Pragati Issue19 Oct2008 Community Ed

8/14/2019 Pragati Issue19 Oct2008 Community Ed

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FIGHTING TERRORISM

MOORINGS OF THE NEW FOREIGN POLICY

AMERICAS PAKISTAN DILEMMAREFORMING THE POWER SECTOR

INDIAN SCIENCE ON THE RISE

ISSN 0973-8460

ALSO


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Contents

PERSPECTIVE2 Asian growth in an American vaccuum A stronger rupee is the path ahead for India V Anantha Nageswaran5 Frontline worry in the war on terror Washington must learn to do without a friendly Pakistani general Nikolas Gvosdev8 Fewer laws, more efficient enforcement There are no shortcuts in the battle against terrorists

Ravikiran S Rao

9 Towards a new anti-terrorism policy A seven-point programme Nitin PaiIN DEPTH

10 The Vajpayee-Manmohan doctrine The moorings of contemporary Indian foreign policy Dhruva JaishankarFILTER

14 Washingtons Pakistan strategy; Pakistans westward drift; The next chapter Vijay Vikram

ROUNDUP15 A new millennium in science Indias scientific output has risen sharply since 2000 Christopher King19 An electric imperative Bringing power sector reforms back onto the national agenda Gulzar NatarajanBOOKS24 American Indians A review of Vinay Lals The Other Indians Chandrahas Choudhury

PragatiThe Indian National Interest Review

No 19 | Oct 2008

Published by The Indian National Interestan independentcommunity of individuals committed to increasing public awareness

and education on strategic affairs, economic policy and governance.

Advisory PanelMukul G Asher

Sameer JainAmey V Laud

V Anantha NageswaranRam NarayananSameer Wagle

EditorsNitin Pai

Ravikiran S Rao

Editorial SupportPriya Kadam

AcknowledgementsThomson Reuters

Chaim Jaskoll (Cover Photo)

Contact: [email protected]

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GLOBAL ECONOMY

Asian growth in an American vaccuum

A stronger rupee is the path ahead for India

V ANANTHA NAGESWARAN

THE US House of Representatives considered andvoted on the Emergency Economic StabilizationAct of 2008Paulson plan for shortfor the sec-ond time in less than a week and approved it witha comfortable majority. It was so keenly antici-pated by the financial markets that it was anti-

climatic to see US stocks end in negative territoryafter the legislation was approved. In the largerscheme of things, the Congressional approval ofthe bill might yet turn out to be inconsequential.

The rejection by the House of Representativesof the legislation in the first vote was not so mucha testimony to their lack of understanding of thegravity of the situation as it was a reflection of thepoor credibility that the administration and WallStreet carried with the Congress and with the pub-lic.

In general, the reason why it has been so diffi-cult for a sovereign government to come to gripswith it is that the extent of leverage involved isunprecedented. Also, the leverage is not transpar-ent. It is in contingent liabilities, it is scattered and

it is both off and on the balance sheet.In this environment, a well-conceived and fair

legislation is essential not only to regain the trustof America but also to restore the trust of theworld in America. Perhaps, that is still a task left tothe new administration and the new Congress.

Even so, the road ahead is long and uncharted.America could conceivably spend a good part of adecade trying to repair itself. What can Asianeconomies do, or what should they do, in suchcircumstances, not only to sustain economicgrowth but also to take advantage of the evolvinggeopolitics? Here is a first and small attempt topose these questions and provide some pointersunder two scenarios.

Scenario 1: The bailout works and borrowing

resumes in AmericaFirst, let us take the situation that the plan worksas intended. For lenders to lend, borrowers mustborrow. American households are just now experi-encing the devastating impact of excess debt on

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PRAGATI - THE INDIAN NATIONAL INTEREST REVIEW 2

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the health of their personal finances. Hence, it ap-pears to be a tall order to expect them to continueto borrow. But let us assume that they do so. Thiswould widen the US trade deficit, just as it has begun to come down due to slowing economicgrowth in the economy.

Twice in the last 25 yearsin 1989-91 and2001there has been a significant correction in thetrade deficit in America. On both occasions, the USdollar strengthened. In 2001, the US dollarstrengthened despite a crash in the stock market,terrorist attacks on the United States and a 475 ba-sis point reduction in the federal funds rate.

Now, if the Paulson plan works and if the tradedeficit begins to widen, pressure on the US dollarto depreciate would rise. It is trickier to identifythe currencies that could appreciate against the US

dollar. Eurozone fundamentals are getting bleakerby the day. Eurozone financials appear poised tofollow in the footsteps of their American counter-parts by disclosing huge losses and seeking eithergovernment assistance or merger into some otherinstitution.

Is Asia ready to accept US dollars weakness?

The dollar has to weaken against Asian currencies.After Europe, Canada and Mexico, America tradesheavily with Asia. Which of the currencies in Asia

are in a position to absorb the potential weaknessof the US dollar?

At this time, the answer points to China, Indiaand Korea. The first two because they are big andbecause they could potentially grow based on do-mestic demand. The Korean won appears to beundershooting its fair value by a substantial de-gree due to the short-term rollover problems facedby its banks.

China is now discovering the pitfalls of itsgrowth model of the last seven years during whichits foreign currency reserves rose eleven timesfrom 165 billion at the end of 2000 to over 1.8 tril-lion by June 2008.

This has come about because of its reliance onexport-led growth that required a competitive cur-

rency. In turn, that distorted domestic monetarypolicy. Interest rates had to be kept low and thishas resulted in excessive credit growth and poten-tial non-performing loans in banks balance-sheets.

If it is impossible to study and understandbalance-sheets of American and European banks, it

is not hard to appreciate the difficulties of inter-preting Chinese banks strengths and weaknesses.They operate in an authoritarian system, they areheavily state-owned and they have flourished in aperiod of low interest rates and excessive reservesaccumulation. All these suggest a massive expan-sion of balance sheets. When quantitative expan-sion of the balance sheets happens, it is hard tomaintain quality especially in a non-transparentsystem.

At the same time, Chinas foreign currency re-

serves face huge re-investment risks and exchangerate losses since they are largely kept in US dollars.However, without a substantial revaluation of theChinese yuan, it would not be possible to steer theeconomy towards non-inflationary domesticdemand-led growth, as monetary policy autonomywould be severely restricted without freeing upthe exchange rate first.

Two legitimate questions remain unanswered.One is whether China would revalue the currencyat all and second, whether the currency would still be deemed undervalued if its financial system

were unstable and weak.Given its experience with American financial

assets, is it even possible for China to continue togrow its reserves when American assets do notyield enough to compensate for their risk. That isthe reason why private investors are fleeingAmerican short-term and long-term securities. Theofficial investorscentral banks and sovereignwealth fundscan only ignore popular disap-proval of their policy choices up to a point. Andeven if they ignore popular sentiment, they would

be inviting the scourge of inflation back with theirpolicy of reserves accumulation and resistance toUS dollar weakness.

Data on net foreign purchase of Americanshort-term and long-term securities provided bythe US Treasury show that private foreign netflows are negative. In other words, private inves-tors are pulling out. Brad Setser, a fellow forgeoeconomics at the Council on Foreign Relations,thinks that the U.S. Treasury data understates offi-cial inflows. Put differently, inflows to the US aresustained only by sovereign investors intent on

exchange rate management.Therefore, the conclusion is that if American

households continue to borrow, the US dollar hasto weaken and the bulk of the burden of its weak-

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If American households continue to borrow,the US dollar has to weaken and the bulk ofthe burden of its weakness has to be ab-

sorbed by Asian currencies, notably China.Their readiness, willingness and capacity areopen to question.


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ness has to be absorbed by Asian currencies, nota-bly China. Their readiness, willingness and capac-ity are open to question.

To be even blunter, the ongoing credit crisis inthe US is as much a test of the American capitalismas it is of Chinese or East Asian mercantilism. How

China emerges out of this and in what economicshape would determine if much of the claimsmade on its behalf by many commentators andobservers would come to pass in the 21st century.

Fundamentally stronger case for appreciation of

the Indian rupee

India is in a better position to absorb strength ofthe rupee. Its currency has come under strain be-cause of the rising trade and current account defi-cit, and withdrawal of foreign portfolio investors

from the Indian stock market. First, while the port-folio outflows might continue as long as anxietiesover global financial markets remain, the recentdrop in oil and fertilizer prices will substantiallyreduce Indias subsidy burden, its fiscal deficit andconsequently its current account deficit. Second,Indias export sector, though vocal, is relativelysmaller. Third, the Reserve Bank of India (RBI) hasdone an admirable job of ring-fencing the Indianfinancial system from global troubles with its pru-dential and proactive oversight and regulation. Itwould not be an exaggeration to say that it has set

a perfect example for central banks all over theworld to follow, including those in developedcountries.

RBIs upward adjustment of risk weights as-signed to bank assets; requirement that banks am-ortise securitisation profits over the life of the se-curitised asset (rather than at inception); and con-servative accounting practices whereby bankswere required to recognize losses but not gains ontheir assets held for trading or maturity, speak forits intimate understanding of the perils of the so-

called financial innovation. It is fair to say that In-dian banks have been shielded from global ills de-spite their best efforts to ape their internationalcounterparts.

Further, given Indias slowly improving infra-structure, rising savings rate and improving pro-ductivity, its real exchange rate must appreciateover time. It is better for Indias policy-makers toaccept that appreciation through the nominal ap-preciation of the rupee than through inflation.

The problem is that it is not even clear if Indiais thinking along these lines. There is no debate

and it is arguably the most important question forthe next decade. Exchange rate policy is as much apolitical decision as it is technical. Whether Indiawishes to emulate the post-war experience of

Germany and Japan, or that of Italy is a politicaldecision. The first two countries faced steady ap-preciation pressure on their currencies and yetovercame the costs imposed by appreciating cur-rencies. Italy faced high inflation and high costs because the lira was always weak. India has to

make a choice and the choice it makes on the cur-rency regime would dictate and require choices onproductivity, technology, innovation and educa-tion.

Scenario 2: What if American households decide

not to borrow and spend?

Now, let us turn to the other scenario whereAmerican households set about repairing theirbalance sheets. Based on experience, that would beUS dollar positive, at least for a while. However,

economic growth would come to a standstill. TheFederal Reserve would be forced to cut rates ag-gressively. Further, it would be natural for policy-makers in the United States to turn to external

demand for growth. America played that rolewhen Asia grew its way out of the slump follow-ing Asian financial crisis of 1997-98. Asian exportsled the recovery with America acting as the buyerof the first resort.

External demand is reasonably and relativelystrong only in the developing world. Asia consti-tutes a huge share of the developing world. There-fore, even from that angle, it is imperative that theUS dollar weakens against Asian currencies. TheUS dollar has not weakened anywhere close to themagnitude that Asian currencies weakened by, inthe aftermath of their domestic credit contractionand economic slump in 1997-98.

For America to export its way out of trouble, itis neither necessary not sufficient for the US dollarto appreciate against European currencies. Euro-

pean nations are hurting equally badly and mightalso be looking to keep their currencies underval-ued. Asian currencies have to strengthen sharplyagainst major currencies.

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The Reserve Bank of India has done an ad-mirable job of ring-fencing the Indian finan-cial system from global troubles. It has set an

example for central banks all over the world,including those in developed countries.


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Asias ability to meet the challenge is not obvi-

ous

Barring a few Asian currencies at most and thattoo with lot of caveats, the answer is unclear as towhich currencies would bear the potential weak-

ness of the US dollar. Like India, East Asian coun-tries have to make a political choice. For long, theyare used to free-riding on external demand in therest of the world. The advent of China and its mas-sive exchange rate depreciation in December 1993exposed their fragility and they experienced a major economic crisis in 1997-98. After that, they re-

sumed their reliance on external demand even inthe presence of China as a big and cost-effectivecompetitor. The rising tide of global growth liftedall boats. Now the tide is receding and is unlikely

to re-appear for quite some time. That leaves EastAsian countries, including China, with an existen-tial question. For the smaller among them, thequestion is daunting and urgent.

In the last seven years, only two countri-esSouth Korea and Thailandattempted to boost domestic demand. Both attempts wereclumsy and ended up in a debt crisis for house-holds. Most of Asia is feudalistic in nature. Theirvast political and institutional underdevelopment

supports the feudal structure and, in fact, helps tokeep the power balance that way.

Thus far, in the last twenty-five years, Ameri-can spending habits helped Asia maintain thispolitical order and mercantilist economy. Now,both will be challenged all for the fact that someAmerican borrowers aspired for homes that theycould not afford. Such is the nature of the inter-connected world.

For India, this is an opportunity to show that ithas what it takes to realise its economic power as-

pirations. India, unlike East Asia, depended not onAmerican demand. Nor has it succumbed toAmerican entreaties on financial capitalism. Theseare its advantages. But, it has its own issues toconsider and at the top of that list is the limitlessreadiness and willingness of the political class togorge on taxpayer money, much in America today.Therefore, it is logical that if Wall Street is in crisis,so would India if it continued to walk down thesame path.

V Anantha Nageswaran is head, investment research,Bank Julius Baer & Co Ltd in Singapore. These are hispersonal views and do not represent those of his em-ployer.

THE UNITED STATES AND PAKISTAN

Frontline worry in the war on terror

Washington must learn to do without a friendly Pakistani generalNIKOLAS GVOSDEV

LAST YEAR, retired US General Anthony Zinniposed two very tough questions to the Americanforeign policy establishment when it came to rela-tions with Pakistan. "Has US support for the Paki-stani military truly been enough to help it operatein the extremely difficult border environmentwhere US politicians urge it to confront al-Qaeda?

Has America's relationship with Pakistan yieldedsufficient benefits to persuade the sceptical Paki-stani public to support mutual efforts to counterIslamic extremists?"

The former general wrote his essay at a timewhen there was rising frustration in Washingtonwith the administration of General PervezMusharraf, who was being faulted on two counts:the first, for a perceived insufficient support of theUS mission to combat the Taliban and al-Qaedaelements in Afghanistan and the tribal regions of

Pakistan; and for failing to democratise Pakistanand return the country to civilian governance. Thesolution that the Washington foreign policy estab-lishment seized upon, therefore, was to find a way

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The rupees real exchange rate must appreci-

ate over time. It is better for Indias policy-makers to accept through the nominal appre-ciation of the rupee than through inflation.


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to peacefully remove General Musharraf frompower. If only the general left office, Americanswere told, Pakistan would not only be a "plus" inthe column of the freedom agenda (another victoryfor democracy) but a new civilian governmentwould become a more reliable ally for the UnitedStatesable and willing to crack down on extrem-ists and fully support the U.S. agenda for Afghani-stan. After all, as the Washington

Post had editorialised, Pakistan's secular politi-cians stood for "co-operation with the UnitedStates" and former Bush speechwriter MichaelGerson, in November 2007, extolled the "responsible senior leaders of the army and well-knowndemocratic leaders" who would keep everythingon track if and when Musharraf stepped down.Indeed, many in Washington predicted that a fullyrestored civilian democratic government would beinclined to expand co-operation with the UnitedStates in fighting al-Qaeda and the Taliban.

All of this reflected what Anatol Lieven, ascholar at the New America Foundation, describedas the "three interlocking illusions", with the pre-mier one being that "Pakistan can be turned into afully co-operative and obedient ally in the 'war onterror' and the war in Afghanistan". The others arethat the "return of 'democracy' would help to makePakistan such an ally; that Pakistani society at pre-sent is capable of generating and supporting de-mocracy in the Western sense; and that in overallUS strategy, it makes sense to subordinate Pakistan

to the needs of the war in Afghanistan, rather thanthe other way round.But General Zinni's questions have renewed

salience today when a new civilian administrationin Islamabad and the Pakistani military post-

Musharraf appear no more willing to accommo-date US concerns. A change in government has notlead to a change in Pakistans calculus on the de-gree to which it should aid or not aid Americanefforts in the region.

Certainly, the Pakistani government is worriedabout extremist activity inside of Pakistan, particu-larly the activities of the Tehrik-e-Taliban-e-Pakistan. And the military will work to preventsuch groups from openly seizing powerandfight them when they threaten Pakistani interests.But eradication is only one strategy.

Another is to adopt what Daniel Byman, ascholar at the Brookings Institution, has character-ised as the "bus station approach"encouragingradical elements to leave the country and go else-where (See "Rogue Operators", The National Inter-est , July/August 2008). A democratic governmentin Pakistan finds that its main concern is removingextremists who attack and kill Pakistanis. Whether

those extremists are physically eliminated or en-couraged to go to Afghanistan or other locales(where, incidentally, they may end up killingAmericans) solves the problem, in the short termat least, from the Pakistani perspective. But it doesmatter a great deal to the US which approach istaken. America's hope that Pakistan post-Musharraf would take a much harder line andseek to eliminate extremism, rather than to negoti-ate deals with them, appears to have been mis-placed.

In addition, the military in a post-Musharrafera seems much less willing to accommodate USconcerns. General Ashfaq Parvez Kayani, the Paki-stan's army chief, is sending pretty clear signalsthat, unlike his predecessor, he is not going to

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INTERNAL SECURITY

Fewer laws, more efficient enforcement

There are no shortcuts in the battle against terrorists

RAVIKIRAN S RAO

THERE IS a simple and plausible way to modelthe fight against terrorism. Combating terrorismis like turning a knob. If we turn it too little, wereduce the risk of harming innocent people, butend up letting free too many terrorists. If we turnit too much, we end up exterminating terrorism, but at the cost of the lives and liberty of manyinnocent people incorrectly identified as terror-

ists. How much one wishes to turn the knob is afunction of one's own squeamishness about hurt-ing innocent people.

As it happens, the simple and plausible modelalso turns out to be incorrect. If one turns theknob too much, the result is not only too manyfalse negatives, but also too few true positives.Combatants in the war on terrorism are human beings, motivated by incentives. This model'slacuna is that it does not account for the distor-tions caused by misalignment of these incentives,

as will be clear if one examines the incident of theSohrabuddin killing.

Sohrabuddin Sheikhwho was allegedly shotin a fake encounter with police near Ahmedabadin November 2005was almost certainly a mur-derer, an extortionist, and a burden on society.But it ought to be quite clear by now that he wasnot a terrorist. There are those who defend killingSohrabuddin on the grounds that he deserved todie one way or the other. They should pause andreflect on what impact their unabashed cheeringwill have on Deputy Inspector General DG Van-jara's incentives. Here was a person who did nothesitate to kill one criminal and two innocentpeople and claim it as a victory against terrorism.In this he had, and continues to have, the fullbacking of Narendra Modi, Gujarats chief minis-ter, because the latter knows that the road to elec-toral victory is paved with victories against ter-rorism, whether imagined or real. If imaginedvictories are easier to obtain than the real ones,why will anyone pursue real terrorists?

The rules of evidence, the principle that

judges and prosecutors ought to be separate, andthe notion that everyone deserves a fair trial, alldecrease the chances of consigning innocent peo-ple to jail. This is a useful function, valuable initself. The rules also serve to keep the agents of

the law honest. The requirement that the caseagainst a terrorist be proved in court also willensure that thorough investigations are carriedout to ensure that the accused is really a terrorist.It is puzzling how readily citizens, who deal withcorrupt politicians, civil servants and policemenevery day of their lives, treat these functionariesas paragons of honesty the moment they think of

them as fighting terrorists.Perhaps, a mental change occurs as soon as

the thought of fighting terrorism strikes. In theminds of many people, the battle against terror-ism is being fought, not by the aforementionedpoliticians, civil servants and policemen, but bymilitary and paramilitary forces fighting in hos-tile terrain against a difficult enemy. Forcingthose fine men to be solicitous of human rights islike sending them to battle with one hand tiedbehind their backs.

The first problem with this is that it does notreflect reality. The bulk of the battle against ter-rorism will be fought by the beat policeman andthe investigating sub-inspector. It is important toprovide them with appropriate equipment andsupport to do their jobs. It is equally important toput in place checks to ensure that the jobs are infact done; the criminal justice system is a usefulcheck.

The second problem is that while there is avalid argument that the constraints of humanrights and the checks imposed by the criminal justice system are too much of a burden in agenuinely warlike situation, it is equally true thatprolonged wars do nasty things to soldiers' mo-rale and discipline. A prolonged, debilitating warin hostile terrain will brutalise even the finest ofhuman beings, which is a good reason to keepwarlike situations short and rare, and soldiers inthe barracks most of the time.

Without doubt, these requirements place on-erous demands on policy and policy implementa-tion. India's courts take decades to hand out ver-

dicts, India's police forces are ill-equipped andare long overdue for a skills upgrade. Worse still,they are caught in a three-way conflict overwhether to enforce the law, do the bidding oftheir political masters or line their own pockets. It

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is tempting to believe that just giving them amandate to shoot the terrorists dead is an easysolution to these problems. Sadly, there are noeasy solutions, and if these problems are to befixed, citizens must demand them first.

Sadly, what we are seeing instead is a demand

for "stricter" laws. That is a bad idea for more orless the same reasons. Given the number of lawson the books already, most Indians are in viola-tion of at least a few at any point in time. This is ahappy situation for policemen who can throwcordons after every outrage, apprehend motorcy-clists for not wearing helmets or cybercafe own-ers with insufficient documentation and claim it

as progress in the investigation. But the unin-tended consequence of this is an evasive and un-cooperative citizenry, which in turn will fuel thepolice force's demand for stricter laws.

A law-abiding citizenry that is generally onthe side of the police is a vital weapon in the fight

against terrorism. To construct this weapon, oneneeds fewer laws, more effective and less arbi-trary enforcement. It is difficult to see what thealternatives are.

Ravikiran S Rao is editor of Pragatiand blogs at TheExamined Life (ravikiran.com).

INTERNAL SECURITYTowards a new national anti-terrorism policy

A seven-point programme

NITIN PAI

Start fighting the war of minds

1. Project the war for what it isthat the New

Jihadis are against everything that India standsfor: freedom, openness, democracy and a tolerantway of life.

2. Assure the nation that we will fightandwinthis war. This will bring fence-sitters ontothe side they think that will win. But the assur-ance must be credible.

Dominate the battle on the ground

3. Connect every thana , every chowki (and infuture every policeman) to a national databaseand network. Neither a new anti-terror law nor a

new anti-terrorism agency is crucial: connect ex-isting intelligence and law-enforcement agenciesthrough a common network.

4. Empower police by implementing policereforms. Use the Supreme Court of Indias judgement in Prakash Singh & Others vs Union ofIndia & Others to generate momentum.Strengthen police-public partnerships.

5. Move internal security to the Prime Minis-ters Office. The Prime Minister should chair a

Cabinet Committee on Internal Security; a dedi-cated internal security advisor should be ap-

pointed to act as the point man covering all as-pects of internal security.

Engage the nation (dont merely secure their

approval)

6. Mobilise the nation through a national saty-agraha against terrorism. Get the grassroots to beuncompromising and unrelenting in the battleagainst terrorism. Pay special attention to recon-ciliation and form national integration commit-tees in sensitive areas.

7. Liberalise the economy. Terrorism and dis-

satisfaction are a direct result of the polices ofcommunal socialism, a form of social license-rajthat stifles socio-economic mobility. Economicfreedom will lead to economic growth that willundermine thejihadi base.

Nitin Pai is editor of Pragati and blogs at TheAcorn(acorn.nationalinterest.in).

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FOREIGN POLICY

The Vajpayee-Manmohan doctrine

The moorings of contemporary Indian foreign policy

DHRUVA JAISHANKAR

CONVENTIONAL WISDOM has it that Indialacks a foreign policy strategy or doctrine; that is,some sort of overarching framework within whicha set of prioritised foreign policy objectives, widelyaccepted as being in the national interest, can be

accomplished. Several analysts have pointed toparliamentary bickering on issues such as theIndia-US nuclear agreement, competing visions ofthe national interest articulated by various politicalparties, and conflicting statements by senior lead-ers as evidence of a fractured, disorganised andinchoate foreign policy.

However, many of these perceivedshortcomings can be attributed to other factorsIndia's notorious bureaucratic blocks, widespreadpolitical opportunism, and frequently

contradictory and ambiguous government rhetoricrather than actual foreign policy schizophrenia.Moreover, this argument is predicated upon ascarcity of information and derives from takingpublic statements at face value, rather than a

careful analysis of India's foreign policy trackrecord.

Extrapolating from the Indian government's behaviour, rather than its statements, reveals astarkly different picture. Indian actions over the

past decade are demonstrative of a new foreignpolicy strategy, one that is remarkably resilient,refreshingly free of ideological divisions, andreflective of a clear understanding both of India'snational interests and the country's still-limitedpotential.Lessons Learnt

It took a 1992 study by American George Tanham,"Indian Strategic Thought: An Interpretive Essay",to expose India's anaemic strategic culture. The

"lacunae in strategy and planning" in India, ac-cording to Tanham, resulted largely from India'shistory of disunity and from uniquely Hindu con-cepts of time and life. At that time of the study'spublication, much of Tanham's analysis rang pain-

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fully true, and several leading Indian strategicthinkers, including General K Sundarji and KSubrahmanyam, more or less agreed with him. Butin the decade following the publication of hisstudy, India also began to experience a radical re-orientation of its foreign policy, a result of seven

formative experiences between 1990 and 2002.First, the withdrawal of the Indian Peace Keep-

ing Force (IPKF) from Sri Lanka in 1990 scarredIndias security establishment, making it reluctantto intervene directly in the internal affairs of otherstates, including its smaller neighbours. The inter-vention in Sri Lanka found little support withinIndia and many questioned its necessity. The effectproved so traumatic that over a decade later, whenNepalperhaps the country most socially andeconomically integrated with Indiawas afflicted

by revolution and violence targeting Indian na-tionals, there was very little, if any, public debatein favour of military intervention.

Second, the end of the Cold War and thedissolution of the Soviet Union in 1991 reinforcedin India a distrust of alliances, even informal ones.Today India frames its relationships in terms of"strategic partnerships", an empty term connotingserious engagement rather than any form of

alliance. According to the Ministry of ExternalAffairs' recent annual reports, India has strategicpartnerships with countries as diverse as Japan,Indonesia, Vietnam, Nigeria and Brazil. Yet thosesame reports make no mention of a strategicpartnership with Israel, arguably now India'sclosest defence collaborator, due primarily toperceived domestic constraints.

Third, economic reforms beginning in 1991 ledto India reaping the benefits of a strong economy,and added growth as a vital factor in India'sforeign policy. Within a decade, economicdevelopment evolved into a significant motivatingfactor in India's engagement with both Pakistanand China, despite continuing disputes overterritory. Economic imperatives were also largely

responsible for Indias Look East policy and itsdevelopment of relations with the United States,Japan and the European Union.

Fourth, Indias overt nuclearisation followingthe Pokhran-II tests of 1998 minimised thepossibility of India being forced to give up

territory by military means. With security vis--visother states largely guaranteed by thedevelopment of a strategic deterrent, nationalprosperity was also gradually pushed to theforefront as a foreign policy objective.

Fifth, Pakistani aggression at Kargil in 1999,and the overwhelming support the Indiangovernment received domestically and externally,reinforced the political importance of maintainingIndian sovereignty. In addition, US backing ledIndian policy-makers to believe that the American-

led world order, previously something to befeared, could potentially be amenable to Indianinterests and objectives.

Sixth, the rising spectre of religious extremismand separatism, represented by large-scale terroristattacks and independence movements during the1990s, caused India to include the defence ofsecularism and pluralism as a foreign policyconsideration. India has since taken steps tocounter the spread of Islamic extremism, often inconjunction with like-minded powers, in countriessuch as Afghanistan. It has also been consistently

wary of supporting ethnic-fuelled independencemovements, such as those in East Timor, Kosovoand South Ossetia.From Indias perspective, thesemovements represent potentially dangerousprecedents.

Finally, Operation Parakramthe bordermobilisation against Pakistan in 2002demonstrated the limited utility of military forcein attaining national objectives, especially after theintroduction of nuclear weapons into the region.The peace overtures that succeeded Operation

Parakram and the apparent unwillingness by theIndian security establishment to operationalise thearmy's Cold Start doctrine are demonstrative ofIndia's willing subordination of military means todiplomatic endeavours.

It was not until the Pokhran-II tests, six yearsafter Tanham's study, that India witnessed aserious and wide-ranging debate on acomprehensive national strategy for the country.By the time the Communist-backed UnitedProgressive Alliance (UPA) government came intopower and attempted to continue where the

National Democratic Alliance (NDA) left off in itsdealings with other states, Indias foreign policyhad taken on firm direction, and an awkwardperiod of transition had come to an end.

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Iran has to make up its own mind where itwants to be. The potential of the relationshipwith Iran can only be realised when when it

sets out on a positive internal and externalcourse.


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unlikely to significantly influence key policydecisions by governments in power.Dismantling the Black Box

The development of a foreign policy doctrine is both an ambitious and an accidental process, a

slave as much to circumstance as to strategicacumen. The United States, for example,developed the doctrine of containment at thedawn of the Cold War, when its global objectiveswere clearly defined. After 1991, the United Statesfound itself lacking a single global threat and theClinton administration's enlargement andengagement and George Bush's global war onterror both failed to adequately replacecontainment as a doctrine. Today, Americanstrategists are still struggling to craft a workable

paradigm for the 21st century.Conservatives have been attemptingunsuccessfully to merge aspects of realism withliberal-democratic idealism. American liberals,meanwhile, are desperately attempting to breathe

new life into failing international institutions,often too rigid and ill-equipped to deal with manyglobal problems. Both attempt to cling to oldalliance structures which are unable to function asthey did during the Cold War.India's first foreign policy strategy was Nehru'snon-alignment, which proved suitable for a largebut poor country in the context of the early ColdWar. Non-alignment gradually gave way after the1962 war with China to the Indira Doctrine, which

emphasised Indian primacy in South Asia throughmore aggressive bilateral dealings with regionalstates. The current Vajpayee-Manmohan Doctrinedraws upon contributions made by predecessorsincluding PV Narasimha Rao and IK Gujral, buthas altered priorities, broadened some tenets, andadapted others for changing circumstances.

The Vajpayee-Manmohan Doctrine is likely toserve India well in the coming decades, enabling afluidity that is not always compatible with formalalliance structures, such as those favoured by theUnited States. It is unilateral, premised upon therealities of the rapidly-evolving internationalsystem, and calculated to yield long-term benefits.It can be easily defended as beneficial both toIndia's citizenry and to the world at large. Finally,

it provides India with a little-appreciated ability torise under the radar. Other than perhapsPakistan and China, Indias neighbours cannot besaid to be hedging against its rise. Contrast this toChina, which has states hedging against it allalong its periphery. Moreover, several regional

actorsparticularly in South-East Asiaappeareager to accommodate India and foster itsadvancement.

Despite these advantages, South Block'sapproach to articulating and defending its foreignpolicy remains sadly antiquated. A black box of bureaucrats topped by cagey politicians, India'sforeign policy apparatus is a throwback to a timewhen the bureaucracy and political classescorresponded with India's intellectual elite. It wasa time when India could have afforded to craft its

foreign policy in a black box, with little outsideinterest, analysis or criticism.Today, India is home to a range of extra-

governmental actorsjournalists, academics,NGOs, advocates and consultantswho have yetto be comfortably incorporated into its policy-making structure. The National Security AdvisoryBoard represents one half-hearted attempt, whichwhile imbued with much capability is alsodeliberately granted no formal decision-makingpower. The lack of quality in the Indian academicsystem is also partly responsible, with scholars

rarely able to shape foreign policy in a mannercomparable to their Western counterparts.

While there are certainly benefits to notrevealing ones intentions, the genesis of theInternet and 24-hour television news channelshave exponentially increased the need for thegovernment to articulate and explain policy bothto domestic constituents and to the internationalcommunity. The inarticulateness of officialgovernment spokesmen on foreign policy issues,the absence of white papers and the opacity of the

government enable a gross misreading of India'sintentions and desires. For external actors andanalysts, deciphering Indian foreign policyremains a difficult task. Forced conjectures, oftendeeply misleading, are extracted from blandgovernment statements, annual reports andspeeches by senior officials, often meant to assuagecritical domestic audiences. India's foreign andsecurity policy structure, despite its successes, hasmostly itself to blame for being an easy target forcriticism.

Dhruva Jaishankar is Research Assistant in ForeignPolicy Studies at the Brookings Institution.

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Indias foreign policy doctrine enables a fluid-ity that is not always compatible with formalalliance structures, such as those favoured bythe United States.


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Washingtons PakistanstrategyASHLEY TELLIS under-lines Washingtons Paki-stan policy dilemma in arecent article in the Inter-national Herald Tribune.He argues that for Amer-icas war against al-Qaedato be successful, the nextadministration needs tosimultaneously engagewith the civilian leader-ship to bolster Pakistansdemocratic institutionswhilst maintaining a co-operative relationshipwith the military estab-

lishment to prosecute thewar.

However, Washingtoncannot risk focusing ex-clusively on either ap-proach. The war on terrornecessitates that the UScontinue to consolidate itsrelationship with thePakistani military. But ifthis relationship is notconducted appropriately itcould risk underminingPakistans fledgling de-mocracy and strengthenthe national security statein Pakistan, which hashistorically been at theroot of the countrys prob-lems.

On the other hand, astrategy of emphasisingPakistani civilian suprem-acy could be counterpro-ductive as Americas plansof wiping out al-Qaedacan only come to fruition

with the aid of Pakistansmilitary establishment.Moreover, if PresidentZardari fails to governproperly, the democratisa-tion approach wouldbackfire spectacularly onthe Americans.

Hence, Washington isleft with a delicate balanc-ing act that requires it tojuggle contradictorystrategies of broad-basedco-operation with an en-tity that has consistentlyundermined Pakistansdemocracy whilst work-ing on dismantling Paki-stans atavistic feudal

structures and emphasis-ing civilian aid over mili-tary aid.

Significantly though,Dr Tellis argues that theUS must assist the Paki-stani military in making aconceptual leap in recog-nising that Pakistans realenemies lie within and notacross the border in India.But, this mindset trans-formation is a long-termstrategy and it is impera-tive that Washingtonchannels the tired andoverextended Pakistanimilitary machine into

fighting al-Qaeda now.Dr Tellis concludes

that a patient and long-term American engage-ment with Pakistan iscalled for. Pakistan isplagued by massive infla-tion of food and fuelprices and a worseningfiscal deficit. Americaneeds to play a construc-tive role in the region bypressing for gradualpolitical reform and pri-vate sector economicgrowth. It is up to the nextAmerican President toconvince Pakistan that theUnited States will not ne-glect them if they are will-ing to do their part.

Pakistans westward driftPERVEZ HOODBHOY, anuclear physicist at Paki-stans Quaid-e-AzamUniversity writes about

the growing arabization ofPakistan in Himal Southa-sian. He argues that thiswestward drift is not geo-physical but cultural withWahhabisman austere,unyielding version of Is-lam replacing Sufism thedistinctly gentler varietypractised on the subconti-nent for centuries.

Dr Hoodbhoy goes onto argue that this was adeliberate policy adoptedtwenty five years ago bythe Pakistani governmentand is driven by a beliefthat Pakistan must ex-change its South Asian

identity for an Arab-Muslim in order to betterdefine itself in contrast toIndia. For example,prayers in governmentdepartments were deemedcompulsory and floggingswere carried out publicly.In the 21st century how-ever, there is no need forthe state to impose strictIslam, as there is a spon-taneous groundswell ofreligious zeal in contem-porary Pakistan. The no-tion of an Islamic state ismore popular than ever,as people turn to Islam to

rescue a failing state.Moreover, the Paki-

stani village has under-gone a transformation,thanks in part to the re-turn of Pakistani labourersfrom Arab countries. Vil-lage mosques are nowgiant madrassas thatpropagate hard-line Salafiand Deobandi beliefsthrough oversized loud-speakers. In fact, Punja-bis who tended to be rela-tively liberal on genderissues are increasinglytaking a Talibanesqueview on the matter.

However, it is schoolmilitarism that emerges asthe most significant issue.Dr Hoodbhoy argues thatthe militancy that bedevilsPakistans tribal areas aswell as its cities as well isa result of an educationsystem that propagates

Islam as a complete codeof life and is designed toengender a siege mental-ity in the mind of thechild. In fact, agovernment-approvedsocial studies textbook forClass V students pre-scribes that the childshould UnderstandHindu-Muslim differencesand the resultant need forPakistan.

Dr Hoodbhoy attrib-utes Pakistans Arabiza-tion or Saudisation tothe Zia regime and theAfghan jihad. With activeassistance from Saudi

Arabia, General Zia estab-lished a network of over22,000 madrassas acrossthe length and breadth ofPakistan. It is these ma-drassas that provided theUS-Saudi alliance withwilling recruits for theanti-Soviet jihad.

In the end, Pakistansfuture will be determinedby the ideological andpolitical battle betweencitizens who want a theo-cratic state and those whowant a modern Islamicrepublic.

The next chapterIn a recent report titledThe Next Chapter: TheUnited States and Paki-stan, an independentgroup of experts on US-Pakistan relations statethat Pakistan may be thesingle greatest challengefacing the next AmericanPresident, and argue thatthe United States cannotafford to see Pakistan fail,nor can it ignore the ex-tremists operating in thetribal areas. Among othersthey recommend the fol-lowing in terms of USassistance:

- Support the perform-ance based, rigourouslyaudited US$1.5 billionper year in non-militaryassistance

- Open US markets toPakistani textiles

- Focus the majority of

US economic aid on pro-jects in basic education,health care, water re-source management, lawenforcement, and justiceprograms

- Redirect militaryassistance to bolstercounter-insurgency ca-pacity

Vijay Vikram is a student atthe School of InternationalRelations, University of StAndrews.

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Essential readings of the month

VIJAY VIKRAM


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ured among the core literature. The majority ofthese fronts, conforming to the trends noted above,fall within the physical sciences. As it happens, theresearch front displaying the highest proportion ofIndian institutions among its core papers is de-voted to black holes and related aspects involving

entropy, supersymmetry, and string theory. Anauthor whose name recurs among the core papersis Ashoke Sen of the Harish-Chandra ResearchInstitute in Allahabad. Dr Sen's name also figuresamong the core authors in another of the mostIndia-centric frontsthis one devoted to tachyoncosmology.

In sum, all but three of the top ten researchfronts with the highest representation of India in-stitutions concern high-energy or theoretical phys-ics. The exceptions are one front dealing with the

adsorptive removal of dyes and other hazardousmaterials from aqueous solutions, another devotedto the study of stress caused by water deficit andsalinity in Catharanthus roseus and other plants,and a third involving conducting polymers andtheir use in biosensors.

Still another aspect of India's progression sincethe early 1980s involves the nation's increasingpresence in international science. In 1981, more

than 95 percent of Thomson Reuters-indexed pa-pers from India featured authors exclusively atIndia-based institutions, with no other nationslisted. By 2007, the percentage of "India only" pa-pers had fallen to 80 percent, indicating that, albeit

gradually thus far, the nation is moving towardgreater participation in world science.

Christopher King is editor of Science Watch. Reprintedfrom Science Watch (sciencewatch.com) by permissionof Thomson Reuters, Philadelphia, PA, USA.

ECONOMY

An electric imperative

Bringing power sector reforms back onto the national agenda

GULZAR NATARAJAN

ENERGY SECURITY will be the fundamental de-

terminant of both our economic growth andnational security in the days ahead. The PlanningCommission envisions power shortage as poisedto become the single most important infrastructure bottleneck facing India. Acute power shortagesand peak-time load reliefs in many states poses aserious threat to achieving the double digit growthrates we aspire to. Securing access to assured oil,gas, thermal and nuclear fuel supplies would be aprimary goal of our foreign policy.

The power ministry has set a target of "power

for all" by 2012, the achievement of which wouldentail enhancing power generation from 144 GWto at least 250 GW. The Eleventh Plan power gen-eration target of 78.5 GW is nearly quadrupling theTenth Plan achievement. The total investment re-

quirement in power sector for the Eleventh Plan is

projected at a massive $170 billion.The first generation of power sector reforms

involved unbundling of the integrated State Elec-tricity Boards (SEBs) and their corporatisation, thesetting up of regulatory commissions, and the re-visal of policy framework for private participation.It is now time for the next generation of reforms:to increase capacity, make transmission efficientand increase service quality and consumer choice.

Power generation

Rapidly growing energy demands require massiveexpansion of generation capacity. This calls forgreater clarity in generation policies, removal of bureaucratic delays, security in fuel and equip-ment supplies, and expedition of land acquisition

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with settlement of related encumbrances.Awarding of projects should be hastened

through standardised bid process managementusing model bid and contract principles. Environ-mental and other mandatory clearances can beissued through single window clearance mecha-

nisms. A land acquisition process similar to thatbeing followed by the National Highways Author-ity of India (NHAI) could be adopted. Project dis-placement concerns can be mitigated effectively ifthe rehabilitation and re-settlement of the affectedpeople are done quickly in a fair and transparentmanner, minimising the pain associated with dis-location. (See Reforming land acquisition, by MR Madhavan, Pragati Issue 18 - Sep 2008)

Similarly, the process of obtaining commit-ments and clearances from transmission and dis-

tribution companies on Power Purchase Agree-ments (PPAs) should be fast tracked. All clearancesshould preferably be sorted through before initiat-ing bidding. This would bring in transparency tothe process and create a competitive environmentin power generation.

An active power trading market with an openaccess framework can increase the commercial vi-ability of generation projects. Power purchasecommitments from distribution utilities will re-duce the cost of capital for investors.

Standardisation of boiler, turbine, and other

equipment designs and specifications would en-able suppliers to swiftly execute bulk purchaseorders and expedite their delivery. The massiveexpected demand for this equipment should be

leveraged to get foreign firms to transfer technol-ogy and set up domestic production facilities, andthereby expand the depth and breadth of the do-mestic market.

Fuel supplies and financing

The acute coal and natural gas scarcity, espe-cially for the smaller generators, and the inabilityof state agencies to import adequate quantities ofthese fuels carries a strong forewarning. Coalpowered plants form 53 percent of Indias genera-tion capacity and will continue to remain themainstay of our power generation program for theforeseeable future. The situation is even worse inthe supply of natural gas, with only 50 percent ofthe demand being met and valuable capacity lyingidle.

The process of identification and handing overof coal blocks to private companies for captive usewill have to be expedited. These blocks should beallocated in a transparent manner, following atariff-based international competitive bidding, in-stead of the usual screening committee route. Sun-set provisions to revert back the mines will pro-vide incentives for immediate development andprevent hoarding. Given the inevitability of largefuel imports, substantial investments will be nec-essary in additional port, rail and handling infra-structure.

Besides ramping up domestic coal and gasproduction, there should be an aggressive policyof acquiring mines and gas fields overseas. Insteadof direct purchases from the market, global bilat-

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Photo:HariniCalamur


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eral commercial fuel supply agreements, whichassure long-term supplies, should become thenorm.

The huge peak load deficit can be addressed byadoption of an appropriate mix of base-load andpeaking load plants. With the overwhelming ma-

jority of new generation capacity coming in base-load plants, it may be economically efficient tomake small investments to convert the existinghydro-electric power plants to peaking loadplants. The large peak deficit also gives impetus tothe role of natural gas driven peaking load plants.

India has an estimated hydro-electric powergeneration capacity of 150 GW, especially from theHimalayan fringes, of which only 35 GW has beenrealised and another 15 GW are under variousstages of development. At least another 100 GW

can be generated by tapping water resources inneighbouring countries like Nepal and Bhutan.This can contribute to a major share of futurepeaking load requirements.

Except for the limited success by a few genera-tion companies in accessing the debt market,transmission and distribution (T&D) utilities havenot managed to raise debt successfully from theopen market. The availability of easily accessibledebt from government backed financial institu-tions like the Power Finance Corporation (PFC)and the Rural Electrification Corporation (REC)

has had the effect of "crowding out" the develop-ment of a private debt market. It is therefore im-portant that these institutions confine their activityto financing the smaller and weaker utilities.

Given the excellent commercial potential ofmerchant power plants, raising funds in the equitymarkets is an attractive option. However, the eq-uity and especially debt markets alone, with theirlimited depth and breadth, cannot meet the hugeinvestment needs. It is therefore imperative tohave policies tailored to attract foreign direct in-

vestment.

Nuclear and alternate sources

Nuclear power forms just over 2 percent of ourtotal power generation and the proposals on thepipeline are expected to add a meagre 3 GW. TheIndia-US nuclear deal and the subsequent removalof restrictions on trade in civilian nuclear compo-nents by the Nuclear Suppliers' Group (NSG),comes as a shot in the arm for nuclear power gen-eration. Globally too, faced with high commodityprices and environmental concerns, nuclear power

plants, with their low operating costs, have be-come financially viable.

The huge business opportunity in nuclear ca-pacity addition, estimated at over US$40 billion,

would be enough to attract global majors likeGeneral Electric, Areva, Hitachi and Westing-house. Collaborating with them will enable tech-nology transfer and facilitate the development ofdomestic expertise in the private sector, whichwould be critical to lowering costs and sustaining

the program.The biggest challenge facing the development

of our nuclear power generation program is that ofsourcing uranium fuel. With scarce domesticsources and access denied by major producers likeAustralia, even the existing nuclear power plantsare running at barely half their capacities. Allequipment supplies should be linked with assuredfuel supply for the entire plant life or access to cap-tive uranium mines across the globe.

The commercial and political influence of such

large companies would facilitate the tie-up of ura-nium supplies. Given the plentiful domestic tho-rium reserves, efforts to expedite the development

of the thorium-based fuel cycle should bestrengthened. A strong regulatory regime, withspecific focus on safety and nuclear waste dis-posal, will have to be put in place to reassure thesignificant public safety concerns about nuclearpower.

Renewable energy sources like wind, biomass,and solar have enormous potential in India and

will become attractive propositions in the comingyears as the cost of production declines and asother fuels become expensive.

The government will need to encourage its de-velopment with appropriate output-based fiscalincentives (See The new Manhattan Project, byAtanu Dey, Pragati Issue 9 - Dec 2007). With mostof the solar and wind power potential areas beinglocated away from load centres, there will have tobe substantial investments in transmission capac-ity to evacuate the power generated.

Transmission and Distribution reforms

Massive investments are required in the upgradingand expansion of transmission networks to evacu-ate electricity from the upcoming plants as well as

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Massive investments are required in the up-grading and expansion of transmission net-works to evacuate electricity from the upcom-ing plants as well as from surplus to deficit re-

gions.


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from surplus to deficit regions. A modern andseamlessly integrated national grid, is critical tothe functioning of active power trading marketsthat can ensure optimal utilisation of scarce re-sources. Allowing for the relative difficulty ofmanaging private ownership of transmission net-

works, government entities will have to make the bulk of investments, at least for the foreseeablefuture.

Distribution captures the last mile in the elec-tricity value-chain, and its efficiency is critical toensure cost recovery and profitability of the entiresector. Unfortunately, it remains the Achilles heelof Indias power sector, with nation-wide Aggre-gate Technical and Commercial (AT&C) losses atan unacceptably high 34 percent. Rampant powertheft, inadequate metering, run-down networks,

poor maintenance, accumulating dues, lack ofprudent financial management, and governmentsubsidies all contribute to these high losses.

The Accelerated Power Development and Re-form Programme (APDRP), with policies promot-ing loss reduction, have brought to focus the needto reduce AT&C losses to 15 percent by 2012. Ajudicious mixture of information technology inter-ventions, energy audit, awareness creation, ag-gressive theft detection and monitoring, coupledwith investments in basic repairs and maintenancecan contribute significantly towards bringing

down these losses.Distribution offers the full spectrum of oppor-

tunities for private participation, from selectivedistribution franchising to outright privatisation.Given the large legacy systems and political oppo-sition to privatisation, the most prudent way toinvolve private partners in distribution is the fran-chisee model. Under this, the state utility transfersthe rights to operate and maintain network, sup-ply power, and to bill and collect tariffs in certaincircles to private players. This arrangement should

be initiated in urban circles initially, since theirconsumption is high and the benefits of improve-ment much larger.

The Electricity Act of 2003 took the radical stepof providing "open access" to distribution andtransmission networks in addition to recognisingpower trading. However, open access has beenconstrained by transmission capacity limitationsand high surcharges, besides the lack of adequatedepth in power trading and competition in distri-bution. In the initial stages, open access to distribution should be used to expand choice for bulk

consumers.A robust trading regime will require adequate

depth of market through increased numbers ofsellers and buyers, and quantity traded. The mar-

ket can be deepened by trading a part of the cen-tral pool reserves through the exchanges, encour-aging more distribution and generation companiesto participate, and by promoting the setting up ofmerchant power plants.

Tariff reformsIndia has one of the highest industrial and com-mercial power tariffs, which adversely affect theirglobal competitiveness. Further, the present tariffarrangement, which does not differentiate betweenpeak and off-peak uses, distorts the incentives forefficient utilisation of power. Given the averagenational peak load deficit of 16 percent, distribu-tion utilities are forced to purchase power at exor-bitantly high rates, thereby placing unsustainableburdens on their already weak finances.

The present arrangement also distorts the in-centives for independent power producers whocan profit from the high peak-time demand andmake handsome profits at the expense of the stateutilities and consumers. With the peak hour defi-cits likely to continue for the foreseeable future,merchant power plants become commercially at-tractive even with low tariff PPAs.

A floating availability-based tariff regime and amerit order based load dispatch system will go along way in efficiently allocating power consump-tion across different categories of consumers. It

will help lower tariffs, especially for bulk consum-ers, and create incentives for reduction in peakpower consumption. An active power trading plat-form, supported by a robust transmission grid anddeployment of real-time consumption monitoringtechnologies will help facilitate implementation ofthis regime.

Ultimately, all these reforms will become un-sustainable and come to naught without politicalcommitment. The wave of free-power inducedcompetitive populism sweeping through many

states is the most pernicious manifestation of thisdanger. States will need to eschew policies thatpromote moral hazard and prevent cost recovery,and the central government must ensure that theytailor policies accordingly.

There is an urgent need to reform the powersector; as the successful deregulation of telecom-munications has shown, tremendous change ispossible if given even half-a-decent chance.

Gulzar Natarajan is a civil servant.

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REVIEW

American Indians

A review of Vinay Lals The Other Indians

CHANDRAHAS CHOUDHURY

IN THE early pages of PatrickFrenchs recent biography ofVS Naipaul, there is a de-tailed portrait of the first rep-resentatives of the modernIndian diaspora in the mid-nineteenth century. Thesewere unwilling travellers:luckless, impoverished inden-

tured labourers, mostly drawn from regions innorth India suffering drought or famine, tossed on board ship like chickens in a coop for an arduous journey across the seas to plantations in the WestIndies.

From these early beginnings, fraught withdread and uncertainty and beset with dangers toboth body and self, the Indian diaspora has come along way to become an incontestable fact ofworld culture, as Vinay Lal puts it in The OtherIndians, his new history of South Asians in Amer-ica.

Notwithstanding several other significant nar-ratives of movement and resettlement, the greatIndian narrative of migration of our age, andsurely for many decades to come, has been the

journey to America. Thismigration has a kind ofdouble reality: it as much adream for millions of whatMr Lal calls Resident Non-Indians (RNIs) as it is aproud fact for actual NRIs.For a long time, before ourcurrent period of reverse

migration in modest proportions, America wasthought to be the natural destination for our bestand brightest, the site where they might break freeof the sloth and stasis and crab mentality of be-nighted Indian life and grow wings.

But one of the tricks of the human brainit thereason we need historyis that it all too easilyextends a present reality back into the past. One ofthe aims of Mr Lals book is to show us the stagesof negotiation, attrition, and doubt through whichIndian life in America has passed in order to reachits present bullish phase. For instance, althougheducational attainment among Americans of In-dian origin is now famously high (63.9 percentnow have a bachelors degree compared to 24.4percent in the general population), Indians had the

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Review

The Other Indians: A political andcultural history of South Asians inAmerica

by Vinay LalHarper Collins India, 176 pages, 2008

Photo: Wingluke Asian Museum


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lowest educational standards of any ethnic groupas recently as 1940. Even as India made the transi-tion from colony to independent republic, Asiansin America were fighting for the most basicpolitical rights (often allying with the African-American movement). Mr Lals book meticulously

charts the progress of Indian life in America fromtrickle to flood, stammer to swagger.

Indians first began to arrive in America in sig-nificant numbers around the close of the nine-teenth century. Almost all were male. Some werepeasants from Punjab who had been drawn byreports of American prosperity and who foundwork as farm labourers, others were students. Per-haps the most interesting of these groups was theone with explicit political aims: a set of nationalistsand revolutionaries trying to unshackle the British

Empire from without by force of both words andmilitant action. As Lal explains,By the second decade of the twentieth century, a

sufficiently large coterie of cosmopolitan Indianrebels, whose ranks would be swelled and compli-cated by peasants and workers who had experi-enced the piercing effects of racial discrimination,felt emboldened enough to initiate a political partyto press for Indian independence from British rule.The Hindi Association of the Pacific Coast tookroot in 1913, founded in Oregon, but it is by thename of Ghadr (also Ghadar) that it is commonlyknown. This Ghadar Conspiracy as the Britishtermed it, lasted a mere five years[...] but it is theGhadrs party newspaper [which had the wordsthe enemy of the British Raj emblazoned on itsmasthead] which most of all suggests why theromance with the Ghadr movement among Indianprogressives endures....Published at first in Urdu, the predominant lan-

guage (alongside Hindustani) of north India, andGurmukhi, the language of Punjabi peasants,Ghadr had within months also commenced publi-cation in Gujarati and Hindi. A contemporary Brit-ish intelligence report confirmed that some 3,000copies of the paper at this time were mailed to theFederated Malay States, Siam, and elsewhere in

Asia [...].When one contemplates that nearly 100 years agoan Indian newspaper was being published fromthe United States in at least four languages...onemarvels at the ecumenism, grit, ambition, and vi-sion of the movements advocates.One might argue that it was only at a great re-

move from India that the Ghadrites couldentertain...the utopian notion of a mother Indiathat would be freed by militant action. The soci-ologist Mark Juergensmeyer coined the phraseGadar syndrome to describe the phenomenon ofa militant nationalist movement created abroad by expatriates embodying the fusion of ethnicanger and nationalist pride...Useful as are theseideas, they do not entirely capture the globalizingenergy of Ghadr, much less the magisterial mannerin which the Ghadr movement anticipated thenotion of a global Indian diaspora. The Ghadrites,

I am tempted to say after Bruce Chatwin, drewtheir own songlines across the oceans, and every-where provided assurance to Indians that Indian-ness was, in some fashion, theirs to claim. Just before the ascent of the Ghadr party an

attractive picture of Indian civilisation had already been imprinted on America by the discourses ofSwami Vivekananda, whose electrifying address todelegates of the World Parliament of Religions atChicago in 1893 catapulted him into the con-sciousness of the American public. And as the cen-tury rolled on India slowly became synonymous inthe American imagination with the thought andwork of Mahatma Gandhi, who acquired a consid-erable following among the intelligentsia andmembers of the press. At the same time Indians inAmerica were fighting a long battle over theirright to citizenship that would not be resolved un-

til the passing of the National Origins Act in 1965,which set in place systems and quotas for immi-gration which are still largely in place today.

Mr Lal has many interesting things to say on awealth of subjects, from the growth of Hinduismin America to the take-over of the motel businessby the Patel community, and from contributions byIndians to American literature to the changing dy-namics of the relationship between adopted landand motherland. He notes the pervasive anxietyabout cultural loss and contamination among In-

dian Americans, which has spawned an aggressiveand rancourous form of Hinduism that is broadlysympathetic to, and often lavishly funds, the ac-tivities of the Bharatiya Janata Party in India andsees nothing wrong in calling itself Hindu nation-alist. It is not surprising, observes Mr Lal,

...that, as India slowly begins to emerge as anAsian power, the Hindu community in the UnitedStates, which contributes substantially more todirect foreign investment in India than Hinduselsewhere, should begin to feel emboldened,mindful of its rights and prerogatives; nor is itsurprising that these Hindus should view them-

selves in the vanguard of what I would character-ize as revolutionary internet Hinduism. The inter-net is not merely the medium through which de-bates on Hinduness and Hinduism are being con-ducted, it is the vehicle, nowhere more so thanamong Indian Americans, for advancing a newconception of Hinduism as a global faith. If inter-net Hindutvas proponents had their way, Hindu-ism, or more precisely Hindutva, would havesomething of an ummah, a worldwide communitythat would also assist in bringing pliant Hindus,both in India and in older Indian diasporas of thenineteenth century, to a awareness of the globalstrengths of a modern Hindu community. [...]Though nationalist Hindus in the United Statestake recourse to arguments about multicultural-ism, they have not at all been hospitable to multi-culturalism or even Indian variants of pluralism inIndia itself.

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Indeed, there is material for an entire book inMr Lals observation that Indian culture is per-haps more stable in the US than it is in India.Himself a resident of America for almost threedecades (he teaches History at the University ofCalifornia), Mr Lal has the advantage of being able

to draw upon both scholarship and personal expe-rience in this work, and speaks as both observerand participant. He elegantly summarises andbrings into the mainstream a wealth of more spe-

cialised literature, such as ethnographies of par-ticular migrant communities (such as the Punjabi-Mexican community in California) and academicmonographs. Many Indians at home will savourthis book about Indians abroad.

Chandrahas Choudhury is a freelance writer based inMumbai and blogs at The Middle State(middlestage.blogspot.com).

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Documents

Pragati Issue19 Oct2008 Community Ed