive indebtedness. It needs to be remembered that rain-fed farmers constitute 85 per cent of all cotton growing farmers.

Added to this, there is desperation among farmers as introduction of Bt cotton has slowly led to the non-availability of traditional varieties of cotton. The cultivation of GM crops also leads to monoculture and the committee has witnessed its clear disadvantages. The decade of experience has shown that Bt cotton has benefited the seed industry hands down and not benefited the poorest of farmers. It has actually aggravated the agrarian distress and farmer suicides. This should be a clear message to policymakers on the impact of GM crops on farming and livelihoods associated with it.


From the various deliberations to which the committee was privy, it is clear that the technology of genetic engineering is an evolving one and there is much, especially on its impact on human health and environment, that is yet to be understood properly. The scientific community itself seems uncertain about this. While there are many in this community who feel that the benefits outweigh the risks, others point to the irreversibility of this technology and uncontrollability of the Genetically Modified Organisms (GMO) once introduced in the ecosystem. Hence, they advocate a precautionary approach towards any open release of GMOs.

One of the concerns raised strongly by those opposing GM crops in India is that many important crops like rice, brinjal, and mustard, among others, originated here, and introducing genetically modified versions of these crops could be a major threat to the vast number of domestic and wild varieties of these crops. In fact, globally, there is a clear view that GM crops must not be introduced in centres of origin and diversity. India also has mega biodiversity hotspots like the Eastern Himalayas and the Western Ghats which are rich in biodiversity yet ecologically very sensitive. Hence it will only be prudent for us to be careful before we jump on to the bandwagon of any technology.

The committee’s findings on the GEAC-led regulatory system for GM crops show that it has a pro-Department of Biotechnology (DBT) and pro-industry tilt. It has also come under the scanner due to its inefficiency at the time of Bt Brinjal approval and for behaving like a promoter of GM crops rather than a regulatory body mandated to protect human health and environment from the risks of biotechnology. The DBT, whose mandate is to promote GM crops and fund various transgenics research, has a nominee as the co-chair of the GEAC, who gives the final approval for environmental and commercial release of GM crops.

The current regulatory system is shameful and calls for a complete makeover. While the government has been toying recently with the idea of a Biotechnology Regulatory Authority, the committee dismisses this and instead recommends an all-encompassing Biosafety Authority. While the committee has also evaluated international regulatory systems on GM crops, it recommends the Norwegian Gene Technology Act whose primary focus is bio-safety and sustainable development without adverse effects on health and environment, as a piece of legislation in the right direction for regulating GM crops in India.

The committee strongly believes that the problem today is in no measure comparable to the ship-to-mouth situation of the early 1960s. Policy and decision-makers must note that the total food grain production rose from 197 million tonnes in 2000-2001 to 241 million tonnes in 2010-11. A major argument by the Department of Agriculture and Cooperation before the committee in favour of GM crops was their potential to ensure the country’s food security. But the issue of food security is not about production alone; it also means access to food for the poorest. Moreover, there is no evidence as yet that GM crops can actually increase yields.

The committee, therefore, recommended the government come up with a fresh road map for ensuring food security in the coming years without jeopardising the vast biodiversity of the country and compromising with the safety of human and livestock health.

The committee unanimously feels that the government should take decisive action on the recommendations of this report and rethink its decision of introducing transgenics in agriculture as a sustainable way forward.

Thursday, August 23, 2012

Issues in Land Acquisition, Rehabilitation and Resettlement

A few thousand representatives of various people’s movements from across the country have gathered at Jantar Mantar in the national capital. They are Dalits, Adiviasis, sections of unprotected working class including farmers and fish-workers but they all form one ‘biradari’ of those who live off land, water, forest. They are the ones who produce, distribute, build, operate, clean, sell, drive and do all that enable society to survive, proceed and progress. But the tragedy is that they have to battle for their own survival. And that is what they do, through non-violent means, against a state that plots to evict them, rob them of their meagre resources, transfer the capital in their hands to corporates in the name of development and then compel them to beg for rehabilitation. Asserting their right to resources and to make their own plans to develop those resources, they are also questioning a development model that is undemocratic, inequitable and unjust.

They are at Jantar Mantar to agitate against the upcoming ‘Land Acquisition, Rehabilitation and Resettlement Bill’. They want to convey the message that it is time to review and discard the British legacy of forcible acquisition on the basis of ‘eminent domain’ of the state and stress the eminent domain of the people who are both at the root of democracy as well as its top. When money and labour, two of the three capital resources for any ‘development’ project (a dam, industry, infrastructure etc.) can’t be taken by force, how can any statutory agency forcibly acquire the third resource — land?

While even the British restricted acquisition to government projects termed as “public purpose”, our elected governments amended the Act of 1894 to legitimise acquisition for private companies and public-private partnership projects. Prime rural and urban land is being acquired, while lakhs of hectares of barren waste land or acquired but unused land is being ignored. The policy has created havoc. In urban areas, basti after basti is evicted in the name of ‘redevelopment’, ensuring huge profits for builders and developers. The results are obvious. With more than 18 lakh hectares of agricultural land directed to non-agricultural purpose in 10 years, and the urban land ceiling acts in States having been repealed, houses are beyond the reach of the middle class. Between 25 and 60 per cent of urban poor live in slums or are homeless.

The recent report of the all-party committee on the Bill appreciates the issues and reservations raised by many of us: no forcible acquisition for private or PPP projects; no acquisition of agricultural land — one crop or multiple crop; and bringing under the purview of this Act, all Central Acts used for land acquisition in sector such as mining, highways, railways, ports etc. It also recognises the role of the Gram Sabha and Basti Sabha, in deciding public purpose to planning the project, deciding the R&R and then monitoring it. This is nothing new, but reiterates the framework provided through Article 243 (73rd and 74th Amendment) of the Constitution, incorporated in 1992-93. If the land allotted to any industry/project is not used for five years, it can go back to the landowner, the report recommends.

Unfortunately, the Ministry of Rural Development is not agreeable to many of these reasonable proposals. Only multiple-crop land can be excluded, it says. How is this possible if, for instance, a single-crop plot is sandwiched between two multiple crop ones? Today’s non-irrigated land can be tomorrow’s irrigated. Rural development should have agriculturists as the prime beneficiaries, not the corporates. The latter are pushing state acquisition through the Ministry of Rural Development for their own benefit. Why should the MoRD or the government bow before them? The answer lies in the politician-bureaucrat-corporate nexus.

But the movements can’t submit to this. They are demanding that the government not act as the property dealer for private corporations. Public purpose itself is defined by the Ministry of Rural Development in a manner worse than in the British Act.

The weakest part endorsed by both the committee and the MoRD is, however, rehabilitation. The number of displaced/affected people since Independence is anywhere between eight and 12 crore (the number is never final as many categories are left out, such as canal-affected persons in dam constructions, and where the government has no comprehensive record). Up to 86 per cent of this number has been left pauper for generations. Whether it is Bhakra Nangal or Narmada, coastal communities of fish-workers, slum dwellers or victims of industrial development, each State has lakhs of families waiting to be rehabilitated, and still in struggle mode.

The only progressive rehabilitation policy in Sardar Sarovar dam-Narmada Project could be brought about only through a continuous struggle over the past 27 years by the Narmada Bachao Andolan. Why can’t the same provisions become part of the new Act, people ask. The answer is: no political will. Only cash — four to six times the market value, as in the Haryana, Gurgaon or U.P. models — is not rehabilitation. ‘Cash’ was offered by the British as well. It has failed to ensure livelihood. Today’s market can be very deceptive and elusive for simple farmers or labourers. Why can’t a government ensure an alternative source of livelihood using the same cash instead of destroying and dividing integrated, non-cash-based communities?

In short, the opportunity to democratise and decentralise planning to minimise diversion of land and destruction of agriculture, and to stop uprooting our own people must be viewed with all seriousness.

Tuesday, August 21, 2012

Warming signs for the economy

Adverse weather events around the world, such as floods in China, the changing pattern of the monsoons in India, devastating drought in the United States and the resulting damage to local, national and regional economies, are stark reminders that climate change is not a fringe concern of environmentalists, but an issue of profound importance for economic development.

A recent study states that recent incidents of extreme weather in different parts of the world are almost certainly the result of global warming. In India it is difficult to link monsoon variability with climate change using existing models, but the recent trends may be serious warning signs. Warming will also lead to melting of glaciers, drought, floods and sea level rise, all of which will likely cause a number of adverse secondary effects taking place alongside existing development challenges and institutional failures.

For instance, the blackouts that recently disrupted power supply for hundreds of millions of people across North India have been blamed on the coalescence of a surge in demand due to warm weather, shortages in hydroelectric power, failure of the monsoon and the absence of grid discipline. Some people were able to use generators to survive the worst effects, a reminder that the poor will suffer the most in any disaster. Many scientists now fear that we will routinely encounter such “perfect storms” in the future, where climate change conjoins with deep social and economic inequalities and failing institutions to deter our ability to cope with problems.


Average global temperature has risen by about 0.5° from the accumulation of anthropogenic greenhouse gases in the atmosphere during the past century or so. The effect of recent emissions will be manifested over several decades and given current trends, the temperature rise will likely exceed 2°. The 2011 drought in Texas cost more than $7 billion. In India, climate variability is expected to lead to crop loss of 10 to 40 per cent and hundreds of billions of rupees in loss of revenue from agriculture with a 2° rise in average global temperatures. Much higher losses are likely if one takes into account other effects, including damage to land and livelihoods due to sea level rise and coastal erosion, morbidity and mortality with increased incidence of disease, forced displacement and property loss from flooding and landslides. Given the scale of the expected impacts in South Asia on livelihoods, human well-being and ecosystems, it is essential that climate change policies be central to India’s strategic thinking on long-term economic development.

A guiding national climate policy was provided in the 2008 National Action Plan on Climate Change (NAPCC), of the Prime Minister’s Council on Climate Change, which led to the development of eight climate missions. The approach as described is expected to lead to a directional shift in India’s development pathway.


In a recently completed evaluation of the eight missions by the authors, a concern that arose was that if sustainable development is indeed a central guiding principle in India’s climate policy, it has not been prioritised in the approaches and outcomes of individual missions. One starting point for the nation’s climate policy might have been to paint a big picture from which medium-term goals, plans and the missions could have been derived. The fact that these missions were placed in eight separate bins has led to viewing the problems and solutions with sector-specific lenses. However, the multi-dimensionality of climate impacts makes it vital that India adopts an approach that is interdisciplinary in its character, breaks traditional ministerial boundaries, and learns rapidly from the effects of warming that are ongoing and our successes and failures in dealing with them.

Experts are still learning about sub-regional impacts of climate change, but we know for sure that reducing emissions is urgent as is reducing vulnerability. We suggest the following processes: first, through a collaborative and systematic method, identify development decisions in different sectors that could lock in structures, technological systems and institutions leading to high emissions pathways, which as it turns out are also generally inequitable, and find plausible alternatives. Second, incorporate increasing climate resilience into decision-making. Climate resilience generally refers to the capacity to respond effectively to climate change. This would safeguard the economy from climate shocks and also protect the poorest and most vulnerable. How can we do this? A few examples.

Plan cities so that the largest amount of space is devoted to bus users, pedestrians and bicyclists, who already constitute the majority of travellers and whose emissions and oil use are minuscule. By promoting cars, the government promotes the use of oil and locks in unsustainable, low resilience modes. Thus, private vehicles are likely to clog highways or come to a standstill during periods of disaster or when petroleum products become scarce.


Phase out producer subsidies for fertilizers, which reduce sustainability and increase emissions; provide incentives for low-input farming practices that grow hardy local varieties and for successful models such as the system of rice intensification. Similarly, current systems of tube well agriculture promote institutional as well as technological lock-in across multiple domains by forcing crises in the electricity sector, reducing availability of fossil water for emergencies, increasing emissions and reducing incentives for farm-level innovation.

In the power sector, reduce technical losses through grid rationalisation and improving distribution infrastructure (e.g., upgrade transformers and distribution lines) and expand options for community-scale micro-grids using decentralised generation sources, such as biomass, solar and small hydro. A diversified portfolio will reduce supply risks and build resilience while reducing emissions.

Similarly, building conventional coal-fired plants and providing leases for open pit mining in forest areas raise emissions and worsen social inequality. Coal plants last 30-50 years and forests that could store water, bio resources, diversity and support livelihoods are destroyed.

One could go on, but the point is that while the PM’s Council on Climate Change provides broad oversight, what is needed is an interdisciplinary body devoted full time to overseeing decisions being made and ensuring that they follow the two principles of avoiding high emissions lock in and increasing resilience and equity. These principles, tacitly assumed in the framework document, need to be made explicit and employed as a screening tool for future economic policy.

Monday, August 20, 2012

India-China- Bhutan Relation

On June 21 this year, during a meeting on the sidelines of the United Nations Rio+ 20 conference, Chinese Premier Wen Jiabao met Bhutanese Prime Minister Jigmi Y. Thinley for the first time.It was said Wen Jiabao as saying that China was “willing to complete border demarcation with Bhutan at an early date.”


The history of the Bhutan-China border dispute starts from 1950 when China published a map claiming areas in the west and north of Bhutan though bilateral talks started in 1984.

Twenty-eight years and 19 rounds of bilateral talks have resulted in a package deal offer from China (a) conceding claims of 900 in the north of Bhutan, (b) insisting on 400 of territory in the west, (c) offering to establish diplomatic relations, initiate trade and pilgrimage, (d) making it clear that any further negotiations would be on acceptance of package deal with “minor adjustments within it.”

It is noteworthy that over the years, the Bhutan government had been quite vocal in keeping its citizens and the National Assembly informed of the difficulties in negotiating with China. Regular deep intrusions by Chinese troops right up to Royal Bhutan Army border posts, road extension work in Zuri and the Phuteogang ridge that overlooks the disputed Charithang valley are in violation of the 1998 China-Bhutan agreement for maintenance of peace and tranquillity, for which protests have been made. Four areas in the western sector claimed by the Chinese are Doklam, Charithang, Sinchulimpa and Dramana pasture land. In the National Assembly, many chimis (district representatives) have claimed “that traditionally, the land always belonged to Bhutan and historically there has been no precedence of Bhutan paying taxes to the Tibetan Government for any of the disputed claims.” The rich pasture lands in the west are intricately linked to the livelihood of yak herders of the border regions.

From the foregoing, it is clear that the Chinese are unlikely to give up their position in the four areas of western Bhutan except for minor adjustments. It is confirmed by the pattern of intrusions sssssand road building activities by Chinese in areas overlooking this sector that Beijing wishes to gain strategic advantage in the Chumbi Valley and put pressure on India for settlement — having settled borders with Pakistan, Nepal and Myanmar.


The narrow and vulnerable Chumbi valley between India (Sikkim) and Bhutan has a single artery from Shigaste, a major Tibetan city, to Yatung with plans to extend a railway line. The lack of space restricts the deployment of troops. The Chinese strategy of claiming areas in western Bhutan is to widen its shoulders to facilitate military manoeuvres in the Chumbi Valley.

The recent development in infrastructure in Tibet has made it possible to induct a sufficient number of troops with adequate logistic back-up at short notice. The limitation is in restricted deployment space; there is no other place on India’s northern borders which severely limits military manoeuvres as the Chumbi Valley does.

The Siliguri Corridor, a vital tri-junction between Bhutan, Bangladesh and Nepal, is a narrow hub of rail, road and air arteries known as the “Chicken neck,” the narrowest stretch of which is just about 30 km wide. India is vulnerable in this corridor as it is the only access point to the northeast. The Siliguri Corridor is about 500 km from the Chumbi Valley.


According to the media, Premier Wen Jiabao had met the Indian and Bhutanese Prime Ministers separately at Rio before making the announcement to the press. Some Chinese scholars have made this comment: “Without India’s permission Bhutan would not have thought about establishing diplomatic ties with China.”

India-Bhutan relations have been experiencing the winds of change. From 1949 onwards they were governed by a Treaty of Perpetual Peace and Friendship of 1949. Article 2 of the treaty was significant wherein “the Government of Bhutan agrees to be guided by the advice of the Government of India in regard to its external relations.”

However, much has changed. The isolation of Bhutan is a matter of the past. The nation has changed from monarchy to a democratic set-up. Article 2 had been a matter of concern for the Bhutanese so much so that some of them called themselves “half independent.” The 1949 Treaty was revised in 2007. Article 2 was replaced with: “In keeping with the abiding ties of close friendship between Bhutan and India, the Government of the Kingdom of Bhutan and the Government of Republic of India shall cooperate closely with each other on issues relating to their national interests. (emphasis added). Neither Government shall allow the use of its territory for activities harmful to the national security and interest of the other.” The 2007 Treaty has begun a new era in bilateral cooperation.

Despite the new Article 2, New Delhi will remain Thimpu’s most important friend and a partner. These figures speak for themselves. Bhutan is the largest recipient of Indian development aid and India accounts for a total of 79 per cent of Bhutanese imports and 95 per cent of its exports. India trains the Bhutanese army through the Indian Military Training Team (IMTRAT), in Bhutan. Simply put, Bhutan’s dependency on India will not match with any other country for many years.

Bhutan has every right as a sovereign country to establish diplomatic relations with any country including China. The opening of trade and tourism with China would usher in development and investments from there. However, a lack of discretion may also result in the dumping of goods, undermine a unique culture and affect the policy goal of “gross national happiness.”

Chinese claims do not seem to have historical evidence. The pasture lands would also deprive the livelihood source of their border people. Western Bhutan is not barren. It may be recalled that in 2006, China-India framed “Political Parameters and Guiding Principles” to resolve their long-standing border dispute. The important principles that need highlighting are that due interest of “settled populations in border areas” would be safeguarded and “historical evidence and sensibilities of border areas” taken into account. These guidelines are worth inculcating by China and Bhutan. The border settlement will require approval by 3/4th majority in the Bhutan National Assembly.

It is hoped that all aspects including India’s interests will be truly considered by Bhutan before accepting the border package. Bhutan should refrain from deepening ties with China beyond a self-imposed minimum limit in their own interest.

The lessons that India should learn from Australia

Indian policymakers should take a long hard look at the recent decision of Australia’s high court upholding landmark legislation passed by Canberra last year to introduce plain packaging of cigarettes.

The verdict sends a strong message — public health concerns are supreme and override intellectual property rights and trademark devaluation. In fact, the World Health Organisation recommends plain packaging for effective tobacco control, and Australia has complied with it in letter and spirit. Under the country’s plain packaging laws, large text warnings and shocking pictures of the diseases and conditions caused by smoking must cover 75 per cent of the face of cigarette packages and 90 per cent of the back from December 1, 2012. More importantly, the packages cannot carry brand logos and colourful designs; even the brand name and variant will be in a standard size, font and colour in an olive green strip at the bottom. The ruling has in effect allowed the country to turn the very purpose of cigarette packaging on its head. Cigarette packets will cease to be a marketing tool for reinforcing brand image and promoting smoking as a status symbol. Instead, they will become effective vehicles for spreading public health messages and dissuading consumption at no cost to the government. The verdict will go down in history as a game changer by choking an industry that is responsible for the mortality and morbidity of millions of people every year for the last several decades.

The case has been closely followed by Britain, Norway, New Zealand, Uruguay and Canada, which are planning to come up with similar legislation. The European Commission is planning to make legislative proposals to introduce plain packaging across Europe.

Using stringent rules to reduce tobacco consumption is nothing new for Australia. Cigarette advertising in television and radio was banned as early as 1976; a similar ban for the print media followed in 1989. The ban on smoking at workplaces came into effect in 1986, followed by a ban in 2000 on smoking in public places. Pictorial warnings were introduced in 2006, and since 2010 cigarettes are required to be kept out of sight at retail outlets. Starting 1978, the price of cigarettes has been increasing steadily; currently a pack of 25 cigarettes costs 16 Australian dollars.

There are many lessons that India should learn from Australia. To begin with, India should introduce larger and shocking pictorial warnings on cigarette and bidi packets, and chewing tobacco sachets and reverse its retrograde decision of changing the warnings only once every two years. According to The Lancet, the number of tobacco users in India is 275 million. How long can the government continue to abdicate its responsibility?

Saturday, August 18, 2012

Judicial appointments & disappointments

The Constitution of India operates in happy harmony with the instrumentalities of the executive and the legislature. But to be truly great, the judiciary exercising democratic power must enjoy independence of a high order. But independence could become dangerous and undemocratic unless there is a constitutional discipline with rules of good conduct and accountability: without these, the robes may prove arrogant.

It is in this context that Chief Justice of India’s observations, at an event at the Supreme Court of India on Independence Day, underlining the need for the government to balance judicial accountability with judicial independence, have to be reconciled with what Law Minister observed about judicial propriety. It is this reconciliation of the trinity of instrumentality in their functionalism that does justice to the Constitution. A great and grand chapter on judicial sublime behaviour to forbid the “robes” becoming unruly or rude and to remain ever sober is obligatory.

The Constitution has three instrumentalities — executive, legislative and judicative. The implementation of the state’s laws and policies is the responsibility of the executive. The Cabinet headed by the Prime Minister at the Centre and the Cabinet led by the Chief Minister in the States, are its principal agencies. The rule of law governs the administration.

Parliament consisting of two Houses and legislatures at the State level make law. When the executive and the legislature do anything that is arbitrary, or contrary to the constitutional provisions, the judiciary has the power to correct them by issuing directions under Article 143. The Constitution lays down the fundamental rights, and if the States do not safeguard them, any citizen can approach the Supreme Court for the issue of a writ to defend his or her fundamental rights.

Thus, among the three instrumentalities, the judiciary has pre-eminence. But the judiciary itself has to act according to the Constitution and work within the framework of the Constitution.

Felix Frankfurter pointed out thus: “Judges as persons, or courts as institutions, are entitled to no greater immunity from criticism than other persons or institutions. Just because the holders of judicial office are identified with the interests of justice they may forget their common human frailties and fallibilities. There have sometimes been martinets upon the bench as there have also been pompous wielders of authority who have used the paraphernalia of power in support of what they called their dignity. Therefore judges must be kept mindful of their limitations and of their ultimate public responsibility by a vigorous stream of criticism expressed with candor however blunt.”


Judges are the ultimate authority in the interpretation of the Constitution, and so must be learned in the law and in the cultural wealth of the world. They play a vital role in the working of the Constitution and the laws. But how judges are appointed is a matter of concern. Simply put, the President appoints them, but in this the President only carries out the Cabinet’s decisions.

The Preamble to the Constitution lays down as the fundamentals of the paramount law that India shall be a socialist, secular democratic republic which shall enforce justice — social, economic and political — and ensure liberty of thought, expression, belief, faith and worship, equality of status and of opportunity, and promote among them fraternity, ensuring the individual’s dignity and the nation’s unity and integrity.


But who will select the judges, and ascertain their qualifications and class character? Unless there is a clear statement of the principles of selection, the required character and conduct of judges in a democracy may fail since they will often belong to a class of the proprietariat, and the proletariat will have no voice in the governance: the proprietariat will remain the ruling class.

Winston Churchill made this position clear with respect to Britain thus: “The courts hold justly a high, and I think, unequalled pre-eminence in the respect of the world in criminal cases, and in civil cases between man and man, no doubt, they deserve and command the respect and admiration of all classes of the community, but where class issues are involved, it is impossible to pretend that the courts command the same degree of general confidence. On the contrary, they do not, and a very large number of our population have been led to the opinion that they are, unconsciously, no doubt, biased.”

We in India have under the Constitution the same weaknesses pointed out by Churchill, with the result that socialism and social justice remain a promise on paper. Then came a new creation called collegiums. The concept was brought in by a narrow majority of one in a 5-4 decision of the Supreme Court for the selection of judges. It was binding on the executive, the decisions of which in turn were bound to be implemented by the President.

Thus, today we have a curious creation with no backing under the Constitution, except a ruling of the Supreme Court, and that too based on a very thin majority in a single ruling. Today, the collegium on its own makes the selection. There is no structure to hear the public in the process of selection. No principle is laid down, no investigation is made, and a sort of anarchy prevails.

In a minimal sense, the selection of judges of the highest court is done in an unprincipled manner, without investigation or study of the class character by the members of the collegium. There has been criticism of the judges so selected, but the collegium is not answerable to anyone.

In these circumstances, the Union Law Minister has stated that the government proposes to change the collegium system and substitute it with a commission. But, how should the commission be constituted? To whom will it be answerable? What are the guiding principles to be followed by the Commission? These issues remain to be publicly discussed. A constitutional amendment, with a special chapter of the judiciary, is needed. Such an amendment can come about only through parliamentary action.

Surely a commission to select judges for the Supreme Court has to be of high standing. It must be of the highest order, of a status equal to that of the Prime Minister or a Supreme Court judge. The commission’s chairman should be the Chief Justice of India.

In the process of selection, an investigation into the character, class bias, communal leanings and any other imputations that members of the public may make, may have to be investigated. This has to be done not by the police, which function under the government, but by an independent secret investigation agency functioning under the commission’s control. These and other views expressed by outstanding critics may have to be considered.

The commission has to be totally independent and its ideology should be broadly in accord with the values of the Constitution. It should naturally uphold the sovereignty of the Constitution beyond pressures from political parties and powerful corporations, and be prepared to act without fear or favour, affection or ill-will. It should act independently — such should be its composition and operation. The commission should be immune to legal proceedings, civil and criminal. It should be removed only by a high tribunal consisting of the Chief Justice of India and the Chief Justice of all the High Courts sitting together and deciding on any charges publicly made. We, the people of India, should have a free expression in the commission’s process.

Friday, August 17, 2012

Rediscovering the growth magic

Over the last six months there has been an increasing sense of pessimism regarding India’s economic future. Is the growth story over? Was the eight-nine per cent growth a temporary aberration of a few years when the global economy itself was doing so well? Perhaps, there was no real takeoff and hopes for sustained double digit growth rates were the result of unwarranted euphoria. There has been for quite some time now persistent high inflation, high interest rates, rising fiscal and current account deficits and declining growth rates.


To add to the negativity of the domestic perspective, the international environment could not have been bleaker. The advanced economies of the U.S., Europe and Japan are still struggling with the consequences of the 2008 financial crisis. Europe is in a crisis regarding the future of the euro itself. A political consensus on a clear road map for the way forward is still a work in progress with deep differences in both diagnosis and policy prescriptions.

If the pessimists are right then the best case scenario may be to assume that perhaps by 2015, Europe and the global economy would have recovered, India may by then have been able to undertake necessary but difficult ‘reforms’ and then, perhaps, higher growth rates could be hoped for.

But are some underlying trends being missed? When the 2008 global financial crisis hit India, the economy suddenly went into a free fall. The general consensus then was that India would be in for a prolonged period of difficulty, and recovery would occur along with that of the rest of the global economy. India surprised itself and the rest of the world by its extraordinary, swift and robust recovery and that too with a stimulus package that was crafted and implemented as the country went in for a general election. The actual fiscal stimulus was quite modest; less than one per cent of GDP and considerably less than that of most others. What made rapid recovery possible was that it was domestic demand driven.

Domestic demand rose substantially on the back of some earlier political decisions (seen with unease and apprehension by most mainstream economic analysts); the positive wealth effect of the write off of farmers’ loans, the improvement in the terms of trade for farmers through higher support prices, and higher salaries for state employees on the implementation of the Pay Commission’s recommendations. In contrast, in the U.S., the negative wealth effect due to a sharp fall in housing prices as well as stock market was so steep that consumer demand fell sharply. Recovery is still a work in progress.

A combined and well coordinated fiscal and monetary stimulus was feasible as there was policy space. The Reserve Bank of India had been raising interest rates to prevent overheating of the economy and inflation, which had shown upward movement, had come down and so the RBI could lower interest rates significantly. Tax revenues had been growing rapidly with both manufacturing and services growth rates being in double digits in the preceding years and so there was fiscal space. The fiscal stimulus was not grandiose but aimed at creating demand immediately in the coming months across a wide spectrum, ranging from increased expenditure for Bharat Nirman projects to grants for purchase of buses for public transport in cities.

The world suddenly took note of what appeared to be India’s unusual strength, the ability to achieve high growth rates on the basis of domestic demand. Historical experience suggests that inclusiveness has been conducive for growth if growth is not to be export led. This was the essence of the American experience for over 50 years in the 20th century till the 1970s, from the time Ford successfully made and sold its cars to ordinary people who also became industrial workers with growing real wages. Larry Summers, the eminent American economist, in an unusual speech in 2010 referred to the possibility of the World in 2030 acclaiming the success of the Mumbai consensus rather than the Shanghai or the Washington consensus; the strength of the Mumbai consensus being domestic demand driven inclusive growth in a robust democratic framework. This was in contrast to the state driven export led growth paradigm of East Asia, the allusion to the Shanghai consensus, which was no longer feasible due to the emerging difficulties in the West which had no option but to make serious structural adjustments. The Washington consensus of liberalisation, privatisation and deregulation with the faith in the market to deliver the best possible outcomes had crossed its useful shelf life with the global financial crisis in 2008.

Business cycles and recessions have been normal to open free market economies since the advent of industrialisation. Since our transition has been somewhat recent, the reality of “recessions” has yet to sink into our understanding and discourse. If we look at IIP numbers, we were in negative growth territory for some months. The reasonable questions would then be: when to expect recovery, what would be its nature, feeble or robust, and how to try and strengthen it? With tight monetary policy in response to high inflation, excess demand should have been squeezed out of the system by now and this seems to be indicated by core inflation numbers. If this indeed is the case, then recovery should, indeed, be around the corner. Credibly signalling fiscal responsibility would hasten lowering of interest rates by the RBI. Becoming more investor friendly would naturally help in turning market sentiment around.

The sharp depreciation of the Rupee is a real blessing at this juncture. It has, in the course of a few weeks, undone the appreciation of the real exchange rate that had taken place due to the difference between our higher inflation rates and those of our major trading partners. This should address the current account deficit as devaluation is a time tested remedy. What is more important, depreciation of this order should be of great advantage to domestic value addition in manufacturing both for the domestic market as well as for exports; with the open domestic market being more important in the current state of the global economy. India’s reluctance to see the advantages of a competitive exchange rate and to pursue it could be a reflection of the weakness of the political constituency for manufacturing in comparison to that for trade and consumption. Brazil, for instance, has been vocal about the appreciation of its currency due to capital flows. It even attempted measures to moderate this to preserve competitiveness in manufacturing.


The real discussion needs to focus on how to make the recovery robust enough. Given the international situation, it would depend entirely on the success in promoting domestic demand. Without raising the fiscal deficit, the state needs to find innovative ways to drive much larger investment flows into infrastructure to reduce the competitive disadvantage that exists. Mitigating policy and regulatory uncertainty and hence risk is what investors seek rather than big ticket reforms, which would benefit over the medium term rather than in the coming quarters. Going by recent experience, inclusiveness would be critical for higher growth. Inclusiveness is not something unproductive that can be afforded with growth but is essential for it. Bharat Nirman needs to be carried further in terms of 24x7 electricity, an essential requisite of the last century, and broad band, the essential requirement of this century. Bridging the divide between India and Bharat could make the difference between a modest recovery and a surge to plus-nine per cent.

Thursday, August 16, 2012

Is there life on Mars? If yes, what will it look like?

NASA has just landed the rover “Curiosity” on Mars, and ISRO is sending a (yet-to-be-named) spacecraft in 2013 which will orbit Mars and transmit data from Mars to us. Among the various issues that these ships want to interrogate on/in Mars is the question of whether the red planet harbours life forms in it.


People have long fantasized on extraterrestrial life and even Martian equivalent of humans. Sci-fi books and movies play on this theme.

carbon-based life, which is what all organisms living on earth are. Why this bias on carbon, when there are a hundred other elements? It is the extraordinary ability of the carbon atom, with its penchant to link bonds with four other atoms — be it other elements such as N, O, S, or C itself, at temperatures, pressure, moisture and other conditions that Earth provides which makes life possible.

For life to occur, flourish and sustain, the information content — both hardware and software — needs to be encrypted, stored, read and passed on down generations. The best material to do this is through molecules made of chemical bonds.

And of the 100-odd elements in the universe, carbon fits the bill under the conditions ambient on earth.

Carbon makes long chains or tapes using itself as the backbone of this chain. And carbon makes stable chemical links with other abundant elements such as N, O, S, and P. The chemistry of life on earth is written using this handful set of elements as the basic alphabet. DNA (and occasionally RNA), the genetic tape of all life forms on earth is such a carbon-based tape.

And it is the shuffling of the information in this genetic tape that has led to the diversity of life forms on earth, all evolved from an ancient ancestral life form, our own pro-biont.

Why carbon? Why not its neighbours nitrogen or boron, or its follower silicon? Nothing really, except under the ambient conditions on and surrounding the earth, the carbon chains stay stable, easily formed and changed, so that diversity in biological information encoded in the chemistry is facile under the environmental conditions obtained on earth.


There could well be conditions elsewhere in the universe where, say, silicon chains can play the biological information storehouse, but we are yet to find them. Herein lies the excitement of extraterrestrial life-seekers.

What have been the special conditions on Earth that made life form, flourish, diversify and sustain? What makes Earth life-friendly?

First, the surface and the top crust of the earth have provided the laboratory for making the molecules of life. Go beneath, it is too hot, too metallic and too high pressure.

Second are climatic conditions. Terrestrial temperature ranges between -40 to +50 degrees C (average around 20) on the surface. Higher than this, chemical reactions speed up (every 110 degree rise doubles the speed) and can change the chemical composition; below this, reactions run too slow.

Third is water, which is a liquid under these climatic conditions.

It is an excellent solvent, keeping in solution many life molecules, allowing them to mix and react. Water has the right size, melting and boiling points, vapour pressure, viscosity, polarity.

Chemistry in the liquid solution phase is optimal. In solids, reactants are hampered in motion while in the gas phase they tend to fly off.

Fourth, our moon is of the right size, able to control the spinning of the earth and its axis of rotation, thus stabilizing our climate and seasons.

Fifth is the ozone layer, which shields molecules on earth from being zapped away by cosmic radiation.

Sixth, the gravitational strength of Earth keeps useful gases such as N, O, CO and O from escaping off into space.

Seventh, we have a geomagnetic field which protects us from solar flares and storms.

Now look at Mars. It is deficient in several of this seven-fold path that sustains life on Earth. We are yet to determine whether there are regions that have soil on its crust, helping any life chemistry. Curiosity will hopefully let us know.


Martian climate is a disaster for carbon-based life. Its surface temperature is minus 55 degrees, too cold for covalent chemical reactions to run at desirable speeds.

Its two tiny moons are more adornment than adjusters of climate or seasons. Water — perhaps there was some water in earlier times, but many believe that the dry channel like strips seen on the Martian surface come from such runoffs of water that once might have been.

Discovery of water bodies on or in Mars, if any, would be important. Also, given the atmosphere (or paucity of it) and the resultant pressure it exerts on the Martian surface, even if water were there, it would stay as liquid only in the 0-10 degree range, above which it would boil off. In addition, Martian gravity is just about one fourth of Earth’s; so, it would not be able to keep gases like N, O, CO and O (if at all) as well as we do. And its magnetic field is too feeble to shield off solar flares.


So, is Mars devoid of life? Not necessarily. Recall even on Earth, we have life forms that live at 120 degrees, in frigid ice-cold climes, and we find microbes that handle radioactive rays with elan.

Hence, let us not dismiss such possibilities in yet-to-be-discovered enclaves in Mars. NASA and ISRO have their jobs cut out.

What then about non-carbon life, or non-water life? Say, silicon-based, or ammonia-based life chemistry? “Nobody knows”, but let us not dismiss it yet.

Prime Minister Manmohan Singh's speech on India's Independence Day

My dear countrymen, brothers, sisters and dear children, I greet you all on this anniversary of our Independence. The leaders of our freedom movement, under the stewardship of Mahatma Gandhi, had dreamt of an independent and prosperous India. On this day in 1947, Pandit Jawaharlal Nehru took the first step towards the realization of that dream by hoisting the Tricolour at the Red Fort. The journey we began on 15 August, 1947 is now 65 years old. We have achieved much in these 65 years.
Today is certainly a day to celebrate the success of our democracy. However, on this occasion we should also introspect about what remains to be done. We would achieve independence in the true sense only when we are able to banish poverty, illiteracy, hunger and backwardness from our country. This would be possible only when we learn from our failures and build on our successes.

Brothers and Sisters,

You are aware that these days the global economy is passing through a difficult phase. The pace of economic growth has come down in all countries of the world. Seen together, the European countries are estimated to grow at 0 percent this year. Our country has also been affected by these adverse external conditions. Also, there have been domestic developments which are hindering our economic growth. Last year our GDP grew by 6.5 percent. This year we hope to do a little better.

We cannot do much about the conditions that prevail outside our country. But we must make every effort to resolve the problems inside our country so that our economic growth and the creation of employment opportunities in the country are again speeded up.

While doing this, we must also control inflation. This would pose some difficulty because of a bad monsoon this year. However, we have taken many measures to deal with the situation. In districts where there has been a deficit of 50 percent or more in the rainfall, diesel subsidy is being provided to farmers by the Government. Seed subsidy has been enhanced. Funds available under the Central scheme for fodder have been increased. Our effort is to ensure that people do not face difficulty due to shortage of seeds, fodder or water in any part of the country. It is good that we have a big stock of foodgrains because of the hard work of our farmer brothers and sisters, and availability of foodgrains is not a problem for us.

Brothers and sisters,

As far as creating an environment within the country for rapid economic growth is concerned, I believe that we are not being able to achieve this because of a lack of political consensus on many issues. Time has now come to view the issues which affect our development processes as matters of national security.

If we do not increase the pace of the country's economic growth, take steps to encourage new investment in the economy, improve the management of Government finances and work for the livelihood security of the common man and energy security of the country, then it most certainly affects our national security.

I promise to you today that our Government will work hard for India's rapid economic growth and for shielding the country from the effects of the global economic slowdown. I promise that we will work hard for creation of new employment opportunities for our young men and women living in villages and cities. We will make every possible effort to secure the livelihood of our poor brothers and sister, our workers and our farmers. We will leave no stone unturned to encourage investment in our country so that our entrepreneurs can make a substantial contribution to our economy.

My dear countrymen,

I believe that this period of difficulties will not last long. Even as we face these problems, we should be encouraged by the fact that we have achieved extraordinary successes in many areas in the last 8 years. We now need to replicate these successes in newer areas.

Brothers and sisters,

It has been our endeavour in the last 8 years to empower our citizens socially and economically so that they can contribute to the sacred task of nation building.

Today, one out of every 5 households in the country has become eligible to benefit from the Mahatma Gandhi Rural Employment Act through a job card. In only the last one year we have provided employment to more than 8 crore people under this scheme.

When the UPA Government came to power in 2004, we had promised that we would provide electricity to all villages. To fulfill this promise, we launched the Rajiv Gandhi Rural Electrification Scheme. More than 1 lakh new villages have been provided with electricity connections under this scheme and now almost all the villages in the country have been electrified. Our next target is to provide electricity to each and every household in our country in the next 5 years and to also improve the supply of electricity.

My dear countrymen,

No praise is high enough for our hard working farmers. They have produced a record output of crops successively in the last 2 years. Because of our Government's efforts for development of agriculture and for protecting the interests of farmers, agriculture has grown at an average rate of 3.3 per cent in the 11th Plan which is substantially higher than the 2.4 per cent we achieved in the 10th Plan. In the last 8 years, we have doubled the support prices of crops. We are providing loans at low interest rates to lakhs of farmers.

Our children are the biggest strength of our country. If our children are provided with good education and are healthy, then our future would be bright.

This is the reason why we have paid special attention to the needs of children in our policies and programmes. The education of children has been made mandatory by law. In the year 2006-07, only 93 per cent of children in the age group 6-14 years were getting admission in schools. Today almost all children in this age group are being admitted to schools. More than 51,000 new schools have been opened in the country and about 7 lakh teachers appointed in them in just the last 2 years. Now we will focus on improving the quality of education. In the next few months we will put in place a system of continuous assessment of the benefit our children are getting from teaching. Participation of the community and parents would be ensured so that they can be satisfied with the quality of teaching.

The Mid-day-meal Scheme provides nutritious meals in schools for about 12 crore children everyday. This is the biggest scheme of its kind in the world.

In the last one and half years no new case of polio has come to light and now India does not figure in the list of countries affected by this disease.

Malnutrition in children is a big challenge for us. We have taken steps in many dimensions to deal with this problem. In the last 8 years, the number of mothers and children benefitting from the ICDS has doubled. The process of making the ICDS more effective is in its last stages and will be completed in the next 1 or 2 months.

We had launched the National Rural Health Mission in 2005 so that health services can be extended to each village in the country. Today this Mission is being implemented with the help of 10 lakh health personnel including 8.5 lakh Asha workers. After the success of the National Rural health Mission, we now want to expand the scope of health services in our towns also. The National Rural Health Mission will be converted into a National Health Mission which would cover all villages and towns in the country. We are also formulating a scheme for distribution of free medicines through Government hospitals and health centres.

Brothers and sisters,

We want to create many new job opportunities for our youth in the coming years. To achieve this it is necessary that we train them in skills which our economy needs. It is our endeavour to put in place a system in which training facilities are available in many new skills. We also wish to provide short duration training courses of 6 weeks to 6 months for our young brothers and sisters. The National Skill Development Council has formulated a major scheme for skill development in which 8 crore people will be trained in the next 5 years. This is an ambitious scheme which can be implemented only through a specialized agency of the Central Government. Therefore, we are considering the establishment of a National Skill Development Authority so that skill development programmes all over the country can be implemented in a coordinated manner. We would also need contribution from the private sector and non-Governmental organizations in this work.

Creation of new employment opportunities is possible only when we encourage industry and trade. For this we need to speedily improve our infrastructure.

Recently we have taken new measures to accelerate infrastructure development. Ambitious targets have been fixed in roads, airports, railways, electricity generation and coal production. The Government will take steps to increase investment for infrastructure development with the help of the private sector. To attract foreign capital, we will have to create confidence at the international level that there are no barriers to investment in India.

Brothers and sisters,

Just 10 years back only 3 out of every 10 households in our villages were benefitting from banking services. Today more than half of the rural households get the benefit of bank accounts. It will be our endeavour to ensure that all households benefit from bank accounts in the next 2 years.

We want to create a system in which money from Government schemes - pension for old people, scholarship for students and wages for labourers - can be credited directly into people's bank accounts. This would reduce inconvenience to the beneficiaries, make it easy for them to receive payment and increase transparency. For this work, we will take help from the Aadhar scheme under which about 20 crore people have been registered so far.

To provide housing for our poor brothers and sisters residing in urban areas of our country we will soon launch the Rajiv Housing Loan Scheme. Under this scheme, people belonging to the economically weaker sections would be given relief on interest for housing loans of less than Rs.5 lakh.

This year we will present the Twelfth Five Year Plan for consideration of the National Development Council. The Plan would determine the future course of action on all important matters relating to the country's development. It would lay down measures for increasing our present rate of economic growth from 6.5 to 9 per cent in the last year of the Plan. The Plan would focus special attention on areas important from the point of view of reaching the fruits of development to each citizen of our country and specially to the weaker sections of our society. I have full confidence that the Centre and the States will act together to implement the Twelfth Plan in an effective manner.

Brothers and sisters,

The incidents of violence which occurred in Assam recently are very unfortunate. I know that these incidents have resulted in the disruption of the lives of a large number of people. We fully sympathize with those families which have been affected by the violence. We are doing everything possible to provide relief to them. I also promise to you that our Government will make every effort to understand the reasons behind the violence and work hard with the State Governments to ensure that such incidents are not repeated in any part of the country.

We have achieved success in many areas of internal security. In Jammu and Kashmir, people participated in large numbers in the Panchayat elections. There has been a reduction in violence in the North Eastern States and we are engaged in dialogue with many groups there so that they can join the mainstream of development. We have initiated new schemes of development in areas affected by naxal violence to ensure that the grievances of the people residing there, especially our brothers and sisters belonging to Scheduled Tribes, can be removed and their lot can be improved. However, we need to be constantly vigilant as far as internal security is concerned. Communal harmony has to be maintained at all costs. Naxalism is still a serious problem. The incidents which occurred in Pune in the beginning of this month point to the need for much more work to be done in the area of national security. We will continue to do this work with sincerity in the future also.

My dear countrymen,

I would like to congratulate our scientists and technologists who have enhanced our prestige by successfully testing the Agni V Missile and launching the RISAT- I Satellite in space this year. Recently the Cabinet has approved the Mars Orbiter Mission. Under this Mission, our spaceship will go near Mars and collect important scientific information. This spaceship to Mars will be a huge step for us in the area of science and technology.

Brothers and sisters,

We have seen a lot of discussion in the recent months about the role of our armed forces and their preparedness. I would like to emphasise here that our armed forces and paramilitary forces have defended the security of our country both during war and peace with valour and honour. Our soldiers have made the biggest of sacrifices, whenever needed. Today I would like to reassure our countrymen that our armed forces and paramilitary forces are prepared to face any challenge. The Government will continue to work for modernizing these forces and providing them with the necessary technology and equipment. Today, I would like to thank our security forces, who are guarding our frontiers bravely, from the bottom of my heart. We will continue to make efforts for their welfare.

Our Government has set up a committee to examine issues relating to pay and pension of armed forces personnel. This committee will also look into matters concerning pension of retired men and officers and family pension being paid to their families. We will take prompt action on the recommendations of the committee, once they are received.

My dear countrymen,

Our Government has paid special attention to the welfare of Scheduled Castes, Scheduled Tribes, minorities, women and other weaker sections. The special needs of our tribal and backward districts are being met through programmes such as the Integrated Action Plan, Backward Regions Grant Fund and Tribal Sub Plan. Through the Forest Rights Act, we have given proprietary rights to lakhs of our brothers and sisters belonging to Scheduled Tribes on land on which they have been living for generations. We are formulating a scheme to ensure that people belonging to Scheduled Tribes can get fair and remunerative prices for the forest produce they collect. The Government wants to speedily convert the Mines and Minerals (Development and Regulation) Bill into a legislation. Through this law we want to provide funds for the benefit of our tribal brothers and sisters in the mining areas.

We will make the 15 points programme for minorities more effective. The Multi-Sectoral Development Programme being implemented in districts with large minority populations will be expanded.

We have enhanced the amount of post-matric scholarship available to children belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes and minorities. Our efforts to make these scholarship schemes more effective will continue.We are considering a new and effective law to put an end to the repulsive practice of manual scavenging and to provide opportunities to those engaged in this practice to begin their lives afresh.

Brothers and sisters,

Our commitment to make the work of the Government and administration transparent and accountable stands. On the last Independence Day, I promised you that we would take many steps for this purpose. I am happy to state that during the last 1 year we have achieved good progress in this area. The Lok Sabha has cleared the Lokpal and Lokayukta Bill. We hope that all political parties will help us in passing this Bill in the Rajya Sabha. A number of other Bills have also been presented before the Parliament. The Cabinet has cleared a Public Procurement Bill. We will continue our efforts to bring more transparency and accountability in the work of public servants and to reduce corruption. But we will also take care that these measures do not result in a situation in which the morale of public functionaries taking decisions in public interest gets affected because of baseless allegations and unnecessary litigation.

Brothers and sisters,

In my first message to the country after assuming the office of Prime Minister I had appealed to you to contribute to the sacred work of nation building. I am very happy that today more of our citizens than ever before, and specially the youth, are taking interest in issues related to the progress of our society and country. Our Government believes that the difficult problems which India faces can be resolved only with the cooperation of the common man. It will be our endeavour that in the coming time, still more people help us in tasks like removal of poverty, illiteracy and inequality.

I believe that no power in the world can stop our country from achieving new heights of progress and development. What is needed is that we work together as one people for the success of our country. Let us once more resolve that we will continue to work for a progressive, modern and prosperous India.