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OPINION 11
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Volume XXIII Number 40 ILLUSTRATION BY AJAY MOHANTY

MUMBAI | TUESDAY, 9 OCTOBER 2018 VIOLENCE IN JAMMU & KASHMIR

LoC ceasefire Militant Soldiers Militants
violations incidents killed killed
‘Managed’ deregulation 2010
2011
35
51
368
195
43
38
232
100
Govt decision to lower fuel prices rightly roils markets
2012 93 124 32 72

T
he government decided last week to lower fuel prices at the pump 2013 199 57 31 65
in India, following a prolonged period of political pressure caused 2014 153 65 31 104
by the pass-through to consumers of high global prices for crude 2015 152 48 33 101

The Pakistan Army

oil. Finance Minister Arun Jaitley said that the excise duty on fuel 2016 228 89 63 141
would be cut by ~1.50 a litre. This follows a series of hikes in duty on fuel over
2017 860 131 62 213
the period post-2014, when global crude oil prices were low. In addition,
state-controlled oil-marketing companies were asked to reduce their prices 2018* 1,128 244 46 166
* Till October 7, 2018
by ~1, meaning that the benefit to consumers nationwide was ~2.50 a litre. Sources: Army and J&K Police records and figures submitted in Parliament

Finally, 12 states ruled by the Bharatiya Janata Party also reduced state-lev-
el fuel taxes, meaning that in many places the benefit to consumers was ~5
or more. The finance minister has insisted that there will be no fiscal slip-
page as a consequence of this move and that the fiscal deficit target of 3.3
per cent of gross domestic product, set in the Union Budget for 2018-19, will
be met.
However, there are concerns on this move. The sharp downward move-
ment in the share prices of the state-controlled oil-marketing companies —
about 20 per cent — reflects widespread fears that they will once again be
conundrum
point, resting on the comforting presumption that
many Nice Pakistanis are forcibly counterposed
against All Us Nice Indians by a Bad Pakistani fringe
— the army, the jihadis and the increasingly rabid
The India-China model of managing a conflicted strategic relationship television media. However, for the most part,
Pakistan’s citizens adore their army. It is hard to figure
provides a model to emulate in the India-Pakistan context whether this stems from a peculiarly Punjabi love for
the uniform, or the absence of other functional insti-

T
he crash-and-burn denouement of New Delhi’s
expected to absorb “under-recoveries” on the petrol that they sell. Private most recent attempt to resume engaging
marketers of fuel, meanwhile, are expected by the markets to prosper. The Islamabad is hardly tragic. If anything, the swift-
same questions that were asked of government action in previous eras in ness of the collapse of the proposed meeting between
External Affairs Minister Sushma Swaraj and Foreign
which “under-recoveries” were common must now be asked again. In par-
Minister Shah Mehmood Qureshi on the sidelines of
ticular, once a public sector company is listed on the stock exchanges, can the United Nations General Assembly (UNGA) might
the government, as majority shareholder, essentially ride roughshod over make Indian and Pakistani policymakers realise that
minority shareholders’ interests in this manner in order to meet its politi- fundamental contradictions in the
cal or electoral priorities? framework of India-Pakistan
It is perhaps too soon to see this as a reversal of the policy of steady engagement pre-ordain the failure
of every peace initiative. On one
deregulation that has been followed by successive governments for the hand, it is ludicrous for India to
past eight years. It is clearly a response to a specific situation in which demand perfect conditions as a pre-
crude oil prices have sharply risen. However, it does to an extent set back requisition to dialogue; on the oth-
some of the gains made in the past of de-politicising the price of petrol and er, Pakistan tempts fate by keeping
diesel. In the recent past, before the crucial assembly elections such as in Jammu & Kashmir (J&K) on the boil
Karnataka, the price of fuel was implicitly frozen — but on this occasion, the with talks in the balance.
With dialogue in cold storage,
government has been open about its intentions. It is worth noting that the the mood in Kashmir is bleak.
arguments in favour of a de-politicised, de-regulated price for fuel have not
lost any of their weight. Allowing administrative or political concerns into
Local body elections on Monday
saw a dismal turnout. India’s army
BROADSWORD
the prices faced by consumers opens the door for sustained pressure on the continues combating a renewed AJAI SHUKLA
fisc through subsidies. In addition, it harms the oil-marketing companies insurgency on the Line of Control
(LoC) and in the hinterland. Ceasefire violations are
as well as the attempts to combat the growing import bill and thus the cur-
up almost six-fold, from under 200 in the last year of
rent account deficit. All attempts to insulate Indian consumers from high the United Progressive Alliance (UPA) to 1,128 already
international crude oil prices will fail in the long term, given the fiscal this year. Compared to 2013, when 30 Indian sol-
mathematics faced by the Union government. It is to be hoped therefore that diers were killed in J&K, more than twice that num-
this indeed is a one-time action and that is not repeated. ber died in each of the last two years. This year could
be as bloody.
Militancy, which was declining precipitously after
Meanwhile, tensions on the LoC remain inflamed
with continued incidents of mutilation of soldiers’
bodies. India’s army chief has threatened more than
once that Pakistan’s army would pay a price for its bar-
barism. However, India’s sensible restraint, given the
dangers of uncontrolled escalation in a nuclear back-
drop, restricts the punishment that can be imposed on
Pakistan’s military. The bottom line clearly is: We can
make the Pakistan Army hurt, but
we cannot make it change.
That raises a fundamental ques-
tion: Does the combination of sta-
ble nuclear deterrence and the
Pakistan military’s implacable hos-
tility render inevitable the contin-
uation of the low-grade conflict
between the two countries?
Well-informed observers of
Pakistan, most recently India’s for-
mer ambassador to Islamabad,
Sharat Sabharwal, have said
Pakistan is not a monolith, but an
amalgam of several constituencies,
each of which must be engaged
separately, on its own terms. There is the Pakistan
Army with its supposedly unwavering institutional
interest in low-grade tensions with India, in order to
maintain its salience as the defender of Pakistan.
There are the Pakistan Army’s jihadi proxies — India-
focused groups like the Lashkar-e-Toiba, Jaish-e-
Mohammed and Hizbul Mujahideen — which do the
army’s bidding; and the increasingly anti-India tele-
tutions to admire, or simply that the Pakistan Army
has channelised towards itself the fawning hysteria
once lavished on world-class cricket, hockey and
squash players that have left no successors. It surely
says something that an ageing cricket superstar was
elected prime minister, albeit with significant help
from men in khaki.
Instead, a realistic peace process would have to
evaluate and find ways to address the core concerns of
the Pakistan Army. Indian “muscularists” would argue
this is a fruitless endeavour since the Pakistan Army
wants only to reduce India to smoking ruins, onto
which it would stomp in jackboots and pluck off
Kashmir. Even if that were true, the army remains a
popularly trusted institution that controls the levers
of power. And General Qamar Javed Bajwa, more than
his recent predecessors, speaks like a practical man
with more achievable objectives.
In evaluating what could attract the attention of
Pakistan’s generals, New Delhi could draw ideas from
its own strategic concerns about China. We in India
know what it is like to neighbour a giant country
with an economy, defence budget and military sev-
eral times larger than our own, and which has once,
not long ago, dealt us a shocking military defeat that
still scars our collective psyche. To extend the anal-
ogy, that country too is rapidly outpacing us and we
sneakily admire its success. Providing a model for
emulation, we refrain from fomenting terrorism or
internal discord in that country and it refrains from
deploying serious military force on its border with us.
Wisely, it refrains from issuing regular threats to

Desperate measures 2010, has revived robustly. In 2014, when the NDA
government was formed, there were only 150 armed
militants in Kashmir. But since 2016, Kashmiri anger
Autonomy for Air India board is no longer a solution at the growing anti-Muslim climate across the coun-
try and the killing of militant commander and social
vision media. But there are also pro-India groups,
such as mainstream politicians that vie with the army
for political power, and business and commercial
groups that see benefit in better trade relations. Then
there are the Pakistani masses, who are not visceral-
teach us a lesson. The India-China model of manag-
ing a hotly disputed border and a conflicted strategic
relationship provides a model to emulate in the India-
Pakistan context.
Any discussion on creating security for India would

H
aving come up empty in its disinvestment plans earlier this year,
the government’s offer of quasi-Maharatna status to Air India and
one-time sovereign guarantee of ~150 billion resembles the last
throw of the dice in the gamble to enhance the national carrier’s
saleability. The illogic of this position is hard to ignore. The Maharatna label
implies board autonomy for profitable public sector undertakings. Air India,
with accumulated losses of ~7 billion on revenues of ~22 billion and a debt bur-
den of ~465.7 billion, does not qualify for this status on any key parameter.
The plan to transfer about ~300 billion of debt to a special purpose vehicle
creates only an illusory improvement to the profit and loss account, since the
debt, whether on the books or off it, still has to be serviced. With financials
like these, that too in an uber-competitive industry beset by rising fuel costs,
media darling, Burhan Wani, has fuelled a rush to the
gun. Militancy flourishes, despite the killing of 500
armed militants in two years. Kashmiri youngsters
are joining the fight knowing the odds are stacked
against them and that they cannot expect to survive
six months. And when they are killed, their emo-
tion-charged funerals see other youngsters taking
their place. Pakistan needs to do little to keep this
meat-grinder churning. A Pakistan-fuelled insur-
gency has transformed smoothly into a predomi-
nantly Kashmiri one.
ly opposed to India, but who coalesce behind the mil-
itary-led “deep state” when an Indian threat arises.
While this notion of “multiple Pakistans” is valid,
the conclusions we draw from this are mostly fanciful.
They centre on the idea that India should focus on the
constituencies that favour better relations with India,
most notably mainstream politicians, the business
class and the aam Pakistani. This would supposedly
generate pressure on Pakistan’s military not to hold
them hostage to its self-serving enmity with India.
This is a seductive theory from the Indian stand-
have to be based on creating a mutual security for
Pakistan — a radical idea in a relationship where both
armies expend enormous energy into creating inse-
curity for each other. Broaching ways to fundamentally
transform this dynamic has the potential to grab the
attention of the Pakistani corps commanders. Whose
security comes first — India’s or Pakistan’s — is a chick-
en and egg conundrum. But, to mix metaphors, you
can’t make an omelette without breaking eggs.
Twitter: @ajaishukla

A small candle of hope

board autonomy or lack thereof is unlikely to make a major difference. ures and their struggles. Sanjeev Sanyal wrote an
Indeed, it is fair to say that since 2011-12, the government has been a rel- opinion piece in The Indian Express (“The massacre
atively generous shareholder, infusing almost ~250 billion in equity, albeit to of the Yazidis,” August 12, 2014). I learnt about the
repair the damage wrought by forcing the airline into expensive aircraft pur- Yazidis from a well-researched monograph on the
region and wrote about their plight in India Abroad

W
hen events transcending geographies and pioned them. The IS called them godless devils and
chases. Further, it is difficult to see how the board can inculcate the habits of history occur, other pressing concerns singled them out in 2014 for slaughter, regardless of (“Speak up India, and act!” August 29, 2014). A read-
autonomy when the chairman and managing director is an Indian appear routine and mundane. The 2018 age or sex, in the name of ethnic cleansing. er’s reaction to it said it all: “This is by far the only
Administrative Service Officer, and two of its members are from the ministry Nobel Peace Prize to Denis Mukwege and Nadia A large group, about 10,000-strong, was besieged news item on this tragedy on Indian news websites.”
of civil aviation. As part of the move towards autonomy, the board has induct- Murad announced on last Friday is one such, which in flight in mid-2014 on Mount Sinjar without food or Dr Mukwege is a complete unknown, much like Mr
ed four independent directors. Two issues arise here. First, only two of them should take our minds off worries about oil on the even water. Many were massacred in the most grue- Satyarthi was before he won the Prize.
have knowledge of the aviation business — Y C Deveshwar was chairman of boil, rupee on the slide and abusive election cam- some fashion. Ms Murad’s village was nearby. She was A new normal is presently emerging. A patholog-
paigns in the pits. The Norwegian Peace Prize then a 19-year-old student. She was kidnapped and ical liar, obsessive ego-maniac bully and serial abus-
Air India during 1991-94 and Ravindra Kumar Tyagi has some tangential
Committee sagaciously recognised held captive in nearby Mosul. She er of women has gained the pinnacle of power in an
connection to aviation as former chairman of Hindustan Aeronautics Ltd. The the contribution of these two indi- was among the hundreds of young otherwise liberal democracy, turning it, with some
other two are Kumar Mangalam Birla, promoter of the diversified Aditya viduals to ending sexual violence as women repeatedly brutalised and success, into an idiocracy (a new coinage accepted
Birla group, and Syed Zafar Islam, a national spokesman for the Bharatiya a weapon of war. treated as sex slaves by the rapacious most judiciously by the venerable Oxford English
Janata Party and a former investment banker. Businessmen like Ratan Tata Dr Mukwege has long worked in IS marauders. She escaped after Dictionary). The time-honoured phrase, ‘sober as a
and Rahul Bajaj had headed Air India (prior to merger) and Indian Airlines; the Congo to bring healing to the three months. Shortly thereafter, she judge,’ is in imminent danger of being rendered
poor women victims. Ms Murad is a bravely told the world her story, in a meaningless following the ascent of a beer-swilling,
Anand Mahindra too had been inducted on the board — all of it to no effect.
victim herself, a Yazidi young woman book called, most appropriately, The intemperate reactionary to a hallowed bench which
Second, as company after company, from Satyam Computer to ICICI Bank to held as a sex slave by the unspeakably Last Girl. Since then, she has found- was occupied not too long ago by such champions of
Infrastructure Leasing & Financial Services Limited, has shown, independent barbaric Islamic State (IS) in Iraq ear- ed Nadia’s Initiative, an advocacy individual liberties and freedom of thought as Earl
directors, however weighty their reputation, cannot be relied on to enforce the lier in the decade, who has now group to create awareness and docu- Warren, William O Douglas and Thurgood Marshall.
kind of hard decisions vital to turning around this ailing airline. turned into an articulate and power- mentation of the IS acts of genocide A Nobel Peace Laureate who stoically endured a
Finally, there are institutional issues. Revival is possible only if Air India ful campaigner against the horrors ET CETERA and atrocities on women. Amal tyrannical state for decades now virtually heads a
inflicted on women. In this, the Clooney is her lawyer. Ms Murad new incarnation of that regime which has turned on
ceases to be an airline for government servants and their families and if union
Committee has followed the prece- SHREEKANT SAMBRANI appeared before the United Nations a helpless religious minority. Nation-states all too
power is curtailed. The airline is overstaffed but employee cutbacks are dent it had set four years ago of Office on Drugs and Crime two years willing and eager to usher in a globalised society
invariably fiercely contested. It is also unclear whether the airline has the choosing a seasoned activist, Kailash Satyarthi, and ago. She has taken much the same road as Ms until recently are now busy firewalling themselves
wherewithal to attract managerial talent from the market. Both proved to be a young victim-turned-campaigner, Malala Yousafzai, Yousafzai before her did, at an even younger age. against the wretched of the earth fleeing the oppres-
the high hurdles during the tenure of Rajan Jetley in the late eighties. Mr in the cause of children’s abuse and their freedom of Dr Mukwege’s land and the neighbouring coun- sion and destitution of their native lands.
Jetley’s stint represented then Prime Minister Rajiv Gandhi’s experiment with education. That singular award focussed the world’s tries have long been strife-torn. Tribal violence Democratically-elected leaders and despots alike the
some degree of managerial autonomy for what was then the country’s inter- attention as never before on this often-forgotten issue peaked in 1994 in the Rwanda-Burundi genocidal world across are driving their countries into new
central to our collective future. The Committee obvi- civil war. Those scars have still not healed. After tak- Dark Ages intolerant of dissent and diversity.
national carrier (Air India and domestic airline Indian Airlines formally ously hopes that this experience will be replicated at ing his medical degree from the University of Burundi The Peace Prize honouring indomitable individ-
merged in 2007). Mr Jetley, who was famous for jettisoning the trademark present. in 1983, Dr Mukwege lived in Bukavu, close to the ual courage and moral leadership is a most appro-
Maharaja logo, did streamline operations and helped Air India turn in a The Yazidis are a minority in Northern Iraq, neither Rwanda border. Post a residency in Paris, he worked priate act of faith in these fraught times, as it was in
record profit of ~700 million in 1989-90 but the pressure of dealing with Muslim nor Christian, numbering just half a million in a Bukavu hospital. When he saw hundreds of 2014. We should all light a small candle, in the hope
entrenched interests forced him to leave before his five-year term was up. As and among the poorest. Their religion is quite simi- women suffering from trauma caused by violent sex, that the world is not rushing headlong into insanity,
such, for Air India, board autonomy is no longer a solution. lar to the sanatana dharma or ancient Hinduism, he set up Panzi Hospital in Bukavu in 1999 for them. not yet anyway.
based as it is on the worship of the Sun and other ele- It has since treated over 85,000 women.
ments. Unlike Christians of the region, no one cham- Not much is known in India about these heroic fig- The writer is an economist

The corruption poser lenge to eliminate corruption. Corruption,

BOOK REVIEW
A K BHATTACHARYA
When does the law become effective? Why
do some people observe the law and others
flout them? What circumstances trigger
such different responses to the law? How
can we bring about a change in human
behaviour so that laws can be enforced
with greater effectiveness, thereby enhanc-
ing economic gains? These are some of the
key questions Kaushik Basu, an eminent
economist and former chief economic
advisor to the Indian government, tries to
explore in this highly readable book.
Dr Basu presents these issues through
the prism of economic theories — using
game theory in abundance, but at a philo-
sophical level these have tremendous res-
onance in Indian society. One, India is a
developing economy and a democracy. Its
economic policy imperatives often put to
the test the durability and enforceability of
laws in far more complex ways than in a
developed economy or a country that is
not a democracy. That is also because
Indians are not only argumentative by
nature, but also excel in ingenuity when it
comes to bypassing the law. Not surpris-
ingly, Dr Basu relies on many Indian expe-
riences to illustrate how there are serious
problems in applying the lessons of law
and economics in several economies of
the world, particularly the emerging and
developing ones.
In India, for instance, the perennial
problem is how the law is impeccable on
paper but is often poorly implemented. An
associated problem arises out of the chal-
argues Basu, can take many forms, but the
heart of the corruption problem is the vio-
lation of the law. Perpetrated either indi-
vidually or in league with a group of gov-
ernment officials or enforcers of the law,
corruption prospers in spite of the exis-
tence of a legal framework. There are also
no satisfactory answers to why some laws
work, some laws work partially and some
others don’t work at all. And this is one of
the biggest failures of law and economics.
So, what solution or an alternative
strategy does Dr Basu offer? The compli-
cating parts of the book start here. He
posits that the focal point approach is a
possible way out of the failure of law and
economics in dealing with corruption. The
focal point approach is premised on the
belief that a better-founded theory of law
and economics should recognise that the
outcome of a law is largely determined by
its effect on the beliefs of people. But the
challenge is how to influence the beliefs of
people in an effective way.
Dr Basu argues that a successful law is
one that shifts human behaviour by creat-
ing a new focal point in the game every
stakeholder in society plays. In other
words, a new law can be effective only
when it creates a new focal point to shift
the behaviour pattern of people. He also
proposes the idea of a focal player, who
can make a big difference in changing the
way people behave. A focal player is like a
leader who directs a group to a certain out-
come by asking them to behave in certain
ways in a situation. The role of a leader
deserves further scrutiny to determine
how well it enhances the effectiveness of
the focal point approach in changing peo-
ple’s behaviour while dealing with new
laws and economic situations.
Dr Basu writes simply and attractively,
but many of the ideas are abstract. In spite
of his lucidity, he is clearly not at his best
while explaining them. For instance, his
explanation of the way the focal area
approach functions and how it can change
the behaviour of people is likely to fall short
of expectations of many readers.
Dr Basu is aware of the difficulty of the
concept that he is trying to explain. Writing
on the focal point approach, he confesses
that “though there is need to sharpen these
concepts and ideas and give them more
formal structure, that is beyond the scope
of the present book, which is the econo-
mist’s jargon for beyond the ability of the
author.” You can’t really quarrel with an
author whose self-deprecating humour
enlivens many of the eight chapters that
complete this monograph.
By way of entertainment, there are
many interesting anecdotes picked up
from his days as chief economic advisor in
the Manmohan Singh government. One
of them deserves to be recounted here.
Within months of joining the government,
Dr Basu wrote a short paper on the need for
amending the country’s corruption pre-
vention law by declaring the giving of
harassment bribes a legal act. His logic was
that this would encourage the person who
is being coerced to pay a bribe to spill the
beans as he would no longer be treated the
same way as the bribe receiver. And the
incidence of bribery would come down.
In his naivety, Dr Basu even posted his
paper on the finance ministry website,
only to create a furore with parliamentar-
ians questioning the immorality of the
idea. He managed to ward off that contro-
versy through some clever phrasing of
written replies to questions raised in
Parliament. This was an example of how Dr
Basu saw the need for changing the focal
area approach to law-making.
In less than a decade since the publi-
cation of that paper, the Indian govern-
ment earlier this year amended the cor-
ruption prevention law in a bid to achieve
precisely what Dr Basu had advocated.
Perhaps Dr Basu’s contention that the dis-
cipline of law and economics must
embrace the focal area approach has
already been heard!
THE REPUBLIC OF BELIEFS
A New Approach To Law And Economics
Kaushik Basu
Princeton University Press
238+XVII pages; ~699