Gist of The Hindu: June 2015


Gist of The Hindu: June 2015


Looking beyond nuclear liability

A month has passed since U.S President Barack Obama was in Delhi as the chief guest at the Republic Day and had his famous “chai pe charcha” with Prime Minister Narendra Modi. An overview of the Indian commentary about the Obama visit would reveal that breaking the logjam on nuclear liability is perceived as its most significant outcome. Both leaders focussed on it at their joint press conference and Paragraph 43 of the Joint Statement states that “the Leaders welcomed the understandings reached on the issues of civil nuclear liability and administrative arrangements for civil nuclear cooperation, and looked forward to U.S.-built nuclear reactors contributing to India’s energy security at the earliest.” A lack of details initially led to considerable speculation about the nature of the breakthrough and the assurances provided. To clarify matters, the Ministry of External Affairs took the unusual step of putting out a seven page ‘Questions and Answers’ explanatory paper which sparked yet another round of debate on whether this was really a breakthrough or not. However, such a narrow focus on nuclear liability misses the larger picture; there is an underlying broader political objective which has driven the nuclear dialogue between India and the United States since the end of the Cold War, and when Mr. Modi and Mr. Obama talked of breaking the logjam, they clearly had the larger political objective in view.

Following their meeting in Washington last September, the two leaders had “reaffirmed their commitment to implement fully the India-U.S. civil nuclear cooperation agreement”. Both leaders realised that the nuclear liability issue was a hurdle that needed to be overcome to take the relationship forward. A contact group was established and met thrice in the two months leading up to the Republic Day summit. In January, the officials had reached the limits of their respective negotiating mandates in the contact group. Mr. Modi and Mr. Obama understood that the issue was not whether Westinghouse and GE would set up nuclear power plants in India (that process was bound to take many months, even years, of complex technical and financial negotiations) but whether the two leaders could lead from the front on this issue. There were two principal sticking points in the 2010 Civil Liability for Nuclear Damage Act (CLNDA). The first was Section 17 which enables the operator of the nuclear installation (under Indian system, the Nuclear Power Corporation of India Ltd. or NPCIL), after paying compensation to the victims of nuclear damage, to have the right of recourse against the supplier, subject to certain conditions. Two of these conditions, namely when such a right is part of the written contract between supplier and operator, and second, when the nuclear accident has happened because of the intent to cause damage, are accepted as part of the international legal regime pertaining to nuclear liability. The third condition introduced in Section 17(b) was novel and gave the operator a right of recourse against the supplier if the incident had been due to ‘supply of equipment or material with patent or latent defects or substandard services’. The supplier community interpreted this provision as ambiguous and one that rendered it vulnerable to open-ended liability claims. The new explanation seeks to address it by relating Section 17(b) to ‘actions and matters such as product liability stipulations/conditions or service contracts’ between the operator and the supplier and therefore to be dealt with in the context of such contractual terms. The attempt is to remove the open-ended nature of possible liability claims by limiting these to the terms and conditions of the contract.

The second sticking point was Section 46 which stated that the provisions of the CLNDA ‘were in addition to, and not in derogation of, any other law for the time being in force’, leading to concerns among the suppliers that they could be subjected to multiple and concurrent liability claims. This is sought to be addressed by explaining that all civil claims can only be brought under the CLNDA since that was the intention behind this special legislation and further, that these claims would come under the jurisdiction of the specially constituted Claims Commission, thereby excluding any jurisdiction of foreign courts.

The concept of risk management behind the setting up of the Indian Nuclear Insurance Pool has been elaborated in the explanatory paper to point out that the premium costs will be modest. For a policy of Rs.1500 crore, the annual premium would be between Rs.1.5 crore and Rs.3 crore (calculated at 0.1 to 0.2 per cent as per global practice), hardly a large sum given that the capital cost of a 1000 MW reactor would be upwards of Rs.10,000 crore. A Nuclear Liability Fund can be operationalised by a nominal surcharge of say 5 paise per unit of nuclear power which at current levels of installed nuclear power can provide about Rs.200 crore annually, thus enabling the government to recover its original contribution to the liability corpus fairly quickly.

Finally, 2015-16 provides a suitable time window that must be exploited to bring about India’s full participation in the Nuclear Suppliers Group (NSG). The momentum generated in 2008 when the NSG approved the waiver from its guidelines to permit civilian nuclear cooperation with India was only possible with U.S. diplomatic heavy lifting. Much of this momentum has been lost in recent years and needs to be revived. With its newfound diplomatic activism, India needs to step up its outreach at multiple levels with NSG members. This process needs to be coordinated with the U.S. so that at the 2016 NSG plenary, India formally joins the Group. This will end the isolation of India’s nuclear establishment that began in 1974 and reintegrate India into legitimate civilian nuclear trade and commerce while acknowledging India’s commitment to non-proliferation. At a bilateral level, U.S. support in bringing this process to its logical conclusion would remove the mistrust that has often cast a shadow on the relationship. Mr. Modi and Mr. Obama’s recourse to political pragmatism to get around the nuclear liability hurdle reflects their willingness to look beyond it at the larger picture. What is now needed is a plan with clear objectives which helps in realising the goal of making the India-U.S. relationship the defining partnership of the 21st century.

The promise of insurance reform

With the Rajya Sabha passing the Insurance Laws (Amendment) Bill, the Narendra Modi-led BJP government must be feeling strengthened. The Bill crossed the final hurdle only because its principal bête noire, the Congress, allowed its passage. That it took over six years for Parliament to give its assent to such a widely-anticipated step on the insurance front illustrates the sharp divide — not necessarily ideological — between the two principal players in Indian politics. Convergence of views very often does not lead to a consensus — for obvious political reasons. Nonetheless, the shadow-boxing between these two major national parties has helped trigger a high-voltage debate on the need for reform in the insurance space. The stakes go beyond the political and business constituencies. Insurance reform is only one of the measures the Modi administration is banking on as part of its growth strategy. But the constant polarisation on political lines on key issues is slowing the traction on important fronts and causing uncertainty, that tells on the economy.

Now that the way is clear for 49 per cent foreign holding in an insurance company, will the country see a flood of foreign direct investment? At the moment, the field is laid a lot easier for players. The operating environment has been redesigned to facilitate foreign investors to engage in the long-haul game. Insurance penetration in India, life and non-life put together, was just about 3.9 per cent in 2013, up from 2.3 per cent in 2000, according to Economic Survey 2014-15. This reveals the extent of opportunities available. Interestingly, according to the Survey, private insurers saw a 1.4 per cent decline in their premium in 2013-14 even as the Life Insurance Corporation recorded 13.5 per cent growth. These numbers tell a tale of their own. For long, insurance has been viewed only as a tax-saving tool. The protection element still has not seeped into the mind of the common person. Changing the mindset and spreading the net will involve much time and enormous cost. Competition could invigorate the field by providing greater access and more products at fair prices. Given the dynamics of the Indian marketplace, foreign players could bring to the table new dimensions. The experience elsewhere — as in the automobile industry — suggests that competition makes the consumer demanding. Surely, the Indian insurance field requires a more aggressive customer. The passage of the Insurance Bill will indeed go a long way in reconfiguring India’s position in the global marketplace.

Leaving beef bans to the States

Even as some of its State units — within and outside government — have shown a zeal in seeking to toughen laws on cow slaughter, the Bharatiya Janata Party (BJP) has nationally been more guarded about the issue. The BJP government in Haryana announced that it is instituting a law that provides for a 10-year prison sentence for those caught slaughtering cattle. In doing so, it has taken its cue from its counterpart in Maharashtra which extended the ban on cow slaughter to all cattle, even as two other BJP-ruled States, Jharkhand and Rajasthan, are considering similar legislation. Reports also suggest that in West Bengal — a State that permits cow slaughter with a “fit for slaughter” certificate — the BJP State unit is seeking to deploy vigilante groups to prevent the ferrying of cows to Bangladesh for slaughter. This activist zeal by the BJP in the States contrasts with the party’s national position. While Prime Minister Narendra Modi had attacked the “pink revolution” — the export of cattle meat — during last year’s general election, his government has not changed its meat export policy since then. That policy prohibits the export of the meat of cows, bulls, calves, any milching bovine or calves less than four months old. Only the meat of non-milching buffaloes, along with that of goats, is allowed to be exported.

Even though most States, except Kerala and parts of the northeast, have laws of varying degree banning cow slaughter, it is a sensitive subject. Beef and buffalo meat are sources of cheap protein not just among sections of the minorities, but also for poor Hindus. The BJP has also not forgotten a speech made in the Lok Sabha by the late G.G. Swell, an MP from Meghalaya, in 1996 during the party’s 13-day tenure in government. On that occasion, Swell spoke about the intolerance of the BJP and its inability to accept that in parts of India, including large swathes in the northeast, beef is a cultural, culinary preference. More recently, in Kerala, leaders belonging to the Congress and the Communist Party of India (Marxist) have described the efforts by BJP-ruled States as a “sign of increasing encroachment of personal liberty and democratic freedom”. While Central ministers have ruled out a Central law as livestock is a State subject, even hardline Hindutva-oriented BJP MPs like Yogi Adityanath say that it is important to let the government focus on development for some more time. The national executive of the BJP has remained silent on the issue since its government came to power. Clearly, the party will calibrate its position on the issue in the long run, not letting it distract attention from its reforms agenda.

Shaking up our village culture

As Anna Hazare, the new age Gandhi consolidates his flock to protest against the government’s anti-farmer land ordinance, one is reminded of the original Mahatma and his love for village life and polity. While Anna’s protest may be more about the right to private property of the farmers, Gandhi had a moral vision that was larger and beyond just the risk of farmers losing their land. Gandhi saw village life as the ideal form of intimate sacrifice and high culture, where an anarchy based on self-sacrificing morals would sustain itself far from the mess of modern industrial life and interest-driven politics. Can the present debate around the Land Ordinance Bill and the sharp criticism from those opposing it help us revisit the relevance of modernity to Indian villages?

During a lecture on modernisation theories of development and the importance of Adam Smith, I shared with my class the history of progress in the United States and how from only 15 per cent of families having flush toilets in the 1900s, almost 99 per cent had them by the 1970s. A student from a semi-urban background was not convinced. He asked me why rich landlords in Uttar Pradesh don’t have toilets in their homes despite having money. Was the U.S. experience relevant in our context? What the student was suggesting was that I find a different logic of economic progress for Indian villages. In caste-ruled villages, the management of faeces is generally governed by gendered rules of touch, purity and pollution. Faeces is, therefore, kept away from the home or removed by a manual scavenger. Labour, caste and purity are thus bound coherently and peacefully in village culture, unlinked to economics.

B.R. Ambedkar strongly disagreed with Gandhi’s celebration of village life and morals. He considered the idea of a village republic as one based on undemocratic values. He said, “What is a village — a sink of localism, a den of ignorance, narrow mindedness and communalism”. How relevant are Ambedkar’s observations today? As relevant as they were in the late 1940s. Even now, close to 67 per cent of India’s population live in villages. In 2000, about two-thirds of rural Dalits were landless or near-landless and close to half depended on farm labour for their livelihood — including in Left-ruled States. Much of the minimalistic land reforms in many States of India ended up providing land to the tiller and not to the labourer, which meant that the Sudra castes became powerful, landowning castes in rural India.

Our village culture and values are intrinsically linked to a control of land and agriculture. Land in present times has turned out to be a major economic resource — it gives access to institutional credit, subsidies on fertilizers, power, farm equipment and almost institutionalised, decadal loan waivers. Some numerically powerful landowning castes also enrol themselves as Below Poverty Line (BPL) families. Land, thus, is a key form of private property that yields persistent rent, which is not necessarily based on its actual merit and which is, of course, not taxed. Above all, land signifies power — how much dowry one gets in villages mostly depends on the extent of land the groom’s family controls. The cultural value attached to lands and its patrilineal ownership has turned daughters into bad debts.

Land makes certain castes ‘kingly’ in rural communities. The control of such castes on local politics aggravates masculine hubris. Land and agriculture, thus, partially construct the localised cultural peace in rural India. City life is not free of caste prejudices either but the vulgarity of its form is minimised in an uprooted context of anonymity. Modernity and its key economic constituents of urbanisation and industrialisation bring with them some basic norms of civility. No landlord in a city or small town can insist on tenants defecating in the open. You cannot ask the caste of a person serving you chicken nuggets at a fast-food outlet, or insist on knowing the caste of your fellow commuter in a cramped local train.

The illiberal aspects of rural society are changing slowly due to market pressures. Despite subsidies and the absence of taxation, the social power of farmers is rendered mildly vulnerable by a budding competitive market and non-farm possibilities in rural India. Increasing urbanisation, migration, and non-farm employment have added some degree of mobility and freedom to the landless in general and to rural Dalits in particular. Landless labourers need not search for work that provides respect and value in the lands of dominant landowning castes alone. Increasing urbanisation, labour mobility and monetisation of rural economy have had significant poverty-reducing impacts on Dalits. The prescription of classical economics to decongest (landless) labour from agriculture and farm dependency still remains of utmost relevance. Even now, close to 80 per cent of Dalits live in rural areas providing cheap labour, with limited productivity, to farms and farmers.

The present government is enlarging the scope of the previous government’s economic policies by aggressively pushing for industrial modernisation. There was, however, something peculiar about the Congress/United Progressive Alliance’s politics of displacement and land acquisition — when dominant castes lost their lands for public and private purposes, they were generally paid exorbitant compensation whereas the colossal loss of tribal lands with minimal compensation was treated like willing sacrifice for national development. The present government, on the other hand, has rightly thrown the economics of swadeshi back into the closet. The BJP is working out a delicate balance between free markets, capitalism and Hindutva, with the last limited to the cultural-political sphere. In this new onslaught of the market, Anna Hazare and his supporters would do well to help the rural dominant classes get the best possible price for their land. If successfully passed, an unintended consequence of the Land Ordinance Bill could also mean the end of some of our long-celebrated village morals, which Ambedkar rightly considered as just plain narrow-mindedness. It was the freedom of Dalits and women that was put at permanent risk by the bigotry of the village polity and economy.

‘Conspiracy’ as an easy way out

There is something seriously problematic about the state of affairs in the Trinamool Congress (TMC)-run West Bengal. Three days following the gang rape of an elderly nun belonging to the Convent of Jesus and Mary school in Ranaghat in Nadia district, by dacoits, arrests of the culprits are yet to be made. Rather than acknowledging the seriousness of the problem of crimes against women in the State, the State government has yet again sought to politicise the issue, initially insinuating “religious fanaticism” to be responsible for the crime. Later, the Chief Minister blamed the Opposition — the Communist Party of India (Marxist) and the Bharatiya Janata Party — for what turned out to be spontaneous protests against the incident in Ranaghat. This is not to suggest that the robbery and rape incident in Ranaghat could not have been a “hate crime”, a number of which have been reported in other parts of the country recently. But for the government to jump the gun even before apprehending any of the culprits just to score political brownie points is unacceptable.

West Bengal, according to latest statistics released by the National Crime Records Bureau, ranked third in absolute numbers of crimes against women and among the high-ranking States in incidences of rape in 2013. However the State cannot be singled out. The issue of rape and other crimes against women is a national one and protests against the Delhi rape incident in 2012 have steadily turned the gaze on law enforcement agencies to effect better responses to these crimes. What sets the TMC government — and Ms Banerjee in particular — apart is its refusal to subject these issues to serious scrutiny and escape into conspiracy theories. Ms Banerjee’s response to the incident in 2012 in Park Street, Kolkata involving the gang rape of Suzette Jordan — who succumbed to encephalitis recently — was to term it a “made up incident” against her government. Her party colleagues dismissed the rape allegation and also cast aspersions on Ms Jordan’s character. The police official in charge of the investigation of the incident was transferred after affirming that it was indeed gang rape. Meanwhile the main accused in the rape case is yet to be apprehended by the Kolkata police nearly three years since the incident. While crimes against women are indeed a societal issue, there is much that the State could do apart from prevention. The State police should not be encumbered by political pressures as it sets out to bring culprits to book. The Chief Minister’s continued reliance on conspiracy theories lends to unnecessary politicisation which leads to a dangerous drift even as it renders law enforcement agencies ineffective.

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