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TheIndian EXPRESS
www.indianexpress.com

l WEDNESDAY l SEPTEMBER 19 l 2012

The Indian EXPRESS

BECAUSE THE TRUTH INVOLVES US ALL

HE Trinamool Congress has announced withdrawal of support from the UPA, citing irreconcilable differences over FDI in retail and aviation, fuel pricing, the pension bill and other issues. TMC ministers will resign on Friday. Assuming there is no rolling back or rolling over, this is a moment of clarity. The UPA has lost its last excuse. If it can lean on one of the other sizeable regional parties, the SP or the BSP for support, this decision is unlikely to destabilise the government. And in fact, Mamata Banerjees departure may mean that internal resistance, real and imagined, has largely dissolved for the UPA. The prime minister can no longer offer coalition compulsions as a reason for inaction. His government must exert itself fully in the time it has left. The UPA has ended up offloading one of its biggest problems, and found itself with room for improvement in the six ministerial berths the TMC will vacate. The railways, for instance, has long needed to be rid of the TMCs erratic and incompetent grip. TMC ministers were conspicuous mostly by their absence and prioritised Banerjees whims over the UPAs needs. Their leaving the government now is no worse than their being inside it while remaining unpredictable and undependable on high-stakes is-

With the TMCs exit, the UPA has a chance to be a more coordinated and coherent formation
sues. From land acquisition reform to the railway budget, from FDI in retail to fuel pricing, Banerjees views have always been at odds with the rest of the UPA. She took her grouse over the presidential candidate to Facebook. She embarrassed the government by dropping out of the prime ministers delegation to Bangladesh, after she developed a dislike for a long-planned Teesta water-sharing arrangement. It is also true that she has been the convenient excuse for a listless, uncommunicative government. Now that Banerjee has walked out of the space of perennial rebel, the UPA will have to deal with other players and their demands. It will be a delicate balancing game, requiring patient negotiations and hard bargains. But it may be more manageable, in as much as the house is not being pulled down from within. Meanwhile, this has also been an object lesson in the perils of striking a maximalist pose. Like the Left before, Banerjee has staked everything on one set of issues, denying herself wiggle room. This time, her political options are severely constrained she cannot afford to be seen with the BJP, and with the opposition to the UPAs economic decisions converging around the Left, Banerjee may have just painted herself into another corner.

UPA 3

HE Rs 1,20,000 crore restructuring package for the state electricity boards, soon to come up before the Union cabinet, will arguably be another reason for the suddenly rejuvenated UPA to congratulate itself. States like Punjab,wherethedeficitofthestate power utility at Rs 8,983 crore is roughly equal to the fiscal deficit of the state government, will have reason to cheer. Past experience shows thatthemessinthepowersectorhas a habit of returning to haunt governments. Power ministers forget that, along with the cheques they write to sign off the arrears, they are alsosupposedtorevisetariffsperiodically for various user groups. Without this correction, as Standard & Poors pointed out last week, the restructuringofdueswillonlycreatea tepid improvement in Indian public finance. Under the package, half the loans will be reset as long-term loans while another half will be transferred to the respective states, which in turn will provide guaranteestobondsthattheSEBswillissue tobanks.Therewillalsobearollover of the repayment schedule, with lenders taking some sort of a haircut. A proposal like this one has many moving parts, which makes it

Restructuring of power dues will help, but in the long run there is no alternative to raising tarrifs
essential that all participants, especially the state governments, keep their side of the bargain. There are signs that it could happen this time. Punjab, along with 12 states, has raised electricity tariffs by impressive margins in the last two years. The large states that have raised tariffs are Rajasthan, by 27 per cent, Tamil Nadu, by 37 per cent, Andhra Pradesh, by 20 per cent, and Punjab, by 12 per cent. This is critical because the banking sector already has an exposure of 7.5 per cent of its loan book to the power sector. Unless the state utilities put more money on the table, the banks cannot give any more loans as they are precariously close to their exposure limits for the sector. Unless there are fresh loans, investments in improving distribution systems remember the July 31 tripping of the national power grid will not come through. Which means that despite the loan recast, the sector remains in the doldrums, and Indias energy security is still in danger. Since the recast would, in the first round, benefit only the independent power producers, it is important that the government stays the course.

Dont reset, reform

N HIS address to the Planning Commission on Saturday, Prime Minister Manmohan Singh underlined the importance of taking risks in initiating new reforms and accelerating Indias economic growth. The theme of risks and rewards is back in the PMs vocabulary. The last one heard of this was when Singh tried to calm the critics of the historic India-US civil nuclear initiative more than half a decade ago. Responding to charges that the nuclear deal would undermine Indias foreign policy and national security, Singh pointed to the experience of reforms in the first decade of the 1990s, when he opened the Indian economy to globalisation despite the massive fears at home. Taking some risk then put the nation on a high growth path and elevated its international position. ThePMsreadinesstotakerisks again, one hopes, is not limited to the making of economic policy. Indias diplomacy, especially towards its neighbours, could do with some risk-taking of the kind Singh demonstrated in transforming relations with the United States during his first term as PM. Through his tenure as PM, Singh consistently articulated a bold vision for regionalism in the subcontinent. Persisting with the good neighbourly policy that he had inherited from Atal Bihari Vajpayee, Singh added a vital economic dimension to it and made some big political moves. But at critical moments, Singh preferred caution to courage. Consider the many paradoxes of his Pakistanpolicy.Fewprimeministersbefore him have invested this kind of effort into transforming relations withPakistan.Yethehastiedhimself in knots over the simple question of making a visit across the border. Vajpayee, accused of leading a Hindu nationalist government, travelled to Pakistan twice in his six years at the helm (19982004). But Singh is still wringing

A visit to Pakistan
Risk-taking is back on the PMs economic agenda. Now it should filter into his diplomacy
C. RAJA MOHAN
his hands in the ninth calendar year of his prime ministership. The secularist Congress appears to have deep reservations about Singhs visit to Pakistan. Vajpayee had to confront similar objections from his BJP colleagues in the cabinet, not to mention the RSS. Yet he took risks by defying the conservatives in his party while framing his Pakistan policy. Singh went much farther than Vajpayee in exploring solutions to such thorny issues as Siachen and Sir Creek. He embarked on substantive negotiations on the Kashmir question, for the first time in outstanding issues with Dhaka in 2010. At the very moment this unprecedented effort was to bear fruit during his visit to Bangladesh last September Singh held back, unwilling as he was to confront the tantrumsofWestBengalChiefMinister Mamata Banerjee. As the prime minister of the republic, Singh had every right to sign the Teesta River waters agreement with Bangladesh that was crafted withmuchcare.YetthePMbuckled. As a result, a transformative moment in the ties with Bangladesh was lost. So was a transit agreement with Dhaka that would have signifi-

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Few prime ministers before him have invested this kind of effort into transforming relations with Pakistan. Yet he has tied himself in knots over the simple question of making a visit across the border. Vajpayee, accused of leading a Hindu nationalist government, travelled to Pakistan twice in his six years at the helm. But Singh is still wringing his hands in the ninth calendar year of his prime ministership.
four decades, with Pakistan. Singh has also negotiated a road map for the normalisation of bilateral trade with Pakistan and concluded an agreement to liberalise a four decades-old restrictive visa regime with Pakistan. Compared to what has already been done, the case for visiting Pakistan is an open and shut one. Singhs reluctance to take risks has been even more tragic in the case of Bangladesh. Having found a forward-looking partner in Sheikh Hasina, who became the prime minister of Bangladesh in 2008, Singh launched a bold effort to resolve all cantly contributed to economic growth in West Bengal and in the Northeastern states. One important consequence of Singhs hesitations on Pakistan and Bangladesh has been the weakening of the PMs sole prerogative to conduct of Indias external affairs. He has let the bureaucracy and state leaders exercise a veto over foreign policy decisions. If he accepts his own advice on taking calculated political risks and showing some political courage in defence of the national interest, the PM can easily reclaim his leadership on the foreign policy front.

Announcing a visit to Pakistan will put pressure on the establishmentsofbothsidestoproducesome substantive outcomes. On Bangladesh, the PM must look for the earliest opportunity to sign the Teesta and transit agreements that will boost the prospects for the eastern subcontinent as a whole. To be sure, bold initiatives towards neighbours will draw political flak. But it is a controversy that the PM would want to welcome. For it is a rare opportunity to contrast the PMs bold vision for the nation and the region with the crass opportunism of the opposition parties. ThePMcancountontheBJPto oppose the Pakistan visit (the party has no desire to recall the visits of Vajpayee and Advani to Pakistan) and the Trinamool Congress to simulate outrage. But the PM can also bet on the left parties support for his regional peace initiatives. Singh can gamble even bigger on China. While there are many strategic contentions between Delhi and Beijing, on the economic front there is much complementarity waiting to be exploited. The PM should actively attract Chinese FDI into infrastructure development and allow Beijing to develop special economic zones in India. The left parties might oppose FDI from the West but will not utter a squeak against Chinese money. The PM could go a step further and offer to develop joint projects with China in our neighbouring countries to promote connectivity and integration within the subcontinent as well as between South Asia and the abutting regions. Put simply, taking bold diplomatic initiatives towards the neighbours is smart domestic politics, sensible economics, and a wise national strategy. The writer, a distinguished fellow at the Observer Research Foundation, Delhi, is contributing editor for The Indian Express
express@expressindia.com

Letters to the

EDITOR

Be bold

ages (IE, September 17), despite the sliding economy, the government can no longer let political compulsions delay bold measures. Be it Mayawatis BSP an anti, reforms TMC or even an opportunist SP other political , parties will seek their pound of flesh. Despite the hurdles, the UPA must make decisions, even politically unpopular ones, to stimulate growth, create employment, reverse the fiscal deterioration and restore the nations fast eroding credibility in global fora. It is sad that, internationally, India is once again perceived as a dysfunctional polity incapable of acting in its own interests. The opposition parties appear to have no agenda except to criticise the government. Ved Guliani Hisar
THE CBI has registered five FIRs against private companies allegedly involved in the coal scam in Karnataka. But what about those in government who made allotments to private players (Ktaka iron ore case: CBI files five FIRs, raids Reddys associates, IE, September 18)? Nobody is above the law. The CBI needs to question every one involved and get to the bottom of irregularities in coal allocation. The Supreme Court is already seized of the matter and have sought answers from the Centre on five specific questions. V.B. Ganatra New York

APROPOS Mirrors and im-

Spare no one

VIJAY KUMAR

Exploring with responsibility

A new bill helps lift the debate beyond mining and no mining
products and by-products from our current mining activities. We raise concerns about the finiteness of our resources, yet we are not doing enough to explore deeper or use relatively abundant lower grade and inferior ores. Many critical resources are now required for new technologies which can give us the competitive edge, yet we are blissfully unaware that there is life beyond limestone, iron ore and bauxite. Today, a typical smartphone includes up to 60 of the 92 elements of the periodic table; computer chips which contain 15 or 18 elements today may have up to 30 elements in future. Photovoltaic thin not enough debate to make the point that general exploration as a venture and some mining as an economic activity is essential for raw materials security and in the national interest. It goes without saying that the progress of human civilisation is in many ways the progress of mining, metal-making and energy production technologies, as we moved from the copper age to the bronze age and the iron age and beyond. It is a little shocking, therefore, that we are still to wake up to the importance and urgency of our raw materials security in terms of ferrous and non-ferrous metals (including titanium, chromium, mining and related industries to alert policymakers and others to the dangers we face in terms of raw materials security. It is for strategic thinkers to conceptualise these concerns in terms of our national interest and help lift the debate beyond the simplistic binary choice of mining or no mining. They must consider the opportunity cost in terms of national interest of not exploring for a strategically or techno-economically important resource, and enable informed decisions on whether or not mining should be allowed taking into account a framework of sustainability based on social and environmental concerns. The new MMDR bill provides a new opportunity to widen the debate by underlining that it is possible to devise a framework that ensures these activities are done in as environmentally and socially responsible a manner possible. It also emphasises critical issues related to regulatory enforcement. At present, some features of the bill are regarded by the exploration and mining industry as restrictive, even disincentivising, in character. But these may, in fact, be the redeeming features of this new approach to mining. Enabling and enforcing socially and environmentally responsible mining is the need of the hour. The writer, currently secretary at the Ministry of Rural Development, is also the former mining secretary
express@expressindia.com

FREEZE FRAME

INING in India has come a long way in the last 50 years or so. From the Industrial Policy Resolution of 1957 to the National Mineral Policy (NMP) of 1993, and now to the NMP of 2008, it has shown a progressive shift towards bringing the private sector into exploration, mining and downstream value addition. However, the regulatory systems perhaps never managed to keep pace with developments on the ground. Many of our current problems with illegal mining, as well as environmental and social concerns, stem from this failure. The NMP 2008 diagnosed some of the problems and has provided a sound base for a new legislative framework to incentivise private sector exploration and mining. The Mines and Minerals (Development and Regulation) (MMDR) Bill of 2011, seeks to reflect not only the NMP 2008 but also current concerns regarding environmental and social issues, and the larger intention of the bill is to facilitate exploration by the private sector while getting better value through bidding for known mineral deposits. The bill provides for the setting up of a mining tribunal and a regulatory authority, which is likely to reduce arbitrariness and improve regulatory compliance. There is near unanimity in civil society and legal fora on the need to improve mining practices to reduce waste and control environmental degradation. Sadly, there is

In case we find economically extractable deposits, we need to fashion the technologies to use them. If not, we will be at the mercy sooner or later, of those who do.
cobalt and nickel), base metals (such as copper, lead, tin and zinc), technology metals (molybdenum, tellurium, selenium, rhenium, vanadium, germanium, cadmium, scandium) and energy critical metals (lithium, iridium, gallium, indium) and rare earths (neodymium, dysprosium, europium, yttrium, terbium, lanthanum, cerium, samarium, gadolinium), not to speak of energy minerals such as coal. There is as yet hardly any venture capital investment in exploration at greater depths or even in process R&D to beneficiate low grades or to recover important metals as cofilms, permanent magnets, wind turbines, lasers, catalytic converters, energy storage units and other devices with crucial applications in civil, military, space, communications, medical and energy-related uses need so-called technology metals or energy critical metals, including the rare earths. National interest requires that we explore for such metals. In case we find economically extractable deposits, we need to develop R&D processes to extract them and fashion the technologies to use them. If not, we will be at the mercy, sooner or later, of those who do. For a large part, it is for the

THIS refers to Death it is for the accused (IE, September 18). The gruesome incident in Pune, in which a BPO employee was raped and murdered, created ripples four years ago. It initiated a long discussion on the safety of women in workplaces, especially during night shifts. A similar incident had taken place earlier in Bangalore. These incidents caused such alarm that people were increasingly wary of letting their daughters work night shifts. There has also been some talk of framing of guidelines for the safety of working women. The judgment should be a signal to all employers, especially those who employ women in night shifts they must ensure a safe environment for their employees. Ganapathi Bhat Akola

Living in fear

On a roll

NE of the winners in last weeks protests outside US embassies in the Middle East was Palestinian President Mahmoud Abbas. Before the eruption of outrage over an anti-Muslim film, Abbas and Prime Minister Salam Fayyad had faced a week of demonstrations and strikes in the West Bank that some were starting to compare to the revolts against other autocratic Arab rulers. Thanks to the eruption of anti-Americanism and Fayyads timely repeal of several recent price and tax increases, the opposition movement appears to have subsided for now. But one way or another, Abbass Palestinian Authority appears headed for trouble. The 76-year-old president has been digging himself into a political hole since early last year, when he announced a new strategy of seeking recognition of Palestinian statehood by the United Nations and a recon-

Mahmoud Abbass bid for a new status in the UN will not create a state and could backfire
ciliation deal with the rival Hamas movement. The recognition bid flopped last fall in the UN Security Council... As the West Bank demonstrations were reaching a crescendo, Abbas held a news conference in Ramallah on September 8 and confirmed that he will renew the UN initiative, this time by seeking a vote in the General Assembly upgrading the Palestinians status to that of a non-member observer state. Palestinian officials say the new status might allow them to join more UN bodies and to bring actions against Israel in the International Criminal Court. However, the vote would not create a state and it might put an end to Abbass Palestinian Authority. From a leader The Washington Post

Palestine on the line

PRINTLINE

Chidambaram has said that the price hike in diesel, rationing in LPG cylinders and FDI in retail will not be rolled back under any circumstances (More reforms coming soon, says Chidambaram, IE, September 18). However, given the popular misgivings about the governments reforms, he might have to retract his statement soon. Opposition parties as well as the UPA allies have put up stiff resistance to the proposed reforms. The UPA might not be able to press forward with its policies in the face of such wide-ranging opposition. Hansraj Bhat Mumbai

FINANCE MINISTER P .