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Pragati No 22 | Jan 2009

The Indian
National Interest

Ideas for India’s future

ISSN 0973-8460

Contents Pragati
The Indian National Interest Review
No 22 | Jan 2009

Published by The Indian National Interest—an independent
PERSPECTIVE community of individuals committed to increasing public awareness
2 Politicise terror and education on strategic affairs, economic policy and governance.
Electoral politics is the best way to punish bad policies
Rohit Pradhan
Advisory Panel
4 Put Pakistan “on the table” Mukul G Asher
Sameer Jain
Terrorist aggression cannot be terminated by Amey V Laud
appeasement V Anantha Nageswaran
Vanni Cappelli Ram Narayanan
Sameer Wagle
6 The people have spoken
Democracy returns, and with it comes a new opportunity
Sushant K Singh Editors
Nitin Pai
Ravikiran S Rao
8 Essential readings of the month Contributing Editor
Ravi Gopalan & Vijay Vikram Sushant K Singh

Editorial Support
IN DEPTH Priya Kadam
9 Human capitalism Udayan Tripathi
A discussion on ideas for India’s future with Nandan
Nitin Pai Acknowledgements
Lakshman Anand (Cover Photo)
13 Improving India’s anti-terrorist responses
The need for scenario planning and read teaming Contact:
Shaunak S Agarkhedkar
16 The empire strikes back Neither Pragati nor The Indian National Interest website are affiliated
to any political party or platform. The views expressed in this publi-
Thirteen reasons to feel gloomy about economic reforms cation are personal opinions of the contributors and not those of
in 2009 their employers.
Bibek Debroy
© 2008 The Indian National Interest. Some rights reserved.
18 The biggest solo flight of them all
More reason to proceed with economic liberalisation This work is licensed under the Creative Commons Attribution 2.5
V Anantha Nageswaran India License. To view a copy of this license, visit licenses/by/2.5/in/ or send a letter to Crea-
20 Underlying agrarian distress tive Commons, 543 Howard Street, 5th Floor, San Francisco, Califor-
nia, 94105, USA.
Hydrogeology offers insights for irrigation policy
Suvrat Kher Pragati accepts letters and unsolicited manuscripts.

23 Discarding ideological blinkers
India’s schools need an intellectual liberalisation
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So must unite in their condemnation of such das.   vention of Terrorist Act (POTA) enacted by its An attack like the one on Mumbai on Novem. despite multi- ber 26th. argue bipartisan approach facilitates framing of a ebullient television anchors and outraged op-ed national anti-terror policy.THE INDIAN NATIONAL INTEREST REVIEW 2 . that political parties and civil society existing laws were sufficient to tackle terrorists. the Mumbai attack. PERSPECTIVE Photo: Sir Watkyn COUNTER-TERRORISM Politicise terror Electoral politics is the best way to punish bad policies ROHIT PRADHAN “TERROR SHOULD not be politicised”. changed? POTA of course could not have pre- val has argued in last month’s issue of Pragati. Yet. For the last four years. 2008 is indeed an attack on India—”an ple terrorist outrages. should it not be asked: What tempts to tackle future threats. Some go on to claim that the Bharatiya Nevertheless. in one of the few decisive actions would punish parties which attempt to take ad. the UPA government took. himself put it. It is a given. predecessor. a special anti-terror law. when it conceded the need for special laws after tardly attacks and back the government in its at.   columnists. ism can be de-linked from politics presupposes jasthan state elections is an express rejection by that the United Progressive Alliance (UPA) gov- voters of the “politics of terror. it abrogated the Pre- vantage of terror attacks for electoral gains. to argue that the issue of terror- Janata Party’s defeat in the recent Delhi and Ra. a merely symptomatic of the government’s lackadai- PRAGATI . Dr the need for POTA and ridiculed those demanding Manmohan Singh. its ministers have dismissed attack on our ambitions” as the prime minister. in vented Mumbai attacks—no law can—the issue is an era of coalition politics and divided polity.” That is. repeatedly arguing that therefore. As Ajit Kumar Do. the voters ernment’s attitude towards terror was not framed demand a bipartisan approach towards terror and by politics.

After all. aggrandisement. then it harms warding good politics. Pursuing national interest is important but politi- ties is essential—indeed welcome. to demand that the government explain its pedestal. beneficial for the people. If political parties can.   Similarly. or the BJP hypo- By punishing bad politics. voters signal the kind of leadership political power? It is their criticism of each other and policies they want. tackling terror is a matter of ists. rewarding good politics.  enact tougher laws. how can they compete for is more important to examine the kind of politics. 3 No 22 | Jan 2009 . at its heart. It is only the correct incentives from voter which arguably afflicts far more Indians than citizens can indicate clearly their intolerance governance. it cannot serve as ourable exceptions—has caused more damage to a veneer to ward off accountability. If it is of the kind that Amar Singh indulged in af- ter the Batla House encounter. An ineffectual government which fails for terrorism—of any kind or ideological hue. So instead of initiating a war on politics itself. tion. Be that as it may. multiple quently frustrates and might even bring about political parties exist because there are different policies which are damaging to the national inter- individuals with varying beliefs. has always been the systematic or. It is the right national interest than frequently derided electoral and the duty of the opposition—in fact. the UPA government’s neglect of believe that there are no electoral gains from internal security was at least partially guided by taking counter-terrorism seriously. and policies—is an essential prerequisite tics of numbers than in politics of morality. convicted of leadership and policies they want. cians are unlikely to do so at the cost of personal political parties regularly compete on poverty loss. Rohit Pradhan is resident commentator on The Indian ership—pursuit of national interest above personal National Interest and blogs at Retributions (retributions. was forced to act in the af- “world class anti-terror policy”. and polices. a ‘moral leader’ frequently escapes ac- failures. re.  It would be reasonable to argue that all politics cannot be electoral—there is a case for moral lead.PERSPECTIVE sical attitude towards terror. critically pursued while defending those accused of carrying out the Malegaon blasts. then moral leadership—with hon- bipartisan approach is welcome. the heterogeneity of polity—of ideologies. By likely to do so. The to ensure good roads or cannot ensure the mini. Electoral politics fre- ganisation of hatreds. they are un. ernance. every citi. to actor put it. punishing bad politics. And in a democracy ban terrorism. simplest way to accomplish this is to vote—for the mum level of public goods can hardly be expected right candidates. But if the history of the world is nationalinterest. If parties bombers like Abdul Nasser Madani have been glo- rified. terrorism seriously. parties. Incentives little interest in the democratic process. which can force their hand. If parties believe that there and their attempt to distinguish themselves. Unsurprisingly. whatever its favour are also the correct ones or the ones most professions. and. Therefore. they find politics on terror distasteful. by punishing leaders who defend terror- Third. and offer feedback. voters signal the kind national interest. demand. Even a government which has refused to they have no stake in governance except for a take terror seriously. Because placed as they are on a higher zen. Because matter. ternal security. it not criticise each other. Naturally. In a democratic est—nevertheless. if more challenging task is to be informed citi- terror cannot be de-linked from processes of gov.   It is here that the role of voters is crucial.   the chatterati but because of politics—the voters.   for its proper functioning. In states like Kerala. A slightly to be an effective anti-terror agency. as one prominent termath of Mumbai attacks: to sack ministers. zens—to question. and to launch a review of in- They are fundamentally disinterested in poli. it terror ignores the essence of democracy. It acted not because of the fear of tics—of any kind. as a practise. in turn. the angst against there is no stronger incentive than the one offered mixing politics with terror is led by the elite which by the power of vote. Similarly.” In other words. Politics matters. they are unlikely to do so. As Henry does not necessarily follow that the policies they Adams put it: “Politics. and. communal concerns.   countability simply by citing a lack of personal Second. while a any indicator. force a change in policy is arguably easier in poli- leaders.   has long seceded from the republic and shown Democracy matters. the sonorous cry of no politics with interest in the policies pursued. accountability and an ability to system. politics. which are no electoral gains from taking counter- helps the voter choose a particular political forma. in turn. competition among different political par.

eliminate the possibility of Pakistan- ghanistan. or Iran? pendence in 1947 under the cry "Islam in danger". locale   guaranteed its staunch anti-communism try. For seven years after 9-11. remotely linked to the security services of Libya. the Taliban and al-Qaeda scrutiny or effective checks on how it would be have established a strong redoubt from which they used. deny ing extremist religious sentiment in order to per- sanctuary to terrorists. women. 1953. America's early Cold War planners took the tion in Afghanistan has led to a record toll of lives.  The critical deterioration of the security situa. Now that the national origin of the attackers Pakistan's creation was justified under the and their controllers has been established. Writing to Secretary of State John Foster Dulles These stark realities manifest the failure of the on December 30. but what does it The current confusion over Pakistan's loyalties mean?" is but the latest turn in a shadowy game that dates Such hesitancy is emblematic of how Pakistan to the beginning of the US-Pakistani alliance over is not held to the same standard of scrutiny as half a century ago. Massive amounts collapse in confidence in the government. Chester Bowles. PRAGATI . ideology. —a vision of chaos which described with exact And that root cause is the nature. bly into India. and needed has always proceeded from a dangerous calls upon the victimised nation to "show restraint" refusal by policy elites to confront the Pakistani if a major terrorist attack elsewhere had been even state's culpability in the rise of Islamic radicalism. That is huge.   Mumbai only forward without a powerful dissent. the history over the succeeding half century. Af. and combat radical Isla. Yet its the table". confirmed the extent of the militants' capacity. into an endless feud with India over Kashmir. In the of military aid were provided without ideological Tribal Areas of Pakistan. "We city of Rawalpindi   that has ruled Pakistan since have to be careful here. Fighting Islamic basis that it would "isolate Pakistan. America's unrealistic view of other countries when it comes to state sponsorship that country's army as a professional force avail- of terror. adamantly opposed   the deal on the namic that produced that event. Indian and Pakistan-Afghan rapprochement (and) ing security structure in the South-Central Asian increase the dangerous wave of anti-Americanism region as a whole that will deal with the root cause throughout India and other South Asian countries" of the phenomenon there. which has traditionally manipulated the Kashmiri connection. can perpetuate chaos in Afghanistan and plot new Yet the provision of arms to Pakistan did not go attacks on America and the West. it is idea that it would be a homeland where Muslims high time that the world finally put Pakistan "on could live free from Hindu domination. demands for "hard evidence". Violently torn from British India upon its inde- Syria. an Ameri. the American elites have always had a hidden agenda of foster- struggle to bring the perpetrators to justice. deepening misery for the population. petuate feudalism   while suppressing democracy. that puts Pakistan on the United States to serve its own ends. viet Union certainly into Afghanistan and proba- nying terrorists sanctuary in a   single state. mism in the South-Central Asian region from social change.THE INDIAN NATIONAL INTEREST REVIEW 4 . and prescience the negative trajectory of the region's historical behaviour of America's putative ally. draw the So- militancy was wrongly conceived in terms of de. table. able to serve its national security requirements as lytical caution. Cassandra.   former Bush administration to adequately respond to 9-11 ambassador to India and perennial foreign policy by transforming the underlying geopolitical dy. enormous. and the rights of ethnic groups and which the   attacks emanated is approaching mis. above all by channelling national energies sion failure on account of its refusal to do so. view that Pakistan's religious   basis and strategic the cessation of reconstruction efforts in the coun. and a and utility to the United States. whereas what is needed is an overarch. When you posit a the 1950's. military-security services complex   based in the can counter-terrorism official equivocated. Would there have been the ensuing ana. PERSPECTIVE GLOBAL TERRORISM Put Pakistan “on the table” Terrorist aggression cannot be terminated by appeasement VANNI CAPPELLI Even as terror still raged in Mumbai.

Democratic India. Allowing a By cutting off military aid to Pakistan. terrorism once it became tragically evident digm of employing   Islamic fundamentalism to that   this behaviour had consequences for   the crush progressive   forces at home and extend its United States as well. and working with its be the public face of the country completes the neighbours to contain it. Such an alli- ducts desultory campaigns against militants   to ance would raise an overarching security structure appease America. and led over and over again to death and de- stan's democratic forces their first real chance to struction. it is now being used to tion of the existential situation in which they kill American and other coalition soldiers.PERSPECTIVE It was a collision course which culminated in and rebuilding the country. remove the incentive for the Pakistani army to tants are not the vagaries of "rogue elements" but support Islamists in Afghanistan. and   prevent future 9-11's and relations in Pakistan. Its ties to mili. dictate that they are actually with   the United 11 turned to the very entity responsible for turning States in this fight. It has prevented the development of take control of their country. especially when there is not a clear quences unless it switches sides—it only pretends picture of the nature of the entity being appeased. country. and bring American national secu- rity policies in line with reality. This approach ignores the deep ideological ba- sis of the ties between Rawalpindi and its jihadi An American-Indian-Afghan alliance aimed at assets. enhance the represent the integrated policies of the military. Aggression can never be terminated by ap- peasement. have been the logical choice for "key ally" against Given Rawalpindi's irreducible geostrategic para. it is as oxymoronic to look to it as ings coming from the Obama team are not promis- an ally against radical Islamism as it would have ing. security services complex itself.  alliances with nations whose ideals and interests That the Bush administration in the wake of 9.   all the better for portraying that would have the same effect NATO had on the Pakistan as a victim of terrorism. the enormous financial benefits that flow to the army as a result of its holding real power in the containing Pakistan is the only way to coun. With mounting evidence that Mumbais. 5 No 22 | Jan 2009 . containing Pakistan is the only way to counter the And if some of Rawalpindi's jihadi assets have fundamentalist geopolitical dynamic which pro- slipped beyond its control while the army con- duced 9-11 and the Mumbai attack. For in the final analysis. allies would effect the same internal collapse of a American military assistance to Pakistan over malevolent order as occurred when the Soviet Un- the last half century has enabled Islamic funda- ion’s weak economy proved unable to sustain its mentalism. especially if receiving billions of dollars in re- An American-Indian-Afghan alliance aimed at newed military aid will be the result. brunt of Pakistan's recidivist behaviour. because it has been threatened with dire conse. to. a ris- South-Central Asia into a stronghold of Islamic ing   world   economic and military power which militancy as a "key ally" against these same forces together with Afghanistan continues to bear   the must stand as an instance of conceptual lag une. Vanni Cappelli is the president of the Afghanistan For- stan. not by the policies of appeasement which The incoming Obama administration must con- have brought on our present crisis." which produces international terrorism. and that means not only sending more troops eign Press Association. end the army's spon- democracy. the United States and its illusion. kering an accord on Kashmir—with the major con- Pakistan's   army has shown persistence in its cessions coming from India—would somehow endeavours over many decades. While correctly placing Pakistan at the heart been to seek to extend the wartime alliance with of the region's troubles. it seems to think that bro- the Soviet Union into one against communism. thrive. power of the civilian government in Islamabad. and the degree to which it sees continued ter the fundamentalist geopolitical dynamic conflict as essential to that power. providing as it does legitimacy to its leitmotif of "Islam in danger. state sponsor of terror it has long been. Winning in Af- ghanistan means keeping Pakistan out of Afghani. That would give Paki- flict. rather than the Soviet Union. historical pa- Rawalpindi continues to support the Taliban in thologies can only be dealt with by a transforma- pursuit of its historic goals. should qualled in the history of American foreign policy. Such an   entity and pave the way for a lasting peace among the does not make a   sea-change in its ethos merely three countries. and equitable economic sorship of terror. perpetuated the India-Pakistan con- military superstructure. Yet the early strategic sound- power abroad. front this fact. civil society. but forging regional New York and Washington on 9-11. naming powerless civilian administration in Islamabad to it a state sponsor of terror.

these elections have provided a This faith in electoral democracy by the ordi. It has left most political Many media analysts in Delhi were so taken in commentators astounded that not a single con. percentages unlikely to reach the levels attained in compared to barely 5 percent in 2002. bly polls would be a huge failure. 2002. including Mirwaiz strations earlier this year about Amarnath shrine Omar Farooq and Syed Ali Shah Geelani. has been cord with local populace in both the Jammu and forced to accept its failure to gauge the mood of the Kashmir regions. state of Jammu & Kashmir. the last two months have posed ‘economic blockade’ of the Kashmir valley brought a significant share of good news from the by the agitators in Jammu. and PRAGATI . with polling corded a voting percentage of over 20 percent. Hurriyat leadership was not the legitimate spear.THE INDIAN NATIONAL INTEREST REVIEW 6 . In the Kashmir valley. resounding answer to the separatists and their un- nary Kashmiri has demolished many myths about discerning supporters in the Indian media. and with it comes a new opportunity SUSHANT K SINGH AMONG THE plethora of despondent stories demonstrations. The hardcore support Indian state. It merely happened to ride on the emanating from various parts of the country crest of the emotional outpouring against the sup- throughout the year. The demon. leadership of the Hurriyat. There is a tendency among commentators now head of the agitation although it had successfully to de-link the three issues—a sentiment for azadi. PERSPECTIVE Photo: Akshay Mahajan JAMMU & KASHMIR The people have spoken Democracy returns. the the ordinary Kashmiri on the elections issue. which land transfer were an emotive issue that touched a had issued a call to boycott the polls. created the impression of spearheading these the separatists’ call for boycott of the elections. by the images and stories from the Valley that they stituency in Kashmir valley has registered a voting began to support a Kashmir’s secession from the percentage in single digits. They had predicted that these assem- base of the separatists in Srinagar district has re. The the sway of separatists in the state. However.

It could put in place a plan electoral process while the urban population has to reduce a component of security forces from in- tended to stay away from the electoral politics. Members of the the one hand. a single issue does not adversely affect participa. Jammu & Kashmir must have the unstinted sup- ronment in the state. political opportunity to move towards a political It believes that an elected state government can resolution. away from the fear of the gun of the the state and announce a time-bound plan for re- terrorists and coercion by the security forces. with facilities to help them settle in other parts of strikes and curfews—a peace that will bring back the state. including new government should start with certain bold in the Kashmir valley. The central government should resist the temp- ties for employment. valley and the undue prominence of the Kashmir region in determining the policies of the state gov- ernment. urban Kashmir yearns for tunity to do so while others should be provided peace away from the fatigue of demonstrations. return to Kashmir should be provided an oppor- ence. As with elections in forces and the governor deserve praise for the suc- other parts of the country. The new coalition government of replicate the same growth story in a peaceful envi. Having been privy to the wages of in. explore the power of the ballot. It is this young These elections have thrown up an invaluable generation that is seduced by India’s growth story. 7 No 22 | Jan 2009 . But this is the hallmark of It is important for India to highlight this in its pub- a democratic process where public grievance over lic messaging to the international community. this new generation is keen to nation—physically. separatists but they are merely the start of a The greatest challenge that the new state gov- long and unending journey towards normalcy ernment faces in light of the events of the summer of 2008 and these elections is to reduce the over- in Kashmir for the governments at Delhi and representation of Srinagar in the affairs of Kashmir Srinagar. The distinct rural-urban divide in the state. On habilitating Kashmiri Pandits. generation of voters that has not seen life without It should instead institute measures that facilitate militancy. On the other. The often peace. the rural population is a keen participant in the ginalise the separatists. ster this legitimacy through its subsequent actions. There should be little doubt now that the political parties that participated in the Sushant K Singh is a contributing editor of Pragati. lated to the call for azadi. the new government allowed rural voters a newfound freedom to cast should reward the regions that have witnessed higher voting percentages by putting them on a path of fast-track development. there were many other cess of these elections.PERSPECTIVE the heavy voting percentages recorded in the state. the security tion in the electoral process. Like other parts of the coun. look ahead and leverage this opportunity to bring The 2008 elections have shown that there is a complete normalcy to the strife-ridden state. it is important to quickly significant stories at play in the state of Jammu & get past the celebratory phase—it is a good time to Kashmir. though. The Indian state must recognise and bol- as a vote for local development that is totally unre. The ternal security duties in designated regions of the downturn in the terrorist activity in the state has state. tourists into the state and create other opportuni. port of the central government—as indeed the in- None of this. integration of Kashmir with the rest of the Indian cessant violence. More importantly. irrespective of the political affiliation of the elected representatives of Successful elections have discredited the that region. polls are legitimate representatives of the people of These analysts portray the high voting percentages the state. There remains no locus standi for the Indian government to negotiate with the Hurriyat or con- sider them as a legitimate party to the resolution of Kashmir dispute. While the electoral machinery. overwhelming rejection their call for a boycott is a clear vote of no confidence in the separatist leader- ship. a displaced Pandit community who are willing to process that has bypassed them since independ. tation to provide another grand financial package A new factor—albeit a small one—is a new for the state in wake of these successful elections. It should engage with other regions of their vote. rural Kashmir seeks development. stability and prosperity. diminishes the loss of ternational community—to chart a course towards credibility of the separatist leaders. and signal measures that further deflate and mar- try. financially and emotionally.

and a no. plan to ensure uninter. prosperity traditionally Russian de- andi.THE INDIAN NATIONAL INTEREST REVIEW 8 . Firstly. search. India’s new defence western stream with the Patrol—Strategic Dimen. Indian in- counter India’s maritime significant number of li. try should aim to develop operation could well forts to create a multilat. In doing so. through private thus far. he argues that els of Western technology racy off the coast of So. the indus- jected as a anti-piracy Thirdly. tendency by Russian sup- options for a medium and the United States). enhanced naval concerning the future of India’s defence infrastruc- presence. Analysing the implications tem. to construct a dam at the delays in providing and financing. tary co-operation agree. and issued to private exporter of defence He also notes that professor of strategic companies. Hence. ses the Ilulissat declara. the fact remains ing safe shipping lanes. the A5 (rather successful interstate basin midway through a project. the incoming Studies (China’s Anti-Piracy cludes procedures to ex. analogous to the consider 49 percent for. a military confrontation in key to peace. the modus oper. shipping routes. ing Karachi in the event of water holds the strategic are set to enter India’s malia. are likely to scale down international trade. and the N NEIHSIAL engages in a of Russian-origin tech- protection of the ecosys. Canada volving all riparian neigh. what is currently pro. which in. defence industry’ in the dustry must ensure that it task force to the Somalian tend to respect the provi. streams. liberalisation has been a rights. deterioration of the situa. various components. Western Europe Trade. enclave is embedded in guard. Roger Middleton reviews chi might also be used to article (Averting Asian wa. In a Japan Focus and Israel. The the grounds of violation projection in the waters dling of the resources of immediate effect of this of intellectual property to the West of India” and the Arctic Ocean. BRAHMA CHELLANEY. Arctic He calls attention to quences. ter wars). the A5 in. both domestic technology and hardware Pakistan and China have studies at New Delhi’s and foreign for producing rather than simply a con- recently concluded a mili. ernment has even sig. He unwillingness to transfer case for an immediate 2008 by the A5 (five Arc. shelf. costlier tute for International and rivers of Asia and the po. und Politik/German Insti. Council) wishes to lead of the Indus. ments. an Indian brand of de- emerge into a permanent eral legal order for the nalled its willingness to fence technology. envi. Norway. Moreover. in Asia due to its signifi.This is bound He lists the conse. discussion about what it nologies for some years. source of all the major Russian defence outlets tion in Somalia. significant lev- the phenomenon of pi. more so fence infrastructure international response terrorist attacks. to have a few conse- quences of failure in ade. Centre for Policy Re. and domestic private sec. Nile and that the Russian defence building a Somali coast the way in resolving issues Senegal rivers. B Raman notes that the national continental courages greater foreign variety. ‣ On India’s defence indus. Firstly. October edition of the can viably integrate two waters. basin arrangements in. Indian in- of China sending a naval Secondly. bours on the model of pliers to jack-up costs term international re. predicts that while dian companies are form- PRAGATI . deter India from threaten. ture and this will ensure ransom policy. The gov. Hence. latest trends. tor participation. Feeding Local Wars). can be exported without value to the Chinese Antarctic Treaty. dustry must aim to be- power projection in the ‣ Water wars cences being applied for come a producer and waters to its East. one that presence “of strategic Arctic. “Great Bend” of the spare parts and repeated Dr Middleton makes a tion announced in May Brahmaputra river. the Arctic Ocean. than the broader Arctic agreements such as that However. along with ing mineral resources. in a paper for the sions of the international IDSA’s Strategic Com. includ. try the continued dominance their pros and cons. takes to create a ‘vibrant In the end. stiff compe- rupted supply of food aid comprising Denmark. under which the past wars were fought ing joint ventures with the IN A Chatham House former is believed to have over land and the current global industrial defence briefing paper (Piracy in offered the use of Karachi wars over energy. In. water. sumer. prevailing Russian-origin sions). which eign equity shares on a any possible objections on Navy in terms of power could constrain its han. major technology Chennai Centre for China law of the sea. tic circumpolar nations institutionalised river. case-by-case basis. it rejects ef. tend the boundaries of procurement policy en. FILTER Essential readings of the month RAVI GOPALAN & VIJAY VIKRAM ‣ Pirates of Somalia ment. in the face quately combating piracy INGO WINKELMANN of the unique status of the of competition from pri- ranging from a further the Stiftung Wissenschaft Tibetan Plateau as the vate Western companies. sponse including organis. future giants of the United Somalia:Threatening Global port to Chinese ships. China’s presence in Kara. tition should curb the to Somalia and provides Russia. advocates creation of technology. and potential terrorist Up the Arctic Ocean) analy. Security Affairs (Fixed tential for a Sino-Indian their business malprac- ronmental catastrophe Rules of Play for Dividing conflict on China’s plans tices of project delays. ‣ Rules for sharing the availability of freshwater. wars could be fought over States. cantly lower per capita companies. and the the wake of the Mumbai and public health.

he said it was the preservation of the resilient core of Indian society Human capital that is the heart of India's national interest. and fulfilment for all our citizens—doing that would automatically address the other challenges How would you define India's national interest? When that we have. My view is of governors of the Indian Institute of Technology. alleviate poverty and ensure good The most important idea and the central theme governance. that comes once in a millennium.  that I start off in my opening chapter is the change 9 No 22 | Jan 2009 . It is in our ining India . a member of the National The definition of Indian society is amorphous and Knowledge Commission. book. more equitable. a member of the board is prone to multiple interpretations. The confluence of events that I have described in my range of his interests and his passionate commit. And due to a ernmental and non-governmental initiatives. more fair gaged in a number of public policy initiatives—he and which can truly leverage the extraordinary is the president of the National Council of Applied opportunity—that would be the national interest.  high rates of growth.Ideas for a new century (reviewed inde. and you have quoted a number Indian society that keeps the wheels turning whatever is of people and their ideas. to lift a billion people out of poverty. we posed this question to Jaswant Singh. stronger. Economic Research. what would it be. national interest to make the most out of that op- pendently on page 25). because it is Your book is about ideas. Nandan Nilekani is en.IN DEPTH Photo: Kiran Valipa Venkat INTERVIEW Human capitalism A discussion on ideas for India’s future with Nandan Nilekani NITIN PAI IN ADDITION to being co-chairman of the board Anything that we can do to make the country of Infosys Technologies. in his voice portunity and achieve economic independence when he spoke to Pragati. India's national interest is to ensure ment. According to K the governance agenda of the coming central govern- Subrahmanyam. As indeed. that it is very rare that nations get an opportunity Bombay and is involved in numerous other gov. If you were to pick one to focus the political structure of the state. we have a truly extraordinary opportunity ment to India’s future comes out in his book Imag. more secure.

So lenge becomes how do we make sure they you have demand and supply. have jobs raised on a diet of socialism. but most of our politicians and decision-makers shift in the way we think about population is the still carry socialist baggage. This is clearly an untenable situation. looks at health.. regulated markets are as bad as unrestricted social- structure. Today. regulations and incentives. I'm a strong believer in don't really need reservations. and what are the obstacles that you right? In other words. we need to completely deregu- late our higher education: it is unfair on our part to neurs. because reserva. It is much better to expand ca- part due to international pressure. have lights to study at The policy issues—which I talk about in my night.. I don't think it's a policy ism. and there is political will. and creating an envi. on time and with quality. have roads to go to to come. and we move towards a system of needed to be controlled. if you want to drive a jobs in the organised sector. Take primary education—there's a huge amount of The moment you think of our people as money coming down the pipe. It is about doing it right. if we are able to do these then we without public policy. For a long time. number of people who need jobs. The last section of my book. we've finally affirmative action where we offer people opportu- realised that people are our biggest strength. rent economic crisis has demonstrated that un- kets. The fundamental young. We who should produce what but more in terms of need to change that and create a large number of public policy. 93 percent of the employment in the unor. assets and not liabilities. in the form of the whole standard of living of billions of people.THE INDIAN NATIONAL INTEREST REVIEW 10 . due to the inflexibility of clearly a huge role for the state to make the right our labour laws. That's exactly what we are doing by all these artificial constraints progress and the only known way of raising the we have put on the sector.. post-carbon economy. There is when necessary. in existing capacity. has been and school. shouldn't those who want to see in doing that. primary education and infra. pensions. our nities instead. educated. work of rules. deny our children a good education. and there's a huge demand from the poor who have realised that lack human capital then automatically the chal- of education impairs their economic mobility. The moment you think of Right shift our people as human capital then automatically It's hard to dispute your contention that the extremes the challenge becomes how do we make sure they must be rejected in favour of a fine balance. very good public governance and public account- ronment where companies and well-meaning en. have roads to go to work born before 1991. I'm not ganised sector where people have no rights what.what would be the policy dom? measure that would stem from this idea: The experience of the world. you can't do it in a big way And third.. PRAGATI . in favour of a state that hunkers down and decides soever. The population may be and can become entrepreneurs. urbanisation. for instance. bring about centre-right outcomes take an unabashed stance in favour of individual rights and economic free- If I were to stretch that . which is about trepreneurs can create a large number of jobs with anticipating the future. But anyone are healthy. markets. entrepreneurs are developing choices so that it can create the right environment capital intensive industries when there are a large in which markets can operate. but I also think that markets should be tions is a way to parcel out quotas from an small complemented with a very strategic thinking state. same time I think we need to balance markets with Second: labour reforms. have jobs and can become entrepre- third section—first. ability. educated. In this climate. but execution is a problem—getting schools to work. and perhaps after that too. At the "HRD Raj" that we have. treme positions so that the balance moves towards the man capital. But today. On the other Markets should operate freely within a frame- hand. For example. environment and technology. work and school. Markets are very powerful and useful issue so much. including the cur- Part of it is execution—in areas like single mar. that human capital is what makes you tick. we treated our pacity so significantly that nobody really needs population as a burden and something that reservations. have lights to study at night. getting teachers are healthy. isn't it nec- central theme of my book and everything I talk essary for those who believe in liberalism to take ex- about is how do we leverage and exploit that hu. IN DEPTH in our view of the population. because there is a demand for that instruments.they are the engines of economic from the people. the flexibility to be able to contract the work force energy.

properly. Now exports ders. and we have to use the money for tioned as something that lead to improved oppor. employment. a lot of the money was spent Absolutely not. In fact. These are the two negative make in the book is that half-done reforms are consequences of the bubble. It is very clear that we can't afford to have an portunity—of education. sics. All our ing children to school. and senior management. infra- something which is to make rich people richer. the Mumbai attacks This has not been sold well-enough. healthcare indefinite number of populist schemes because we to the common man. the world—and India—is in a cri. can't afford it. especially for on the balance-of-payments front.IN DEPTH Photo: Infosys I'm a strong believer in markets. and those who don't get without fundamental structural reforms: that shut out. our markets and the stock exchange. and not pro-rich. The UPA government's fiscal profligacy has left us some money and we go home. Whether it will happen or reforms are done under stealth by our technocrats not depends on the politics of the situation. severely constraining we must have a well-governed state. And this led to two things: plish that. the issue of security. and now it is becoming education. and Obviously running a company and running a two. old fashioned things like building roads and send- tunities. Rather than positioning our reforms as broaden access to education. In your book you write about the trans. secured bor- India's ability to implement fiscal stimuli. The message to us that it is back to ba- real part of reforms is to broaden the access to op. But is there enough in the public discourse in terms of two because it created a fiscal robustness due to selling market ideas to the people? higher tax collections. but I also think that markets should be complemented with a very strategic thinking state. What do you think the cur- rent. it took our eye off the ball in terms of the fun. Reforms have not been posi. secure In the 20-odd months between your starting the book and a well-governed state. a good police. the structure. Having said that. and motivate it to engage with the political also exposed immense shortcomings on the internal process and demand better accountability and security front. they all come from very pro- 11 No 22 | Jan 2009 . If sold a strong message to go back to basics. perhaps indicating coming heartburn have come through very strongly. the whole world was in a bubble try is infinitely more complex. It's not as if we have and its publication. worse than no reforms. will transform?  What lessons does the success of Infosys have for Indian There are broadly two issues: one. The state has a huge role: to make the right choices and create the right environment in which markets can operate. those of us who have access to will come down to normal. we make sis. English language and jobs can really increasingly apparent that we cannot continue prosper in this economy. nise the middle class. On the issue of terrorism. manifold crisis. one. law & order. have demonstrated very clearly that we really cannot ignore the need to have a strong. It something on a big scale and were able to accom- was bubble growth. country are two different things—running a coun- On the first. towards our entrepreneurs. If you look at the founders and even the current damental structural reforms that we needed. the middle class. phase of growth and it made us complacent. Those points have begun to dip. The Infosys is a story of common people aspired to do 8-9 percent growth we had was not real growth. then from this tragedy we could have formative effect of crises—1991 changed our attitude a good consequence in the long term. infrastructure. Because when you have Now the bubble is gone and our growth rates half-done reforms. The reality is that staring at a large fiscal deficit. the global governance?  economic crisis and its implications on India. one of the arguments I on populist schemes. That's one of the political failures. And to the extent this will galva- tacks on Mumbai have not only resulted in a geopoliti. which has by and large abdi- cal shock (the benign half-decade has come undone) but cated. but it's as if its something they shouldn't be doing. governance. reforms are pro-people. And the terrorist at.

for other part of the world: we have to learn from instance. is to lay a road. recently suggested that shareholders require corporations to set up trust funds for political contribu. the politics of competitive development will over- nesses invest precious little in improving the overall take the politics of caste. One of the or more demand for de-politicisation of the secu. then the 21st century can functional knowledge of English. and media and technology an order of magnitude greater than today. with a that can motivate people. and while the response is improving. The more viding the intellectual infrastructure for the 21st strongly we do this. guages. we will collaborate in some areas. our own strategic position as opposed to someone What I've done with my book. In same. able to take ordinary people and make them Things are not going to change overnight. things I have been advocating is that not only rity agencies. India is in a strategic position. thinking happening. playing field moves to their strength. training of public officials (policy schools and scholar. Arun Shourie. they'll make Mandarin one of the global lan- and some of us who are doing it—it's not wide. other part of the world: we have to learn from the And yes. whose language is not English. Can the is what we have today. we were take it further. At some point outward-looking Indian businesses. We really don't have a roadmap from any ships) and indeed in clean politics. We have to make map for what are the ideas that we need to think sure that remain the dominant business language about. There are areas where we have common PRAGATI . and chart out a whole new plan. we need a lot of introspection and I don't see pen. and Brookings. India is a I think the terrorist attacks have woken up swing country in this because our embracing Eng- people to the strategic risks of not focusing on a lish in a big way will be an important reason for strong and secure state. Indian busi. lot of introspection and I don't see that level of With China. or more initiatives on governance should India learn English internally. India can do the dian politics will change over the 10-12 years. We haven't done it—barring the Tatas way.THE INDIAN NATIONAL INTEREST REVIEW 12 . That shift will occur over Indian entrepreneur continue to be globally competitive the decade. if not the global language. I've been involved with a large number of that level of thinking happening. and provide leadership the age of 25. percent urbanisation. which public policy and public management capacity. the Ameri. 90 percent of them literate. religion and creed. We really don't have a roadmap from any of the world and global communications. a lot more can be done. That might translate into English to continue being a dominant global lan- multiple kinds of things: more political activism. India is at such a phenomenal position that 2020 we will have 500-700 million people under if it can set its vision high. I believe it should also translate into pro. IN DEPTH saic. initiatives to set up institutions. endowed chairs in Indian universities). Yet. middle class backgrounds. the spread. in the face of poor governance at home? How can corpo- rate India be made to invest in thought-leadership (think tanks. If the Intellectual infrastructure for the 21st century seeds of that are laid today they will become the From Bombay Plan to Bombay Club to Bombay basis for huge changes in the way political parties House—we've seen the entrepreneurial shift from function and governance improves. we should reforms. That way. the more strongly we secure century. actually spread English globally. think-tanks and so forth. If the Chinese had their current day. how do you see the India-China relationship foundations. we should modernise our infrastruc- mistakes made in the developed countries and ture before China catches up on the language chart out a whole new plan. That needs to happen very rapidly. guage. the mistakes made in the developed countries tions. If you compare the 21st century Engaging China India with the US in the 20th century. and ensure that these are spent only on candi. To do that we need a front. to name a few—many evolving over the next few years. It's a little early to say whether that will hap. So my book is a broad agenda compete in others and partner each other in yet and it's time we got into the details of each of these others. great institutions were set up and they do it to the It's more than that. But because we things and create the intellectual infrastructure to had a larger vision of what is possible. we'll have 35-40 be an Indian century. To do that dates without criminal records. Will India modernise its infrastructure before the Chi- cans really built huge intellectual infrastructure nese learn English? What if it is the latter? More gen- through philanthropy—the Ford and Rockefeller. erally. In- achieve extraordinary things.

the attacks were a com. The Mumbai attacks are state’s broken decision-making process. the policemen orientated future. a low probability high more than two days. In the absence of a policy that set clear to enable the state to minimise casualties in the rules of engagement. themselves by analysing and synthesising avail- At the abstract level. and tries to evolve rec. But I don't believe Both countries have an interest in keeping global that you have to necessarily be a formal politician markets open. That sense (acorn.” but left much to be desired. IMF. this turned into a severe dis- given its superior ability to mobilise resources. 2008 – Incorrect orientation rity agencies trying to exculpate themselves by The attacks began at 21:10 with terrorists attacking claiming to have predicted the attacks on time. November 26. and with Nitin Pai is editor of Pragati and blogs at The Acorn perhaps the right position to contribute. and some will not. of history is very much in me. I am involved with equitable deal on climate change. in getting a a whole number of initiatives—and some of them larger say in international organisations like the will succeed. I strongly feel that I am fortunate to be in the right time. 2008 was a Black Swan. G-7 which have to recognise the of them do then I would have made a reasonably shift from West to East. So we will need to deal with China differ- ently. economies and for natural resources. terial and moral COUNTER-TERRORISM Improving India’s anti-terrorist responses The need for scenario planning and red teaming SHAUNAK S AGARKHEDKAR THE TERRORIST attack on Mumbai on November And yet the terrorists managed to hold out for 26. Initial reports mistook the attacks for a process during the attacks. depending on the issue. patrons at the Leopold Cafe at Colaba. That the Indian state against trained and well-equipped terrorists with would ultimately succeed was never in doubt superior orientation. gang war and the police orientated themselves ommendations for bolstering the process in order accordingly. And there are are areas we can be partners—like in bilateral trade. The decision-making process have been a source of significant advantage in a of the Indian state on display during the attacks conflict against the Mumbai “underworld. What's next for Nandan Nilekani? In one year. The interests are not 100 material contribution to the direction where India percent common but broadly in the same ball park. effective and to bring about change in India. able information (gunfire) within the perspective petitive conflict between non-state actors (albeit of their previous experiences (fighting the Mumbai likely to have been backed by state machinery) “underworld”). on trade and environment. Attacks on The article seeks to identify the reasons for the commuters at Chhatrapati Shivaji Terminus fol- severe breakdown in the state’s decision-making lowed. This can be attributed ity. and acted accordingly. advantage. at the right place.nationalinterest. inflicting severe human. no exception to this rule and have spawned a frat- ricidal exercise with various intelligence and secu.IN DEPTH interests: for instance. is headed. and in five years? I certainly would like to engage in the change process of India. in getting an efficient. ma- impact event marked by retrospective predictabil. So I think that's good for a day's work— There are some places where we compete: as a good decade's work. Black Swans seem predictable and explainable partly to the terrorist’s training and partly to the after they have occurred. This would and the Indian state. But even if a few World Bank. 13 No 22 | Jan 2009 .

place. tacks. the state need not be completely unprepared quest the deployment of the National Security and caught unawares. Civilians from the strategic studies com- operate at a higher tempo than the NSG. attached to the MHA at layouts and this allowed them to manage the the central level and reporting directly to the Un- situation effectively. The red team should “war- undoubtedly causing the operation against the game” against bureaucrats and the police brass of terrorists to be prolonged. The Research & Analy. be staffed to maximise diversity of experience and In the end the state had to fight a battle of attri. sented. The ernments. along with the Border Security Force in higher casualties (civilian and otherwise). with a certain level of familiarity with the un- tated by believing that the incidents of gunfire were related to a gang war. and munity and even experts from the armed forces of seems to have enabled them to hold out for so friendly nations can be tapped. Such famili- only at 00:45 on November 27th. either by The reports had also highlighted that the targets had been reconnoitred and that the terrorists would infiltrate via the sea. It needs to become more Guards (NSG). and resulting in far each state. This information asymmetry enabled cial Forces units from all 3 arms of the armed the terrorists to orientate faster. Despite the state having received fective responses to Black Swans are possible multiple warnings (observations). No measures were taken to prepare the police for an eventuality as mentioned within the intelligence reports and the excuse given was specifying the adversary’s preferences and strate- that there was no “actionable intelligence” pre.THE INDIAN NATIONAL INTEREST REVIEW 14 . This can be achieved by sce- not filter down to the operational level or they nario planning and red teaming. Scenario planning involves the construction of The state government had been provided with plausible scenarios and suitable responses. eight days before the attacks ac- tually took place. wearing down the terrorists and exhausting The red team should participate in “wargam- their resources. Effective and efficient responses to Black added 105 minutes to the delay. gies or by simply serving as a devil’s advocate. were ready arity can only be achieved if the state actively en- within 15 minutes. IN DEPTH The Maharashtra state government displayed stani fundamentalists to realise the impact of the an astounding lack of orientation during the at. given orders by the MHA miliarity with the unfolding situation. There would be further delays gages in scenario planning and red teaming. The objec- chological victory by holding off the might of the tive of these exercises should be to probe each and Indian state for more than two days. allowing them to forces. an adversary’s perspective. It took more than ninety minutes for the While nobody expected such attacks to take Chief Minister to be briefed and subsequently re. and the Coast Guard and so. It only takes a every aspect of the state’s defences in order to cursory look at online forums populated by Paki. In doing case of border states. every state in country. and that the Taj Mahal Ho. Navy in case of states with coastlines. and the National Swans is only possible with a certain level of fa- Security Guards (NSG). teams is to enhance decision-making. pointing to the lack of orientation on the part Scenario Planning & Red Teaming of various arms of the state. Either the reports did folding situation. ceaselessly innovates operationally and strategi- The Union Ministry for Home Affairs (MHA) cally. The state was forced into that posi. the police orien. Ef- vember 18. It should begin by forming a dedicated terrorists had superior awareness of the building red team for this purpose. 2008. intellect. identify as many vulnerabilities as possible. were ignored. due to non-availability of air and land transporta- tion. displaying an inability to orientate “cerebral” if it is to succeed against an enemy that itself in the face of overwhelming observations. Red intelligence inputs indicating that a terrorist attack teaming is the practice of viewing a problem from on Mumbai was likely. engaging the NSG at will and ion home minister. This red team should be staffed disengaging and withdrawing with remarkable by experts from the intelligence services and Spe- effectiveness. The Indian state must start scenario planning In Mumbai the NSG were hampered by a lack and red teaming involving central and state gov- of maps detailing the layout of the buildings. ing” exercises with the security apparatus from tion by its inability to effectively orientate itself. The team should long. then PRAGATI . tion. The state need not be completely unprepared sis Wing (RAW) had provided a warning on No- and caught unawares by terrorist strikes. the state allowed ten terrorists to score a psy. terrorists psychological victory. The goal of most red tel and the Oberoi Trident Hotel were the targets.

they are likely to face resis. The personnel chosen steps to mitigate their impact. while commendable. helping reduce the number of next Black Swan to occur in India.IN DEPTH utilise this knowledge to develop scenarios and Quicker Reactions recommended counteractions. By requiring that po- ernments. are insufficient. a uniformly applicable policy and rules of engagement can go a long way in en- suring accurate and uniform orientation through. These teams are raised and main- The exercises are meant to serve as a means of tained solely to respond to terrorist incidents and continuous improvement for the state apparatus as such do not suffer from the orientation prob- by highlighting vulnerabilities and recommending lems that other units might. police. those maintained by the Indian Army in Jammu & gence agencies. multinational corporation and blogs at shaunak. Linking spend 6 months attached to Indian Army QRTs in successful and frequent conduct of these exercises Jammy & Kashmir to learn their tactics. served in QRTs in J&K. an anti-terrorist orientation can be forced gations agency will not help in dealing with the upon the personnel. Tougher anti- police casualties in future incidents. equipped with superior weapons and may help soften the resistance and enable success. para bellum Policy and Rules of Engagement The events of November 26th point to a singular There is an urgent need for a national policy on lack of preparedness on the part of the state. however. tally and vertically across the government machin- Although each part of the system must orien- ery. Given In- That can only be achieved by proactively improv- dia’s severe legal control of firearms in the hands ing the ability to anticipate events. Police to central funds for police force modernisation QRTs. equipped with superior weapons in. This solution serves as a not be publicly humiliated. hypothetical plans for NSG garrisons in every ma- cally reviewing the implementation of their rec. Shaunak S Agarkhedkar is a strategy consultant with a out the entire system. Any organisation plans for NSG garrisons in every major city. ommendations. the red team must utilise inputs that the state Quick Reaction Teams (QRT) along the lines of in question may have received from the intelli. Considering the na. tate itself separately. lice units assume reports of gunfire to be terrorist Seductively simple solutions like a central investi- related. The results will need to be kept sponse with comparable firepower within minutes confidential. There is an urgent need for a database of the and trained in better tactics are a golden internal layouts of high profile buildings that are likely to be targeted. These terrorism that clearly delineates the rules of en- are systemic issues and need systemic solutions. to be built and made avail- mean between the current situation and the able to elite counter-terror units. will not needs to be accompanied by a corresponding help reduce the number of civilian. include powers for 15 No 22 | Jan 2009 . and team must. such a policy should not result in too and respond in a co-ordinated manner horizon- many false-positives. among others. Of special significance is the internal layout of the buildings they are to operate ernments. It will also serve to make the state of a terrorist incident. by those who have ture of these exercises. Policemen selected should tance from the entrenched bureaucracy. The charter of the red golden mean between the situation as it exists. provement of tactics through training. named as a potential target must be required to provide layouts of all its facilities to this database immediately. Kashmir (J&K). This policy terror laws. the scenario they face. During these exer. gagement for police and paramilitary units faced The steps announced by the state and central gov- by potential terrorist threats. while serving as a deterrent. Buildings’ Layouts Elite units such as the NSG need to be provided with as much information as possible regarding Police quick response teams under state gov. trained in better tactics would provide a swift re- ful completion. manage risks of the public. para- weapons upgrade through purchase and an im- military and armed forces casualties in the future. jor city. Si vis pacem. State governments should raise and maintain cises. could be trained. This should help mitigate apparatus more amenable to being “questioned” civilian casualties during the period before the by the red team if they are assured that they will NSG are deployed.

For the former. the increase in food prices   in recent mists never agreeing are clichéd. no one expected the financial crisis. with recession in developed countries. Fourth. First. India isn't China. ROUNDUP ECONOMIC POLICY The empire strikes back Thirteen reasons to feel gloomy about economic reforms in 2009 BIBEK DEBROY JOHN MAYNARD Keynes is back in fashion with economies—banks and financial institutions must a vengeance. After the East Asian gramme (NCMP) constraints. capital account convertibility and the Inter.  money. The dollar's role as a de ployed resources. elimination of subsidies in devel- opinions. or privatise and South Korea to be closed down and for inter. Perhaps there should be caps government and its ministers have exhibited on leverage ratios. Sixth.  Keynes. said that two economists always gave him two For the latter. and the reverse elsewhere in wrote during a period of depression and unem- the world. credit rating agencies? However.  ion for a different reason too.  Third. Jokes about econo. gotiations aren't going to resume in a hurry. ternal trigger for trade liberalisation is postponed. then that's a tribute to from India. not trade liberalisation. ered away in India.THE INDIAN NATIONAL INTEREST REVIEW 16 . So that ex- and declined in East Asia. more accurately with what chary of agricultural liberalisation. multilateral or putes need for prudent regulation. Ordinary non-economist mortals have every the attention switches to domestic economic poli- reason to complain about confusion. Note that savings rates have the skeleton until the EU's Common Agricultural increased (before the crisis) in the United States Policy (CAP) is reformed beyond 2013. ing in developed economies goes much beyond cement. not self-equilibriating mechanisms for correction before 2011 and will not have flesh and blood on would have emerged. But in this reverse swing of the pendulum. That India. instead of leaving these to market forces—steel. Winston Churchill said about Keynes. But was expected to make public expenditure more that medicine can't be applied to developed accountable. it was fine for banks in Indonesia UPA to open up pensions or insurance. Had it not been for that. PSUs. As a PRAGATI . in which case. there are situations facto   international currency. with private vices.   Indeed. who US primarily in mind. he got three opinions. pharmaceuticals and interest rates. these issues are revisited. Keynes is back in fash.  regulation and its content and overturns the wis. flexible exchange where monetary policy does not work. But it est rates to be jacked up to exorbitant levels. But can one regulate ratings by mindsets of controlling prices by government fiat.  tent of regulation needs debate. Keynes therefore advocated use of fiscal policy  national Monetary Fund's role are thrown in. However. These kinds of sentiments are associ- high consumption and current account deficits in ated with the name of John Maynard Keynes.   And rates. Fifth. within India. linking outlays with outcomes. Churchill food inflation means catering to domestic markets. the incoming US president has reserva- ment banking needs to be separated from other tions about free trade. the UPA banking operations.  we would have continued to debate global imbal. If Developed countries can do what they want. Economists have talked about global be nationalised and public money used to bail out macro-economic imbalances   ad nauseam. Saudi Keynes and his role in shaping the initial Bretton Arabia or Japan and is not in a position to offer Woods regime. cies. though the con. Thankfully. Second. what is happen. and a World Financial As long as they do not want bail-out resources Organisation contemplated. No one dis. it isn't the case that these imbalances the empire has struck back with a vengeance in caused the present global financial crisis. ure in the United States. or introduce labour market reforms. The empire of state intervention never with- trigger was provided by domestic regulatory fail. It only dithered for a while.   Perhaps invest. such as Asia. Consider the following. regional. given National Common Minimum Pro- dom of the last thirty years. In a way. Unless one of them happened to be oped countries means higher global prices. the Doha round of multilateral trade ne- ances for another twenty years and eventually. these years   made both net exporters and importers originate with Keynes.

Parliament will agree. That was due to declining cost of capital and high invest- Because fiscal consolidation didn't occur. With growth slowing from 9 per- 17 No 22 | Jan 2009 . Eighth. But now. Reduction of compliance costs is contingent the form of consumption expenditure and doesn't on these. It is the composition Eleventh. portunity costs.  resources had no opportunity costs. Once the Centre flagship programmes. and harmonisation of rates and removal of exemp- cator. with discretionary brought about. If they are significant.  guarantee and the Sixth Central Pay Commission. Compared to the original tion of agriculture in national income. These show up in bank figures on lending Centre's true deficit is now 8. Keynes wrote in a period of depression. why did Indian liberalisation (to the or through higher GDP growth. consequently. with revenue. Because fiscal consolidation didn't oc- cur. The as. headlines. the preoccupation with 10. there has been no treatment part of the fiscal response. all governments since 1991 have pursued this there has been consensus on reducing deficits. As share of GDP. that statute also lost some of its of industry and services and better productivity teeth. Private invest- vate investment to public consumption and ments will be crowded out because of a high inter- knock the bottom out of what has driven In. though they are of doubtful does that. national rural employment legislations. India is in a downturn. But these are incremental and don't explain the sharp break in 2003. the terminal year target is 3 fiscal policy diverts attention from monetary pol- percent for the fiscal deficit and 0 percent for the icy and the required financial sector reforms that revenue deficit.  have been reduced by slashing capital expenditure Twelfth. back to pre-1991 Seventh. the ment rates. high growth draft legislation. trajectory in 2003? The demographic dividend. encapsu. deficit figures (as shares of GDP) are levels. since there hasn't been There was little movement along that path with any consensus on how deficit reduction is to be the UPA government. and resources have op- and one only has a terminal year target for 2009.ROUNDUP budget promise. not depression. there is a tax reform agenda for both of government expenditure that matters. If they are sources from private investment to public con- significant. one that was historically outside the ambit for fiscal consolidation. they will switch re- won't be quantitatively significant. Ninth. they will switch resources from pri. Unfortunately. as is the goal of uniform Goods and Serv- add to creation of productive assets. In greater or lesser de- is said that across all governments since 1991. the overall misleading. Though useful. these won't be quantitatively signifi- cant. sumption and knock the bottom out of what has driven Indian growth since 2003. it ice Tax (GST) from 2010. why did India move to a higher growth technical definition of the fiscal deficit. export growth. involving standardisation precisely the reason the revenue deficit is an indi. The yearly numerical targets were junked are valid arguments. the of unionisation. it loses all moral arguments against efficiency and leak like the Titanic. off-budget items don't figure in fiscal Add also off-budget items like food and fertiliser deficit numbers. with the latter extent it happened) meet with so little resistance? blowing up the denominator and also boosting tax Part of the answer is in the young generation. Admittedly. the bonds.  deficit is 11 percent of GDP. agenda and have never formally discarded it. figures on credit growth are with State contributions thrown in.  fetish out of the fiscal deficit.  alarming. consumption and income growth from the services The high growth years since 2003 weren't used sector. For instance. Worse. There will Information (RTI) Act has had its teeth knocked be demands for relaxation and given the present out. They are also misleading. That's a pointless assertion. Quite often. There is a Tenth. Not- scope for fiscal expansion is limited. lated in the Fiscal Responsibility and Budget Man. Once those are factored in. That is direct and indirect taxes. that agenda consensus on reducing public expenditure. gree. the outlay-outcome exercise has incoming government in 2009 will find FRBM ter- now been discarded. labour input. Deficits goes for a six.5 percent of GDP and and therefore. when dian growth since 2003. Add to that States not   implementing their   own FRBM farmers' debt relief. the Right to minal targets impossible to adhere to. withstanding assorted packages that grab media sorted packages that grab media headlines. decline in contribu- agement (FRBM) Act. the scope for fiscal expansion is limited. most public expenditure is in tions. one shouldn't make a can make monetary policy more effective. The government has expanded the so-called climate. est rate regime.

25 percent.  is. Regardless of the composition of the new growth slowing from 12. turities to bring down interest rates for all kinds of serve decided to cut the overnight federal funds debt. Liberalisation is the antithesis of discretion. some of government in 2009. Photo: Simon Bisson GLOBAL ECONOMY The biggest solo flight of them all More reason to proceed with economic liberalisation V ANANTHA NAGESWARAN ON DECEMBER 16th 2008. nuance. by all accounts. the Federal Open debt securities of different issuers at longer ma- Market Committee (FOMC) of the US Federal Re. That owners and small businesses in the new year. Witness the Jet Air. The first a step further. back. it had no more control over the years. Thirteenth. and with a slightly different that support base disappears.3 to 0.5 percent but is now back overnight interest rate.1 percent. Some time in the last two zero was reached. So it has promised to buy near zero. these are thirteen reasons to feel gloomy ways episode leading to demands for a nanny about the cause of reforms. Today. Bibek Debroy is a research professor at New Delhi’s there is gloom and doom in India about the slow. It hinted at a new lending facility for home rate to a level between zero and 0. the Bank of Japan reduced its over- loans is effectively zero. The empire has struck state.5 to 9 million. ROUNDUP cent to 6 percent and annual new employment down. The Federal Reserve went night interest rate from 0. In the one year since Japan reduced the PRAGATI .THE INDIAN NATIONAL INTEREST REVIEW 18 . Centre for Policy Research. rent-seeking among ministers has increased and this thrives on discre- tionary abuse. Thirteen is an unlucky number.  time the Bank of Japan lowered its overnight rate It has realised that once the lower-bound of to zero was in 1999. the interest rate at which the Federal Reserve Within days of the Federal Reserve announcing wants banks to lend to each other overnight for these steps. it went up to 0.

operating savers. In other words.ROUNDUP overnight interest rate down to zero. therefore. into the Global Depression. much of the increase in the Nikkei index The second issue is the obsession with growth. Nixon closed the gold window and effectively there is a trade-off between growth in the next two ended gold-dollar convertibility at US$35 per years versus growth in the medium to long-term. Attracting potential cost to using fiscal policy in such circum- capital entails not only financial liberalisation stances: growth today vs growth tomorrow. economists would argue that real re. That may or may not turns are positive and that is reward enough for be true. and that therefore the gold terms.   real terms. the fact remains that the Nikkei ods. the efficiency. One is that policy-makers have brought the world to the brink most of us think in nominal terms rather than in of another depression. Low interest rates might en.  It is forgotten that Keynes was rates.   ing desire for growth has led to the name of great Of course. But. it was in the short-term and in the long-term. The impact of growth on the envi- plauded. The world is running out of crude oil and global warming is a and attract capital in a world that has turned growing threat. Unem- Bank of Japan. and global warm- benefits and consequences of these measures both ing and peak oil were unheard of. The third issue is one of an unbalanced and unhealthy global monetary regime that is currently in place. There is very little debate about the ronment was a remote concern. One of the criti- capital. The questions concern the meth- zero interest rate. Of course. people tend to save less or not The reason is that in the post-gold standard at all when nominal returns are non-existent. There is a to excessively trapped capital.  Woods in 1945. but they won’t encourage critics of the gold standard. there is no that has been in America’s favour since 1945. Without investment. investment The context is different today. in practice. Hence. In played cognisance of this trade-off. That country is may be condemned to years of sub-par growth if the United States of America. The second time was in 2001-03 when the 19 No 22 | Jan 2009 . they tend to borrow more. There is theoretical merit in that argument. as money supply could be loosened only with there is very little incentive for saving in nominal more gold availability. There are no two and attribute the stock market performance to the opinions on that. Much of this has fourth of the labour force was without a job in the been accepted unquestioningly and even ap. what is instructive is that. world’s But. system that evolved after the conference in Bretton Worse. This overwhelm- mented in Japan. without the constraints of gold standard. if there is no inflation and even standard magnified the policy errors of the 1930s deflation.   India. When cisms against it is that the it limited policy freedom interest rates are lowered to such ultra-low levels. the product of the Great Depression when indus- ther. the United Kingdom has not ruled it out ei. it has set the world monetary policy and it has abused it consequences for long-term growth. Countries at least four times in four decades. savings do not rise. Many economists from America remain Interest rates are not only about the cost of highly sceptical of gold standard. ounce. and hence investment needs would go native is one way of perpetuating the status quo unmet over time. there are three issues. should aim to raise savings. any emergency economic relief. United States. All major countries have lowered interest trial output contracted more than a third and one- rates to historically low levels. It is no surprise. the Nikkei Policy actions all over the world have not dis- stock market index rose more than 40 percent.  sustainable growth. the effectiveness and the long- stock index is down nearly 60 percent around ten term costs and growth sacrifices that accompany years after the zero interest rate was first imple. Even if we were to overlook that ployment has to be addressed. one country has enjoyed rights to When savings are thus not encouraged. but also economic liberalisation. Hence. Japan’s post zero-interest rate The first time was in 1971-73 when President growth experience is an example. Countries such as India have used viciously from excessively footloose capital up fiscal policy when times were good instead of conserving it for occasions such as now. not only have the United States and British economist John Maynard Keynes being fre- Japan edged closer to having zero policy interest quently invoked. They are also the reward for saving. could be attributed to the global stock bubble in Yes. that American economists are leading courage consumption.   natural for him to exhort governments not to wait for the natural curative forces of the economy to work but instead to hasten the recovery. Discrediting an alter- savings.   fact. democratically elected governments have an 1999 and not the zero interest rate policy of the obligation to respond to economic crises.

interest rates and exchange rates. they did not. the they are manipulating all asset prices for short- world was awash with easy money for too long. It is a race to the killed financial capitalism. Worse. In the process and in bottom. tal in a world that has turned viciously from exces- pushing crude oil price over US$140 per barrel in sively footloose capital to excessively trapped 2008 and many developing nations over the edge capital. in turn. preciation of their currencies. Consequently. AGRICULTURE Underlying agrarian distress Hydrogeology offers insights for irrigation policy SUVRAT KHER WHAT IS the relationship between geology and aquifers and the rest of peninsular India aquifers economic development? The chances are that you within complex geological structures. The road ahead appears both danger- As the previous article by Bibek Debroy bril. What better way to show that we understand the eral Reserve meant good tidings for the world difference than to stand by and take credit for economy. been the consequence of financial the norm than the exception. It will be depreciating its currency and world that is wallowing in groupthink? others will have to submit meekly or resist by de. should aim to raise both savings and in- US dollar spigots on was in the fourth quarter of vestment through different ways and attract capi- 2007 that lit a fire for speculation in commodities. dictated partly Delhi.  that. Intellec- ing and expanding one’s share of the pie. The immediate explanation for PRAGATI . Other countries followed. Aurangabad. A groundwater map (see next page) prepared Looking at Maharashtra in the map. we have the worst of all possible worlds. The map divides aquifers underlying India potential'. ous and dark now. That views. The Himalayas have Amravati. Combined will point to the oil and gas and mining industry. When governments had to intervene in financial sector. It would have been all right if capitalists had preciating their own currency. tual bankruptcy has clearly been the catalyst for beggar-thy-neighbour policies are now more likely and. term considerations. Thus. thus likely to be an increasing clamour for retain. they under.   The third time the Federal Reserve turned the India. with recharge potential the map gives on a broad You will be right but not entirely.  bankruptcy. As the global growth pie shrinks. there is collusion with both intellectuals and governments. at the same time. liberalisation but also economic liberalisation. Attracting capital entails not only financial of the cliff. they have nearly killed capitalism itself. unshackling the econ- The United States is embarked on a similar omy and showing intellectual leadership in a path now. Nagpur. Over the last 6-8 years the districts of into three main categories. when they should be intervening by their own economic circumstances and partly minimally and letting markets find the right level by the anxiety to prevent excessive and rapid ap. None of the previous solo flights of the US Fed. December 2008 is the fourth time and what the Reserve Bank of India did in the last few this is the biggest solo flight of them all. These are his personal that enhanced systemic risk but not efficiency. Nashik and Pune according to this study shallow local aquifers. ROUNDUP nominal Federal funds rate was brought down to 1 happened all the way from Washington to New percent. you will recently by the World-wide Hydrological Mapping notice the areas classified as 'complex hydrogeo- and Assessment Programme drives home this logical structure' with 'medium to low recharge point. the has seen the death of more than 2000 farmers Indo-Gangetic plains high yielding homogenous through suicide. V Anantha Nageswaran is head of investment research mined regulation of the financial sector in a way at Bank Julius Baer (Singapore).   years and. liantly argues. The influence of scale the likely patterns of aquifer yield across the geology on our lives is much more pervasive than country. of asset prices. Now.THE INDIAN NATIONAL INTEREST REVIEW 20 .

• Around 93 percent of land is rain-fed and 98 per- guidance. poorer crop yields. The rock mass is made up of in- terlocking crystals.  results of several studies of farmer suicides and But the study also found that overall ground- identified conditions that made farmers in these water is under-exploited in this region. A recent study of groundwater use and most of these cases is indebtedness. These fracture sys- tems are not uniformly distributed throughout the rock mass. They are restricted to linear or irregularly shaped zones and die out laterally and vertically making the contained aqui- fers heterogeneous. Farmers bor. agriculture in Vidarbha. and Cotton the dominant Finding water in basalts can be crop. And • Disruption in regular rainfall cycle since 2001. Long dry spells. tough without proper geological ted suicide had planted cotton. • Single crop a year.  used groundwater as a supplement to surface wa- The Maharashtra government compiled the ter have higher yields from their fields. He then has to rely en- tirely on the rains or get into a groundwater sharing agreement with a neighbouring farmer who might have a yielding aquifer under his farm. Farmers who farmer suicides occurred. These were: ers cannot afford to dig into the hard basalt. So poor farmers don't cent of the farmers who committed suicide had exploit groundwater enough and no irrigation. 21 No 22 | Jan 2009 . highlights this influence of geol- other personal reasons and fall into a debt trap if ogy on agrarian economies. but regular rise in cost of input lowered margin of profit. water sources usually make for • Commitment to money lender did not leave any- thing with the farmer. The research con- crops fail or give a low yield. However. Basalt is a volcanic rock. About 70 percent of farmers who commit. therefore remain poor because in- • Yield limited by rain. Poor farm- regions particularly vulnerable. Those areas marked ducted through the International Water Manage- as 'complex hydrogeological structure' and with ment Institute-Tata Water Policy Programme 'medium to low recharge potential' coincide with found groundwater exploitation a strong determi- the areas in which the vast majority of the 2000 nant   of crop yields and incomes. often the rock is fractured and these fractures or joints become the storage and transmission pathways for water.  An unfortunate consequence of this extremely variable and compartmental- ised basalt aquifer system is that   a farmer with a small landholding of a hectare or so—and there are plenty of them in this region—may just have the Image: © WHYMAP/BGR-UNESCO bad luck of farming on top of an un- yielding basalt. it has minimal per- meability. a region badly hit by row money to meet high farming input costs or for farmer suicides. ROUNDUP This agricultural region sits on top of the Deccan basalts. deficient monsoon. adequate and infrequent surface • Volatility in market price further lowered return. But during times of water stress there is too little water to go around resulting in What lies beneath—groundwater map of India crop failure or low yields.

the due to soil degradation. Not all cases of farmer dian subcontinent suggest that monsoons are suicide can be linked to water problems.   Irrigation water yielding properties of the rock makes dig. use the dug well to replenish the aquifer during Global warming and changing monsoon pat- times of good rain. crops can likely to become stronger although some areas get wiped out by pests. some instances where Bt US government released a summary of federal and Cotton seeds failed. warming will affect different regions in India. Finding water in basalts India means canal irrigation (read mega infrastruc- can be tough without proper geological guidance. No 16. For daily analysis. yields could have been low might experience erratic patterns. the relief package lists irriga. Tushaar Shah. that even though tens of thousands of crores of Another problem. So poor farmers don't exploit groundwater enough It doles almost ten times more money to irrigation and therefore remain poor because inadequate and de ve l op me n t than to w a t e r sh e d infrequent surface water sources usually make for development. en- couraging a diverse array of crops and reducing dependence on pesticides and fertilisers. Poor management of groundwater resources gions in the US. small landholding benefit most not from canal mary water extraction method but do not widely networks but through groundwater irrigation. This made irresponsible financial commitments. In May 2008. new monsoon strategy”. July 2008). and one that is seen increas. they irrigate just ingly all over India. ture projects) and not local groundwater irrigation. rupees have been spent on canals. Climate models for the In- the groundwater resource. terns will be the next challenge to agriculture in draft and a steady diminishing over the years of the decades to PRAGATI . and In a recent issue of Pragati.   Farmers use dug wells as a pri. Pragati. Visit our blogs For everything on the Indian National Interest visit http://www. a use this to plan and execute a massive and focused groundwater expert with the International Water effort of aquifer exploitation and replenishment Management Institute made a strong case for the using existing and new groundwater recharge systematic and scientifically managed exploitation structures. But the was followed by another report on extreme link of low yields to ready availability of water is weather and how that may impact different re- real.blogspot.   This. We too badly need a thorough has exerted a powerful influence on the lives and region-specific scientific assessment of how global livelihoods of Maharashtra farmers.nationalinterest. despite the revealing statistic poorer crop yields. But water underlies any success- ful agricultural strategy.  In terms of water.THE INDIAN NATIONAL INTEREST REVIEW 22 . commentary and discussions. is that not enough attention about 15 percent of arable areas over the landmass has been paid to managing the available ground. ROUNDUP past experience has taught them that the variable the water problems faced by farmers. All these are valid points. of India and   marginal farmers and farmers with water resource. development in the language of the government of ging a risky proposition. This has led to aquifer over. This is the cheapest and environmen- of groundwater as a solution to India's present and tally least destructive solution to improving water continuing agrarian water problems (“Needed: A security and alleviating farmer poverty. and then there are probably independent research pointing out region specific cases where despite decent yields farmers simply impacts of human induced global warming. Suvrat Kher is a geologist and blogs at Reporting a Revo- tion development as the only long term solution to lution (suvratk. The Prime Minister of India's special relief package for Maharashtra farmers wants to attack the problem on a broad front which includes tink- ering with the economics of cotton farming. The government of India however doesn't seem to agree.

state itself. 23 No 22 | Jan 2009 .ROUNDUP EDUCATION Discarding ideological blinkers India’s schools need an intellectual liberalisation RENU POKHARNA EDUCATION IS a liber. Unless students understand this eco- canteen is revealing of the kind of activism that is nomic aspect of policy-making. it also manifests itself in Indian universities that offer the subject.from among students of these courses tory of Marxist student parties winning elections The impact of a flawed education though is just every year on the very same slogans. Whatever openness or support there is today for liberal ideas has come more from the process of economic liberalisation. and is also kets within the country and free trade with other a hotbed of student activism. Photo: Jasvipul Chawla ating process—oft re- peated. It makes the youth closed to ideas of freedom and of a liberal society. is they receive a large numbers of their participants available for sale from its counters. from Coca-Cola to Cadbury’s. the universities across India contains just one or decided to launch guerrilla warfare against the two courses on basic economics. Unfortu- paradox—bold colourful posters pasted on its nately. It presents a striking velopment studies’ courses can help. But one visit to the countries. which is why when events like World So- and ‘March against Globalisation’   but many a cial Forum or Asian Social Forum are held in India. Surely develop. and increased ment and poverty eradication are more than about social freedoms. is con. most famously in the Naxalite social work course promotes the state as the sole movement.been due to easing government controls on mar- sidered a top university in the country. the psyche of students is being shaped dif- walls with slogans like ‘Down with Capitalism’ ferently. Like many other elections for communism. for example.  short term action plans of helping poor by charity The curriculum in our educational institutions and other government programmes? The greatest is strictly socialism-oriented. global brand. which made people real- ise the benefits of open Still lurking in the canteen markets. In India the formal education that is provided by schools and colleges actually impris- ons the young mind. JNU's violent rebellions. The movement. than from education. New Delhi's Jawahar. JNU has a his. spearheaded by the saviour of the poor in the country.  Communist Party of India (Marxist) in the 1960s The curriculum of the ‘development studies’ started off as a peasants’ uprising and then follow- and ‘social work’ programmes that are offered in ing the ideals of Che Guevara and Mao Zedong. but seldom true unless education is de- fined clearly. no amount of ‘de- espoused by the students. A look at its not restricted to peaceful marches and campus textbooks yields explanations.impact on poverty from Sweden to Vietnam has lal Nehru University (JNU).

and Thousands of students in India pass out from providing recruiting grounds for. would obviously reform project. As H.wordpress.” young minds towards sympathising with. it is ironic that an educational in- of as many as 160 out of India’s 604 districts. Ini." to their opinions of course. health care. That initial fascination explains why means. the chapter on Liberalism wards socialism due to Nehru’s admiration for the gives a very misconstrued idea of what liberal Soviet Union. Times have changed and In- people are not free”. and doesn’t connect it to the pros. One positive trend has been the emergence of pri- funct ideology. what Prime Min. people espousing the same kind of ideology. But it is given as “They did dia's democratic and economic development re- not believe in economic equality.” On the other hand. The issue here is not only of textbooks. For example. trinated becomes a difficult task. colleges dominated by teachers who still believe in ister Manmohan Singh has called the "gravest a Red Revolution. India and blogs at renupokharna. first in the West and now in China and here to the Central Board of Secondary Education India. it cannot afford to put ideo- cerned. who is influenced by all this at an age the curriculum must be part of India's education where opinions strengthen easily. Laissez faire doctrine led to great dif. A capitalist society produces ugly conditions. The teaching faculty has a right threat to India's internal security. it is also of the extent to which the teaching faculty influ. ROUNDUP Today Naxalism directly threatens the security Sciences (TISS).But at the end of the nine. At the very least.” mixed economic planning which leaned more to- This is an excerpt from a Class XII textbook of Political Science prescribed by the National Coun- cil of Education Research and Training (NCERT) Teachers have a right to their opinions. It is abundantly clear that un- Ironically.. but when an institution Consider the following statement: “(Socialism) is filled with the same kind of people espousing emerged as a reaction to the rise and development the same kind of ideology. the chapter on Socialism concludes shackling the education system by introducing with a mention of the opening of economies in the competition and empowering the students is the 1990s and laments at the loss of socialistic ideas. of classical liberals. Further. A way forward. in response to corporate interest in rural it. it says that liberals widely the education system emphasised the benefits of a believe that “free people are not equal. made many educated youngsters become a part of Recently. Renu Pokharna is associated with the Liberal Youth ences the students.” dated over time. but positively good for all con. stitution funded by one of India’s biggest corpo- tially. and equal socialised economy. convincing the students of capitalism. teenth century.” Nowhere is ‘rule of law’ talked about de. logical blinkers at a time when it stands at the spite it being a pillar of liberalism. Certain sections quires its youth to a better understanding of Liber- indeed believed that economic inequality was not alism. “Presidency Col. Liberating minds by transforming student. Yet a majority still ad- the world. be perverse to the ideas of a free market economy and markets providing public goods. vate schools and colleges many of them experi- perity and growth enjoyed by economies around menting with the syllabus. To complete the demonisation. but it glorifies socialism with statements like “It protests convincing students about liberal ideas after against the harsh materialism and individualism they have been indoctrinated becomes difficult. argued in a newspaper that it was not a plausible ing a trademark. about liberal ideas after they have been so indoc- ficulties in society…. textbook talks about Liberalism as if it were a de. but that designs the syllabus that is set as a benchmark for central board schools across India. At the Tata Institute of Social Forum. it was the romanticism of rebellion that rate companies should actually be anti-capitalist. the chapter (CBSE) or the local State Boards where the text- concludes that  “the concept of market swallows books and the ideas in them have not been up- up the concept of justice and equality. the verge of exploiting the demographic dividend. idea “as it depends on the business house's charity rived. the fallacies of the doctrine became Post-independence India saw the adoption of a evident. only inevitable. Beards a la Che Guevera had ar. The book when an institution is filled with the same kind of has chapters on both Liberalism and Socialism PRAGATI . the jhola be. a very senior member of its faculty lege was the hub of student activism.” India cannot afford to help indoctrinate its quotient rather than on a sustainable module. Balakrishnan remarks.THE INDIAN NATIONAL INTEREST REVIEW 24 . der the heading of ‘Major Political Theories’.

So when combined with a humble curiosity that really he makes the point that using unique smart cards makes this book so engaging. Allen Lane/Penguin. cred of Mr Nilekani does not hurt India from a colonial administrative language to dlemen we should liberalise our agricultural sector a neutral language in the post-independence lin- too. in populist. they necessary next round. 2008 globally-connected. is highly inspir- religion through economic growth is highly in. because that will create organised sector jobs for But Imagining India is not all policy and is in the poor. making it safe to tag him as a "venture schemes we should rationalise our labour laws philanthropist".ing as Mr Nilekani pens the rise of yuppie ideal- ists.poor children of an English education without fac- 25 No 22 | Jan 2009 .tion which beautifully combines all three is about tion by giving private players a level playing field the English language which Mr Nilekani calls "The with the government. and linking up our disparate vertical databases can move us away from the inefficient subsidies towards a system of direct benefits. you know that this can be executed coming as it is from a former Nilekani says that we must understand "the CEO of Infosys. politics and history. BOOKS REVIEW National process re-engineering Why reforms with a human face are possible and within reach HARSH GUPTA NANDAN NILEKANI.ernment to abolish urban land ceilings and other coming India's "vertical divides" of caste and socialist urban planning disasters. besides showing the successful use of incentives by the central gov- statist. bulging demographics of glamorous yet necessary job by Nandan Nilekani Indian youth who are more of publicly endorsing eco. His vision of over. On the basis of what actu. Tracing the language's evolution subsidies which help only large farmers and mid. started effective NGOs on issues like e- governance. and that these are not just the ideas of nerdy policy wonks and esoteric academ- fierce urgency of now". guistic battles to finally the language of upward The importance of these reforms is very well mobility in a knowledge economy. than on partisanship or ideology. Review Nilekani remains optimistic lously researched book Imag. Professionals from Delhi to Bangalore have spiring. our political rhetoric remains socialist. It is that sense of pragmatic idealism. Mr Nilekani himself (along with his Mr Nilekani presents his argument through wife) has donated both money and ideas to such three examples: instead of having make-work projects.chauvinistic politician today can deprive rural and known. And instead of agricultural phoenix tongue". Mr his well-written and meticu. in order not to waste ics. he argues against Obviously having evangelists with the street socialism. In spite of this. Instead of resorting to reservations and fact peppered with many perspicacious observa- blind educational spending we should increase tions about our society. that change is coming. he says that we known to our technocrats and "professor. The Imagining India—Ideas for a new ining India—Ideas for a new century biggest factor here is the century has taken on the un. ambi- nomic reforms and laying tious and have no dogmatic out his own vision for the ideological framework. A sec- overall access to both primary and higher educa.allow themselves to be responsive to rationally- ally delivers truly inclusive development rather argued and clearly-presented policy messages. education for slum children and wa- ter solutions. our demographic dividend by staying on this The section on urbanisation.have finally accepted the language and that no politicians" but as they remain relatively un. quasi-socialist path. 531 pages.

what is the opportunity cost of ideas accepted but not implemented. ronmental practices locally is our best option. But the question remains: even The structuring of the book into four parts— given the scientific consensus on anthropogenic ideas that we have accepted and implemented. in some form or shape. This book needs to be read carefully But the book—clearly being a tour d’hori. but ther King Jr. quasi- you-go Ponzi welfare schemes. competent citizens need to usher it in. carbon taxes and emission caps for India are (swaraj. thought process and struggles—why he rejected and accepted certain policy alternatives—is not well documented throughout. BOOKS ing a "groundswell" of protest. share it with your friends. ignoring a spectrum of policy options on some issues. built around defined con. is it in India's national interest on India—it is in the last part that the book really from a strategic point of view to commit to ceilings stands out by daring to be innovative as well as and green taxes now? These are tough issues but controversial. For example. like the author that they are in fact not "unelect- pious quotations of experts is included in every able. And the net present value of future costs if the problem while the first three parts. in the section over what India's Harsh Gupta is a resident commentator on The Indian policy response to global climate change should National Interest and blogs at Swaraj be. What’s the best thing you could do after reading this issue? Why. the author's internal inevitable. So the author's de- bate with himself should not have been edited in favour of a this-or-that position pitch. mitigating global warming? In other words. of course! Forward your digital edition to your friends and pass your printed copy around PRAGATI . is not addressed on a war footing? are standard fare for the recent crop of non-fiction Furthermore. tributions (and not defined benefits)…would On the whole though. global by all thinking and compassionate Indians. he says that we must understand "the would bolster government revenues from the capi. socialist path. ideas pres.nationalinterest. Quoting Martin Lu- would not only be economically inclusive. dend goes waste by staying on this statist. He explains that this policy highly inspiring and relevant. lest our demographic divi- tal markets instead of depleting it with pay-as. the economic future of millions is at stake.THE INDIAN NATIONAL INTEREST REVIEW 26 . Mr Nilekani's vision of touch a demographic sweet spot…leveraging the overcoming India's "vertical divides" of caste and growing value of India's capital markets in the religion through economic growth and reforms is next few decades". fierce urgency of now". directly endorsed. At the same time. and ideas for future debates— current cost to combat global warming less than precludes an episodic feel to the chapters. They zon—can feel a little dry and encyclopaedic at might even convince public-spirited entrepreneurs times because historical contextualisation and co. Maybe Indeed Mr Nilekani accurately presages and sticking to carbon credits while further encourag- pre-empts future leftist attacks by advocating for a ing technology transfer globally and better envi- "social insurance plan." Because even if positive change in India is section. is the ently under debate. Map: Arun Ganesh .nationalinterest. a culture of tolerance and an em- phasis on good governance. economic policy and governance. What’s in this issue The larger the word. Generated using Wordle Pragati . realism in international relations.The Indian National Interest Review comes to you from an independent community of individuals committed to increas- ing public awareness and education on strategic affairs. The themes we care about dearly: economic freedom. the more frequently it occurs in the text. an open society.