Vivek Issues n Options March 2013

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VIVEK : Issues and Options March2013 Issue: II No: III 2

What Does The Chinese Take Over

Of Gwadar Imply?

- Radhakrishna RaoReforming The Criminal Justice

System

- Dr. N ManoharanIndophobia And Its Expressions

- Dr. Anirban GangulyPakistan Looks To Increase Its

Defence Footprint In Afghanistan

- Monish GulatiPolitical Impasse Over The

Caretaker Government In

Bangladesh

- Neha Mehta

EVENTS

Vimarsha: Security Implications O

Contemporary Political

Environment In India

ARTICLES

ndias Compass On Terror Is Faulty

- Kanwal Sibaltop Appeasing Pakistan

- Satish Chandralandering The Indian Army

- PP Shukla

Hydro Power Projects Race To Tap ThePotential Of Brahmaputra River

- Brig (retd) Vinod AnandDefence Acquisition: Urgent Need For

tructural Reforms

- Brig (retd) Gurmeet KanwalThe Governor, The Constitution And The

ourts

- Dr M N Buchndian Budget Plays With Fiscal Fire

- Ananth NageswaranAfzal Gurus Execution: Propaganda,

Politics And Portents

- Sushant Sareen

Contents

3

6

10

15

21

25

62

51

46

69

76

34

41

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Indias Compass On Terror Is Faulty

- Kanwal Sibalfzal Gurus hanging showsthe ineptness with whichour political system deals

with the grave problem ofterrorism. The biggest challenge toour security, and indeed that ofcountries all over the world thatare caught in the cross currents ofreligious extremism, is terrorism.

Traditional military threats can beassessed on the basis of the size ofthe armed forces, equipment andlogistics available to theadversary. A militarily weakcountry would normally hesitateto attack a stronger one as defeatis never honourable and the price

could be loss of territory. A casusbelli has to be established tonegate any charge of unprovokedaggression; the laws of war areapplicable. The internationalcommunity can intervene throughthe UN or otherwise against astate resorting to militaryaggression.

ChallengeTerrorism has a different logic. Itis asymmetric warfare by non-

state actors outside any law. Thenumbers involved are small andthe targets are unsuspecting andunprepared individuals in thestreet, in public transport, hotelsor restaurants or peaceful publicspaces. Suicide bombers and carbombs can cause substantialcasualties indiscriminately.Shadowy groups with leaders inhiding orchestrate these attacks.The involvement of stateinstitutions through groupsnurtured by them is on the basis ofthe practiced art of deniability.The international communitycannot even agree on thedefinition of terrorism. The

extraordinary challenge thatterrorism poses to societies, has tobe dealt with at exceptional levelsof alertness, discipline, training ofpersonnel, technical capacity,policing and organisationalresponse.

Indias problem with externally

supported terrorism is amongstthe severest that any countryfaces. Our next door neighbour hasbeen long using terrorism as aninstrument of state policy. Even if

* Kanwal Sibal - Member, VIF Advisory Board


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some countries like Libya wereaccused of supporting terrorism,the acts imputed to them were notso blatant, wide-spread and

persistent as those of Pakistan-based terrorists against India.North Korea has been accused ofsporadic terrorist acts and Iranhas supposedly targetted politicalopponents abroad and supportedterrorist groups attacking Israel,but the Israeli-Arab confrontationhas no parallel with the reasons

for Pakistans animosity towardsIndia. As for North Korea andIran, they have noterritorial claimsthat they seek toadvance throughterrorism. Pakistansupports terrorismto destabilize India,

to makegovernance in Kashmir as difficultas possible, to nourish separatismthere, and to cause a communaldivide in India. It is also aconsequence of the deepeningIslamisation of its society.

To meet the enormity of such athreat India needs politicalconsensus and cohesion within thecountry. We have, instead,political bickering and confusedthinking in the civil society andsections of the media. Afzal Guruwas sentenced to death by the

Supreme Court, his reviewpetition was rejected by the samecourt and yet the government tookwell over 6 years to decide on his

mercy petition. To claim that thisdelay was not political incharacter is being disingenuous.Because the delay was motivatedby political considerations, thedecision to hang him is beinginevitably attributed to politicalcalculations. Action againstterrorists should not be vitiated by

competition between governmentand the opposition for political orelectoral

advantage. Withthose responsiblefor killing RajivGandhi and BeantSingh escapinghanging so far, the

question ofselective decisions arises. Sectionsof our mainstream press considerit appropriate to present AfzalGuru as a victim of the Indian

judicial and political system ratherthan a brutal terrorist deservingcondign punishment.

TravestyThe dictum better late thannever would have providedadequate social catharsis if thedelay in hanging was actually forreasons beyond governments

To meet the enormity of such athreat India needs politicalconsensus and cohesion withinthe country. We have, instead,political bickering and confusedthinking in the civil society andsections of the media.


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control. If some members of theNational Advisory Council couldplead with the President to saveKasab - a Pakistani who

personally killed hapless, innocentIndians - from the gallows, one canimagine the resistance within thesystem to hang Afzal Guru. If themilk of human kindness flowswithin our society for terroristslike Kasab, who were actuallywaging a proxy war by Pakistanagainst us, it is hard to imagine

how we can steel our will and honeour organizational responses tocombat terrorism zealously.

BlunderWe have voluntarily confused thedebate over Pakistans culpabilityfor terrorism against us bydeclaring that both countries are

victims of terrorism. We havedamaged our case further by notresisting Pakistans attempts toequate the Mumbai terror attackwith the attack on the SamjhautaExpress. By playing up ofdisclosures about terrorist attacksby right wing Hindu extremists weare bracketting Pakistani abetted

terrorist attacks in India and localacts of terrorism that have nothingto do with Pakistani territory. Theprevious Home Minister blurredthe focus on externally supportedterrorism by highlighting domestic

religious extremism. His successorhas scored a self-goal by speakingof Hindu terrorism and RSS/BJPrun training camps. The External

Affairs Minister, whose wordshave more echo outside because ofhis position, has endorsed theHome Ministers accusation, nodoubt adding to the confusionabroad about the ground realities.

There is no parallel between thehighly deplorable but isolatedterrorist activity of vengefulHindus and the terrorist industryin Pakistan and the Islamic worldsustained by oil wealth andpernicious religious thinking.There are no NGOs or Hindupreachers in India publiclyadvocating religious violenceagainst Pakistan on the basis ofreligious texts. There is no statesupport for such activities. If wethink our domestic jockeying forpolitical advantage can beinsulated from the externaldimension of the terrorist threatfacing us, we are committing acostly error. We let the Kashmiriseparatists, who are de factopolitical accomplices of theterrorists, travel to Pakistan tomeet even the Army and ISI chiefsthere without reaction. Ourcompass on terrorism is faulty.

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Stop Appeasing Pakistan

- Satish Chandrahe anger in India at therecent mutilation of itssoldiers by Pakistani forces

in J&K is natural andunderstandable. Quiteunwarranted, however, are thecalls for revenge and ofinternationalisation of the issue asalso our feelings of surprise. The

idea of a tit-for-tat response to themutilations is an obvious non-starter given the Indian ethoswhich militates against suchatrocities. Moreover, unlike thePakistani Army which isessentially a jihadi outfit inuniform the Indian Army is muchmore professional with a code of

conduct that makes suchreprehensible moves unthinkable.

Going by our historical experience,calls to haul Pakistan before thebar of international opinion, whilemore meaningful, do not holdmuch promise. In this context, oneneed only recall the manner in

which the internationalcommunity failed to addressPakistans aggression in Kashmir,its blatant involvement withnuclear proliferation, and its

aiding and abetting severalterrorist outfits. Moreover, todaywhen the West needs Pakistan inorder to facilitate itsdisengagement from Afghanistanit is most unlikely that theinternational community willbestir itself in order to address ourconcerns about Pakistans

unacceptable behaviour,particularly when we continue toengage it.

There is no reason for Indians tobe surprised at the acts ofbarbarism committed by thePakistan Army and its modusoperandi when confronted with

them. These have been committedby it from time to time mostnotably in August 2011 and earlierduring the Kargil conflict. Itspropensity to engage in themarises from its affiliations toterrorist outfits since its veryinception. Its standard operatingprocedure when confronted with

its behaviour is to flatly deny thesame. Lies, deceit, and subterfugeare second nature to it. Thisshould only be expected of anarmy and a nation that has

T

* Satish Chandra - Distinguished Fellow, VIF


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engaged in Mumbai like terrorattacks on India for decades.

Quite clearly Manmohan Singhs

policy of engagement withPakistan has failed in reducingthe trust deficit with the latterand in securing India from thelatters inimical designs. This isreflected not just in Pakistansrecent acts of barbarism againstour soldiers, but also in frequentbreaches of the ceasefire,infiltration of terrorists into J&K,repeated terrorist attacks againstother parts of Indiaeven after 26/11,refusal to shutdown theinfrastructure ofterror and to bringto justice theperpetrators of26/11, efforts to revive theKhalistan movement, theinduction of fake Indian currency,etc. This falls into a pattern asover the years all Indianendeavours to establish ameaningful relationship withPakistan, most notably theextraordinarily generous IndusWaters Treaty, the return of over90,000 Pakistani POWs as well asthe over 5,300 square miles ofterritory captured by India in the1971 conflict, and the unilateralgrant of MFN treatment, did not

succeed and must go down asgrave errors of judgments.

Engagement and generosity with

Pakistan have failed because itsarmed forces, which have all alongcalled the shots, have had a vestedinterest in maintaining aninimical relationship with India.

An Indian bogey has been criticalas a means of keeping their handson the reins of power. Theexpectation that civil society couldweaken the grip of the Pakistanarmed forces on power is totally

misplaced as notonly is it too weakbut has over thedecades beenbrainwashed intoan anti-Indianmould and, to anextent, co-opted

into the establishment. This isborne out by the insensitivestatements coming from HinaRabbani Khar. Given the fact thatanti-Indianism is a part of thePakistani DNA the latter willcontinue with trying to bleed us nomatter what gestures India makestowards Pakistan.

In view of the foregoing, Indianeeds to undertake a paradigmshift in its Pakistan policy.Policies of engagement andunilateral concessions have got us

Quite clearly ManmohanSinghs policy of engagementwith Pakistan has failed inreducing the trust deficit withthe latter and in securing Indiafrom the latters inimicaldesigns.


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nowhere and, indeed, have provedto be counterproductive as theyhave only encouraged Pakistan tocontinue with its efforts to hurt us.

Accordingly, we need to evolve aholistic approach designed to bringhome to Pakistan that its pursuitof inimical policies vis-a-vis Indiawill not be cost free and, in fact,persistence with the same could

jeopardise its very existence.

Some elements of such a policy,which should be short on rhetoricbut strong onaction, are: thecomposite dialogueprocess may beabandoned. It hasnot succeeded inbridging the trustdeficit and onlymaintained anillusion ofimproving tiesbetween the two countries.

Abandoning it would, moreover, bein keeping with our PMs initialassurance, which he reneged upon,that it would only be resumedwhen the perpetrators of 26/11would be brought to justice; tradeliberalisation with Pakistan maybe made contingent upon itsaccording us MFN status andproviding us overland access to

Afghanistan; visa liberalisationshould not be implemented till

such time as Pakistan addressesour concerns relating to terrorismas it would open us up to allmanner of undesirables from that

country; India should exercise fullrights over the Indus waters aslegally permitted under the IndusWaters Treaty. For starters, therelease of Indus water to Pakistanshould be minimised bymaximising the use in India ofthese waters as permitted underthe Indus Waters Treaty. Building

of storages as permitted under thetreaty should beaccelerated inKashmir. Noticeshould be served onPakistan forrenegotiation of thetreaty under whichwe get only 20 per

cent of the waterswhile having 40 percent of the catchment area;Pakistans faultlines must beruthlessly exploited particularly inBalochistan. Since it alreadyaccuses us of such activity it woulddo us no harm to engage in itcovertly; covert action, and if needbe focused strikes, should beundertaken to take out terroristelements and their supportersoperating from Pakistan.Contingency plans for such actionshould be developed expeditiouslyso that following another terrorist

Some elements of such a policy,which should be short onrhetoric but strong on action,are: the composite dialogueprocess may be abandoned. Ithas not succeeded in bridgingthe trust deficit and onlymaintained an illusion ofimproving ties between the two

countries.


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attack on us or any unacceptablebehaviour these are undertakenwithin a matter of hours; thearmed forces may be given full

tactical freedom to militarilyaddress any Pakistaniadventurism across our borders;and, at the diplomatic level Indiashould relentlessly exposePakistans involvement withhuman rights violations, nuclearproliferation, and terrorism. Inaddition, we should oppose its

efforts at securing any office ininternational bodies.

The pursuit of such a policy alonewould lend reality to the PMsassertion that it cannot any longerbe business as usual with

Pakistan.

It goes without saying that such apolicy must be accompanied bymeasures designed to tighten upinternal security, ensuring thatthe needs of our armed forces bothin the conventional and nuclearsphere are met, and endingalienation in Kashmir through ourendeavours.

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Dealing With The Neighbour From Hell-

Slandering The Indian Army- PP Shukla

ince the recent episodes onour side of the Line ofControl in January 2013,

there has been a spate of articlesseeking to justify and somehowexplain the Pakistani actions, evenif many are prefaced with the pro-forma demurral that the

beheadings this time and in thepast - were condemnable. Many ofthe spurious arguments used bythe appeasers of Pakistan havebeen disposed of in earlierwritings; one of the newer oneshas been that the Indian Armyhas done similar things. Happily,Raksha Mantri Antony has denied

these allegations, and so has theformer Army Chief, Gen Malik.But this has not settled matters.Proof of the culpability of theIndian Army, as adduced in somesections of our media, is thatPakistan has lodged several suchaccusations against the Indian

Army with the UN Military

Observers Group for India andPakistan [UNMOGIP] over thelast decades. This latter body has,in turn, taken this up with India,

but has received no reply.

There is a history to all this, and itwould be important for theunbiased reader to be aware ofthis and draw the correctconclusion regarding these kindsof arguments. There was a time

when UNMOGIP played an activerole along the Cease-Fire Line, asit was called before the 1972 Simla

Agreement, and India was dealingwith this body on a continuingbasis. The last time that it playeda substantive role was in 1965,especially in the run-up to the warthat broke out in the autumn of

that year. The events that led towar were, as usual, precipitated byPakistani action in sendinginfiltrators across the LOC, whiledenying any role in this. By now,this is Standard OperatingProcedure, but then it wasrelatively new, having been doneonly once before, in September-

October 1947.Accordingly, both sidescomplained to UNMOGIP in

August 1965. That body was thenheaded by an Australian, Lt Gen

S

* PP Shukla - Joint Director, VIF


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Robert Nimmo, who had been itshead since 1950. He enquired intothe charges made by both sidesand submitted his report to the

UN Secretary General, U Thant.The latter made a report to thefull Security Council on 3September 1965, and reported asfollows.

UNMOGIP received an Indiancomplaint of Pakistani shelling, on1 September, of pickets and abattalion Headquarters in theChamb area of the Jammu-Bhimber sector ofthe Cease-FireLine. Thecomplaint statedthat at 0230 hourson that date oneand a halfPakistani tanksquadrons crossed the Cease-FireLine in this area supported byartillery. Pakistani artillery wasalso said to have fired on abattalion Headquarters in thePunch area from 1630 on 1September and on an Indianbattalion Headquarters in theJangar area. The substance ofthese complaints wassubsequently confirmed by UnitedNations Military Observers. APakistani complaint reported thatIndian soldiers had crossed theCFL in strength in the Kargil,

Tithwal, and Uri-Punch sectors asreported above. Pakistan, in thiscomplaint also affirmed thecrossing of the CFL by Pakistantroops in the Bhimber area on 1September as a defensive measureto forestall Indian action,asserting also that in this sectorthe Indian Air Force had takenoffensive action against Pakistantroops. Also on 1 September armedinfiltrators ambushed an Indianconvoy at Gund north-east ofSrinagar on the Leh road and bothsides sustained casualties. On 2September theJammu team ofUNMOGIPreceived an Indiancomplaint thatPakistan aircrafthad attacked the

road betweenChamb and Jaurian during themorning of 2 September and thatJaurian village was in flames. Theair attack on Jaurian village wasconfirmed by UN MilitaryObservers. [Emphasis added].The purpose of this long quote andthe added emphasis is todemonstrate that the Indiancomplaints were confirmed by GenNimmo, while the Pakistanicomplaints were not. This isimportant, because, as mentionedabove, the charges against the

Pakistani artillery was alsosaid to have fired on a battalionHeadquarters in the Puncharea from 1630 on 1 Septemberand on an Indian battalionHeadquarters in the Jangararea.


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Indian Army in recent years reston the record of Pakistani chargesagainst it, and lodged with theUNMOGIP. It is another of

Pakistani SOPs to make suchfalse charges, and the events of1965, which were subjected tocomprehensive scrutiny byUNMOGIP and the UN SecurityCouncil, testify to this.

Gen Nimmo died in January 1966in Islamabad, apparently of aheart attack, this being the veryday that the Tashkent Conferencebegan. Prime Minister Shastridied at the end of the Conference.

There is more: this may be seen inthe statement made by SecretaryGeneral U Thant, which againdeserves to be quoted at length.

In mid-June of this year [1965]for example, Gen Nimmo reportedthat during the five months, atotal of 2231 complaints from bothsides charging violation of theCease Fire had been submitted toUNMOGIP. Most of these involvedfiring across the CFL [Cease FireLine], although some concernedcrossings of the Line by armedmen. As of that date, 377violations in all categories hadbeen confirmed by theObservers

The point to note is that there wasa gross exaggeration in thenumber of incidents alleged tohave taken place. This was at a

time when India used to maintaincontact with UNMOGIP, andthere was the danger that chargeswould be proved false, as didindeed happen regularly. Today,when India no longer deals withthat bodys complaints, it would betempting for Pakistan to makeeven more charges than in 1965. It

is safe therefore to conclude thatthe charges being purveyed in themedia today are wildexaggerations.

The Nimmo Report itself wasnever made public. The recordsshow that Prime Minister Shastriwanted it made public, but foundno support among the principalactors USSR, USA and the UK.He acknowledged that the Reporthad some negative things to sayabout the conduct of India too, butits conclusions were unequivocaland placed the blame on Pakistan.It is probably not too late evennow for our Ministries of Defenceand External Affairs to uploadthese on their websites, and fulfilShastris wishes.

To sum up, what the record showsis that Pakistan has beenhabitually misrepresenting the


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facts to the internationalcommunity, and it should notsurprise anyone that thiscontinues today. Both in terms of

the number of charges, and, moreimportantly, in terms of theveracity of the allegations, thehistorical record shows thatreports made by Pakistan toUNMOGIP were just not true. Thedishonesty was taking place rightfrom the start, of course, but theywere being made even at a time

when there was the serious risk oftheir being challenged and provenfalse. Today, Indiano longer has anytruck withUNMOGIP, and itis therefore muchsafer to trump upcharges against it.

For Pakistan, it isa safe bet: India will not answer,and so the appeasers in India canrepeat and endorse the allegation.

Alternatively, India is forced toanswer, and thereby bringsUNMOGIPand by extension, theUN back into play on theKashmir issue.

There is an important tail-piece tothe 1965 episode described above.The Security Council meeting of 3September was followed by adebate on 6 September at whichthe Indian Foreign Secretary, CS

Jha, [and a representative ofPakistan] was also present. Thespeech of the Indianrepresentative contains the

following passage. He wasresponding to the Pakistani chargethat India was in Kashmir as acolonial power.

If there is colonialism, it exists inPakistan. The Pashtuns, theBaluch, and the East Pakistanis,are being ruled without anyregard to their civil rights, to theirfundamental human rights andfreedoms. This iscolonialism as theworld understandsit.Events since then,with the emergenceof an independent

Bangladesh and the on-goingresistance in Baluchistan,certainly provide a ringingendorsement of the Indian ForeignSecretarys judgement.

As to UNMOGIP itself, the fact isthat Shastri wanted its numbersto be increased in 1965, so that it

could do a more thorough job ofmonitoring. This did not happen,unfortunately, and after 1972,India stopped all dealings withUNMOGIP. The important thingis to see this to completion, and

Events since then, with theemergence of an independentBangladesh and the on-goingresistance in Baluchistan,certainly provide a ringingendorsement of the IndianForeign Secretarys judgement.


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wind up the operations of the bodyon the Indian side, even ifPakistan will not agree to this onits side.

There remains the question of whythe appeasers and pro-Pakistanelements are so gullible as to buyinto any allegation against the

Indian Army. The motive behindsuch reports requires examinationand understanding, so that thepublic at least is not misled.

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Hydro Power Projects Race To Tap The

Potential Of Brahmaputra River

- Brig (retd) Vinod Anandor the past many yearswhile China has been in thenews for its efforts in

exploiting the vast hydro powerpotential of Yarlung TsangpoRiver of the Tibet AutonomousRegion, India has also been

attempting to tap the potential ofthis river, known as theBrahmaputra in India. Recentreports indicate that China hasapproved the construction of threenew hydropower dams on themiddle reaches of YarlungTsangpo. Work on an older 510MW hydro project in Zangmu in

Tibet had commenced back in2010. The capacity of the two newprojects coming up at Dagu andJiacha would be 640 MW and 320MW respectively while thecapacity of the third new dam atJiexu is yet to be confirmed. Theseprojects have been planned to becompleted in Chinas 12th Five

Year Plan period i.e. 2011-2017.China has, as usual, given theassurances that these are run ofthe river projects and in no wayaffect the downstream flows. In

addition China has also built atleast six smaller projects ontributaries of Tsangpo which againaccording to the Chinese wouldnot affect waters flowing intoIndia.

Earlier assertions by China that ithas no plans to construct a

massive dam at the Great Bend onTsangpo (at Metog) to divertwaters to the arid North havebeen met with a certain degree ofskepticism in India. The proposedproject has the potential ofproviding 38 gigawatts of energy.Chinese engineers have beenclaiming that technical difficulties

in construction of the dam can beovercome. In fact, Yan Zhiyong,the general manager of ChinaHydropower Engineering

F

* Brig (retd) Vinod Anand - Senior Fellow, VIF


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Consulting Group stated in May2010 that "The major technicalconstraints on damming the

Yarlung Tsangpo have been

overcome."

According to a well known Chinesescience forum, the Great Bend wasthe ultimate hope for waterresource exploitation because itcould generate energy equivalentto 100m tonnes of crude oil, or allthe oil and gas in the South ChinaSea. Zhang Boting, the DeputyGeneral Secretary of the ChinaSociety forHydropowerEngineering hasclaimed that such aproject will benefitthe project bymarked reductionin carbonfootprints.

While upper riparian states havean upper hand in controlling thewater flows to the downstreamstates and therefore the lowerriparian states usually raiseobjections to any damming activityupstream it was rather surprising

when China raised objections toIndias Siang Upper hydropowerproject in Arunachal Pradesh.

Siang is the largest river ofBrahamputra river system whichoriginates from Chema Yungdungglacier near Kubi in Tibet. Whilein Tibet it is known as Tsangpo,and flows in a West Eastdirection, and turns south beforeentering Indian territory in the

Upper Siang district of ArunachalPradesh. The riverthen flows in aNorth Southdirection, passesthrough the UpperSiang and EastSiang districts of

Arunachal Pradesh

and is known asSiang River. Further down, theSiang is known as theBrahmaputra.

As part of realizing the hydropower potential of rivers in

Arunachal Pradesh the NationalHydroelectric Power Corporation

(NHPC) had completed the pre-feasibility study of the UpperSiang hydro power project lastyear. The output of the dam wasoriginally planned for a massivepower generation of 12, 000 MW.

As part of realizing the hydropower potential of rivers in

Arunachal Pradesh theNational Hydroelectric PowerCorporation (NHPC) hadcompleted the pre-feasibilitystudy of the Upper Siang hydropower project last year.


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Because of the environmental andrehabilitation concerns the projectwas converted into two twin damsfurther downstream and given the

name of Siang Intermediate dam.The earlier location being about 60km from the border, the Chinesehad also expressed concerns abouttheir areas being submerged.

Now the project is targeted toproduce 9,750-MW which issupposed to be the second biggestproject after Chinas Three Gorgesdam. The project involves aninvestment of nearly Rs. 1,00,000crore over a 10 year period. TheCentral government also plans tocompensate Arunachal for anysubmergence. Arunachal had heldup the plan for the past few years,mainly because it feared theproject would submerge the townof Tuting in Upper Siang district.The dams reservoirs are expectedto store 10 billion cubic meters ofwater, collected from the Siangand smaller rivers in the area,which can be released into theSiang if China plans to divertwater massively.

Further, the overall hydropowerpotential of Arunachal Pradeshhas been identified to be over50,000 MW; in fact in the entireNorth East Region the potential isover 58,356 MW. When compared

to the overall hydro-electricpotential of India of around150,000 MW Arunachal Pradeshhas one third of the potential due

to rivers and tributaries flowinginto Brahmaputra. As of now onlyless than two percent of thecapacity has been developed, thatis only 405 MW; the capacity thatis under construction is 4460 MW.This means that only about 8%capacity is under development. Anumber of factors like

environment and forestationconcerns, geographical and seismicconditions, rehabilitation andavailability of funds, besides poorimplementation of the plannedprojects have affected therealization of the full potential ofthe States hydropower resources.

So far as the mega dam of 9750MW to be developed by NHPC onSiang Intermediate is concerned,it has not progressed beyond thestage of pre-feasibility report. Thestate government has demandedfrom National Thermal PowerCorporation an upfront payment ofabout Rs 4 lakhs per megawattbefore it can start work on theproject (i.e. a total of about Rs 400Crores). This demand is believedto be based on existing State policyon the issue. This project has beentermed as a strategic project toestablish lower riparian rights but


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evidently there is a little to showthat the Government is seizedwith the urgency to construct it inthe requisite time frame.In the 12th Five Year Plan i.e. from2012-2017, Siang Intermediateproject does not find any mentionand no funds have been allottedfor the purpose so far. This isdespite the fact that in July, 2012the Planning Commission hadassured that the State would beprovided with special funds evenas Asian Development Bank haddenieddevelopment fundsto ArunachalPradesh based onChinas objections.Obtaining funds forinfrastructureprojects in

Arunachal Pradeshhas been a difficult proposition.

On the other hand, when theChinese 12th Five Year Plan hasincluded the aforementioned fourdams for construction on YarlungTsangpo it is a given that thesehydro-power projects will be

completed in time.

However, in the 12th Plan (2012-17) for Arunachal Pradesh, thecentral government has proposedto develop three dams with a total

capacity of 1610 MW and thePrivate sector has been given 23projects with a total capacity of7969 MW; thus total capacity to be

developed during the five yearperiod is expected to be 9579megawatts in Arunachal Pradesh.Most of the high capacity projectsare planned to be developed instages in more than one planperiod. But what is of particularinterest is construction of twohydro power projects known as

Siang Middle and Siang Lower onthe Siang River. Out of the 2400MW capacityplanned for SiangLower only 600MW is proposed forcapacity addition inthe 12th plan whilefull capacity of

1000 MW for SiangMiddle is proposedto be developed in the plan period.

Environmental clearance andapproval for construction ofDemwe Lower Hydro Electricproject with a capacity of 1750MW on Lohit River in ArunachalPradesh was given in Februarylast year. Lohit originates in Tibetand is one of the main tributariesof Brahmaputra. EnvironmentMinister Jayanthi Natarajan, whois also the chairperson of thestanding committee of the

On the other hand, when theChinese 12th Five Year Planhas included theaforementioned four dams forconstruction on YarlungTsangpo it is a given that thesehydro-power projects will becompleted in time.


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National Board for Wild Life(NBWL) was instrumental ingranting the clearance. There issome degree of awareness among

government circles that damconstruction has to be speeded upto get the first user rights as perinternational norms before Chinadoes it on its side of the river.

If India is able to harnesses thehydro-power of Brahmaputra in

Arunachal Pradesh through theproposed projects, it willstrengthen its case againstChinas building of a reportedmega-dam at Metog (in Tibet). Butthis would have to be done beforeChina completes its projects asunder the doctrine of priorappropriation, a priority right fallson the first use of river waters.Exploiting the full potential of

Arunachal Pradesh would havethe added benefit of making usless dependent on proposed hydro-power schemes of Nepal andelsewhere.

The future will tell whether Indiawill be successful in completing itsprojects within the scheduled time

as its record of executing suchprojects in a time-bound mannerhas not been very encouraging.

Last year, there were reports ofSiang River suddenly drying up

and some patches of sand evenbeing visible near Pasighat townof Eastern Siang district.

According to the State officials

diversion of water or blockage ofwater upstream by China wassuspected. Disruptions in waterflow by China bydamming/blocking the riversoriginating in Tibet, is a recurringconcern voiced by many analystsand experts.

The above problems are furthercompounded by a number ofprotests in Assam which is a lowerriparian state about the dammingactivity and construction of hydro-electric stations in ArunachalPradesh. These protests are byenvironmentalists as well asfarmers and fishermen who wouldbe affected adversely by reducedflow of water to Brahmaputra.

According to an opposition partyleader Arunachal Pradesh is setto gain revenue from theseprojects, but Assam will be thevictim if anything goes wrong.Larger interests of the nation arehowever, glossed over due toparochial considerations.

The environmentalist lobby inIndia has been gaining ground andsome of the decisions for suchprojects have been affected byenvironmental concerns. Chinese


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objections to damming activitymay cause some consternation butthe environmentalist lobby andlocal/provincial politics besides

provision of adequate funds arethe major causes for causing delayin the realisation of mega-damplans of Arunachal Pradesh.

There is an urgent need for fasttracking the hydropower projects in

Arunachal Pradeshby providingadequate funds andby striking a rightbalance between therequirements ofdevelopment and environmentalconcerns. Safeguards againstearthquakes also need to be takenwith alacrity as the region fallswithin Zone 4 and 5 of seismicsensitive zones.

The strategic imperative ofestablishing prior users rightshould also not be lost sight of. In

April, 2010, no less than the then

Environment Minister JairamRamesh had observed that Indianeeds to be more aggressive inpushing ahead with hydro projects(on the Brahmaputra) - that would

put us in betternegotiating

position (withChina). China, as

is its wont, wouldcontinue with itshydro power plansall the timeassuring that

water flows to the down-streamnations would not be affected. Itwould be dangerously nave tobelieve in such banalities.

Back to Contents

There is an urgent need for fasttracking the hydro powerprojects in Arunachal Pradeshby providing adequate fundsand by striking a right balancebetween the requirements ofdevelopment andenvironmental concerns.


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Defence Acquisition: Urgent Need For

Structural Reforms

- Brig (retd) Gurmeet Kanwalllegations of corruption inthe VVIP helicopter dealhave once again brought to

the fore the fragility of Indiasdefence acquisition process.Corruption appears to be endemicin defence procurement and a

structural overhaul is nownecessary.

India is expected to spendapproximately USD 100 billionover the 12th and 13th defenceplans on military modernisation.

As 70 per cent of weapons andequipment are still imported,

there is an urgent need to furtherrefine the defence acquisitionprocess and insulate it from thescourge of corruption. The DefenceProcurement Procedure (DPP)being followed now was introducedin 2005. Since then it has beenrevised and modified several timesbased on the experience gained in

its implementation. The currentDefence Production Policy (DPrP)was unveiled in 2011. Itsobjectives are to: achieve self-reliance in the design,

development and production of,weapons systems and equipmentrequired for defence in an earlytime frame; create conditionsconducive for the private sector toplay an active role in thisendeavour; enhance the potential

of small and medium enterprises(SMEs) in indigenisation; and,broaden the defence research anddevelopment base of the country.While the objectives are laudable,the achievement of self-relianceremains in the realm of wishfulthinking as most weapons andequipment continue to be

imported, the defence PSUs have astranglehold over contracts thatare awarded to Indian companiesand defence research anddevelopment is the monopoly ofthe DRDO.

Defence Research andDevelopmentThe Defence Research andDevelopment Organisation(DRDO) has been conductingresearch at all levels of technology

* Brig (retd) Gurmeet Kanwal - Visiting Fellow, VIF


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development from the strategicto the mundane. It should actuallyconcentrate its effort only indeveloping strategic technologies

that no country will provide toIndia. The report of the P RamaRao committee had reportedlyasked the DRDO to identify eightto 10 critical areas which best suitits existing human resources,technical capability andestablished capacity to take upnew projects. Since its inception in

1958, the DRDO has achievedsome spectacularsuccesses but alsohas many failuresto its name. Thesuccesses includethe IntegratedGuided MissileDevelopment

Programme thatproduced thePrithvi and Agni series of ballisticmissiles and, subsequently theBrahMos supersonic cruise missilein a collaborative venture with theRussians.

Among the failures are the mainbattle tank Arjun that tookinordinately long to meet criticalGeneral Staff requirements of theIndian Army despite huge costoverruns. The LCA (light combataircraft) still appears to be manyyears away from operational

induction into the Indian AirForce. However, to DRDOs credit,for many decades it worked underextremely restrictive technology

denial regimes and with a ratherlow indigenous technology base.The time has come for the MoD tooutsource defence R&D in non-critical areas to the private sectorso as to encourage thedevelopment of indigenoustechnologies. In fact, funds shouldbe allotted to the three Services

for research aimed at productimprovementduring the life cycleof weapons systemsand equipment.

DefenceProcurement andProduction PoliciesThe policy of self-

reliance in defence production hasnot yielded the desired results. Forseveral decades, the primarysupplier of weapons systems wasthe Soviet Union and, later,Russia. If some MiG-21 aircraftand other weapons systems liketanks were produced in India,

these were manufactured underlicense and no technology was evertransferred to India. The resultwas that even though India spentlarge sums of money on defenceimports, Indias defence

The successes include theIntegrated Guided MissileDevelopment Programme thatproduced the Prithvi and Agniseries of ballistic missiles and,subsequently the BrahMossupersonic cruise missile in acollaborative venture with the

Russians.


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technology base remained verylow.

The defence procurement and

production policies (DPP andDPrP) continue to pay lip serviceto public-private partnerships andhave so far failed to encourageIndias private sector to enter intodefence production in asubstantive mannereither on itsown or through joint ventures(JVs) with multi-nationalcorporations. The large-scaleprocurement of weapons andequipment fromdefence MNCs hasbeen linked with 30to 50 per centoffsets; that is,the companywinning the ordermust procure 30 to50 per cent components used inthe system from within India. Thiswill bring in much neededinvestment and will graduallyresult in the infusion oftechnology. However, the MNCsdo not find the present level of 26per cent FDI exciting enough.There is no credible reason whyoverseas equity investment cannotbe raised to 49 per centimmediately for a JV to be reallymeaningful for a foreign investor.

As a growing economicpowerhouse that also enjoysconsiderable buyers clout in thedefence market, India should no

longer be satisfied with a buyer-seller, patron-client relationship inits defence procurement planning.In all major acquisitions in future,India should insist on jointdevelopment, joint testing andtrials, joint production, jointmarketing and joint productimprovement over the life cycle of

the equipment. The US and othercountries with advancedtechnologies willsurely ask whatIndia can bring tothe table to

demandparticipation as aco-equal partner.

Besides capital anda production capacity that isbecoming increasingly moresophisticated, India has its hugesoftware pool to offer. Todaysoftware already comprises over50 per cent of the total cost of amodern defence system. In theyears ahead, this is expected to goup to almost 70 per cent assoftware costs increase andhardware production costs declinedue to improvements inmanufacturing processes.

In all major acquisitions infuture, India should insist on

joint development, joint testingand trials, joint production,

joint marketing and jointproduct improvement over thelife cycle of the equipment.


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Transparency in Decision MakingWhile the need for confidentialityin defence matters is

understandable, defenceacquisition decision making mustbe made far more transparentthan it is at present, so that thetemptation for supplier companiesto bank on corrupt practices canme minimised. For example,tenders should be opened in frontof the representatives of thecompanies that have bid for thecontract. Before a contract isawarded, the file should bereviewed by the Chief VigilanceCommissioner (CVC). If the CVChas reservations about suchscrutiny, either his charter shouldbe amended or an eminent personsgroup should be appointed to vetlarge purchases. Surely, manysuch persons with unimpeachableintegrity can be found in India.

In the past, the selective tweakingof the technical requirementsduring the procurement processhas led to one company beingfavoured over another. Alltechnical requirements must be

frozen when a Request forProposals (RfP) is issued by the

MoD. It may seem heretical, butthe conclusions contained in thereports of user trials must bemade public. This step will not

only amount to a huge leapforward in transparency, but alsoinsulate the trials teams of thethree Services from being undulyinfluenced to stage-manage trialsin favour of any of the contendingparties.

The frequent blacklisting ofdefence companies is having adeleterious effect on Indiasmilitary modernisation. Perhapsmonetary penalties can be builtinto the contracts instead. TheMoD must immediately undertakea structural overhaul of thedefence procurement andproduction process. The aimshould be to streamline it so thatthe armed forces get high qualityweapons systems and equipmentat competitive costs, preferablyfrom indigenous suppliers.Soldiers must not be called uponto fight the nations enemies withinferior rifles made by the lowestbidder.

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The Governor, The Constitution And The

Courts

- Dr M N Buchhe Supreme Court of India,in a Division Benchconsisting of Dr. Justice B.S.

Chauhan and Mr. Justice FakkirMohammed Ibrahim Kalifulla, hasdisposed of a civil appeal filed bythe State of Gujarat Vs. Honble

Justice R.A. Mehta on thequestion of appointment of theLokayukta in the State of Gujarat.The sequence of events asnarrated in the judgment is:-

Under the GujaratLokayukta Act 1986 theGovernor appoints the

Lokayukta as per theprocedure given in the Act.As per the procedure, asstated by the SupremeCourt, the Chief Minister, inconsultation with the ChiefJustice of the Gujarat HighCourt and the Leader ofOpposition makes a

recommendation to theGovernor, on the basis ofwhich the appointment ismade.

The post fell vacant on24.11.2003 and remained sofor about three years. In

August 2006 the ChiefMinister wrote to the ChiefJustice, suggesting the nameof Justice K.R. Vyas. The

Chief Justice concurred andthe matter was sent to theGovernor, who sat on it forthe next three years.

In December 2009 theSecretary to the Governorrequested the RegistrarGeneral of the High Court to

obtain a panel of names fromthe Chief Justice forconsideration of theGovernor. About two monthslater the Chief Ministerwrote a similar letter to theChief Justice, who repliedalmost immediatelysuggesting the names of four

retired judges.

The Chief Minister tried toconsult the Leader ofOpposition, who replied that

T

* Dr M N Buch - Visiting Fellow, VIF


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the Chief Minister had nopower to consult him,especially because theGovernor had already

initiated the process and theChief Minister had no locusstandi.

During this period theGujarat Council of Ministersmet and recommended thename ofJustice J.R.

Vora (retired)forappointmentas Lokayukta.Thissuggestionwasforwarded tothe Governor,

who again saton it.

The Governorsought theopinion of the AttorneyGeneral about the process ofconsultation. He also wroteto the Chief Justice askingwhich of two retired judges,Justice R.P Dholakia andJustice J.R. Vora, the ChiefJustice preferred.

The Attorney General opinedthat the Chief Justice need

not suggest a panel but onlyone name. The Chief Justicecommunicated his preferencefor Justice R.P. Dholakia,

but on the insistence of theGovernor he recommendedthe name of Justice S.D.Dave(retired) because Justice J.R.

Vora had been appointedelsewhere. Meanwhile theChief Minister wrote to the

Governor againstating that his

recommendationabout Justice JRVora stood as theHonble Judge had

expressedwillingness to beconsidered for thepost of Lokayukta.

The ChiefJustice now

recommended thename of JusticeR.A. Mehta

(retired). The Chief Minister,on 16.6.2011, requested theChief Justice to reconsiderhis recommendation becauseJustice Mehta was aboveseventy-five years of age andwas also associated withNGOs and organisationsknown for antagonismagainst the StateGovernment. The Chief

The Chief Justice

communicated his preferencefor Justice R.P. Dholakia, buton the insistence of theGovernor he recommended thename of Justice S.D.Dave(retired) because Justice J.R.

Vora had been appointedelsewhere. Meanwhile theChief Minister wrote to theGovernor again stating thathis recommendation about

Justice JR Vora stood as theHonble Judge had expressedwillingness to be considered forthe post of Lokayukta.


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Justice rejected thiscontention of the ChiefMinister and againrecommended the name of

Justice R.A. Mehta. TheLeader of Opposition saidthat he had been consultedby the Governor andapproved the appointment ofJustice R.A. Mehta. On25.8.2011 the Governorissued the warrant ofappointment.

I have narrated the sequence ofevents at length because this is aclear-cut case of all the players,but especially Governor ofGujarat, deliberately playinggames according to their own setof rules and their own politicalagenda. For three years between

2003 and 2006 the StateGovernment did not initiate theappointment of the successor ofJustice S.M. Soni. Thereafter theGovernor sat on the file for threewhole years. The Governor thenbypassed the Chief Minister andentered into direct correspondencewith the Chief Justice and theLeader of Opposition. TheGovernor also chose to completelyignore the advice of the Council ofMinisters and kept the ChiefMinister out of the loop forappointment of the Lokayukta.The whole issue, therefore, boils

down to whether the Constitutionof India permits this and whetherthe Gujarat Lokayukta Act 1986can permit the government to act

otherwise than on the aid andadvice of his Council of Ministersmandated by Article 163 of theConstitution.

In paragraph 74 of the judgment,which gives the conclusions, theHonble Supreme Court has veryrightly pointed out that for nineyears the post of Lokayukta layvacant because only half-heartedattempts were made to fill thepost. Regarding the Governor, theHonble Court has said, Thepresent Governor misjudged herrole and has insisted that, underthe Act, 1986, the Council ofMinisters has no role to play in theappointment of the Lokayukta andthat she could, therefore, fill it upin consultation with the ChiefJustice of the Gujarat High Courtand the Leader of Opposition.Such an attitude is not inconformity or in consonance withthe democratic set up ofgovernment envisaged in ourConstitution. Under the scheme ofour Constitution the Governor issynonymous with the StateGovernment and can takeindependent decisions upon his orher discretion only when he or sheacts as a statutory authority under


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a particular Act, or under theexceptions provided in theConstitution itself. Therefore, theappointment of Lokayukta can be

made by the Governor, as Head ofState, only with the aid and adviceof the Council of Ministers and notindependently as a statutoryauthority. This statement aloneshould have been enough for theSupreme Court to have acceptedthe appeal of the Government ofGujarat and set aside the

appointment of Mr. Justice R.A.Mehta. However,the Supreme Court,in its wisdom, haschosen fit to rulethat the Governorwas wronglyadvised that shecould ignore the

Council ofMinisters, butbecause of the facts in thisparticular case, the Chief Ministerwas aware of the circumstancesand, therefore, giving primacy tothe opinion of the Chief Justicewas perfectly in order. This meantthat the process of consultationstood complete and theappointment of Justice R.A. Mehtacould not be considered illegal.

Under Article 141 of theConstitution every judgment of theSupreme Court is a law declared

by it and, therefore, is binding andmust be respected by all. I acceptthis proposition and respect thedecision of the Supreme Court in

the instant case. The questionremains whether this is the finalsay in the matter of the powers ofthe Governor and hisconstitutional position vis--visthe Council of Ministers. Withutmost respect to the learnedHonble Judges who constitutedthe Bench, perhaps this matter

should have gone to a largerBench, preferably aFull Bench, not onfacts but because avery importantquestion ofconstitutional lawwas involved. Inthis behalf I would

like to point outthat the GujaratLokayukta Act 1986 is one of theworst drafted pieces of legislationit has been my misfortune to comeacross. Under section 3 theGovernor is the appointingauthority for appointment of theLokayukta. Such appointment isto be made after consultation withthe Chief Justice of the GujaratHigh Court and the Leader ofOpposition in the State VidhanSabha. In the entire Act the ChiefMinister and the Council ofMinisters and the Gujarat

Under Article 141 of theConstitution every judgment ofthe Supreme Court is a lawdeclared by it and, therefore, isbinding and must be respectedby all. I accept this propositionand respect the decision of theSupreme Court in the instant

case.


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Government are not mentioned.Under these circumstances couldit be interpreted that the Governorhas to consult only the Chief

Justice and the Leader ofOpposition and that the ChiefMinister has no role to play? Forthis purpose we shall have to go tothe Constitution itself. Article 124(2) reads, Every Judge of theSupreme Court shall be appointedby the President by warrant underhis hand and seal after

consultation with such of theJudges of the Supreme Court andthe High Courts in the States asthe President may deem necessaryfor the purpose and shall holdoffice until he attains the age ofsixty-five years: Provided that inthe case of appointment of a Judgeother than the Chief Justice, the

Chief Justice of India shall alwaysbe consulted. Under Article 217these provisions apply mutatismutandis to the appointment ofJudges of a High Court. Can thePresident, in view of the wordingof Article 124, ignore the PrimeMinister and the Council ofMinisters in the matter ofappointment of Judges? Under

Article 217 in the matter ofappointment of a Judge of a HighCourt the President is required toconsult the Governor of the Statealso. Can the Governor make arecommendation to the President

without the aid and advice of hisCouncil of Ministers?

In order to answer the above

question recourse must be had toArticles 74 and 163 of theConstitution. Under Article 74 thePresident shall, in exercise of hisfunctions, act in accordance withthe advice of the Council ofMinisters. The provisions of

Article 163 are similar. Exceptonly where the Constitutionrequires the Governor to performhis functions at his discretion he,too, is required to perform hisfunctions on the aid and advice ofthe Council of Ministers. An Act ofthe Legislature, such as theGujarat Lokayukta Act, cannotnegate these provisions of theConstitution. Despite the fact thatthe Gujarat Lokayukta Act doesnot mention the government, theChief Minister, or the Council ofMinisters, the Governor cannot actotherwise than on the advice ofthe Council of Ministers unless theConstitution itself requires him toact independently.

In what cases can the Governor

act at his own discretion? UnderArticle 75, whereas the Membersof the Council of Ministers areappointed by the President on theadvice of the Prime Minister, hehas discretion in the matter of


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appointment of the PrimeMinister. Article 164 has similarprovisions regarding the Governorand the Chief Minister. However,

because under Article 75 (3) and163 (2) the Council of Ministers iscollectively responsible to theHouse of the People and theLegislative Assembly respectively,the President or Governor wouldobviously invite only that personto be Prime Minister or ChiefMinister who enjoys the

confidence of the House. The onlydiscretion that the President andGovernor enjoy isin how best todetermine whoenjoys theconfidence of theHouse. ThePresident and the

Governor havingsworn an oath topreserve, protect and defend theConstitution, would obviouslyreject any advice from the Councilof Ministers which calls uponthem to act in an unconstitutionalmanner. I have not come acrossany instance of such advice havingbeen given by any Council ofMinisters in this country. It hasbeen stated that Mr. Fakhruddin

Ali Ahmed, the then Presidentshould not have approved theproclamation of Emergency under

Article 352 because under Article

352 (3) unless the decision of theUnion Cabinet, that is, the Councilof Ministers consisting of thePrime Minster and other ministers

of cabinet rank, has beencommunicated to him in writinghe cannot issue the Proclamation.However, once the Cabinet givesits advice in writing the Presidenthas no discretion in this behalf.

Another set of circumstancesunder which perhaps thePresident and the Governor canreturn a matter to the Council of

Ministers is if theCouncil is inviolation of theRules of Businessframed under

Articles 77 and166. Of course theCouncil ofMinisters can

advise amendment of these Rulesand the President or the Governorhas to agree.

By stretching the interpretation ofthe Constitution a bit, which hasbeen done both in the case ofParliament and the State

Legislatures more than once, thePresident or the Governor neednot dissolve the House of thePeople or the Legislative Assemblyunder Articles 85 and 172respectively on the advice of the

Another set of circumstancesunder which perhaps thePresident and the Governor canreturn a matter to the Councilof Ministers is if the Council isin violation of the Rules ofBusiness framed under Articles77 and 166.


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Prime Minister or Chief Ministerwho has been defeated in a noconfidence motion or hasotherwise lost the majority in the

House. In Britain, however, theconvention is that the monarchmust accept the advice of theoutgoing Prime Minister who mayhave lost his majority in the Houseif he asks for dissolution of theHouse and holding of elections.However, one has to accept thatthere is a difference of perception

about this issue in Britain andIndia.

The Constitution itself providesfor those matters in which theGovernor may exercise discretionunder Article 163. Under Article371 in the matter of the SpecialDevelopment Boards inMaharashtra and Gujarat theConstitution gives specialresponsibility to the Governor andhere he may reject the advice ofhis Council of Ministers. Under

Article 371 A, the Governor hasspecial responsibility with respectto law and order. Under Article371 C, the President may givespecial responsibility to theGovernor of Manipur in order toprocure the proper functioning of acommittee of the Legislative

Assembly consisting of Members ofthe Assembly elected from the hillareas of that State. Under Article

371 F, the Governor of Sikkim hasspecial responsibility for peace andfor equitable arrangement forensuring the social, economical

advancement of different sectionsof people of Sikkim. Under Article371 H, the Governor of ArunachalPradesh has special responsibilitywith respect to law and order inthe State. He is required to consulthis Council of Ministers, but hecan exercise his individual

judgment, differing from the

advice given to him by the Councilof Ministers. In all matters otherthan those specified by theConstitution, the Governor has nodiscretion to act otherwise than onthe aid and advice of his Council ofMinisters. With utmost respect tothe Honble Supreme Court Iwould submit that this is a true

representation of the powers of theGovernor, including in the case ofappointment of the Lokayukta.

There are certain other issues inwhich we need an authoritative

judgment from the Supreme Courtsitting in a Constitutional Bench. Irefer specifically to the provisionsof Articles 111, 200 and 201 of theConstitution. Under Article 111 or200 when a Bill is presented to thePresident or the Governor forsignature after being passed bythe Legislature, the President orGovernor is required to give his


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assent or return the Bill forreconsideration or amendment. InParliament both the Houses, asalso in a bicameral State

Legislature and the LegislativeAssembly in a unicameralLegislature, will reconsider theBill and if it is passed by theHouses or House with or withoutamendment neither the Presidentnor the Governor may withholdassent. Under Article 1, section 7of the Constitution of the United

States of America the Presidenthas ten days timein which to eitherassent to a Bill orreturn it to theCongress. In casehe does not returnthe Bill it isdeemed as

assented to and ifhe does return theBill and the Congress once againapproves it, then the Bill isdeemed to have received thepresidential assent. The differencebetween the United States and theIndian position is that in India nolimitation of time is prescribed bythe Constitution within which thePresident or the Governor isrequired to either assent to theBill or to return it toreconsideration. When Giani ZailSingh was the President of Indiaand Rajiv Gandhi was the Prime

Minister, a Bill was sent to him forassent which would have virtuallybrought in postal censorship.Giani Zail Singh considered this as

undemocratic, but he also knewthat if he returned the Bill, RajivGandhi had a massive majority inParliament and would have beenable to get the Bill passed a secondtime. Using the provisions of theConstitution which laid down notime limit in consideration of theBill he argued that he was

examining it, he neither assentednor returned theBill and he sat on ittill the term of theHouse of the Peoplewas over. It wasdissolved and theBill lapsed.

Governors havealso played the

same game, for example, inGujarat to frustrate a BJP ledgovernment and in the case ofMadhya Pradesh to frustrate firsta Congress led government and athen BJP led government. Thescheme of the Constitution is thatthe Legislature has competence tolegislate. If a piece of legislation isunconstitutional, then the HighCourt or the Supreme Court hasthe power to strike it down. ThePresident or the Governor may, inhis or her wisdom, delay a Bill by

The difference between theUnited States and the Indianposition is that in India nolimitation of time is prescribedby the Constitution withinwhich the President or theGovernor is required to eitherassent to the Bill or to return it

to reconsideration.


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sending it back to the Legislaturebut neither functionary can aborta Bill through delaying tactics.That flies in the face of the

mandate given to the Legislatureby the people to legislate on theirbehalf. I would most respectfullysubmit to the Honble SupremeCourt that at some stage it willhave to define the words as soonas possible after presentation tohim of a Bill for assent given in

Articles 111 and 200. Even though

the Constitution does not providefor a time limit should not theSupreme Court, in exercise of itspowers under Article 141, define

what as soon as possible means?The President or the Governorwho sits unduly on a Bill is actingin violation of his oath to protect

the Constitution and, therefore,either by a suitable amendment ofthe Constitution or aninterpretation by theConstitutional Bench of theSupreme Court a time limit mustbe prescribed for giving of assentor denial of assent and return ofthe Bill to the Legislature for

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Indian Budget Plays With Fiscal Fire

- Ananth Nageswaranhe budget that thegovernment presented onFebruary 28 had a much

higher level of anticipation due tothe variety of formidable economicchallenges that the country isfacing. Redemption from theproblems starts with an admissionof guilt. However, in its macro-economic framework statement,the government chose to blame theglobal economic slowdown and thetight monetary policy of theReserve Bank of India (RBI) forIndias economic deceleration.

First, it is factually incorrect. Themonetary policy of the ReserveBank of India is not that tight.Real interest rates in India arenegative and second, RBI hasengaged in open marketoperations in sufficiently largequantities to infuse liquidity intothe Indian economy. In theprocess, it has monetisedgovernment debt. Therefore, RBIpolicy intent might have beentight but in practice, it was nottight enough. Second, thedocument is conspicuously silent

on the many mistakes that thisgovernment has made, especiallysince it took office for the secondtime in May 2009. If one chose toblame external factors for failures,it is futile to expect correctiveaction. The budget proves thisright. Philosophically, thegovernment has not turned thegaze inward at all. Seers have saidthat the route to salvation lies inturning the gaze inward. That isas much true of fiscal salvation asit is true of karmic salvation.

Getting the optics rightIt is against this backdrop that

one should evaluate the budgetpresented on the 28 February. Onthe face of it, the government gotmost of the optics right:

Anticipated fiscaldeficit of 5.2% of GDPvs. target of 5.1% ofGDP for 2012-13.

Target of 4.8% of GDPfor 2013-14. Themedium-term fiscalpolicy statement(MFPS) projects 3.6%

T

* Ananth Nageswaran - Visiting Fellow, VIF


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deficit in 2015-16. Revenue deficit of 3.9%

of GDP vs. target of3.4% of GDP and a

target of 3.4% of GDPfor 2013-14. MFPSprojects a revenuedeficit of 2.0% of GDPin 2015-16 and aneffective revenue deficitof zero per cent by thatyear! EffectiveRevenue Deficit is total

revenue deficitexcluding grants forcreation of capitalassets.

On the three majorsubsidy heads food,fertiliser and petroleum

the governmentmight have had to

provide for a revisedestimate of 2.5 trillionrupees against theoriginal budgetestimate of 1.8 trillionrupees for 2012-13 butit provides for about 2.2trillion rupees in 2013-14. This is still higherthan the 2.1 trillionrupees spent on thesethree major subsidyheads in 2011-12.

In nominal terms, onfertiliser and petroleumsubsidies, the

government expects tospend lower amounts in2013-14 than it did in2011-12. With that, the

government can claimthat it has arrested thetrend of rising subsidypayments.

While these numbers may prove tobe good to prevent the ratingagencies from pressing thedowngrade button in the short-

term, the risk of a downgraderemains real because theassumptions do not appear tocontain much of a margin for erroron the revenue or on theexpenditure side.

Before we proceed to examine theassumptions on the revenue side,

we have to note a couple of caveatson food and petroleum subsidies.One is that the government hasprovided for only 100 billionrupees for the implementation ofthe Food Security Bill for the newfinancial year 2013-14. Theassumption is that the FoodSecurity Bill will begin to be

implemented only from January2014. In a full financial year, costswill be much higher.

Second, on petroleum subsidies,the government has now providedfor over 930 billion rupees of


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payments to oil companies fortheir under-recovery. Oilcompanies face under-recoverybecause they sell kerosene, diesel

and cooking gas at subsidisedprices. According to the Ministryof Petroleum and Natural Gas, theunder-recovery amounted to 1.248trillion rupees for the nine-monthperiod ending December 2012.Over the next three months of thefinancial year ending March 2013,the under-recovery would amount

to an additional 389 billion rupees.The under-recovery will thus be atotal of 1637.3 billion rupees.

Some assume that thegovernments share of this must beabout 60% only since oilcompanies calculate their under-recoveries based on a cost-plus

formula. Oil companies wereguaranteed a 12% mark-up overcost. Hence, some in thegovernment and outside take theview that oil companies shouldabsorb a portion of the lossthemselves.

This does not sound veryconvincing. Indias public sectorenterprises do not have full controlover their costs. There is politicaland administrative meddling, fromthe hiring of contract labour,permanent labour to major capitalbudgeting decisions. Under these

circumstances, the decisions thatoil companies take may not beoptimal. Therefore, it is hard toknow how much and how well oil

companies could control their owncosts and thus minimise theunder-recovery. Second, ifretention pricing (cost-pluspricing) is flawed, then it has to bechanged. As long as it remains inforce, the government iscontractually obligated tocompensate oil companies fully for

their under-recoveries. Viewed inthis light, the government has toprovide for additional 707 billionrupees for petroleum subsidiesunpaid for the current financialyear. It is instructive to note thatit has provided for 650 billionrupees on account of petroleumsubsidies for the next financial

year.

Growth potential is much lowerbecause of ...The nominal GDP growthassumption for 2013-14 is 13.4%.It continues to remain in thefootnote in the Budget at a glancestatement. With the government

projecting a real GDP growth inthe range of 6.1% to 6.7% in 2013-14 (the government has adoptedthe estimate made in theEconomic Survey), the impliedinflation rate forecast is around


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7%, which is not very encouraging.This inflation rate will do nothingto encourage households to savemore in financial assets rather

than in real assets. To that extent,resources available for investmentwill remain relatively scarce.Therefore, one has to question theassumed tax revenue growth of19.1%. That implies a tax revenueto GDP buoyancy rate of 1.4(growth rate of tax revenuesdivided by the nominal GDP

growth rate). It is close to the 1.5times seen in the boom years ofgrowth prior to theglobal crisis. That toois on the high side.Much depends on therealisation ofeconomic growth rateof over 6%. That is

far from assured.

Revival in investment spending isunlikely in the coming year forseveral reasons. In the first half ofthe millennium, India used toclaim that it had a far lowerIncremental Capital-Output Ratio(ICOR) than China. In recentyears, Indias ICOR has risen.

According to Nomura Research,the five-year average of ICOR hasrisen to 5.0. In other words, Indiasinvestment rate has to be 40% nowto achieve a growth rate of 8%.The reason for the rise in the

ICOR to around 5.0 in recent yearsis the inordinate delay ininvestments translating intohigher output due to delays in

land acquisition and in securingenvironmental clearances. Theproposed land acquisition bill isunlikely to make it any easier.

drastic fall in savings rateHowever, the savings rate hasgone down to just above 30% froma level of around 35% just few

years ago. In the financial yearending March 2013, it is expected

to have droppedto below 30% - toaround 27%.

Assuming thatthe sustainable

externalfinancing is 3.0%

of GDP, then thetotal available

savings rate is about 30% of GDP(domestic + external). Applyingthe ICOR of 5.0 to this amount ofcapital available for investmentyields a potential growth rate of6.0%. This is the maximumpossible potential growth rate for

the Indian economy given currentsavings, investment and capitalefficiency rates. Trying to growabove this would require runninga higher current account deficit,which then has to be financed

That implies a tax revenue toGDP buoyancy rate of 1.4(growth rate of tax revenuesdivided by the nominal GDPgrowth rate). It is close to the1.5 times seen in the boomyears of growth prior to the

global crisis.


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through recourse to externalfinance (debt or equity). Further,it would also be inflationary.

and lower capital efficiencyFrom a bottom-up perspective,Indian companies ratio of debt tooperating cashflows is above 6times, suggesting very little roomto expand debt, and non-availability of internal resourcesto trigger a revival in investmentspending. In fact, by directing

investment intoareas that have ashort-termprofitabilitypotential, theIndian corporatesector too hasbecome less capitalefficient than it

used to be. Thereturn on equity(RoE) for Indiancompanies has dropped from ahigh of around 22% before theglobal crisis of 2008 to below 15%now. Stretched balance-sheets, lowRoE and a high ratio of debt tooperating cash flows preclude a

private sector-led investmentrevival. Thus, assumptions onreal, nominal GDP and revenuegrowth rates may turn out to havebeen too high.

Non-tax revenue estimates are toohighSimilar to the assumption on thegrowth of tax revenues, the

government has assumed a 32%jump in non-tax revenues. Inparticular, it anticipatessubstantially higher dividendsfrom public sector banks after itscapital infusion. It is very doubtfulif their profits would be highenough to meet the governmentsexpectation, considering that they

have beengrappling withever-rising non-performing assets.Consequently, theymay face pressureto go easy onprovisions and onrecognition of non-

preforming assetsin order to meetgovernments

dividend expectation. That is a bigworry.

The government also expects toraise more revenues from the saleof spectrum to telecom companies

and 550 billion rupees from thesale of stake in government-ownedcompanies and others. In 2012-13,the stake sale is expected to netonly 240 billion rupees against theoriginal budget estimate of 300billion rupees.

The government also expects toraise more revenues from thesale of spectrum to telecomcompanies and 550 billionrupees from the sale of stake ingovernment-owned companiesand others. In 2012-13, thestake sale is expected to netonly 240 billion rupees againstthe original budget estimate of300 billion rupees.


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There are two problems with theseassumptions on revenues to beraised from sale of spectrum andfrom sale of government stake in

public and private enterprises. Notonly are they too optimistic butthey also do not represent genuinefiscal consolidation.

Cuts in Plan expenditure to hurtIf optimistic revenue projectionsare behind the projection of afiscal deficit of 4.8% for 2013-14,

an equally important question isthe source of the achievement of afiscal deficit of 5.2% of GDP for theyear ending March 2013. Just fewmonths ago, all expectationspointed to a deficit of 5.9%, thesame ratio as in the year endingMarch 2012. The governmentsaved 918.4 billion rupees in Plan

expenditure. However, it spent541 billion rupees more thanbudgeted originally under Non-Plan revenue expenditure. Itsaved 371 billion rupees in capitalexpenditure (both Plan and Non-Plan). Overall, it saved about 601billion rupees in expenditure(revised estimate of 14.3 trillion

rupees vs. the original budgetestimate of 14.9 trillion rupees).

It is unfortunate that the bulk ofthe savings had come from Planexpenditure. In fact, Plan

expenditure in health, educationand rural roads are now expectedto be lower than originallybudgeted by about 229.3 billion

rupees. These expenditurecutbacks could have adverseimplications for the economysgrowth potential and performance.

Still waiting for credibleconsolidationThe impression one gets is thatthe government could and should

have been a lot more serious aboutgenuine fiscal consolidation. Thedire state of the economy andpublic finances provided anopportunity to push throughunpalatable changes. Perhaps, thegovernment was not serious afterall.

In paragraph 22 of the medium-term fiscal policy statement, thegovernment states that taxprojections need to be as ambitiousas they have to be realistic so thatthe fiscal roadmap could beachieved without having to resortto more than the requiredexpenditure compression. That

says it all. There is a reluctance tocompress expenditure. Thegovernment is unable to get itpresumably because UPA (orNAC?) politics is a bindingconstraint. Alternatively, it could


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be that the feudal mindset of therulers and that of the ruled is thebinding constraint.

In sum, the government has notdone enough to achieve ameaningful reduction in the

probability of the Indian economyundergoing a severe macro-economic adjustment in the nearterm.

Back to Contents


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Afzal Gurus Execution: Propaganda,

Politics And Portents

- Sushant Sareenore than 12 years afterthe most audacious andoutrageous act of

terrorism against India theattack on the Indian Parliamentone of the prime accused in thecase, Afzal Guru, was finally

executed after he had exhaustedall available legal options. Eventhough there is a lot to be saidagainst the long delay in carryingout of the death sentence in such ahigh profile and politicallysensitive case, delay whichneedlessly provides ammunition tothe legions of India-baiters and

India-haters within the countryand without to question theverdict and demand relief for aconvicted terrorist, the fact thatthe government gathered theresolve to finally carry out thesentence needs to be welcomed.

Questions of timing are inevitable

in the highly surcharged politicalclimate that exists in the country.Perhaps if the government hadsent Afzal Guru to the gallowsearlier, it would have been accused

of showing unseemly haste.Having delayed the execution solong, it is now being accused oftrying to derive political benefitand indulge in damage control torecoup its falling political capital.Clearly, politics cannot be

completely divorced in a case ofthis nature. Apart from legal andprocedural obstacles that need tobe overcome (including thereluctance of some Presidents toreject a mercy petition and of someHome Minister to push forwardwith the case because of a moralopposition to the death penalty),

the government also has to keepan eye on the political fallout andlaw and order implications of sucha sensitive case. For instance, in2010 and 2011 the streets of citiesin the Kashmir Valley were restiveand executing Guru at that timewould tantamount to pouring fuelinto fire. Before that there were

state elections and then theAmarnath agitation. Seen in thislight, the timing of the executionmakes sense and carping about it

M

* Sushant Sareen - Senior Fellow, VIF


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is only that.

This is not to deny that therecould have been other political

motivations for carrying out thesentence at this time. Forinstance, one proposition is thatthe ruling Congress party hasbeen trying to refurbish it anti-terror credentials and steal thethunder of the opposition BJPwhich has been accusing thegovernment of being soft on terror.

Another proposition is that thegovernment was trying to dilutethe damage done by the utterlysenseless remarksof the HomeMinister on HinduTerror and terrortraining camps runby the BJP andRSS. If true, thenit would signal a dangerous levelof desperation in the Congressgovernment to recover lostpolitical ground. On the otherhand, it is entirely possible thatgovernment was onlydemonstrating its resolve in thefight against terror and will nowhold the feet of opposition partiesto the fire on other high profileterrorists who are awaiting deathsentence.

Frankly speaking, all politicalparties have been guilty to some

extent of being soft on visitingretribution on convicted terrorists.Take for instance the BJP whichhas been clamouring for Afzal

Gurus execution for so long. Whenit comes to carrying out the deathsentence on Balwant SinghRajaona, the murderer of theformer Punjab Chief MinisterBeant Singh, the BJP veryconveniently sides with its ally

Akali Dal which is trying to win areprieve for this unrepentant

terrorist. This is so even thoughthe BJP holds the fate of thePunjab government in its hands

and could easilypressure the AkaliDal to let Rajaonaface theconsequences of hiscrime. The

Congress tooadopts a deafening silence on theissue of executing the LTTE mensentenced in the assassination offormer Prime Minister RajivGandhi simply because of thereservations of its ally DMK. TheBJP too is keeping quiet becauseits potential ally AIADMK isopposing the execution. Similar isthe case of the BJP and Congresswhen it comes to the execution ofDevinder Singh Bhullar who wasresponsible for a series of bombattacks in Delhi.

This is so even though the BJPholds the fate of the Punjabgovernment in its hands andcould easily pressure the AkaliDal to let Rajaona face theconsequences of his crime.


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The point simply is that politicalparties end up playing into thehands of fringe groups whichsupport these terrorists. By

pandering to these groups, thepoliticians effectively shootthemselves in the foot because onthe one hand they embolden theseextremists and give respectability,legitimacy and credibility to thenoise which they make, and on theother hand undermine the justicesystem and law and order

machinery in the country. Worse,while this sort of politics doesnothing to change the anti-national positions that thesefringe groups take and bring theminto the national mainstream, itinsidiously lumps evennationalistic and patrioticelements with the extremists even

though the latter have absolutelyno sympathy or truck with theextremists. Thus, the impressionthat all Kashmiris and perhapsmany Muslims in India would besympathetic to Afzal Guru, allSikhs will take umbrage at theexecution of Bhullar and Rajaonaand all Tamils will be infuriated ifthe killers or Rajiv Gandhi arehanged.

The ambivalence andprevarication by the political classalso plays into the hands of theprofessional and paid anti-state

elements within the civil society.Using a completely perverted andperverse logic which smacks ofintellectual fascism, this class of

people has taken upon itself todeclare guilty anyone they despiseeven though no court in thecountry has convicted the person,and pronounce anyone theysympathise and support asinnocent even though he has beenconvicted after running throughthe entire due process of law. Like

good defence lawyers, they arguethe case of their client before thepublic and try to sow doubts aboutthe fairness of the trial and thequality of evidence on the basis ofwhich someone has been foundguilty. With the assistance of theirallies in the media, they manageto create reasonable doubt in the

minds of the public. The problemfor them, however, is that the verysame false and speciousarguments were thrown in therubbish bin by the courts whichwere in a better position than thepublic to evaluate the quality oftheir arguments.

Indeed, the fairness of the judicialprocess and the falseness of thearguments made by the Love-Guru brigade is borne out by thefact that the trial courts verdictwas reversed by the High Courtwhich overturned the death


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sentence against one of theaccused Shaukat Guru andacquitted another accused. Ofcourse, acquittal doesnt

necessarily mean the manS.A.R.Geelani, who remains anunabashed separatist wasinnocent; only the evidenceproduced against him was notcompelling enough to warrant thesentence pronounced against him.

Despite this if the hate-Indiabrigade has managed to conduct apropagandacampaign in favourof Afzal Guru thena large part of theblame must restwith thegovernment whichshould havecountered thisinsidiouspropaganda by arobust rebuttal. Instead, thegovernment let the verdict of thecourt speak for itself. In theprocess, the love-Guru brigadegot a free run to peddle theirpropaganda in the public domainand create suspicion and doubt inthe minds of many people on thefairness of the trial.

Interestingly, the propagandistshave found resonance among the

jihadists in Pakistan and

Kashmiri separatists, who havefound a potent ally in these peopleto justify their poisonous rhetoricagainst India and incite hatred

and violence against India.Bizarre though it may appear, theRepublic of one in India and acertain Hafiz Saeed in Pakistanseem to be on the same page as faras their aversion to everythingabout the Indian state isconcerned. Incidentally, the sameHafiz Saeed who never tires of

demanding respect for thePakistani judiciary(jihadi judgesactually, but letsleave that aside fornow) which hasacquitted him, isntwilling to give thesame respect to the

Indian judiciarywhich sentencedAfzal Guru after due process.

Be that as it may, the focus overthe next few weeks will be on howthe execution plays out insideKashmir and in rest of India.While the separatists are likely totry and exploit the situation to stirtrouble in the Valley, how muchtraction they receive remains to beseen. A lot will depend on how thegovernme

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Vivek Issues n Options March 2013